For many aspiring real estate investors out there, finding the ideal real estate investment deal that affords them the enviable benefit of a steady passive income stream and the associated financial freedom is the ultimate goal. Over the past few years the market has grown steadily stronger, and more and more people are eyeing the real estate investment sector as their path to achieving success.
With interest rates at all-time lows, and so many potential homebuyers opting to rent instead of looking to buy their own home, it’s the ideal time to snap up a great deal on a property. In fact, studies have consistently indicated that the majority of new millionaires are made during recessionary periods in the real estate market.
Finding a solid real estate investment deal is one of the most important, yet challenging, aspects of getting started in the industry. Ideally, the transaction will be premised on informed decisions made upfront, which will in turn determine the scope of your ultimate return on investment down the road. Real estate entrepreneurs have to know what they’re searching for when scouring the market for the next property to add to their respective portfolios. In other words, knowing what you’re looking for from the start goes a long way in getting you the right property that suits your unique investment profile.
In order to leverage the potential COVID-19 induced real estate market dip to your advantage and generate real estate leads, investors should have clearly defined goals that will serve as a framework for the overall project—to include what type of asset you are looking for, what you can afford and the profit margin you are aiming to achieve when it’s all said and done. Here are a few good avenues to kick off your property search.
Consider Bank Foreclosures
When a debtor is delinquent on their mortgage payments for an extended period of time, the lending entity will eventually repossess the property and remove the occupants. After the home has been cleared out, the financial institution will typically put the house on the market for sale, often using a local real estate agent to list it on their behalf. Although foreclosures are a regrettable occurrence, these properties can present some of the most favorable deals you’ll ever find in the real estate investment space. Banks want to focus their operations on lending money, not managing a host of foreclosed properties, so they are usually quick to offer significant discounts just to get houses off their account. Because the foreclosure process can be lengthy—in some cases several years—these properties often require some sweat equity in the form of repairs to prep them for resale.
Timing is Everything
We’ve all heard the saying: The early bird gets the worm. The same principle holds true in real estate transactions as well. Typically, it isn’t the highest offer for a home that the seller accepts—it’s simply the first one that they receive. Accordingly, if you are looking to land a great deal, be proactive! Obtain a pre-approval from a bank or a proof of funds to be used for a hard money loan from a hard money lender so that you have the ability to make an offer on any property that pops onto the market and has all the features that you are looking for in your next real estate project. Go even a step further and ask your real estate agent to coordinate automated email notifications that let you know if any new listings hit your target market. Alternatively, another strategy to get a good deal is to search for listings that have been lingering on the market for an extended period of time. Those sellers are usually much more willing to offload the property for a cut-rate price because they are getting desperate making multiple mortgage payments for months on end and will consider almost any reasonable offer.
Take a Different Approach
In a competitive real estate market, similar to the one the majority of the United States is beginning to experience as business resumes after widespread lockdowns, great deals can be challenging to find due to the sheer number of potential buyers looking for their ideal property. In some localities, a single home for sale might attract multiple offers on the same day it hits the market. As such, one of the most effective tactics real estate investors use is to expand their search beyond multiple listing services and alternatively reach out to homeowners directly by asking them if they are considering selling. At any given moment, a significant percentage of property owners are at least willing to entertain the option of selling if they receive the right offer, so why not reach out prior to them listing their home with a real estate agent and then having to fight off the competition by submitting a pricy offer? One of the most ideal owner categories to try and establish contact with are absentee owners—which are individuals who own a home but do not reside there. They may be landlords who have a vacant property on their hands or heirs who inherited the home and do not know what to do with it yet.
If you are looking for your next investment deal, you will want to consider partnering with a hard money lender. Alpha Funding Partners offers the best combination of rates and leverage. We pride ourselves in our fast turnaround times, quicker closings, customer service, and our experience in the industry. Reach out to Alpha Funding Partners today to learn more about obtaining your next hard money loan.