Investing in residential properties: the next step

Once you have identified the area and type of property you are going to make the base of your portfolio, now you need to get out there and get to know your area. This is a vital step as although you can talk to real estate agents selling property in that area, they usually cover an entire city, so they don’t have the in-depth knowledge that is required of private property investors.

Some of this research can be done using your computer to give you a general understanding of property prices and rental values ​​in your chosen area, but nothing can beat walking around the area and even talking to the locals. Sometimes you can get a lot of detailed insights and even find potential tenants this way.

You are now better prepared to negotiate with the real estate agent, since you have a multitude of facts at your fingertips that, in most cases, you do not know. In these negotiations, remember that you are not looking to lower the price so that the seller feels that he has lost the deal. What you are trying to achieve is a win-win situation, where you get the property at or close to the price you think you should pay, but the seller still makes his profit, although not as much as you first thought. But if his argument is sound and his facts are correct, then the realtor is obligated to pass his offer on to the seller, who will likely listen and make a decision based on his facts.

However, the ideal type of property to buy is generally from a distressed seller who is someone who needs to sell for compelling reasons. These could be probate sales, divorce sales, or if the home has been on the market for so long that it is now costing the seller money in bridging fees. These people are more likely to listen to low offers as long as you can produce the quick sale that is desired. These types of sellers and properties are always worth finding.

There are a number of residential property investment companies on the market that will have properties that could match your requirements, but remember that they are a profit based company so their price will reflect their need to make money from their businesses. By all means, look around and talk to these types of companies, but remember to do the basic research and make sure the deals you are offered stack up.

This is part 2 of a 5-part article series looking at investing in residential property.

david p thomas