Finding Profitable Deals

Gabrielle Dahms

• Publisher: PublishDrive
• Year: 2019
• Print ISBN: 9781733147323
• eBook ISBN: 9781733147330
• Topic: Business
• Subtopic: Real Estate
• Index: Business

The Riches Are in the Niches.

Do you desire financial independence and passive income? Being a real estate investor can transform those desires into realities and allow you to live life to the fullest and even to retire early. To achieve all that real estate investing can offer you, finding profitable deals are a must.

But how to find deals that turn a tidy profit rather than give you a 'red ink' migraine? Where are they? What do they look like? What does every investor need to know about them? Which real estate niches deliver results while eliminating much competition?

You may already have attended an endless number of seminars, Real Estate Investment (REI) gatherings, and scoured the internet for the best real estate investments. If so, you may have discovered that finding profitable deals is not as easy as it appears. In fact, it can exhaust - and be fraught with financial peril - to search for, locate, and execute on a profitable real estate deal. That's where Finding Profitable Deals gives investors like you a leg up.

Written by long-time real estate professional and real estate investor Gabrielle Dahms, the book details essential information about residential and commercial real estate niches. Armed with this information, augmented by the author's considerable experience in up, down, and flat real estate markets, investors hit the ground running.

Finding Profitable Deals offers investors an inside look at real estate niches. All in one place and without hype.

You'll learn:

* What niche markets exist.

* Choosing the right niche for you.

* Sorting the wheat from the chaff.

* How to gain a competitive advantage.

* What resources you need to succeed.

* Where and how to find real estate niche leads.

* Real estate marketing basics.

* 11 strategies to build wealth.

Finding Profitable Deals is a compact reference for any serious investor. It is Volume 2 in The Real Estate Investor Manuals series.

Why piecemeal information when you can get it all in one place?

Whether you are interested in investing in foreclosures, probates, short sales, hotels, parking lots, or mobile home parks, this book is for you. The riches are in the niches.

For further details and FREE special reports visit www.riches-in-niches.com.

Chapter 1

Markets & Opportunities

Real estate investing is a business which, like any other business, requires buyers, sellers of property. Think of the real estate profession, whether a real estate agent, a real estate attorney, or a mortgage professional, as facilitators between the buyers and sellers they must somehow find. Real estate investors are no exception.

All markets, the opportunities they offer, and the potential profits which derive from the markets and the opportunities comprise buyers and sellers. Behind all properties is the party which owns it, the potential seller. Buyers may already own property or not but their interest in buying real estate lies in the desire to generate profits. Those are real estate investors unless the buyer wants to own a place to call home, in which case they become homeowners. Any party can be both a buyer and a seller.

We glean from this description that a party who is a buyer today may be a seller tomorrow. Therefore, anyone who wishes to invest in real estate must know how and where to find sellers for any property category. The questions then become how best to do so, where to focus, and how to pursue this goal.

This chapter details several ways to identify markets, recognize opportunities, and find leads.

Because you, the real estate investor, must decide what most resonates with you and your aims, the content implies no endorsements. Once you encounter what resonates with you, it will be easier to proceed and to assess any other missing pieces. With further information, training, and experience you may even become a master in certain investment categories.

But before listing the many sources to find great real estate properties, let’s first mention specializing in a niche market. All categories are niche markets and those niche markets have sub-niches. Niche markets benefit real estate investors because they provide specialization and therefore differentiation in the wide world of real estate.

Once you decide which type of property to invest in and what that property looks like, you will be miles ahead of the competition. That could mean you focus on fixers, on properties in original condition or on turnkey properties. When you become knowledgeable about your chosen category, meaning you understand its distinctions, idiosyncrasies, opportunities, and numbers, you will succeed. But let’s move on to the next big question

Which Markets to Invest In?

Perhaps the number one question for opportunity and profit seekers, the question of which markets to invest in often arises in real estate investors’ minds. The question stems from a fear of making a mistake, a human trait. After all, many real estate investments cost princely sums of money, though what is a big sum to one person might be little to another. The question is, therefore, more about how to avoid making mistakes, how to mitigate risk, and how to succeed–all aspects that warrant much consideration. Read about all this in the first book of this series. It addresses them in deeper ways because these aspects are fundamentals any real estate investor must master.

