Real Estate: How I Made Over $100,000

My husband and I share real estate investing as a common interest. It is something that we are both completely passionate about. In 2002 we bought our first home. Mortgage rates on a 30 year fixed loan were 6.25% and housing prices were relatively low. With a growing family it was necessary to sell. We sold that home in 2004. Our profits were over $20,000. We invested that money into a new home. It was a larger home in the same neighborhood. Home prices were on the rise and interest rates were dropping. We locked in an interest rate of 5.75% on a 30 year fixed loan. We later sold that home in 2007. Interest rates were at an all time low and housing costs were on the rise. We made well over $100,000 from that home sell.

Now, four years later the real estate investment market is completely different. Mortgage rates are extremely low and the market is sluggish. That doesn’t mean that you cannot be financially savvy in this economy. If you bought a home prior to 2004 chances are you bought at a great time and can still come out ahead if you were to sell. If you bought after that time, there is still hope. Interest rates are incredibly low. I believe that alone will encourage more buyers. The problem the real estate market is facing is simple. People that are ready to buy a new home are unable to because they owe too much on their current mortgage to sell and come out ahead, or possibly break even. Many of our neighbors opt to rent out their homes instead of selling them. Another popular trend is to rent to own. I always prefer to sell. I would rather not sell at a loss, so I guess the key is patience. We have been in our current home for almost four years. This is the longest we have been in one place. So, will we sell again? Yes. I think it all comes down to crunching the numbers. Watch the rates, pay attention to local trends and what homes are selling for in your neighborhood. Here are some important things to remember when investing in real estate.

Wait to sell until you have owned the property for over two years. Do this and you will avoid having to pay a Capital gains tax on any income you incur from the property. When purchasing a property with the intention of eventually selling, remember that location is everything. Look for fixer-uppers in upscale neighborhoods. New construction can be a good choice if the neighborhood is right. Be cautious of builders that add on additional costs for upgrades. This may cause your home price to be too high for the area. Look for spec homes, sometimes the builders are willing to negotiate more on these homes because they want them off their books. Remember to calculate the cost of a yard and sprinkling system into your investment when you purchase a newly built home. Don’t buy the biggest home in the neighborhood. It is awesome to have a nice sized home, but if you plan on selling you may find yourself in a huge predicament. Choose a home that fits well into the area. Homes that stand out because of size or style may be hard to resale. Keep the property well kept and neat. Look for homes that have great curb appeal and catch your eye. Chances are they will attract others as well. Keep these tips in mind and you will be off to a great start. Happy house hunting!


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