REMEMBER STEP ONE – GET QUALIFIED – Once you have been qualified for your first rehab property. The exciting journey has begun. The process of buying a property differs from state to state. The one consistent theme is: Get qualified; do not settle for a letter of intent; Ensure all documents have been submitted to a lender and “GET A FIRM” (commitment) letter of qualification. This will save you and your realtor plenty of time, while looking for property. All while narrowing your focus for a property you can afford.
STEP TWO – FIND A COMPETENT REALTOR – It’s the realtors’ fiduciary responsibility to assist you with finding the property you envision. However, with the internet, many buyers are steering realtors to properties. This can be tricky, however. I know you are excited but streamline your focus. The right property will emerge. Stay patient!
In the case where there are several properties of interest, it may require driving through a few communities of interest to narrow down your options. To reiterate, securing the right realtor upfront can make the acquisition of a property less stressful and even more profitable. An experienced realtor knows how to negotiate and help get you the lowest possible price.
Make sure, each realtor agreement has a term or time-period to find you your property. Should time lapse, as the purchaser you can extend or terminate your agreement. Negotiate commissions, so that there are no surprises at closing. This item is negotiable. The base commission will depend on regional trends.
A few things to think about:
- I want to buy houses to make a difference in a neighborhood. if this is your goal. You may need to survey a neighborhood before determining whether to buy the first property. This will give you an idea of how many you can buy to create the desired neighborhood impact.
- I want to create a portfolio of rental units. Before you buy your first unit. Determine the monthly income you are trying to generate. This will give you a projected idea of how many units you need to buy and rehab to meet your goal.
- I want to sell 1-3 units per year to offset my income. This depends on the number of units you can rehab and sell in a calendar year.
Finally, I recommend at least two per property appraisals. The cost for the appraiser will vary from state to state. The first appraisal should give you an idea of the properties’ current assessed value. The second appraisal is called a post appraisal. The post appraisal will factor the rehab cost, design, location and functionality of the property.