1. Money is made when buying.When buying an investment property your money is made at the point of purchase not at the sell. Many times people buy investment property with the intention of making a huge profit only to find out they can not make any money after the repairs and renovations because the purchase price was to high. When you purchase investment property be sure that you buy with enough margin to make the necessary renovations, cover all carrying cost and still turn a profit.
2. Inspect the Property - Get a complete inspection done on your investment property. Spending several hundred dollars on an inspection can save thousands in problems that you cannot see. Foundation, mechanical and pest issues to name just a few. By getting a full inspection you can rest assured that you know every thing that is wrong with the property before you buy. In the contract to purchase the property make sure that you have ten days to have an inspection preformed. Also if the inspection uncovers problems that are going to cost more than your margins allow you can get out of the contract without penalties.
3. Don't do the work yourself: - Get a contractor or several sub-contractors and have the work done quickly. You need to have investment property either earning money or being ready to flip ASAP. When first starting with investment property I tried doing all the light construction myself. Figured it would save money right? In truth it ended up taking much longer than what a sub-contractor would have. Trying to save money just ended up taking to long. On the next property I used contractors for almost everything and had the property completely done in a quarter of the time. Time was not spent working on the property rather looking for the next deal. This is a key point and where many fail.
4. Place the property for sale just below market value: If you are wanting to flip real estate and make money the object is to sell the property as quickly as possible so that you can move on to the next investment. If you try to sell it at top dollar to make and extra couple of thousand dollars on your investment and end up holding it for six months you will loose more money. Get the property on the market at a price that is going to beat the competition. Even if the market goes down do to the tightening of loans or raising interest rates you can still sell. How? Because you can offer the property at a price that is still a good deal and others will see value. This is what you have to create in your transactions, especially if the market is slow. If the margins aren't there to make a good deal for you and someone else move on.
5. Use a Realtor - Yes, I may be a little biased but do not try to sell the property on your own. Harness the power of a Realtor and the MLS system. When you do a FSBO (For Sale By Owner) you are depending on people just driving by your property seeing a sign or reading an add. With a Realtor you have someone actively marketing your property to get it sold. Once again this will free up more time for you to look for more great deals.
Trust this article has been helpful with the basics needed to buy investment property. If you will study and learn, over time you will make money. But do your homework before you purchase and make sure that there is profit on your end while still making a good deal for someone else.