Getting a foot on the real estate ladder has become a way for people to make real money fast. If that sounds like a simplification, bear in mind that one word not used in that sentence was “easy”. Yes, you can buy a house cheaply, work to renovate it and sell for a profit. It can result in an income that would have been hard to earn from spending the same time working. But easy it is not.
If you want to make real money from real estate investment, you have to be prepared to put in the hard yards. The more success you have, the easier it will be to buy more property and make money from it. But getting the foot on the ladder is the hard bit. First you have to find a property going cheap. And if it is cheap, there’s likely to be a reason. That’s where you’re going to have to work on putting things right.
Why It’s Cheap: The House Is Derelict
Some properties go on the market because they have been left uninhabited by residents who simply upped and left. Eventually they are sold off at auction, but by this time have fallen into disrepair. The elements and time may well have left it uninhabitable, a process you need to reverse.
What To Do: You could be looking at a total renovation. Would you be happy going into a house left untouched for years? You’ll get it at a very low price, but you’ll need to work for your profit.
Why It’s Cheap: It Has An Infestation Problem
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Uninvited visitors can leave a house in a desperate condition. If the owners are planning to move on anyway, they may not want to sink the cost of putting it right. They’ll drop the price to realize a quick sale and decide that it’s someone else’s problem now. Your job is to make the problem a profit.
What To Do: Getting rid of an infestation problem is the easy bit. Rat control or termite treatment experts can do this without even a great deal of upheaval. The trickier bit is putting right what the infestation has damaged. This could mean extensive structural rebuilding. It won’t be cheap, but you can rebuild it stronger and better than before.
Why It’s Cheap: The Area Has Low House Prices
The key parts of real estate investment are about the quality of houses, the potential for overhaul and the location. Houses in less-valued locations will come at a lower price, but be harder to sell on at a profit. In real estate, we are sometimes too hasty to call an area “bad” because ceiling prices are low. It might be the case that the area is ripe for profit.
What To Do: Scout the neighborhood fully. What are the upsides? Is this a house that with a bit of TLC could be attractive to families or young couples? If it’s not going to be easy to sell at a profit, would it be worth leasing the property for a regular income? If you do the same with a number of properties you could bring rental and sale value up in the area.