When we buy houses, Buffalo proves to be a hot market good for higher ROI. The possibility of success makes newer investors want to leap into business as quickly as they can. They assume investment will be easy. However, buying a property for investment purposes is not a passive experience.
Without being intimately familiar with the steps of a basic real estate transaction, you may not get as far or be profitable as possible. Each step is essential, and there are no shortcuts. Missing one detail or making one incorrect calculation can ruin a potentially good deal, or tie you into a bad one. The steps listed below can be helpful on your first deal, but they are also useful for dusting off your preexisting skills.
Numbers are king when choosing a property. You can like everything about a location, but if it does not pass muster during crunch time, walk away. Check out the property’s condition and note the improvements that will have to be made. Are the improvements cosmetic, or does more intensive work need to be done?
Will the work you put in make sense upon your investment’s return? There needs to be a price tag attached to everything. If you are not familiar with how to accurately assess the cost of a job, get someone who can. Also, remember a list price is only what the owner hopes to get. The market and conditions of the property will dictate the final number. Evaluate every aspect of the property prior to deciding its worth. Once that is done, you are ready for step two.
It is very unlikely you and the owner have the same number in your heads when it comes to the location’s value. That said, if you want their property, ultimately it is what they believe the location is worth that matters. Spitting out facts and offering supporting data won’t move them if they are not pressed to sell right away.
If you want a deal, you will need a seller that is motivated. Short sales, foreclosures, deaths, relocation, and other factors can make a seller more flexible on price. If you can, try to find out why the owner is selling. If they are not interested in unloading the property, it will be a waste of time for you to go back and forth with negotiations.
Your financing options will affect the offer you can make. If you have access to hard money, a cash offer can give you more wiggle room on price. Sellers like the security of a lender free transaction and quick closing. However, if you will be going through a lender everything needed for financing should be ready when the time comes to submit your offer. There is normally a 30 to 45-day window to get your offer approved and to close. Without financing sorted out, you won’t be able to make an offer.
There are four factors that should dictate the amount you will offer a property:
If a property has little demand, you should not offer top dollar for it, or you will end up bidding against yourself. If comp sales and listings are low, you will want to adjust your offer. It is better to start low and bid up than to start too high because reversing course is near impossible.
However, if there is high demand, you will want to come as close to asking as you can. At the front of your mind, you should be running numbers. The goal is to have enough room to make a measurable profit. Don’t get emotionally invested. If the buyer won’t sell. Move on.
Once your offer is accepted the final parts of the deal take place. You will need to get an inspection right away – never waive it. Submit your loan items as soon as possible so the lender can move forward with their side of the process. You should have a real estate attorney that is reliable and capable of working well with lenders and other attorneys. Most of all, stay involved until closing is complete. It is your deal, so see it through.
There is always the chance of unforeseen events. However, these five basic steps are the bones of a good transaction. When we buy houses Buffalo is a market we have found a great deal of success in. You can find success here too.
If you need help selling or buying a property, contact the experts at Arcane Property. As investors, we are looking to make a modest profit off any deal. However, we can help homeowners with just about anything. Contact us today to see what we can do for you.