Insiders Secrets for Buying an Investment Property Series
As real estate investing becomes more and more popular, it becomes more and more difficult to find deals that are worth while. Even terrible deals can get snatched up quickly, because most people generally have no idea what makes a good deal.
Because of the sheer quantity of properties and the number of competitors, you need to be both fast and smart. Focus on these four tips to avoid overwhelm and take action.
Quickly Screen Out the Duds
Learning to quickly screen out properties that aren’t good enough will save you time so you can focus on the small percentage that will be worth pursuing. So which properties make the best rentals?
When looking at single-family properties, you’ll find that 3-4 bedrooms attract long-term tenants, which cut down on your vacancy expenses. If you’re looking for a multi-family property, two-bedroom apartments are incredibly common. You’ll generally find more transient tenants and higher turnover with studio/one-bedroom apartments.
Stable tenants also need a place to park their vehicles and their things. Off-street parking (a driveway, carport, or garage) is something nearly all great tenants prefer. Garages are great for storage, and many carports have dedicated storage sheds to meet that need. Tenants accumulate a lot of stuff, and need somewhere to store it just like anyone else, so look for properties with this feature.
Focus on Distressed
Homes that have some kind of a “problem” are the ones that 90 percent of homebuyers out there are avoiding, so focusing in on those is going to be your best chance for a deal. Issues found in distressed properties drive buyers away, clearing out much of the competition. Look for issues like these:
- The Bigfoot Smell
- The Hidden Third Bedroom
- Ugly Countertops and Cabinets
- The Bad Roof
- Jungle Landscaping
- Lots of Junk
Of course, with problems come risks. Make sure you know the full nature of each of these issues and include an accurate budget to fix them when you are running your numbers.
Work When No One Else Is Working
Make it your goal to submit offers when the competition is relaxing. Offering on weekends, holidays and especially at the end of the year can be the best times to find deals. During the holidays and end of the year, most people are working half as hard as usual. Meanwhile, banks are in a hurry to unload their properties before the new year and properties are sitting on the market longer since everyone is busy enjoying their downtime.
Make Lots of Offers and Fail Often
You are playing a numbers game. Because most properties you submit an offer on will not work out, you need to offer often and fail often. Many wise investors will feel that if they get more than one in ten offers accepted, they are likely offering too much. The ratio may be different for you, but the concept is solid: Don’t be afraid to submit a lot of offers.
Everyone wants a good deal, so you’ll never find a lack of competition as a real estate investor. This can often be overwhelming, but focus on the 4 things we’ve discussed here. And above all: Be fast, Be Smart and Be Very Active.
Next up in our Insiders Secrets for Buying an Investment Property series is – Frequent Questions Answered. If you have a question, we’ve likely heard it before and will go over it next week!
Parker Properties, Inc.
With a background in property management, I know which homes make the best investments and excel at managing those properties for you after we close. My meticulous eye and high standards are applied to every aspect of caring for your home & your investment.
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1192 Draper Parkway #154
Draper, Utah 84020
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