Finding a property to invest in can take a long time, and often you’ll have a lot of time to sit around waiting for things to work out. But you can do a lot more with that time than simply sitting around and twiddling your thumbs. I recently read a very interesting article on the BiggerPockets blog, which talks about some productive things you can do with your time while searching for your next property. Here’s what they had to say:
Find an investor-friendly agent: Residential real estate agents typically work with retail buyers, so they may not understand what you’re looking for. Investor-friendly agents, however, often have a network of investor clients who can help you build a network and find a great deal. They often have a reputation of being able to sell properties that others can’t, and won’t hesitate to write up lower offers or make offers on numerous properties.
Drive around: Once you find a target area, drive and walk around and look at houses there, and speak with neighbors. Look for signs of a lack of interest in a property as well (tall weeds, weathered door hangers, etc). This will give you a more in-depth understanding of a property and its location.
Write a letter: Once you’ve found a good property, write the owner a letter, telling them that you want to buy their house. Write this letter nicely; a lot of people have a strong emotional attachment to their homes. And be sure to include every conceivable way to contact you.
Build up your credit score: Unless you have giant cash stores, you’ll most likely need a loan. And getting a loan will be a lot easier if you have a high credit score. Looking at your credit report, make sure that you don’t have too many lines open, which will make you seem like a high risk.
Establish relationships with lenders: Most mortgages are sold as investment vehicles called mortgage-backed securities. Some smaller lenders keep loans, called “portfolio loans”, that aren’t sold in-house, which don’t have as many compliance hoops as those that are sold. Having a relationship with a local lender who can offer portfolio loans can be a huge asset.
Find a contractor/property manager: If you purchase a property that needs to be renovated, start looking for a good contractor. There are great contractors and property managers out there, but they’re hard to find, so it pays to start looking sooner rather than later.
Join a local group: To make connections, find a local real estate investment group and attend meetings. This offers you a chance to network with other investors in the area, who could have great connections and recommendations.