Questions Investors Should Ask When Buying and Selling Investment Property

If you're a real estate investor, here are several questions to consider when looking at investment properties. Providing sound answers to these questions will greatly increase your profits:

Why do homeowners sell for bargain prices?

There are many factors that can prevent owners from being able to maintain their homes. Such factors as job transfer or loss, divorce, illness, addiction to gambling, drugs, or alcohol, or any of a wide variety of other problems may overwhelm a homeowner. When that happens, their home becomes a low priority and necessary repairs are no longer made. The house may even go into foreclosure.

The death of a homeowner may leave relatives with a house no one wants, which then becomes a burden. These homes may just be "tired" and only in need of cosmetic upgrades in order to compete with other homes on the market.

I recently purchased a "Triple D" house: one that had been involved in a Divorce, was going through Default, and was a Doghouse. But it needed only cosmetic work, so my daughter and I bought it and we're doing it all ourselves, without the help of the men in our lives, and we expect to make nearly $50,000 for one month's work. That's not as much as our husbands generally make on their "doghouses," but we're not going to work nearly as hard.

What should you look for?

The hardest house for a homeowner to sell is a "doghouse," which is also commonly known as a "dump" or "fixer-upper." These run-down houses scare off most buyers, who lack the up-front funds for the down payment, closing costs, new furniture, and things like new carpeting, roof repair, and other repairs that may be required. With that in mind, looking for key words such as "handyman special," "as is," "fixer," and other tell-tale words in real estate ads or listings can make you money.

Tell your realtor to use those types of key words when doing a Multiple Listing Service search in your target area. Once you find a fixer that you can transform from a doghouse to a dollhouse, find out the seller's problem and then offer a solution. Those problems are often money-related, so being ready to close quickly is generally important and can lead to a bargain price from a seller in a financial bind.

How do you close quickly?

You can close more quickly by having your loan in place before you even begin negotiations with the seller. Motivated sellers will respond favorably if you've been pre-approved for your loan, so getting yourself both "pre-qualified" and "pre-approved" by an experienced lender will let sellers know that you can close quickly.

How "bad" is good?

When you first start out in the real estate "fixer" business, look for UGLY houses that are in need of only cosmetic work. Entry level "blow 'n go" fixers are houses that just need cleaning up, paint, and carpeting.

Know your limitations, and use caution when looking at houses that are in need of structural repairs. Such homes can be very profitable (we've made $75,000 for one month's hard work, for instance), but they're not good candidates for most beginning investors. Since my husband knows how to do construction, we're able to take on houses that other investors might not. He's replaced structural beams, sub-flooring, walls, plumbing, and electrical systems, but he learned those skills over the course of many years.

Over time, you may learn how to do much of the structural work yourself, but when you're first starting out, make sure to get estimates from reliable contractors for any structural repairs that might be necessary, and then decide if there will be enough profit left over to make the project worthwhile.

What's the easiest house to sell?

Selling a "dollhouse" in a desirable family neighborhood is easiest. For instance, we once sold a house we called "Orange Tree Cottage" just three hours after it hit MLS! Buyers first look for a particular neighborhood, and then look for a house within that area with the right number of bedrooms, bathrooms, and other amenities. They'll ultimately buy the house that not only meets their basic requirements, but also supports their emotional needs.

What are buyers' emotional needs?

We find that the use of Design Psychology and Marketing Psychology makes a huge difference when we sell our investment properties, selling them more quickly and at higher prices. But both concepts go far beyond simple "curb appeal."

We first entice buyers onto the porch, through the use of potted plants and flowers near the front door, which we've painted a happy color. Once buyers are inside the house, we use colors that target our prospective buyer's income level and match the selling season. Generally, buyers of higher-priced homes prefer complex colors, and using cool colors during hot weather and warm colors in cold seasons sets the stage for making buyers feel comfortable in our houses.

As a real estate investor, asking yourself these questions, choosing your properties carefully, being prepared to act quickly, and using Design Psychology and Marketing Psychology can all work together to greatly improve your bottom line.

