The real estate game has many players. If you want to be a game changer, you should know the different perspectives of everyone involved. Whether you’re buying or selling an investment property, these are some questions to ask and some real estate etiquette tips.
You’re Buying An Investment Property – Questions To Ask
Can I afford an investment property?
What new real estate investors may not know is, there are different ways to finance an investment property. Investors don’t obtain multiple investment properties because they have lots of cash laying around; they use cash flow and other ways to obtain more and more properties.
Before looking for investment properties, get pre-approved from a bank in order to be aware of your budget and to avoid getting your hopes up. It’s also important to know what other costs that come with obtaining an investment property
Where should I buy an investment property?
If you’re worried about picking the optimal location for your rental property, that’s good. You’re thinking like an investor!
What are the traits of a good neighborhood or market? A growing population, strong job market, development plans, low crime rate, and proximity to amenities are some of the major key points. More importantly, the neighborhood needs to provide high returns for the investor. You can use Mashvisor to find the best places to invest in real estate based on an area’s average investment performance and projected returns.
What kind of investment property should I have?
There are numerous real estate investing strategies and ways to make money in real estate. A buy-and-hold will provide stable income and a chance to sell the property later for a profit. A fix-and-flip will provide a quick profit. The best strategy for you depends on your financial allowances and personal goals. No matter what the strategy is, the goal is to gain profits, and that begins with knowing all the costs beforehand.
Know What Sellers Don’t Like
Sellers work pretty hard at preparing a property before a showing (or at least smart sellers do). Not showing up or canceling at the last minute can make a bad impression. According to Mark Ramsey, a broker at The Ramsey Group at Keller Williams, the number one complaint among sellers is no-shows after an appointment has been scheduled.
How many times have you watched a real estate show and saw someone point out every single detail they didn’t like? Don’t bring up the minor details that can easily be changed, such as carpeting and paint colors. Being meticulous is not the way to a seller’s heart or house.
Renegotiating after contracts have been signed
A deal is a deal! Believe it or not, buyers try to make new demands or renegotiate after a contract has been signed. These new demands might range from replacing appliances to trying to pay less. This is considered a breach of contract.
Discussing everything beforehand and getting a home inspection can prevent this kind of cognitive dissonance.
You’re Selling An Investment Property – Questions To Ask
Is it the right time to sell my investment property?
You know the expression, “Don’t wait to buy real estate. Buy real estate and wait”? This expression might have sellers wondering when is the right time to sell? Timing is everything. There are investors who waited too long, expecting for their property value to grow exponentially, and ended up losing. On the other hand, there are investors who rushed to sell their property and regretted not waiting longer.
The best way to determine the right time is by letting the market conditions and numbers decide for you. Ideally, you’ll sell the property during a seller’s market. If you’re in a buyer’s market, your property will need to be appealing enough to get some bidding war action.
This is definitely something to consult an agent about. But in general, spring time is usually the best time to sell an investment property.
What do I need to do in order to sell the property?
There are several steps to take before listing the property on the market. Besides getting an agent, you’ll want to get a home appraisal and home inspection. Why do you need to take these steps if buyers are going to do the same thing? To know where you stand. An appraisal will give provide realistic expectations and with the help of an agent, you’ll know how to price the property just right. As for home inspections, you can assess the issues beforehand and avoid losing value if buyers find problems with the property.
If you want to maximize your profits when selling the investment property, making updates and giving the property a facelift will go a long way. Doing this will not only increase the property’s value, it will attract more buyers and get you multiple offers.
Know What Buyers Don’t Like
Setting a ridiculous price
Selling your investment property for a profit is a given but guess what, it won’t sell if the price is unreasonable. While renovations do add to a property’s value, it doesn’t mean the seller will get a return right away, it could just expedite the selling process. If that’s the case, you might need to wait a bit longer before selling the investment property.
Not being transparent
Being deceptive can lead to a lawsuit. Avoid covering up property defects for two reasons, 1) you’re likely to get caught and 2) you’ll lose your profits to lawyer fees. Disclose all information about the property because a home inspection will reveal its flaws.
If fixing the flaws isn’t feasible, inform genuinely interested buyers before they sign any document or make any payment. If they love the property enough, they might be able to look past or accept the issues. They’ll be more likely to negotiate if they know they’re not getting gypped.
If you’re not really interested in selling the property, don’t list it. Some interested buyers have experienced calling a listing agent, only to find that the agent is trying to acquire new clients.
Now you know some of the most crucial do’s and don’t do’s in real estate. As an investor, you must do what’s in your best interest. But, it’s also important to know the different perspectives of other parties to make the investing process smoother.