Two ways to make money in real estate and a dozen ways to lose it all.
Make money in RE:
- 1. Buy and sell
- a. Buy and sell as-is
- b. Buy, fix and sell
- 2.Buy and hold:
- a. Buy and hold based on per unit price
- b. Buy and hold based on a per sq ft price
Sooner or later you will mature enough to:
- 1. Buy and hold instead of keep buying and selling
- 2. Buy and hold the type of properties that require the least amount of marketing, management and finance.
Lose money in flipping RE:
- 1.Buying at a high price
- 2. Buying at the wrong time/market
- 3. Buying in the wrong place
- 4. Buying the wrong property with physical obsolescence
- 5. Fixing at too high a price
- 6. Fixing too much – too little or the wrong things
- 7. Under marketing property
- 8. selling at too low a price
- 9. Having no cash reserves
- 10. Having wrong people involved (partners, investors, contractors, brokers, bankers, appraisers etc.)
Lose money in holding RE:
All of the above plus:
- 1. Renting to the wrong tenant
- 2. Bad lease, price and terms
- 3. Not maintaining the property
- 4. Not resolving matters with finality
Obviously, this is a very shortlist. Please give me feedback and let’s add to the list of how and why some people lose money in real estate.
Wishing you the best investing.
Cherif Medawar
Comments