Real estate investing can bring you great wealth, as many millionaires can attest. And while it has more risk than, say, investing in stocks, there’s also the potential for a much greater return on your investment – if you know what you are doing. Right now, although prices are not as steep as they have been the last couple of years, deeply discounted properties are still scarce. So here are 7 agent tips for investment buyers.
1. Think Outside the Conventional Real Estate Box
As an investor, you first have to find the properties you want at the price you need. The unconventional route is often the best here. So in this first of my agent tips for investment buyers, I advise looking beyond and outside of traditional listings.
Many landlords looking to sell don’t list their properties so as not to upset tenants, which means many properties move quietly off the market. Some agents even recommend going around neighborhoods and knocking on doors to find owners of likely properties who are thinking about selling.
2. Be Quick With Cash
Speed is often king in real estate investing. And so is cash. If you act fast with cash in your hand, you’ll have the advantage. Agents recommend making an offer within 24 hours of a property’s coming on the market. And even if yours is not the first offer, a cash offer will do much to sweeten the deal for the seller. Don’t be afraid to make an offer! Once you determine the price that makes sense for the return you are looking to see, submit it and STAND FIRM in that number. The worst the seller can do is say no. The worst you can do as a a buyer is go under contract on a deal where the numbers don’t make sense. BE OKAY WALKING AWAY!
3. Consider Tear-Downs
Agent tips for investment buyers absolutely must include ideas on where and how to find deeply discounted properties. Accordingly, then, be sure to consider tear-downs. If you find a run-down home in a fairly decent area, you may be able to sell it to a developer to be torn down. This way, you turn a quick profit with little effort. One man’s trash is another man’s treasure.
4. Don’t Overlook “Undesirable” Properties
This tip runs counter to what some advise. And that is . . . don’t avoid or overlook those seemingly undesirable properties or those that are heavy-duty fixer-uppers. They may turn out to be a diamond in the rough, and you likely won’t have much competition from other investors. If the neighborhood is decent, there is massive potential. Don’t discount sweat equity! Put in the work others don’t want to. It could pay off big time in the long run.
5. Cast a Wider Net
While I recommend investing in/around the area you live if you are just starting out, don’t totally narrow your focus. Be sure to look beyond your immediate area for potential investment properties, especially if you live in an area where prices are high. In casting this wider net, you should focus on places that are growing, but still have a good amount of lower-priced inventory. Don’t know what area to search? No problem. There are several websites that break down pertinent data points that will show you if it is an area worth investing in. A key data point I look at is unemployment and population trends. Do you see steady growth over the last ten years? Numbers don’t lie and they will allow you to make informed decisions about potential properties beyond your local area. So don’t be afraid to search other cities and other states.
6. Make Connections
Connections and networking are as important in the real estate investing business as in any other. You can learn new strategies and methods from other investors in your area, and they can connect you with other important industry players – appraisers, banks, contractors, and agents. A lot of Facebook groups also provide invaluable information. Get plugged in and engage. These groups are chock full of investors that are happy to connect and help you work through a deal you are considering. The more people you know, the better equipped you’ll be able to succeed in the investing game.
7. Consider a Property Management Company
The last of the agent tips for investment buyers could be the most important for some investors involved with rental property. Some people just aren’t cut out to be landlords. So if you can’t or don’t want to deal the all the landlording hassles, consider using a property management company. Hear me when I say, GOOD MANAGEMENT IS CRUCIAL. This is an investment that requires detailed oversight, especially in the beginning. It doesn’t matter how good the deal is, if it is not properly managed it could end up costing you big time. Little side note: poorly managed properties are my FAVORITE to find as an investor. All it takes is better management and a little sweat equity to get them up and running and they yield great returns.
With my agent tips for investment buyers, you should be able to skirt some of the pitfalls and find the investing bargains you need. Also, keep in mind that a good agent can be an invaluable asset and sometimes a necessary partner.