How to Generate Wealth from Real Estate | Tips to Becoming a Home Investor in Any Real Estate Market

Generate Income From Real Estate

philly home investor

Some of the world’s wealthiest have made a substantial living off real estate. At times, the real estate market can be tricky to generate money for some individuals. Most people assume that real estate is a risky investment; we have found this inaccurate in some instances. Just about anyone can take advantage of becoming a home investor, regardless of what city you reside in, with each real estate market being unique in its way but similar to how to build wealth and establish success. We decided to elaborate on the ins and outs of becoming financially free when investing in real estate. There are plenty of real estate forms to partake in, but we wanted to focus on two methods. One of the most common and popular ways people tend to make money off real estate is by purchasing fixed and flip homes; these investors will buy a home at a low price, make the necessary repairs, and either refinance or sell the property for profit! The second common way a home investor will build wealth from real estate is by purchasing property for rental purposes. Plenty of Americans have been participating in this for years because there will always be a market for renters; even during the real estate market crash in 2008, people still found ways to generate wealth off real estate services. Buying Property 215 is a family-owned real estate company that has been growing its business for many years and currently looking to share its knowledge with individuals who desire to learn and become leaders; as a Philly home investor, we aspire to see others; succeed; within the real estate industry!

Fix and Flip

Are you exploring different routes to produce wealth within real estate? Fix, and Flipping homes is one of the best methods to see adequate profits from real estate investing. The process is simple and beneficial for all involved. First, you’re taking a house that the seller desires to relieve, mainly because the property is not in the best condition. Then, you will complete the work to the home to bring it to its fullest potential, also known as the ARV (After Rehab Value). The first aspect you need to focus on if you want to purchase homes to turn some profit is learning the different methods to acquire real estate. Finding a qualified distressed property with potential can be very difficult for most. You can decide to go about this process independently, or the easiest way is to find a licensed realtor who handles acquiring homes for investors. If you choose to locate residences on your own, search for homes in need of work. You can always begin the search to acquire your property by driving around the desired neighborhood where you may be interested in rehabbing homes. You can typically tell when a property has been vacant or ignored simply by seeing how the front yard and the front of the house present themselves. It’s good to watch overgrown grass; some properties stick out like a sore thumb. The distressed property may have a worn roof or boarded-up windows. Once you have a few homes in mind that you think could be appropriate for rehab, you can purchase a skip tracing service or search the internet and begin calling owners. You can keep trying this method till you find a willing homeowner looking to sell property!

Purchase Price is Key

How exactly do you know what sales price to purchase these houses that you may be looking to fix and flip? There should be a basic rule that every investor should follow when evaluating the purchase price. When conducting the real estate comps, it helps to focus on a distance within a tenth or quarter of a mile from the subject’s home. If you’re not dealing with a property in the city, you need to go further out but attempt to stay within a mile of the home. You will need a real estate agent to help find accurate recent sales of homes in the area you plan to purchase a home. Once you locate a home that has been rehabbed and has the same square footage, bedrooms, and bathrooms that your home has, you can apply a formula to determine the correct sales price. You now have what a home investor calls a comparable property, also known as a real estate comp. If your comparable property after rehab value is $200,000, you roughly have an idea that it will cost close to $60,000- $80,000 in repairs to bring it to the value of $200,000. Then you just complete the simple math of {ARV x .70 – Rehab cost = Purchase Price} (200,000 x .70 – 70,000 = 70,000). If you follow this simple math equation, you should have no problem making a profit on your next fix and flip. When you get your final figure, you must account for the six percent real estate agent commission you will be responsible for paying. As well as closing costs of roughly one to three percent of the total sales price and any other charges you may endure during the closing process. It is always good to add extra expenses to your construction cost to leave room for error or unexpected costly obstacles.

