One of the safest and low-risk investments for your hard-earned dollars is in the real estate market. This type of investment does not depreciate easily, and the land where structures are built upon appreciates through time. Thus, these investments usually entail a high cost. That is why a lot of people are on a look out for a bargain when it comes to local real estate investments. Here are some secrets of successful businessmen who made it big in the real estate markets by buying properties at wholesale prices.
Study the Market
This is a prerequisite for anyone who wants to make big bucks with a real estate investment. Since prices in different areas and types of real properties may vary, it is good to arm yourself with the knowledge of the price levels of properties in your locality. Check the newspaper ads and property listings. These will pretty much give you an idea on how much real properties are valued in a specific area.
Take it Slow
When planning on making a investment, do not rush. The price differentials can be caused by the time element. The longer a property is listed at an auction, the bigger is the chance that its price will go down. Unless you have very competitive buyers around, take your sweet time in negotiating the deal. Eager sellers will likely agree to a lower price if you do not appear to be in a rush to grab the property.
Also, inspecting the property, and checking for ownership and tax compliance may take time. You should appear to know all this so the selling agent or broker would know that you mean business and would be careful not to overprice their offers.
Foreclosure properties are often in various states of deterioration. Smart investors are on the look out for fixer-upper houses in decent neighborhoods. One type of repair that is especially attractive to the professional investor is a failing home foundation. The cost to repair foundations is easy to calculate with a little experience, but scares off the average investor. Here’s a quick overview from a foundation repair contractor:
Look for investment properties from banks and mortgage institutions. They often have properties that they foreclosed from their mortgage holders. Most often, they hold auctions and price the properties wholesale. Remember, these institutions are not really into the business of real estate buying and selling. All they want is to liquidate such assets so they can use it in their core business operations. While some may be careful to price the properties at their real market value, most banks and mortgage companies base the price on the amount they need to recover. And because more often than not, their valuation of the properties at the time the mortgage was made is only around 60 to 70 percent of the appraised value, these properties generally valued lower than the mainstream real estate market.
Buy in Bulk
If you have a deep pocket, you can get a price lower than the published rate if you buy more than one property from an agent or a broker. So it is good to plan how you want to diversify your real estate investment and buy at once. It can be a commercial district building, a residential property and a beach side lot with glorious white sand. If you buy this much, the bank would be very happy to give you a generous discount.
This is applicable when you are into the business of real estate investment. Buying a mix of properties doesn’t only serve to diversify your investment. This also gives you a portfolio that would offer a wide array of potential customers.
It is common knowledge that agents and brokers make a killing with just a single property. Thus, when planning on making a major real estate investment, look for friends in the industry. If you do not have one, make friends out of the existing agents and brokers. It would not hurt their pockets to help you obtain a generous discount for the sake of friendship.
Organize a Group
Persuade your friends to make a real estate investment as a group. Then, you can buy properties from a seller, agent or broker together at wholesale prices. This might be hard to do, unless you have really wealthy friends but it is worth a try given the hefty price tags of most real estate properties.
Buy and sell websites abound nowadays and their list of properties sold include investment opportunities in real estate. The main feature that these online stores boast of is the fact the property owners themselves are the ones doing the transactions. Taking the agents and brokers out of the equation would certainly bring down the price tag drastically. Thus, this is equivalent to buying at wholesale prices.
There are precautions to take when transacting online, though. First, because there are no agents to pre-screen the validity of the offer to sell, much less the legal papers that are needed in the real estate investment transaction, you can be duped in the process. Thus, it is important to make sure that everything is done legitimately.
There are also possibilities that the estates for sale do not really exist. Therefore, it is essential to make a visual inspection of the properties in question before making a purchase offer.
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