Last week I was buying a dishwasher with the tenants for one of my rentals. We went to Sears. Could we have gone to Best Buy, Home Depot, or Circuit City? How about Pete’s Previously Enjoyed Appliances? Sure, but we went to Sears where the tenants can feel like I am taking good care of them. Quality appliances for quality people.
As I was paying for the dishwasher, the husband asked me if I would be interested in selling my rental. Now, you don’t know me, so let me make one statement that summarizes how I feel about my rental real estate: My rentals are my ticket to retirement.
I could work for as long as I wish, but when it’s over I will still have cash flow. Two ways I will always have cash flow is with my rental properties and my note portfolio.
My comeback to the husband was, “What do you have in mind?” He went on to say that right now he cannot afford to buy. It would take a few years to save for the down payment.
I love hearing this as I know I won’t have turnover for at least a few more years on this property! Plus, this couple will maintain the house as their own home because one day it just might be theirs.
As we continued our discussion, one of the salespeople overheard us talking about buying property. She came up to us and said “We are getting ready to list our property for sale. Would you be interested?” My tenant said “No, I want the property I am living in.” But she had my immediate attention. “Tell me more…”
You never know where you’ll find your next deal
She and her husband built this home on one acre six years ago. It is too big for them so they want to downsize. They also want to move to Iowa to be closer to their children and grandchildren. I listened while she went on for a good ten minutes describing the property and its surroundings. My tenants said goodbye as she and I continued our discussion.
I live in Fort Collins, Colorado. In 1991 you could have purchased any three bedroom, two bath home in any subdivision for $80,000–many with FHA, non-qualifying, assumable financing. Today, the same home sells for $175,000 cash.
Most real estate investors who buy property for the long term would think it’s crazy to buy in my market. I don’t think so. If the seller is motivated and willing to work with me on price or financing, I am still in the market to acquire property.
This seller owned her home free and clear. She wanted $200,000 net for her home. Comparable sales (what has sold in the neighborhood in the last 3 months) are in the $190,000 to $220,000 range.
As the seller and I work out the financing details I can market this property for rent. By the time it closes, I should have a tenant who will give me a deposit and first month’s rent to be used toward my down payment. I also get to pick up a property with a favorable price and terms.
Where do you go to find your investment properties?
Here are a few suggestions.
1. Farm. I don’t mean to buy a farm, but you need to farm the communities where you live. I only buy property in the southeast part of town. I am constantly in touch with the market in these communities. I am known in my farm areas as a landlord who takes very good care of her rentals. I leave my telephone number with the neighbors surrounding each of my rentals.
They know they can call me if there is ever a problem with a tenant, and they know it will be fixed. I have had potential sellers call me with their property for sale and when I ask them how did they get my name, they tell me it was a neighbor!
2. Board of Realtors. As an affiliate member of the Board of Realtors, I get access to sold property information. I am able to know what’s a good deal before I actually get into a property. I also get an opportunity to network with some of the more creative real estate agents who learn what I am looking for and who stay in touch.
We recently bought a property through a relocation company that was anxious to get it off its books. I would have never found this deal without a knowledgeable Realtor I met through my association with the local board.
3. Open Houses. We have many new developments popping up all over town. I visit the higher-end homes and ask the agent sitting at the open house if they ever run across someone who wants to build but needs to sell their existing home in order to do so.
You will be surprised at the response you will get if you take the time to visit and ask. The agent would be interested in working with you because it gives them an opportunity to earn two commissions–one for the new home and a piece of the old one. So everyone wins!
There are many ways to find real estate investments. Whether you flip houses, do lease options, or buy for the long term as I do, the successful investor knows how to find a good property and make it work. I hope the above suggestions will get you started. Don’t wait! Get out there and promote your real estate business.