Over the last two years, real estate prices in the US dropped more than they have in decades. There are many reasons for this, however what really matters is that this means there are new rules for you to play by. It doesn’t mean the market is dead – in fact there is still a huge amount of money to be made if you do things the right way!
The Basics of Profit in Property Investing
Real estate investing can be compared to any other kind of business – the premise is to buy low and sell high, making a profit. Just like a grocer will buy his vegetables at a lower wholesale rate, he passes his own costs to his buyer and makes a small profit. The business succeeds because he is always careful to sell the products for more than he bought them for. Real estate investment is the same – you must always follow this basic principle to be successful.
Flipping Homes
In the past, before the current housing slump, one of the most effective ways of getting into real estate investing was to purchase houses in bad condition, restore them and sell them. This kind of scheme was available to just about anyone, especially with the potential to buy with no money down. Many people were able to keep costs at a minimum by doing the repair work themselves, and them putting it back on the market as quickly as possible. Loans were then paid off after a good profit was made.
Things Have Changed But Property Investing is Still Profitable
The truth is that things work a little differently today, and “flipping” isn’t as easy as it once was. The banks, for one thing, are skeptical about the potential for success, due to the fact that there are so many quality homes and fewer buyers available. But all this means is that you need to rethink your strategy a little and take advantage of what’s happening now.
The main thing to remember is that people still need places to live even after they’ve defaulted on their mortgage. This means that there are a number of potential renters out there today, and you can take advantage of this situation. If you have good credit, you can get a low priced property from the bank, and get a renter in. The rent will pay a substantial chunk, if not all, of the mortgage, and you can wait for the property market to rebound once more. When it does, you’ll have the option to sell for a great profit.
As you can see, there is still huge potential in real estate investing if you know just how to go about it!
