Do Your Sums And Make Sure They Add Up

Commercial Real Estate

When someone tells you that there is good money in real estate, they are not going to be telling you anything new.

We all know that there is profit to be made there, and no-one will get any medals for breaking the stunning news that it can be a lot of money.

What we need to be careful with is when someone describes something as a “can’t miss” prospect.

There is no such thing in real estate, and claiming that there is will show someone to be a fantasist.

When you buy real estate for the purpose of renovating it and selling it on, it is important to be as dispassionate and profit-focused as you can possibly be.

One part of this is to do all of the math involved in buying and selling, and make sure that the deal has the largest potential upside you can possibly manage.

This means getting the lowest price possible when buying the house, spending only what is necessary to make the house attractive to potential buyers, and doing the work so well that you push the selling price as high as you can.

Think of it this way. Your buying price added to your budget for any work done to the house (this includes materials, labor and any arrangement fees you may need to pay) must be lower than the price you get when you sell the house.

Anything other will simply lead to you making a loss or merely breaking even – and if you have been working on the house when you could have been earning a wage, this will be a net loss.

You don’t just need to be confident that you can turn a profit on the deal, you need to seal off any potential avenues which could lead to you not turning one.

Even after all of this is done, you are still left with the question of how you can make the profit as high as possible without spending too much money.

Avoiding vanity projects is important here – if you are thinking of tiling the bathroom all in gold, stop right there because it will never make you more money than it costs you

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