Making Money with Real Estate Trading

Real estate trading has become one of the most well-known methods for investing in real estate in Florida and in the entire United States.

The practice has become favored both by regular traders who exchange properties with other local Florida-based investors and those interested in selling and purchasing homes or lots online.

What Is Real Estate Trading?

To put it simply, real estate trading is a type of arrangement that would require you to sell a property at the same time as buying another one from the person you are selling to. This is called a simultaneous-sale approach.  It is the most common type of real estate trading and has become a very attractive investment option after 2006, when the real estate market was in a state of deterioration.

In a simultaneous-sale trading agreement, it is very important for both property owners to be on the same page: either both sell their properties or neither.

While buying and selling properties this way can lead to significant profit, there is also a tax benefit that can be gained, as real estate trading falls under the 1031 exchange loophole which makes it possible for investors to make the trade without having to pay capital gain taxes.

Risks and Potential Profit

The biggest risk involved with this type of investment is that you might not be able to cover the expense on a future purchase after having sold your old one.

Real estate traders have to keep a constant eye on their finances in order to make sure they can cover anything from mortgage payments to light bills while they’re trying to sell a property and on whether or not they can achieve a profit.

While it is always best to sell and exchange houses worth more than $200,000, some investors have also managed to make a fortune over time by trading inexpensive lots that require only minimal maintenance expenses.

Online Trading

Online trading has become a real trend in the past couple of years, as more and more investors are trying to make a quicker profit by marketing their properties on the internet.

Websites where you can post pictures, details and prices for one or more properties can get the word out that you are looking to trade to virtually all of Florida in a matter of minutes, and, with other advertising methods, such as printed ads and online classified ads, you can quickly find a viable offer.