How to Make Money Buying and Selling a House

Property with a "for sale" sign.
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Buying and selling houses is an excellent source of income if you have the right knowledge. When buying and selling homes, it is important for you to know the market trends. There also are guidelines to follow, such as property financing and using professionals for real estate transactions.

Step 1

Get pre-approval for financing before you search for property. This will determine the price range of houses you can buy and sell, as well as gives you an edge when you submit your offer. Pre-approval can be obtained by taking your previous year's tax returns along with current income information to the lender's office. Using a bank or mortgage company offers you the opportunity to deduct any mortgage interest on taxes. Using personal funds can tie up your resources for an unknown amount of time.

Step 2

Contact a Realtor. A Realtor has a code of ethics that she must follow. She also is a member of the National Association of Realtors and has access to a database with all the available home listings, which provides valuable information about the housing market.

Step 3

Search for a location where property usually sells quickly such as property close to schools and manufacturing areas. Think of the home as one you want to buy. If the location is not desirable, it could take longer than necessary for you to sell the house. Time is money when it comes to investment property.

Step 4

Get a home inspection. A general home inspector will look for electrical, plumbing, and roofing issues. Getting a termite and wood-infestation inspection also are important. Knowing what repairs you face before purchasing a house will help you determine if there is money to be made. Your Realtor will have a list of licensed local home inspectors. You also can check online at the website of the American Society of Home Inspectors.

Step 5

Buy a home that is priced less than the market value. This is key when trying to make money by buying and selling houses. You must be able to sell the house for more than you paid including closing costs, renovations and any other fees.

Step 6

Develop a marketing strategy for the house you have for sale. This should include a sign in the front of the yard, advertising in the local papers and listing your home online at for-sale-by-owner sites. Keep the home in good repair and presentable. Curb appeal is what attracts buyers and makes them want to look inside the home.

Step 7

Use professionals. Find an attorney to handle closings. The real estate market can be risky. Take every step possible to avoid a liability issue after a sale. A Realtor can help you list your property for sale if it takes longer to sell than you expected. Remember that working with a Realtor will include commission, which is deducted from investment profit.

Tip

Take the real estate investment quiz offered by REALTOR Mag.

Things You'll Need

  • Financing

  • Realtor

  • Home inspection

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