Real Estate Investor Secrets

Real Estate Investor Secrets

Renovating real estate is a trend so popular that it has several reality shows on the subject airing on a regular basis. While anyone can purchase a fixer-upper, that does not mean they will make a windfall profit from their efforts. This is because getting a property that needs fixing up is actually more difficult than you might think. Here are five real estate investor secrets that will help you identify the best type of purchase so that your rehabilitation efforts will have the best chance of success.

Find the Right Deal

What you see on reality TV shows where they evaluate and decide to purchase a property in mere minutes actually takes days, if not weeks of research. Basically, you cannot rely on your trusty real estate agent to call when the perfect fixer-upper is for sale as there will be several others aware of the property also. So, you will need to effectively network so that you can get the news of the right deal ASAP and beat the competition. Remember, if the deal isn’t right, then it’s not worth the investment. The best deals are found off market through marketing and not listed on the MLS (listed through a Realtor) so you may want to consider setting up a marketing budget to sellers directly. There is a saying that goes “If you are not ashamed of your offer, you are offering too much”.

Be more involved in the rehab process

While there might be that golden deal of slapping on a coat of paint, most fixer-uppers require real work for you to see any real profit. By subbing out most of the tasks to sub-contractors (specialty contractors like painters, demolition, electrical) before calling in a general contractor can save thousands of dollars. The more work you can sub-out, the more profit you will have in your hands. Subbing out work like drywall, flooring, tiling, electrical, etc. will save you money but can be very time consuming so be warned but you will learn the most doing your rehabs this way.

Have Reserves On Hand

Keep in mind that whatever you eventually pay for the property, it will most often be substantially more than the initial price. One of the simplest real estate investor secrets is to have an ample reserve around to pay for the little things like permits, title search, utility costs and other expenses that can add up quickly. Basically, have an addition 10%, if not more above the total cost of the effort handy so that you don’t get caught short.

Be Prepared for the Unexpected

Even the best most thoroughly inspected properties may offer up some surprises that will catch you off-guard. While your reserve may cover some of it, it may not cover all of it. So, you will need to have a Plan B just in case you are facing an issue that goes beyond your pocketbook. Remember to be patient with the people and personalities that come and go as you work to improve the property, but keep in mind that your expenses may go up in the process.

Rehab with the Market in Mind

One mistake that too many rehabbers make is having the belief that putting in the best materials will boost the price of the home. In fact, you may find that putting in the best materials will not give you the best return. You will need to craft your efforts towards the type of buyers who are most likely to purchase a home in the area. You will not likely need to install marble tile in the bathroom if it is a first time homebuyer property. Do not over rehab a home because it may produce diminishing returns or even produce losses. By following these real estate investor secrets, you will be able to get the most out of your fixer-upper by doing the right type of research and work.