The Easiest Way to Get Started in Real Estate Investing
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The easiest way to get started in real estate investment is by finding properties that more experienced buyers want to buy. Experienced investors are able to handle more complex aspects of the real estate investment, from negotiating with sellers, writing up offers, hiring contractors to rehab the property, doing property management, to marketing the property for sale. Much of the complexity of real estate investing can be overwhelming to the new investor. But by focusing on the first step of the process – that is, by finding a good deal – the new investor can get great practice and even coaching from more experienced investors. Finding a good deal is a time-consuming process. Yet it is critical to a successful deal. If it were easy to find good deals everyone would do it. But often good deals are not the easiest ones to find. They are typically not retail listings found on the Multiple List Service. The best deals are those that have a motivated seller, a distressed property, and/or that of which the competition is unaware. How to find these deals? All investors have heard “it’s a numbers game. “ And it is. Most investors have to look at a hundred or more properties to find one that is suitable for a purchase. Because the process is so time-consuming, most investors will pay “bird dogs” or wholesalers to send them leads. To become a “bird dog,” simply find an investor looking for properties to buy, whether these are residential or commercial. Find out what it is that they are looking to buy, what kind of investing they do. If they answer, “a good deal anywhere in King, Snohomish, Kitsap or Pierce counties,” move on. This response is much too general to provide good direction for a new investor. Look for something more specific. For example, I specialize in Seattle properties. I am looking for 3 bedroom, 2 bath homes in the City of Seattle, below median home price (in Seattle, this is typically under $450K), in any condition, preferably with a garage and not located on a busy arterial. I am looking for motivated sellers, who either have no equity (meaning they probably bought their house between 2004 and 2008), or they own it free and clear (meaning they have probably owned it for more than twenty years). For every qualified lead that a bird dog sends me, I will pay a finder’s fee. The finder does not have to get the property under contract. If the finder is able to negotiate a contract – and has done a good job of negotiating a contract – then I may pay an assignment fee to purchase the contract. I may also purchase a property from a wholesale seller who bought the property at a discount and is selling it to me at a discount. This is known as selling a property wholesale. I often encourage my bird dogs to check “for sale by owner” (FSBO) ads on Craigslist or other FSBO sites. They can search for terms such as “must sell,” “motivated seller,” “medical issues force sale,” “downsizing,” “major fixer,” etc. Bird dogs can then email or call the seller directly to find out how long the seller has owned the house, why they are selling, and most importantly, if we were to pay cash, what is the least amount of money they would accept for their property? Good responses here may signify a possible deal, and I will pay for leads if the investor does not know how to analyze the deal beyond this information.