Real Estate Investing takes a lot of learning before you can finally hit the right timing. It takes a lot of effort to reap the rewards that you are targeting. Buying, selling and renting out properties and profiting from it is achievable.
When a buyer signed a contract to buy your home, do you think it’s time to go to cloud 9 and celebrate? No. So many things can still happen. You will encounter challenges like financing problems in the process, jittery buyers, and imbalance of power between a buyer and a seller and so on and so forth. When the ownership of the house is officially transferred to the buyer during the closing day that is when you can say the buying and selling transaction is really done. So what should we do to avoid falling into this trap?
- Research Before Buying - Anything that you purchase will be subject to your assessment to decide, is this worth the money and what are the known risks? The same criteria apply to buying a house and you are going to weigh up and compare similar places in the same and different neighborhoods. It’s not just about any appraisal value it’s about condition, the safety of the neighborhood and availability of nearby facilities like good parks, nature trails, schools, shopping malls and places where employment might be found like industrial zones or a major airport. Also, is there a risk or any history of subsidence caused by mining or is the house in a flood zone? And, what is the history of the home, it’s best features and upgrades and prices it sold for over the years including the price the current seller paid and when?
- The “I can do it all” Mentality - Where buyers can be confident in this field especially if they have done this many times over in the past and never encountered any glitch. However, there’s no telling that one hopeful, important transaction can turn sour if you do it on your own. Any investors in real estate know that to reach out is the smartest thing to do. Tapping all sorts of possible resources, getting a mentor and reaching some experts in the field is a sure ball. A good attorney for example is someone to keep and to consult whenever you encounter legal challenges. So don’t just do all the work, utilize a team of experts who can minimize your real estate challenges, today! Also, get advice about financing your projects for bridging loans to pay for house purchase and any rehab. Unless you have a cash rich partner you will need this until the buyer signs on the closing day. Also your professional network should include other experts in real estate, like a good realtor, banker, lawyer, builder, tree surgeon, kitchen and bathroom fitter and so on.
- Financial Incapacity - It is vitally important that the buyer has the financial capability and flexibility. It shouldn’t just be that you need qualified buyers but sellers as well need to be solvent and be weary if they have issues with the lender. One has to consider the following expenses and take into account all the cost associated with the attorney, closing fees and so on. New real estate investors should also look at short term financing costs, any cancellation fees and prepayment penalties. Looking at every cost involved will help the transaction journey to be a stress free one. This will also build buyers credibility in the process. So do your homework before purchasing a property and list down all the necessary costs involved and this is even more important to house flippers because your profit is still tied up to the amount of time it takes to purchase the home, rehab and resell it.
- Rental Investment - If you don’t sell the house perhaps your plan is to rent it out and get a regular income? If so, you also need to plan and factor in wear and tear and maintenance costs. Electrical appliances will break down and eventually they need replacing. Trees and gardens and any decking all need maintenance by the appropriate specialist experts and this costs money.
Whether you are buying houses to flip for a quick profit or in for a longer term investment as a landlord you need to network with other specialist experts and you need to plan your financing and budget for predictable expenses. Also make sure that whatever you sell or rent you would be delighted to receive yourself if you were the buyer or the renter. This way you will gain respect as a person of integrity who can be trusted and this is worth as much as the balance in your bank account.