*** This article was first published in the Georgia Real Estate Investors Association Handbook in 2001. Some specific details (i.e. prices and tax information) are out of date, and should be viewed with that in mind. If you are interested in learning more about the concepts covered in this article, please visit www.gareia.com, or contact us at firstname.lastname@example.org or at 770-451-8800. ***
From the Archives: A Guide to Real Estate Investing in Georgia (Part 1)
Focusing on the Right Real Estate
There are many different types of real estate, and profits can be made in most of them. You may wish to focus exclusively on residential real estate for the purpose of making money, and there are several reasons:
- People have to have place to live. There is always a relatively good resale market for detached single family homes, and you can’t say that about other kinds of real estate.
- Detached single family homes attract a better quality of tenant than apartments or rental condos.
- There is a huge (inexhaustible) supply of people needing to sell their single family homes in the Atlanta area. Just look in the classified ads.
And some of those sellers can afford to be flexible in their price o their terms in order to accomplish their goal of selling. That’s where an opportunity for investors may come into the picture.
In general, you are looking for a ten to twenty year old three bedroom house in an improving lower middle class neighborhood where most of the people who live there are owners. Many experienced investors suggest a price range of $50,000 to $75,000. There are certainly exceptions, but this is a good place to start.
The key to success in real estate investing is this: YOU’VE GOT TO SEE A LOT OF HOUSES AND MAKE A LOT OF OFFERS.
If you are not seeing a lot of houses, you will quickly lose touch with the real estate market, and you won’t know a good deal when one turns up. And if you are not making a lot of offers, it is unlikely that you will happen to make an offer on on the perfect combination of factors in your favor, namely the house with good upside potential combined with a seller who is willing to be flexible on price or terms.
Sources for ‘Don’t Wanter’ Properties
You are looking for don’t wanter SELLERS, not don’t wanter PROPERTIES. Let’s define a “don’t wanter seller as somebody who, for whatever reason, is willing to sell his house for substantially less than it is worth.
Remember, “worth” is a relative term. A house that is worth $55,000 to one person might be worth only $35,000 to someone else who wants to sell immediately. Fortunately, there are many reasons why people are willing to sell their home for substantially less than the house is seemingly worth in the open marketplace.
Among the most often cited reasons for selling below market is personal problems in the family. Marital problems can cause an otherwise happy household to become a place of misery, with both sides simple wanting to be finished with the relationship at any cost. It’s not your job to reconcile the marriage. It is your job to find out if the owner(s) can be flexible in their price or terms to the degree that you can find an opportunity to help them out of their problem.
Other reasons a seller might be willing to be flexible in price or terms include death, sickness, job loss, financial disaster, job relocation, military reassignment, career change, marriage, or any of a thousand personal reasons. It is critical to note that the cast majority of factors that might lead a seller to want to be flexible in either price or terms have NOTHING to do with the house. In most cases, it’s a PERSONAL problem, not a real estate problem.
Look for ‘Don’t Wanters’ Consistently in the Following Areas:
- MLS (active and expired listings)
- Tax records of absentee landlords
- FSBO [for sale by owner] classified
- Lease with option classified
- Real estate agents
- Farming a specific neighborhood
- Foreclosure notices
- Vacant houses
- Banks/HUD/VA/RTC Suctions/Gov’t Auctions
- Tax Sales/FIFA notices
(Check back in December for Part 2 of this article!)
One of the best resources for persons interested in owning and managing rental and investment properties is the Georgia Real Estate Investors Association, Inc. We are a non-profit educational organization that serves our members with programs on various real estate topics. For more information about our meetings, call 770-451-8800.
This article first appeared in the Georgia Real Estate Investors Association Handbook in 2001. Some specific details (i.e. prices and tax information) are out of date, and should be viewed with that in mind. If you are interested in learning more about the concepts covered in this article, please visit www.gareia.com, or contact us at email@example.com or at 770-451-8800.
Published by Georgia Real Estate Investors Association
Copyright 1998 by First American Management Corporation, All Rights Reserved