Investor Questions

Roxanne...most investors fall in to 2 categories buy for resale or buy for cash flow, The flippers are not doing so well in this still declining market so they have to time the purchase as the upswing begins (basically they'll wait for the bottom) The cash flow buyer wants the property to cover itself and pay back 8-12% returns on the investment...so if they have to come up with $50,000 to buy the property it should clear $5,000/ yr after all expenses (and tax benefits added). Good Luck

Roxanne, there are so many questions the investors should ask you.  Be prepared!

Roxanne ... Residential real estate investors will be (a) looking at whether they can buy a property, hold and rent it out, and get a positive cash flow, or (b) determining whether they can buy, fix up the property, and put it back on the market to sell, and get a reasonable return, considering cash used, amount of time needed for repair and resale, cost of carry, etc.

Commercial and other real estate investors will be looking more at CAP rate, because banks and appraisers use this to determine value.

CAP rate is the annual Net Operating Income (NOI), the numerator, which is divided by the asking price, the denominator.  If that's over 7 these days, investors will be interested.

Best wishes.

Roxanne,

As a budding investor, investors have more questions for you than you may have for them.

As Tony noted in an earlier comment, there are ROI goals to achieve. Financial information will be requested that the seller may or may not already have available.

Hi Roxanne, The number one question I'm asked is what is the cost per square foot on lots and what is the cost per square foot above ground on properties. After that the logical question is "can you show me comparables within this neighborhood to prove it is bargin priced?'.

Bob

Investment properties are typically advertised on LoopNet.  It's good to know that whether you're working with a buyer or seller.