Tuesday, April 30, 2013

3 Top Real Estate Profit Building Tips

Do you know what separates a good Real Estate investment from a bad one ?

Do you know how to maximize your future profit potential ?

Discover these three methods to increase your overall wealth !

Profit Building Tip #1

There is one thing you can never change about a Real Estate investment. Location. No matter how hard you try to fix up a property, if you buy in the wrong location, you will lose.

Whether you are buying a property for revenue or for your own use, always consider the location first. There are reasons that properties in poor locations sell for much less. Because nobody wants them. Nobody wants to live in an area with high crime or high industrial pollution etc.

Start your property search by determining what areas are best for reselling later on. You always want to have an exit plan before you invest in anything, even Real Estate. If you can't get out, you could be stuck with a real mess.

Profit Building Tip #2

Once you choose the area or areas you want to invest in, you can now start looking at individual properties. For maximum investment growth potential always pick the worst house on the block so to speak.

Look for properties that have been neglected by the previous owner. Never buy a newly renovated property. If you do, you will be giving your profits to the previous owner instead of making them yourself.

Fewer Real Estate purchasers will want to buy a fixer upper, especially if they are planning to live there themselves. For this reason, you should be able to get a better price and may even be able to get the property for substantially below the asking price. Never be afraid to low ball your offering price. You can always increase you bid later if the vendor doesn't bite.

Profit Building Tip #3

Once you have purchased your undervalued property in a good area it is time to add value to your investment. Renovate your ugly home and turn it into the best house on the block. Look for ways to add to it's curb appeal and to make it more comfortable to a new owner. Update electrical, plumbing and heating/cooling if necessary.

Be careful with your renovation plans though. Do not over renovate your property to the point you will no longer be able to increase it's resale price. Given your chosen location, there will always be a maximum price that new purchasers will be willing to pay.

The key here is to bring your property up to the level where it will be one of the more desirable properties on the block without spending more on renovations than you need to. Many investors overdo it in this area which reduces their overall profit on resale.

What To Do

Whether you are looking at buying a piece of Real Estate for revenue producing or for your own use, the above three tips will help you to make maximum profits on your property once it comes time to resell.

You should still be careful though about when you buy into a given market ( as mentioned in one of my previous posts) . If you buy at the wrong time at the top of  a market cycle, you could still end up losing even by following these tips. Be careful and be well informed before you buy.

To recap, when the time is right, find a good location, find a fixer upper and renovate. This process can be repeated many times in many locations.

As always, I welcome your comments and suggestions for future topics.


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