We talk with lots of people looking to buy real estate investment properties in Indianapolis and surrounding areas. Some of them know what they're doing... and some of them are still in the learning process.
But, since our entire business is finding great deals... and often passing those deals onto real estate investors like you at huge discounts... I thought it would be a great idea to share with you some resources on how to effectively evaluate a real estate investment deal. This works in any market... Indianapolis, surrounding areas, Indiana, any other states across the country.
When you really boil it down... evaluating a real estate deal is a pretty simple process. If you're looking to buy real estate as an investment, wholesale properties, hold them for rent... whatever, one of the most important parts is buying it right (i.e. - not overpaying).
So lets dive in.
There are just a few main elements when you're evaluating a deal.
There are other things you can (and should) look at too... but those 3 are the main important things to look at first.
One of the things you should do when you are looking at a property is find out how much it'll cost you to fix it up to a point where it's in great shape. In other words, the cost of repairs. This could be a new roof if it needs it, carpet, paint, a new kitchen, yard, maybe even more.
To find a good estimate of cost of repairs, the best advice we have is to get to know a contractor or two in your area and have them walk through the properties with you the first few times... have them quote out the repair cost... and build that into your offer.
This is simple, but many investors get stuck on this part. This is essentially what you could sell the property for today... after you repaired it and brought it up to a great condition. This is found by finding out what other similar houses in the same area are actually selling for. NOTE: Don't look at the "Listing" price... look at what houses similar to yours have actually sold for in the past 3 months. This helps you determine how much you could actually sell that house for if you had to... right now. You never want to over pay to a point where you can't sell it for a profit in the next 3 months.
How do you find this? There are services out there that can help you with this... but often times the best way to find out the true value of a house is to talk to a Realtor that you know... or an appraiser. Heck, if you don't know one... call up a few today... tell them you have a property that you're potentially going to sell in the near future... and ask them what they think it should sell for.
Buy And Hold For Rental
So, you're going to buy and hold for rental? Great! You don't need to worry about what it'll sell for right away. What you need to know is if it'll pencil out on a month to month basis. You know... cash flow.
So, talk to a mortgage broker (or a private lender) and find out what the monthly mortgage payment will be for that specific property.
Then find out what you can rent the place out for on a monthly basis.
Then, you work backwards... and find out at what purchase price your mortgage payment will be low enough so you can make the monthly cash flow you need to make on the property. Be sure to figure in other expenses too like property taxes, maintenance expenses, property management fees, and keeping money in reserves for future repairs.
So, your offer price here should be:
Monthly Mortgage - Monthly Rents - Operating Expenses - Taxes & Insurance - Monthly Cash Flow = Offer
Simple enough right?
The cool thing is, the more you're bringing into the deal in cash... the lower your mortgage is.
We've been talking about how to look at the numbers and analyze a real estate deal.
From there, just make an offer. Many times the properties we let you know about will already be so deeply discounted that we get multiple offers... often above our asking price.
So, if you really want a property... find out what is the bare max you could buy the property at... and offer that. Otherwise you may lose the deal because someone else is likely making an offer too.
With that said, the golden rule in real estate is to never over pay for a property. That's why our own deal analyzing criteria is so darn strict... and why our buyers (like you) get such great deals.
I hope this little tutorial has helped you sharpen up your real estate deal analyzing skills... and we really look forward to working with you in the near future.
Happy investing!
@Jay Hinrichs she probably meant her business dropped 54% and she is blaming the market instead.
ForUncle Sam gives, and Uncle Sam takes away.
But in the case of buying local [market_city] investment properties... you can earn investment property tax deductions for real estate investors, the United States provides the opportunity to earn a living purchasing investment properties... and holding those properties as investments, and of course the income from those properties is taxed.
But many new investors often overlook tax deductions that could have an impact on their bottom line. Today, we’re going to take a look that [market_city] [market_state] real estate investors can take advantage of.
A security deposit is not taxable, based on the thought that your intent is to return this deposit at the end of a lease term. However, if a tenant breaks the lease and forfeits his or her deposit, you can claim the security deposit as income, so long as the deposit is used to make repairs.
These repairs are deductible expenses.
Make sure with your accountant or local property manager that they're handing your security deposit accounting correctly so you're not paying income tax on security deposits that you'll be turning right around and paying back when a tenant leave.
