Tag: Investing in Real Estate

Investing in Real Estate: Motivated Sellers – How To Find One?

If you’ve ever read a book on real estate investing, you’ve read that the best deals come from motivated sellers. Now how do you find one?

A friend of mine told me the following story: “My wife and I were trying to keep the renters happy, the rent coming in and the house repaired – while living 2100 miles away. You bet I was motivated. We just sold our house last month, and even got a good price, but I’ll tell you a secret. We would have sold the place for… well I don’t want to stress out the buyer if he reads this. Let’s just say we would have sold it for much less.”

There’s your first clue on finding a motivated seller. If his (or her) property isn’t where he is, he’s probably ready to deal. How do you get this information? By asking. Talk to the real estate agent, the neighbors, and anyone else who might know something useful.

Here are some other things to watch for that may indicate a motivated seller.

1. Relocation. If you hear that the seller is relocating for work, ask when he will be moving. He may already be worrying about those double payments.

2. Divorce. Divorce or relationship problems create many motivated sellers. Often a house payment needed both parties, and will have to be sold quickly.

3. Financial problems. A failing business, too much debt or other financial problems often force a sale. Find out if the owner is behind on payments.

4. Tenant problems. It is easy to get tired of being a landlord. It is also common to want to get out at any reasonable price.

5. Probate. If the house is in probate, and the heirs are all waiting to get their inheritance, they may be more interested in a quick sale than a great price.

6. Up-sizing or down-sizing. Owners moving into a larger or a smaller home may already have one in mind and need to sell quickly.

More Clues For Finding A Motivated Seller

Another way to find motivated sellers is to pay attention to the wording of ads in the classifieds. Statements like, “Need to sell,” “Must sell,” and “Will look at all offers,” are good indicators. “Must have a good job,” in a rental ad may indicate a landlord that is tired of tenants and ready to sell.

Some other methods:

1. Find neglected properties. If they aren’t maintaining the property, they may be short on cash, tired of it, or out of town – all good motivators.

2. Use property tax rolls. Go to the county records, which are open to the public in most places. What you are looking for is properties that list an owner with an address far away.

3. Use timing. Just before school starts, people are motivated to get their house sold so they can get their kids enrolled in the new school where they are moving. If an apartment building has been sitting there for sale for the whole winter, the owner may be tired of the bills and ready to get it sold fast.

The bottom line is to use your eyes and ears and look for the clues. Talking to people helps a lot. However you find your motivated sellers, the next step is to motivate them even more, by giving them what they want. Start by negotiating for a fast, easy closing for them – and a good price for you. That, however, is a topic for another article.

Investing in Real Estate? Try this Strategy, Buy Property That’s Not For Sale

Buying real estate can start with a look in the newspaper, a visit to a broker, or a search online. These are all good ways to find your next investment property. You’re looking at the same properties as every other investor, so it’s not always easy to beat the competition to a great buy.

A better way to find good real estate investments is to look for properties that aren’t yet for sale, and make an offer. A friend of mine bought his first home this way. He put an ad in the paper stating what he was looking for, and soon had a call from an old couple that had been thinking about selling. He bought their place at a good price, and saved a broker’s commission.

Buying investment real estate that isn’t for sale starts with a three step search process.

First decide what you are looking for. Single family rentals or apartment buildings? Then start looking for properties that fit your criteria. Then contact the owners.

Buying Real Estate From Non-Sellers

Don’t limit yourself to “fixer-uppers” or other “problem” properties that seem more likely to have owners willing to sell. Many owners of investment real estate have thought of selling, so you can start with almost any building you like. You never know beforehand if or why a landlord is ready to call it quits. You find out by asking.

Tact is necessary here. Call the owner and tell him (or her) you’re an investor, not a broker. Let him know that you like what you see. Tell him you can have an offer ready in a week if he’s interested. If he’s not interested, thank him politely and hang up, but send him your card or a letter. Many investors have bought from owners that changed their minds.

If there is some interest, explain that you are an investor, so your offer will have to be based on your return on investment. This means you’ll need to see the books. Specifically, you’ll need to see the rent roll listing the units and what they rent for, plus current occupancy, and operating expenses for the last year.

Have a confidentiality agreement ready before you call. Let the owner know that you’ll sign it and deliver it to him before you see the books. He may not want to let the tenants know he’s thinking of selling, so inspecting the units may have to wait until you make an offer. Just make an acceptable inspection a contingency in the offer.

