As agents search for homes in unlisted sources, buyers create sellers. A wonderful part of being a real estate agent is that you get paid to search for real estate on a daily basis, and, in doing, can often stumble onto property that would be a good fit for your own collection.
Soft pricing, like we're seeing now, creates the best environment for property acquisition. The best real estate investment strategy is not to buy low and sell high, however, but to hold your properties and allow renters to pay off the loans. This can often be done quicker than most people think, especially if you buy the property at or below market value and carefully monitor the value, increasing the rent when appropriate. Also, by directing positive cash flow from your properties toward paying off the loan principle, amortization of a 15 year loan can be done in 8-10 years. This can be done with various types of properties including single-family houses, multi-family dwellings, commercial properties, or condominiums.
Real estate agents, through their access to the MLS, can easily review the "hot sheet" everyday for new listings. The following are a few tips for buying property to increase your bottom-line. You should choose properties with which you will break even or generate positive cash flow after 6 months of ownership. Avoid balloon payments of ant kind. Never get into a loan with an adjustable interest rate. Avoid neighborhoods that are not generally well-kept, homes in areas with good schools are generally good investments. Try to acquire properties within 3 hours of your home. Once properties are acquired, your goal should be growing net worth, and, after the loans
amortize, generate income. That income can then be used to speed up loan amortization for other properties with the end result being a stable of properties when you retire. Analyzing a potential property purchase is quite simple. Estimate where the income can be in about 6 months-time. Assume an expense factor of 35%. Subtract the 35% from the estimated income and what is leftover can be used to pay the loan down. Then, going backward, calculate how much of the mortgage this will pay at the current interest rate. The amount of the loan divided by the inverse percentage of your intended down payment should give you the sales price. This will be the offer you send to the listing agent. This strategy should work regardless of market, although a slow market will provide more qualifying properties.
Never buy just to turn the property, but be willing to sell in the event a property is un-rentable. It is vital in using this strategy to get fixed rate mortgages, especially now, as rates will likely only go up. Property management can be a significant time drain for busy real estate agents, but the following steps can help you manage your time. Make sure your properties are in good condition and charge rent that is fair. Finding tenants will be far less time-consuming if you strive to be the best option out there. Be thorough when conducting background checks on potential tenants. Check their credit history, job history, rental history, and criminal records. Require a substantial security deposit, even if you have to allow them time to come up with it. The more money they stand to lose, the less likely they will ruin the property. Require long-term leases. Frequent turnover of tenants can greatly increase your management costs. It is also a good idea to examine the current residence of potential tenants. If they are from out of town, ask for help from other realtors. Real estate agents have a responsibility to conduct business fairly and ethically. It is usually not a good idea to buy your own listings, but if you secure a can't miss deal for a buyer and he pulls out, it is completely ethical for you to take over and save the deal. So take advantage of the wonderful opportunity available to real estate agents. People are paying you everyday to search for their homes, why not simultaneously be on the lookout for investments for you and your family's future.
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