Most residentail real estate investor gurus tell investors to align themselves with real estate agents that speak the language of real estate investing but yet few real estate agents know what the so called "language" of real estate investing is.
My question to all activerain members is, what is the language of real estate investing to you from your point of view as an agent or investor or both?
Anthony
Ok,
I started out as an investor in 2003. I focused only on the preforeclosure market. My goal was to buy homes at a discount from distressed owners, do repairs and improvements, and keep the properties as rentals.
My personal understanding of investing from my own point of view is, find a home below market value that needs work but is livable according to local inspections, market to renters, make all repairs and improvements with positive cash flow from rental income, sell after 2-3 years. I repeated this process with a larger property.
In brief, my goal was to simply make sure that the cost of my financing was covered by the amount of rental income coming in each month.
Based on my experiences the language of residential REI includes some basic terms:
preforeclosure, foreclosure, bank owned/REO, tax sale, distressed homes
notice of default
marketing/ locating distressed homes
home improvements, handyman, contractors, rehab
cashflow
standard renting, lease w/option to buy
property management
exit strategy
When I work with an investor as an agent these are the terms that we talk about most. Most of my buyers are rehabbers who want to buy a property at about 65% of ARV, complete a the rehab project in 6-9 months while marketing the completed project, and sell ASAP. I try to guide them towards purchasing rentable rehab projects to ease the pain of monthly payments.
When I invest for my own portfolio these are the terms that I am constantly reviewing before, during, and after my decision to purchase something. I look for 65% ARV, a livable/rentable unit, tenants who might be candidates for lease w/purchase option, if not I will go month to month only, my time frame is 2-3 years.
What drives me crazy is agents who advertise multi-family homes with no income or expense information. Why waste my time making me call? The only reason someone buys a duplex or fourplex or more is to earn income. So that is a pet peeve of mine.
The other is advertising "This place cash flows"...again, without any information as to what income and expenses are. Where does it cash flow? 10% down? 20% down? 0% down? What do you mean? What expenses, if any, are you including in your calculations?
I have to stop here before my head explodes.
I totally agree!
All investments produce cash flow if youre a 100% cash buyer, right? LOL
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