How to Buy Real Estate That's not for Sale
The point of learning how to buy real estate that's not for
sale is to find deals that are not obvious or available to other
investors. It is true that you could spend a lot of time and
effort without result. On the other hand, the -not-for-sale market
doesn't have a lot of competition from other buyers.
Normally you might buy real estate by looking in the newspaper
classifieds, visiting a good broker, or a searching listings
online. Those are all good ways to start looking your next investment.
But when you're looking at the same properties as every other
investor, it's not always easy to beat the competition to a great
deal.
Another way to find good real estate investments is to look
at properties that aren't for sale, and make an offer.
My first home was bought this way. An ad in the paper stating
what I was looking for soon brought a call from an old couple
who had been thinking about selling. They saved a broker's commission
and I bought their place at a good price.
Buying real estate when it isn't for sale starts with a three
step search process. Start by deciding what you are looking for
- single family rentals, large apartment buildings, commercial
properties, or whatever works for you. Then look for properties
that fit your criteria, and when you find them, contact the owners.
How to Buy Real Estate from Owners Who Aren't Selling
Don't limit yourself to "fixer-uppers" and other
"problem" properties. They may more likely to have
owners willing to sell, but many owners of investment real estate
have thought of selling. Start with almost any building you like.
You can't say beforehand if or why a landlord is ready to call
it quits, but you can find out by asking.
Tact is necessary, of course. Give the owner a call, and tell
him you're an investor, not a broker. Tell him you like what
you see. Let him know you can have an offer ready in a week if
he's interested. If he says he's not interested, thank him politely
and hang up, but be sure to send him your card or a letter. Many
investors have later bought from owners that changed their minds.
If there is some interest, explain that you are an investor,
so your offer will have to be based on your return on investment.
This means you'll need to see the books. Specifically, you'll
need to see the rent roll, listing the units and what they rent
for, plus current occupancy, and operating expenses for the last
year.
Prepare a confidentiality agreement before you call. Tell
the owner you'll sign it and deliver it to him before you see
the books. He might not want the tenants to know he's thinking
of selling, so inspecting the units may have to wait until you
make an offer. Make an acceptable inspection a contingency in
the offer.
Why buy real estate investments in this way? Here are two
good reasons:
1. No competition
2. No sales commission
Both of these make a better price a strong possibility. Also,
instead of waiting for a great property to be listed for sale,
you just find it now. Why wait until it's for sale before buying
real estate?
|
