Answering This Week’s Top Real Estate Investing Questions
Do you have any burning real estate investment questions you need answered?
We compiled some of this week’s top real estate investing related questions that were posted online, and served up quick answers to help investors move forward:
Where can I find house deals for flipping?
There are houses ripe for flipping all over the country. While the typical spreads and volume of deals may vary, there are deals for flipping houses in every city. Some can be found by marketing directly to homeowners and asset managers. Others may be discovered via Realtors and the MLS. Moreover, there are normally local real estate wholesalers that can provide a consistent flow of deals to be fixed and rehabbed.
What are the best ways to find tenants?
There are many methods to find prospective tenants. The best might depend on your particular market, and the specific property, though it is always helpful for income property investors to have a steady mix going. Some options might include: direct mail, door hangers, and email to current renters in the area, online marketing via Google Adwords, blogging, a real estate website with good SEO, yard signs, and Craigslist.
How can I cash out refinance when I have too many mortgages?
It’s amazing how some real estate investors don’t keep up to date on new mortgage lending rules, programs and lenders. This should at least be a weekly activity. Some real estate investors are overly optimistic and are not aware of how issues can prevent them from obtaining loans at local banks and conventional lenders. Others are not aware of the ranks of new mortgage lenders offering blanket mortgage loans, which can be used to consolidate loans across a portfolio of single-family or even multifamily properties. This can streamline bookkeeping, reduce risks of error, minimize borrowing costs, and even free up credit and preserve credit scores.
Should I always counteroffer when buying or selling a house?
There are really a few hard rules in the world of real estate investing. While there are some sound, time tested investment principles, it can be dangerous to blindly apply rules to other areas of investing. In one sense, it sounds like it is always a good idea to counteroffer. After all, many feel that if they don’t do some negotiating, that they are leaving money on the table. However, there may be cases in which the deal is so sweet that risking losing it by messing around could absolutely be foolish. So weigh the risks versus the advantages before counter-offering and playing hardball.
How can I “guestimate” the cost of repairs on a 1,100 sq. ft. house?
You don’t. Ever. This question, which was just posed on a popular online real estate forum resulted in many different random answers, figures, and calculations. Of course, whenever you assume, you know what the likely outcome is, and it isn’t good. It doesn’t matter whether it is a 600 square foot condo or a 10,000 foot estate. Unless you do real due diligence and inspect the property, real estate investors should plan for the absolute worst case scenario and the financial costs. This is have to completely tear down the property, take responsibility for environmental cleanup and remediation and rebuilding from scratch. Even this number could wind up being far less than it might cost in some cases. You just never know what severe structural, environmental, and legal issues are lurking unless you do your homework. You can make estimates based on initial information and your expert knowledge of the neighborhood, market and home when making an initial offer, but if you close without following through on due diligence you’ll get caught sooner or later. It doesn’t take too many of these disasters to wipe out all of your other gains.
Should I re-screen tenants before renewing a lease?
This was a really different question. Few probably ever think to ask this. In one sense it may appear to only be common sense, though it is likely virtually unheard of among private landlords, or even the majority of apartment complexes. Theoretically this could be an excuse to get rid of problem tenants or to clear out the property for sale or raising rents. However, in most cases the decision is simply made on tenant performance. After all that is really the only metric which matters, and no amount of vetting this month will necessarily guarantee specific results over the next year. It may be useful to know if your tenant just lost their job, took on a ton of debt, or just filed bankruptcy. Though most landlords will automatically renew leases, or roll over to month-to-month arrangements if a tenant has been paying reasonably well. Or decline to renew if they haven’t.
Should I spend a year researching before being ready to invest?
Real estate investing education is critical. More upfront real estate education is a good thing. However, it can also sometimes become an excuse and crutch for inaction. You don’t need a real estate degree to get started in investing. Though you should invest in a good course and system. However, it becomes overkill over long periods. Remember it just takes a matter of hours to get a real estate or mortgage license. Spending a year or more researching a given market or strategy can be a waste as regulatory changes and constantly influx markets might look completely different in 12 months. Your tactics may then be illegal, and new strategies might be required. In the current environment it would also almost certainly mean missing out on hundreds of great deals, and paying more for the same properties later, and potentially with far higher costs of borrowing. Learn what you can efficiently, get in, and keep on learning and investing in your education as you go.
What’s my next step?
For those real estate investors that find they are constantly getting stuck as to what their next step ought to be then it is probably high time for them to get a system, or a real estate coach so that they can plug in every piece of the puzzle and just keep rolling.