Guide to Short-Term Real Estate Investing

Guide to Short-Term Real Estate Investing - Short-term real estate investing can be a very profitable investment strategy. Short term investing involves buying real estate and making a quick profit, usually in less than 3 or 4 months. Techniques such as flipping and quick resells are considered short-term investing. Long-term investing usually involves renting. You're not concerned with a quick profit, but more about long-term income. Both types of investments involve risk; however, the financial rewards can be very lucrative. Follow this simple short-term real estate investing guide and you will be well on your way to making a quick profit.

First, you have to realize the goal of short-term real estate investing is to find a great deal on property and sell it as quick as possible. The longer you keep a property the less money you are going to make on the transaction. There are a few different ways to approach the process.

One way to invest short-term is to find a piece of property that is listed under market value. Then offer an even lower amount than it is listed for, remember this isn't your primary residence so if they turn down your first offer it's not the end of the world. For example, you find a house listed at $100,000 but has a current market value of $120,000. Make an offer on the house at $90,000. If you get the property, immediately list the property for sale at $110,000, still well under market value. Even if you sell the house for $105,000 and subtract your expenses you still should make a quick profit.

A second approach is to find a fixer-upper house that needs some renovations and repairs. Again you will want to get the best deal possible on the house by doing some negotiation. You can contract out the needed repairs and renovations, or fix up the house yourself for a bigger profit. Remember to shop around for contractors and get the best deals possible and keep them on a strict deadline. List the house at a much higher price than you purchased it for in hopes of making a much larger profit. This process is called flipping and has made a lot of people, a lot of money.

A final and less risky approach my wife and I have used is to purchase a home in an area that is currently in construction. Purchase the home as your primary residence and wait until the area has completed construction. Once construction is complete in an area the property value will increase significantly because there is no more room to build and the construction mess has been cleared. Our first house was purchased for $110,000 and was sold 2 years later for $125,000 with very little work. Maximize your profit by waiting until the end of the construction phase before purchasing a home. The quicker you sell the house the more money you will make.

There are many other key factors to remember when investing in real estate short-term. Here are 5 very important things to remember before you start your venture.

1. Real estate investing is risky
2. Calculate all of your expenses carefully
3. Include closing costs on the loan to purchase the property in your expenses
4. Calculate how much money you will need to fix up the house and stick to the budget. Every dollar you go over budget is lost profit

Shop around for the best interest rates when taking out a loan for the property