Whether you are an experienced real estate investor or looking to get into the field, there are some tried-and-true tips that can help you, or provide you with a refresher when you are struggling to find the right investment.
When someone cannot pay a mortgage payment for an extended period, the lender will ultimately repossess the home and remove the occupants. Once the home is empty, the lender lists the house for sale on the market, using a local real estate agent to list it. These listings can often be below value so the lender can sell quickly to a new owner.
In real estate, often the old adage holds true: "The early bird gets the worm."
Often, it’s not the highest offer for a property that gets accepted, it’s simply the first. Therefore, if you are looking for a great deal, be quick about it! Get a pre-approval from a bank so you can jump at any property right away and have your real estate agent set you up with automatic email alerts notifying you of any new property that hits the market. Then, don’t delay! Check it out quickly and make an offer the same day, if possible.
Conversely, another way to find great deals is to look for properties that have been on the market for a long time. Those owners are often far more willing to sell for a discount because they are tired of holding on to that property. Many times, they will have been making two mortgage payments for months (or years) and will entertain almost any offer.
One of the best tactics that real estate investors use is to look outside your multiple listing service (MLS) and instead cold call owners directly, in person or on the phone, asking them to consider selling. At any given time, a good percentage of the population will entertain that option, so why not reach out before they list the home with a real estate agent?
There are several factors that could cause a real estate investment to flop—or become highly profitable. One of the biggest is its locations, but we all know that. Other common features of rental properties that are known to be profitable include the current job market and the market within the same location as the property you are considering, low property taxes, affordable and desirable amenities and schools, average rent in the area, and the crime rate within 2 miles of the property. Another major factor is the potential for future development surrounding the investment property you are eyeballing. It’s best to get in early and see the area you bought in become more desirable!
Finally, understand that finding good deals is largely a “numbers game.” You often have to kiss a lot of frogs to find the prince!
Think of deals like of a funnel. At the top, all the leads come in, but at the bottom, only a few deals come out. Therefore, if you want more deals at the bottom, you need to improve each aspect of your funnel, including the quality and number of leads at the top.