Investing in real estate in an unfamiliar area? My advice: Do your homework!

By
Real Estate Agent with Better Homes and Gardens Real Estate Metro Brokers
http://actvra.in/ppp

Investing in real estate in an unfamiliar area? My advice: Do your homework!I get several calls a week from investors around the country that are attracted to our low house prices.

When you are getting about one percent interest on savings, the notion of 20-30% return on investment is pretty enticing.

Unfortunately, most of these callers are basing their interest solely on the price of the home and not any other factors. There are many reasons that a house is priced under $25K, and none of them are usually good.

And the occasional good house that slips in is gobbled up by an owner-occupant that lives in the area and is ready to move quickly.

Just because a house is priced at or below $20,000 does not necessarily mean it’s a good investment property. Our recommendations are usually foreclosure homes that are in relatively good shape in the $75-125K range that will produce good rental income and at least have a chance of future appreciation.

Before buying anything in an unfamiliar area, do your homework. Study trends and look at location, schools and amenities. The key is to purchase a home that people will want to live in and enjoy,

Because that is what determines the true intrinsic value of the house!

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Robert L. Brown 12/10/2011 08:16 AM
  2. James Lyon 12/10/2011 02:56 PM
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Show All Comments
Rainmaker
509,824
Lisa Wetzel
RE/MAX Realty Affiliates - Carson City, NV
CDPE, SFR carsonvalleyland.com

Richard ... we are experiencing very much the same thing!  Prices can be deceiving ... looking at the overall market is very important!

December 09, 2011 11:09 AM #8
Ambassador
625,691
Doug Rogers
Bayou Properties Realty - Pineville, LA
Your Pineville Louisiana Agent

But the guy on TV said I can buy nice homes for pennies on the dollar?

December 09, 2011 11:20 AM #9
Rainmaker
147,674
Cheryl Dickson
RETIRED - Realtor, GRI / Home Inspector - Grand Junction, CO
Grand Junction

Such great advice Richard! I know first hand! I moved from California to Colorado, to Oklahoma, to Colorado. I discovered I did not know values, neighborhoods, or economics of the areas. Thank goodness I had the sense to get a Realtor, and that saved me from several mistakes I could have made.

December 09, 2011 12:20 PM #10
Ambassador
1,489,010
Tammy Lankford
Lane Realty - Eatonton, GA
Your Lake Sinclair Expert (706-485-9668)

pays to do your homework or hire someone who has already done it.

December 09, 2011 10:21 PM #11
Rainmaker
895,352
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

Richard,

That's true everywhere!

What appears intially to be a bargain oftentimes turns out just to be the right price.

Brian

December 09, 2011 11:11 PM #12
Rainmaker
521,973
Maria Morton
BHG Real Estate - Kansas City Homes - Kansas City, MO
Kansas City Real Estate 816-560-3758

Richard, you are so right! Investors really need to learn about an area and also consider the costs of rehab before investing in real estate. It helps to have an expert to advise you. (such as yourself, for instance)

December 10, 2011 12:52 AM #13
Rainer
177,469
Rosalie Evans
Meritus Group Real Estate - Sioux Falls, SD
The Evans Group, Sioux Falls, SD Homes For Sale

Richard you need another collumn on your porch there! lol. We also have the bargain hunters here! If you have to put in 50k to make something look decent and then it is still in a unpopular location it has then ceased to be a good buy anymore! 

December 10, 2011 03:37 AM #14
Rainmaker
477,913
Robert L. Brown
www.mrbrownsellsgr.com - Grand Rapids, MI
Grand Rapids Real Estate Bellabay Realty, West Michigan

Very good pont(s) and a very timely post. Investors need to find good agents in those particular areas who will work for THEIR best interest.

December 10, 2011 08:10 AM #15
Rainmaker
891,836
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Richard, due diligence is a major factor when buying a property for an investment. Although, a low price does attract a lot of inquiries.

