This is very helpful information. I am new to REI and am trying to purchase my first property. I am putting together an exit strategey. I agree that doing nothing at all is a big mistake. I had many opportunities in the UK before the properties sky rocketed but did nothing and missed some really good deals.
I always feel that I lack the knowledge to proceed with any REI but I am taking the first step to buy a house that has been on the market for a short time, it is listed at $1,175,000. It started out at $1,400,000 two years ago. Can anyone tell me if this is too risky. My exit strategy is to buy it and run one of my businesses there and resale in the spring of next year, hopefully turn over 150,000 profit.
Also, there is another one in this very desirable area, been on the market for 3 years, it started out at $1,400,000 as well but I may be able to get it for $825,000 and resale it in 18months. Would I be able to get funding for these projects?
A neophyte investor will, in my opinion, have a difficult time optaining funding for properties in these price ranges - especially if it is commercial and/or you don’t have a lo of money to put into the transaction. Not to say that it can’t be done but I’ll bet there is a difficulty factor…
For a 1st time investor this is not a good strategy, I tell new investors to start out with smaller loans from 60,000 to 150,000. A property that they can sell quickly and move to the next. If you are looking to buy and hold you should look at buying a duplex or 4 plex for cash flow purposes. The homes that you speak about in your post have been on the market for 3 years, that itself should tell you they are not moving and will be dificult to move.
Donald Trump is said have mentioned several time publicly,“If your going to think anyway, you might as well think big”. I read Art of the Deal some 25 years ago and seversl things I learned there have served me very well in life, so I can appreciate someone like you looking at high end properties for your initial deals. Although these are likely not prudent or adviseable first deal targets, I do admire that attitude in a person.
So heres my free advice; Work hardest on educating yourself, particularly in FINDING GREAT DEALS! You will find that a great deal is ALOT easier to get funding on than a skinney one.
I live in the West. And no I am trying to get funding, although I own a profitable small business and earn an engineer’s salary.
One house has only been on the market for a few weeks. The other one has been on for a few years. I was thinking of rehabbing it and placing it back on the market in a year or so for $150,000 more than my purchase price but less than it has been listed for.
There is nowhere near enough information in this post for anyone to give you a very useful answer…but I’ll try to point you in the right direction. First, you need to realize that a listing price, in and of itself, is meaningless. The listing price is just what a seller is asking…it doesn’t have to have any basis in reality. You can have a property that is worth only $500K and is listed for sale at $1,000,000. So, the first thing you need to determine with ABSOLUTE CERTAINTY is what each of these two properties are actually worth right now. You CAN’T consider buying a property just because it’s listed for a lot less than it used to be. If you are unfamiliar with property valuation, you might seriously consider hiring your own independent appraiser (perhaps even get two separate appraisals for each property - about $300 - $350 for a typical single family home appraisal) so that you can get some insight into what these two properties are really worth right now. A lot of people in this type of a situation will try to save money by asking the opinion of a real estate agent rather than paying for an appraisal from a licensed or certified appraiser…in my opinion, this is a BIG MISTAKE…real estate agents are salespeople, that’s not an insult, it’s a fact. And by that very fact, they are NOT independent. If you hire an appraiser, you will get an expert, INDEPENDENT opinion of value for those properties. This would be the first thing I would do before even thinking about considering buying these properties.