A fast-turning real estate business helps you make money fast…and without too much headache. You can work from home, work part-time, and even get into real estate investing without a big chunk of upfront capital. No wonder fast-moving real estate is one of the fastest growing segments in real estate investing.
Broadly speaking, there are five ways to profit from quick real estate trading strategies. In this article I want to tell you about one of them. It is a basis of real estate investing, and it is commonly referred to as “rehab and retail”.
In fast-moving real estate, when you buy a house for a low price and resell it for a higher amount, it’s called retailing. You buy a house “in bulk”, perhaps make some modest repairs, then sell it for a profit. What kinds of profits do we make in fast turn real estate? How much you earn will depend on whether you work full-time or part-time and how many homes you sell. The average profit per sale is $20,000 to $35,000. In real estate investment… these are good numbers!
In this regard, real estate investing is similar to any business where you mark up the price of an item before offering it for sale. And like any other business, it can fail.
In addition to being one of the most popular ways to profit from fast-moving real estate, rehabilitation and retail is also one of the most profitable. Yet despite the money that can be made this way, rehab and retail continues to be one of the most misunderstood techniques in real estate investing. Although the process seems simple – buy, fix, sell – the reality of rehab and retail transactions is quite different. Many costly issues can arise with rehabilitation and retail, especially during the repair process. For this reason, I recommend that novice investors choose another fast-turning real estate investment strategy.
Does that mean I’m saying your real estate investment business should never focus on rehabilitation and retail? No way. In fact, if you’re really into home improvement and really like turning a repairman into a “castle”, then you might be very well suited to the demands of both rehab and retail.
If this is the direction you would like to go, let me offer you these
Top 4 Tips for Success with Rehab and Retail Deals
Location, location, location – Limit your purchases to areas where qualified buyers will want to live. No matter how good your renovations, it will be difficult to sell a house in a high crime area. Why take unnecessary risks? Stick to the best neighborhoods for your real estate investment.
Don’t Assume – Under no circumstances (i.e. NEVER) close a property until you have it professionally appraised (contractors, service personnel, etc.) so you know what repairs are needed, how much these repairs will cost and what the house will be worth (repaired value) when the work is complete.
Expect the unexpected – Inevitably, home repairs will take longer and cost more than expected. This is one of the biggest downsides to this fast-moving real estate strategy. Be sure to borrow enough to cover more than the purchase price and estimated repair costs to give yourself a “cash reserve” to lean on.
Trust No One – I know it sounds harsh, but contractors, on-site workers, and others involved in home renovations are notorious for poor business practices. Get recommendations from people you know, if possible. Supervise the work and keep a close eye on progress and results.