After college I plan to buy older houses and renovate them…is there a term for doing this?
would this be considered real estate? or what?
What are some pro’s and con’s of this?
Is this similar to construction and real estate development
Thanks guys all your information helped a lot…
I have been hearing in the news thata the ARM adjustable mortages have been causing a lot of people to foreclose on their houses… so now probably isnt the best time
i probably should have clarified better…im only a sophmore in college..so it will be at least 5 yrs before i am ready to think about starting…but i got the idea today b/c i have a big interest in the concept of flipping…
It’s called “property developing” over here in England. But you could also simply label what it is as “real estate” as that’s the sector the business is in. I hope that made sense.
- The pro’s are that the risk’s involved are far lower than most other businesses or investments (eg, the stock market). A house will always be worth something and someone will always need a house so you will never lose all of your money like is possible when investing in the stock market.
- Another pro is that there is potential to make large sums of money doing this.
- The con’s are that it isn’t as easy as it sounds, bare with me and I’ll try and explain.
- Most “property developers” are over ambitious with there estimations for the amount of time it will take them to sell on there renovated homes. You need to be aware that it is possible that your house may sit on the market for years without selling which is a problem if you only have one house to sell and no money to buy and sell other properties. Hence why there are so many rich people dabbling in property – they can afford to have a house sit on the market until it sells.
- Most beginners do not take into account the fees involved with buying and selling properties when planning there business in their head. Realtors fees and all the other taxes and so on are huge and I mean HUGE, this can seriously reduce the profit margins you had in your head.
- The US real estate market is in a terrible position now and it really isnt the best time to start buying properties with the intention of selling them on, apparently there arent any buyers at the minute and the next few years look grim.
- Interest rates are high at the minute, so assuming you would need a mortgage to buy your first renovation project, this isnt a good idea. The amount you would have to pay the lender back would render it almost impossible for your business to succeed.
- There are already people established in this business, and as I mentioned before these people will probably have more money than you making it easier for them to ride out any problems with houses not selling.
I hope I have been of some use to you, and good luck if you do decide to go ahead with it. Also it would be better if you had some experience in construction or architecture however this really isnt essential.
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