Profitability in Real Estate Investing – Knowing when to Buy or Sell

The Global Downturn
home owners bankruptcyThe global downturn heralded an age when investing in real estate was no longer seen as being profitable. The rental market was collapsing and the first time buyers were holding on for better times. Established home owners had undergone bankruptcy and were never going to consider the property business as a really profitable venture again.

The financial experts were warning anyone who would listen that it was no longer practical to sustain whole economies on debt and a shaky housing market. This then leads us to ask the question as to whether it is still possible to make a decent profit from the real estate investing sector of the economy.

Using the Old in New Innovative Ways
The global downturn was useful to businesses in many ways and one of the many ways in which it became useful was that it showed people what not to do when entering the real estate investing sector. Let us take for instance the issue of borrowing. It is an essential part of this business that you will have to borrow from time to time in order to finance projects that need cash.

property market bubblesPrior to the downturn people could borrow way above acceptable limits on the back of consumer confidence and the signs of an excellent economy. Now they have to be more imaginative by in a sense isolating the well being of the economy as opposed to their own personal circumstances. In not so many words, the mantra is to borrow but within your means. Otherwise your profits will be kept back by your debt servicing obligations.

Looking at the type of investments available, the people in real estate investing have learned that distressed properties are normally not the answer to your financial problems. They are distressed for a particular reason and you might end up picking up the tab for someone else problems and mistakes when they were setting up the business.

You have to take your time in selecting the properties that you invest in because that first decision will determine the level of income that you can garner throughout the lifetime of the asset. It is no good coming up with properties in so called prime locations which mean that they are inflated way beyond what they could possibly ever be worth. When you come to sell these properties you will almost certainly make a loss and it if far better to stay away from such poor propositions in the very beginning of your project.

The key to making a good profit in real estate investing is know when to buy and when to sell properties. If you hesitate and the right time has come you will either make a loss or will lose out on the profits that you could have had. Sometimes a valuable asset is on the verge of losing its market price and you get certain warning signs. You should then sell as soon as is practicable rather than waiting any longer than absolutely necessary. Likewise if you know that a property is about to gain in value, then you should buy it as soon as is practicable.

Profitability in Real Estate Investing – Knowing when to Buy or Sell
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