Is Your Vision For Real Estate Investing 20/20?

Wishing everyone a Happy New Year for 2020! Will 2020 be the year you have that perfect vision to invest in real estate? Let's hope so. As you know, it comes with evaluating the market, plotting a plan, seeing the properties and getting your finances in order ... among other things. But doing the basics will help you see more clearly in 2020.

Evaluating the market. Sometimes easier said than done. With market fluctuations, changing interest rates, demographic developments and neighborhoods in transition, it can be tough to get a pulse on the area you are interested investing in. Here in Pittsburgh we are still in a seller's market, meaning that inventory is still low driving home/investment property prices up. Buyers are often finding themselves in multiple offer situations. Sellers are smiling all the way to the bank as they are in command. As a buyer, you need to develop or improve upon your negotiation skills. There is no standard answer to this, but often it comes with experience and, unfortunately, some lost deals. But rather lost than missed. So learn from your experiences. Investing in real estate is certainly an educating process, but with perseverance and tenacity, you will find that perfect property in a neighborhood that makes you money.

So, how do you find the right neighborhood to invest in? Simply said...with proper planning. You've heard the expression location...location...location. right? The phrase started out as advice for businesses, but throughout the years it has entered into the real estate property investing world. You must know the right areas to invest in. So look at the areas that have shown increases in market value, escalating growth, and a rise in property development...even population. It's been said that when you see a lot of construction cranes, that means the city is growing. When a neighborhood is "up and coming" we see new businesses moving in, buildings being refurbished to rent or sell and opportunities to cash-in boom. Then we see these neighborhoods explode to the point that the capacity to secure the best deals start to wain. The trick is to get in early. And don't be afraid to try neighborhoods that are close to those that have already developed. Think "urban sprawl"or "gentrification". You can plan for it. And planning comes with knowledge so stay close to those real estate news publications, television and other social media venues. Here in Pittsburgh, I am currently seeing a lot of buzz about the Strip District as mostly apartment housing complexes are being constructed. And rents for these are going at a premium. Of course the buy in on SFH or MFH might also come at a high price point so choose wisely. You can still make money owning Mediterranean and Baltic Avenue (a la Monopoly). You just have to decide what kinds of properties you are interested in, their cost to buy, rehab and maintain, what they are currently drawing in, what your gain would be and how long you plan on keeping them. Again, planning and doing your calculations is essential and all a part of your due diligence often before actually seeing the properties.

In these days of automation, you can virtually tour just about any property you're interested in. But actually seeing is believing. Sometimes the properties you see listed are missing information that can become crucial in your decision. Sometimes the lack of pictures online or super enhanced pictures warrant a closer look in person. If you can, go see those properties as this also gives you an opportunity to assess the neighborhoods for comparison. And certainly get complete information and ask questions as needed. If you can get a contractor to go with you, do so. If you are an out of state investor, connect with the locals in the area you are interested in. Realtors who already have an established business relationship with investors are good sources to be your "boots on the ground". I often tour properties providing pictures, videos and feedback based upon years in the real estate industry. I look for cracks in foundation, uneven flooring, mold and other health and safety issues. Almost anything can be remediated, but you have to evaluate if the cost to fix is worth your investment. You still want to make money as you watch your finances.

Speaking of finances, if you have the resources to pay by cash, great. Run the numbers and see not only if you can swing it but how much you are willing to spend. If you don't have the cash laying around and are looking to finance, like most of us, Get a mortgage Pre-approval. With a pre-approval, the lender checks and verifies your financial and employment information through documentation, as this confirms your ability to qualify for a mortgage. Also you will want to know what types of mortgages you could qualify for and the terms involved. If you qualify for a mortgage, a lender will approve a specific loan amount. Why is this so important? First off, you want to know how much you qualify for in order to be realistic in your expectations of what you can buy. It's important to do this PRIOR to even looking at your first property. Why bite off more than you can chew? So get your finances in order as a part of your due diligence.

So as you can see, it takes a lot to have perfect 20/20 vision investing in real estate. But you can do it by evaluating your choice market, proper planning, touring properties or having someone reputable to do that for you, and getting your finances in order. Doing these things will help you see 20/20 in 2020!