As a rule, it’s always best to view investment in property as a long-term plan. Given the fact that in the short-term, property valuations can fluctuate far more than when you play the long game, it seems to make total sense. That said, there are some techniques you can use to buy and sell within a matter of months, and still make a nice profit.
In today’s guide, we’re going to go through a few different ways you can make this tactic happen, and also make it fruitful for your finances. Let’s take a closer look at what you need to do.
Cash buying gives you a lot of options when it comes to investing in a property. It means you don’t have to wait for mortgage clearance, you don’t have to worry about chains, and that makes you an attractive options for people waiting to sell their homes. Ultimately, the home buying and selling process can take months to sign off, as each party sorts out their financial affairs, find a new house to live in, and waits for the legalities of the contract exchanges to take place. But when you move in with a cash offer, it makes the process so much easier than it is when you have a mortgage. You might find that sellers are open to the options of giving you a discount, too. Plus, depending on your morals, you could wait until the last minute to demand a reduction. Then it’s just a case of waiting until market prices going up and selling on for a nice little profit.
Up and coming areas
This tactic can be a little tricky, and you will need to understand the ins and outs of your local council’s plans for development. But, it can result in a fast turnaround and significant profits. Investment properties in an area that has been earmarked for regeneration means you will pay a low price, and once people start to move in and spend more money, there is no doubt that the house prices will rise. And you, obviously, will walk away with a tidy profit under your belt.
Buying off plan
Housing developers often offer special deals to entice homebuyers to buy properties before they are even built. So by buying off the plan, you will often get a lower price than something that already exists. The risk is that that the rest of the development may not attract the numbers the developer was hoping for, but in the vast majority of cases, you will find that buying off plan and selling once the development is finished is a nice way to earn a big return.
Find distressed sellers
There are many people out there who struggle to pay their mortgages and might be looking for a way to sell their home as fast as possible. These distressed sellers will often accept much lower valuations for their homes as it will ease their severe financial difficulties. And, of course, when you pay for a home at less than market value, you make an instant profit. That said, there is an obvious ethical issue with this approach. While you could tell yourself that you are helping someone out who is in severe financial difficulty, ultimately you are taking advantage of their nightmare situation. It’s up to you to decide if you are happy to deal with that issue – many prominent investors will never do this, and those that do often build up a negative image of themselves.
The fixer uppers
Finally, you can look for distressed properties that need a lot of work done. Clearly, it’s important to have a thorough understanding of the costs involved to fix it up – an engineer’s report or home inspection is essential. But if those costs don’t exceed the value of similar properties in the area, it’s an excellent way to make a tidy profit. There are a few things to watch out for, of course. First of all, you will need to develop relationships with local building firms that you can rely on. The longer any work takes, the more it will cost you regarding mortgage payments. And you will also need a good knowledge of the local market. What are buyers expecting from their homes in the area, and what will they be looking for? Make sure your renovations are based on market needs, not what you feel ‘looks nice!’
We hope these tips have helped you understand a little about making quick returns on property investment. Good luck!