Several strategies can help you make a better offer (and get accepted) on the property you’re buying.
1. Put in more cash. Many people like to minimize the down payment they will commit to, and then only raise it if the lender requires it. More cash shows more financial strength, and offers get accepted on the size of down payment, even if they are otherwise identical.
2. Make a “clean” offer. Asking for closing costs, carpet allowances, concessions of other kinds can doom your offer. Banks want “clean deals.”
3. Prove up everything with the initial offer. preapproval letters (from a known lender!), evidence of deposit, and proof of cash to close your transaction with your initial offer package.
4. Have everything ready for your agent to send over the minute you find the property you want. I’ve seen a day’s wait be too much. Being ready to perform is the most important strategy of all.
Here are the profit centers for real estate purchases for investors:
Here are what I believe to be the best opportunities for you to make money with real estate in the near term (less than 5 years):
1. Rentals. By this I mean condominiums or single family homes in good areas, or 1-4 units. Apartment houses and commercial buildings are problematic, both because of financing limitations, and because they are sold with “tenants included.” Additionally, it’s much easier to “cook the books” on an apartment house than on a single family home. Expect a return in the high single digits if you select the property well. Cash is king in this market, and cash will get you the property you want. Financing always creates issues, since the banks now restrict lending on non-owner occupied properties pretty severely.
except for “hot” markets, investor-owned real estate is almost always valued by the income it produces, whether residential real estate, commercial centers, or farmland.
Some investors like “land banking” (buying land for future development or sale), but unless you have a very good idea of where prices are headed in a given property type and location, land banking is not normally a great strategy.
2. Limited “Flipping.” It’s increasingly difficult to flip properties and make a real profit, because the difference between the “fixed up price” and the “ugly trash price” is now so small. However, I believe that the future of flipping properties could be very good, because of the many foreclosures that will likely come to market, since the average buyer’s appetite for repairs is limited. A turnkey property is preferable for a first time home buyer to a “junker,” and the rehabber/flipper will probably find a great opportunity for himself in the near future. High profit margins will be unusual, though, so be careful when you buy.