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Improving Your Investment Property Profits


Investment Property

Investment Property Costs

If you want to buy an investment property, you have to be willing to spend money. You stand a very good chance of making it back later, of course, but you have to learn the best way to turn the property from a money-loser into a money-winner. Fortunately, keeping a simple factor in mind can change the way you look at these properties as well as your investment choices.

The Cost of Holding an Investment Property

Most would-be investors will tell you that the key to making money off of an investment property is to buy low and to sell high. What most will not tell you, though, is that speed is often more important than your potential profit. Investment properties usually have three major cost sets. The initial cost is related to the actual purchase of the property—the initial investment. Next is the cost to rehabilitate the property. What most forget, though, is the third cost—the holding costs. Holding costs are what you pay when your investment property sits on the market. This might mean unsold months for those looking to flip a home, or it might mean periods without renters for those looking to rent out a unit. What is important to remember, though, is that holding costs constitute the money that you lose while the house is not turning a profit.

If you want to invest in property, you need to make sure that it is desirable enough to avoid holding costs. This might mean investing in something that will turn less of a profit, but will do so more quickly. If you are willing to take the time to find those properties that can turn a smaller profit in a faster amount of time, you will still end up making more from your investment property.

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