How to Search For and Value Property Investment Choices

April 21, 2009 by  
Filed under Real Estate Investing

Many investors are looking for another way other than the stock market to create profits and make their money work for them, and real estate is a great way to do this. For beginners, this process can become very costly if you don’t know what you’re doing, but cheaper home prices make this option more appealing than ever.

The first step is to actually find a devalued property that can become profitable with nothing more than a little sweat equity and timing the housing market. Searches on the Internet provide several sites that will offer listings and information on many of these homes, but there are also options in ‘for sale by owner’ ads in the paper or in Craigslist. Just remember that purchasing common-listed MLS properties will require paying realtor commissions, too!

MLS listings are typically only available to licensed realtors, but have recently become open to public viewing as well. However, you may want to choose a realtor to perform ideal searches for you to wade through all of the information – you may be surprised at how many properties fitting your criteria are available.

There is still some physical researching work required after finding one of these homes listed online. You’ll want to dedicate the time and energy to give each considered property a preliminary look before scheduling a formal showing with your realtor or the real estate agent who listed the property.

Don’t forget that even the most devalued properties may be so for good reason. Take note of what the neighborhood and area are like, school systems available, and recent sales in the area. Also look for other ‘for sale by owner’ signs in the area and ‘for rent’ properties to see how many homes are currently empty in the area.

Also consider approaching the neighbor to a property and ask if they were familiar with the former owner and property you’re looking at. They may be privy to information not listed for public viewing, such as that the yard turns into a lake with a few days’ rain.

Once you view the inside of the home as well, you’ll probably narrow your choices and decide to make a contingent offer on one or more of them. This contingency relies on a satisfactory inspection paid for by you. If you are beginning to invest in properties, it’s a good idea to choose a reputable inspector to perform this task for all of your properties – they may strike a deal with you for such an arrangement.

After the inspection, you’ll want to take note of minor flaws such as missing or torn screens, and major flaws like mold or bad plumbing. Major repairs needed may clue you in and prevent you from making a costly investment, cutting into your huge profits on the property. However, if you feel it’s something you can repair yourself, this can be a huge bargaining chip. Major repairs can be used to negotiate a far lower purchase price than you originally planned for, or require the current owner to fix it before you take possession.

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