OK… so you’ve been to a bunch of meetings. You’ve probably read
some books, gone to some seminars. You’ve really done your homework….
Now what?
Once someone has done their homework, the first thing I suggest doing
is selecting a target area. It’s often that I ask people where they’re
target area is and they’ll reply something like ”Anywhere” or
“Anywhere I can find a good deal.” Sound smart? Maybe. I know
there are a lot of real estate investment experts who will tell people
to go anywhere for a deal. That may be right for them, but I
strongly disagree.
You have to know your target area, every block, every house. So many
areas are block to block in the city or development to development in
the suburbs. If a house comes on the market an investor needs to move
lightening fast. There is very little time to do research when a
property pops up on the MLS (Multiple Listing Service) or when
foreclosure notices are filed. Every investor and their mother are
about to swarm in on this deal. How can you make the proper offer if
you don’t know the area extremely well? Offer to little and someone
else will get the deal. Offer too much and…. Well… we don’t even want
to think about what happens then. Ask yourself… do you know what a 2
bedroom sells for on Maple Ave? Or whatever Ave in whatever
neighborhood? If you don’t. Stop and do some more homework.
There are so many cities, townships and neighborhoods, how do you
pick the “right” one? The answer is, there is no “right” one. There’s
only the “right” one for you. Typically speaking, inner cities or
redeveloping areas tend to have the most potential, but they also have
the most competition. The real answer is, you should stick to an area
you already know. Maybe where you live now, where you grew up, where
you work or somewhere in between. The point is that it needs to be
familiar enough for you to know the ins and outs. It also needs to be
convenient enough for you to be there on a regular basis.
Hopefully, your mind is starting to think about what area will work
best. What now? Now, you have to know the area like the back of your
hand? How do you do that? Spend as much time as possible there. If
you have to run an errand, do it there. Do you exercise? Ride your
bike there or jog there. Go out to eat there, the supermarket,
whatever. You’ll start to learn the area real quick... which blocks are
good, which are bad, and which are ripe for development. You also need
to know what every property sells for. You should attend every open
house, find out what every property is listed for, know their
condition, and what they eventually sell for. This will give you a
real good feel for what properties sell for at what price in what
condition. I know that this sounds like a lot of work. If it’s more
than you can handle, you can either devote more time or scale down to
a smaller part of the area. Don’t sacrifice your intimate knowledge.
So, now that you know it, what do you do? Now you post your
“we buy houses” signs, post flyers anywhere you can, target dilapidated
or runned down properties, let everyone you meet know that you buy
properties and you will gladly pay them a referral fee if they find you
a good one. Rental properties that a landlord is having trouble renting
out are good ones too. Canvas the area and before you know it you’ll
be seeing a lot of deals.
Now that you’re seeing some deals, how do you tell a good deal from a
bad one? We’ll have to save that for another article.
Ari Miller is Vice President of Gelt Financial Corporation, a private
portfolio lender in Pennsylvania that specializes in investor real
estate and development loans. Gelt lends in PA, NJ, DE, MD & FL. You
can contact Ari at (215) 357-4955 ext. 275 or
email: AriMiller@GeltFinancial.com.
To learn more about Gelt Financial, go to
their website www.GeltFinancial.com.