Which real estate markets to invest in presents a conundrum for many investors. Some investors live in high cost-of-living areas where specialized investment strategies such as flipping properties can produce excellent results. However, cash flow often is elusive or negative in such areas.

Other investors have little available cash or little knowledge of real estate markets. Plus, other unknowns exist. They include how to manage the investment, how to run a business and many others.

Where to invest in real estate can often be the biggest obstacle for real estate investors to move forward.

The good news is that real estate opportunities present themselves once you network. Some good places to start are real estate investment groups (REIs) and local real estate investment groups. Although you can join virtual REI groups like BiggerPockets, it is better to start with a local group or a chapter of the National Real Estate Investors Association. Virtual platforms are large and sell investors on anything from membership to books, to webinars, to seminars, to real estate opportunities. While most local groups offer the same items, it is easier for investors to interact and to discern what is what.

Still, consider joining them because you will get to know fellow investors, trends, and some market data. Also, consider becoming a member of associations that relate to your investing interests. For a multi-family investor, the local apartment owners’ association can add much value. In addition, multi-family investors ought to learn about local tenancy laws, information which local rent boards provide.

And, educate yourself. Real estate investing is a field in which education pays a lot of money, but real estate investor training, seminars or conferences are entry points only. There is always more to learn and more to become. Learning inspires you, right?

If you are like most investors, starting online is the natural first step. It is easy to locate anything real estate investment related on-line, on Craigslist or Meetup, Zillow, Trulia, LoopNet, and the list goes on. But online searches supply superficial information only.

As you search for information, property, and opportunity, you will meet more sophisticated investors who offer you the properties they rehabbed, for example. These investors capitalize on others wanting investments without knowing how to find them. They also know that uncertainty creates inertia.

Do their investment offerings meet the opportunity and profit criteria? Sometimes yes. Sometimes no. Only you know what works for you, so long as you are realistic. What this means is for you to do your homework on the other party and the property. Never take someone else’s word to relieve you of your responsibility to do your own analysis. Remember, the magic words are due diligence. And because due diligence is so important, chapter 4 brings it to life.

Back to our discussion about more sophisticated real estate investors. These investors know that paralysis can strike when fear of making a mistake combined with the wish to make a tidy profit is present. This combination leads to suspending good judgment.

Therefore, always scrutinize the solutions such parties propose, whether they are expensive training, opportunities for bird-dogging, mentoring deals which split the profits, and variations on these themes. Experienced investors also sell properties, notes, tax liens or deeds, and any other real estate investment to newbie investors. Reasons for this may include properties they no longer want or ones that require different strategies.

Some of these offerings are bona fide and provide excellent educational immersion to new real estate investors. Just know that shady outfits and individuals clutter the field. Relying on mentors works well when the mentor takes a true, deep interest in the protégé. Otherwise, it can become an expensive trap.

The moral here is to make true business decisions versus hoping for the best. The message bears repeating do not leave your due diligence and decision-making to other people, no matter how sophisticated and successful they are or appear!

This may seem tangential, yet powerful because it helps learn all you can, then putting together a plan and sticking to it. Resist the urge to jump into real estate investing until you have done some homework.

And although conventional wisdom says you must be an action taker, this half-truth can hurt you just as much as it can propel to real estate riches. No one talks about real estate poverty - and for good reason, because we rarely listen to the unsuccessful.

Yet it exists. Smart investors consider this possibility in order not to go there. Doing so serves them well. It aligns the personal qualities necessary with an investor’s dreams of financial freedom.

Now, let’s return to the original question about where to invest in real estate?

The short answer about which real estate market or markets to invest in is the market you know and the one that passes your investor checklist. Locating excellent and profitable real estate investments can be a daunting task, even more so for brand-new real estate investor. It is not clear what makes a great investment.

While there are many properties to choose from, locating an excellent real estate investment is akin to panning for gold. Doing so requires a plan, a system, and several invaluable personal traits.

I have already mentioned the value of a plan. Both help direct real estate investors’ lives. Lacking either is like being at sea in a ship without a rudder. Both these success elements in receive in-depth treatment in the first volume of this series. Assuming a plan and an exit strategy are in place, finding the right investment is the first logical step.

So how to do that? What qualifies?

You may have heard the phrase, ‘the deals are all around you’ and this remains true even in high-value real estate markets like those in most urban centers. The numbers for a property are different in different markets. Remember all markets have sub-markets.

