Become a real estate expert in any market with this simple formula
Many years ago I was recommended a real estate book by Dolf De Roos. He was a prolific real estate investor that travelled the world and owned rental property on 5 continents. Obviously he was a big fan of the services a property management offered, buying was his game. De Roos had a simple formula that I’ve remembered to this day. Look at 1,000 houses to walk through 100 to make offers on 10 to buy 1. Essentially get out there and really get into the market.
- 1,000. Always be looking. With the technology today websites like Trulia, Zillow and Realtor.com will allow you to favorite houses that you’re interested in. They will then send you a daily email with all of the new listings similar to your favorites in that area. Looking at 1,000 houses gives you context for the market when you come across one that you think is good. It will almost pop out at you based on all of the others that you’ve seen.
- Get out there and go through everyone that might have some possible potential. This where many falter, you need to leave the computer behind and get face time with the properties. Photos and realtor comments are almost guaranteed to be embellishing the condition. Additionally, you might see opportunity that is unmentioned, such as an expansion attic space.
- Make offers. This might sound a little crazy, but its good practice at the very least. Obviously if the idea is to offer on 10 to get 1 that means LOW offers. Have the audacity to offer low and you will be amazed at what just might happen. This can also help you feel a pulse for the market, other buyer demand, etc. More often than not I’ve been surprised at the seller’s response when offering low. You never know what situation the seller is in. I’ve bought homes where the seller had inherited and never even seen the property. Offer low until you know differently.
- If you make it through the diligence, the house you come to agreement on will likely be a winner. When I was young I had a mentor who had over 200 units. He worked hard at all aspects of the game, but always said, “You make your money up front.” You can make money improving a property, but ultimately buying right will always have significantly more bang for your buck.
Different markets have varying ordinances and regulations on everything from inspections, to rental licenses. Be sure to find a knowledgeable realtor that you can communicate well with. At Heirloom Realty we specialize in rental property and investor buyers. In a new market your realtor will be your lifeline to knowing anything unforeseen that could hinder your prospective deal. Happy hunting!