Can You Make Money Flipping Houses in This Market?

Even though the real estate market has entered a "correction cycle," there's no need to sit on the sidelines, waiting for the market to rebound. There's still money in flipping houses, even during an economic downturn. Here are a few suggestions:

First, save money on your building materials. A good place to find discounted construction materials, paint, and appliances is at ReStore, the retail outlet of Habitat for Humanity. You can purchase quality used or surplus building materials, doors, lighting fixtures, and hardware for your project at a fraction of the normal price.

If you don't have a ReStore nearby, shop around for an appliance store that offers returned, refurbished, or scratch-and-dent appliances at a discount. If you let it be known that you're in the market for those kinds of items, you may find a store owner who'd rather sell those types of appliances to you rather than writing them off altogether. Ask. You have nothing to lose, and profits to gain--especially during a market downturn.

Another way to sell your house is to research your target buyers and then make sure your project meets what they're looking for. When the market's hot, you can get away with painting the walls white and installing neutral carpet, but when times are tighter, you have to be more creative. If you know your potential buyers, you can tailor your flipping efforts toward attracting them.

Along that same line, don't underestimate the value of staging a house to attract your target buyers and to prompt them to offer top dollar. You don't have to totally furnish it. Just add a few strategic decorations to prompt potential buyers to begin visualizing what their own furnishings would look like in the home.

Finally, it's important to close sales quickly during a down market. If you find someone who really likes the home, don't spend too much time negotiating. The term "buyer's market" means that buyers have the advantage, so when you find someone willing to buy your house, don't try to squeeze out every dollar of profit you can. Take your profit and move on, since you can never be sure when the next offer will come in--and in real estate especially, time truly is money.

It doesn't matter if the market is up or down. You can still make money flipping houses if you plan carefully--and then stick to your plan.

Free "The Truth about Making Money Flipping Houses" ebook at http://www.doghousetodollhousefordollars.com/free_flipping_houses_ebook.html

Copyright c 2007 Jeanette Fisher

Real Estate Now, Can You Make Money in Today's Market?

I get this question often. Understand I have been investing full time in real estate for more than a decade. I've seen up markets and down markets. And, the question is consistent, "Can you make money in this market?"

The answer is always, yes. In today's market there is loads of inventory. There are however a limited number of loan programs, and the ones that are available have stricter guidelines and qualifications. BUT people are still buying.

How Do You Profit?

There are plenty of strategies (or recipes as I call them) to win. One that you can use is "buying, fixing, and re-selling". Remember this is but one-way to win. The first thing to realize about real estate is there is always a current value. Unless we are speculating, the current value is the value. NOT what the home was worth last year, or what it might be worth next year.

If you are buying at a discount on the current value then you have potential to win, period. It's like gas prices; we remember what it once cost. But the reality is we buy gas at today's price. You must treat real estate investment the same way. What is this house worth today?

Using a local agent to establish value - and even an appraiser - will help you understand the values in your investment market, the average time on market, and the median house price.

AVERAGE TIME ON MARKET will tell you how long it takes to sell a house in your market, and even better, for the neighborhood of the house you are buying.
MEDIAN HOUSE PRICE tells you what the average price is for a house in your area. You want to know this number because if you buy a house lower than or near this median you will have a higher number of potential buyers.In other words, take the statistics of wealth in general; there are many more people with ordinary jobs than there are rich and carefree. You want to follow this statistic. Don't worry we aren't going to get crazy about analytics here, just know we want average houses, not mansions.

Okay so where are we? You are buying average houses, under the current market value. What's next? Here is your punch list:

MONEY - How will you pay for this house?
FIX IT - Who will be doing the rehab work?
SELLING - Who will sell it?
DISCOUNT - How much under value?Notice I didn't number this list. That was intentional. All the factors here tell you what you can pay for a house...

DISCOUNT - How Much Under Value?

On average we are paying no more than 75 cents for a house. What that means is if the house will sell for $100,000 we will pay no more than $75,000 AND that number must include any repairs. If the house requires $15,000 in work then we can pay no more than $60,000 for the purchase.

Understand, we have been doing this for many years. As a rookie you can quickly eat away a 25% profit. Let's look at an example transaction:

You pay 60 cents for a house, where you budget $15k to fix it. You will have an additional 6% or ($6,000) in agents fees, another 2% in closing costs, and this does not include any holding costs; utilities, cost of money, etc.

