With TV shows like Million Dollar Listing and Flipping Vegas it seems like the world has become obsessed with real estate investing. However I’m sure it’s not as easy as it looks on TV. The truth is there are several different ways you can invest in real estate from being a landlord to buying and selling homes.
Today we’re going to talk about buying and selling homes a.k.a. flipping houses. This type of real estate investing is very similar to investing in the stock market, well the general principal is the same. You want to buy low and sell high a.k.a. buy a cheap house, renovate it and sell it for a profit. That sounds easy right?
Well if it were easy then everyone would be doing it. However if you do it right you can make big bucks investing in real estate.
Here are three tips on how to invest in real estate:
You need money to make money
It’s no secret that buying a house costs money. You will need a good chunk of cash up front to purchase the home, buy all the materials and pay the contractor or renovation crew, pay for electricity while renovating (because you need water and lights for the workers), the costs of staging the home for resale and hiring a real estate agent. All of these things cost money.
Remember that your home may sit on the market for a while after it’s done, it may not sell right away but the mortgage payments, property taxes and utilities are still due every month. Give yourself some wiggle room when it comes to real estate investing.
Think about curb appeal
First impressions can make or break a home sale. You want real estate agents and potential buyers to pull up to your house and be wowed from the first look. Invest some money in landscaping. Add flowers for color, add trees and shrubs for a cozy feel and make sure the grass is green. There is nothing more of an eye sore than a dying, yellow or baron lawn.
Think about the exterior of the house as well. Ask yourself if the color of the paint is appealing? Does the roof look solid? Basically ask yourself if you would want to live here based on first impressions.
HGTV says to focus on the areas you need to fix immediately and will use the most. One way to save costs is to research your options, think about the return on investment and hire a professional. Being open and honest with a landscaper about your need and budget will help save both time and money.
” Know what you want to spend and talk budget up front with your landscape professional. Understand what things cost by getting at least three estimates and If you’re unsure what to budget, the American Society of Landscape Architects suggests to start with 5 percent to 10 percent of your home’s worth. The good news: a good landscape design can add as much as 15 percent to the value of your home compared to other houses on your street.”
Make sure the price is right
Everyone wants to make money and if you’re learning how to invest in real estate one of the first lessons to learn is it’s all about the price – after location, location, location. Setting the selling price too high will turn buyers off immediately and you may never have a single visitor at your open house.
“Setting the right price and making an excellent first impression are both essential to attracting buyers” says US News.
Working with a real estate agent can help get your home sold faster because they will know the market value as well as use their connections to bring in potential buyers. Another way to help you set the selling price is to look at other recent sales in the area, these are called comps in the real estate world.
You don’t want to under value or over price your home. Comparing it with other properties in the area will give you a good starting point. From there you can justify a higher selling price based on additional amenities, larger square footage and higher quality of materials.