Buying investment property isn’t rocket science, but when you are just getting started it can seem overwhelming. It’s hard to know just where to start. There are definitely some tried and true things you can do that will help ensure your success. Here are a few tips to get you started.
Get To Know Your “Farm Area”
One of the first things you need to decide on, are the areas where you want to invest. These will be your “farm areas”; the neighborhoods where you will concentrate your marketing efforts. It’s important that you get to know the home values in your farm areas, and there are a number of ways you can do this.
If you have access to the MLS (Multiple Listing Service) or know someone that cam pull comps for you, this is a good place to start. You can get a wealth of information from the MLS by doing a search of all the homes that have sold in that area during a specific time period. This will give you a good idea of the property values, the average number of days it takes for a property to sell, and many other things. Another good way is to work with real estate agents.
Learn How to Work With Real Estate Agents
There is another thing that I personally recommend that you do. And that is to get in your car every Sunday and hit all of the open houses in your farm area. This is a great way to find out the values of homes in a particular area.
When I first opened my home inspection company many years ago, that is exactly what I did. I took a nice coffee mug full of “goodies” and gave it to the agent. My mug would typically have a pen and pad of paper with my company name and logo, some chocolate and mints and a couple of tea bags to make a cup of tea. Be sure to tuck your business card in the mug. It doesn’t have to be fancy or expensive, just memorable.
The agents were always willing to spend a few minutes telling me about the neighborhood. Taking this small gift to them made my visit memorable, and it really helped to build my business when I was brand new. Agents that work in your farm area can give you a wealth of information about the neighborhood. And don’t forget to return the favor if you hear about someone in your area that wants to list their house.
Developing a good working relationship with Realtors that work in your target area gives you a leg up on other real estate investors. It often puts you at the top of their buyers list when they have an “ugly” house to sell.
Open House Etiquette
When you are using this same open house strategy when buying investment property, it’s important that you are upfront with the agent. Introduce yourself and hand out your business card when you arrive. Let the agent know that you are a real estate investor and that you are doing research in your target area. Ask if they are open to working with investors (and most will be) then ask them to add you to their list of investor buyers. Let them know that you are a cash buyer and would appreciate a call when they have a house that might meet your specifications. Real estate agents should always be part of your team.
Networking with agents has also opened the door to talk about one of my favorite subjects – “pocket listings”.
Pocket listings are brand new listings that haven’t yet been put into the MLS. In my area, agents have about 24 hours to get them into the system.
Realtors get stuck with houses all the time that are in need of a lot of repairs or are just plain “Junkers”. When one of their repeat customers calls to say that they have a run-down rental in a bad part of town that they have to unload, that agent just can’t say no to this person. They have to take the listing or risk losing their future “good business”.
What this agent wants is to just get the house sold quickly without investing a lot of time and without having to do any advertising. If they have a list of investor buyers that they can sell this house to quickly, they look good to the seller and someone gets a great deal! Often times these “pocket listings” will be sold with one phone call before they even hit the MLS. It’s a win-win for everyone. Position yourself so that you are the first person they think of!
There are a lot of different things you can do to grow your business and in many cases, all you have to do is invest your time. You just have to get a little creative.
Sharon Vornholt has been investing in real estate since 1998. She is an experienced rehabber, landlord and is now a full time wholesaler and internet marketer. She also has a popular blog for real estate investors that you can find at: LouisvilleGalsRealEstateBlog.com.