By taking advantage of all applicable tax deductions, investment property owners can increase their revenue and reduce their tax liability, opening the possibility to purchase additional properties. There may be other ways to decrease your tax liability. Talk to your financial advisor or certified public accountant, as they typically keep abreast of new tax deductions that [market_city] investment property owners can claim.
Most real estate investments, despite the name, are really about the buildings and structures on that land. But buying vacant land, without such infrastructure already in place upon the property, can be lucrative as long as you enter into the deal with your eyes open and a clear strategy for what you’ll use that land for set in your mind. The process starts with setting up a support network of professionals who can help you analyze undeveloped property; as there are significantly more unknown factors in play with vacant land lots than with those which have already seen development. Use your network to help you prepare a plan for how the land will be used and built. Then consider your finances, because development and construction can be quite a bit more involved, and expensive, than simply buying an already existing structure. When you have all this plotted and lined up, then it’s time to go looking for the right piece of property to execute it on; considering factors such as road and utility access, as well as the zoning and other neighborhood issues. Before you get caught blindsided, be sure to evaluate permits and other legal regulations that will be financial and process checkpoints if you were to develop the property. After you submit an offer that’s accepted, get inspectors going and ready your plans for implementation.
Things to consider:
Does this land offer easy year round access?
Does this land have good cell service and access to utilities (sewer, water, electricity?
Is this land zoned for the type of development you desire to build?
Empty land is a blank canvas for the right real estate developer. Just follow the steps.
Key Points:
1. Vacant land is often cheaper to acquire than land that is already developed and less expensive to maintain.
2. It can be hard to obtain financing for vacant land.
3. You cannot claim depreciation on vacant land.
Real estate investors are required to wear many hats, but that doesn’t mean they should shy away from working with a reliable team. A group of trusted professionals is particularly helpful when buying undeveloped land, as the process requires many more steps than purchasing a traditional property. Any vacant land search should start with the acquisition of a successful team. Network and build connections with architects, contractors, land surveyors and even other investors who may have a background.
Empty land is a blank canvas for the right real estate developer. Just follow the steps.
The only problem with vacant land is that nothing’s on it, and buyers are usually interested in what’s on land more than the land itself. But undeveloped land can be a golden opportunity to turn it into just the right thing for the buyer or buyers you’re targeting. Investing in vacant land is as simple as following some general steps that will take raw to refined, and turn property into profit.
Most real estate investments, despite the name, are really about the buildings and structures on that land. But buying vacant land, without such infrastructure already in place upon the property, can be lucrative as long as you enter into the deal with your eyes open and a clear strategy for what you’ll use that land for set in your mind. The process starts with setting up a support network of professionals who can help you analyze undeveloped property; as there are significantly more unknown factors in play with vacant land lots than with those which have already seen development. Use your network to help you prepare a plan for how the land will be used and built. Then consider your finances, because development and construction can be quite a bit more involved, and expensive, than simply buying an already existing structure. When you have all this plotted and lined up, then it’s time to go looking for the right piece of property to execute it on; considering factors such as road and utility access, as well as the zoning and other neighborhood issues. Before you get caught blindsided, be sure to evaluate permits and other legal regulations that will be financial and process checkpoints if you were to develop the property. After you submit an offer that’s accepted, get inspectors going and ready your plans for implementation.
Things to consider:
Does this land offer easy year round access?
Does this land have good cell service and access to utilities (sewer, water, electricity)?
Is this land zoned for the type of development you desire to build?
Empty land is a blank canvas for the right real estate developer. Just follow the steps.
Key Points:
1 Vacant land is often cheaper to acquire than land that is already developed and less expensive to maintain.
2 It can be hard to obtain financing for vacant land.
3 You cannot claim depreciation on vacant land.
Real estate investors are required to wear many hats, but that doesn’t mean they should shy away from working with a reliable team. A group of trusted professionals is particularly helpful when buying undeveloped land, as the process requires many more steps than purchasing a traditional property. Any vacant land search should start with the acquisition of a successful team. Network and build connections with architects, contractors, land surveyors and even other investors who may have a background.
The only problem with vacant land is that nothing’s on it, and buyers are usually interested in what’s on land more than the land itself. But undeveloped land can be a golden opportunity to turn it into just the right thing for the buyer or buyers you’re targeting. Investing in vacant land is as simple as following some general steps that will take raw to refined, and turn property into profit.
