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Our subject shall include only residential properties. To begin with, we shall discuss single family houses.
Many couples buy a house to live in for a few years, until it has appreciated in value, then they put it on the market to reap a profit. Actually, the place will sell for more than they paid for it, but it has not appreciated in value. To be factual, the dollar has depreciated in value, and it requires more dollars to do business. They will become painfully aware of that, when they prepare to buy a replacement.
Other investors buy houses at advantageous prices and, after making improvements, they put them on the market. There have been many successes in both methods. However, the first one involves too much time to add up to important money.
The types of houses to which I have been referring are all previously owned places. The older they are, the more owners they have had.
It is presumed that each owner has sold at a profit and paid a real estate commission. Thus each selling price has been greater than the last, even though the house has been deteriorating with each passing day. There is no way to stop wear on plumbing, heating, electrical, air conditioning or even wood, and replacements must be made, in time.
Another example of costs is real estate commissions. If a house has been sold five times at six-percent commission, there is an item of approximately thirty percent that has been added to the cost of the property, without any improvement in value.
This book will not be based on used properties. It will deal only with brand new, never occupied houses. I am sure you will agree that you are in a better position if you have an investment in a spanking new property, rather than one which has been sold a half dozen times or more. You have acquired the new one at a wholesale price and there has not been as much as one real estate commission to add to its cost.
Please understand that I do not wish to imply there is no profit to be made in handling used properties. However, the advantages are so much greater from confining oneself to new residences, they are not in the same category.
As is the case with most advantages, they are attained by careful planning and intelligent direction, with a minimum of risk. Since my method of operation entails building one's own properties or having them built by others, I may engender some doubt in the minds of my more timid readers. The remainder of the book will be devoted to all of the steps necessary to acquire new properties and dispose of them, profitably.
Construction of a house involves several phases, which I shall outline below and discuss later.
I shall devote a chapter or two to each subject. This is the most important segment of the book. It may be used beneficially by someone who wishes to build one single family home in which to live, or one who desires to enter the real estate investment field.
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Copyright ©1995 Robert A. MacDonald,
All Rights Reserved.
Last revised: May 10, 1998.