We have good news for all you real estate investors out there– ’tis the season for finding bargain real estate properties! During the holidays, people are preoccupied and the market tends to cool off a bit. (Increasing interest rates are adding to the slow down this year, too.) Whereas we still think a surplus of great deals is going to hit the market in about a year, there are plenty of quality bargains on the market. So, in the corresponding episode of The WealthBuilders Podcast, Karen Conrad gives you 10 tips to help you find them.
10 Tips to Finding Bargain Real Estate Properties:
1. Know what you want.
Clearly establish what you want to accomplish and the type of property that aligns with your goals.
2. Play the numbers game.
This simply means that you are going to have to look at a lot of properties before you find ‘the one.’ Billy Epperhart notes that for every 100 properties he would look for or consider, he typically finds one to put an offer on—so be patient!
3. Primarily focus on single-family residential properties.
Single family homes tend to be the easiest to find, finance, and sell.
4. Look for distressed properties.
Distressed refers to the condition of the property. Ideally, you want to stick with properties that only have cosmetic issues not foundational problems.
5. Determine value.
Every market is different. You make money when you buy, not when you sell, so determine if a property is overvalued before you purchase it. Compare similar properties, consider how long it’s been on the market, and ask your real estate agent to help you get the best deal.
6. Consider the condition of the seller.
Why is the seller selling the property? You can often get a better price if you know what’s valuable to the seller. For instance, if the seller is in a hurry to move, being able to close quickly might be of more value than a higher price point.
7. Look for foreclosures.
When people don’t pay their mortgages in a timely manner, the home goes into foreclosure. The best time to buy a foreclosure is when the lender has taken back the property.
8. Identify your formula.
Formulas are key to finding bargain real estate properties. They help you confidently calculate whether your investment will turn a profit. Here’s what we recommend:
- A property that turns 1-1.5% of the purchase price each month in rent
- A property that costs within 3-4 times the median income
- A property that provides a minimum of $300 in cash flow per month
9. Build a team.
A knowledgable real estate agent as well as excellent contractors can help you save tens of thousands in the long run.
10. Again, get a real estate agent who invests in real estate!
Before you solidify a real estate agent, ask them if they’ve owned investment properties and for how long. They will know how to help you negotiate, understand holding costs, and abide by your formulas.
Curious to learn more? Listen to this episode on The WealthBuilders Podcast for more examples and practical application tools.