How to Create Profit When You Buy

How to Create Profit When You Buy
How to Create Profit When You Buy

Speculators hope for profit. Investors create it.

Though the adage, “profit is made when we buy” has been around the real estate industry for many years, it still serves as a handy reminder of the importance of proper financial evaluation when purchasing investment properties. At the beginning is the time to recognize if an opportunity to create profit exists. This is when the work of comprehending financial conditions that determines whether success (or something less) is present should be performed.

Profit, i.e., built-in equity, positive cash flow and even property value appreciation (likely, but not necessary for profit) comes as a result of knowing the right formula for success. The formula is an objective, primarily mathematical calculation which helps the investor quickly recognize if factors make for a favorable deal or represent the signal to “move on”…

Once the investor learns to accurately evaluate the potential profitability of income producing properties, the ability to identify “winning” deals quickly and early is always available. Investors are then able to rely on and repeatedly reuse the same formula.

The secret to investing in real estate is to buy intelligently and have a well conceived strategy with long term investment goals in mind. That in turn should be followed by disciplined execution. Income follows and begins to flow immediately. Buying intelligently means acquiring properties which produce enough income to cover all expenses associated with ownership in addition to a steady return on investment (passive income). The ability to accomplish this should be relatively easy to predict and recognize in the early stages. It begins with the numbers.

Here’s An Example Of Our Formula

Certainly other additional elements such as location, desirability of structure, condition of the dwelling, neighborhood type, rental potential and a few other variables must be considered. Additionally the ability to overcome impatience and remove guesswork or emotion is vital as any of these factors could manufacture risk. Investors can’t become enamored with particular properties that they “like” with hopes that they’ll work out financially.

The successful real estate investor sets standards and sticks with them. They don’t compromise their principles, become impatient or swayed by greed. They set a steady course to build wealth and stick with it. They recognize and accept that true wealth cannot be created overnight.

And successful investors know that the ability to achieve those things resides mainly within the math…

Happy investing and profit making!

Note: This article is for informational purposes only and is not intended to be a substitute for professional legal advice.