Investing in real estate can be a source of excellent income, but it can also be very challenging. When the economy is poor, the risks involved are increased several-fold as fewer people have the money to think about purchasing new property. However, there are a few considerations that can help reduce the risk inherent in buying real estate with an eye to sell for a profit.
First, consider what is in demand in a particular area. College towns and towns with a low cost of living that might attract young families are generally places where low-cost “starter homes” will be in demand. Areas that attract professionals, namely urban areas with notable industry or higher education available, are good places to target higher-dollar homes.
When the economy is slow, lower-dollar houses are often the better bet, as lenders and buyers alike have become more cautious. Massive layoffs around the country have also given potential buyers pause when considering how much home they can afford because some jobs are no longer perceived to be as secure as they once were.
If foreclosed or seized real estate can be purchased through the bank or government, these properties can often be purchased for a lower price. In the down economy, the risks should be minimized as much as possible by selecting properties that have some fixing up that needs to be done. The best bet for investors is to find properties with low-cost, easy fixes such as new paint or siding, needing brush cleared or fixtures changed out and more.
Houses with poor curb appeal that can be easily spruced up are also an excellent choice. If there’s room for a garden, starting one or preparing the beds for planting can help, as well as planting low shrubs for a yard border. Homebuyers want to be impressed with a property at first sight and generally want to be able to move into a home and not have any work already waiting for them.