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Real Estate Investing 101:
Finding the Deal
Real estate investing 101 lesson. Finding the deal is probably the most important part of the whole real estate investing aspect. Because you have to sort through many properties in order to find a good one - where do you start?
I am always on the lookout to find another investment property. Since I just closed on the sale of my last property which left us with a good profit and a lot of new knowledge I am eager to get going on another deal.
When I go through my goal setting routine every year and every month I figure out where I am in relation to where I want to be. So depending on what your goals are you might be looking for your first property or your next one.
One thing you want to look ahead is the time of the year. A real estate investing 101 fact is that real estate activity lowers dramatically during the end of year holidays so you don’t want to get caught with an empty house come November. It is not the end of the world if you do but just be aware of what is ahead and be prepared.
So right now I am using all my contacts, networks, educationand resources to find a great deal.
As you probably are aware foreclosures are at an all-time high and they are still going up . Real estate investing 101 rule is to search for opportunities to buy at a discount and there has never been a better opportunity to do that.
However even at times like this finding a deal might be a challenge. I have gone through periods were I have looked at twenty properties, made offers on nine of them and haven’t gotten a single one accepted. Sometimes my offers get beat by people offering substantially more than I am on these foreclosed homes.
If this happens to you be aware of some of the possible reasons:
- The word is out that there are great deals out there. We have gotten past the fear stage and people are realizing that this is a great time to buy at a reduced price.
- On that same line of thinking people think that anything with the word “foreclosure” on it is a great deal and they are making offers at full bank asking price.
- There is more credit available now than there was in 2009. Its not as available as it was a back in 2006 but it’s definitely better than when the credit market froze in 2009.
- In the summer time you might also be competing against retail buyers (families looking for a house to live in) and they need to find something before school gets started.
- There are some serious government incentives to buy foreclosures. These are mostly for owner-occupants and first-time homebuyers so there are a lot of people wanting to get in on this.
- Banks are more willing to deal. When 6 months ago they were not willing to sell a house for much less than what it had been foreclosed for, now they realize that their foreclosed inventory is increasing AND the government might not bail them out. So they are willing to sell these houses at a 20-30% discount from market value pretty easily. But, I am looking for a 50-60% discount.
Real Estate Investing 101- It’s a numbers game…
In real estate you got to look at a lot of ugly ducklings before you find the swan. From different sources I have learned from I’ve heard things like “you got to look at 100 houses before you find a good deal…” or “you have to make a lot of offers”. I just always thought that was all approximations
In the meantime I got to keep looking and making offers. Here are a couple of strategies I have used that can help you find a good deal:
- All my searches start online. If you have a full-time job starting your search online is very efficient and allows you to narrow down your selection without having to drive a single mile. When looking for properties in specific areas this will allow you to target your search to specific cities or zip codes. I use the MLS, local brokerage sites, county tax records, Zillow, HUD and others for this.
- Define your criteria and then contact several real estate agents that understand real estate investing and let them know what you are looking for and that you are ready to buy (make sure you are).
- Contact wholesalers (people that specifically find investment properties) let them know of your criteria.
- Make a lot of offers. Set a goal to make a certain amount of offers every week.
- Broaden your search area or modify it if it will still meet your investment goals. My area of interest has turned out to be pretty competitive.
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