When my uncle, Greg, came to me with his plans to start investing in real estate after retirement, I encouraged him to get started now. Though he hadn’t officially retired, he wasn’t exactly spending every waking moment at the office anymore. As a partner at the finance firm that he’d help build, he didn’t have to. With spare time on his hands, I just saw no reason he couldn’t start buying and selling houses as a business—even if only on the side, part-time. To help make the transition easier, I even offered to provide a checklist for buying an investment property, much like the one I used when I began my professional career years ago. Not only did it demystify the process for me, but it also kept me on track for repeatedly achieving good returns. From the look in Greg’s eyes, I could tell he was realizing a list could do the same for him.
Your Buying Investment Property Checklist for Achieving Good Returns
Especially as a first-time investor, it helps to have a checklist for buying investment property on hand. It’s not just that you don’t want to forget a critical step in the process of buying, rehabbing, and selling homes; it’s that you don’t want these missteps to cost you your potential returns. And, in the beginning, it’s easy to overlook what needs to happen next on a deal simply because you want it so badly. So, to make sure you don’t let your emotions derail your intentions—and your ROI—here’s a checklist to keep your deal-making decisions on track.
➜ Find a deal. It sounds easier than it might be just starting out. The best deals that offer the greatest potential for good returns are properties from homeowners in distress. Since they typically need to unload their homes fast, you can often buy them at below-market value. Of course, that’s why other investors go after them, too. So, when you put a system in place that helps you generate leads, make sure it’s designed to find off-market properties that don’t make it onto your competitors’ radars. Otherwise, finding a deal won’t always lead to a close.
➜ Offer wisely. To get anywhere near realizing decent returns, you have to buy properties at pretty steep discounts. The more room you have to renovate a house, the less likely you’ll get thrown off your financial course if things don’t go as planned. Anything from a surprise leak to a severe storm has the potential to knock you and your ROI around a little. But, offering wisely is not just about offering low. The homeowner needs to feel like they’re getting a deal, too. So, to make sure your offer doesn’t get shoved aside, consider where they’re coming from as much as where you want your returns to go.
➜ Get an inspection. To ensure that you make an appropriate offer that takes into account all necessary repairs, it’s critical to perform an inspection. Skip this item on your list and you could find yourself falling into a money pit. Things like mold, foundation issues, and overburdened electrical panels aren’t always obvious from a single walk-through. You’ve got to get the right pros in there to help you calculate exactly what kind of rehab you’re getting into. There’s really no excuse for skipping this step and putting your returns at risk.
➜ Rehab smartly. Once you know what you need to do on your investment property, run those numbers correctly so that you can perform that rehab smartly. In order to do that, get a real estate investment analysis and valuation tool that estimates local labor and material costs that you can accurately budget for. Then, stick to your budget. Deciding halfway through repairs that tearing down walls to open up the kitchen will look as good in your property as it does on TV could actually damage your returns. And, there’s nothing smart about that.
➜ Sell at a price that makes sense. The final item on your checklist is to sell your investment property at a price that makes sense—for your bottom line and the market. Obviously, you don’t want to price the house too low. Sure, you may sell it fast and for exactly what you’re asking. But, you may also miss out on realizing the highest possible returns. That doesn’t mean you should list the home for as much as you can imagine, either. Price out your buyers and you may be holding the house for longer than your ROI can bear. It’s a balancing act to be sure. But, if you’ve correctly and confidently checked everything else off your list, the balance in your checkbook should reflect good returns.
The beauty of having a checklist for buying investment property like this one on hand is that it keeps you focused on your goal of realizing optimal returns no matter what else crops up. So, you can spend a little extra time with a distressed homeowner if that’s what they need to feel comfortable with the deal. Or, you can get more estimates for repairing the electrical system if that’s what you need to feel satisfied with the cost. No matter what happens, you’ve got an easy-to-carry tool to help keep you on track—from your first deal on.
The Right Tools and Resources Make Staying on Track Easy
Just as I told Greg, when I first started buying houses to renovate and sell, I carried a similar list around with me all the time. But, even after I’d closed on several deals, my checklist for buying investment property frequently found its way into my pocket. It took some time for the work I was doing as a professional investor to feel like second nature and, until I gained more confidence, I wasn’t willing to risk realizing the best possible returns on my deals.
But, I’ll tell you what I told Greg. It wasn’t my checklist that ultimately made the process of real estate investing easier for me. It was becoming an independently owned and operated HomeVestors® franchisee that did it. The breadth of tools and resources that I have access to as a franchisee are designed to ensure I realize optimal returns on all of my deals. From the nationally-known and trusted “We Buy Ugly Houses®” ad campaign that brings great qualified leads on distressed homeowners to me to the valuation tool, ValueChek™, that helps me buy, rehab, and sell at good numbers—I’ve got what I need. And, having the right proprietary tools and resources have helped me make the most out of my investment decisions.
If realizing optimal returns on your investments is at the top of your list, contact Homevestors® about getting access to all the right tools and resources for making that happen today!
Each franchise office is independently owned and operated.