Real Estate
Real estate trading is the wild side of real estate investment. Like day traders,
who are
distinct from buy-and-hold investors, real estate traders are an entirely
different breed
from buy-and-rent landlords. Real estate traders buy properties with the
intention of
holding them for a short period of time, often no more than three to four
months, after
which they hope to sell them for a profit. This technique is also called
flipping properties
and is based on buying properties that are either significantly undervalued or
in a very hot
market.
As property flippers we often forgo putting any money into a house for
improvements; the
investment has to have the intrinsic value to turn a profit without alteration
or we won’t
consider it. Flipping in this manner is a short-term cash investment. To take
advantage of
potentially large returns, We have to have cash on hand, as traditional
financing doesn’t
generally work for this type of transaction.
A second class of property flipper also exists. These investors make their money
by buying
reasonably priced properties and adding value by renovating them. This can be a
longer-term
investment depending on the extent of the improvements. The limiting feature of
this
investment is that it is time intensive and often only allows investors to take
on one or
two properties at a time hence we try to avoid properties with high maintenance
cost and
focus more on properties with high undervalue
“Real estate trading has a shorter time period during which capital and effort
are tied up
in a property. Depending on market conditions, there can be significant returns
even on this
shorter time frame.”
Despite the magnitude and complexity of the real estate market, many people tend
to think the
industry consists merely of brokers and salespeople. However, millions of people
in fact
earn a living through real estate, not only in sales but also in appraisals,
property
management, financing, construction, development, counseling, education, and
several other
fields. Many professionals and businesses—including accountants, architects,
banks, title
insurance companies, surveyors, and lawyers—also depend on the real estate
industry.
