You may be reading in the real estate blogosphere and hearing from the experts out there, that now is a great time for real estate investing, due to the incredible amount of deals and foreclosures that exist across the country. Banks are giving homes away.
I do agree as I work with these deals all the time. However real estate investing can be a risky business and a very slippery slope. One thing that is indisputable, investing in Real Estate involves MATH.
Yes our favorite subject. But it is really quite easy and Here it is:
INVESTOR + REALTOR LOYALTY= SUCCESS
First, you must, not it would be nice if you did, but you must interview local real estate agents in the area you are thinking of investing, because they are in the trenches every day with buyers. Realtors know what buyers want, what neighborhoods are in transition, declining, revitalizing and which areas will likely bring investors the best return on their investment down the road.
Once you have interviewed several Realtors to see which ones are selling, not just listing the properties in your chosen area then commit to them. Let me say this again….commit to your Realtor because they will work hard to make the entire transaction smooth and bring it to its ultimate conclusion….closing.
There are many, many steps along the way from contract to closing. If you are loyal to your Realtor, they will be loyal to you and will be a considerable asset in your investment plans. As a good investor you must realize the importance of having a good real estate agent in your corner. It can mean the difference between success and failure. Your TIME is money and your Realtor saves you an incredible amount of time, from negotiating the contract, to setting up the inspection, to working with the lender, appraiser and the closing attorney, the list goes on and on.
If you buy to renovate and resell, guess what? The Realtors are a wealth of information when it comes to contractors who they recommend for your project. They have had the opportunity to see how these contractors work, their fees, their reliability, etc. Bad contractors can eat away at your profits quickly, so you need good ones.
Okay, so now you are ready to resell the property. It is here where many investors think the hard part is over. They think they will just put a FOR SALE BY OWNER (FSBO) sign in the yard and sell this thing on their own. BIG mistake in this market. Now more than ever you need a Realtor working hard to get the home sold. They have access to buyers that you do not, when a buyer does comes along, again the negotiation process starts and you do not have to deal with that buyer face to face. As an investor there are significant benefits in NOT having to deal with the buyers directly. Remember TIME is money and many investors mistakenly think, hey I can sell this home on my own and save thousands in commission, but forget to realize that they will likely hold onto that property for a longer period of time than if they had used a Realtor from the start.
Here is what happens so many times. Investor puts the home on the market on their own, it sits there unsold for a few months or more and THEN they call upon the Realtor. Well they have just lost equity by having to pay their mortgage note for the months that the home sat unsold on the market. Realtors will tell you, the longer it sits, it becomes stale and you will most likely have to reduce your price to sell.
Depending upon your margin, you may have lost most if not all of your profit/equity…not a good situation, but one in which many investors fall into.
If you use a knowledgeable Realtor to buy the home, use the same Realtor to sell the home (why not, they know all about it from start to finish). If you stay loyal to the Realtor, guess what? They will become a “bird dog” for you and start finding YOU the deals. Now that is what I call Success!
Investor + Realtor Loyalty= Success.
There is NO fuzzy math here….Agreed? Now go out there and do good things! Invest in Real Estate Today–but do not go it alone, get the training, coaching and mentoring you need to reap the rewards this business can bring to you.