Anyone out there into this? Do you have any homes you own that you rent out or do ya buy cheap homes, then fix them up, and sell for a profit? I am thinking about going into this and just seeing what any of you have to say about it, just curious
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Investment Properties
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Been watching "Flip that House" huh?I think you have to be saavy as to the location and what the market will bear. Also I think you need to have someone who will be able to do good fast work at a reasonable price AND you have to be able to do a lot of work yourself. If none of the above apply, it would probably be tough to start out. If this is going to be your source for income, all of this needs to move very fast otherwise you're screwed.
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Hah, that's what I was thinking. I knew a couple who did it in Boston a while back, after the real estate slump hit in the mid-80's. They did/oversaw a lot of the work themselves. It was a lot of work, but they enjoyed it. They spent years living in the dust and debris of whatever house they were fixing (including kids). It depends what you like. I don't think it's for me.The problem with doing it in a place where the value of real estate tends to change rapidly (like most places on the east and west coast, and Las Vegas), you can really be left holding the bag if you're working on or renting out one or more properties, and you're expecting to sell them soon. It's probably less risky (but with less of an upside) in the Midwest.I rented out my condo in New Hampshire in the early 90's, after real estate cratered in the Northeast, and I couldn't sell it without taking a big loss. Depending on the tenant, being a landlord can be a real pain in the ass.It's a job. Most people don't get rich dealing in real estate. A few do. A few people get rich doing most anything. It's a mixture of luck, skill, dedication, resourcefulness, support, and more luck. Dealing in real estate is riskier than having a union job, but less risky than day trading. You just need to have a taste for risk, and the patience to deal with contractors, tenants, and banks.
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Pretty much all of it was covered, but I will add. Alot of time the profit to be made can be eaten up in Realestate agent commissions.
In order to make that money you also need to understand realestate law...or be willing to pay an agent/broker.
Most of those homes are low scale houses, and the commission on sale averages around 6% so for every hundred thousand that you sell a house for you lose 6 grand in just the sale. So, for example you buy a house at 70k, and spend some 20k to fix it up, then you sell it with a broker for 100k, you would have only made 4k.
If you DON'T do you home work, someone can turn around and sue you, because of a missing disclosure or something, or prior work done with out a permit, and then you are screwed out of MORE than your profit.
It isn't impossible to make a living at turning property, just alot of work goes into it. It isn't as simple as one would think.
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6% is the "going rate", but everything is negotiable. I paid 5% for the townhouse I sold in New Hampshire, before I knew better. It sold on the first day it was shown, to the second party that saw it. That was the easiest 2 1/2% each of the brokers ever made. I wised up when I sold my north-of-Boston townhouse...I think I negotiated for 4%.....or maybe it was 4 1/2%. In any case, there are various discount brokers available, with fixed-commissions (which makes sense; it's no more difficult to sell a $300,000 house than it is to sell a $600,000 one....it may even be easier to sell the more expensive one, depending on the market).And it's not illegal to sell it without a broker, but if you do, I suggest you learn about real estate law in your state, and work with a lawyer you trust (not a self-contradiction, I hope).> It isn't impossible to make a living at turning property, just alot of work goes into it. It isn't as simple as one would think.The problem is, the guys selling the seminars and how-to books make it sound like it's just turning on a money faucet. It's not; there is hard work and risk involved.Another problem is that, when everybody jumps on the bandwagon, the good deals become very hard to find. Properties are bid up to market value...or beyond.I looked into buying some property at county auction down here, and it was ridiculous. There were a bunch of people, including Armani-suited real estate types who had a lot of money to use at auction, knew what they were doing, and really knew the local market. I might as well have jumped onto the court at a professional basketball game.The importance of knowledge of the market in which you're investing cannot be stressed enough.(Speaking of Realtors, it's good to have a business relationship with one, to give you a heads-up when something good comes on the market. Slso, now the MLS database is accessible on the Web.)
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I am really interested in, for now, is buying duplexes and renting them out. There is more money coming in for just one house. I know about the upkeep and understand it all, I have someone that can do the work and I know an realestate agent.
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"non a self-contradiction, I hope)."
no, except that attorneys CAN cost just as much.
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You can get a $600-an-hour lawyer if you like, but for the most part, it's pretty straight-up stuff, with boilerplate forms. The important thing is that the lawyer go over things like purchase-and -sale agreements and such.6% of $500,000 is $30,000, and you'll need a lawyer even if you use a real estate agent. The differential for the extra forms should be a hell of a lot less than $30,000. Still, it's nice to have a lawyer in the family -- or a reasonable familiarity yourself with legal terminology and real estate law.