Here it is more clearly (same end value of $100,000):

- 60% buy

- 15% in repairs

- 6% in commissions

- 2% holding costs

- 83% total

- 17% potential profit

MONEY - How Will You Pay for This House?

There are many ways to pay. You can get a bank loan on the property, but, in many cases rehabs need more work and the lending guidelines will not allow for rundown houses. You can get a loan on your current house, if you have equity. You can borrow private/hard money. And, you can likely do a combination of several. Lastly, you can use your own cash or partner with someone with cash.

Regardless, there is a cost of money. That cost is the interest rate and any loan fees, plus time. For example, a private lender will charge points - one point, equals 1%. On a loan for $75,000 one point is $750 or for a two point loan - $1500. In most cases this will be added to your loan. Meaning you will pay it when you sell the house.

The common lingo for investors and private money is "two and twelve" which means that the loan costs 2 points and 12% interest. Note: you may pay more, even six and eighteen. Shop around. Assuming you paid 2 and 12 your points are $1500 and you monthly interest is $765 monthly.

If you hold a house for a number of months time is ticking dollars:

- month 1 - $765

- month 2 - $1,530

- month 3 - $2,295

- month 4 - $3,060

- month 5 - $3,825

Which means that over five months you will pay $3,825 plus $1500 (the points) for a total cost of money of $5,325. IF you held your house for 8 months you'd spend $6,120 plus $1500 ($7,620).

Remember you had 17% potential profit ($17,000). The other variable here is unforeseen costs of repair. I just bought a house that had an overage of $2000 for roof repairs - hidden under snow. Which brings us back around to your repair work.

FIX IT - Who Will Be Doing the Rehab Work?

People come and go. Over the years I've had several dream teams. Your contractor is a part of your team, as is your agent, and any other person you find yourself working with again and again. Once you have all the players your job will get easier. Our focus now is on your contractor.

All you have to do is turn on the TV for a primer on how to flip houses. And you see all the cliches; yelling at contractors, contractors who don't do good work, and contractor who charge too much, etc. There are however, a select few who get it.

You want someone fixing your houses that wants to grow with you - I assume you plan on buying more than one investment. You want a team player that not only understands how to fix houses, has a team attitude, and enough of a foundation he can eat some of his mistakes. Why? Because no matter how hard you BOTH try there will be houses like mine with a $2000 roof overage. I made the contractor share the cost. It was an item he over looked.

Your contractor is also there to look at houses before you buy, give you a cost for repair, then to DO the repairs quickly and have the home shining for you tell sell it - in the shortest time possible, tick-tock.

SELLING - Who Will Sell It?

Choosing an agent to work with is much like finding a contractor. There are people that specialize. You want an agent that works with investors when you are buying. But, you also want an agent capable of selling your house when it's ready to go back on the market!

RECAP

MONEY, how will you pay for this house? - You can use private/hard money lenders, bank loans, or cash. Yours or a partners.
FIX IT, who will be doing the rehab work? - Find your team. Shop around. Ask for referrals, there ARE good contractors with great prices.
SELLING, who will sell it? - The agent that helps you buy can also help you sell. Again, shop for an agent who works with investors.
DISCOUNT, how much under value? - Your discount may change based on your cost of money. I would never pay more than 75 cents with repairs.In closing, this article was not meant to give you every answer about buying real estate for profit, but rather a glimpse at how you can win today. Again this is but one recipe for buying and selling houses. You must find the one that works for you. "Can you make money in this market?" You bet!

Robert Wayne is a philanthropist, investor, urban mystic and educator. He has spent the last decade investing in real estate and teaching financial literacy. Robert's musings can be found at his digital highrise on the web http://DigitalHighrise.net.

Make Money from the Stock Market

This is probably the most traditional form of investment pre-Internet. And has it gone away today? No! Quite to the contrary, it's alive, revamped and there is a lot more opportunity to make money...and lose money...from the stockmarkets.

Is it worth putting money on the stockmarket?

Classical question, to which I will give the classical answer. It depends how long you want to keep the money in there for.

If you want to, and can, leave the money aside for 5 years or more (i.e. you are putting some of your SAVINGS into the stockmarket), then definitely YES. Whilst past performance is not a guarantee of future performance, the stock market tends to outperform other forms of investments in the long term.

