It seems obvious, but this is a basic plan that works.
Most investors in the stock market use the "buy low – sell high" simple investing approach. It's pretty much the same when you're thinking of the best way to profit in real estate investing. Locating properties that you can purchase below their actual value is the best first approach to a successful investment.
What Might Cause A Property To Be Available At A Price Below Its True Value?
- A family situation, such as a divorce or death of a spouse
- Poor condition and in need of repairs….see ARV or After Repair Value
- Title problems that can be remedied, but sellers don't know how or want to deal with it
- Foreclosures or those trying to avoid it (short sales)
- Homes damaged by flooding, fire or other disaster
- The owner is just tired of owning it, sees it as a burden and wants to unload
- Inherited property with heirs that want to take out money
There are other reasons why a property might be undervalued, but these are common ones. Your ability to locate these properties will have a major impact on a real estate investing plan. Critical to this working for you is your ability to correctly assess real value or your resources for those who can do it for you.