The first important lesson for starting out in real estate investing is to know the market.

Where are you investing?

It's important to know the market in order to determine if the property in question is in fact a deal or not. For instance: Is the area seeing a lot of sales, or are the properties lingering on the market a long time? Even in a soft market, there is still the potential for profit. This is because there are always sellers. The idea is to find the motivated sellers that will really be looking to unload their house. A profit can be made in any kind of market. Being prepared and knowing all the information from the get-go is crucial to earning the full profit potential.

What features sell?

As mentioned above, regardless of the market, people will be selling and buying houses. After further investigation of the market, note which features sold the property. In the case of finding the fixer-uppers, the hot-points are the cosmetic things, nothing structural. Making structural repairs can drastically cut into any profit. Still, it's the types of things that attract buyers which need to be incorporated into an investment strategy.

Enhancements like replacing walls, plumbing, structural beams, sub-flooring, and electrical systems can certainly be done and have been done by investors. Some things to look at are condition of the house's exterior, or aluminum siding, areas that can be converted like splitting a 2-car garage into a one-car garage and an additional room, and things like odors, bad decor, and overgrown gardens.

It's important to note however, that the successful investors tend to be the ones with many years of investing under their belts; it should not be done by anyone brand-new to real estate.

The bottom line: an ugly house could be your cash cow.

Fixer-uppers are that way because they need work. Maybe the yard is overgrown and in disarray. Cosmetic repairs can be simple enough to do. Investors should embrace the garbage-filled houses, stained carpets and nasty odors. These are all things that can be easily fixed and which will turn a nice profit when complete.

Be wary of what people say.

It's good to have a second opinion before making any investment. This is especially the case if you're just starting out in real estate. The seller or agent for the seller will be biased if they really want to get rid of a property. Investors looking at these "handyman specials" need to be cautioned as the seller may be very motivated to dump their property and problems in your lap. This is why it's so important for investors to have inspectors, contractors, and plumbers in their real estate arsenal of tools: they will know if the seller or agent is on the level about the property's "downsides".

It's the alternative methods, the "thinking outside the box" that will make it possible to create an instant income stream.

BlueWaterArticles.com: - Finding the Right Property to Invest In

About the Author

Discover exactly how Sal Vannutini combined two of the easiest (yet brutally powerful) real estate investing strategies and made an insane $31,510 Profit In Just 49 Days... And How You Can Do The Same!". Visit www.FixerUpperFortunes.com.