There is an opportunity in every crisis.
A vast number of people in the US have no savings and cannot come up with a down payment to buy a property. With fewer buyers and lots of people to house there is great opportunity for owning rental property.
Consider suburbia.
Major metropolitan areas are safe bets when it comes to rentals. Cities have the most population and the most people who need to be housed. But don’t overlook the suburbs. Many people with families still find the suburbs a good option. Rental prices may be less expensive but tenants are usually happy to stay for longer because they are connected to the location thru schools and churches.
Don’t go it alone.
You want to choose a professional investment counselor that is with you for the long haul and is willing to put their own money towards the properties they recommend.
Invest your money directly.
When you use a third party or investment group to buy, sell and rent for you your goals and risk tolerance will be decided by the group. The more control you have of your investments the better control you have of your future.
Four more things to know about real estate you might have already missed and not be following.
Key Points:
1. Right now the rental market is hot, providing investors great opportunity.
2. Cities have the largest markets for rental properties.
3. Invest directly and you keep control of your assets.
It is no secret that a significant portion of the population does not have any savings (the crisis), presenting real estate investors with a great deal of opportunity to step in and serve the population.
Even if you’re doing your research, networking and learning about real estate and how to manage and develop it, there could be some tips you’ve missed. Don’t be afraid of a crisis; one person’s disaster can turn into your golden chance to profit. Markets near large settled areas can be a major opportunity to profit at a lower cost. Cut out middlemen when you can, and also look for an investment counselor to keep you on track.
Few expect a real estate deal to be a simple and uncomplicated matter. While real estate doesn’t have to be rocket science, neither is it necessarily true that even an experienced investor can take ownership of a piece of property without needing to wade through negotiations and the finer points of the deal.
Some deals, however, are inherently simpler; skipping the need to come to terms on things that might be fixed or improved or covered by the seller before the buyer takes possession. Some real estate deals are offered “as is” , which means the property is being put up for sale specifically to buyers who will not require any final changes or fixes to the property before the deal can close. While this can make some aspects of the sale simpler for the seller, it doesn’t turn selling real estate into child’s play.
Typically, sellers have to legally disclose what they do or don’t know about the property, as the law won’t allow them to fail to present the property honestly and accurately to potential buyers. And for buyers, while it’s true that “as is” real estate is more likely to have problems that will require prompt renovation or maintenance attention, and investment, it’s also not necessarily true that every “as is” property is a disaster zone of danger that will make it a liability.
Whether you’re buying or selling, “as is” could be the right deal, as long as you do your research and remember to take a close look at the property before you sign on the dotted line.
Just because it’s being sold “as is” doesn’t mean you can’t make a profit flipping it!
Key Points:
1. Benefit for Sellers: The seller will have no repairs to finance before the deal can be closed. This can be huge benefit for many sellers, who don’t have the money for repairs or don’t live in the state where the property is being sold.
2. Benefit for Buyers: Buyers can often get “As Is” properties at a discount, saving significant money.
3. This type of property can be attractive for rental use, fix and flip, or even to secure a lot in a good location to tear down and build.
The key to buying an “as is” property is to understand that sellers are still subject to a home inspection. This can act as a safeguard against any repairs buyers may not be equipped to deal with—providing an opportunity to back out of the deal if the property becomes more costly than expected.
Many think something being sold “as is” will be a disaster in the making, something the owner just wants to be rid of before it causes more headaches. With “as is” real estate, while it often is something that might need developing, land is land, and a depressed price just increases the profit once you’ve gotten it turned around with proper management. Don’t let opportunity pass you by!
When speculating on long-term passive property investments, one should consider taking into account the “1% rule”. While it is not a perfect measure of whether or not a property will yield a profit, it has been shown to be a good “rule of thumb” for determining approximately how much to charge for rent on any give property and if that rent will be enough to cover the mortgage.
The basic idea is to take the total cost of the property and any necessary repairs and multiply it by .01 (1%) and then use that figure to plan how much one will charge a tenant. It does not take into account all aspects of an investment but is close enough to generate a ballpark number which can be compared to current rental prices in the area and ensure the investment is economically viable. The biggest value is determining which investment properties to avoid, rather than determining which will generate the most profit.
