How To Buy Houses At The Right Price For Real Estate Investing

One of the most common expressions in real estate investing is buy low, sell high. Though it sounds quite obvious, it is not always easy to buy houses at the right price.

Whether you plan to sell your houses immediately or keep them for cash flow, your buying price must be low enough to make you profits.

So how do you determine the best price for your property?

Until recently, the market supported buying houses as high as 80 cents on the dollar. In fact, you always expected the price of the house to go up within a few months.

Currently, when you buy a house, you should expect the price to go down. Almost everyone who owns a house for a year or more has lost equity in it within that time.

This means that when you buy a house, you must consider this fact. Wholesale properties currently go for 60 to 65 cents on the dollar minus repairs.

Also, since there are more houses to chose from, tenants are more picky and would go for a house with a pristine rehab job than one that looks basic.

Fir this reason, rental prices have become more competitive.

Even though there are more houses for sale than any recent past, you must let the seller know these facts.

So whenever I am talking to a seller, I let them know that even though it seems to them like they are leaving a lot of money on the table, I have to spend my time and money fixing it up, then I have to sell at a deep discount.

And I might be unable to sell it at all in this market!

I let them know that it might take months before I can sell it in which time most of my profits will be gone. Most sellers will relax when they understand these facts.

I like to make this clear before I can make an offer. Even though motivated sellers really need to sell their houses, they do not like to feel like they are being taken advantage of.

Once they understand the current market conditions, then I can make my offer - and it offer does not look too low-ball and the seller is likely to accept it.

Why is it necessary to explain all this?

Since you have to sell houses lower than we used to a few years ago, you must buy them lower to make money.

If you buy properties on terms such as lease options, it is also necessary to do this. Your buying price must be low enough to cover the facts above even when you buy properties on terms.

This way, you can still sell it at a profit in a year or two even if the market remains poor.

About the Author

When buying houses, it is necessary to to pre-educate motivated sellers so they understand how you buy houses. It is also important to generate leads and follow up with them automatically to convert them to motivated sellers automatically. Find out how an automated real estate investing website can attract, pre-educate and deliver motivated sellers fully pre-screened and pre-negotiated so you close more deals using less time, money and effort.

Author (simon87). Submitted on Tue, 3 Jan 2012 Time: 8:30 AM

Rating: Not yet rated

Comments

No comments posted.