Pumped to find your first investment property? Real estate investment is a useful way to build net worth, but it’s important to make sure you understand how to find and purchase your first investment property in New Orleans. Mistakes are costly, so don’t allow stress and emotions to steer the transaction.
There are multiple ways to find possible investment properties. Streamlining the searching process can take time, so before moving on to other avenues, choose an area and learn how to sift through its properties.
Probate estates often need to liquidate properties to pay off debt, taxes, or beneficiaries. As a result, they are motivated buyers. Develop relationships with probate attorneys or learn to read probate court public records and cross-reference them with obituaries.
Another resource of distressed properties at wholesale prices are foreclosures. Periodically, tax lien auctions are held in most counties with publicly accessible records. To find out about the process and when auctions are held, call the tax assessor.
Evaluate properties in terms of time and money. You must be able to quickly review a property to determine what work needs to be done in terms of marketing, expenses, and time. Properties should ideally be acquired at a 30 percent discount or more. If you aren’t experienced enough to estimate rehab costs quickly, bring in a contractor to estimate the numbers so you can do the math.
Keep in mind that time is money. The longer you hold a property, not only do you tie up your money, but you also miss opportunities to buy and sell in the real estate market. If a rehab takes too long in a declining market, you can miss out on a higher sale price.
Purchasing Investment Properties
An investor who already has financing in place has the most leverage. The purchase looks like a cash offer with little, if any contingencies from the seller’s perspective. Investors are typically inclined to purchase properties “as is” and forfeit many of the inspections, which quickens the escrow process. When sellers are sure that escrow will close without risking financial failures, cash is a favorite.
If you don’t have enough cash for the whole purchase, get financing in place as early as you can. Ensure that the financing includes your renovation budget. There are specialty lenders who offer short-term loans for investors. You may pay more in interest but you’ll have the money you need to act quickly. Lenders don’t act like traditional mortgage lenders for personal properties. They expect a well laid out business plan and are more like partners than banks.
Partners: Yes or No?
You might consider having a business partner if you’re new to real estate investments. Real estate investment clubs are awesome resources for information, property leads, and partners for financing or rehabs. Think about going to some meetings and becoming familiar with the group. There may be an investor willing to partner or mentor you through the process. Successful real estate investors often love to share their experience, and it may help you avoid making a newbie’s mistake on an investment. The last thing you want is to lose money on your first deal. Exhaust all resources.
If you are looking for a team who has a pulse on the investment property market in New Orleans, feel free to contact us today at (504) 224-9066. We are here to help. We succeed when you succeed.