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Investing in a real estate transaction means buying real estate, renovating it, and then selling or renting for a profit. There are several strategies for doing business in the real estate market. However, one thing is certain: for an operation to be profitable, you have to know how to approach this business. Each step is a brick that must guarantee you the highest return possible, and these are our ten tips to help you to approach this sector in the right and safest way. First, however, let’s better understand what the steps of a real estate transaction are.

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Investing in the real estate sector: how does it work and what are the earning opportunities?

As we have said, there are three steps in a real estate transaction. Regardless of the profit you want to make, first and foremost you need a property to buy. Then you will have to renovate it, depending on your target and goals. Finally, you will need to make a profit, therefore sell it at a price that takes into account the improvements made, or rent it out.

Step 1: the right purchase

Buying is a very delicate phase. As you will read in our tips, the best properties to buy need work, but have potential. You can focus on just one home, but also on entire buildings or large spaces to be converted: the possibilities are endless!

Step 2: quick renovation with no surprises

Renovating requires a lot of attention to timetable and budget. For a quick and consistent return, the work must be completed in a little time minimizing surprises. Renovating is not only about bringing systems up to standard and the right finishes, but can involve complex operations, such as dividing up properties, land or buildings and changing the intended use.

Step 3: sale or rent

The culmination of a real estate transaction is to profit from the purchased and renovated property, but also to redevelop and beautify a property or an entire urban area. So-called house flipping, or real estate flipping , is the strategy whereby the investment ends with a sale. The profit lies in the difference between the sale price and the purchase price, in addition to renovation costs, taxes and advice. As an alternative to selling, you can earn rental income from the property.

>> Do you want to start your first real estate transaction? Contact us!

How to make money from a real estate transaction: the rules to follow

And here we are at the heart of the matter. The precautions for completing a real estate transaction mainly concern attitude, attention to crucial aspects, and some good practices. Here is what you need to do to make your real estate investment profitable.

 

1. Start with a simple real estate operation

Earlier we talked about dividing up property and large floor spaces. However, if you are a beginner, it is better to start with a simple real estate transaction. Maybe your return will be small, but you will get a feel for the sector and gain confidence in its dynamics. When you are able to better master the technical, bureaucratic and relational aspects, you can start investing with greater confidence in more complex transactions and therefore more profitable ones also.

2. Buy in an area where there is a vibrant real estate market

The context where the property is located can make a difference in the sale, so you have to choose well. Focus on cities and areas where there is a vibrant real estate market: to know which ones are vibrant, pay attention to statistics made available on the Internet. Try to figure out how many real estate transactions take place annually in these areas, and related fluctuations of the global and domestic market. Next, ask yourself a few questions. Do homes remain unsold or is there dynamism? How much competition in terms of real estate agencies is there in the area? What are the average prices per square metre?

3. Stayed detached 

Although this sector requires a lot of enthusiasm, during a real estate transaction you have to think in a neutral and detached way. Making decisions in the wake of enthusiasm may cause you to make bad choices. The answer is to look at the numbers, i.e. the objective data that point you in the right direction. For the same reason, you have to leave personal taste aside. You may love big country houses, but if the market is leaning towards one-bedroom apartments just outside the city, it is better to follow the most profitable trend with data at hand.

4. See the opportunities in problems

Choose properties that can truly benefit from a renovation in terms of sale. Depending on your renovation skills, you may decide to solve different degrees of criticality: from a simple redistribution of the interior space to the rebuilding of the foundations. There is no fixed rule, the important thing is that you are knowledgeable about your project.

5. Consider bargaining important

As they say, the real deal is made at the time of the purchase. Since you will have to bear the renovation costs, make sure you buy at a really good price. This is where the ability to find the ‘right’ property and the ‘right’ seller for your transaction comes in, by mapping the territory. Certainly, bargaining power will also play a role in concluding the real estate transaction in the best possible way.

6. Choose only fast real estate transactions

The faster the transaction the faster you make a profit. The best investments are those that are completed within a few months, or at least within a year. Clearly, these timeframes apply to minor transactions. If you want to invest in more complex transactions, the timeframe will also vary accordingly.

7. Be willing to say no

Don’t be afraid to turn down a deal. Saying yes at all costs, just because you see a prospect of making money, is reckless. Remember that numbers say a lot: if they are not on your side, don’t go out of your way to make them balance. Rather, take a step back and look for a real estate transaction that is really profitable.

8. Keep your focus on your objective

Throughout your real estate transaction, keep focussing on your objective. Every step is important: bargaining for the purchase, the renovation work, the sales process, your gain at the end. In order to achieve your goal, do not consider these steps as ‘watertight compartments’, but always consider them as a whole.

9. Seize the opportunity to beautify an urban area

Real estate transactions involve properties in need of redevelopment, i.e., dilapidated, old or in need of work. Their renovation is an added value that has a positive impact on the community and the area where they are located. Investing in real estate gives you the chance to really participate in urban redevelopment, beautifying a property, and thus enhancing the whole area where it is located, also from an aesthetic point of view.

10. Don’t do everything on your own

And finally, the most important tip: get help! As you have seen, a real estate transaction involves a lot of knowledge and skills. If you are enthusiastic about real estate, the best way to stem the pitfalls and make a real profit is to invest with a company like MA Living.

Our core business is knowledgeable and high-yielding real estate investments. Aside from problems, we save you from worrying and wasting time, because we look after every aspect of a real estate transaction, from choosing a property to selling it and even renovating it. Investing in real estate flipping with us guarantees you a sure, sizeable and quick profit.

>> Do you want to invest in real estate transactions but don’t know where to start? Let’s talk together!