Investing – buying without passion…

I have to correct myself a bit on yesterday’s post. There is a type of sale that I deal with where there is little emotion involved; where it truly is “nothing personal, it’s just business.” Those are sales made to investors. I was out recently looking with a young investor couple and it quickly became obvious how little emotion was in the process and how much it was about the ability to fix the place up and flip it. There’s certainly nothing wrong with that – more power to them, if they can pull it off.

You would think that buying without any passion in the game would mean that much better decision are made; and, for the most part, that’s true. Investors look at house dispassionately. They are investments, after all. But, they too can make major buying mistakes for reasons that somehow elude the logical process that one might think is in place with investors.

Investors need to understand the surroundings of the investment property. Is the neighborhood on it’s way up or down? Is it in a growth area or one that is shrinking? Are there any environmental issues in the area? Who maintains the roads and what plans are there in the Township, Village or City Master Plans for any changes to the roads or for sewer lines? What’s the normal turnover rate for the area – are there a lot of homes for sale and do houses sell quickly?

Those questions and many more are why investors, even savvy ones who have been investing in real estate for quite a while, need a good local Realtor to work with when entering or considering a new area in which to invest. It is especially important for young, first-time real estate investors to partner up with a good Realtor. There are just too many potential pitfalls to real estate investing to start off on the wrong foot by buying a troubled house in a troubled area that provides little potential for return.

Now is a great time to invest in real estate, either for your own use or purely as an investment. Prices and mortgage rates are at historic lows and there are plenty of properties out there that would make great investments. I’d advise that you not look just at foreclosures, but rather put together a model of what the ideal investment property for you would look like; especially for those looking to build a rental property portfolio. You can either buy a fixer-upper and put money into it or buy a regular house at the currently depressed prices and immediately rent it out without putting more money into it. Obviously those looking to “flip the house” need to find a foreclosure that doesn’t need excessive repairs and one that is marketable once it is fixed up. A good Realtor can help you evaluate the marketability of the house.

So, if you are an investor, let me help you with that purchase without passion by supplementing the data that you would otherwise have to help you make a better decision. I may be the only person grinning at closing, but that’s OK, too.