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3 pros and cons of flipping property

In our previous post, we shared with you tips on flipping property. Well, it would not be wise for us to live it at that. As an investor in real estate looking to grow your finances through such a profit making venture, it is important to know that property flipping comes with a number of pros and cons.

Property flipping falls under the category of high risk, high reward investments. Just as you are likely to make a financial kill, you are equally at risk of losing it all. So before you decide to put your money in such a venture, let’s first look at the 3 main pros and cons.

 

The pros of property flipping

Let’s get right into it.

 

#1 There is a huge potential to make a veryquick profit

Property flipping is a quick money game. You get in quick and get out quick. If you get it right, you stand a chance of making some really good financial returns. That is what makes this a very attractive investment venture.

 

#2 You will gain valuable experience in real estate

When you decide to get into property flipping as an investment option, you are bound to gain a lot of valuable experience in the real estate sector. The idea is that you want to make your financial return quick so you invest a lot of time in learning all you can about construction, the local market, unanticipated costs and real estate in general. By the time you are done and you have flipped your property, your body of knowledge of the real estate industry will be tremendous.

 

#3 It is an opportunity to growyour network

When undertaking the venture of property flipping, you will end up creating very many new valuable contacts as this is not a venture you get into on you own, you have to work with others in the industry from realtors, building inspectors, insurance brokers, attorneys, contractors as well as other investors.

 

The cons of property flipping

Just as there are pros, there are also cons.

 

#1 The potential of losing money is high

This venture relies on everything going right therefore, if one or two things go wrong such as unanticipated expenses or change in the tax regime, you have the potential of taking a major financial hit.

 

#2 The property loses value pretty quickly

The major challenge with house flipping is that every day you are unable to find a buyer, the property loses value to increasing costs. As the owner, you have to pay holding costs therefore such costs eat into your potential returns thus making your property lose its value.

 

#3 House flipping is stressful

The process of house flipping is not for the faint hearted. The task of identifying and buying the right property, working with contractors, designers and realtors, and finally finding a buyer within the right time is a stressful period of time.

It is therefore upon you to weigh these pros and cons and decide whether it is all worth it.

We would love to hear your thoughts.

Here are 3 key tips to a successful house flip

Over the past couple of months, we have shared with you various insights on investing in real estate, specifically home properties, and how to identify the best ones.

Once you have acquired a property, the next step is figuring out how to add value to it with a view of making the most money in order to achieve a financial net return. This is where the term flipping comes in.

So, what does flipping a house mean anyway?

In simple terms, flipping a house basically means investing in buying a house with the sole purpose of selling it quickly and making a profit. Usually, this is not a long term play, it is more of a short term investment play.

We look at 3 key flipping tips below.

 

Ensure you buy the property at the right price

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The whole point about making an investment in real estate is to make profit when you finally sell. Flipping property applies the same principle. The idea is to buy the property way below market rate so that by the time you are done working on the improvements, you don’t spend too much of your money that takes the cost of the house beyond market rate. The less you spend on purchase and renovations, the more your profit margin. You need to do proper research to ensure you have all the financials well calculated before purchase. Only do it when the finance bit makes sense.

 

Be sure to get out quick

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House flipping is a short term play that aims at making the most profit in the shortest time possible. The longer you hold on to the property, the higher your chances of losing your investment. Seasoned real estate investors know that the property market at times can get very volatile. Property can dramatically lose value for one factor or another, you just never know when. So it is a good idea not to be too greedy. Once the value of the property gets to a number you are comfortable with, you better sell. Don’t seat around waiting for it to go higher so that you can make more. Things might actually take a turn.

 

Pick a team to work with wisely

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Often, a property flip is not something you will do on your own. You will need to work with a contractor or designer for the renovation work and a realtor to handle the quick sale. You cannot afford to go wrong here. You ought to pick a team of individuals you can trust, and those who know what they are doing. The costs incurred in this process also determine how the bottom line will look. This is a make or break decision.

Now you know. We trust you are better equipped for a house flip.

If you have any insights and personal stories to share about house flipping, we want to hear about it.

Real Estate – The top 6 websites with the best investment property

Knowledge is power, it goes without saying. This is true especially in real estate investment. The more information you have about properties, where to get them and how to get them, the better placed you will be to make the most beneficial and timely investment decisions.

Here are the top 7 websites with the best investment property listings. This is a list that will benefit both seasoned and newbie real estate investors.

 

#1 Craigslist (craigslist.com)

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Craigslist.com is undoubtedly one of the simplest ways to find property online. From the website, all you have to do is filter out the part of the country you wish to find a real estate property then go through the selection provided to find something that may be of interest to you. The site allows you to narrow down searches through simply keying key words, prices or even available deals.

 

#2LoopNet (loopnet.com)

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Loopnet.com focuses more on listing commercial real estate properties that are available for sale or for leasing. This particular website has a very extensive inventory of property that provide good investment options. One of the main benefit of this platform is that you can pick a target area and go ahead and make sales comparisons.

 

#3 Realtor (realtor.com)

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Realtor.com is an official website for the National Association of Realtors. This particular website gives you the option of millions of property listings from across the country owing to the fact that it is a compilation of hundreds of databases. The interesting thing about this site is that it gives you the option of searching for foreclosures.

 

#4 Auction (auction.com)

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Auction.com, just as the name suggests, is a platform that has a specific focus on listing properties that are on auction. These are all the auctions that take place in courthouses, on-site as well as online, and includes all properties from foreclosures, short sales, notes to luxury properties.

