A Guide To Investing In Previously Owned Homes

When investing in residential real estate, buyers can choose from several types of investment properties. Investors can choose either commercial or residential real estate and decide whether to construct an entirely new building or purchase a previously owned building. While commercial real estate can be a great option for some, the recent shift to virtual or remote work has slowed the market as many businesses no longer wish to pay for a physical space if it is not necessary.

The residential real estate market, on the other hand, is currently very hot. For some investors, building homes can be quite profitable, but that process is lengthy and costly. Purchasing commercial or previously owned homes may be a better investment, especially if the investors are real estate agents. Agents understand local real estate markets and know which locations are likely to see increases in property values.

There are multiple reasons previously owned homes present major opportunities. Older homes have the most room for value-boosting renovations as they may come with lower price tags. Outdated homes or those in need of improvement can create better margins.

The renovation process is a key step when investing in previously owned homes, but renovation can be expensive. Developing a positive relationship with contractors is key to keeping prices affordable and maintaining high margins. This takes research to determine a good contractor and time to foster a relationship. When searching for investment properties, look for homes that may need improvements but are free from any major structural issues as these can greatly increase costs.

Another key factor in determining the profitability of investment properties is the change in market values. If investors can find properties in growing markets, they will have the most success as rising property values can drive larger profits.

Timing the investment is also a critical determinant of profitability. Investors often must be able to acquire financing for a property, and while there are many ways to finance properties, the most common is bank loans. Interest rates with these loans vary depending on many factors including stock market volatility and political climates.

High interest rates may price some prospective investors or buyers out of the market, decreasing demand and forcing prices to fall, creating a buyer’s market. Lower interest rates may allow more people to afford property, driving an increase in demand and growth in prices. Finding affordable properties and obtaining loans with low interest rates will create the best chance for successful investing.

If you are an agent interested in investing in commercial or previously owned homes, contact X-Cap to learn how our agent education program can help guide you through the investment process. Begin your journey to financial freedom today.