I received an email today from a local real estate agent who has many investors on his email list. I have only met this particular agent one time, and communicated via email a couple of other times. He seems like a good guy with good knowledge of the Pittsburgh real estate market. However, this email really hit a nerve with me.
Real estate agents and real estate investors do not always agree on everything, which is fine. Real estate is one of the most subjective industries that you will ever encounter. This is part of the reason that it has both remarkably low barriers of entry, but also a remarkably steep learning curve.
The email was a “told you so” hyperbolic spew from the agent. He wanted all of the investors on his list to understand how real estate is working in the current market. The thing that got to me is that the agent acted as if the only way that anyone could ever find a piece of investment real estate is by joining a real estate agent’s inner circle and getting on their not-so-exclusive email list. An excerpt:
“Just sending this quick email to show you how HOT the city properties are right now for all of you looking to buy in the city.”
He went on to describe a foreclosure listing that was listed at $25,000. It was a wreck of a property, needing repairs and having mold. It ended up selling for something ridiculous, above $80,000! The after repairs value of this house is around $120,000, so there is not much room to fix it and then somehow turn a profit on a flip. Because so many buyers are only working with an agent, they don’t know about better ways to find cheaper deals with lower competition. They are simply listening to the gospel of their agent, and then bidding each other up in price wars for foreclosures and short sales.
The email continued to “tell us so” that when we want to make low offers on properties (AKA – anything below list price), we should have our heads examined and that we would be wasting our agent’s time and energy. But I digress…
So HOW do you find cheaper deals, with less competition?
The easy answer is to start sending letters and postcards directly to absentee owners, pre-foreclosure prospects, and to owners of vacant-looking houses that you see while driving around town. People will call you and tell you about their cheap houses, and you can offer them anything you want: cash with a fast closing, terms with nothing down, lease with option to buy, trade your motorcycle for their house, etc. You get the picture. Be as creative or as straightforward as you want.
What if you don’t want to spend money on letters and spend time on phone calls?
Find a local real estate wholesaler and tell them about your unique buying preferences: where, type of property, repairs you are comfortable with, price range, whether you are a rehabber or a landlord, and anything else you want to tell them. You will have some competition from their buyer’s list, but if you prove you can close fast and you are easy to do business with, and they prove the same to you, you will forge a great relationship for your investing career and someone who will find deals for you!
Here soms simple ways to invest in Real Estate: http://www.investopedia.com/articles/pf/06/realestateinvest.asp.