It's been said many times before, but only because it's always been true: If you want to be a successful real estate investor, the best way to begin is by finding a "fixer-upper" house being offered for sale by a seller who really wants to get rid of the property.
Why would a seller sell a property at a low price or with great terms?
The reasons are as numerous as the number of sellers, but the most common situation has to do with money problems. Whether it's due to divorce, illness, or loss of employment, some sellers find themselves in need of a quick sale, especially if they're facing potential foreclosure on the property.
What Is a "Triple D" Fixer?
As a beginning investor, the most desirable type of investment house to look for is a "Triple D," which is a doghouse owned by a seller involved in a divorce who is close to defaulting on the loan.
The term doghouse describes a rundown home that's tired but not in need of much structural repair to bring it back to life and to make it sparkle. A great doghouse also has the potential to fit nicely into a neighborhood of well-maintained homes once again after the repairs have been done.
One advantage to investing in fixers is that your competition will be less than for homes in better condition. Ugly houses scare away home buyers who don't have the money to finance the repairs or upgrades necessary to turn a doghouse into a dollhouse. As you scan the classified ads, look for terms such as "handyman special" or "fixer-upper." They're clues that there's work to be done to bring a house back to an acceptable condition.
Once you've located a doghouse that can be converted to a dollhouse without a great deal of time or money, the next step is to find out what seller's problem is and then to offer a solution. Most sellers who've let their homes run down will be in need of a quick injection of cash, so if you're in a position to offer a speedy cash out, you'll be in a strong bargaining position. Establish a relationship with a lender and get pre-approved for a loan before you've found your property. You want to be able to show a seller that you can quickly alleviate their money problems.
Your object is to get into the home quickly, fix it up, and then sell it, so you can move on to the next property. Look for entry-level homes that are merely ugly and in need of mostly cosmetic upgrades such as paint or new carpet. Those are types the houses you can flip quickly and make the most money on, because there's always a strong demand for entry-level houses. I know it's true because my husband and I sold a little fixer in a great neighborhood within three hours!
Find a Triple D house in your area and you can be on your way to becoming a successful real estate investor, too.
Copyright ï¿½ 2006 Jeanette J. Fisher