Investment properties can be tough to come by right now. There is a lot of money, big money, chasing almost every property that comes on the market. Getting outbid is almost becoming the norm. But, the highest bid does not always win. There are ways we smaller investors can tip the scales in our favor. Learning how can help you get more properties.
Money Is Not Everything
Sure, everyone would like the biggest pile of money they can possibly get for their property. That is just human nature. But sometimes other factors, especially speed, can be more important. Time is money. If you can close quickly, and I mean really quickly, like within 48 to 72 hours, you might just beat out everyone else, even if they bid more than you.
You may not think you can close that fast, but it can be done. To close quickly you need three things. One is financing that is ready to go. The second is a good knowledge of rehab expenses. The third is a title search.
Traditional bank financing is not speedy. You are not going to have time for appraisals and other paperwork. Fast money comes from private lenders, lines of credit and even hard money lenders. These sources of funds need to be developed now, before you make any offers.
The financing types needed to make this quickness work need to be developed well in advance of any offer. You need to have private lenders or other types of funds lined up and ready to go once you make an offer. There will be no time for lengthy explanations once the trigger is pulled.
Secondly, you are likely to only get one shot looking at the property. You will not have time for any later inspections. Actually, the fact that you do not require inspections is what will make your lower bid offer tempting. Make the time you do get to examine a property count. Learn how to estimate a rehab.
Lastly you will need a quick title search. This can generally be done by a reputable title agency. Have a relationship lined up before you make any offers.
Put It All On One Page
All of the above can be said on a one or two page purchase contract. Keep things simple. Lots of words and clauses can create confusion. A confused mind will often say no.
Contingencies?
I am not a big fan of signing anything without a way out, but sometimes it might have to be done, especially in this seller’s market. You can often lure a seller if you offer a contract with a speedy closing and NO contingencies. No appraisals. No Inspections. Nothing.
Be careful here. But if you know what you are doing and are confident of your numbers, then go for it.
I’m Local
You might be surprised, but sometimes sellers feel better about selling to someone local. During negotiations, I always try to somehow thrown in that I am a local buyer. You never know, it just might give you an edge. I know that it has helped me a time or two in the past. Try it.
Someday the market will swing back towards us buyers and the money that is out there will dry up. But for now, we smaller buyers may have to pull out all of the stops if we want to keep growing and acquiring properties. By doing so we may just find an edge over those deeper pockets.
