When You Purchase Properties, Make Sure You Know your Market

market-575842_1280-PDKnow your market.  When a great deal comes up on an investment property, there will be multiple offers.  You want yours in, and accepted, before the other offers even come in.  Knowing what a good price is saves time.  The ‘other guy’ is writing an offer while you are still thinking about it.

Most of my properties were foreclosures.  Most of the deals were sealed before they hit the MLS.  I have purchased them as short sales, REO properties, at the sheriff’s sale, redeemed as a junior lien holder, and bought mortgages directly from the bank.  I have purchased a 4-plex every year in 2008 to 2012, 5 total.  I purchased an investment property in 2013, and promptly sold it for a handsome profit after three months and about $10K in improvements.  Most of the properties were purchased for about fifty cents on the dollar from the peak.

Understand the foreclosure process for the area you are buying in if you want the best deals.  Get the deals where the “turn-key” sellers are getting them, or even before they do.  You do know they make money too?  Why not pick up their profit while you are at it.  Get a RE license.  It’s generally easy and will not only save money, it will give you additional knowledge.  Take a few RE seminars, even if they are over the web.  Buy the ‘kits’, study them, and return them for a full refund.  Make sure your RE agent gives you a cut of their commission.  You are a buying in bulk; you should get 25% of the agent’s commission, that’s what I did.

Join a local RE investment club.  Lots of great deals are passed around there.  There are ‘bird doggers’ who find deals, but do not have the capital to execute them.  They get $5K or so, you get the deal.  Make sure you know about liens and title transfers, or have a great RE attorney.  With any deal, there will be some risk, you need to understand it and mitigate it.

You will have cash to bring if you want the best deals.  You cannot get a mortgage when you buy a mortgage…  There are still deals to be had, but you need to work for them, or pay someone else.  I just did a flip last month with a partner and picked up $26K in a deal that took 3 months and only ~80 hours of work.

I do much of my own maintenance, but I do hire guys to work with me at times.  Why pay someone if I am just watching TV otherwise.  If someone is going to make $50 per hour, I want it to be me.  Learning the maintenance goes a long way to understanding if your handyman is doing it correctly.  You should know how to do a few things on your own house anyway.  If you do not know how to do something, someone has already dedicated their life trying to teach you and has posted a YouTube video on the subject.

A 4-plex costs $4000 per month sitting vacant in lost opportunity, plus the hard expenses.  So it is imperative to get it up and running as soon as possible.  Hire someone to help.  With only one vacant, it’s only $1,000.  You can do the work and save $2,000.

Put in decent quality fixtures.  “Industrial strength, but cheap” is a good mode to be in.  I use Moen faucets; laminate counter tops, RTA cabinets (100% real wood, no particle board).  Not Taj Mahal, but not slum lord either.

Consolidate colors and fixtures.  I use the same color paint in all my apartments, Ceiling and trim is white.  Walls are interactive cream.  Most have the same appliances.  Lowe’s is great for getting 10% off appliances with free delivery, even off sale prices.  Buy 10% off coupons on eBay.

Use the Home Depot paint program, or get Sherwin Williams to give you a deal on paints.  I get SW Pro Mar 200 in semi-gloss, at a price about half-price of list. Use sheepskin roller covers and Purdy brushes.  HD’s $47 carpet install is a great deal.  For rentals, use laminate flooring instead of carpet in all rooms except bedrooms.  Sam’s club has great flooring for a small price.

Keep your properties maintained, do not mistake deferred maintenance for profit.

What is your experience in purchasing rental properties? Or any property?

One Reply to “When You Purchase Properties, Make Sure You Know your Market”

  1. Thanks for reading! Please view my ‘Coming Attractions” to see the posts that are coming up. I have quite a few ideas for posts, if you are a landlord or thinking about becoming one, this is the place to get the “back room” secrets of tenant screening and what to look for.

    I will also be posting some personal goals as I move forward.

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