A profitable real estate investing business must be fuelled by profitable deals no matter what business model you adopt.
The following tips will guide you on how to narrow down on profitable deals and weed out the bad ones.
1) Market Value
You must know the Market Value before you can make an offer on any house. When I buy houses, I prefer to work with conservative market value to be safe.
The county records market value of the property is a good indicator of market value. It is often lower than average comparable sales in the area. However in a poor house market, depressed house values can be caused by foreclosures in the neighborhood. You might need to team up with a local realtor if you do not have access to the MLS.
2) Repair Estimates
You will need to do some kind of repair on most houses. You must have a fair estimate of the repairs needed without getting down to the nail and bolt. Once you get used to looking at houses, you can be in and out of a property in 5 to 10 minutes with an estimate of the repairs required.
I try to over-estimate repairs to stay safe.
3) Mortgage Balance
You cannot make an offer on the property unless you know the mortgage balance. If your offer cannot pay off the mortgage and leave a profit for you, then you may be better off looking for another deal.
If a seller cannot provide mortgage information, they are not motivated enough to sell their house to an investor.
4) Sale Price
If a seller wants full market value for their house, they are not motivated enough for you. Unless they can allow a margin for profit, you may be better off looking for the next deal.
Sometimes, explaining your numbers to a motivated seller may result in them accepting a rejected offer once they understand how you work.
5) Is It Vacant?
This indicates how motivated the seller is. If they are making two or more mortgage payments, they must sell fast. It also indicates that you can own the property as soon as buy it.
How do you gain access to this information?
The easiest way to have this information is to have a good real estate investor website. The website should serve to convince them you are the best person to buy their property and collect the information you need right on the website.
The form should ask them for as little information as possible, but just enough for you to find out whether it is a deal or not.
The less information you request the more people are likely to respond via your website. This will be a big time saver because you will only talk to motivated sellers whose houses you can buy.
You can then collect more information once you talk to them.
Author Resource:-
Simon Macharia is a real estate investor in Dallas, Texas. His business is run from a real estate investor website that pre-educates motivated sellers delivering pre-screened and pre-negotiated deals. Click here to see how to pre-screen motivated sellers hands-off.
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