This article is about How Investors Buy Houses. If you have any kind of financial wealth or abundance, you enjoy the power that it gives you. You have safety, security, and a bit of freedom to enjoy life. The ironic thing is that you likely do not do so because you know that once you spend that money, it is gone. Unless of course you find ways to invest it so that you can both spend your money and grow it at the same time. So, you start looking at what other investors do with their own wealth in order to grow it and enjoy life.
You know that some investors buy houses, and some of them are even very successful at it. There is an entire subgenre of house-flipping shows on cable television, and you likely hear radio ads all the time on the radio while commuting about property investment specialists coming to town for a free information seminar, or even a paid one.
Want To Know How Investors Buy Houses? They Use These 3 Home Buying Secrets!
If you’re thinking about jumping into house buying as a form of investing yourself, then it’s useful to know 3 secrets of how successful investors buy houses. If you’d like to know this trio of insights for yourself, then keep reading into the following paragraphs:
1) They know exactly what they are going to do with a house
Finding investment houses to buy is one thing, but what you do with them is another story, right? The thing is, it isn’t. You should know exactly what you’re going to do with an investment home when you buy it. In fact, you should make up your mind what kind of investment home you’re looking for when you go out hunting for them, because it impacts the kind of home you’re looking for and what you’ll do with it when you possibly land one.
There are three things you can do with an investment property.
- Buying it
- Flipping it
- Selling it back on the primary market as quickly as you can
- Lease it
Investors often buy and lease out for long-term residents. Another option is to buy a vacation or retirement home, and renting out. These leases or often short-term leases when you’re not using it themselves.
2) They’ve done the math
Successful investors know that not every house might be a winner, no matter how much they look at the numbers. However, they also know that the more they look at the numbers, the better their odds of success are. If they’re looking to flip homes, they know what the local comps typically go for. However, they also know what a full renovation is likely to cost on average, even if they can’t inspect a property before they buy it, and so they know how much they can afford to spend blindly on a home and still leave room for a profit margin.
In the case of short-term rentals, like a vacation home, then an investor looks at the overall property market in that area and knows how much rental income a home will generate in an average week or weekend. However, they won’t just subtract the costs of owning and maintaining that home, they’ll also try and figure out what their vacancy rate is going to be.
In the calculations of both scenarios, the possible swing or variation of local comps has to be considered. Even a quick flip done in less than a month or two might be a property you hold on long enough to see a dramatic swing in the neighborhood that can make or cost you tens of thousands.
3) They’re willing to spend, and lose
Successful investors who buy homes know it’s a numbers game. It’s not just in the individual properties, but also how many properties they buy. They’re willing to possibly invest in ten homes so that the returns on seven of them make up for the losses. They understand that the other three may not return a profit.
They’re also willing to get up every morning and check the listings. You have to strike fast when something comes available. It can mean many mornings of going to foreclosure auctions and walking away empty handed. It can also mean sometimes spending money you don’t get back at all.
Once you really think about it, you’ll realization that these 3 home buying secrets aren’t really secrets. But just fundamental truths that successful investors remember each and every day. On the other hand, many aspiring investors just forget them. Many don’t hold true to them because they have trouble maintaining focus. They allow their minds get clouded with doubt, frustration, and impatience. Keep your own mind clear, and you can use these basic principles to find your own house-buying investing success. One day we will be writing about you and how How Investors Buy Houses you like.
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