December 10, 2011 08:43 AM #16
Rainmaker
283,115
Charlie Dresen
Steamboat Sotheby's International Realty - Steamboat Springs, CO
Steamboat Springs, CO e-Pro

If it looks too good to be true, it probably is. I see it as my job to steer people away from listings that may seem like great deals on the surface, but really aren't if you know the area, have done your homework and dig in a little further.

December 10, 2011 08:58 AM #17
Rainmaker
533,382
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

It's enticing to be able to purchase a house for that amount of money, but like you mention there is a clear "catch" somewhere along the way as far as who would rent it, what kind of condition, where it's at, long term growth.

December 10, 2011 09:00 AM #18
Rainmaker
714,371
Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota Real Estate Expert

I agree that for most investors they are best getting a house in good shape but priced well assuming your rental market has the cash flow like we do here now.

December 10, 2011 09:23 AM #19
Rainer
257,963
Richard Bazinet /MBA, CRS, ABR
Realty ONE Group - Scottsdale, AZ
Phoenix Scottsdale Real Estate

Richard, I echo as well other comments that indeed clients need to be encouraged to do their homework and research very carefully.

Had a recent situation like this where my client wanted to invest into a multiplex property. I was unsure how to convey my sentiments about this property without breaking any rules. Thank god a police car was driving by. I flagged the police car, and voila, the police officer was gracious enough to provide my client with a full report about the area.

December 10, 2011 10:32 AM #20
Rainmaker
313,610
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

Hi Richard, yes so important to know an area to answer those questions of why a house is priced so low. You definitely don't want someone else's headache. (Seriously though, under $25 K??).

December 10, 2011 11:32 AM #21
Rainmaker
606,048
Sussie Sutton
UTR Texas Realtors - Pearland, TX
UTR TEXAS Realtors - Rep for buyers and sellers.

I too have people calling for those rock bottom priced homes. When they get to the showing then they realize it is a little more work than they anticipated.

December 10, 2011 12:27 PM #22
Rainmaker
73,283
The Myers Team at Keller Williams Advantage Realty
The Myers Team at Keller Williams Advantage Realty - Golden, CO
We WILL connect you with your goals!

This seems to be a trend all over the country, Richard. I also think it is in everyone's best interest to do as much homework as they can but this should be more so for those buying out-of-state. 

December 10, 2011 06:21 PM #23
Rainmaker
952,112
Kathy Clulow
RE/MAX All-Stars Realty Inc. Brokerage - Uxbridge, ON
CNE - ASP - SRES .... Uxbridge Ontario Real Estate

Richard while doing ones own due diligence is important it also helps to have a competent, knowledgeable Realtor® working for you in the area you are considering investing in ..... I suspect you might know one in Coweta Fayette, Georgia.

December 10, 2011 07:07 PM #24
Rainer
157,536
Anthony Daniels
Coldwell Banker - San Francisco, CA
SF Bay Area REO Specialist

Anybody investing in real estate, without first doing their homework, is usually the guy left holding the bag.

Good post, thanks for sharing it.

December 10, 2011 08:36 PM #25
Rainmaker
236,692
Vanessa Saunders MBA MIMC CIPS FIABCI
Global Property Systems Real Estate - Nyack, NY
From Manhattan to the Catskills of New York

Most of my investors are coming in from overseas and are interested in purchasing a home within 1.5hrs of Manhattan. Their average price range is $700k with a couple at over 1M, and they aren't looking for Foreclosures or Short Sales, just aggressively priced homes in good condition. All of them do their homework as to area, schools, resale etc. Most buy with cash and ALL have not one but 2 or 3 appraisals. Smart buyers and great for business!

December 11, 2011 01:30 PM #26
Rainmaker
120,437
Wayne Turner
Turner Real Estate Group - Mandeville, LA

Great advice Richard!

December 14, 2011 01:00 PM #27
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Richard Weisser

Richard Weisser Coweta Newnan Homes for Sale
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