Each new investor is ready to dive head first into buying real estate – no questions asked. It usually happens like this because someone sits down and watches their favorite house flipping show… and then they set out to start investing in property because the experts make it look so darn easy. Can you see how this can be a real recipe for disaster?
When investing in property, it makes no difference what kind of property you are looking for… all the same basic rules apply. If you follow them, you will come away with the perfect find every time.
Whether you are looking for your 100th investment property or your very first home, use these 5 basic rules to ensure that your deal goes through smoothly, accurately and fairly…
Gather All Property Information
When you fall in love with a house, you have to learn to think with your head and not just your heart. Don’t shell out major bucks for something that just isn’t worth your investment. What cosmetic work would the home need? Are there any serious issues with the home (foundation, electrical, etc.) Is the price of the home more than you really have to spend? If you go over these questions and answer any negatively, go ahead and move on. There are plenty of homes out there and you are going to fall in love with another one too.
Gauge the Seller’s Motivation
Often times there is a BIG difference in property worth when it comes to buyer and seller. If you think the price is too high, you can try offering all the data and figures in the world, but in most cases, these sellers still won’t budge. This is another instance of knowing when it is time to move on. It is, however, ok to touch base with the seller at a later date to make sure they still have the same stance on selling as they had before.
How you will plan to finance your purchase will change the effectiveness of your offer. For instance, if you had hard cash you could offer money on the spot. Meanwhile, if you have to wait for lender approval and forms, someone else could take the house out from beneath you.
You will want to base your offer on three things:
– Seller motivation
– Market Demand
– Comparable Price Listings
If a property has little demand, come in at a low number. However, if a property is in high demand, offer as close to asking price as possible.
An accepted offer is just part of the process of buying real estate. You will need to get the home inspected no matter what form of payment you have chosen. Even the most seasoned contractor can miss something. It you skip out on the inspection, you are only opening yourself up to problems. You will also want to find an attorney who specializes in real estate. They can make sure that no one drops the ball.
Never enter into investing lightly. Take time to know your stuff… when you do. You will come away with a deal that is not only fair, but a downright steal.