Real estate investment, whether buying or selling, can be a gamble in today’s economy. There are some days that you never know if you are going to make a profit or fall into the pit of woes of property owners and property buyers. Things can get pretty shaky in the real estate market, if you have no idea what you are doing. Making a large investment in a property can turn sour if you cannot find the right seller or buyer for the property or cannot get a turnover in a short period of time. The other problem is in knowing if your purchase is at the right price in order to profit from a sale when it comes. Inexperience can be damaging.
One young investor nearly lost everything, since he had no experience in the real estate world. He made a purchase above his finances, and ended up carrying that debt for some time before he could resell the property. He became homeless and nearly hopeless before his first big sale was made. The lesson here is to find the right sellers before you make your purchases. For example, if you are looking at a warehouse property, why is the seller getting rid of the property? If it is for financial reasons, you may have found pay-dirt. If it is because the property is too damaged, or outside of local codes and zoning ordinances you are probably not going to be able to get a profit on it. That’s where our young investor made his first and only mistake.
He found a mentor in an experienced real estate investor that told him the importance of finding motivated sellers. Most often, it is due to financial hardship and the property is ready for resale. Of course, sometimes it can be difficult to determine the reasons why someone is selling a property that seems perfect. Find their motivation for selling, and you can find your motivation for investing. Every investment you make in real estate is a case-by-case investment. First consider if your investment is worth it. Do you have a buyer’s market for the type of property you are investing in, and how soon do you expect to resell it? When you are in the real estate investment business it means that sometimes you have to do the numbers in your head on the spot. When the contract is in front of all parties, it will be the final numbers that matter to both you and the seller.
Some sellers will forgo the use of an agent to speak on their behalf in order to save the cost of the agent’s fees. Instead, they will make their own offers. You can get a great price on these deals and reap greater profits in a resale. With highly motivated sellers, they get the benefit of your payment, and you get the benefit of selling to someone else for what the property is actually worth, or more.
The key is to know your sellers, as well as your potential buyers are. If you find a highly motivated seller with a property you know will sell, you are going to get the bigger return on your investment.