What do you look for when finding properties?

Question

I am new to real estate investing and I am trying to figure out what to look for when finding a deal.  I have been looking at price per square foot but I am not sure what else to look for.  I live in Fort Collins Colorado and any information you guys can provide would be great.  Thanks!

Marlon Johnson · Answer

Hey What's up Anthony! You are going to want to gather a few key items to know if you are looking at a deal or not. First and foremost you want to look at the motivation level of your seller. They are in control of the property and ultimately they decided the sale price. People make deals, not houses. Look for a seller with a problem and bring the most value when you solve their problem.

Motivated seller aside, get to know your market. You want to know what median home prices are in your neighborhood, what sort of houses are moving quickly in your market(how many beds and baths), Average DOM (days on market), School district, crime rate, renter vs owner ratio. Those are some of the basic things you need to know that will help you determine your exit strategy which is ultimately what makes your deal.

Let me ask you, what is the investing strategy you are interested in? Flipping, holding, developing, renting, assigning?

Marlon Johnson · Answer

https://www.realtor.com/research/market-trends/ Here you will be able to check out market data. Really want you want to do is a build a good relationship with a full time realtor who works with real estate investors and hopefully is an investor themself. Do not work with an agent who is doing this part time. Find someone who knows the market like the back of their hand. They will guide you and teach you the ins and outs of your market.

Go to your local REIA's. You will find them on meetup. A good resource for learning your market is this website right here. https://www.neighborhoodscout.com/

Check out FSBO's, for rents, and craigslist and FB marketplace. Reach out to owners and see why they are selling. Remember people make deals. If I own a lambo but I am in a sticky situation and need to sell that thing tomorrow. I will take a price reduction because time is more valuable than money. Find out why they are selling and when they need to sell.

Are you doing any direct to seller marketing?

James Hamling · Answer

To keep it as baseline basic as possible I look for 3 points: - Equitable/ Appreciable gains - Operating good numbers (ROI, COC, NOI etc etc) - Risk exposure (this is to say how stable is the area, how likely are tenants in the area to be trouble or decent, desire for unit, etc etc)

It's really that simple. I focus on how it is today, 3yr window, 5yr, 7yr. I feel anything longer is just a guess and the trend line I see on the easier to project speaks to further out.

Ian I Leinwand · Answer

For a house hack you need to decide if you want separate living spaces like a traditional conforming duplex or a house you will share common space with a roommate. You can also try and find a place you can do a non-conforming separate living space... IE a walkout basement you can put a kitchenette in.

What is your budget? Are you handy... ie could you finish an unfinished basement. Sweat equity plus house hack investment should pay off in the long run. For a shared house rooms typically go for $500 to $600 plus utilities.

Marlen Weber · Answer

Pretty awesome feedback by @Marlon Johnson. Thanks for the insight.

Ned Carey · Answer

@Anthony Bratina you didn't say what kind of investing you want to do.  @Dani Beit-Or makes a good point about criteria. That can help narrow down your choices and focus.

The criteria becomes much more important if you want to rent or rehab.  If you goal is to wholesale a deal then what it is is less important than how good a deal it is.

Dani Beit-Or · Answer

I'd say build yourself a baseline criteria what you would consider a good investment, should include something like:

• Min. beds
• Min. bath
• Min. age
• Min Sq Ft
• Price range
• Rent
• Garage/s
• Min. ROI
• Min. cashflow
•

This will help you ID acceptable/unacceptable and great proeprties.

This means you will quickly know if a specific on the worth your time checking or should you move on.

It will also help you focus on the right ones.

Ned Carey · Answer

@Anthony Bratina welcome to BP.

The number one thing to look for is a good deal. Knowing if a deal is good is about knowing your market. You learn you market by looking at LOTS of deals. Look at all kinds of deals like Wholesaler deals, open houses, listed properties, FSBO, auctions and other investors deals.

If you can get another investor to show you his or her deal or deals, ask them everything about how they found it and the numbers. If it is an ongoing project like a rehab follow up and see how it is going.

Only when you truly know your market can you decide if the price asked for is a good deal.

Remember the best deals you are going to get usually will need some work. So look for distressed property or distressed situations. What you are really looking for is Motivated sellers.

Anthony Bratina · Answer

I've been chewing on this for a week and I have some more insight.  I am wanting to start with a traditional mutli-family home because it is weird to me to have someone living in my basement or another part of the house.  I have not seen a lot of these on the market so I have been looking at redfin to get an idea of what the market looks like.  I am getting a little sidetracked looking at homes I would like to live in and not necessarily investment homes.

I have started looking around for meet-ups in Northern Colorado but I haven't done much with that yet.  It sounds like finding the right people will be more use to me than incessantly researching.

Anthony Bratina · Answer

You guys are on a other level. Let me chew on this and I’ll have some more questions for you later.

What do you look for when finding properties?

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