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Real estate investing is a great way to earn some extra money for you and your family. The current recession has made acquiring properties easier than ever but on the flip side has made selling the properties more difficult after they have been fixed up. Anymore suggestion and ideas on real estate investing for profit?
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What you want to do is dealing in real estate, buy it low, fix it up as needed, and then sell for a profit. This is called dealing. Investing in real estate is something different. It is buying an income property, etc., renting it out for income for a period of time and then selling it in the distant future. Even better than selling it, is making a 1031 exchange, which means trading in a lower priced property for a higher priced property and owing not capital gains or income taxes on the transaction.
Actually dealing in real estate is good for a pro, that really understands what they are doing. I was a commercial/investment real estate broker from 1972 till I retired. I made more money dealing in real estate as a principal not taking any commission when I bought it, than acting as a broker. I want to warn you, that the money the way you are thinking, is made by the pros with money and credit behind them, as well as the connections to make good buys, and have an outlet to move the property to investors like I had. It sounds good on paper, and a lot of people write books on how to do it, but most make more money off the books than from real estate deals. I have seen a lot of people like you trying to do it, and ended up hurting financially over it.
They buy a property, most often paying too much for it, then work day and night in their spare time to fix it up, and find it is not as easy to sell at a profit as they thought. They often underestimate the cost of doing the fixer up of the property, and the costs to sell it. They sometimes had to end up selling it for less than they had in the property.
As you say, it is not so easy to get rid of the property when you want to sell it. Too often the price you will be able to sell it for, is enough under what you thought it would sell for and leaves little or no profit. A blip in the market when prices fall even a little bit, can wipe out any equity you had in the property. I had a reputation I would, could buy, and would close quick at the right price. I had both agents and owners, bringing me deals, and if I could see a profit I would buy the property.
Example: I had an agent bring me a 40 acre farm on the edge of town. The front 10 acres was a long narrow strip, that ran down to 30 acres in a square shape. From the road, you saw an old farm house, with a barn, and a alkali pond of water. A real turn off. If you drove to the end of the 10 acres you would find that the 30 acres was a nice sloping parcel that ran into a nice middle class housing tract, with the utilities and the street stubbed into the property. I offered to buy it with the down payment to release the 10 acres, then I could get the rest released 10 acres at a time, for a certain payment and with annual payments on the mortgage. I gave a $1,000 personal note as the earnest money.
I then exchanged the 10 acres taking a nice middle class home as down payment and a bank mortgage. I leased the house to a big corporation, that needed a 2 year rental for an executive from Europe they brought to the U.S. for specialized training and sold the house to one of the department heads at the corporation. All of this was arranged before closing. We closed, and I now had 30 acres of beautiful development land with great financing and release clauses and no money invested. I then sold the 30 acres to a developer in short order for $100,000 profit, who took over my mortgage. He would get 10 acres released and build it out, and then get the next 10 acres released. He was very happy. I could maybe have gotten more over time, but I was happy with a quick $100,000 profit.
People had seen that property all the time but they did not understand how to deal in property. The developer that bought the property from me, drove by it every day going to his office, and never even looked at it. You have to be able to spot bargains, other people overlook. If you want to make money buying and selling like you are asking about, you need a lot more knowledge of the business than you apparently have. You are not going to learn to do it, on these threads.
I am using this one example, but even a small property as an older house, takes knowledge of how to make money, how much you dare pay, and how to estimate your costs of fixing it up, which most amateurs underestimate. You have to understand the local market well enough, on what you can sell it for within 30 to 60 days at the most including closing costs, after putting it on the market .
Money can be made in dealing, but you have to really know what you are doing. You hear some people say read the books on how to do it. Problem, most of those books get more people in trouble than make money doing it. The money was in writing and selling books.
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To me, it was worth much more.
