Mon, Oct 13, 2008
|
TCI Shopping
|
|
Featured TCI Properties |
|
Charming Fieldstone Home
Fife Lake, MI
|
| Price: $48,800 | |
|
|
If you have a trained eye for profit
| | Tuesday, December 28, 2004 @ 12:00 PM EST
|  Printer Friendly Page
 Send this Story to a Friend |
Contributed by: John Michael
John Michael Properties
Read more archived articles about Buying
I have found 2 areas that often scares newcomers to real estate investing is face to face dealing with the property owner and how to tell when a property needs too much fixing up to make it a good investment.
I will tell you that I have rarely ever come across a property that is beyond repair and in dealing with a really bad property can turn into a great deal.
Let me give you one example:
In 2004 I purchased a property in a lower end neighborhood in Springfield Missouri for $6,500 or should I say put it under contract for 90 days for $6,500 (no money) "I took control of the property with no per-say no out of pocket cash" with a true market value of $55,000 and an as is value of $33,000 and it needed around $15,000 in repairs.
If you have a trained eye for profit you will know the difference between cosmetic distress and serious problems and this is what inspecting is all about "Having a trained eye for profit".
In a matter of weeks I had this property sold to another investor who specializes in rehab investing for $14,000 with a net profit of $6,000 after all expenses for advertising and little clean up and closing cost.
This was a WIN-WIN for all!
In most cases just a few trips to the dump and some elbow grease can turn a property that looks like it is ready to fall down around you into a windfall of profit!
When you inspect a property you are simply inspecting for profit not problems. Every time I inspect a property I am looking for ways to negotiate the deal and how I may profit from acquiring the property.
As a real estate investor any and all properties you are considering purchasing should be inspected by yourself and/or a professional property inspector.
Keep in mind when in doubt hire a professional.
I use one simple rule in inspecting property and that is:
If it does not look right - It's not right!
I suggest using inspection clauses such as:
- "Subject to partner’s inspection"
- "Subject to final inspection"
Clauses are contingencies put into your sales contract so that you have a way out of buying "to protect your interest" do not abuse clauses or contingencies as you will build a poor reputation and as an investor your reputation is more valuable than your cash or your knowledge.
Use common sense and dress appropriately when you meet with the property owner, something casual but not sloppy. Never bash their home or use negatives just to get over on the customer! In all that you do create a win-win for all and this is what makes a good deal!
Inspect the property with the owner. Never comment on the owner's lifestyle or living conditions, just the physical condition of the property as related to repairs you will have to do. Point out the obvious defects or items in need of major repair. I will normally let them know I will take care of all the repairs and cost if we are able to come to an agreement. Use an inspection checklist to record your information and estimated costs of repair, as this will guide you throughout the inspection process.
I try to avoid making any promises at this point. I normally will make no offers or give the property owner any money at this point. I simply make a future appointment to meet with them again if I want the property.
You will need to get a feel for the property by doing your informal inspection using the many techniques that all investors should know.
As a general rule you will want to look in every corner, every cabinet, and every room in the property. All blemishes and problems must be documented. You will use them when you make your discount offer.
I will even provide my customer with a copy of my inspection report with my offer to purchase and simply review the problems with the owner and ask the owner:
If they are willing to repair the property or would you like me to take care of this?
You know that the repairs will take time and money. So does the property owner and most likely the owner will opt to drop the asking price or accept your offer for the property.
Note: John Michael is the author of many guides that can help you become more successful as an investor. See http://www.thecreativeinvestor.com/ChanPart-JohnMichael.html
Word Cloud:
need inspection into come should using problems time make want look real profit $6,500 meet normally investing tell when good with does never value care take just contingencies face this have inspecting "subject estate turn every contract reputation most offer around dealing trained repairs property. owner win-win property inspect repair rule give will know simply what like clauses investor them point.
|
|
| |
Average Score: 3
Votes: 3
|
|
|
|
|
Logged In members can moderate all comments.
|
|
