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Invest Smartly
By: Dr. Drew Henry
Are you interested in real estate business? It sure is tempting, but what are
the pitfalls? What should a new investor know before putting money into real
estate?
There is one mantra that successful real estate investors live by: "buy low -
sell high". How can you apply this to your investment strategy?
1. Don’t get oversold: New investors can easily get caught up in the sale.
Without experience or a background in real estate you may think your instincts
are good and quickly get in over your head. Investment properties need to be
undervalued and you need to do your research first. Don't plan to buy without
spending a lot of time comparing values. Your goal is to purchase an undervalued
property which can take time and experience to spot.
The best way to determine the true value of a property is by comparing similar
properties and noting the common features. The properties must be in the same
area since location can drastically affect price range.
Take note of the features and failings of each property, how long they're on the
market and the price they sell for. Once you have a good understanding of the
value of properties you will be able to tell when a property is undervalued -
perhaps because a quick sale is needed or the seller is inexperienced. Don't
hesitate to barter for the best deal possible.
2. Know your market: You're not buying for yourself so spend time noting the
trends in the market. You can often find data in the local real estate papers
listing the percentage of growth for various properties in the area over the
past year.
Keep an eye on what's moving quickly through the market and what features are
promoted in new constructions. You can use this information to make your
upgrades as market friendly as possible.
Be careful not to make the mistake of renovating to your personal tastes. Use
neutral palettes and current styles to appeal to the broadest market.
3. Know your budget: The more time you spend researching the costs of your
venture, the higher the profits you will see. Know how much you can spend, the
price of materials and labor and the time frame to have it completed. Some
experts would tell you to double or triple that amount. In any case, the more
research you do the more accurate your budget will be.
Don't get swept away in the process either; concentrate on the most profitable
renovations. Kitchens and bathrooms are important. Adding French doors or
updated lighting can also be a good investment. A fresh coat of paint is a must.
You have to do your home work before entering real estate business because
investing in real estate is a financial business. Plan your investment like a
business; make well researched decisions, stick to a budget, don't let personal
preferences get involved, and you're ready to make some money!
About the Author:
Dr. Drew Henry maintains a number of websites about banking, including Offshore
Bank, Offshore Banking, and Online Banking Secrets
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