How To Protect Yourself When Doing Real Estate Investing Deals
Ive got some good news: Protecting yourself on real estate deals is actually pretty easy for you to learn. Here are some suggestions for you:
- Confirm the After-Repaired Value Of The Property
"After-repaired value" is the value of the property after any and all repairs have been made, and the property is in "retail sale" (i.e. excellent) condition. Well call this the "ARV".
The best way to determine a propertys ARV is to get an appraisal, and ask the appraiser for two different figures: The as-is value of the property, and the approximation of the value of the property in after-repaired condition.
- Determine the Repair Costs
If the property needs repairs, request a quotation from 2 or 3 different contractors - you always need more than one quote. And the best way to select these contractors is by personal referral, so visit your local real estate investor club to find out which contractors have worked well for other investors.
- Determine the Marketability of the Property
Contact 2 or 3 local real estate agents. Ask them to give you their estimate for the price that the property could be sold for in after-repaired condition (this will help to confirm the information provided by your appraiser). Then ask the agent to tell you the average time on the market for houses in the location and price range that yours matches. This will tell you approximately how many mortgage payments will need to be made while youre selling the property.
- Always Get Title Insurance
Youll have the option to purchase title insurance from your closing attorney or title company. Always do so.
- Ask Your Attorney To Review Your Purchase & Sale Agreement & Closing Documents
You must have an attorney to represent your interests in each real estate deal. Its completely legal to work without an attorney, but its not very smart. The very best resource Ive found for getting high-quality attorneys at a very attractive price is via Prepaid Legal Services (see authors website for more info).
- Plan For The Worst - Be Prepared For The Best!
Youll be wise to think about anything that could potentially go wrong, and plan in advance for it. Because most of the time, youll be well prepared and wont be caught by surprise.
But whatever you do, it cannot be overstated. Take Action! Dont fall into the "paralysis of analysis" syndrome!
Note: If youre interested in being a property rehabber (in other words, doing fix-up work), I can recommend a very reliable resource for you...
About the Author: Though a relative novice in the real estate arena, Alain Diza catapulted to rapid financial success with his uniquely simple marriage of Internet Marketing and Real Estate Investing. To see a sample of his strategies, and to answer the question in the above article, visit Alains private website at: http://www.tm-RealEstateInvesting.com