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If you're investing take a long term view but if you're buying to make a profit then usually a short term view is favoured. Having said that, to buy cheap at an auction and rent for several years can also lead to some excellent profits.
Decide what your strategy is before you start.
Very often experienced real estate investors make their business look easy and beginners need to consider the downside and not just look at the potential profits.
Would you buy a car simply because it seems cheap? Well, that's how some people buy property.
There are plenty of individuals who, if asked, will happily tell you how they started and will be prepared to give some tips. Go to seminars, business network meetings, local chamber of commerce meetings to find people who can advise.
Ask your bank manager if he can introduce you to a bank customer who already deals in real estate. Money can be spent quickly but sometimes it's not so easy to realise the cash if you suddenly have to sell.
Check the location, how long has the property been on the market...and if a long time ask why? Do your research! What is market value and how do you know you're buying below it?
Set yourself an absolute price limit and NEVER go above it. You know what you decided before the auction so what changed during the bidding to tempt you?
Auction fever can do funny things to the supposedly rational mind! The moment you buy at any auction, including ebay, you have made a legal commitment and if you fail to complete within the quoted time frame you will be in breach of contract.
You will face legal proceedings and costs and you will damage your reputation. You may also be banned from further bidding.
If the property requires repair work get several quotes, unless you're good at DIY, and always add another 15% to cover any unforeseen expense and problems.
Don't just research the area, look at how popular the type of property is in that area. Look for local schools, shopping malls, communication. Success really is dependent on location, location and...location!
Visit the area at least twice and make one trip over the weekend. A street can be very different when schools are closed. An evening drive could also put a different personality on the locality.
Look to see how the neighbours look after their homes. If in doubt...walk away! There are plenty of other choices available. Why not call in to ask the police what the area's like?
Then look at the property itself. If you're going to let it what work needs to be done to make it habitable and how long will those repairs take?
Time is money and you want your return starting quickly so prepare a cashflow forecast to help you.
You'll need to check all appliances and wiring and anything else you may be held legally accountable for if there's a problem. Ensure you have proper legal documents for renting a property in case you have to evict bad tenants.
Finally, when you buy a property at auction for your own occupation you are looking for certain requirements. But when you're buying to sell or to rent it is NOT the same.
Never buy what YOU like. Buy what the market wants and you'll do well.
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