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Real World Real Estate Investing - Ten Steps To Success

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Making money as a real estate investor is not as simple as just "fixing and flipping it." Sometimes you don't even have to fix it before you resell it. The key to making money is to follow these ten simple steps to success.

1. Locate your property. You can spend hours and hours searching on the Internet or through newspapers looking for cheap properties to sell or you can benefit from the shortcuts. Put ads in the paper that state, "I buy houses for cash" and find people who are willing to sell for pennies on the dollar.

2. Research your property. Sometimes a property that seems like a real deal isn't one at all. Before fixing and flipping a house there are all sorts of things that you should consider including what the neighbors are like, how the zoning laws are apt to change and other considerations. Look for things that might specifically prevent you from reselling the property or that might devalue it in the future (such as a toxic dump scheduled to be built nearby.)

3. Inspect the property before you buy. Houses can have all kinds of hidden diseases - cracked foundations, termites and other problems that can only really be determined by an inspector.

4. Analyze your financials. Before buying ask why the seller is letting the house go for cheap. Usually it is because of illness, relocation, divorce or credit card problems. Deal with a quality broker or real estate agent and make sure that you can personally afford what you are going to buy.

5. Fill it out a contract making by making a deal with homeowner. Find out where to copies of a contract that you can negotiate yourself just like a real estate agent. You can also find out, how once the contract is signed, you can find another investor (a rehabber) who will buy the property wholesale. This is accomplished by running an ad in a local paper telling others that you have houses in foreclosure.

6. Make sure you follow the rules. Once you find someone to do the deal with you, simply assign the sales contract to him or her and this person will close on the transaction in your place. You'll get paid an assignment fee for putting the deal together. The closing will take place at a title company or an attorney's office. The rehabber can arrange the entire closing. All you have to do is show up and collect your check.

7. Get your house appraised. Once you have acquired the house you should see how much it is really worth. Sometimes it is worth so much that you don't even have to fix it up that much to make a profit.

8. Refinance your house for tax-free proceeds. Did you realize that there are all kinds of benefits for you tax wise when you refinance your newly acquired property? Check frequently with government sites to find out about these tax breaks.

9. Sell the house for a profit. After you have fixed up your house it is ready to be flipped. You can use all the usual routes to sell a house including putting an ad in the paper or using a real estate agent if necessary.

10. You could also consider exchanging the house for one you like better. Section 1031 of the U.S. Internal Revenue Code allows investors to defer capital gains taxes on the exchange of like-kind properties. 1031, or tax-deferred. These exchanges hold great advantages for both investors and realtors.
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