Whenever you purchase real estate with the intent of using it to make a profit, the process is vastly different than buying a home for your own use. While my tastes in my own house may justify spending a bit more, the sole purpose of investment properties is to run an efficient business. It can be hard to take the emotions out of the process, but you have to be able to do so in order to see success. In this piece I’ll show you a few tips for negotiating the best price of real estate investments and how to find the best deals.
The first thing you need to do is get a feel for what is going on in your local market. You can’t recognize a diamond in the rough if you have nothing to compare it to. Regularly check online listings and the MLS in your region. You will start to get an idea of what is the current norm. Also, track foreclosures separately. This category is often where you will find the best deals and you should expect lower prices as a rule for this type of sale. Once you understand what is happening in your market, you can move on to active shopping for your investment properties.
There are several things to look at when you start viewing properties that you are considering for an investment. First, you have to realize that there are often different ideal situations for investment properties that you plan to sell as opposed to those that you think are great for renting. The best pick is optimized for both scenarios and finding that can be a challenge. Do the research before signing any papers! Also, don’t be afraid to look at properties that seem less than ideal. Things like disconnected utilities or some damage can work in your favor. Just make sure that these are small things to fix. While it can cut off a significant amount of the purchasing cost, structural damage isn’t a bonus. Getting this type of problem fixed for a rental or sale can end up costing you more than it’s worth. Finally, I always try to visually assess little clues that let me know if the property is being looked at by a lot of people. If there is dust and cobwebs, the property is probably languishing and my initial offer can be lower.
Like any type of investing, successfully dealing in real estate is somewhat of a game. With investment properties, you are shooting for the lowest possible asking price. I always let the numbers speak for themselves. By knowing what is happening in the market, it’s easy for me to pick out the best properties in order to make a profit, either by renting and holding or by flipping right away.
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