You probably have friends or family members who are raving about how they’re making money from investment properties, and it’s something you’d like to do but would rather go off expert advice than theirs!
Where is your money best invested in the real estate market? How can you find a property that will be profitable? Should you house flip or buy to let? Let’s get some of those answers.
Finding Profitable Investment Properties
If you were buying a house for yourself you’d contact local real estate agents and also look on the online properties listing websites. If you’re buy to invest these aren’t necessarily the best strategy, but that having been said talk to your local agents about your plans so if they find a property that needs a lot of work and they don’t think it’ll list and sell well in its current state then they might give you a chance to buy it first before its listed. And on the listing sites, look out for properties that have been listed for a long time because they’re run down, there might be a deal to be had there.
But really you want to try and find a property at a low price so you can make the biggest margin. So try property auctions, look out for hand made signs in windows where the owner is selling a property themselves, and keep an ear to the ground about properties that may come on the market soon, say a family is moving an elderly parent into a care facility, or someone has a rental property they want to sell.
Once you’ve identified a few properties have a look at the surrounding streets and the housing market in that area. What is the potential sales price on this property once you’ve renovated it? Is there enough profit in that for you? Calculate how much you’re going to have to spend to renovate the property, including your own time, and decide if that profit margin is enough. Its always best to buy the best house on the best street, than an average house on an average street, because your selling price potential will be a lot higher with the former.
House Flip or Buy to Let
If you love renovating properties and you have the skills to do a lot of the work yourself then house flipping is for you, that’s where there’s money to be made. But if you think that sounds like hassle and you would have to pay contractors to come in and do the work for you then its probably bets to buy just one property, have it renovated and then rent it out.
The key to selecting the right property to be rented out, is picking one that will rent out at just above the average local rental price. Because then if you have the property kept in good order you will always have high demand for it when you need new tenants. So be smart and pick a property that will provide you with the highest profit margin.