 

#5 Trulia(trulia.com)

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Trulia.com can be considered as one of the most user-friendly real estate websites available. The site allows you to search for property through keying in what you want to search for. This site has an extra feature in that you can see statistics such as school and crime displayed alongside the property you searched for as well as market trends.

 

#6 RealtyTrac(realtytrac.com)

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Realtytrac.com is a site with a specific focus on properties that are on foreclosure. The site allows you to make searches based on the latest listings countrywide. Through the site, you can find additional information such as how to buy foreclosures as well as statistics on foreclosures.

Be sure to check them out and be sure to share your reviews.

5 ways to identify a home for sale with investment potential

It is usually a great feeling being a landlord, especially if your property is bringing in a good and consistent rental income. This is usually the case if you managed to invest in just the right property at the right place and at the right time.

Here are 5 ways to help you make better informed investment decisions when it comes to buying a home as an investment.

 

#1 Urban areas are a good place to start

When it comes to real estate properties, the closer you are to amenities, infrastructure, schools, and so on, the faster the property value will increase. It is therefore advisable for you to look for homes in urban areas if your goal is to sell it later.

 

#2 Homes in a school district have an added advantage

Often, most potential renters are people with families, specifically kids that are still in the school going age. Therefore, properties that are within a school district are in demand. The numbers also indicate that renters would be willing to pay extra for a home that is close to a school district. As an investor, you need to take an extra step to find out the ratings of the schools within the district you would intend to purchase the home as this is crucial.

 

#3 Be sure it is a property you can rent

Many investors in homes have ended up very disappointed after finding out that they cannot rent out their property. In various places, there might be zoning laws or even homeowners’ associations that have put a restriction on rentals. It is therefore important to do your homework before signing on the dotted line.

 

#4 Find out how vibrant the job market is

Jobs go hand in hand with purchasing power therefore as an investor looking to buy a home, try and find out how the job market is in that particular area. Availability of jobs means there is an availability of renters ready and willing to pay for your property.

 

#5 Ensure the property will require minimal landscaping

As a rule of thumb, when you are planning to invest in a home, you should ensure that the property is not high maintenance as this will eat into your net returns. Generally speaking, you cannot count on the fact that you will get a tenant passionate about lawn mowing or gardening hence most of the costs of maintaining the landscape will fall on you.

We trust this will be helpful information for all budding investors in home ownership.

Let us know if you have any additional ideas.

 

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Infographic by: visual.ly

Here are 4 ways to finance your real estate investment

Before deciding whether to invest and what property to invest in, it is important to know how you are going to finance your investment. The method you use to finance your real estate ventures ultimately determines your net return.

Here are four ways you can finance your real estate investment.

 

#1 Financing using your cash

With cash, an investor can significantly save up on interests charged on other financing options and maximize the return on investment. If you can, it is advisable to invest using your own cash. If you think of it even in terms of risk, it is better to lose your own cash than to lose someone else’s cash. The latter means you are left with a debt which you have to pay off. In addition, when you have cash, your offers are accepted much faster by the seller of the real estate property.

 

#2 You can opt to turn to traditional lenders

Many real estate investors have been known to opt for traditional lenders as the option to finance their ventures. The most common options they go are FHA and traditional loans. Investors prefer these options because they have traditionally attracted lower interest rates in comparison to other financing options. The main thing to keep in mind is that lenders here often have strict conditions attached to their financing.

 

#3 You can opt for hard money lenders

Hard money lenders are primarily private businesses or individuals who offer loans to potential investors. This loan can be in form of a short-term financing which is often at a higher rate when compared to banks. For this option however, you need to be careful because the lenders don’t conform to standards as compared to banks.

 

#4 You can opt for private money lenders

Private money lenders are almost similar to hard money lenders however, the difference lies in the level of interest in working with you. Most private money lenders will want to see you succeed and pay them back therefore they are more interested in working with you. All that is required is for you to go by the terms of repayment agreed. Their interest rates are usually also very reasonable.

As an investor, ultimately the choice is yours. We welcome your take on this article.

Investment – How to identify a great property

Being able to identify the right property to invest in, is never easy especially if you are looking to hit a financial jackpot. However, there are basic pointers you can look at in the real estate industry that will give you an idea of how to target the right investment.

Below we look at 3 of the pointers.

 

#1 Does the property meet your objectives?

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As a rule of thumb, your investment choices need to be guided by your objectives. For instance, if you are looking at using the property to make money, then you have to ensure that the real estate property you intend to invest in has sufficient features to guarantee a substantial rent income. If the property is meant for a business, then you need to ensure that it is accessible to your target market. It doesn’t sound like rocket science but ironically, a large number of investors never take these factors into account.

 

#2 Is the property in a growing market?

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So, once you have established whether the real estate property has met your objectives, you need to find out whether the property is in a market that is growing or has the potential for growth. To know whether it is a growing market, look for new businesses being opened up in the area, new construction sites coming up, roads and other amenities being constructed, corporations expanding into the area or the vicinity of the area and more people moving into the area.

 

#3 Find out how easy or difficult it is to find a vacant property

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The ability to find a new vacant property in an area means two things either property in that location is in very high demand or low demand, or the properties are offered on a long lease hold or short lease hold. These factors help in guiding you on how likely it is for you to earn a return on your investment.

Be observant, be wise and you will never go wrong. Happy hunting!

We would appreciate your thoughts and comments on this article.

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