Tips for Investors
Tip #1: Define the end purpose of your investment
As an investor wishing to take advantage of the low prices of real estate today, you are really faced with 2 options in the end: keep or sell, depending on market conditions.
Your end strategy will determine how much time and money you should be ready to invest in your property and/or real estate portfolio.
Keeping it may also mean 2 things: renting it out or using it for your own needs. In both cases, you should be prepared for potential renovation/rehab or upgrade costs to keep up with the latest housing standards as well as market trends.
Exiting the real estate market could mean turning it around as quickly as possible (e.g. through wholesaling) or waiting for the right market conditions and type of buyer.
Tip #2: Take the time to understand the market
Above all, take the time to study and compare current market prices and transactions history with the help of a real estate agent very familiar with the area. Leverage local resources as much as possible and spend time in the target area to form your own opinion.
Also, while the location always remains the critical factor, there are other "soft" criteria worth considering such as crime rate, hazards risks such as fire (most common in California) or flooding as well as attractiveness of the area to potential buyers or tenants of the property.
Tip #3: Buy from an investor’s point of view
When shopping as an investor, you always face 2 choices: look for quality properties or snap homes on the low end of the market.
Unless you plan to use the property you are purchasing for your own needs, stay away from homes on the high end of the market.
Try as much as you can to invest in cheap properties. Remember the old maxim: buy low, sell high.
Cheap and inhospitable places might turn you off first as a home owner but should inspire you as an investor. Look for "fixer-upper" places, "starter homes" that will require varying levels of restoration and/or renovation.
Tip#4: Always make a low first offer
Make your first offer well below market prices. This will tip you about the sense of urgency with which the seller is ready to part with the property. At the same time, be considerate that if the seller accepted your offer, you are probably already paying too much.
At the end of the day, time is of essence. Making a laughable offer may just enable you to buy some time to come back with a more serious and realistic offer. You can never know for sure when the seller will take your bait.