Everything always goes in cycles. In our real estate investing world we have experienced smooth sailing for many years but now we are facing challenging times that have forced everyone to regroup and invent their approach to the investing business and return back to the basics.
Just a few days ago I received a call from an investor friend. I had not talked with him in over a year. It was wonderful to catch up on all the events that had taken place as we both actively worked our investing business..
As with many investors, he had revised his business plan, downsized on some over leveraged properties and had readjusted to continue forward into the new year.
As our conversation continued I found that he and I were both returning back to the basics…maybe even “real estate investing 101″…because this approach is what is working best in this economy. Let me share a few of our thoughts.
1. Focus on a simple basic approach to locating and purchasing properties through face to face contact. For years we have read books, attended seminars and followed many newly revised methods for locating, purchasing and financing properties. The Internet has opened many avenues for investors to easily search through mountains of properties without ever visiting the site or talking with a seller or agent.
2. Locate a geographical area you want to “farm ” and focus on locating properties within that area. Become an expert in that area so you are knowledgeable of property values, rental rates, schools and community amenities, the job market, etc.
3. Many people are now knocking on the doors of for sale by owner properties and making direct contact with the owner. Returning to the basics means building a relationship with the seller and working together as a team to create mutually agreeable terms to acquire the property.
4. Many older people may not be internet savvy. They may not advertise their properties on Craig’s List or other internet sites . Some of the best properties with high equity will have to be located the old fashioned way…farming neighborhoods in your area.
5. What is the seller’s motivation? For many FSBO’s , the seller may not be totally motivated by money. Once we understand the seller’s motivation and identify their needs, we can then know how we can assist the seller and how we can structure the offer.
6. People like to help people. It should be our main purpose to help the seller whether we are offering to purchase the property to rehab, wholesale, lease purchase , etc. Many times as we develop a good relationship with the seller, they are willing to help us purchase the property by being creative in the offer with owner financing and agreeable terms.
7. Sellers have also experienced many challenges this year. They have lost equity in properties because of declining values, , financing issues and having compete against a market flooded with homes for sale. Many sellers are more willing to consider mutually agreeable terms to sell their properties.
Yes…there have been many challenges this year for investors, but as in so many other areas, usually the simple things work the best. We are reminded that what is important is helping people first . Returning to the basics of real estate investing will create continued success as we enter into the new year.