How to Profit by Buying and Selling Homes
Some people choose to do it as a profession, others do it as a hobby, but one thing they all have in common is the desire to profit from it. `It` being the buying and selling of houses, or as some term it - house flipping. In other words - speculating.
So, with the current downturn in property prices, and the upturn in foreclosures, is it a good time to invest in property? What factors should you bear in mind if you are thinking about buying and selling houses?
Consideration of the following, though not an exhaustive list, should give you some guiding principles to help you before jumping in to real estate.
From what source will you find the funds to purchase the property? If it is going to be a bank loan, consider the rate of interest you will be paying the lender until the loan is repaid, usually at the point of the sale of the property. If it is your own money you are using, how much interest will you lose on it being in a bank? Might you need that money in an emergency?
How much are you prepared to buy the house for? The higher the value, potentially the greater the profit. Set yourself a ceiling, particularly when first starting out. Where will you look to locate the ideal property you wish to buy? From an auction, through a realtor, or even privately, are some of the more obvious options.
Once you see a house you think you could do things with, check how much similar properties go for in that neighborhood. Pay too much and if you can`t make sufficient profit you are wasting your time, and you could even lose money on the deal.
Will you be carrying out repairs, or remodelling, yourself, or, will you have to bring in contractors to do the work for you? If you do the work yourself, do you have the necessary expertise to carry out the work safely, and do a proper job? What about family commitments, will you have the support of those closest to you? If you can do the work yourself, or at least the majority of it, you can save yourself a lot of expense. But, you need to consider whether you can afford to take the time off work with the possibility of losing wages. You need the commitment to see the job through, and set a realistic time scale for completion.
It is absolutely essential to calculate how much profit you will receive after taking into account the initial cost of the property, interest on any loan needed to fund the purchase, selling costs (realtor fees, legal costs etc.), your own wages for the time spent on the house, and costs of materials and possibly employing a contractor to do any work needed to add value to the property.
If you have ticked all the boxes and feel confident that buying and selling houses is for you, then you could be on the road to making money in the property market.
Geoff Cummings runs a DIY tools site at http://www.ourhometools.com where many products are at discount prices.
Article Source: ArticlesBase.com - How to Profit by Buying and Selling Homes