Many people make a living out of buying and selling real estate, and it can actually be compared to many of the other common forms of investments such as mutual funds, bonds and stocks. However there are two main differences. It’s possible to buy and sell other investments very quickly at the market price. Buying and selling real estate takes much longer, it can take months to sell. This means that there are some important considerations when buying or selling property.
Similar to other investments you should try to sell at a time when the market is high and then intend to buy it back when the market falls in price. This is easier with other investments, however it can be much more interesting (difficult!) with the housing market.
Most stocks are the same, it’s possible to compare them fairly easily. Real estate is much more unique. Every house is completely unique. There are also substantial entry and exit costs, when selling you need to find a new property to move into, you also need to wait until there is a house which you can afford to buy in the future. The costs of buying stock are minimal, whereas with the housing market they can be quite large.
The real estate market should be treated as a long term investment tool. It’s not possible to buy and sell very quickly in order to make a fast buck. Housing is a tangible product and is much less risky than the stock market.
There are a number of different ways in which you can improve the profits which you make from buying and selling real estate. One is to buy property at very low prices. This would be possible by looking at foreclosure properties, or looking at houses which need a lot of repair to get them up to scratch. If you’re a patient person then you will probably be able to find many foreclosures which are for sale at up to 35% below the market value of the area. You can find out about these by looking in local newspapers and on websites. This is true if you’re looking for property in Costa Blanca or anywhere in the world.
It is also possible to look at areas where sellers seem to be leaving, but it is still possible to sell property there. For example previously depressed neighborhoods in Manhattan are now quite valuable. Other cities have experienced similar situations. Try to guess which area will be the next up and coming thing by seeing which has the most money spent on it for regeneration.
If you’re good at DIY or know a friend that is then you could consider buying property which needs fixing up for it to be profitable. A house with a leaky roof and water damage could be 10% below market value or more.
It is possible to make a profit from the real estate market, even if it’s starting to slow down recently. It’s only really possible for people that are willing to be patient, do lots of homework, and not get too sentimental about the properties.
Author: Guy MorrisThis author has published 4 articles so far.