Quote:
Originally Posted by Jibartik
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When I was a kid I used to always see informercials like this and wonder, what are the secrets?? WHAT ARE THE SECRETS???
It's buying a house and selling it 6 months later to some dipshit who is willing to go in to debt for 30 years to pay an extra 230k because you painted it.
This on steroids, is both the boom and bust of our modern nation.
edit: I think this shit should be illegal. But then again, it makes better neighborhoods (at the cost of evicting old people, more sin!)
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If you buy the house then sell it 6 months later, you have to pay what you still owe on the house when you sell
So let’s say you put 20% down and finance 80% in a mortgage. In 6 months, you will have only made 6 payments on that mortgage. Considering you are paying the maximum amount of interest at the beginning (minimum at the end because interest paid scales off how much of the loan is left owed), then you wouldn’t have paid off even 1% or maybe not even 2% of the value in those 6 payments
So unless the home just skyrockets in value in the next 6 months, you would either be at a wash (no change) in money or else you might be down due to the fees and costs associated with buying and selling
So as a non-rich average joe who wants to make money in real estate, here’s how: buy a cheap home to live in that needs a lot of work done but is in a desirable area. Then find the cheapest (in my state this would be the illegals that post up outside home improvement stores) labor you can find to fix up the home. Then re-sell it after about 1-3 years. The value will have gone up due to demand for homes in that area + the value of the improvements you spent on the home. If you were able to get a bathroom put in for only $2000 of your money, you could still choose to charge $10,000-$20,000 more for it having an additional bathroom now. People love extra bathrooms, especially in multi-bedroom homes. Or if you put in that fancy hardwood floor everyone likes, you can charge way more for it in the home price when you sell than what you paid
Plus you get the amount of money the house naturally went up. You would still have to pay back what you still owe on your loan, but you could make like 80-100k in a few years doing that. Then, repeat
That would be my strategy. But you have to compete with the big firms trying to buy and flip these homes