How To Buy Houses Low In Real Estate Investing

In real estate investing, buy low sell high is a very common expression. As simple as it may sound, it is not always easy to buy houses at the right price.

You must buy houses at a price that will make you good profits whether you sell them immediately or whether you keep them long term as cash flow properties.

<b>So how do you determine the best price for your property? </b>

A few years ago, it was not un-usual to buy a house at 80 cents on the dollar and wholesale it for a tidy profit because the market supported it. Houses always appreciated in price even within a few months.

Currently, when you buy a house, you should expect the price to go down. Almost every home owner has lost some equity in the home in the last one year.

You have to consider this loss when you buy a house. Today, the regular price for wholesale properties is 60 to 65 cents on the dollar minus repairs.

Also, tenants have become more choosy since there are more houses to chose from, and are likely to go for a house with a pristine rehab job.

Rental prices are also competitive due to this fact.

When you are buying houses, it is necessary to make sure you let the seller know these facts.

so when talking to a seller, I let them understand that I have to spend money fixing it up, holding it probably for months, then sell it at a deep discount.

And I might be unable to sell it at all in this market!

I explain that I might lose most of my profits when I hold it. When most sellers understand these facts, most of them relax.

I make sure I make this clear before I make any offer. I have come to learn that even though motivated sellers really need to get rid of their properties, they do not like to feel like they are being taken advantage of.

My offer then easily gets accepted even though it is low.

<b> Why is it necessary to explain all this?</b>

Since you have to sell houses lower than we used to a few years ago, you must buy them lower to make money.

If you buy properties on terms such as lease options, it is also necessary to do this. Even though you can buy higher when you buy on terms, the price must be low enough to cater for the facts above.

This way, when it is time to cash out in a year or two, the price at that time will still be competitive in the market to support the sale.

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