How To Determine If A Deal Is Good For Real Estate Investing
Being able to recognize a good deal is crucial to the success of a in real estate investing business. There are many properties for sale on the market, but not all of them are good deals.
So how do you tell which deals to pursue and which ones to trash? Being able to recognize a good deal is crucial to the success of a in real estate investing business. While the market is full of properties for sale, not all of them qualify as good investment deals.
So which ones are good and which ones are not?
The key to successful real estate investing is following a business model that you understand. It is necessary to develop ball-park figures that help you analyze deals whether you wholesale properties, do lease options, fix and flip, keep as rentals, etc.
These 3 steps are necessary in analyzing your deals.
1) Pre-screen your sellers
Of course, you must properly pre-screen your sellers so that you have all the information you need to do your numbers. You do need to have a good real estate investor website that helps you pre-educate motivated sellers, pre-screen them and pre-negotiate with them.
The information you receive through your website is enough to know if you have a deal or not.
If you end up pre-screening them over the phone, a simple script with the proper questions should help you get all the information you need to analyze the deal.
2) Run comparable sales
You must estimate the cost of the house if it was sold TODAY in perfect condition.
3) Analyze your offer
You can then make a determination if you have a deal or not armed with this information. Of course, you must have the mortgage balance and asking price to do this.
a) Wholesale deals
If you can buy the house for 70 cents on the dollar minus repairs, this should probably qualify as a wholesale deal. In a depressed real estate market, 65% minus repairs is more marketable.
You do need to factor your profit in this calculation. That means to make $5000, you should buy it at 65% minus repairs minus $5000.
The lower you buy it, the faster you can sell it.
b) Rentals and lease options
A house that needs no repairs and cannot qualify as a wholesale deal probably qualifies as a rental and lease option.
You therefore need to know the rental rates in the area. For the deal to work, the rental rate must be higher than the mortgage payment. For example if the mortgage payment is $1150 and the rental rate is $1500, you have at least $350 monthly cash flow.
You can fetch a higher cash flow in lease options, though it is a good idea to use rental rates.
Remember you still need equity in these properties because you will need to cash out in the future.
c) Short sales
A short sale is viable if none of the options above cannot work and the mortgage payments are late.
Typically, properties with more than one mortgage are better short sale deals than those with one mortgage.
We have addressed different short sale situations in different articles.
Be sure to visit our blog to learn more about techniques and strategies for real estate investing. Learn how you can increase your profits with an automated website for real estate investing that makes you close more deals using less time, money and effort.
Thanks for sharing this article with us. I really enjoyed reading this article and learned quite a lot. I have to agree with the author that knowing the rental rate in the area is quite important. Awalys, always ... do your homework before determining which deal is good.
I believe Real estate investment is the more profitable than other investment, But it has some risk also. The only way to make sure that you get good deal is to make sure that you consult a professional real estate agent.
Montana real estate
I believe Real estate investment is the more profitable than other investment, But it has some risk also. The only way to make sure that you get good deal is to make sure that you consult a professional real estate agent.
Montana real estate
I believe Real estate investment is the more profitable than other investment, But it has some risk also. The only way to make sure that you get good deal is to make sure that you consult a professional real estate agent.
<a href="http://montanarealestateagent.com/">Montana real estate</a>