Tuesday, November 24, 2009
Do your homework!
You have heard it said trust, but verify. This holds true for nations, and for real estate as well. Do your homework! Don't rely on other's analysis of costs, profits, etc. Check everything yourself, and get second opinions. If you are hiring a contractor to do repair work, get several estimates. If you are being offered a deal no matter how reputable the seller, have your own trusted contractor price the deal for you. Verify that the potential rental price quoted is indeed in keeping with similar rentals in the area.Real Estate is a demanding, active business. If you allow others to do the legwork, you set yourself up for failure. The successful investors are those who do their own verification of costs and potential profits. Sometimes seemingly simple things are what topple those who lack due diligence. For example, there are cases where someone claims to own a property, when indeed he does not. Something as simple as not checking titles oneself can lead to disaster! Scam artist tenants will sometimes try to sell property as their own. Always go to the registrar of deeds and pull the tax records. Many times this can be done online. If the county operates such that it is not easy to pull up this information on line, many people will not bother, and sometimes great deals can be found by those willing to invest the time. Ask lots of questions- ask other realtors, management companies, attorneys, REA groups- is the property you are considering able to rent at the price being claimed? Gather as much information as you can yourself, and ask those who might know. Don't just trust the seller's word. Find appraisers who will do "desk comp work", where they will pull up information for a nominal fee and be able to tell you what neighboring property is worth in rental potential. By just driving through the area yourself, writing down all property for sale, and then calling the realtors and finding out what the other properties are going for, you can become a remarkably accurate appraiser of the value of the property you are interested in.The way to develop an accurate feel for the value of a property, its rental potential, and learn to smell the spectacular deal is be willing to do the work yourself. Very few people in real estate get rich letting someone else manage all the details. Trust others, but verify that what they say is true with your own diligence and work.