5 Strategies to Help You Pay Attention

As a real estate and marketing consultant, the majority of questions I am asked when lecturing or consulting involve marketing: How do you find the deal? How do you find the money? How do you grow the business?

I interviewed twenty of the top real estate investors I know on how they find property. As I listened to their answers, I kept hearing the same statement made over and over again. They pay attention–to the marketplace where they live, to their local economy, and to the neighborhoods they invest in.

Here are five strategies to prepare you to pay attention and take advantage of being “at the right place at the right time.” Yes, this takes work, but let me ask you a question…

If paying attention was good enough for the top 20 investors I know, do you think it will work for you? The best part is you will look, sound, and be the expert in your area if you follow these five suggestions.

1. Read the local paper

Every day. Start with the local headlines. Become intimate with what’s happening in your community. Read the classifieds under real estate for sale, as well as real estate for rent, money to lend, and bank advertising.

You may end up finding your competitors in these ads, or new money sources, or disgruntled landlords who would like get out of the landlord business NOW. I know of one investor who has an ad in the obituary section of the paper looking for estate sales.

2. Specialize in at least three neighborhoods

Start farming. Drive or walk these neighborhoods at least twice a week. Why twice? The majority of new listings and signs that appear in a neighborhood are posted on Wednesdays. Don’t laugh; it’s true. The people who put up the signs must only work on Wednesdays!

You also want to know these neighborhoods as well as you know your own. You want to know who lives there on the weekends. It is a nice, quiet community, a family community or a young singles community you are looking for? Know what you are really looking for before you buy. Don’t take someone else’s opinion. Get out in the neighborhoods and see for yourself.

3. Know what the properties in your farm areas are worth

You need to know the market values> long before you start looking for property. Befriend your local Realtor and ask him for comps. Don’t go out there blind. Know what something costs before you shop. Why waste your time in an area that is either out of your price range or doesn’t fit your objectives as an investor.

4. Call three property managers

If your objective is to buy and hold property for the long term, call three property managers in your area to get an idea of what a property will rent for. You need three opinions on the same address. Why? Because you are trying to determine fair market rent. When I become interested in a neighborhood I’m not familiar with, this research is imperative.

Recently I received quotes from $250-$400 per bedroom as a “reasonable” estimate of what I can get for rent based by property address. That’s a pretty big price swing on a 4-bedroom home, $1,000-$1600 per month.

I always factor this number towards the middle to lower end. I use rental information from property managers to help me evaluate whether or not a property will cash flow. This information can make all the difference to my negotiation strategy.

5. Go to every open house every week

You will learn a lot about the property, the neighborhood, and the motivation of a seller by visiting with the person who is sitting at an open house. I have purchased rental properties from sellers who needed to sell their existing property, so they can qualify for the new more expensive home. This contingency clause offers lots of flexibility to price and terms.

Six months ago, I looked at a property listed for $325,000. I thought it was at least $25,000 overpriced. The sellers were building a more expensive home and wanted to stay in their existing property until the new home was completed.

I offered $280,000 with a first right of refusal, meaning if anyone offered more then my price, they would have to come to me first. I would have the right to buy it or not at that time. I have a one-year limit on the contract and will be happy to close at $280,000.

The new home was completed the end of March. The sellers just moved, leaving this house vacant. I still have six months left on my contract. Since it is springtime, the seller decided to list the property with their friend the Realtor. It is now listed at $345,900. I’m still in there at $280,000. Neither they nor I have anything to lose.

Remember, pay attention

When you pay attention, people get to know who you are and what you do. Neighbors, professionals, and others will call you from time to time to see if you can help solve a problem, let you know about a property getting ready to go on the market, or invite you to a variety of functions where you get to meet others who can be in your sphere of influence.

Paying attention could be the key to your success as a real estate investor.

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By CREOnline Contributor

A content contributor to the original CREOnline.com.