Real Estate — Finding and Evaluating Property
Today, investing in Real Estate is easier and more profitable than ever. But even in a healthy market, with new tools to find and evaluate potentially profitable properties, you can lose a lot of money in a short time. To maximize the odds of winning, consider these tips...
The process of finding 'diamonds in the rough' has been revolutionized by the Internet. You can spend hours on-line finding descriptions, prices, photos, and useful legal info about properties close by or thousands of miles away. Unless you restrict yourself to FSBO (For Sale By Owner) ads on eBay, Google Base, or Windows Classifieds, though, prepare to pay realtor fees.
Visit Realtor or estate agent businesses. If you can afford it, you can obtain an MLS, a multiple listing service, and get the same information they get. In some locations, a license is required, even if you have the cash.
Even if you use the web to find a great value, be prepared to do some 'leg work'. The only way to judge properly is to visit the property and the surrounding area. Is the neighborhood maintained in a way that won't depress the selling price? While you're driving around, look for FSBO signs, For Rent signs, and talk to some of the neighbors.
The person next door, might know something about that yard that turns into a swamp after a few days of rain. Be prepared to make more than one visit, in different kinds of weather and at different times of day, if possible. Property, land and houses, look and act different in the cool of the night than they do in the heat of the day.
And the best way to check for a leaky roof is to go when it's raining — exactly the weather you don't enjoy evaluating property in. Neither will your competitor for that property. Going that one step further puts you ahead in the race. Information is power.
After the informal inspection, you can strike a contingent deal. 'Contingent', here, means dependent on a satisfactory professional inspection. Find someone experienced and reliable, even if you have to pay a little more. The price will be repaid many times over, especially if you use them regularly in the future.
Learn the craft yourself if you have time and interest, but at minimum learn at least enough to keep the inspector honest. Most are, anyway.
Review the report carefully. It's not required that everything is 100%, but every major and minor flaw should be recorded. Leaky plumbing or roofs, stained carpets, damaged walls or floors, inoperative air conditioning or heating systems, etc. Look especially for any standing water in basements, near foundations, etc.
Everything is negotiable, so there's no rule about who pays for repairs, if anybody. But information is power. Still, be realistic. Very few properties, even newly constructed ones, are perfect. If they are they're expensive enough to eliminate your profit, unless you plan to keep the investment for an extended period.