Maximizing Your Returns on Real Estate Investments

April 15, 2009 by  
Filed under Real Estate Investing

The most general investment strategy used in any realm is to buy low and sell high – but unfortunately, most markets don’t behave this straightforward normally. However, when investing in real estate, you want to make a profit – here are a few ways to maximize the money you get to put back into your pocket.

Real estate investors need to focus on the fact that their properties are business ventures, and not their personal home. This means that the home doesn’t need to be designed with the most expensive tastes in mind to suit him or her. Costs should always be kept as low as possible, and buyers that aren’t afraid to spend some money need to be brought to the table.

A great way to keep costs very low is to do most if not all repair and cleanup work on your own. This will save on labor costs, and allow you to track material costs first-hand.

Another area where you can save is inspections. If you or a friend has background in building homes or remodeling them, you may have all the expertise you need. You can also find a quick course or material to study to ensure you’re not missing anything. This one action can save thousands a year if you purchase several properties.

Low-cost home loan interest rates are also easier to find at smaller community banks. This will lower your fees as well when it comes time to close. Always refuse to pay an application fee to any home mortgage lender; do the same with any and all title and insurance companies. There are plenty of companies out there willing to approve you at no cost.

Searching for your own title and insurance policies, rather than simply using those that the lender or agent recommend, will also save you quite a bit of money when buying. Call around and ask for rates, or contact businesses you currently do business with to inquire about available discounts.

It will also behoove you to learn to do your own accounting and taxes. Although it sounds complicated, it can definitely be done. You’ll simply need to check a few books out of the library and invest in a computer accounting system.

When it comes time to sell your property, you also want to reduce your costs in marketing and selling your home or building. Foregoing the aid of a real estate agent can significantly lower your financial obligations, but can also limit the market of potential buyers who see your home.

However, several online databases offer this option at FSBO (for sale by owner) Web sites and the like. Also, take ads out of any local papers and pay to add a picture; you may also have a custom yard sign to attract attention from drive-bys.

Ensure your asking price allows for wiggle room and a nice profit, and get the property ready for sale. Make sure that the price you’re asking is reflected in the appearance and state of the property before listing and accepting bids, or you’re likely to be disappointed with your results.