Foreclosures and bank REOs are pulling a new wave of novice investors into the market, some of whom are just a little clueless.They see the price and they say, wow! I can buy that house and turn it
Real Estate Investment Buying Tips
Dated: February 2 2022
Foreclosures and bank REOs are pulling a new wave of novice investors into the market, some of whom are just a little clueless.
They see the price and they say, wow! I can buy that house and turn it into a rental. But they don't understand the local market, they don't understand landlording, and don't even necessarily visit the property.
What are some of the key rules for freshman class investors?
Number one: Due diligence is never optional. You've got to understand the local market - and that includes not just where prices are headed, but specific market demand for rental real estate in this price segment, and even the local government's plans for the area where you're thinking of buying.
Number two: Buy with a written plan - that's right, just like the large professional investors use, with an entry strategy and an exit strategy. How long are you going to hold onto the property, how much will it earn you during your period of holding?
And what's the endgame - a sale to another investor? Conversion to condos? Tear it down and build something that's closer to the underlying real estate's highest and best use?
Write it all down, that way you can analyze it better.
Number three: Calculate the actual costs of the property in advance - not just the bargain basement price, but how much you'll need to fix it and feed it - the management costs, rental commissions, vacancy costs, taxes, to name just a few.
If you don't know these things up front you are flying blind. And there are few good surprises in real estate.
Helping clients with their Real Estate needs; buying or selling.AREAS OF EXPERTISESuccessfully listing and selling residential real estate in the East Bay since 1985.Utilizing different marketing tech....