April 21, 2021
By Saeed Ghaffari
Purchasing an income property in this current market can definitely be a challenge, however, it is not impossible. I just closed escrow on my own purchase of an income property just a couple of weeks ago.
What makes a solid income purchase? This depends on several things… 1) What type of investor is buying the property? Is it a someone purchasing an income property for the first time wanting to get their feet wet in investing or is it a seasoned investor that purchases income property frequently? 2) The type of property, condition and location may very well also impact a decision in purchasing an income property. 3) What is the goal or financial objective in purchasing the income property? These and many more reasons may determine what makes a solid income property purchase.
So, how do you go about finding an Income Property in a market with very low inventory of homes available to purchase? Working with an experienced Realtor that is familiar with investment purchases is the first step to being successful in this process. This Realtor will know how to best guide you in what to look for. Such as, identifying properties that would provide opportunities that favor the Buyer. One way to identify a property with an opportunity is a property that requires some renovation or better known as “TLC”. Another way is finding properties that have just been put back on the market due to a cancellation of a previous escrow. Finally, the ability to identify a home that has great rental potential. This would require a rental market analysis to determine how much rent can be reasonably charged for the home in its location. Also, determining the needs of a potential renter and researching if the location meets those needs. Such as, quality of the School District, proximity to freeways for the commuter, proximity of grocery stores, restaurants, entertainment and other popular amenities.
Once you identify the property what’s next? How will you get your offer accepted? Was I lucky to be able to purchase an income property in this high demand market? Well, I believe luck has a part in everything that I accomplish, however, there was much more than just luck that made it possible. For example, your experienced Realtor will need to be able to openly communicate with the Listing Agent and determine what needs and wants the Sellers have to be able to consider in putting together your offer. They will also be able to conduct a market analysis to best guide you on what price range you should consider when submitting your offer. Also, remember, as an investment purchase you will be required to put 20-25% down on the purchase with most mortgage lenders. This will set yourself apart from many other offers you may be competing with because most may only have 3.5% or 5% Down. Finding leverage when putting together your offer is the key to make sure your offer is not just another stack of papers amongst the rest.
What I believe allowed me the opportunity to purchase my most recent income property was the combination of identifying the opportunity of a property that just came back on the market from a cancellation of escrow, speaking directly to the Listing Agent and discussing the needs and wants of the Sellers and having the 20% down financing which from the beginning was something that the Listing Agent felt was what set me apart from the other offers.
Again, using an experienced Realtor is the key to being successful in purchasing your next income property and I wish you the best in accomplishing this goal. It is one of the best investments you will ever make.
Call Us Today
714 469 5529
Should I Wait For Housing To Crash Further Before I Buy A House? 3 Reasons The End of 2022 Could Be The Very Best Time To Jump In
Prices falling in expensive cities
In two-thirds of major regional housing markets — 98 out of 148 — prices continue to drop, especially in more expensive locations.
We may see expensive markets fall further, which if that happens sooner than later, would make it an excellent time to buy into an expensive market. This wouldn’t have registered as a possibility even a few months back.
It’s difficult to predict if this will happen. And if so, whether falling prices become offset by the federal interest rate hikes practically certain to arrive in the coming months.
The only way to know for sure is to wait until the latest rate hike sets in.
Meanwhile, keep in mind that — as with any investment — it’s best time to buy is usually when prices are low.
With mortgage rates dropping and fee changes in the pipeline, now may be the time to buy that home Do you like this Article ? Sign up HERE for your FREE M&M Account to receive more Real Estate related information and news and THIS article. M&M Membership...
The days of waiving contingencies such as appraisals and forgoing inspections are fading into the rearview mirror. Still, contract activity remains slightly competitive depending on your location.
At least 24% of buyers waived the inspection contingency in December 2022, according to the National Association of Realtors confidence survey, up from 16% a month prior and 19% one year ago. An additional 24% of buyers waived an appraisal contingency in December, up slightly from 16% in November and 21% a year ago.
Home inspection contingencies are particularly important because it can let you know if there’s a deal-breaking issue with the property before a purchase occurs. It can also help you negotiate repairs with the seller, which is becoming increasingly common in today’s market.
“If buyers have this short window to buy where they can get incentives to purchase, [they] would rather buy where they have an opportunity to really think about it, get an inspection, a financing contingency and not feel rushed,” Jeff Reynolds, broker at Compass and founder of UrbanCondoSpaces.com, told Yahoo Finance.