Is it Still Possible to Make Money in Real Estate in the Current Market?

Esomelodan

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Many people ask me about this. My full-time real estate investment career has been ongoing for more than a decade. I've been through both the ups and downs in the stock market. "Can you earn money in this market?" is a recurrent question.

Yes is always the answer. Currently, the market is flooded with products. If you're interested in applying for a mortgage, you'll have to meet a tougher set of requirements. Despite this, people continue to purchase them.

How do you become rich?

I call them "recipes" because there are so many ways to win. "Buy, repair, and re-sell" is a good example. It is important to remember that this is just one approach to winning.

To begin with, it's important to understand the present value of the real estate. Otherwise, the current value is what we're dealing with. It's not how much the house was worth last year or how much it may be worth this year.

If you're getting a good deal, you're going to win, no matter what. As with petrol costs, we recall what it was like before. It's a fact of life that we pay today's prices for petrol. You need to approach real estate investments the same way you treat other investments. How much is this home worth today?

If you want to have a better sense of the values in your investing market, you may use a local real estate agent or even an appraiser to do so.

If you want to know how long it will take to sell a property in your area, you may use the average time on the market to find out.

It tells you the average price of homes in your neighborhood. People who are looking for homes are more likely to look at properties that are below or close to the median price.

If you take a look at the overall wealth figures, you'll find that the majority of individuals have professions that require them to put in long hours. No worries, we're not going wild with the numbers here. Just know that we're looking for properties that aren't mansions.

So, where exactly are we now? You're getting a good deal on residences that are currently undervalued. What comes next? The following is your to-do list:

Money: How are you going to pay for this property?

Fix-It: Who will be responsible for the rehabilitation?

Who is going to buy it?

How much is the item marked down from its original price?

There are no numbers on this list. That was done on purpose. What you can afford to spend on a home is determined by the following factors:

How much of a discount is this?

On average, we're spending little more than 75 cents per square foot on a home. What this implies is that if the home is going to sell for $100,000, we will not spend more than $75,000. We can't spend more than $60,000 on the home if it needs $15,000 in repairs.

Please keep in mind that we've been doing this for a long time. It's easy to lose 25% of your earnings in the first year. In the meantime, let's look at a transaction:

It costs 60 cents to buy a home that requires $15, 000 in repairs. An extra 6%, or $6,000 in agents' fees, and a further 2% in closing charges will be added to your bill, which does not cover the cost of utilities, the cost of money, or any other costs associated with keeping the property.

Here's a clearer picture (with the same $100,000 final value):

60% of the people who saw this item purchased it.

15.5% of the total cost of repairs.

-6% commission on all purchases

2% of the total cost of ownership.

83% of the total

A potential profit of 17%.

Where Do You Plan to Get the Cash to Buy This House?

There are several methods of payment. Getting a bank loan is possible, but in many situations, rehabs need more effort, and banking criteria don't allow for dilapidated properties.

If you have equity in your present home, you may be able to get a loan. You may be able to borrow private or hard money. Additionally, it's possible to mix and match several options. Finally, you have the option of using your funds or those of a partner who has some.

There is always a price to pay, regardless of the method of payment. The interest rate and any loan costs, as well as the amount of time it takes to repay the loan, are all included in the total cost.

Adding one point to a $75,000 loan costs $750 while adding two points costs $1,500. If you're getting a loan, you'll likely have to pay this fee. When you sell the home, you'll have to pay for it, too.

Investors and private money lenders use the phrase "two and twelve" to refer to a loan that costs two points and has a 12% interest rate. Keep in mind that you might end up paying anywhere between six and eighteen dollars extra. Look around. If you pay 2 and 12 points, your point total is $1500, and your interest is $765 each month.

Time is running out if you have had a home on the market for a long time.

-$765 in month one.

-1,530/month 2

-$2,295-month 3

$3,000 for the fourth month.

-$3,825-month 5

That works out to a total cost of $5,325 over five months: $3,825 + $1,500 (the points). To keep your residence for eight months, you'd pay $6120 + $1500 (a total of $7,620).

It's important to remember that you had a potential profit of $17,000! The cost of unexpected repairs is also a factor in this equation. An extra $2000 in roof repairs was concealed by snow when I purchased a new home. Your repairs are the next topic of conversation here.

Fix-It! Who's Going to Do the Repairs?

The population fluctuates. I've had many dream teams throughout the years. Your contractor, your agent, and everyone else you deal with regularly is part of your team. As soon as you have all of the players, your work will be much simpler! Your contractor is now the focus of our attention.

Flipping properties is as simple as turning on the television. As a result, you'll see the usual suspects: contractors who don't perform a decent job, contractors who overprice, and so on. Only a few people, though, understand it.

If you want to invest in many properties, you're looking for a contractor that wants to grow with you. If you're looking for a team player, you'll need someone who knows how to fix homes, has a team mentality, and can swallow some of his blunders. Why? In the end, no matter how hard you both try, there will always be homes like mine with a $2000 roof overage. I asked the contractor to split the expense. He missed it because he was distracted by other things.

Besides inspecting properties before you purchase them, your contractor is there to provide you with a repair estimate and then do the work promptly so that the home is ready for you to put it on the market—tick-tock.

Who's going to buy it?

Choosing an agent is similar to hiring a contractor. Some have a particular area of expertise. When you're looking to purchase, you need an agent that has experience working with investors. As well as selling your home when it's ready to go back on the market, you need an agent who can do so.

RECAP

How are you going to pay for this home, anyway? Paraphrased formalized Private or hard money lenders, bank loans, or cash may all be used for financing. Whether it's yours or a co-worker's,

Fix it. Who is going to conduct the rehabilitation work? Make a team. Look around. Inquire about recommendations; there are excellent contractors at reasonable pricing.

How do you sell it? You may use the same agent who helped you acquire it. Again, look for a real estate agent that deals with investors.

How much of a discount is this? Your discount may vary depending on your financial situation. Repairs would never cost me more than 75 cents.

When it comes to purchasing real estate for a profit, this post was not designed to be a comprehensive guide, but rather a look into how you may win right now.

There are many ways to purchase and sell homes, but this is only one of them. If you're not happy with any of them, keep looking. Is it possible to profit from this market? Definitely!

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