You buy a house and rent it out, sit back and watch the rent payments come in, right? Well not quite. If you were to talk to the majority of landlords you'd find that they had horror stories to share. The successful landlord has learned real estate investment in a trial by fire, with no shortage of mistakes made in the heat of battle. Real estate investment can be a profitable investment, but without a full understanding, can quickly turn into a stressful nightmare.
Real estate is more of a stable investment than many others; vary rarely does property value ever go down. There are pros and cons to investing in real estate; here we will talk about a couple of them. The two most popular ways to invest in real estate are to buy a house, fix it up and sell for a higher price (house flipping) and to buy a place and rent it out (becoming a landlord.)
House flipping can turn a quick profit in a short amount of time. The basic idea is to look for a house that needs work and can thus be bought for a lower price. The buyer will then buy the house and do the majority of repairs themselves to save on costs, and then sell the house for market price. Many homes are available at a discounted price and with a little effort, they can be found extremely discounted. These deep discounted homes are often referred to as HUD homes. They are homes that have been foreclosed on, usually for default of payment, and will be auctioned off. Usually the minimum price is what is owed to the bank. If the mortgage lender is owed a hundred thousand dollars on a fifty thousand dollar house, then if the auction isn't very aggressive, the winning bidder could potentially walk away with ...