|
|
Buy Income Property |
|
|
How to Find an Investment Property
Hire a Real Estate Agent - Hiring a real estate agent to buy a property doesn't cost you any money but gives you lots of help and grants you access to lots of useful information. It's true that you don't need to hire a real estate agent to buy a house, but unless you are buying a For Sale By Owner property, it is not going to cost you much money. That's because the seller pays all of the real estate agents' fees (typically 6%, 3% for the selling agent and 3% for the buying agent). Here are the benefits you can gain by hiring a real estate agent: · The agent will sort through all of the houses on the market and find the best one's for you to look at. This saves you a lot of time and may help you find houses you would otherwise miss. · The agent has access to all kinds of information about previous home sales, current selling prices, and knows the hottest markets. · The agent has all the real estate forms you'll need to make an offer and close the deal. They will also help negotiate on your behalf and will coordinate the work that takes place between the seller, title agent and possibly even your loan agent. · The agent has been through this process many times before, so they will be able to guide you and give you advice based on years of experience. · Despite all the great things that a real estate agent can do, don't ever let the responsibility of buying a property fall on them. Make sure you remain proactive in the process, do the cash flow analyses yourself, and question every bit of advice they give you. Search and Analyze Listings - Look at as many property listings as you can. Visit the websites of companies that represent your area (realtor.com for example). Most real estate agent sites list not only the properties that they are selling, but also list all of the properties that are listed on the MLS (multiple listings service). That covers about 80% of the market. Most of the other listings can be found by going to the For Sale By Owner site for your local area. Keep up to date on these listings and you will get a better understanding of the market in which you are searching. You'll learn which neighborhoods are more expensive, how prices are trending, and you'll get expectations of how much you'll need to spend to buy your investment property. Use the listings to compute estimated mortgage payments and rental income that will later be used in your financial analysis of which properties make the best prospects. Look at as Many Properties as Possible - Visit, in person, as many properties as you can. Even if you are not that interested in the property, visit it anyway. The more properties you see, the more you will learn about valuation and the more you will know when you find the right property. Look for the pros and cons of each property, and keep mental notes about what it is you liked and didn't like. This will help you form opinions on future properties. Get Your Real Estate License (can save money) - If you plan on investing in a lot of property over your lifetime, consider getting your real estate or broker's license. Not only will you learn more about real estate, but you'll save money on commissions. In fact, by being your own agent, you can save 3% of each transaction you participate in (6% if you represent both the buyer and seller). The downside of doing this is the cost of getting the license. You'll need to be sponsored by a broker or a real estate company and work for them for at least a year (typically) before getting your independent broker's license. You'll also need to spend 40+ hours in a classroom and pass one or more state and federal exams. Find Properties That are NOT on the Market - By using public records, word of mouth, and simply knocking on people's doors you can create your own real estate leads. The good thing about these properties is that there are not very many people pursuing them, so in essence the competition is reduced and therefore the demand is lowered, meaning you can likely get a better price or more favorable deal terms. The best deals on houses are found in these types of properties. Also, property owners of these types of houses are more open to creative deal structuring. Some examples of ways to find these properties include: · Look at the list of owners that are delinquent on their property taxes and then offer to buy their place and rent it back to them. · Use public records (most are available online) to find out how much homes sold for previously. Find some homes with a lot of equity in them (where the potential seller stands to gain) and then contact the owner about selling. · Use word of mouth, including mailings, posters and newspaper ads, to let people know that you are willing to buy their house. You'll often find motivated / desperate sellers that are willing to sell at very favorable rates. · Look into the foreclosure auctions in your area. They differ dramatically depending on your location, but in some areas (not that many) you can find good deals this way.
|
||
