I.REAL ESTATE INVESTING
1.How To Get Started In The Real Estate Game Fixing And Flipping Houses
A neat way to make good money in the real estate market is to buy homes in cosmetically poor shape and turn them into eye-catching beauties before selling them off while pocketing the difference. An eye for detail is essential in addition to a nose to sniff out good financial deals when you see one.
Inexperience in this field could result in repair bills so high that it could wipe out all your profits and you could even end up pumping in money from your own pocket.
The first thing you do is to connect with an experienced and reliable contractor who will take care of the technical side of repairing, repainting and other general repairs of the home that you buy. Ensure that all his work is up to the local building codes.
If you are new to this business engage an experienced real estate broker to guide you. Identifying the correct house is very important. Stay away from homes that are structurally damaged. The costs of replacing beams or fixing concrete foundations is difficult to estimate. You never know what you are going to uncover. Worn out carpets, peeling wallpaper, leaking taps, outdated cabinetry and even broken doors and windows are easy to fix or replace and result in great returns on investment. Make sure you point these defects out to the seller to negotiate a better price. If the house has any existing loan on it then get all details from the lender. Calculate the cost of repairing the house and add in an additional figure in case of any hidden expenses that may pop up after you start work on the house. If the house has good potential, then you could rehab the house and make it even more beautiful than it originally was when built. That will help to get you a higher price.
Remember not to let potential buyers peek when repairing and re-decorating it. Showing them the finished product is very important since first impressions can be profitable impressions. Always buy houses in areas where the demand is high so that you have a greater number of potential buyers ready as soon as you finish your work. You can even find a badly maintained house for a low price, in a short sale, which the owner has not maintained due to shortage of funds.
You will also need the services of an attorney and a tax consultant to handle the paperwork and the repair bills related to the house. With enough experience you could even buy ill maintained houses and custom make them for specific confirmed buyers. This could propel you into a niche market and the profits in that line could be tremendous. Normally, you should look at a profit of around $25,000 to around $100,000 or even more in such deals, depending on the location of the house and the workmanship of your contractor.
So, if you want to create a different area of expertise for yourself and want to earn more profits as compared to just buying and flipping houses, then buying houses in bad condition before turning it into a beautiful masterpiece and then flipping it for a higher price is a very satisfying way of making money in the real estate market.
2.How Many Businesses That Increase Their Profits By 500%+, Go Down In Value?!
I was speaking to an investor this week, and we were both agreeing the credit crunch has a lot of positives for existing investors.
While the media may make you think anyone owning a lot of buy to let property is at breaking point right now, the truth is far different.
As anyone who owns more than 20 buy to let properties will have seen, annual profits have rocketed due to interest rates being slashed.
With interest rates down to almost a third of what they were, interest payments to mortgage lenders have also been slashed.
If we run through the numbers - the average property that say had a mortgage of £500 a month, now has a mortgage payment of around £200 on a variable rate - and if rent is £550 then that is a huge difference.
So many investors that were barely breaking even 6 months ago, are now seeing huge annual profits!
The average investor with say 50 properties can have gone from profits of say £1,000 a month after costs, to an extra profit of say £150 per property per month ie an extra £7500 per month - so now bringing in £8500 a month, or £100,000 per annum!
What I think is very unusual, and doesn't really make sense, is the fact that your annual profits have jumped by more than 8 times the previous years amount, and yet in theory your business is now worth 10-15% less than last year - with property values supposedly having dropped!
Where else can you see that?!
I think all business owners would take annual profits jumping by 8 times, even if that affects overall business value! Profits and monthly cashflow are so critical for any business and say far more about the long term value of your business than the short term.
When people on the outside of the property world, say times must be hard right now to me, it is hard to agree when your annual profits have increased more than 8 times - and continue to increase!
What I would say is this is a great time to actually reduce your debt by over paying on mortgages - Mortgage Express for one are willing to let you over pay each month on your mortgage - make the most of the next 12 months to reduce your overall borrowing, to keep your long term profits as high as possible.
Also look to keep taxable profits as low as possible, by keeping copies of all receipts and bills for any work done on your properties.
So don't feel too sorry for us property investors right now - with annual profits on UK property up by up to 8 times the profits of the previous year this credit crunch has certainly got some benefits!
For those looking to start out, cashflow has also never been better - with mortgage rates at very competitive levels giving you good positive monthly cashflow!