High-Property-Value Markets

Let’s start with the high-end markets like San Francisco, Seattle, and New York City. Do deals exist in such markets?

They do. Sometimes. However, conventional deal sources, such as foreclosures (REOs), short sales, probates, bankruptcy sales, and For-Sale-By-Owner listings are few in these markets. When and if you locate them, high competition drives their prices to market prices and higher most of the time. You, therefore, must be diligent, analyze each listing, and move on the few that represent a bargain. This process takes time, patience, knowledge, work, and the ability to act.

Probate sales are the exception because they can offer wonderful bargains. In real estate markets where median home prices hover at or above a million dollars, most new homeowners have the financial wherewithal. That means fewer short sales, foreclosures, bankruptcy and IRS sales occur in high-property-value markets.

Those who have owned homes in high-property value markets for a long time have a place to live, maybe a place to rent out, and access to their home’s increasing home equity. Unless they use their homes as piggy banks or practice other unsound financial management, their homes will sell at market value or more. That is true even for fixer-upper properties.

While homeowners in high-property-value markets are sophisticated and know what they have, sophistication sometimes bleeds into greed. The market corrects such attitudes but often it does not.

For Sale By Owner listings (FSBO) are rare in these markets because homeowners stand to make healthy profits even when paying real estate commissions. And selling through a real estate agent exposes their home to the entire hot market with all the buyers for their home. This stands in stark contrast to posting their property on Craigslist and even on For-Sale-By-Owner websites.

Savvy marketing and full market exposure sell property, something will return to in chapter 3. Excellent marketing creates transactions. It makes any business, including the one of real estate investing viable and successful.

Yet, despite the first hunch that no great deals exist in high-property-value markets, they do.

In those markets, it takes time and effort, and deep market knowledge to identify them. Investors who can think ‘out of the box’ and who can add value to the property once they own it are those who do well in such markets.

This disappoints investors who believe deals are those that sell at below market prices because they are rare in expensive markets like San Francisco. Maybe sophisticated markets are best entered by sophisticated, experienced real estate investors.

Lower Value Property Markets

Now let’s look at property in other, lower property value markets. When looking at different markets they will appear cheap compared to high-cost-of-living areas and high-property-value markets like San Francisco, New York City, and other major metropolises. But cheap does not equal value.

Assessing the true value of a property stands in relation to the property’s real estate market, which has micro-markets. Understanding this and acting under it makes a huge difference in an investor’s success.

Realize that low- or lower-priced property markets are so for a reason. Such markets often are in locations with few or no jobs, with the population decreasing versus increasing and so on. Low- or lower-priced markets have less vibrant and diversified economies.

While some low- or lower-priced markets exist in high-property-value cities and their surrounding suburbs, they are in disadvantaged neighborhoods or even in “war zones.” Such locations present special challenges for investors.

Short sales and foreclosures may be plentiful in such markets. If these properties are in markets whose economies are poor, investors must understand the accompanying challenges and mitigate them. They must have a plan for their properties because the market in the area may fail them.

That said, some lower-value property markets will become high-property price markets. Areas under consideration and/or development for Amazon warehouses offer one such example. Vacation properties intended as short-term rentals–think Airbnb–in areas that attract large numbers of travelers are another example. College and university towns are yet another.

If a low- or lower-value property market’s trajectory is one of growth, investors must investigate the growth, its projections, and its trends. Once complete, other metrics, such as jobs, infrastructure, taxes, and others must follow.

Why all this work when the trend seems obvious? –The short answer is that trends change. Big employers change their minds and pull out. Vacation trends change.

Opportunities exist for investors with short sales and foreclosures in disadvantaged neighborhoods, “war zones” in high-property-value cities and their surrounding suburbs. The city and its suburbs may undergo considerable gentrification. Investors must analyze such properties considering those trends to ensure profitable investments. –As a side note, the more gentrification has already happened, the less opportunity and the higher the price for properties.

However, gentrification, its implications, and its consequences may offer other real estate investment opportunities. Storage units, retail properties, hotels may be investments worth consideration. Also, everyone needs a place to live in. Multi-family ...

Table of contents

• Preface
• Introduction
• Chapter 1: Markets & Opportunities
• Chapter 2: Real Estate Investment Niches
• Chapter 3: Leads and Marketing
• Chapter 4: Steps to Niche Leads
• In Summary
• Appendix A: Resources