Process From Start to Finish

Once you have the subject property you would like to rehab and have already made the settlement on the home, you will want to have architectural plans drawn up, along with a scope of work from a reputable contractor. It will allow your plumber, electrician, and contractors to know precisely how the home will form to its new layout when it is fully complete. Once this is finished, you can take these plans to your local township or city municipal building to pull work permits on the subjected home. When that is complete, you can get started on the demolition process. First, you will need to gut the entire house from top to bottom; you will also need to decide if you will need to dig out the basement to increase the ceiling height, which is not a necessity in most circumstances. Suppose the ceiling heights are already a proper height, typically anything more than 6 feet tall; you will not be required to do this. Once the entire house is empty, you will want a contractor to come in and frame out the home with studs allowing for the outline of the rooms. Then you will bring in your plumber and electrician to put in the rough plumbing and electrical, which usually is the wiring for your lights and outlets. If you need a higher amp electric panel, they will have to put one in at this step. Next in the rehab process, plumbers will put in the new sewer lines and PEX piping for your new water lines. Once all of this is done, it’ll be time for the contractors to start coming in, putting up drywall, and placing down the floors. After that, the plumbers place in the kitchen and bathrooms. At the same time, electricians finish any lighting, fixtures, and receptacles in the wall. The last thing you’ll be required to do is have the carpet installed and then the finishing touch of painting the walls. Once you get to this stage of the process, you will want to contact a reputable licensed agent familiar with the area in which your property is located!

Rental Income

Everyone is aware that there are Landlords and Tenants in this world. We learn this at a young age when it is time to move out into the real world and we may get our first apartment. Every month you may be paying someone the privilege to live in a home that they own. It is so common for millions of Americans to be paying rent. If you are reading our article, you may be hoping to find something here to help you make that push to buy your first rental property. You are in luck because if you have a few thousand saved in your savings account, you should decide to purchase a rental home to help provide passive income. You don’t have to be a millionaire to buy a rental home, just a few thousand dollars and suitable credit scores. There are a few things to consider when purchasing a home for investment purposes. Location is one of the first things you should focus on. You need to make sure you are acknowledging where you can maximize profit and gain equity in the home over time, more than just paying down the existing mortgage. Make sure you purchase a home for rental purposes and fully understand the rental property process to make a profit each month instead of losing money. Be on the lookout for maintenance costs and repairs attempt to complete any necessary repairs to avoid further charges. There are tricks you can conduct to keep awareness on a money-draining house.

Location is Everything

When it comes time to purchase your first rental home, you want to ensure you are buying in a location that has growth and potential when it comes to value. You never want to buy a property in an area that you know will decrease. It is tricky to tell if a property will depreciate in real estate but look for sure signs when deciding on a location; it is always suitable near stores, malls, and shopping centers for luxury purposes. You will also want to be near social services such as doctors and hospitals. Cultural benefits can be a huge plus to a neighborhood, such as ethnic grocery stores, churches, libraries, theaters, and restaurants. Being within a short distance from police, fire, and other government buildings can also be desirable. It will make for a happy tenant, making it easy to get the property rented out. Also, you want to make sure that the home is easily accessible to transportation such as highways, bus routes, regional rail, and airports. It allows tenants that rent from you to get to places much more accessible. If you find an area close to highly rated school districts, this is also a bonus; you will open the doors to having families rent from you. There are plenty of factors that decide the location of your rental home, and you must consider every aspect!

Deciding Your Price Range

Once you have found your location settings and are ready to buy, you must decide on the price range you can afford and the best number to buy the home at. Usually, when purchasing a home, you need to put down at least ten percent. In some situations, depending on if it is your first home or how good your credit is, you could get away with putting down less money. For the home you are buying for investment purposes, you must make sure the mortgage is not more than the potential rent you will be receiving from the tenant. You can always use a website like Rentometer.com to give you an idea of the rent on the home. You can always follow the cap rate rule on investment properties (cap rate = net operating income divided by assessed value or purchase price.) For example, if you buy a home for $100,000 and the rental rate is $1,000 a month, you purchase the house at a 10% cap rate. If you’re a home investor, you want to stay right around an eight to twelve percent rate. If you can find a home that falls into that category, we recommend you buy that home immediately.

