Important Real Estate Investing Tips To Keep In Mind Prior to Buying a Property

Posted by Brett Carman on 3/5/2008 at 8:43 AM
Posted in Real Estate

Daily I receive calls from prospective clients who are 1^st time real estate home investors looking to capitalize on a slumping real estate market. And, for the most part, they always have the same 7 delusions about how to go about making money in the real estate game. It’s like they all were lying awake watching the same infomercial at 2 o’clock in the morning on their couches. I will discuss these “delusions” separately over the coming weeks individually as each one deserves it’s own detailed response. The end result will be to show each reader what to look for and how to go about investing differently than everyone else.

Delusion #1 “I want you to find me properties priced 30-40% below market value. We‘ll buy them cheap and flip them for a nice profit”

My response to this is “Well, if they are having to reduce them that low, then what we are paying IS going to be market price.” Market value is not determined by how much below the published tax assessment is, but rather what someone is willing to pay. Now, I am not saying that there aren’t deals to be had out there, just know that with the current glut of inventory on the market, a flip is not a sure-thing.

You will be competing with the many other homes in the area that are likely priced much lower. When you factor in your transaction costs both to buy and then sell plus any taxable gain, you may find that there wasn’t as much profit in the deal as what you originally thought.

One of the best real estate investing tips I can give you today is to build intelligent plan around the concept of buy and hold. Such a plan can throw off a 20-25% positive cash flow over and above expenses (even when financed). You must know what the rental demand and area rental rates are in order to estimate your likely vacancy period of time and projected income.

Make sure you have the right real estate investment training and the right mind set when you look for investment properties. Do not buy the property if the analysis shows to be a break even. You are in business to make money, not spend your time and resources for nothing, right?

Brett Carman is a seasoned veteran in the real estate industry for over 17 years. He holds active licenses in real estate, mortgage finance, and property & casualty insurance. Offering a one-stop shop for his residential and commercial clients, he strives to not only educate, but streamline the real estate acquisition process. With a long and proven track record of success, he is uniquely qualified and has a passion for helping people achieve their goals in real estate.

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4 Comments Post a comment

Posted by member1729723 on 03/06/2008 2:15 AM

For anyone investing in property, do not overspend. Often the market is set by someone with too much money and not enough time to negotiate, trusting the appointed agent in the proposed selling price. Above all, give the seller something in writing. I have never lost a sale.

And, no, I put all my recourses into investigating a niche market. All I have to do is find an investor. Just how does one get an idea to THE DONALD without leaking the formula?

To Donald Trump, you are going to loose out on this deal unless one of your employees has the vision and understanding of just how much income can be generated from a niche in the property market. You too, don't seem to have the time to catch a good deal.

All in all, I think you are great but, if I have to go to the UAE for financing the soon worlds largest property profit income generator, I’m sure YOU WILL FIRE YOURSELF.

Posted by member1619953 on 03/06/2008 12:29 PM

Since the Donald knocked me off my socks with his book think like a billionaire in 2007 I have been educating myself. I am now focusing on long term gain and this article confirms that I am right on track. I am getting ready to come on board and become the active player in the game!

Thanks Brett......

Posted by Business 2000 Foundation on 03/07/2008 4:18 PM

The problem is your cash-flow. Are you making payments? Is your money at risk...short...mid or long term? Don't forget about it's closing structure and tax strategies. Buy to fast...something gets missed.

Posted by member1749081 on 03/10/2008 11:10 PM

I am a complete beginner and want to learn about real estate investing. We found a great beginner property but our credit rating wasn't good enough. where do we go, how do we find unconventional financing. We have money to put down, but can't get a loan!!

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