Most people will say they make money in real estate when they sell the home. But that is when you cash in your investment. You made the money or created the profit potential when you purchased the home. Purchasing is when you have control over which home had the best potential to increase in value or what improvements to make to maximize it’s potential.
When buying a home always focus on your exit strategy. Certainly the home needs to work for you and your family but to make money on it you want to maximize the appreciation potential. I was showing homes to a new buyer and told them, “I just met you and as much as I am trying to understand what works for you in a home you don’t need me to walk thru and tell you if the home is right for you. What I can do is tell you what your options are in your price range and I can tell you how the next buyer will view your home”.
Here are a few things to consider to maximize your profit potential;
- Quality of the finishes. If building new select appropriate finishes for your market so you can effectively compete when it is time to sell. If you are buying a home needing updating have your agent help you focus on what needs to truly be done so you add value to your home.
- The layout of the home. The layout has to meet the needs of the market place. Not having enough bedrooms or rooms that are too small laid out will kill the homes appreciation potential. You may not need that 4th bedroom but if the market dictates 4 bedroom homes are the norm you may be better of with it even if you never use it.
- Location is important since it sets you apart from other homes you may be competing with. When possible select the premium location even at a premium price.