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How To Get A Good Deal In Real Estate Investing In A Poor MarketBy: Simon MachariaArticle Word Count: 609 words [Comments (0)] Total Views: 6 Views |
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It follows this trend will continue for a while, which means most houses will be worth less tomorrow than they are today. So how do you identify a good deal that will hold its value until you sell? Most home owners looking to sell their houses are getting more and more realistic about the value of their house. They understand the value of their house may be much lower than it was just two months ago, and that the prices continue to go down. They also understand that everyone now buys houses below market value. With so many houses sitting in the market today, you can almost certainly negotiate your price down even for properties that are already deeply discounted. Motivated sellers therefore know that even though they think they are giving you a discount, you must also give a discount when you sell the property. For example if you buy properties to fix and sell, it means you could end up holding them for as long as six months. How much price drop in the house value will you suffer during that time? You are likely to end up paying too much for your houses if you do not answer this question. Even if you wholesale houses, you still need to answer this question. How much extra discount will your wholesale buyer need to give to sell the house? As a general rule, you can only wholesale houses if you leave enough money for the wholesale buyer to make money also. Previously, most investors have been quite comfortable buying houses at 70 cents to the dollar minus repairs. I believe some real estate investors are still using these numbers. 60% minus repairs is barely enough to get you by in the current market. These numbers could be perfect for you if you buy to hold them as cash flow properties. If you buy, fix and sell, you do need to get a better deal to cover your holding costs and the price drop within that time. If you buy to fix and sell, you must have better numbers that will cover your holding costs and the decrease in price within that time. Of course you must also remember that you will need to give a discount when you sell. It is not uncommon to give a discount of 15% to 20% when you sell. How much profit does that leave you? I find it very easy to explain these things to a motivated seller when buying a property. Of course they think that they are giving you say $20,000 discount. Any good real estate investor knows that we work with percentages, not dollar figures. Once I explain my numbers in percentages, they can easily see how it small my margin really is. They end up understanding that you are not taking advantage of them, and you end up getting a deal that can make you profits. Author InfoHave you seen a drop in profits in the current market because you see to be out-priced by the drop in house prices? Get more in-depth advice from our real estate education section, and find out how an interactive real estate website can drastically improve your business and profits.Grab this articles
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