Keeping Up With The Property

Deciding what type of appliances to have in the home can be complex. The majority of the homes you may purchase will come with a stove, refrigerator, and microwave. Unfortunately, it does not happen for a house you decide to buy, or one of your appliances in your rental home stops working. When purchasing a new one, stay with a dark color appliance; it is easy to clean. Cabinets should be the same way; some landlords prefer higher-priced items that are more durable, or others go with cheaper cabinets if they need to be replaced anytime soon. Flooring is another part of the home you should not shell out too much cash for because it is likely to get scratched or scuffed inside of a rental home. Finally, carpet is something you would want to stay away from because of how easily messy it can get, and you don’t want to be replacing the carpet after every tenant.

Maintenance On Your Home

Everyone is likely well aware of issues you may face when owning property. We found plumbing issues to be something a little more common than others. Suppose it’s a clogged toilet, leaky faucet, or even finding yourself with no hot water. There are plenty of things you will have to maintain in a home. The average life span of a water heater is anywhere from ten to fifteen years and will cost you around $1,400 to replace. The average roof life span is about ten to fifteen years; depending on the roof’s size and style, you may be paying around $5,000 to $10,000 for a brand new one. Another costly repair would be the sewage system, and a sewage system could last you thirty years, being an expensive repair if it begins to back up or get damaged. Another one is right around the $3,000 range, depending on the size of the home. If you have radiators on your property, you will be looking at problems with your boiler costing you $3,000 to $4,000 to replace your home. That one is another chunk of change when needing to get replaced. The good news is that you will only need a new one every twenty-five to thirty years. Having an HVAC system at your home is anywhere between $3,000 to $4,000 to replace every fifteen years. With all these constant things going wrong in a house, someone can be wondering how you can turn a profit on a rental property. It may be hard in the beginning when you have a mortgage and expenses. It is essential to be aware of the properties overall condition before buying a home. If any of the things we mentioned here need a replacement anytime soon, you may want to either stay away from purchasing or ask the owner to make house repairs before making a settlement.

Everyone Can Make Money in Real Estate

Everyone can make money in the real estate market regardless of who you are. The truth is that you have to have money saved up to purchase homes. A significant factor that many of us do not get taught in school is the power of our credit score. A high credit score shows creditors that you are honest with making payments on money owed. It will allow you to get incredibly low-interest rates, saving you hundreds if not thousands every month. There is also a solid urgency to save money than spend it. Suppose you set a goal to keep a certain amount of money each paycheck. Even by creating separate savings account from your regular account and setting it up where you can only touch the money by going into the bank. It will make it harder for you to spend that money as well as it will be out of sight, out of mind. Do not be afraid to jump into real estate at any time. The real estate market is red hot right now; the interest rates have risen but are still at adequate numbers, take advantage of these prices and get involved in the real estate market. Many successful individuals within the real estate industry will not tell you this, but you do not need to be a billionaire to earn substantial wealth from purchasing and selling homes. The purchase price and location are the most critical factors to achieving success. The basics of real estate investing can be self-taught, and the different forms of real estate provide endless opportunities to create generational wealth!

(How to Generate Income from Real Estate | Tips to Becoming a Home Investor in Any Real Estate Market | Home Investor)

Follow Our Social Media Accounts:

Buying Property 215 (@BuyingProperty_) / Twitter

Buying property 215 – Home (facebook.com)

Real Estate Investor (@buyingproperty215) • Instagram photos and videos

Buying Property 215 – YouTube

Introduction to Buying Property 215 | We Buy Houses
Buying Property 215

Get More Info On Options To Sell Your Home...

Selling a property in today's market can be confusing. Connect with us or submit your info below and we'll help guide you through your options.

Get An Offer Today, Sell In Less Than 21 days...

  • This field is for validation purposes and should be left unchanged.

3 responses to “How to Generate Wealth from Real Estate | Tips to Becoming a Home Investor in Any Real Estate Market

  1. Excellent content I appreciate the insight. I have been looking to get into real estate for some time now. I feel confident enough to get started in purchasing a rental property. Thank you for the insight

  2. Quite a comprehensive look at an oftentimes complicated business. You’ve outlined critical information in a very organized fashion which will serve to help anyone contemplating a jump into the real estate world. Thanks for sharing your insight and tips!

Leave a Reply

Your email address will not be published. Required fields are marked *