Location value
For investment purposes, property in the best location will offer
the greatest liquidity (shortest sale time) and greatest opportunity
for appreciation in a good market. The best location offers the least
risk and will depreciate less, even though it will cost more initially.
The old axiom is true: buy in the best location you can – even
if it’s the worst property.
Stick to your own backyard
Become an expert in a particular area. You will begin to see patterns
indicating the value of a specific kind of property in a specific
area. Unless there is a strong reason for investing outside you
geographical area, don’t.
Be very wary of property advertised outside its geographical area.
In general, it’s either overpriced or has a hidden defect
that’s kept it from selling in its local market.
Using real estate agents
The easiest way to find property is by using a local real estate
professional. By having direct access to the MLS (Multiple Listings
Service), they’ll know everything on the market in your price
range. In addition, a knowledgeable agent or broker can supply valuable
information about market conditions, prices and properties that
may be coming to the sale. Also, make sure the agent you chose to
work with is successful in the area and with the type of property
you are interested in.
Why a third person can make a difference
When dealing through an agent, owners tend to be more objective
and have a better negotiation than without an intermediary. Agents
are used to working with sellers and can help you tailor your offer
to overcome the seller’s objections.
Working without an agent
If you are interested in distressed properties (foreclosures, sheriff’s
sales, tax sales, etc.), you may be better off without an agent.
Agents tend to avoid these situations because there are no funds
available for their commission. Distressed properties are often
in debt in excess of the property value and would be a waste of
time for an agent.
Owners who don’t use agents
In general, owners who try to sell their own property are doing
so to avoid paying an agent commission. Often the owner does not
have an accurate idea of the value of his property, so one of two
things occurs. Either they will under price the property allowing
a savvy investor to get a bargain, or, more likely, they will overprice
the property based on the fact that it is the price at which they
would sell – regardless of the market data. In addition, there
are unscrupulous owners who appear unsophisticated, but are really
trying to hide a defect. Be wary of dealing directly with owners.
Advertising leads
Begin a regular practice of searching the classified ads for property
for sale or lease. Even if you are only interested in buying, a
desperate-sounding owner seeking a tenant may be motivated to sell.
Look for indications that a seller is under pressure to get rid
of the property.
Advertising for property
In addition to looking through ads to find property, you can also
advertise your interest in finding property to buy.
Finding the bargains
If you can buy a property for 20% less than it’s fair market
value, then you’ve already made money just by buying it. Don’t
dismiss a property because the price is too high. That number is
only the asking price. Many real estate deals are made at prices
below what the owner is asking. Regardless of the asking price,
owners of properties that have been on the market for a while are
likely to be receptive to a low offer.
Buying below market value is one way to make money, but a smart
investor doesn’t discount a higher priced property if they
feel they can turn around and make a profit of more than 10%. As
an investor, you shouldn’t shy away from a property that’s
a mess or in need of maintenance. A few cosmetic improvements can
significantly increase the salability of your investment.
Legal notices
Another way to obtain leads is through posted legal notices. Owners
who have problem tenants they have to evict are often good candidates.
Divorce records, filings from probate court, notices of abatement
or code violations, etc. provide a wealth of information on property
owners who may be interested in selling.
Friends & networking
Be sure to let people you know and those your meet that you are
looking for property. In addition, investment clubs or even more
formal property owner’s organization can be a good place to
communicate your needs. In many states you can offer and pay a finder’s
fee to someone who helps you find a property, even without a real
estate license.
Turning down bargains
It isn’t a bargain if you can’t afford it. Evaluate
potential investments carefully; considering repair, maintenance
and holding costs. Avoid any purchase where you would have to get
rid of the property quickly. There will always be other opportunities.
Additional information in Investing in Los Angeles Real
Estate:
We at Valerie Fitzgerald and Associates realize that you are in the information gathering stage of your purchase and we respect your privacy. Should you have any questions, please feel free to email us at info@valeriefitzgerald.com or call us directly at 310-285-7515. If you or anyone you know is looking to buy or sell a home, please note that we can provide detailed information and access to:
You can count on the services of Valerie Fitzgerald and Associates to provide you with information you can trust.
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