Buy Low, Sell High (The Secret To Making Money In Any Market)
This is correct when it comes to property investments and many kinds of other investments. Now at a first glance you may think or say, this isn’t exactly rocket science, but time and time again when I see or hear of people buying a bum deal. They have not followed this formula, other factors have taken over.
Things like emotional buying Vs Financial
1. It looks like my dream house.
2. That is a lovely couple, let’s buy their house of them because we like it.
3. The financial adviser says it will appreciate by 30% per year (Hmm have you heard this one before?)
4. Other people have made a fortune from this. ( The Herd Mentality)
5. My own mother bought a rundown shack for about 40k over it’s market value, because it was across the road and she had been having a bad day.
Questions you need to ask?
1. What is the market value of this property or land in a fire sale (meaning if you need to sell it tomorrow)
2. What is the upside potential of this property
Here is one I found two years ago
5 Bedroom House usual market value in area in down market 200,000
On The Market For 109,000 finally sold for 103,000
Needed a lot of renovation work new bathroom, kitchen some roof work at the back of the house.
Cost of property and purchase fees £106,000
Cost Of Renovation £60,000
Value Of property after renovation £200,000
Upside Potential £34,000 Profit Want more profit offer £90,000
Monthly Mortgage Cost 103,000 at 5% Approx £500 Per Month
Rental Value £850 Per Month
Rental Net Profit £250 Per Month After Agent Fees.
A friend of mine who didn’t listen to me went into A Insolvency for over 1 Million Pounds
The properties were bought to sell in a rising market. Not via financials of rent and fire sale value.
While everyone the herd where buying, I sold my local property portfolio and bought in the next rising market, which was at rock bottom at the time.
Then in the worst part of the local housing price fall I sold my European portfolio at a profit even though the local properties where selling for less than 50% of their previous value.
Of course, there are many different types of properties and Land Investments, but before going into any of them make sure you do your homework.
Check out the similar properties on the market, find out how long they take to sell. What are the regular fees involved in buying them IE. Property Taxes, Management Fees, Refurbishment ETC.
As You need to be able to make a good profit. After all of these factors are taken into consideration, to make it worth your while.
If you are happy that you have done your homework and everything stacks up on the selling or holding and keeping front. IE. There is also a rental market for your property, then by all means make your move
But above all remember the golden rule ( You Make Money In Property When You Buy At The Right Price)
So Whatever You Do Buy Low And Sell High 🙂
Successful Investing My Friends 🙂