Investing By Buying Low

This is what everyone's dream is: buy low, sell high. How can you do this without "house flipping" and a hot market? Wholesale purchases!

Now how the heck does someone buy a house "wholesale"? Well, what I'm really referring to is buying a property that is pre-foreclosure, foreclosure, tax sale, etc. In this case, you get the property well below market price, because someone (usually the lender or the municipal government) wants to get the property off their hands.

This can still qualify for "house flipping", but usually these properties need a bit of "loving care" before you can sell them at a tidy profit. Still, if you are looking for another tried and true method of making money in the real estate market, this is one of them.

Do keep in mind that any "trick" has times when it can fail. If the entire housing market is collapsing in an area, and there are a ton of foreclosures and such, don't expect to make money. What you really want is a property in at least a stable market, where once you invest in some paint and wallpaper and surface changes, you'll be able to sell again.

Which reminds me: it doesn't usually pay to buy a true "junker". Avoid homes that have structural problems -- that costs too much money to fix, and therefore reduces your chance of making a profit. You are looking for the "diamond in the rough", which is structurally sound. If all your bargain needs is some spit and polish (okay, paint and such), then you are on your way!

More on home investing in my next blog.

Michael

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