If you’re starting a real estate business, you know it’s important that your new business makes money. After all, you have to have enough cash in the bank to stay alive as a business, never mind making enough to purchase that luxury vacation home in Jackson Hole, Wyoming.
While television shows make it seem like you can earn $100,000 on a flip, it’s not common to make that much. According to Mark Ferguson, a professional real estate agent and the owner of Invest Four More, “The real money is not hitting it big with one flip, but in flipping multiple properties that make a modest profit.”
There is also a lot of risk involved in flipping houses. In order for this strategy to work, you need to buy a house below market value and you need to be able to accurately estimate the cost of repairs. Experience is everything.
A good place to find houses you can flip is on the foreclosure market. Sites like MLS have a dedicated section to search for such houses. Of course, this may also be a competitive market depending on where you live.
Before you buy a property, make sure you know your After Repair Value (ARV). You will probably need to enlist the help of a real estate agent to figure this out, but you can get a preliminary idea by looking at the recent sales value of houses in that same neighborhood.
Of course, you don’t have to repair the house. You could also buy at wholesale price, and then sell as quickly as possible. According to JB House Investor, “You can make an average of $5,000 to $10,000 per deal, with very little effort and work.”
Before you jump into flipping houses, we recommend you read step two (below).
2. Find hidden, off-market properties
If you can’t find deals before anyone else, you’re going to have a hard time making money. Many properties that are going to make you money are the ones you won’t find on the usual sites like MLS or Zillow. Despite them hiring The Marketing Heaven and many other marketing companies, they are not able to get to the ones the owner needs to get rid of quickly and they’re not necessarily the foreclosures.
An off-market property (sometimes referred to as a “pocket listing”) might be one owned by a couple going through a divorce, or a property an owner no longer wants, perhaps because they’re leaving the country or going through financial hardship. Check https://xsikisizle.net, they’re the houses that the owners can’t usually sell through traditional channels as they need to move fast. They’re the houses you might drive by with a sign out front that reads FSBO, or “For Sale by Owner.” These are your gems.
Finding someone who needs immediate cash means you’re much more likely to acquire a property at below market value. It’s these properties that are going to give you the biggest return on your investment.
A good way to find off-market properties is to keep an ear to the ground. After all, you never know when someone from your network of friends, acquaintances, or relatives will approach you for help, either for themselves or on behalf of someone they know. Get your name out there. Join networks like the Rotary Club and Business Network International. This way, when someone from your network is in a jam, they’ll think of you first!
Beyond networking as usual, try to network and build connections with estate attorneys. They often have creditors who need access to money fast. Because of this, they’ll be much more likely to sell at a discount. Networking with wholesalers is a good idea too, as they often buy low-price properties that need fixing, almost as they become available, and make a quick profit by selling them just days after purchasing them. They’re in it for the short game, so if you’re a long game player, this could be a good strategy for you.
If you’re comfortable purchasing a property at auction, check out Auction.com. You can use this site to search for both residential and commercial real estate. Many properties are priced low and are listed on the site because they’ve gone into foreclosure or they’re owned by the bank.
See Also: 20 Networking Tips from a PR Expert
3. Target the vacation rental market
Let’s talk about how you can make money, or how you can help your clients make money: vacation rentals.
In peak tourist season, owning a property you can rent to tourists may seem like a no-brainer—you build equity in a great location and have an opportunity to capitalize on that demand. But what happens when the tourist season ends?
If you’ve priced your rental too high, you’re probably going to have a barren off-season or at least an unpredictable period. All those vacancies are going to add up, especially if you’ve hired a property manager to take care of things. According to Mark Ferguson of Invest Four More, the real cost of a vacation rental is the cost to manage and maintain them.
The key to a successful vacation rental is to price the property low enough that it stays rented year round. If that’s not possible, ensuring you can make enough in the good season is essential.
Cash flow difficulties aside, the vacation rental market can still be a great investment. HomeAway, a vacation rental site, notes that the average homeowner on their site rents his property for 18 weeks of the year (about four months) and grosses $28,000 annually. For more than half of these property owners, that accounts for 75 percent of their mortgage each year—a fantastic investment in the long-term.
Before you rush headlong into this market however, be sure to remember the ongoing costs of maintenance and management, as well as repairs. Are you equipped to do this, or can you help your clients assess the needs and risks, in order to maximize their ROI?
What you cannot do with this license is open up your own practice and hire other real estate agents. To do that, you have to become a broker.
By taking and passing the broker’s exam, you will then be free to start your own real estate agency and collect commissions from the real estate agents who work for you.
Because most brokers take between 20 and 50 percent of an agent’s commission or a workers compensation attorney southern California oc, it pays to become a broker yourself—and not just because you could make an extra buck, but because you won’t be losing out on the money you make and check this site https://financerr.co.uk/ offer help and advice to your business finance.
If you haven’t already written your business plan, take a look through our library of free real estate business plans. This should give you a better idea of how others are doing things—and there’s nothing wrong with filching someone else’s strategy if it looks like it’s going to work for your business!