By investing in real estate,
Beware of “analysis paralysis” behavior… You know what I’m talking about, about analyzing the deal to the point of being paralyzed. Imagine if you were playing ice hockey and instead of throwing the puck into the net, you just go around and around the goal area too scared to shoot, but wow! What a great skater you are and boy, you don’t look good! “Well, I hate to break it to you, but no goals means no win and Taking no action means there is no money in your bank account.”
The fun thing about acting is that it causes chain reactions and before you know it, you’re making more calls to salespeople, offers are coming your way, and people around you will see you as a person who can act. It’s a very scary time right now to invest in the real estate market and it’s interesting to follow the success of the master investors: Warren Buffet, George Soros, John Templeton. These master investors do the opposite of the “crowd” and are very successful because of that secret to success.
Take note of the tactics these investment icons use, and then follow their lead. The current economy and the falling dollar make it very advantageous for international real estate investors to acquire properties at significant discounts. For example, houses that once sold for over $400,000 in Las Vegas just 2 years ago… are now selling for $200,000.
The most important thing to do now as part of your action is to research the property you are considering buying. Get an idea of what the values are in your target area. For example, be sure to look at ‘comparables’ in the neighborhood to see how much they’ve been selling for. Caution: Don’t look at ‘for sale’ home prices as your key valuation research. What matters most is the sale price of houses that are close, within a mile, of the property in question. One way to compare is to calculate the price per square foot. If the house you’re thinking of investing in has a total interior heated area of 2000 square feet and they’re asking $200,000 for it, then that’s a price per square foot of $100. That way, if you have a house sold inside mile from your subject property, is priced to sell at $250,000 and measures 2,500 square feet, then the price per square foot is $100 and confirms that the selling price of your subject property is reasonable.
If you really want to know real estate values in a particular area, you should ‘take an appraiser’ out to lunch! Make it your goal to meet 3 different real estate appraisers, invite them to lunch, and explain that you are a real estate investor and interested in making smart investment purchases. The real estate appraiser will be happy to help you determine the value of a home, and this is often a better data point than a real estate agent, as the appraiser is generally not biased towards you buying a home or another…since they know it usually will. Hire that appraiser after you hire the house. It’s often a good “value checkpoint” to simply ask your appraiser friend, “I’m thinking of offering $180,000 for this house, is the property value based on initial comparables greater than $180,000?” Your appraiser doesn’t need too much extra effort to help you determine value before you make an offer to purchase the property in question.