In the first two articles in this series, we noted that Florida Governor Crist had suggested buying Florida real estate as an investment at today’s low prices and showed a couple of different ways a person can act on the Governor’s suggestion. governor.
Florida homes today are priced especially low and really do offer an opportunity. A few years ago, Florida home prices rose much faster than most of the rest of the country and now they have fallen even further, presenting an opportunity to buy and rent.
But, don’t buy just because the house is cheap. You want to buy value and buy below market and a house that you can rent for more than market. Numbers are key. And in this series we will go over everything you need to do step by step.
When banks boast that they will pay 1.7 percent interest on a certificate of deposit, the governor may well be right to suggest an investment that actually benefits from low real estate prices and can pay double-digit returns.
Using techniques that we will reveal in this series of articles, we will show you several ways to buy houses below the so-called market price and find tenants to live in the houses and pay you a much higher return on your investment than what banks pay. for the certificates. de deposito And while you can hire a professional to do all of this, we’ll show you how to do it yourself and using free information.
Of course, when you read the picture with the remains of real estate investors from three years ago, the first thing to look for is not the highest return on your dollar investment, but the return on dollars. What did the investors who are in foreclosure now do wrong? And how do I avoid doing what they did?
The simple answer is that they bought with the expectation that they would be able to sell quickly for a profit. Once they bought a house, it had to go up in value so it could be sold to another novice investor. This is no better than betting on the stock market, buying in the hope of selling later.
Hard enough to imagine that this was what the Governor had in mind for the state of Florida’s retirement plan.
The best approach is to buy something that pays you weekly, monthly, quarterly (or some other period of time) whether the market is going up or down. And the best approach is to buy it so cheap that the amount you get paid is eight percent, ten percent, or more after all expenses.
Unlike novice investors who buy houses hoping they will rise in price overnight, this form of investing requires effort, money, discipline, and patience.
Basically, two sets of skills are needed at this stage. You must buy cheap and know that it really is cheap (later) and you must be able to get people to commit to paying you money on a regular basis for the use of the house you bought: You are going to have to be a landlord in person or by attorney.
Really cheap means you have to combine the purchase price with the expectation of ongoing expenses. There are a number of approaches to evaluating “really cheap”. Some are expensive, and you may need to use some of them if this is your first time investing in real estate. Others, however, are free and surprisingly effective.
To find a house you can buy really cheap, I suggest you first use two free websites: Realtor.com and Zillow.com. If you have a friend with a real estate license, he or she can do better, but the free version is pretty nifty.
On Realtor.com search for the area where you would like to buy. Look for three-bedroom, two-bathroom homes that are listed for sale at least 20 percent below the median sales price for that type of home in that area. An easy way to estimate value is to ask a real estate agent. But you can do it yourself (DIY) by searching the Public Records with the Clerk of Court or checking the houses in that subdivision on the property appraiser’s website. Look for recent sale prices, not fiscal value.
Now search for each home on Zillow.com. Get the home value Zestimate and compare it to the seller’s asking price on Realtor.com. Secret: You are looking for homes for sale by MOTIVATED sellers. The people who start by offering to sell for less than recent asking prices are the people you want to buy from.
You should know that Zillow.com will be wrong. You are using it here only to help you identify houses. More checks to follow before putting money at risk.
You should now have a list of houses, with the address, the seller’s asking price, and what Zillow.com thinks it’s worth. You need one more number to finish this part of your investigation. Go to RentORama.com, enter the address of the house and the number of bedrooms and you will receive an average rent for a house of that size in that neighborhood.
Multiply the monthly rent by ten and divide that number by the seller’s asking price for the house. Rent $700, house price $60,000. It gives you $7,000/$60,000=11.6%.
Make a list of all the houses where this percentage is greater than 10 percent and meet me in the next article in this series for what I think will be a surprise.