Hello,
What are some big first time mistakes that I should avoid? Most of all, How should I start out? Buying a condo or low-income housing and renting it out? Please, if you have experience or first hand knowledge about real estate investment, I would love to hear your take on it and what you would’ve done better if given a second chance.
Thank you__________________
MakitaLearn to negotiate hard (and it's not always about money, so many things to negotiate on).. just started late last year and at #IP2 now.
First property, I felt I was being rude offering such a 'low' price. My dad who always has an opinion told me off for not negotionating hard enough.
Fast forward 6 months, purchased property number 2. This time dad was uncomfortable as I was putting in 'low ball' offers. I stuck to what I felt was the right price for me in order for said property to meet my cash-flow criteria, amusingly all offers have come back with a yes (some 2-3 months later). I took the one that I felt was a great buy.
Lesson learnt, now working on improving research and negotiating skills.
Hi danis.
No one can tell you what or where YOU should buy.My advice is to know what YOU want from buying property. ie what is your end goal? This (combined with your current situation) will determine what and where you buy.
The mistakes people make are not doing the above. People get it in their head to buy a property because it seems like a good idea, or everyone else is doing it. Or to save tax (biggest mistake beginners make).
Look at YOUR situation – are you cash flow rich and equity poor? Or equity rich and cash flow poor? Can you afford negative cash flow? Lots of people buy their first property without considering the long term (or even short term) implications. Eg how much will you be out of pocket each month? How will you cope if your IP is empty for 2 months? What if there are maintenance issues. Not thinking about these issue and having cash reserves is the main reason a LOT of people buy one investment property and sell it within a few years, NEVER to buy property again.
Not getting it right at the beginning is also the reason 99% of people who own investment properties lnly own 1-2 investment properties.If you want to be one of the 1% of people that own more than 2 investment properties you need to get some education. It's not rocket science. There are many ways to make money in real estate. But you need to have the right fit for you.
Hi Makita
Along with all the excellent advice here on various strategies and operating models, my answer to your question, i.e. 'what you would’ve done better if given a second chance' is, Start Earlier
Time in the market has a great multiplier effect.Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
I think real estate is the best and safe option to invest your money in the right way. Make sure that you have been able to invest in real estate business. This investing source can help to earn more profits and get monthly cash flow.
Hi,
Thanks for all your useful inputs. Your tips are valuable and very helpful.
ThanksI would like to say two things to you; if you don't know anything about the real estate market then you should hire a real estate agent; secondly, real estate is a very good sector for the investment purpose. If you invest at the right place then you will definitely get some profit in the future.
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bal harbour condosNHG wrote:First property, I felt I was being rude offering such a 'low' price. My dad who always has an opinion told me off for not negotionating hard enough.Fast forward 6 months, purchased property number 2. This time dad was uncomfortable as I was putting in 'low ball' offers. I stuck to what I felt was the right price for me in order for said property to meet my cash-flow criteria, amusingly all offers have come back with a yes (some 2-3 months later). I took the one that I felt was a great buy.
Lesson learnt, now working on improving research and negotiating skills.
I don't really want to go OT, but just a quick question in regards to offers/negotiating:
Say the agent is asking $140k-$150k for the property – you know it's a bargain already. However, you offer $110k-$120k to try and get it that extra bit cheaper for your returns, yet someone else offers $135k. Even though you expressed interest, but your offer is lower, would they come back to you, or take the $135k offer?
There are two things to consider before jumping into real estate investment..
First: your Goals. What do you want? Why would you want to avail? What are your reasons?
Second: Your situation: Are you capable of availing? do you have your savings? Consider your cash flow and lifestyle.My advise would be to take some action then see how it goes. You can research and analyse as much as you want but it takes action to learn lessons. The other guidance I would give is to do one thing at a time, get it settled in and be sure it is before you do another.
Always start with the end result you desire and work back from that. It’s important to develop great negotiation skills or have someone negotiate for you if you don’t feel that is your strong point. If you know the reasons why someone is selling, you can work towards solving their problem whilst negotiating what you desire at the same time. Win win scenarios are the best.
I previously purchased a property in Adelaide for $129k in Salisbury North. 5 Bedroom, 5 yrs old. Mkt value at the time was $180k as it needed some maintenance. In good condition it was worth $215k. The above info was enough to gain some insight to the property and owners. Research revealed that this family built the house, so I could work out what the build cost was and what they were likely to owe, which was no more than $100k. Knowing that and the emotional reason for selling told me a lot. The bank was about to repossess the property within three days, so my cash offer for $129k was accepted immediately because it posed no delays or hiccups or any chance of falling over.
Hope this helps
Matthew_W wrote:NHG wrote:First property, I felt I was being rude offering such a 'low' price. My dad who always has an opinion told me off for not negotionating hard enough.Fast forward 6 months, purchased property number 2. This time dad was uncomfortable as I was putting in 'low ball' offers. I stuck to what I felt was the right price for me in order for said property to meet my cash-flow criteria, amusingly all offers have come back with a yes (some 2-3 months later). I took the one that I felt was a great buy.