Then what if I want to make a short-term gain?

Once again, I will give a classical answer to this classical question. BE CAREFUL. You can also LOSE money on the stock market. Yes, it's very true.

Many, many people have lost money on the stock market. Some have become bankrupt, some have committed suicide over it.

But many people earn big money in the City and Wall Street doing just that, don't they?

True. But you cannot and should not aim to compete with them. First, you do not have the resources, database, training and time to research stocks as much as they do. Second and more importantly, you do not have the huge financial backing that the banks/funds have to leverage or hedge your positions. And finally, even they lose money. They just don't publicise it as much for obvious reasons. Click here to read an article on that matter.

Therefore, you should only play the stockmarket with money that you can afford to lose!

If you do want to play the stockmarket, please consider the following advice which, once again, is not exhaustive:

1. If you want the potential for higher gains, consider buying Contracts for Differences (CFDs). These are sophisticated derivative products that are now available to the public. You only put down a fraction of the money you want to invest on the stockmarket and borrow the rest. Obviously, you pay interest on the amount you borrow. This means that your investment is then geared. You stand to make stronger gains, but also more painful losses! I invested $3,500 in a CFD on a blue-chip company in August 2006. I am still licking my wounds!!

2. Bear in mind that you don't have to trade only in stocks/shares anymore. You can trade on gilt bonds, derivatives and commodities such as oil, gold and silver. If you feel you have some better knowledge about a particular market, go for that!

3. Research the market. For example, every day, I read This is Money. Every weekend, I read the Money and Business Section of The Guardian. I try to pick blue-chip stocks that are giving a relatively high dividend yield. This is interesting for 2 reasons.

(a) If, like me, you are buying stocks on a CFD, you will pay interest the longer you hold the position open. However, you will also be paid dividend. Hence, a higher dividend helps to offset the cost of keeping the position open;

(b) Such stocks may soon attract hot money hence pushing up their price;

Obviously, you need to take this with a pinch of salt, so ALWAYS research the company first to try to ascertain why this is the case. For example, has there been a profit warning issued recently?

My tips for stockmarket investments are:

1. Invest in currencies - the markets and less volatile and more predictable;

2. Invest in funds - they are less volatile and still offer good value;

3. Never act on inside information - you can go to jail for that!

3 Key Steps To Make Money Trading Stocks in the Stock Market

Stocks in the Stock Market

We feel the first key question that needs to be asked is how to save enough capital so the investor has enough capital or money to invest that money into the stock market and trading stocks in the market. Whether it be buying stocks, mutual funds or ETFs, they first step is to save enough money so that you can obtain a meaningful return on your investments within the stock market. The first key step in answering the question of how to save, is living within your means and putting some money away on a monthly basis. Be it $250, $500, $5000/month, it is crucial to have a decent source of capital and it requires money to make money.

After you have accumulated enough money to be able to deploy a meaningful amount of money into the stock market, they next question that needs to be answered is how to trade stocks within the stock market. Our first answer to this is, you need to expand into all investment products that reside on a given stock market and these include commodities, ETFs, mutual funds and other investment products. The next step is to determine your risk appetite as if you are looking to generate an annualized 8 to 10% return and have a lower risk tolerance you should probable look at large cap stocks, yield stocks, bonds, mutual funds and certain ETFs. Whereas is you are willing to take on risk and are looking to hit the homerun, we would suggest you look at small cap stocks, penny stocks, leveraged ETFs and commodities. Even if your rick appetite is extreme, we strongly suggest a diversified portfolio. Once you narrow down your investment product, stocks, bonds, etfs, mutual funds, we suggest you analyze valuation multiples, yields and growth potential as even though the current market appears beaten up, there continue to be numerous stocks which we feel are over-valued in relation to their peers.

The third and final question is likely the most important and it is when do I sell. Whether it is a stock, a mutual fund, an ETF or any other investment product, we strong suggest taking money off the table when you have reached your targeted rate of return. We suggest, at the time you buy the stock, mutual fund or ETF in question that you set a threshold whereby you will liquidate all or a portion of your investment.

Stockmarketopedia's goal is to be the leading online resource for investing in stocks, mutual funds, ETFs and stock trading within the North American stock market. Our goal is also to be a leading resource on various topics relating to personal finance.