Many folks dream of becoming real estate investors, but not everyone has what it takes. If you’re dreaming of becoming an investor, here are several important questions to consider, long before you buy your first investment property:
1) Why would a homeowner sell a house at a bargain price?
Many things happen in people’s lives that make their home suddenly become a burden. Loss of income, divorce, or illness are the most common, but sometimes a homeowner dies, leaving a home that none of their heirs wants. In any case, the home has become a problem, which is where you, as an investor, come in. The homeowners, or the heirs, have a problem, and you must find a way to offer a solution.
2) What types of houses should you look for?
Besides being owned by someone who no longer wants or can afford to stay in a property, you want to find a home that’s only tired, and not in need of structural work in order to favorably compete with similar houses on the market. We call that type of house a “doghouse.”
3) How do you find doghouses?
Your real estate agent can scan the MLS listings, looking for fixer-uppers, handyman specials, or as-is houses. You can also find similar properties yourself, using the local newspaper or shopper.
4) Should you try to close quickly?
This is an important step in becoming successful, because beleaguered sellers will almost always be in need of money in as short a time as possible. Get yourself prequalified and preapproved for a loan, so you can close on the property quickly. Being able to let sellers know they’ll get paid fast will consistently net you more houses than your competition.
5) How do you flip houses fast?
Find ugly homes, in good neighborhoods, that need as little work as possible. Clean them up, paint them inside and out, and install a neutral shade of new carpet, and you should be able to flip the home in a short amount of time. Always keep your limitations in mind. Hiring professionals for repairs will cut into your profit margin.
Asking yourself these questions will help get you started in your real estate investment career, and keeping these answers in mind at all times will keep you from making costly mistakes as you buy and sell investment properties