An excellent way to make money with real estate is to purchase an old run down piece of property, rehab it, and than sell it for a profit. Several people have gotten quite wealthy by following this simple formula. The reason so many people have been able to make so much money when rehabbing houses is because when the average person is looking for a home, they are looking for something that they can live in right away, they would rather spend more money and get something nice, than have to spend months making a home habitable. Essentially you are acting as a sort of real estate middle man.
The Properties
If you are interested in by a piece of real estate at a rock bottom price and than making a profit on the sale, you are going to be looking for a very specific type of property. You want to make sure that the house has a really sound foundation, a lot can be done to fix up a run down house, but if the foundation is compromised you will want to look for a different property. You want to make sure that the property is located in an area where people want to live; there is no point in purchasing property in an area that people are leaving.
Finding a Property
If possible try to find a property that the bank is foreclosing on. The bank is usually willing to sell these properties for less than the market value; they are just interested in getting what they are owed.
Other properties that can usually be purchased for a rock bottom price include places where the owner is dealing with health issues. If the owner is relocating and needs to sell the property quickly or if they suspect that they are going to lose their home to the bank. If you are unable to find a home where the owner needs to sell the property quickly, you should at least look for one that is being sold by the owner instead of being handled by a real estate company, that way you won't have to worry about paying a commission on the sale and can reduce the closing costs.
Before you purchase a piece of real estate you should make sure that you get several contractors to look at the property and provide you with an estimate of how much you will have to spend on the rehabbing project. You should also look at similar, finished houses, in the area and see what they are selling for; this will help you decide if the real estate is going to make a good investment.
