Real estate investing can be a great option if you are looking to boost your income and build your financial wealth with time. But it can be risky if you are flipping a home without the right strategies to protect your investment. Too often, inexperienced investors buy a property with great intentions, and then later discover that the numbers don’t add up when the costs are finalized.
It is important to know what you have signed up for. Also, tap into the expertise offered by real estate professionals. A few precautionary measures can go a long way to reduce your risk and maximize the profits that are available.
Know the Real Estate Market
One of the most critical aspects of profiting from your real estate investment is knowing the trends in the local housing market. Not only do you need to watch the economic fluctuations so that you can buy low and sell high, but you also need to be familiar with the area so you can find the right property.
An experienced real estate agent can help you evaluate the market and identify neighborhoods that offer great potential. Your agent will help with cost comparisons in the area so that you know how much you can expect when the home is ready to be sold. You need to understand the market prices and the anticipated amount that will need to be sold on the property. Then do the math to see what the profit potential is on the deal.
Plan for Unexpected Costs
Even if you are careful about your spending on renovations, there are always unexpected issues that could cut into your profit margins. Be conservative about your anticipated profits so that you have a little extra cushion in case something goes wrong.
Most people agree that it isn’t worth all the time and effort if your profits will be minimal. Aim for the highest profit margins possible, while still allowing room for a little extra spending if needed.
Most new real estate investors don’t have the money to pay cash when flipping a home. So, financing is needed to cover the expenses until the home sales. But remember that the more you borrow, the more the interest costs and fees will cut into your profit margins.
Whenever possible, try to minimize the loans on your project. Do your best to pay for everything out of pocket and make sure that you understand the financing terms if you choose to take out a business loan.
Real Estate Support for Your Purchase
At DUFFY Realty, we are familiar with the Atlanta real estate market and can help you find great opportunities for investment. If you are ready to buy a property, then call us right away so that we can assist with your home search. We’re here to help: (678) 318-1700