As you embark on your real estate investing venture, realize that although you'll be doing most of the work and (hopefully) seeing a nice profit, the entire process is a collaborative effort. You wouldn't be able to start a new job without the proper training, and you probably wouldn't be able to successfully invest in the stock market without the proper guidance. So it is with real estate investing. Gone are the days of quick-and-easy buying and flipping with enormous profits. You need a plan if you're going to succeed, and you're also going to need some help. One of the first things you need to know about getting started in real estate is what to look for in a property. There are so many homes on the market today you may feel any of them would be perfect to invest in. This is not true. There are some rules to buying properties for investment purposes.
The first thing you need to know is your market. Take a look at what is selling in the area you are looking in. There may be many two bedroom homes on the market but if the three and four bedroom houses are the ones that are selling, then that is what you want to buy. It would not make sense to buy something that is not selling. Two bedrooms might work in a retirement community but not in a family area.
You need to find out what price your market will support. Just because someone has their house for sale for $120,000 does not mean it will sell for that price. Check real estate transfers over the past six months to a year. You will see a trend. Homes listed for a certain amount and below are the ones which sold the quickest. You want to be able to find a good price and make a decent profit. So when you find a house that is listed for $98,000 and the average selling price for the market is $99,5000 a wise choice would be to find another house. Now if the average selling price is $150,000 then it would be a great deal.
When looking at the selling prices of the homes, take a good look at how long they were on the market before selling. The average market time is 4.5 months. When you find a market that is moving faster than that, you know it would make sense to buy in that neighborhood. Areas where properties stay on the market for six months or longer are not where you want to buy. You want to make your profit quickly. Remember the longer you have the property the more taxes and insurance you have to pay. If you took out a loan to purchase the home, you may have to make payments on the loan. This will cut into your profit. If you did not prepare to make these payments, it could be a catastrophe.
When you are getting started in real estate, you should find a reliable contractor who is willing to inspect the homes. You will want to know if there has been cosmetic repairs done to cover up large problems. You may find a basement which ?has just been redone?. This could mean the paneling was hung to hide the massive cracks in the foundation. ?Fresh paint? could be hiding a leaking roof. Although real estate agents are mandated by law to disclose any structural problems they know about, sometimes the seller is not as honest as he or she should be. Have the home inspected so you know what you are buying.
If you buy what is in demand, below the market value, with a solid foundation you should have no problems making a profit when getting started in real estate.
