Thursday, July 04, 2013

Good To Know: Don't Look At Houses

Don't look at houses, can be a hard lesson to learn. In fact it goes against the very image of real estate investing. How can you invest in real estate if you are not looking at the houses? doesn't make much sense.

Well then ask yourself why are you looking at houses. I get that it can be fun, it give us the feeling that we are actually out there doing it. 

In fact your time would probably better spent developing your team. Once you have a good realtor with good understanding of the type of properties you are looking for, they would be well equipped to do the initial sorting of property they come across. They can also provide a good idea of the value of the property vs. the listing price. Any advantages or disadvantages to the neighbourhood. And of course the details of the current tenant, income and expenses if applicable.

Based on that information you should be able to present an offer and get the property under contract. 

At this point is when you'll want to concentrate on the due diligence. This is where your property manager comes in. He can view the property, meet the tenant and provide more information on the property. The quality of tenants, if it looks like some will have to go. They should be able to bring along their contractor, handyman or someone from their maintenance department and provide a list of what will need to be fixed, with quotes and an idea of priority. Of course a home inspector can also provide that for you but I find a lot of the time, some things they miss is caught by the contractor and the contractor will probably not charge. At a later date when the purchase of the property is getting more serious, you can have it inspected then. The property manager can also provide insight on the rental market in that specific area. Vacancy rate and if the rent are at fair market value.

So what I'm saying is that chances are, the professional you surround yourself with in your power team will have the better skills to evaluate the properties. Although you could go along with all the viewings your time would be put to better use in other aspect of your business.

When viewing properties we automatically picture ourselves in the space and our likes and dislikes gets in the way. We will not be the one living there. This is a business after all and emotions should not be part of the equation when purchasing a new rental property.

Saying that I know you will or have gone out to look at houses. We all have. But be aware that your time could be put to better use elsewhere.