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No matter what business model you adopt, you must acquire profitable deals for successful real estate investing.
The following tips will guide you on how to narrow down on profitable deals and weed out the bad ones.
1) Fair Market Value
You must know how much a house is worth before you can make an offer to buy it. When buying houses, I try to be conservative so as not to over-estimate the value of the house.
The value shown by the county records is a good estimate in most cases. It is usually lower than comparable sales of homes sold in the area. Nonetheless in a depressed real estate market, property prices can be affected by foreclosures in local area. If you do not have access to the MLS, you might need a local realtor in your dream team to run comps for you.
2) Repair Estimates
Repair is an integral part of buying and selling houses. You must reliably estimate repairs quickly without getting too detailed. As you get experienced at looking at houses, you can estimate repairs by looking at a house in 5 to 10 minutes.
I try to over-estimate rehabilitation costs to stay safe.
3) Mortgage Balance
You cannot make an offer on the house unless you know the mortgage balance. If the offer you make cannot pay off all the outstanding debts on the property and leave a room for profit, then it is probably not the best deal for you.
If a motivated seller is not motivated enough to provide this information, you might want to move on to the next one.
4) Asking Price
If a motivated seller wants full market value for their property, they are not motivated enough for you. If a seller is looking to get full market value for their house, move on to the next deal. Unless they can allow a margin for profit, you may be better off looking for the next deal.
Sometimes motivated sellers may not know the market value of their house, and showing them your numbers may change their minds and accept your offer.
5) Is It Vacant?
This shows how much a seller is motivated. If they are making two or more mortgage payments, they must sell fast. It also indicates that you can own the property as soon as buy it.
How do you gain access to this information?
It is necessary to have a good real estate investor website to receive this information. The website should serve to convince them you are the best person to buy their property and collect the information you need right on the website.
The form should ask for as little information as possible but just enough to know whether you have a deal or not.
The less information you request, the more people will provide information through your website. This will be a big time saver because you will only talk to motivated sellers whose houses you can buy.
You can then ask for any remaining information once you talk to them on the phone.