Why buy investment properties this way? No competition and no sales commission means you may get a better price. Also, instead of waiting for that perfect property to be listed for sale, you just find it now. Why wait until it’s for sale before buying real estate?

4 Things to Look Out For if You’re Flipping Real Estate

If you have recently purchased some real estate for investment purposes, you are in good company. Recent reports suggest that as many as 25% of these purchases are made by those who plan on using the property for investment purposes only.

What is “Flipping” Real Estate?

There are two ways to “flip” real estate. The first is by buying low (at a time when real estate prices are low) and waiting until the market gets hot and prices go up. You can then “flip” the property and make a nice profit on the increase. The other is to buy a property that needs some work, put a little elbow grease into making the repairs, spend some money sprucing up the property, and then selling it for a profit. Many contractors and handymen do quite well using this method.

However, it isn’t as easy as it sounds. If you hope to “flip” a property,  there are 4 things you must be aware of that can put a crimp in your profits.

1. Property Taxes: Keep the property for a few years and you may experience a surge in property taxes, especially if your taxes are reevaluated during that time. Some hot real estate markets have seen taxes nearly double in just 5 or 6 years.

2. Renovation Expenses: You may have purchased a “fixer upper” at a bargain rate. Once your project is complete will you be able to recover the expenses and make a profit, especially if the value of your renovated property is above those in your neighborhood? In addition, can you withstand a correction in real estate values?

3. Insurance and Mortgage Costs: You will pay more for homeowners insurance if you do not occupy the residence and you have tenants. If you are financing the property your mortgage rate will be higher as well.

4. Rental Pressures: A market saturated with rentals will mean that the rents you can charge will be less than what you had hoped to receive. In some markets you are required to get special licensing in order to be a landlord. In other markets the legal rights of tenants mean you could have a lengthy and expensive battle in ridding yourself of a bad tenant. Will the lower income levels coupled with the added expenses drag your investment down?

Of course, you can limit your risks (and costs) by doing the majority of the upgrades yourself, appealing excessive property tax increases, and finding yourself a trusted and dependable tenant. It isn’t easy flipping a home, but with a lot of luck and determination it can result in strong profits for you.

Feel free to give me a call if you need some help.

Investing in Real Estate, Yes, You Can Do It!

Investing in real estate is one of the oldest and most profitable ways to make a good part or full time income, you just need a strategy.

If you’re thinking about investing in real estate to make money, you need to first determine your financial goals. Do you need to make money quickly, invest for your children’s college fund, or build wealth for your retirement? Once you determine your financial goals, you need to decide which type of investing strategy works for you.

Investing in Real Estate – A Simple Way to Get Started if You Need Fast Cash

If you’re low on cash, get started by finding a bargain house and selling the contract to another real estate investor. Join a real estate investing club to find investors willing to pay you for finding good deals. Start slowly and make some money first to get your feet wet. The big deals will come further down the road.

Investing in Real Estate – Income Property Strategy

If you want to increase your monthly income, look for income property that returns a positive net income from month to month. Start with single family house. Look for a bargain below market value. Fix up the house to generate top rental income. Find houses that will rent for more than your mortgage payment. You may need to go out of your home area to a location that supports this type of return on your money.

You can’t pay $300,000 for a home with a mortgage of $1,500 that only rents for $1,000. You might start with a home for around $300,000 that rents for $1,750. You will need good credit to get a loan with good interest rates. In a few years, your rental income should go up. Many real estate investors enjoy thousands of dollars each month generated by income property. Check out our Renovation Financing Program to buy and fix up a home all in one loan.

Some investors don’t like dealing with tenants and prefer to make money in other real estate ventures.

Investing in Real Estate – Investment Property Strategy

If you want to make money focusing on profits, investment property offers a different strategy. Instead of worrying about rental income, look for property that you can transform and sell, or property that will appreciate significantly over time. Besides fixing a house up, you can transform a property by changing it. For example, some investors buy apartment buildings and turn them into condominiums. Many investors speculate in land and make money by holding the land until new development in the area increases the value.

Examine your financial situation along with your long term goals. You can get started by flipping properties, move onto income properties, and then make larger profits with investment properties. You might end up using a combination of all three strategies to make money investing in real estate.

Investing in Real Estate – The Most Important Part – Financing

Find a good mortgage professional that you can work with on your long term goals. Together, you can make your real estate strategy a winning strategy that will bring you great profits and great satisfaction. Feel free to contact me anytime, I’m here to help.

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