Investments

Good intentions...

I used to love working with investors. The ones that I worked with weren’t usually the larger investors; they were the ones who bought a property or two a year in tough real estate times, fixed them up, rented them, and in this way accumulated a tidy portfolio over years.

These atypical buyers had not set out to make a killing. They kept their eyes open and purchased good deals. For the most part, they had their ducks in a row when they found what they were looking for and were able to act quickly. They had either bank approval for loans against property that they already owned, or they had letters stating enough net worth to purchase so when they found that property, they were ready to make an offer.

In contrast, I can remember working with investors who had backing and were charging out into the market ready to make some fast cash. They found a likely property (actually a great investment in an area where property values had not dropped like they had in some areas). But because they were afraid of risk, it took them nearly two weeks from the time that they viewed the property to the time that they requested that I put the offer in.

And they lost it without even the chance to negotiate.

I had shown another property that I had listed – a bank-owned in a neighborhood where surrounding property values were much higher – to two sets of buyers. One buyer wanted me to provide him with information that I didn’t have about the septic system since it was a bank-owned property, and emailed me every week asking if I had any offers on the property. The second set factored in replacement of the septic system when they made the offer. They purchased the property, put maybe $30,000 into it, and flipped it in two months at a nice profit. I know this because they called me later asking if I had any other listings similar to that one.

If you think that a property is a good value, and your agent confirms it by running the numbers, chances are that someone else – or 5 someone elses – think the same thing. The bottom line is that if you don’t act quickly or as quickly as prudently possible you are going to lose the property.

How can you be ready? After you look at the information that you get via email or online and decide that you want to see the property, bring along the person who is going to do the work for you to give you a ballpark figure for work required from which to base your offer. Do as much legwork up front so that you can make a fast informed offer. Don’t stop looking for properties while your offer is being crafted and presented – this offer may not come together and you need to keep the momentum in place. Be prepared to present your offer with a prequal for mortgage, or proof of funds on bank letterhead. Keep in mind that it is more difficult to go FHA on many properties in lower price ranges because of the condition at time of sale.

Investing is about numbers – either they work or they don’t and that is what you base your decision to purchase on. Emotion should not factor into it. And remember that thinking about buying a property is different from actually investing in the property – you work for one, and the other works for you.

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