Five Steps to Fixer Upper Profits

Fixer upper strategy is the key to making quick profits in real estate with minimum risk. Listed below are five quick steps to successfully apply this strategy.

Step 1 - You have to find the right property with the greatest potential for quick profit. This will imply that you should be able to drastically increase it's market value within a very short turn around period. The property you buy should only require cosmetic changes and no major improvements that may require time and money.

Step 2 - You should be able to negotiate and buy the property 15% to 30% below market value. By doing so you will minimize your risk by building a cushion and making a profit when you buy.

Step 3 - You should structure the deal in such a manner that you use very little or no money of your own. The financial Leverage will multiply your returns many fold and at the same time reduce your risk.

Step 4 - You should be able to increase the market value of the upper fixer through quick cosmetic changes. The trick is to buy a property at 20% discount and add a further 20% value through a quick rehab. By doing so you make a profit when you buy and also profit when you sell thereby doubling your profits!

Step 5 - You should either sell the upper fixer for the highest price or get a much higher rental to generate positive cash flow. If you want instant profits then you should flip the property at full retail price or you can decide to hold the property for long term capital gain and interim cash flow. You can use the increase in equity as a down payment to purchase your next investment property.

To be successful in using the fixer upper strategy you have to become proficient in identifying the right properties that can be turned around quickly and also that can be purchased below market value. Both these aspects have to be combined at the time of buying the property.

The next step is to acquire skills to negotiate the correct purchase price and also learn about creative financing techniques to keep your personal financial involvement to the barest minimum.

Last but not the least you should be able to sell the property at a profit or lease it out to generate positive cash flow. You have to get your facts and figures right before you venture into fixer upper properties.

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