If you’re new to investing in single family homes, it is a good idea to look at several (minimum of 50) homes for sale before you make your first offer. Pick a day that you can devote to driving around clean, neat and reasonably priced neighborhoods in your desired investment area. Think about things like – Where would I would feel comfortable owning a rental house? Write down the telephone numbers and addresses of FSBO’s (For Sale By Owner).
Before calling, plan out a set of questions you want answers to like Why are you selling? Do you need cash out now? Would you sell for what you would net with a realtor? etc. By taking the time to talk with several sellers, you will learn the values in your market place and come to recognize a good deal. You\’ll also become comfortable asking important questions about the property, the owners and their problems.
Also don\’t forget to write down the phone numbers and addresses of homes for rent. Call the owners and casually pretend to be interested in renting the home. This will help you to find out what other properties are renting for in the neighborhood.
Stick to your local area. I would recommend a 50 mile radius, but you have to make that choice. Buying houses in other states and all over the country may be a good investment, but wait until you have a problem a thousand miles away! It can be a very expensive lesson.
After you have taken the time to learn your marketplace, talked with several homeowners you should be ready to put in that first offer. A big part of investing is buying based on distress ownership situations. That\’s where your profit is. You make your profit when you buy, not when you sell. Those who need to sell and sell quickly due to death, divorce, major repairs will often sell for deep discounts.
Now, you must do the locating. You need a system for finding and tracking properties. When driving around keep a stack of 3×5 cards. Everyday look in your local paper and cut out the FSBO ads from the real estate section. Then paste each to its own card. I copy the ad phone number in the upper left hand corner and the date in the tipper right corner. The property address goes in the top center. Now file the cards by the first three digits of the telephone number. I know when owners change their ads. I know how long they have been marketing their property without success.
You may ask why do this? Well it’s really quite simple, their ads may change, but their phone numbers don’t. By reviewing my cards I can see who has stopped advertising. This tells me who sold their property, gave up, or can no longer afford the ads. All this is important information in the quest of a good deal. You see the first time you call someone they will likely say no, but as time goes by, situations change.
For Rent signs and ads are another opportunity not to be overlooked. Two types of owners place “for rent” ads: other investors and people hoping to rent properties they’ve failed to sell. You never know why a home is being rented until you ask. Some rent because they have had no luck selling. These are the ones you want to talk to. These ads get posted in my 3×5 box along with “For Sale” ads.
Eventually, your goal should be having homeowners call you. You can place fliers on public bulletin boards and place ads in your local newspaper in the real estate paper letting people know you buy houses. Canvas neighborhoods on bicycle or foot, talk to postmen about vacant properties. Hand out business cards to everyone you meet. Eventually your phone will not stop ringing! More sources of single family home opportunities are: real estate brokers, foreclosure notices, and bank-owned properties (REOs).