As I work with a lot of home buyers and sellers, I can constantly see the effect of the HGTV network and the internet. These are great forums and buyers and sellers are coming to the table much better informed than they were 5 to 10 years ago. My word of caution to you is to realize that real estate, like many economic issues, is very geographically specific. It is true that there are general trends that affect everyone, such as tighter credit criteria, more foreclosures, lower housing prices and lower interest rates, that still varies greatly from one locale to another. When I have someone come into the Fayetteville market and expect to be able to buy a foreclosure at 1/2 the asking price, because that is the way that it happens on television, I have to explain to them that is not the reality in our market. Also, as I was getting ready for work this morning, I had HGTV on (yes, I love their shows), but the couple trying to sell their home and discussing their options had a calendar hanging on their wall for 2010, three years ago. A lot changes in three years and from place to place. So my advice to you is to learn what you can from television and the internet, but find a very good real estate agent that you trust and then let them guide you through the process. They are the expert in your local market and they will be able to give you the best advice.
As we have more short sales, REO’s and Foreclosures come on the market (sadly), there will be more of a need for Realtors to understand the process to market and close the deal on these properties. The process from offer to close is very different from a traditional home buying process and can be different from case to case. At this point, I am trying to learn everything that I can about the process so that I can provide the best service to my investor clients. I would really like to hear from some investors that have been in the business for a while about what they need and expect from a realtor. Also, I would like to hear from other realtors that are specializing in this field with any advice that they might have. I am just trying to position myself to provide the best service that I can to my investor clients. Any response and suggestions would be greatly appreciated. Thank you in advance.
A lot of factors go into choosing the investment property. We are back to the previous post where we discussed the purpose of your investment, flipping or rental. As in any real estate transaction, location is key. So knowing what you intend to do with the property helps you to determine if the location is conducive to renting or selling. Location will also help determine the selling price or the monthly rental that you can demand. Have a well thought out plan. You need to decide how much you can afford to spend. You also need to understand that “investing” does not necessarily mean that you are buying short sales or foreclosures. There are a lot of good buys out there by owner. You need to determine if you are going to rent/sell, how much cash you can spend and how much you want to finance. Normally on a foreclosure, you will be required to put a 25% – 30% down payment in cash. Then you have to figure in the cost of fixing and rehabing the house. So your equation is going to be cash down payment + amount financed + $ amount of repairs has to at least equal the value of the house when you finish if you are going to rent. If you are going to sell, that final amount has to be less than the sale price for you to make a profit. So purpose, location, price, repairs and potential income are the main factors in your decision to purchase that investment property. Let me know if I left anything out of my list. Are there other factors that you are going to consider?