The Profit Is In Your Hands!
"Make It Big....Or.....Make It Small"
There is alot of confusion today among novice buyers and first time investors. What is a bargain anyway? Is a house a bargain because it has a cheap price that is affordable to our pocket book? Is a house a bargain because it has a reduced price tag that perhaps was $10,000 above what is being asked at present time? It a house a bargain just because the listing says it is well under appraised value? How can you look at a piece of property and tell whether it really is a bargain?
These are the kinds of questions that I think buyers today are not realistically answering. Once out the doors of the investment seminar, buyers are dashing for what might seem at first glance a true bargain. What I am seeing,though, are buyers who are getting way in over their heads and losing money when the goal was to make a profit in the first place. It is sad to see homes where buyers have started projects with good intentions but finished in a foreclosure. Some get a home ready for resell only find themselves short of either time or money and the home ends up in the hands of another investor who can easily finish the projects, get the home back on the market and sell for a profit. Not knowing The Going Prices Of The Area
Many first time investors make a huge mistake by not considering the going price of the neighborhood. They often buy a small home because it was cheap. As they begin to tear down all the walls to the studs, the cost of putting the home back together forces the investor to over spend for the neighborhood. What he neglected to consider was this: If he were to raise the price tag, who is the potential new buyer? What would they expect to have in the home? If he spends too much to get the home up to that potential buyers expectations, his profits are lost and his labor has become a nice communitor service project! One of the questions he should have asked himself is: would that buyer be willing to spend that much money for the neighborhood he is thinking about or would he go to another that was more compatible in home prices?
Not Sticking With A Budget
One of the worst things anyone can do is turn his pocket book loose in a store without some kind of guide lines and controls for how much he can and should spend. Doing your homework before you make an offer will allow you to calculate your expenses compared to projected profit. Keep in mind, the more you spend, the less profit goes into your pocket if you are not able to recoup it when the house sells.
Often the novice investor will start to remodel the home as if it were his own. The problem he faces is he thinks that he must put in the same quality of materials as if he were going to live there. But making a profit on a home is not about what you like or dislike. It is about finding the best for the least amount of money so that in the end, more profit stays in your own pocket. It is about finding out what today's buyer likes and then attempting to produce that product to meet the buyer's needs. You see...you must be as good a shopper as you are a remodeler!
Not Calculating The Cost Of Resale
Accurately calculating the most probable price your home can sell for helps you stay within the boundaries of your budget for the home. When you try to estimate what the home can sell for, take into account the current market place, the average price of like homes and what kind of discounts or seller contributions you might have to contribute to in order to secure the right buyer. Being ready means being smart about ALL the costs of buying, fixing and flipping homes.
Not Considering Who The Next Buyer Will Be
Many novice investors I work with have never considered who that next buyer will be. Every price range brings a potential buyer from a different life style, financial status and a multitude of tastes, wants and desires. Considering whether the new buyer in a higher price catagory would even consider buying a home without a garage or with vinyl floors would be good to know wouldn't it? Do your homework before you pick up that next investment property.
Here is the formula for making a good profit in today's market place:
- Do Your Homework
- Buy Smart
- Budget Wisely
This is a great market place to make money if you know how to do it wisely. It has been said that the time to make money is in a buyer's market when prices are at the lowest.