- Sell the property for more than what you paid for it. You can do this after renting the property for a certain amount of time or immediately after you fix it up. List the property with a real estate agent and sell it for a profit.
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Buying a house because you think the price is right, the income potential is good, or because it simply is a deal you cannot refuse is a calamity waiting to happen. There are many factors to consider prior to jumping in on the
invesment band wagon in hopes of being the next Donald Trump, Real Estate Investor and Development Billionaire. One should first count the cost to see if there is fact, enough to finish.
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The first decision needed, in your decision-making process, is to decide which investment model is right for you. The
business model is the means or method in which you plan to earn revenue with your investment. It is the system that outlines how you plan to earn money, sustain that source, and develop it into its grow potential. When choosing your investment model, it is wise to evaluate if it is a model that can sustain on-going change, the economy, management changes and/or process replication.
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Considering how much cash you actually have available to you for investing is important. Having just enough to complete the purchase, pay the bills, and just break even is not good enough; cash reserves need to be available to maintain your sustainability. Money should be available for the unexpected events such as a leaky roofs, busted pipes, non-working Frigidaire stoves, or water heaters. If the business model you chose for your real estate investment business focuses on the buying and renting of properties, then the responsibilities for the property repairs are yours and money needs to be available to do so. A good way to lose your revenue potential is to lose your tenants, which is sure to happen if you are not prepared as a home owner to manage those responsibilities when needed.
Another area to consider, money needs to be available to cover all expenses in the event the tenant moves out. The mortgage, utilities, insurance, association fees, and advertisement costs to locate new tenants all need to be accounted for. Some properties can potentially sit un-occupied for several months at a time, so you have to be sure, you can handle the bill.
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Buying properties from MLS listings or other searches at full price is not the way to make a profit with your investment. To generate revenue and build the value of your wealth, you must buy at a reasonable discount. Also, you cannot commit to a deal based on some else's previous experiences, performance, or success story. For example, do not buy a property on the basis of it is only $80,000 and last year you remember Mr. or Mrs. X paid $60,000 for a property and sold it for $260,000. This is not a wise
investment strategy. Real estate investing is not a series of what looks to be just buying and selling transactions. Real Estate Investing is the
Art of planning and gathering of the most efficient and effective resources to put in action the best solution that will achieve the desired goal or mission.
- Having the right team of professionals available can help you avoid costly mistakes. Develop relationships with professionals such as real estate agents, home inspectors, appraisers, attorneys, CPAs, construction contractors, electricians, roofers, painters, heating and air contractors, cleaning services can all alleviate the responsibilities and pressures for these field specific tasks that you should not being taking onto yourself as business owner.
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