Belize Real Estate Links 
| Belize Real Estate Links | |
| |
|
Real Estate Information |
|
|
|
How to Calculate Real Estate Rehab Profits
If you are investing in real estate you will face a variety of challenges. First you have to find the right property. Finding the right property is a combination of personal preferences and opportunities involved in a real estate deal. My most important real estate investment principle is; "You make money with real estate when you buy the property not when you sell it". This means that I wouldn't touch a rehab property where the purchase price is not below 65%-70% of the market value. Why do you need such a low price to make it work? This is quite simple. A common guideline among investors is that you must make at least $10,000 to make it worthwhile. Remember you're an investor and not a handyman. Rehab projects last typically 4-6 months, sometimes even longer. You don't want to end up making minimum wage as a handyman after the project is done. Quite frankly this is not uncommon for first time investors. Real estate investment is all about numbers. If the numbers are right you must make every mistake in the book to turn your project into a financial disaster. That's why you must buy the property as cheap as possible. Selling the property is your least problem. First you have to put together a budget. Here's a little example. Property A is located in a decent neighborhood with average home resale values of $150,000. That's what our property will appraise after the repairs are done. We also take out a hard money loan with 4 points and 12% (interest only) for 100% of the purchase price. We calculate that the property will sell for $150,000 in 6 months. There are about $10,000 in repairs you have to take care of. Property A Purchase Price $100,000 Purchase Closing Cost $8,000 (fees + 4 points) Holding Cost $6,000 (6 months of interest) Repair Cost $10,000 Insurance, Utilities $2,000 (you need a vacant property insurance which is more expensive) Selling Closing Cost $13,000 (6% realtor fee of $150,000 + closing cost) Total $139,000 Selling Price $150,000 Expenses -$139,000 Total Profit $11,000 This is just a very simple example, but I hope you get the picture. Keeping track of the numbers is essential in real estate investment. In the example above just imagine what happens if you spend more money for the repairs or you have to sell the property for less money. Even worst if you can't sell the property within 6 months and after 9 months you sell it for less money. Not only did you loose on the selling price you had 3 months of interest piling up as well. When you're investing in rehab properties you have to have an exit strategy. My exit strategy is, to rent the house and refinance the hard money loan if I can't sell the property after 6 months for the price I'm asking for. This will cover my monthly expenses and I have more time to sell the property when the market is better. Actually converting a rehab property into a rental can be a very profitable choice of real estate investment. Friends of mine are doing quite well with this strategy. Bottom-line; crunch the numbers, make a budget, keep track of your expenses and have an exit strategy. Having this in place you're good to go. Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner. Learn more about real estate investments at http://www.suncoastrenttoown.com or send a blank email to mailto:suncoastrenttoown@getresponse.com
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
How To Simplify Your Real Estate Buying/Selling Experience Today's real estate consumer has a lot to consider during the sale or purchase of a home. Be it waiting for the right buyer/seller, mortgage rates, or the moving truck, the experience can take a bit of patience on the part of the consumer. A Few Easy Ways To Take The Headache Out Of Moving Moving from one house to another is always a challenge, but it doesn't have to be a nightmare. Here are some simple tips on how to get it done with minimal stress and strain. Spain Excellent Choice for British SIPP Investors Second homes in favourite holiday destinations such as Spain are likely to be top of the shopping list when the pension rules change April 6th 2006, allowing individuals to invest in residential property through Self Invested Personal Pensions (SIPPs).Research shows that Spain's mature market makes an excellent choice for SIPP investors, with capital growth still high and forecast to grow at 10% a year for the next five years at least. Buy or Sell First? When it comes to home buying, the ideal situation would be to find a new home, just as you receive an offer on your existing home. You would then be able to close concurrently and move into your new home a few days prior to closing on your previous home. Housing Bubbles and You Are we in a housing bubble? To answer that question first we need to understand what a housing bubble actually is. A housing bubble is what happens when the there is a significant rise in the market that is mostly due to the expectation that the prices will continue to rise. New Housing Starts Do Not Guarantee Aftermarket Sales We have been studying a trend of new home buyers in the US in light of this latest housing boom. And how we should adjust our strategies to deal with it. Types Of Real Estate - An Investors Choice There are different types of real estate, and different ways to invest in them. Which way is best is for you to decide, according to your particular needs. Many Ways To Make Money In Real Estate! Real Estate is a multi-faceted investment arena - there are MANY different methods to earn money from different niches in real estate. One or several may work for YOU!Here's the typical experience: "buy your own residence and sell it when its all paid off and you want to retire, oh my gosh look at all the money its worth". Selling Houses: Design Psychology and Interior Colors Interior colors are vitally important to selling your home quickly, and for more money. But you must always take your target market and selling season into account, using Design Psychology techniques, when choosing the colors for the inside of your home. Selling Your Own Home: 10 More Tips Selling your own home can be a time-consuming and frustrating process. Sometimes, though, in the right market, it makes sense to save thousands of dollars in commission and do it yourself. Purchase Online Tenancy Agreements Buy an on-line Tenancy Agreement now. As a landlord and also as a tenant it is important that there is a comprehensive tenancy agreement in place to protect both parties. Basic Real Estate Valuation Given the current interest (dare I say hysteria) associated with investing in dirt and buildings, I thought it might be interesting for our readers to have a quick, dirty manual on real estate valuation. My perspective comes from years in the industry as well as some time learning at the knee of some of the better real estate minds in academia. Selling Property - Valuing Your Property Selling property privately has many advantages over using an estate agent. However estate agents can provide useful local information not available from the internet. Budgeting Your Log Home: Where Do You Start? The Log home industry has matured these last many years, but there is still a lot of confusion about how much a log home costs. Naturally, everyone wants to know the cost of the log package; however, the budgeting only starts here. When is the Best Time to Move? As Realtors, we are often asked, "When is the best season to move?" This is a tough question, one we cannot answer for you. Most people are asking about price, do they fluctuate throughout the year? NO. How to Use the Internet to Help Your Apartment or House Hunting So you are looking for an apartment to rent or a house to purchase. One of the most important steps is researching the neighborhood to decide if you really like to live in that area. The Real Estate Bubble-When Will it Burst? More and more individuals are realizing that real estate is much safer, and a better return on investment than many traditional investment vehicles. Unlike stocks or bonds, real estate investments can usually be liquidated in order for the investor to access funds in far less time. Flipping Fixers: Using Transformation Psychology for Top Dollar Satisfying and lucrative real estate investment depends upon your correct assessment of profit potential, of course, but your ultimate success depends on your ability to transform a fixer into a dollhouse. The renovation process involves physical work and choosing the best supplies, in order to create maximum positive emotional effect and profits. Buy FHA HUD Homes FHA HUD homes are those dwellings that have been acquired by the United States Department of Housing and Urban Development (HUD). The HUD oversees the Federal Housing Administration (FHA), which offers federal insurance on home mortgages. Home Owners: Disclose the Facts! One of the most common causes for disputes occurring after the sale of a home arise from the buyer finding defects in the property, defects which were not disclosed to him by the owner before the sale of the property. If you are the owner of a home that you are looking to sell, please be aware that you may be held liable for not disclosing any known defects in your home.
|
| home | site map | Colorado Log Homes | Homes for Sale in Denver Metro |
| © 2006 |
