Published & Updated as on - 2010-03-03
The following collection of real estate investing
tips will probably have a few things that you already know. There will be
a few you haven’t heard before as well, and in any case, we sometimes need to
be reminded of what we know.
1.
Find an agent with the right experience. When selling real estate, drive around
and see what else is for sale in the same area. Look particularly at the name
of the agents on the signs. The agent whose name shows up the most in your
neighborhood will likely know best how to price and market your property. You
can also do this by looking through real estate guides to find those agents who
are either active in your area, or with your type of property.
2. Make low
offers correctly. When making a low offer that may offend a seller, let him
know that it isn’t personal, that this is just what you need to make the deal
work for you. You can include a list of concerns or of things that you will
have to repair, to justify the lower price. If you have a choice in a situation
like this, it may be better to let the agent present the offer without you. It
can be tough for a seller to hear you say anything bad about his property in
person. A list of concerns is less personal, and less likely to offend him –
which makes it more likely that he’ll seriously consider your offer.
3. Look for
“extra” opportunities. When flipping a house, you might normally look for fixer
uppers that can simply be “put into good shape” and sold for a decent profit.
But if there are “extra” opportunities that other investors aren’t seeing, you
can make even more. These are things like a full basement that can be converted
into living space, or attic space that can be made into a bedroom or office, or
an extra lot that can be split off and sold without reducing the value of the
home much.
4.
What to do when rentals won’t produce cash flow. People often buy rental
houses, duplexes, and even four-plexes for homes, thinking they are “investing”
as well. They pay according to personal values, so these properties can be
priced well beyond where they would produce cash flow. Apartment buildings, on
the other hand, are priced according to one thing more than anything else: net
income. The lesson? When you can’t make cash flow with small rental properties,
think bigger.
5.
How to find motivated sellers. Real estate investors will often talk about the
importance of “motivated sellers,” but how do you find them? When searching
newspaper classified advertisement, pay attention to the wording. “Need to
sell,” “Must sell,” and “Will look at all offers,” are the usual indicators,
but you can look at the rental ads too. “Must have a good job,” may indicate a
landlord who is tired of tenants and ready to sell. Searching county records
for out-of-state owners is another way.
6. Don’t rely on appreciation. If
you are planning on rising real estate values as your primary way to profit,
you’re speculating, not investing. Recent drops in values in many areas show
the flaw in this strategy, but also keep in mind that transaction costs can be
up to 10% of the sales price, so you have to have a big increase in value just
to break even. Enjoy any appreciation as a bonus, but buy based on the cash
flow, a plan to increase the value (fix and flip), or some other
well-thought-out plan for profit. This may be the most important of these real
estate investing tips.
Source: realty.maadhyam.org
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