Statistics show that nearly 95% of our fellow citizens will retire at or below the poverty line by the age of 65. These people will be dependant on friends, family and the Federal Government for financial support. If ours is the land of opportunity, why does this startling reality exist? The answer can be traced back to our upbringing. From our early years we are taught that the correct path in life is to go to school, get good grades, and get a “secure” j.o.b (Just Over Broke) with benefits. Sound familiar?
And let's face it folks, you won't ever get rich working for someone else! With “Job Security” a thing of the past, thousands of people are looking for alternative ways to make money. Real estate investment continues to be one of the largest wealth creation tools in America. It remains one of the fastest and proven ways to amass a fortune, and more importantly, once you understand the basics, almost anyone can do it. Incredible profits can and are being made by purchasing run down homes and improving their value with a quick makeover. The strategy is quite simple: Buy a run down home below market value (wholesale), fix it up, and sell it for full retail price. Newcomers to this field are advised to devote considerable time to research and study. Before you test the waters, there are four factors that you should consider:
1.) You must know something about remodelling and get an idea of how much it will cost to get the house back into shape. Consider what you will be able to do yourself and what it will cost if you have to have it done.
2.) The location and design of the home are two of the most important factors to consider. Study the neighborhood, shopping and transportation facilities.
3.) You make your profit when you buy. Therefore, you must learn how to calculate your ideal purchase price.
4.) You should always finance the project in the most inexpensive way and use very little if any of your own money.
Why is it a smarter way to invest? Traditional buy and hold is too slow for my liking. Buying a home and relying on the market to go up is one of the riskiest ways of investing that I know of. I call it the buy and hope strategy! I prefer a method that will give me my profits up front, and any increase in value from market forces should be seen as a bonus. Still not convinced? Well, here are another four powerful reasons why:
1.) Fast track your capital growth: The biggest advantage of the buy, fix-up and hold strategy is that you can make instant capital gains of 10 to 30 per cent over and above any gains made from market forces.
2.) Make $100,000 plus per annum: If your objective is to buy, fix-up and sell, then a six-figure income is not out of the question. The equation is quite simple really: Five properties flipped at a $20,000 profit each equals $100,000!
3.) Sack your boss: Depending on your financial circumstances, you may be in a position to generate enough income and stop working full time.
4.) Get a life: You have probably heard the saying that the day you find a job that you love doing, is the day you stop work. If, like me, you enjoy rolling up your sleeves and getting your hands dirty, then this may be the greatest career move that you make.
As you can see, fixing up old homes does have its advantages over traditional strategies. Sure it may take more work, and things don't always go to plan. But as anyone who is wealthy will tell you, their level of success has a direct relationship with the effort they put in.