To Look B4 U Buy???

arreee1

My husband and I are also new to PI and have looked at lots of potential IP in the last month. It is a good way to learn what to look for and what questions to ask real estate agents. I think in the beginning it is good to see with your own eyes… it is not wasted time as you will most definatly learn something and will get to know which agents are good to deal with.

Steve has a great resource called “Buyer Beware” and it outlines what you need to know about a property before buying. So it might be a good place to start if you don’t already have it.

I guess you have to weigh up how much risk you are willing to take, and if you are starting out, it is always best to minimize risk!

Good luck,

mapleleaf

Achieve the Dream!

Even as a new investor, as Margaret Lomas once said, (she is a positive cashflow investor, in case you didnt know) if the deal adds up and you have weighed up all the risks, why do youhave to see it? What difference is viewing the property going to make, apart from emotionally? The reason i believe that most people feel a need to see the property before buying is that property is real, unlike shares or other forms of investing.
Say for example you were investing in shares… would you ask to see the company before investing in it? No you wouldnt, because its all abou the numbers.
if the deal adds up to be profiatble, i would say go for it. However, i am definately not saying you should go ahead and buy something from a town you havent thoroughly researched either. its all about doing your due diligence. Like someone else mentioned on this forum, try steves product, buyer beware, its a great product, and will help you research. Dont rely solely on this product though. When you think you have found an area that may be cash positive, do some research on google, or other such search engines. You may find a newspaper article on something bad happening in the town that the agents in the area are just not going to tell you about. If it is a big problem, walk away, if you can work out what the risks are, and have back up plans should something go wrong, then you have weighed up the risks, and you would know what to expect.
Again, another reason i wouldnt advocate insisting on seeing the property before signing the dotted line, is that positive properties are really rare these days, and do not last longer than 48 hours on the market most of the time. So if you need to fly out to an interstate possible property, not only could this turn out to be very expensive if the property is not what you thought it would be, but you could fly out there, only for it to come off the market while your on the plane over there! How do i know this? because i contract for a buyers agency who specialize in positive properties, and i have seen how fast these go. You need to have your research done on a town before you start looking for a suitable property. Because i can safely say, that you will not have time to do most of your due diligence once you have found the property, because they just dont stay on the market very long.
As someone else said too, for your first couple of properties, use a buyers agent. they will teach you all you need to know, and most importantly, there is less chance of things going wrong than if you had sourced it yourself. the company i work for actually organizes everything for you, so all you have to do is say yes i want that one, and they will take over the rest for you, which is a great help when you work full time!
Im sorry this is long, but all i can say is research research research. it sounds simple, but i made the mistake once of not researching thoroughly, and it has been my biggest mistake yet. Its easy to get carried away by the thought of a positive property.

You can pay someone to do an independant study on the area / property you are interested in, (buyers advocate) or you can just do the research yourself, which is what I did..
I bought 2 of my properties without seeing them, but not before doing my due diligence …at least 20 questions on the property and area…then finally of course, you get a building and pest inspector to check over the whole place – they give you full reports on the state of the place from tiny cracks in the wall to major problems.
You need to be creative and speak to the local council, get them to do a search on the surrounding area to make sure they aren’t about to build a morgue next door (heehee) etc…
Both of those properties have made me $53k together in less than 2 years, and they are +CF, so this strategy has worked for me..
I recommend the Margaret Lomas book pocket guide to positive cash flow investing, as it has all the questions you need to ask…
Tracy

TD

My opinion is you cannot do thorough due diligence on a title without actually physically inspecting it.

Many a time, crawling through the limestone foundations on a cold winter’s morning, or the roof cavity on a hot summers day, the building inspector actually appreciates having someone next to him / her crawling through the dust and cobwebs – pointing out heaps of defects / good points that never make it onto the report. They simply tick a little box and that’s it. Seeing it with your own eyes and the circumstances surrounding it gives you a feel for what you actually buying.

Smells / weird noises / and the feel of the place cannot be adequately captured on a written report.

I agree that a property deal and a shares deal should be about the numbers, but then shares don’t have leaking rooves, soil contamination, overlooking amenity neighbours, poor landscaping, not enough height for trucks, poor fencing and security etc etc.

Obviously it depends on the purchase price, but if you are going to spend alot of money with respect to your personal budget, I reckon it’s worth your time and effort to actually go out and have a detailed squizz of exactly what you are buying. What else are you doing with your time and money that is more important at that exact moment ??

Oh, and just on buyer’s agents, IMHO I reckon they are bad value for money….whatever their price. By being handed the research on a platter all dressed up, you really don’t know if it’s right or not. Furthermore, the lessons learnt going through the process will be lost and not able to built upon for the next purchase. What about 10 or 15 deals down the track, are you still going to be sitting there paying someone to do the legwork for you ?? You simply miss that fundamental understanding of the title that comes with conducting the research and more importantly negotiating terms of the contract, both sales and later on leasing. The knowledge you pick up is worth way more than the “savings” the buyers agents / advocates supposedly get you – which you’ll not really know and have to trust their word.

Anyway…..