Real estate is a bellwether investment that high net worth individuals have been bringing into their portfolios for many generations. Stocks, bonds, and other commodities are growing in the retail investor’s total holdings, yet real estate remains one of the most lucrative opportunities on the open market and more and more investors are realizing this universal truth.
Investors looking to branch into the real estate market need to know a few truths about the space, however. Without a firm understanding of how finance and return on investment in this space is structured, it can be difficult to compete with other investors and continue to build your overall wealth.
The real estate market is different from the traditional stock trading space. Here, you will be borrowing the startup capital required to earn dividend income in the form of monthly rent payments or a cash payout on the flipping of a property. In this way the real estate market is more a speculative investment than many options that exist within the traditional investor’s wheelhouse. Yet the transformative power that comes along with the property market can breathe new life into your portfolio unlike any other asset class.
Flipping is a powerful investment opportunity.
Flipping homes is one of the best investment opportunities available to the retail trader. In the real estate market investors are able to utilize fix and flip loans on a consistent basis in order to fund the initial purchase price of a new property. In this way, building cascading profits in the real estate market becomes the standard rather than a long sought after eventuality.
A flip loan is a great way to upgrade your investment chops as a borrower and purchaser. With a hard money loan—a typical arrangement for flip loan funding from a lender—investors are able to minimize their upfront capital requirements and lock in repayment on the back end, when the home sells for a potential windfall. This means that you get to hold on to as much cash as you can during the renovation process that will boost the later sale price of the real estate.
Maintaining liquid cash assets is a key feature among successful real estate investors, and it should be a priority for your process as well. This is because the profits that will come from the sale of the home down the road are completely reliant on strategic upgrades that you will make during your time holding the property.
Fix and flip property purchases require targeted care.
Utilizing your local outlet mall is a great way to find key stylistic upgrades for bathroom, kitchen, and bedroom installations, and outlets are easy to find, too. Just search for “outlet mall near me” to find your closest outlet, with major brands and retailers from Sears to Michael Kors. These resources can get you bargains on storage solutions and other key upgrades that a home buyer will appreciate.
But larger, systemic changes within the home are where the price structure really makes its moves. Appliances, flooring, and even the addition of new internal space within the home are the high value action items that will get buyers to really salivate over your property once it comes back onto the market.
Flooring, for instance, is a simple solution for reimagining the interior of any home. New buyers love the look and feel of a hardwood floor. While it costs more than carpet, installation of this new option is lightning fast, and many handier property owners can install certain types of hardwood on their own. Wood floors smack of luxury, and they’re simple to incorporate into a flipper home.
Appliances are another key feature of a great home. Bringing in a new dishwasher, refrigerator, or washing machine to the home is a great way to package together a high quality listing that people will be battling to get a look at. Another great option here is in the appliance repair space. Honolulu appliance repair is a huge industry for Hawaiians because of the distance from mainland U.S. territory. Shipping in new dryers, ovens, or refrigerators is costly and time consuming. Yet with an appliance repair technician you can bring old appliances back up to a high standard of efficiency with an inexpensive solution. This is a useful trick for someone making a flip investment on the island of Oahu.
Time is money in the real estate space.
Lastly, it’s crucial to remember that the longer you own the home the more costly it will be for your bottom line. This is because insurance, taxes, and mortgage repayment obligations all add up during the ownership period. The faster you can sell on the property, the quicker you will enjoy the fruits of your labor. Profit is used to pay off the remaining loan balance while the net earnings go straight into your cash flow, other investments, or the next property buying opportunity.
Building a successful home flipping brand for yourself doesn’t have to be challenging, just make sure you are prioritizing the right areas that will lead to increased profits.