I take it very seriously when it comes to following rules and procedures I set for myself and my company Cash Flow Properties when I buy fix and sell or buy fix and rent cash flow investment properties.
Here are three NO-NO I follow every I buy an investment property.
1. Not Having Enough Money
Know what expenses are involved. The first expense is buying the property. If you’re financing the house, that means you’re paying interest. Every dollar spent on interest adds to the amount you will need to earn on the sale just to break even. Research your financing options to determine which mortgage type best suits your needs and find a lender that offers low interest rates. Use a mortgage calculator.
2. Not Having Enough Time
Renovating and flipping investment properties is a time-consuming business venture. It can take months to find and buy the right property. Once you own the house, you’ll need to invest time to fix it up. Next, you’ll need to invest time to sell the property. If you show it to prospective buyers yourself, you’ll spend plenty of time commuting to and from the property and meeting with potential buyers. If you can make a 10% profit on a house that cost $50,000, you’ll make a $5,000 profit. For many people, it might make more sense to get a good job, where they can earn that kind of money in a few weeks or months via a steady paycheck – with no risk and a very consistent time commitment. Doing your numbers right and following your own guidelines will allow you to consistently make the market average for flipping houses which should be 15%, 20% and even 25% of your money invested.
3. Not Having Enough Knowledge
To be successful, you need to be able to pick the right property, in the right location, at the right price. In a neighborhood of $100,000 homes, do you really expect to buy at $60,000 and sell at $200,000? The market is far too efficient for that to occur on a frequent basis. Even if you get a fantastic deal, you need to know which renovations to make and which to skip.
To learn more about how we help investors start their investment career with no money or experience, visit www.CashFlowPropertiesAcademy.com/training.