Posts Tagged ‘real estate investing’
There are many tricks and techniques that can help improve your knowledge when it comes to dealing with investing in real estate. There are new ways and methods of doing things and handling situations that are worth learning about. Knowledge about the most recent types of financing can be of great help. However, there are six basic principles about real estate investing that you need to know about. The principles are
1 Relationship building
2 Understanding the numbers
3 Risk reduction
4 Always be prepared
5 Goal setting
6 Get educated
Investing in real estate is all about relationships and building relationships. The most valuable resources in real estate are people and the more you know about people, the more likely you are going to find good properties to buy or good buyers for your property. Knowing sellers, buyers and other investors can be of great help as these people can provide you with information, opinions and even good deals. Always take notes, ask people for their names and note it down. You never know when it will come in use. Hire a good real estate agent who will bring you many interesting listings. Knowing and understanding the relevant numbers is also very important. For example, looking at a rental property should bring income, expenses and the capitalization rate to your mind. Think of changes that will allow you to raise the income and how this change in income can affect the value. Never invest in a property on impulse as this will most probably lead to trouble. Always invest in a property once you are sure of the fact that you have understood the numbers.
Always find and use risk reduction methods. It is advisable to include inspection, financing and other contingency clauses in the offer. This is done to retrieve the deposit in case the deal fails. Before buying any property, always consider an exit strategy and formulate a backup plan. It is not wise to value real estate property based on impulses and gut feelings; always use comparables and capitalization rates to value property. It is best to buy through your limited liability company or your corporation. Always be fully prepared when investing in property because you never know when you may hear about a new and interesting property that might be up for sale. Keep a pen and paper and business cards ready at all times.
Creating goals and not wishes can not only help boost your morale, it can also help you get that interesting property that you have been dreaming about. It is good to make a plan or a schedule. Look at a fixed number of articles per week and write a certain amount of offers per month. Set goals for everything including the number of phone calls you have to make per week or the number of online listings you need to check per week. The goals you set need to be action packed as action creates force. By following your goals on a regular basis you can create habits and positive habits ultimately lead to more successful investing when it comes to real estate. There is nothing more important than education, so keep learning and using that education as a means to more effective real estate investing. Spend as much reading books and magazines and listen to tapes and CDs concerning real estate. Good information is very important and can only lead to better real estate investing.
1. Find out who offers foreclosure properties in your investment area. Contact each of the following: (a) Banks offering real estate loans. They will usually have foreclosures they want to put in the hands of ambitious people such as yourself; (b) Your County Clerk’s office where they usually have foreclosure properties listed for sale, and; (c) Federal Government offices (IRS, FHA, VA) that have foreclosure properties you can acquire at low cost.
Get all the free information from these organizations that you can. They’ll be glad to put you on their mailing list, plus they’ll supply you with a packet of their current data. Study what you receive – it could give you a quick “college education” in the foreclosure situation in your investment area.
Since there is a wide range of quality of foreclosure properties, you must develop a sense for the good vs. the bad. Do this by visiting a number of foreclosure properties offered to you. Make notes about each. Be completely frank with your notes because they’re for only your eyes – no one else’s. If a property is in awful condition, make a note of that. If a property is in superb condition, note that also. You’ll soon know the good from the bad!
2. Work with foreclosure sellers who will pay all closing costs for you while providing the needed legal counsel free. Banks often offer to pay all your closing costs while having their attorney act as your counsel. You can trust such an offer because the bank does not want the property back. Instead, the bank wants to see you successfully operating the property and making your mortgage payment on time, once a month. If you’re nervous about the bank’s attorney representing you, hire your own attorney to check the work done by the bank’s counsel.
In general, your attorney will approve the bank attorney’s work. And the fee your attorney charges you will also be small – say $100 to $300 – because no new original work is being done. Taking over foreclosures from banks can get you started in real estate on almost zero cash.
3. Learn bidding techniques before you make an actual bid for a property. You will have to bid on foreclosures offered at County Clerk sales and Federal Government (IRS, FHA, VA, etc.) sales because their rules require public open bidding. In making a bid you will usually be competing against others who also want to buy the foreclosed property that appeals to you. Since open bidding is based on raising the price of the offered item to the highest level possible, you must be careful not to over-bid by getting caught up in the give and take of the process.
4. Flip your foreclosure properties to make fast money without owning the property too long. You can of course hold onto foreclosures and rent them out. But many times you’re better off flipping foreclosures – that is, selling them for the highest price you can get, shortly after you buy the foreclosure. Why is this? Because many foreclosures will require repairs and cosmetic work before they are suitable as rentals.