- There are two basic types of real estate investors: passive and active. Those who are passive are purely speculators. They believe they can determine when the market is about to explode and buy properties that will do well in such a market, even with no improvements to the property. This involves a great deal of skill and a substantial amount of luck. Active investors actually take the time to fix up properties. Perhaps they buy a home in need of care and work to fix it up, then put it back on the market. Determining what type of real estate investing you want to do is very important.
- Even a home that is fixed up may not bring in enough money to make the remodeling project worth it. For example, if a home is bought for $50,000 and $30,000 is put into it, but it can only sell for $75,000, the investor will lose $5,000. Know what the market will support in your area, stay on a budget and wait for the most opportune times. Doing all three shows a keen understanding of the market, but it is an extremely difficult task.
- Anyone truly wanting to succeed in real estate must find bargains. The easiest way to do that is find homes that have been listed for more than 90 days. Many listings online will provide this information. These owners of these homes may be willing to cut a deal. Research the going rate of similar properties in the area. When you find a deal, take it. However, be patient and know the deal is a good one before jumping in. The multiple listing service has information on houses from many different real estate agents and is a good place to start (see Resources below).
- This step represents the final part of the process. Selling requires patience and understanding of the above three processes. For example, those who understand the market may be able to anticipate when interest rates are going to be lowered. This could mean a flood of new buyers and represent a prime opportunity to sell. Current average mortgage rates can easily be found online. Do not be afraid to hold on to a property if there are no reasonable offers. If the research you did is correct and the price is good, you should find a buyer.
