Buying and Selling Homes For Profit

When I first started acquiring residential real estate many years ago I wasn't really thinking that I'd have to sell my own home someday. One thing I learned early in my career and still consider of paramount importance is this: I make my profit when I buy, not when I sell. Does that make sense? Striking a good deal on the purchase of a home is the critical activity that will allow me to make a profit in the future. If I don't buy the home right in the first place, there's not much chance to profit later.

It takes a while for this concept to sink in, so let's go over it a little more thoroughly in this article. While it's true that I don't receive my cash profit until I sell my own home or pay a real estate agent to help me sell it, how much I paid for the home in the first place makes all the difference. If I paid $100,000 for a home and sell it for $90,000 a few years later, I did not make a profit at all, in fact I lost $10,000 and possibly more, depending on how much I invested in the home for improvements, taxes and selling costs.

However, if I bought that same house originally for $70,000 (instead of $100,000), then I will make $20,000 profit on the sale at $90,000 when I sell my own home. My original investment in the home controls whether I profit on the sale, and in many cases these days it controls whether or not I have a home for sale at a reasonable price that is likely to attract buyers. So many homeowners are caught in a terrible squeeze right now, and their real problem started the day they bought a home for a certain price that is much higher than the market will bear at the present time.

Naturally, they could not foresee the dramatic market downturn, but just as an example, it shows how everyone, a real estate investor with many homes or a family with one home, has to think ahead in order to make a profit on the sale of a home. None of us can really afford to lose money in the real estate market.

Whether or not I do all the tasks involved to sell my own home or hire an agent to help me get it sold often depends on how much profit I expect to realize on the sale. Once again, it all depends on how much I paid for the home in the first place, as well as my expected selling price on the current market.


------

Leo Kingston and his wife Paulette own 18002sellhomes in Oklahoma City. They have been helping people sell a home fast for cash for over 20 years in the central OKC area. They offer house owners a way to quickly sell a house without the hassles of having to use banks or Realtors.