Tips for Real Estate Investors

With home prices at such low levels and interest rates historically low, I am working with more and more investors. Some investors are interested in “flipping” the property, which means buying a property that needs repairs and remodeling with the intent to sell. Other investors want to purchase a property to be used as a rental. Both options are viable options in this market but they are not necessarily searching for the same types of properties and there are different concerns and things to watch out for depending on what you goal is.


If you are considering flipping a property you need to understand the local real estate market. You will need this information in order to help you determine if the purchase, repairs and subsequent resale will be profitable.

1. Time is of the essence when flipping a property. The longer you own the property, the more it will eat into your profit (mortgage payments, taxes, insurance).

2. When determining the budget and plan make sure you take into consideration the closing costs for both the purchase and the resale. There will be costs on both sides of the transaction.

3. You must be able to accurately determine what the cost of repairs will be and have the means to get the work done quickly. Many flippers are themselves contractors who can assess the work that will need to be done and can do the work themselves.

4. You need to understand what buyer’s are looking for. You must tailor your remodel to suit both your budget and the taste of potential buyers. You may find great purple carpet on sale, but will that help you sell a home?

5. The work must be done in a professional manner. The buyer’s will have a home inspection done and the inspector will tell them everything they find wrong with the property. If you have cut corners or tried to cover up defects, the buyer will find out. As a result, you will scare the buyer away from the deal or if it closes you will open yourself up to lawsuits.

6. You must be realistic when it comes time to sell. You need to know what the average time on the market is and what similar homes are selling for. Do not fall into the trap of listing the property too high, this will cost you in the end. Get it SOLD.

Now may be the perfect time to buy an investment property that will be used as a rental. There are things for you to consider before you make the purchase.

1. You must understand not only the real estate market but also the rental market for the area you are considering. Cheapest is not always the best. You need to know what similar properties have sold for. You do not want to over pay for a home. At the same time you need to know what similar properties are renting for and if the area you are considering is a popular area for renters.

2. You need to determine the cost of bringing the property up to rental condition. As with flipping a property, the longer the repairs take the more money you lose.

3. Be reasonable with your profit projections. Make sure you have a plan to cover the mortgage should the tenant suddenly lose their job and stop paying rent or if the tenant moves out and you need to find a new renter. You will also need to budget for repairs that may be needed.

4. You will also need to determine if you are going to management the property yourself and be responsible for collecting rents and doing repairs or if you are going to hire a property management company to take care of this. Add these costs to your budget as well.



There are many great opportunities in the real estate market right now. But as with anything, there is no such thing a sure thing. You must do your homework and be informed. Do not be unrealistic with your goals. Surround yourself with knowledgeable professionals who can assist you and guide you through the process.