Properties Flipping: Facts And Myths
Real estate is often advertised as the hot way to make quick money. While property investments can be extremely financially rewarding, it takes hard work, patience, and perseverance to be successful.
It's easy to fall into thinking that real estate will immediately bring you financial security. The news media encourages this belief with stories about people who made it big in real estate.
It takes several months to a year before you begin reaping the rewards of your business. Finding your first investment and closing the deal cannot be done quickly, and then you have to put substantial work into your investment in order to get it ready to resell or rent out. If you do sell your investment, it takes just as long to finalize as it did when you bought the home.
The way piece of real estate flipping is described, it sounds like all you have to do is stumble across a random home, buy it, and fix it up. In actuality, you have to put as much work into it as you would into any other job: writing a budget, making lists of the kind of investment you're looking for, and evaluating potential homes to see if they are a good fit for your plans. You are very unlikely to be successful without such a plan.
Your budget should include how much money you can afford to keep tied up in a house (you need to have adequate cash flow to pay for renovations, property managers, or other expenses) and how much time you can afford to spend dealing with this property. Sometimes a real estate investment will take up to twice as long to come to fruition as you expect, so it's important to make sure you can wait that long to see profits.
It's important to stick to your budget; some aspects of house buying end up being more expensive than you expect, and if you don't have enough extra money you could end up losing money on the deal.
This may be true at the beginning, when you're dealing with just one investment. Even that can be overwhelming, as you will soon see. You have to find the right house, finalize the purchase, take care of maintenance and repairs, find renters or buyers, and so on. You also have to deal with tax laws and monthly mortgage payments. If your business becomes successful and you decide to make several investments at once, your workload will quadruple.
This is also why it's important to research properties prior to purchase. Learning about the piece of real estate's history, the type of neighborhood, and how costly it will be to maintain or repair will help you avoid making foolish purchases.
MYTH #4: The real estate investment business consists entirely of flipping properties .
House flipping--buying low and selling high--is popular thanks to the news media. However, the entire real estate investment industry does not revolve around this practice. Many people rent out properties or convert them into bed-and-breakfasts. It is a good practice to have a back-up plan for making money off a given house in case renters aren't interested or you can't afford significant improvements.
Real estate is an exciting, lucrative, dynamic business. Go in armed with the facts and you may find yourself reaping handsome rewards. - 23199
It's easy to fall into thinking that real estate will immediately bring you financial security. The news media encourages this belief with stories about people who made it big in real estate.
It takes several months to a year before you begin reaping the rewards of your business. Finding your first investment and closing the deal cannot be done quickly, and then you have to put substantial work into your investment in order to get it ready to resell or rent out. If you do sell your investment, it takes just as long to finalize as it did when you bought the home.
The way piece of real estate flipping is described, it sounds like all you have to do is stumble across a random home, buy it, and fix it up. In actuality, you have to put as much work into it as you would into any other job: writing a budget, making lists of the kind of investment you're looking for, and evaluating potential homes to see if they are a good fit for your plans. You are very unlikely to be successful without such a plan.
Your budget should include how much money you can afford to keep tied up in a house (you need to have adequate cash flow to pay for renovations, property managers, or other expenses) and how much time you can afford to spend dealing with this property. Sometimes a real estate investment will take up to twice as long to come to fruition as you expect, so it's important to make sure you can wait that long to see profits.
It's important to stick to your budget; some aspects of house buying end up being more expensive than you expect, and if you don't have enough extra money you could end up losing money on the deal.
This may be true at the beginning, when you're dealing with just one investment. Even that can be overwhelming, as you will soon see. You have to find the right house, finalize the purchase, take care of maintenance and repairs, find renters or buyers, and so on. You also have to deal with tax laws and monthly mortgage payments. If your business becomes successful and you decide to make several investments at once, your workload will quadruple.
This is also why it's important to research properties prior to purchase. Learning about the piece of real estate's history, the type of neighborhood, and how costly it will be to maintain or repair will help you avoid making foolish purchases.
MYTH #4: The real estate investment business consists entirely of flipping properties .
House flipping--buying low and selling high--is popular thanks to the news media. However, the entire real estate investment industry does not revolve around this practice. Many people rent out properties or convert them into bed-and-breakfasts. It is a good practice to have a back-up plan for making money off a given house in case renters aren't interested or you can't afford significant improvements.
Real estate is an exciting, lucrative, dynamic business. Go in armed with the facts and you may find yourself reaping handsome rewards. - 23199
About the Author:
Arranging investment property loans has become increasingly difficult throughout the credit crisis, and not many are under the illusion that things will become any easier quickly. The property investment market is still a risky proposition, and proper planning needs to be undertaken.
posted by X - Men @ 6:46 AM
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