The 1% rule is not even necessarily an indicator that a property will make a profit, but is at least likely to break even. It can be an extremely powerful tool when used appropriately and should be in the toolbox of anyone considering investment properties.
Looking to rent property out? Use the 1% rule to make sure you can cover costs and turn a profit.
Key Points:
1. Helps determine if a rental asset is worth buying.
2. This rule is not helpful with determining the costs of up keep, repairs or taxes.
3. Helps you calculate if enough rental income will be generated to cover the rental property mortgage.
In its simplest form, the one percent rule is a form of risk mitigation.
The 1% rule is a guideline that helps you determine if the income you could generate from renting a property out will outweigh the cost of a mortgage or loan on that property. Proper use of the 1% rule can help you from going underwater on a rental property you’re considering adding to your real estate portfolio.
People who are willing to invest in a business are generally upbeat, optimistic and excited by new possibilities. All this positivity can make one a little reckless. It is important to remain level headed when looking at the potential that a new rental investment property promises.
Bad things happen in all walks of life even in real estate. So you need to protect yourself from worse case scenarios.
To lessen your risk:
Do your homework. Make sure the numbers for cost, maintenance and rental income favor the profit side of the equation. Make sure you are property is in a location that rents well. And finally make sure the laws for your area don’t have rent control stipulations or unforeseen tax liabilities.
Screen your tenants. You want tenants who are going to be able to pay and pay on time. Taking extra time up front can save you lost rental income down the road.
Get a home inspection. Make sure there are no expensive repairs needed that you are unaware of.
Get proper insurance. You need to know if the house burns down your insurance will cover that. Also make sure there are no loop holes in your insurance where your tenant can sue you for injury while living in the property. You also need to make sure that you personally are not liable for any type of lawsuit that would arise from the property. Find a good honest insurance agent that has experience in the rental market.
Use proper lease language. Contracts are all about the details. Make sure yours is ironclad in order to protect yourself. Pay attention to obligations, liabilities, and price and lease length so there is no misunderstanding.
It is fun to get excited about a new money making opportunity but don’t get carried away. Slow down take time to prepare for the worst and you will be well on your way to profits.
Learned how to plan for the best, hope for the worst, and set myself up for success:
Key Points:
1. Investments can be profitable but be prepared for unforeseen circumstances and have steps in place to deal with every scenario.
2. Don’t slack on getting professional opinions and know when to walk away from a deal.
3. Insurance and well thought out leases are very important and can protect yourself and your tenant.
Getting in and out of properties should not be the goal when finding new deals.
Does investing make you as nervous as it does me? Check out this article – it answers a lot of questions.
See the original at: https://www.fortunebuilders.com/plan-worst-hope/
Off market properties wont be found on any real estate sites but you're still able to find them if you know where to look. These off market properties can give investors an advantage on the housing market. Most of the off market properties are sold via word of mouth through a broker or a brokers network. There are other ways to keep an eye out for these listings however. One way is through direct mail marketing, which is when companies send out postcard like letters with an advertisement about upcoming listings that get sent to a particular neighborhood or area. Another method is to talk to builders and contractors, people in that profession are typically pretty clued into housing projects, whether they're upcoming builds or unfinished projects, contractors are hands on and its their profession to know about new developments. Auctions are also a great place to spend time if you're looking for off market properties. Auctions have a variety of different type of potential investment properties including foreclosures and REO's. With any investing its crucial to do your research prior to putting money up and make sure you mind your budget. The best way to find these properties is just good old fashioned networking. Talk to the people that are in the world of unlisted properties. Ask around and you will find something that suits you.
The Multiple Listing Service doesn’t list everything; don’t miss out on off-market properties
Key Points:
1. An "off market" property is not advertised on the MLS or other real estate portals.
2. Off market properties can also be referred to as pocket listings.
3 .Driving around and identifying vacant or distressed homes can indicate an owner ready to sell.
Off market real estate deals can offer a number of perks to investors, making them highly sought after.
The Multiple Listing Service doesn’t list everything; don’t miss out on off-market properties.
Now a days real estate become more complicated on your life.real estate is part of your investment. Investment makes money for future enhancement. It is a big network of the industry. So dont be afraid of your well. Contact our peoples for your safety.
See the original at: https://www.fortunebuilders.com/off-market-real-estate/