(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.

Professor Jeanette Fisher, author of Doghouse to Dollhouse for Dollars, Joy to the Home, and other books teaches Real Estate Investing and Design Psychology. For more articles, tips, reports, newsletters, and sales flyer template, see http://www.doghousetodollhouse fordollars.com/pages/5/index.htm

In The News:


pen paper and inkwell


cat break through


Late Mortgage Payments Sabotage PMI Cancellation

There's something you should know about PMI!Private mortgage insurance is... Read More

Relocation Humor: Why I Bought A House

The Rental Experience in South FloridaReaders: This is based on... Read More

Termite and Moisture Damage Not Reported

I have done so many appraisals where I saw obvious... Read More

Selling by Owner Escrow or Closing Checklist

Home sellers should keep on top of their pending sale;... Read More

Title Insurance Protects Your Financial Investment

You purchase homeowners insurance to protect yourself financially in case... Read More

Selling Houses Fast: Basics of Design & Color Psychology

Fixing up houses to ready them for sale includes a... Read More

OPM - The Art of Leveraging

Equity lender, hard money lender, private investor or what ever... Read More

A Simple Step by Step Aproach to Fail Your Way to a Million Dollars

If You want to be Financially Successful you need to... Read More

U.S. Real Estate Sought By Foreign Investors Due to a Weaker Dollar

The weak US dollar has been good news for real... Read More

Real Estate: The Consumers Will Have The Final Word!

"The first step toward change is awareness. The second step... Read More

Buying a Vacation Home

You'd like to buy a vacation home, but you're not... Read More

Selling Your Home ? Be Sure It Shows Well

Whether you are selling a house, townhouse, condo or apartment,... Read More

A Real Estate Investing Primer

There are a great many books and web sites devoted... Read More

Making Money In Real Estate - 10 Ways

Making money in real estate is an endless topic that... Read More

Using Color Psychology to Sell Your Home

When painting your home for resale, choosing the right colors... Read More

Do You Have the Correct Home Buyer Mindset to be Buying a Home?

By learning what you need to know and preparing how... Read More

Golf and Waterfront Living: Live, Play, Relax

With today's planned lifestyle communities, golf and boating enthusiasts have... Read More

Escrow From a California Homeowners Perspective

The Escrow ProcessBoth Buyer and Seller deserve the assurance that... Read More

Selling Houses: Flooring & Feelings

Buyers think they love Italian tile and other hard floor... Read More

Green Building Media Fact Sheet - Past, Present & Future

PastSpecialized, niche home builders began constructing resource-efficient, environmentally sensitive homes... Read More

Real Estate Development Feasibility Study (Income) - $1.2 Billion Developer Tells You How To Do One

There are two sides to a feasibility study and in... Read More

The Psyche of The Seller and The Tenant Buyer

For those of you who were not psychology majors the... Read More

Selling Houses with Curb Appeal and Design Psychology

Curb appeal is the most important challenge you'll face when... Read More

The Many Benefits Of Lease Purchasing

Lease Purchasing affords wonderful benefits and opportunities to sellers, buyers,... Read More

Theres More To Making Money Than A Tertiary Education

An education of some sort is a prerequisite these days... Read More

Cashing Out of Preforeclosures - Exit Strategies for Maximum Profit

One of the quickest ways to real estate profits is... Read More

The Listing Contract: Its All in the Details

Now that you've chosen a real estate professional to sell... Read More

Real Estate Appraisal - Do It Yourself

For single family homes, there are two basic methods used... Read More

Real Estate Investment - One Simple Formula

I saw the ads in our small-town newspaper for years... Read More

Searching For Maui Beachfront Houses?

Who wouldn't want to move into a Maui beachfront house?... Read More

Victorian. Modern. Colonial. What?s Your Architectural Style?

You are attracted to a home for more than its... Read More

7 Different Ways Anyone Can Become a Real Estate Investor

Being a real estate investor is not really that hard,... Read More

First Impressions Will Sell Property Fast!

First impressions count, buyers will have already formed an impression... Read More