Buying Investment Property For Profit
It's not easy buying investment property for profit. If it was, everyone would be doing it. Here are some things to keep in mind that will keep you out of trouble:
1. Buy in a hot market.
Whether you are buying land, residential property for investment or commercial real estate, if you are in a hot market, you will make money. It's amazing how many people become "experts" in investment property when every kind of property is going up in value. It's hard to go wrong in a hot market.
2. Buy good property.
It seems too obvious, but it's not as easy as it looks. You may have heard the saying "the devil is in the details". This applies to properties more than anything else. There are so many things that can go bad in a building or make land unsuitable for investment. In buying investment property just one key fault can flush your money down the toilet. Be sure to get a site evaluation or property inspection by a professional company with a good track record. ALWAYS go and look at the property yourself before you finalize the deal.
3. Buy at a good price.
What is a good price? Is is simply a price that is cheaper than others on the market or is it based on the potential for profit? When buying investment property I would pick potential for profit any day. However, it's easy to get carried away with the word "potential". Keep in mind your time-frame for investment. When do you want to cash out? When do you want to see positive cash flow? How long do you want to keep your money tied up? Is the potential real?
Determining a good price for a property is never as simple as looking at the neighbourhood properties. You need to consider changes to the neighbourhood in the near and distant future. You need to consider how land / properties are being used in the neighbourhood. Of course, the overall trend of the economy is important. If the investment is big enough, consider hiring a professional company to evaluate the price and determine potential profitable uses.
4. Get good advice.
Good advice can come from a lawyer, experienced investor in that type of investment, an appraisal company, a chartered accountant firm can provide a feasibility study or other KNOWLEDGEABLE advisor. Avoid advice from your next door neighbour whose only investment has been the house he lives in. On the other hand, even if you have a lot of experience in that type of investment, it never hurts to run it by someone to see if it makes sense. When you verbalize your plans you are forced into making it sound sensible. You'll be amazed how many times you'll catch an obvious oversight when you start explaining your plans to someone.
5. Get your timing right.
If you move too quickly or too slowly you can lose money. The best way to have good timing is to be prepared to invest. Know your market. Know lots about the type of property you are investing in (or have a partner who does). Have your team of advisors in place. Have your money in place. You have a lot of negotiating power if you have money available at the right time. Do your homework beforehand if you want to be buying investment property for profit. Scrambling to put things together at the last minute is a good way to lose money fast.
These are some key guidelines when buying investment property for profit. It's never as easy as it looks. However, like anything else, buying investment property for profit becomes easier with practice.
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If You Are Too Busy
To Manage An Investment Property...
You Could Double Your Money
In 3-5 Years In A
Hands Free, Low Risk Investment
In order to make money consistently (and not depend on luck), there is a lot of work involved. You can do it part-time, but you still need to do your homework.
If you too busy to do all the due dilience and upgrading work needed to make sure you make a hefty profit, it's a good idea to team up with a group of people who do this for a living. You may not make as much as going on your own, but the program I recommend gives you pretty close to what you would make if you got involved personally in developing investment property.
In my way of thinking, if you want to develop property but don't have experience, getting involved with a company like this is a great way to learn how the pro's do it. These guys are really thorough in doing everything to make sure they maximize profits. Here is the their process:
1. Find bargain priced properties in HOT markets before any development is planned.
2. Thoroughly research what the best use of the land would be to maximize profits.
3. Buy a huge piece of land so they become the dominant player in that region.
4. Lobby the local government and residents to get zoning approval for the way they want to use the land.
5. Develop the area structure plan and land-use plan to make it easy for developers to come in and do their thing.
6. Negotiate with developers to squeeze out as much profit as possible from every project.
7. Work with the developer as needed to maximize profits for investors.
That's a lot of work. This is why these guys are so successful. Most small investors don't have the time, expertise or resources to do all of that. It doesn't mean that this is the only way to do it, but if you are serious about making the "big bucks" you have to do some version of this process.
If you would like more information on the projects these people are involved with, please fill out the form below: