Real Estate Education: Three Rules To Reach Profit In Properties

On the path toward becoming financially knowledgeable in the real estate markets, several ideological maxims are of prime importance.  It is a good idea to keep these concepts in mind whenever investment decisions are being made in the property markets.

This is especially true now because the housing market is seeing surging demand levels that have not been seen in a long time.  In the U.S., sales of previously owned homes have rallied to their highest levels since 2015. This suggests we could see substantial strength in home sales for at least the next few years.

Of course, profiting from these markets requires careful planning.  Industry experts with years of experience in real estate have already made every error imaginable, and this is why it is better for us to learn from their mistakes rather than to make those same mistakes ourselves.  Here, we will look at three critical rules for reaching the path to profits in property markets.

Profit Comes From Purchase Prices

In any financial transaction, the price paid for an item will always be a critical element in the investment process.  The traditional logic tells us that we should be looking to “buy low, and sell high.” But this is an idea that is not always easy to achieve in practice, and obtaining the best possible price on a property usually involves patience and savvy negotiating techniques.  

The latter comes with practice but the former can be achieved at any time during a real estate investment career (from expert to novice).  Patience is critical for any real estate investor looking to find the best deal and the right type of property.

Don’t Procrastinate, Time Is Money

Any time we are making a purchase, the price of the item must stand in central importance.  Ultimately, real estate profits are determined by subtracting the sale price from the purchase price and if we forget the early parts of the equation, there will eventually be problems with the results.  

These days, low-income property costs are low and investment yields are consistent.  This creates excellent opportunities for home sellers that might not have much experience being active in the market.  Those that are able to successfully flip houses stand to generate handsome returns for their efforts. There are also some nice tax benefits that are attached to the buying and selling of properties, so this is a great way for investors to capture tax-advantaged passive income.

Another strategy is to focus on short-term rentals of residential properties.  This has become more popular with the advent of sites like AirBNB, as the shared economy continues its move through real estate.  Short-term rentals produce the highest returns, so it is not entirely uncommon to see returns of +20% percent for properties in beautiful areas. This is largely why the majority of many investor real-estate holdings are now in short-term rentals.

Consider City Properties

When generating substantial profits in real estate, another factor to consider is the inclusion of city properties.  Both millennials and baby-boomers have trended toward moving into smaller houses in bigger cities. Furthermore, real-estate investors commoditizing re-gentrification in these areas have made some of the best returns in the market.  

For these reasons, American suburbs have seen an outflux of higher-income home purchasers.  This creates excellent opportunities in these areas, as home values in cities have rallied to their highest levels since 2014. This means that there are significant opportunities to post returns in growing markets

Overall, property investing can seem like an intimidating and daunting task.  But if we are able to keep a few important market maxims in mind, the process becomes much easier to understand and navigate.