Investor Page – General Information for Beginners
What would you do for $30k? Would you risk buying an ugly house, hiring an expensive crew of power-tool professionals, manage the progress while juggling a full-time office job, and then get snubbed by a real estate agent that puts a sign in the yard and never calls you back? Sounds like a lot of stress to me. Here are some observations to consider if you are a beginning investor.
Flip or Hold? First you have to decide what your purpose for the property is, preferably before you go shopping for a house.
Flipping a house usually means an investor purchases the property, does some repair and improvement work, then puts it back on the market within a few weeks. The ultimate goal is to sell it before any mortgage payments are due. Fast, sound decisions and a hard working group of designers and contractors are essential in maximizing profit. The more months go buy that you are responsible for making that mortgage payment, the lower your bottom line will be. Flipping is all about speed and profitability.
Holding a property, on the other hand, is about long term investment. If you are looking for an alternate way to invest excess funds, or to build a portfolio of properties that will one day be able to be sold to fund your retirement, consider buying and leasing (or renting) the house out. This type of house may be in a neighborhood that you think will greatly appreciate over 5-10 years, and it may not be a foreclosure (might be a short-sale, estate-owned, corporate owned, etc). The purpose here is to get it livable and rented in a very short amount of time. If the tenant is able to pay a monthly rent that is equal to the amount of the mortgage, then you basically ‘cash-flow’ the property for as long as you want to own it. The goal is to sell after several years and capitalize on the equity and the appreciated value of the property.
