By | Victoria
The real estate market of 2021 is extremely tight. Those who have been sheltering in place may find that they have more savings than they expected. Those who have been decluttering may find that they have more houses than they need. With the right buy and the right sale, you can make money in the real estate market.
Get Your Funding in Place
If you’re remotely interested in building a real estate business or just making some cash on your next move, get your money situation lined up. For those looking to buy investment properties, be aware that the burden of proving you can make the mortgage payment is on you and your credit rating. An FHA loan for an owner occupant will look more closely at the house. Commercial lenders look more closely at the buyer.
If your credit is not great and your savings are not high, consider wholesaling to build up your reserves. Phrases such as
- driving for dollars
- bird-dogging real estate
- “we buy ugly houses”
are all tied to wholesaling. It’s hard work to find properties for sale, get a contract on them and turn them over to an investor with the cash, but you can bootstrap a real estate investment business by wholesaling.
Finding a fixer-upper can also be a great way to make money in real estate. You will want to connect with Lehigh Valley real estate agents to make sure that the fixer-upper you’re looking at won’t price you out of the market once you’ve made the updates. A $100,000 house in a $200,000 neighborhood can be profitable, but not if you have to put $125,000 into it to sell it.
Before you start flipping, build a relationship with a quality contractor and hire them to inspect potential properties. A home inspector may be required by your lender, but a contractor can give you a much better idea of what is cosmetic and what is structural. They can also tell you if the property is a fixer-upper or a burner-downer before you get the keys.
If you have construction skills and are at a point in your life where you can live in the mess, be a minimalist. Buying a house that needs work and moving in to live in just one bedroom and bathroom isn’t fun. However, if you can do the work yourself and don’t mind a bit of dorm-style living, the work will get done more quickly and you can save a great deal on your personal expenses.
Owning rentals will be much easier on your pocketbook and your stress level if you buy into a pool of owners. Getting together with other investors and buying a 20 apartment building with a superintendent and rental manager built in means that you will get fewer phone calls. It also generally means a fairly steady return on your investment because you are now the bank for the building.
It’s important to note that landlords don’t always get paid. The moratorium on evictions in 2020 and 2021 left many landlords scrambling to cover mortgage payments. Make sure your rentals are owned by a business, rather than in your own name, so you can seek SBA loans and grants more easily.
If you know a particular city or suburb well, check trends in the area. If the city has invested in an arts district, look for houses in the area that you can split up into apartments. If you notice the crime rate going up in a particular area, change your search parameters.
Chasing trends can be risky. However, if you know that a particular neighborhood was built in the 1920s and is slated for street improvements, keep an eye out for For Rent and For Sale signs. You may be able to get great deals from weary homeowners and landlords who are tired of the noise, mess, and tax increases.
Real estate investing isn’t for the faint of heart. Yes, you can make passive income. However, you may have to put in a lot of active sweat equity to build up the funds necessary for your investments. Stay nimble and keep pushing.