Real Estate Investing involves a lot of money and entails the risk of losing lots of it if you don't know how to do it the right way. When starting out in this industry, it is best to look for bad-looking houses that you can refurbish and sell easily at a much higher price after the repairs. Most likely, these will be entry-level houses that would only need a quick face lift. A little accessorizing here and there, a new touch of paint inside and outside, viola the house is a beauty once again.



The Handyman

If you know a thing or two about construction work and are willing to do some of the work yourself, then this will definitely save you a lot of money in the beginning of this new venture of yours. However, if you don't have a talent for fixing things and would probably do more harm than good then it is best to leave the work to the professionals. In this case, entrust the project with people you feel comfortable with and who will give you the best value for your money. It is a good idea to be honest with your budget constraints early on so no unnecessary expense will be made.

The Sub-Con Partner

On the other hand, if you don't have any budget allocated with fixing up the place and beautifying it, then you can talk to a subcontractor who will be willing to do the repairs for you at a fraction of the earnings that you will make from the sale of the house. Otherwise, you may look for a partner who would want to share the expenses with you and with whom you would also share the profits with.

Take note however that not all ugly houses will be good for refurbishing. If you're working on a limited budget and experience, make sure that the house you intend to purchase is not in need of any structural repair. If the house is in a pretty bad shape, don't quickly assume that you can spruce up the place easily. There might be structural repairs you are unaware of which will cost you a lot of money. In such cases, you'll end up not being able to sell the house at a price that will allow you to recover your capital and make profit. So it is best to get repair estimates from contractors who will give you an honest assessment of the house.

The Next Level

Gaining more experience in real estate investing will allow you to build confidence in buying houses that need major repairs. By that time, you will also be prepared to tackle such projects because you already know which houses will be profitable despite their bad condition. The advantage of being able to bid on such houses is of course, the less number of competitors on that level. Moreover, you will be able to use the cost of repairs as leverage for a lower sale value.

So be patient and be timid in investing. The time will come when you will be able to handle more difficult projects and you'll have sufficient time, money, and experience to back you up.

Copyright (c) 2007 Jacques Coquerel