1. Identify distressed properties.
2010 will continue to provide opportunities for picking up distressed properties. Over the next 3 years the commercial debt for acquisition of apartments is coming will be coming due and it will be difficult to refinance these properties in the new conservative lending environment. Owners who are able to add equity to the properties will be able to survive but others will have to walk away from their properties. This provides an opportunity to pick up some great properties at pennies. It is important to be continuously scanning the horizon to find valuable distressed properties and a good real estate agent who understands the investor’s criteria is a great asset.
2. Raise Cash to move quickly
Landlords and real estate investors with cash in hand have an upper edge as they lower the risk with closing and accelerate the deal as compared to others who will need to finance the purchase. Cash may also enable better discount on a property from the seller.
3. Can’t Raise Cash, Find Lenders
Overall lending requirements have become very strict and lenders are demanding more stringent loan terms for acquiring residential rental properties. In order to pick up properties at pennies, if no cash is available, raising capital from financial institution may be the only option. So finding a bank or mortgage broker who can find financing is critical for success.
4. Move quickly and execute fast
As more and more real estate investors and landlords become comfortable with the economy they will open their wallets leading to some competition in acquisition of distressed properties. Therefore, the key to success is going to be working with a real estate broker who can find discounted deals and the ability to move fast on making offers and closing the deals.
The next few years provide opportunities for savvy investors to pick up properties at discounts and by following these tips, they can improve their chances of adding more valuable residential real estate properties to their portfolio.