Lesson learnt, now working on improving research and negotiating skills.
I don't really want to go OT, but just a quick question in regards to offers/negotiating:
Say the agent is asking $140k-$150k for the property – you know it's a bargain already. However, you offer $110k-$120k to try and get it that extra bit cheaper for your returns, yet someone else offers $135k. Even though you expressed interest, but your offer is lower, would they come back to you, or take the $135k offer?
A good agent would come back to you – to create competition between the two of you in the hope of achieving a higher price. If you can only justify matching the offer the next point to sweeten the deal for the vendor is to look at conditions – does the other prospective purchaser have conditions that you don't need?
As a property manager the main point I always stress to prospective property investors is… Make sure you've got money in the bank in case something goes wrong!
I see so many landlords whose focus was solely on obtaining the property (yields, price, outgoings etc etc) that they overlooked the possibility of the hot water service bursting 3 weeks after settlement or the oven breaking down – and there's no money to fix it, which equals panic.
Best wishes for your future investing.
tonnygarden wrote:I would like to say two things to you; if you don't know anything about the real estate market then you should hire a real estate agent; secondly, real estate is a very good sector for the investment purpose. If you invest at the right place then you will definitely get some profit in the future.________________________________
bal harbour condosWhere are you from? In Australia you don't hire real estate agents to buy property. Most real estate agents don't know about property investing. They know how to sell houses.
You can hire an independent buyer's agent.
Kristin Simondson PBRE wrote:Matthew_W wrote:*snip**trimmed*
Thanks Kristin. That's what I thought. I guess it depends on the agent….
Matthew_W wrote:NHG wrote:First property, I felt I was being rude offering such a 'low' price. My dad who always has an opinion told me off for not negotionating hard enough.Fast forward 6 months, purchased property number 2. This time dad was uncomfortable as I was putting in 'low ball' offers. I stuck to what I felt was the right price for me in order for said property to meet my cash-flow criteria, amusingly all offers have come back with a yes (some 2-3 months later). I took the one that I felt was a great buy.
Lesson learnt, now working on improving research and negotiating skills.
I don't really want to go OT, but just a quick question in regards to offers/negotiating:
Say the agent is asking $140k-$150k for the property – you know it's a bargain already. However, you offer $110k-$120k to try and get it that extra bit cheaper for your returns, yet someone else offers $135k. Even though you expressed interest, but your offer is lower, would they come back to you, or take the $135k offer?
I can't recall who told me this, yet I felt it was a valid point…
If it's a good buy already, and it meets all your criteria, why loose it over 5-10k. I haven't had the most experience, tho I feel I would I would only negotiate further if there were multiple offers on the table which met my criteria.
I saw a place and put an offer in 20 mins later, about 8% lower asking price, as I felt that even at asking price it was a great buy, and I had a nagging feeling the vendor had a reason to sell cheap (I was right). A month later a friend placed an offer on a house a street away and lowballed by 10k, he missed out on what would have been a great purchase already.
Spend a good deal of time getting to know an area, and you will quickly assess what property stock is worth.
NHG wrote:I can't recall who told me this, yet I felt it was a valid point…If it's a good buy already, and it meets all your criteria, why loose it over 5-10k. I haven't had the most experience, tho I feel I would I would only negotiate further if there were multiple offers on the table which met my criteria.
I saw a place and put an offer in 20 mins later, about 8% lower asking price, as I felt that even at asking price it was a great buy, and I had a nagging feeling the vendor had a reason to sell cheap (I was right). A month later a friend placed an offer on a house a street away and lowballed by 10k, he missed out on what would have been a great purchase already.
Spend a good deal of time getting to know an area, and you will quickly assess what property stock is worth.
Albeit true. However, whilst there's that chance you can lose it, there's also a chance the offer could be accepted too.
Like Kristin said above, the agent should get back to you to make a counter-offer if a higher offer is received. So there's really no harm I guess. *shrugs*
Hi,
Your posts are really very helpful. I want to invest in property. Please suggest where to invest: in flat or in plot.I think buy a condo and then renting it out, because now days condos are in demand. People prefer them for renting as they provide better facilities.
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st. regis condosReal estate is also a gamble in my opinion. what ever you buy and where ever it may be located , the conditions dont remain the same always. The property may seem to have high prospects but sometime later maybe the place become way to commercial, or a bridge is built there that adversely affects the value of the property. or the plain common case of bad tenants is something you can TRY to avoid but may anytime come across such people.Therefore, buy where its convenient for you to easily approach off and on to deal with related matters. Another advice is to rent out commercially. There are more chances of tenant sustainability for a longer period then in case of residential tenants.
Time in the market has a great multiplier effect.
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