Questions Investors Should Ask When Buying and Selling Investment Property

If you are a real estate investor, here are several questions to consider when looking for investment properties. Providing solid answers to these questions will greatly increase your earnings:

Why do owners sell at bargain prices?

There are many factors that can prevent homeowners from being able to keep their homes. Factors such as job transfer or loss, divorce, illness, gambling, drug or alcohol addiction, or any of a wide variety of other problems can overwhelm the owner. When that happens, your home becomes a low priority and the necessary repairs are no longer made. The house can even go into foreclosure.

The death of a homeowner can leave family members with a home that no one wants, which then becomes a burden. These houses can be “tired” and only need cosmetic upgrades to compete with other houses on the market.

I recently bought a “Triple D” house – one that had been involved in a divorce, was in default, and was a doghouse. But I just needed a cosmetic job, so my daughter and I bought it and did it all ourselves, without the help of the men in our lives, and we hope to make almost $ 50,000 for a month’s work. That is not as much as our husbands generally earn in their “doghouses”, but we are not going to work as hard.

What should you look for?

The most difficult home for a homeowner to sell is a “doghouse”, which is also commonly known as a “dumpster” or “repairman.” These dilapidated homes scare off most buyers, who lack the initial funds for down payment, closing costs, new furniture, and things like new carpet, roof repair, and other repairs that may be necessary. With that in mind, searching for keywords like “handyman,” “as is,” “repairman,” and other revealing words in real estate listings or ads can generate income.

Tell your real estate agent to use those types of keywords when conducting a search for the Multiple Listing Service in your destination area. Once you find a repairman who can transform from a doghouse to a dollhouse, find out the problem from the seller and then offer a solution. Those issues are often money-related, so being ready to close quickly is generally important and can lead to a bargain price from a seller in a financial bind.

How do you close fast?

You can close faster if you have your loan in effect before you even start negotiations with the seller. Motivated sellers will respond favorably if you have been pre-approved for your loan, so having an experienced lender “pre-qualify” and “pre-approve” you will let sellers know that you can close quickly.

How “bad” is good?

When you first start in the real estate “repair” business, look for FEAS homes that only need cosmetic work. Entry-level “blow ‘n go” fixers are homes that just need cleaning, painting, and carpeting.

Know your limitations and be careful when looking at houses that need structural repairs. These houses can be very profitable (for example, we have made $ 75,000 from a month’s hard work), but they are not good candidates for most beginning investors. Since my husband knows how to do construction, we can buy houses that other investors may not know about. He replaced structural beams, subfloors, walls, plumbing, and electrical systems, but learned those skills over many years.

Over time, you can learn to do much of the structural work yourself, but when you start, make sure you get estimates from reliable contractors for any structural repairs that may be necessary, and then decide if there will be enough profit left over to make the project worthwhile. .

What is the easiest house to sell?

Selling a “dollhouse” in a desirable family neighborhood is the easiest thing to do. For example, we once sold a house we called “Orange Tree Cottage” just three hours after it hit MLS! Buyers first look for a particular neighborhood and then look for a home within that area with the correct number of bedrooms, bathrooms, and other amenities. Ultimately, they will buy the home that not only meets their basic requirements, but also meets their emotional needs.

What are the emotional needs of buyers?

We found that the use of Design Psychology and Marketing Psychology makes a big difference when we sell our investment properties, selling them faster and at higher prices. But both concepts go far beyond simple “curb appeal.”

We first attract shoppers to the porch, using potted plants and flowers near the front door, which we have painted a cheerful color. Once buyers are inside the house, we use colors that target our prospective buyer’s income level and coincide with the sales season. In general, higher-priced home buyers prefer complex colors, and the use of cool colors during hot weather and warm colors in cold seasons sets the stage for buyers to feel comfortable in our homes.

As a real estate investor, asking yourself these questions, choosing your properties carefully, being prepared to act fast, and using Design Psychology and Marketing Psychology can all work together to greatly improve your bottom line.

(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.