Real Estate Investing is always very exciting looking at properties and trying to figure out a way you can negotiate the best deal. Some new real estate investors often believe the best deals are the cheapest or the least expensive properties in an area. I often see many real estate investors competing for these cheap properties. Theses hungry real estate investors will often drive up the price more than they should and overpay for a property. These real estate investors let their emotions get involved with their financial sense. These cheap properties often require an extensive amount of work. The value in the property will be developed as the property is rehabbed and brought to a move in condition.
Before you make the offer you should always know what your exit strategy will be. Are you going to wholesale the deal to a cash buyer? Are you going to buy, fix and flip the property? If you are going to buy, fix and flip the property or buy and hold the property you have to have cash or access to cash. If you do not have the availability of cash, you must do a wholesale deal such as an assignment or a back to back double close.
When calculating your numbers to make an offer, you have to get good at calculating repair costs. The amount of renovation will affect how much you might offer on the property. I would strongly recommend you start by not tackling the worst houses in your target area. The ones that need extensive repairs can be good deals but take a lot more time and effort. I often tell new real estate investors they need to crawl before they walk and walk before they run, when it comes to real estate investing.
The best way to learn how to calculate repair costs, is to spend time understanding the total cost for materials and labor. The best approach may be to target properties that need a lighter renovation, then move on to a medium renovation and then heavy renovations. That way you can gain the knowledge you will need and not get as frustrated during the process of evaluating repairs on each property you decide to make an offer.
Go out there and take action and make your dreams a reality. Today you might be crawling with action or walking with action. Make sure you start slow and build up speed. You should realize that you will be running with action soon than you think. When you start dreaming about real estate, you are running! Live life in the moment with no regrets! CRAWL, WALK, RUN! Believe and Achieve! – Joe Jurek