Ask the Realtor - Investing in Rental Property

Jim E. Flynn
"Experience
& Integrity"

Ask The Realtor

As printed in the OC Register / Saddleback Valley News

Written by Jim E. Flynn, Century 21 Beachside Realtors, Lake Mission Viejo

Dec. 4, 2009

Investing in Rental Property

Four important things : The very first is financing.. then .. Location, condition, and price

Q. Wayne from Mission Viejo asked: I have been leasing now for close to 5 years and I am considering buying a rental property as an investor. Is this really a good time during this “Foreclosure City” market and what are some of the issues I should consider ?

A. As I recently read Wayne “Foreclosure City” as you have labeled the market has created the perfect storm in many major cities for investors such as yourself to find a great Real Estate deal. Let’s review what you have going for you? First there is a good selection of both Bank owned/Short sell properties and eager property owners hungry to sell .Combined that with recently declining very low interest rates and that is the perfect storm. The only real caution If, you decide to pursue a bank owned/short sale is you cannot be in a hurry. This is absolutely necessary to understand before you even start. The process probably will take anywhere between 4 months, which so far is on the quick side and as long as 7 or 8 months. You should talk with your Short Sale experienced Realtor/Broker and understand all the delays and reasons for the delays .

In your situation Wayne, you have a lease and are not planning to move. You can wait out the gusty winds and delays. For others, that want and need property sooner they should not consider a short sale and have their Realtor show them property that are for sale by owners which have a much better record of closing in 45 to 60 days.

Before you rushing out to buy that bargain property ,to keep in mind the four most important factors in a successful Real Estate deal. The very first is financing.. This as a mistake many new and even seasoned buyers save as the last thing to do. You absolutely MUST first spend quality time with your lender and have an solid understanding of what is the maximum priced property you can buy. Then, have a pre-approved letter from the lender for your Realtor to submit with any offer you decide to make. Location, condition, and price are the next three important considerations . Ideally,, the best target property should not need repairs; however, there are an abundance of homes on the market today that need significant repairs, Those that are owned by the Bank/lender are usually sold “as is “ with no repairs... Others may not need only a coat of paint new carpet .and minor cosmetic repairs. When you do have an accepted offer you should then be prepared to quickly do a inspection with a professional to determine whether you should move forward or decline based on too costly a repair estimate. Sometimes price may not be that easy to determine, since the sale of many distressed properties have negatively impacted the sale price of all homes in the area. So, Wayne, If, you will wait 4 to 7 months and maintain frustrating patience and possible “start-overs” you could get a bargain property but, then you may have been able to get good results by having your Realtor deal direct with an owner represented Realtor who is able to get much faster decisions .

Jim is an Award winning Realtor at Century 21 Beachside on the Lake Mission Viejo

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