DEAN GRAZIOSI: DEAN GRAZIOSI REVIEW – REAL ESTATE FEED BY DEAN GRAZIOSI

Given that there are terrific buying opportunities in today’s real estate market, the experienced real estate investor learns how to buy at the best price.  Real estate investors leave the emotion at the door and replace that emotion with facts, figures and budgets.  Quite simply, there is no other way to invest today.

So, now we need to build a reliable checklist that will eliminate surprises and lead us to the bottom line.  To build this list, we break expenses into three basic categories.

Purchase expenses – depending on the type property, the investor’s credit history and the lender’s requirements, there can be some variation to the cash requirements at time of closing.

·    Down payment
·    Attorney fees
·    Taxes in escrow
·    Recording fees
·    Survey costs if necessary
·    Title insurance
·    Pre-paid reimbursements to seller

Income & expenses – with most investment property, current and projected income and operating expenses affect the property’s value.  The buyer should understand:

·    Net heating and cooling costs
·    Net tax obligations
·    Net management fees
·    Annual maintenance expense
·    Cleaning or janitorial expenses
·    Lawn and landscape costs
·    Mortgage expense
·    Income

Each property presents unique income and expense opportunities.  When it comes to gathering this information, more is better than less.  Gather as much info as possible.

Immediate Cash Requirements – every property can be improved.  Some improvements are superficial while others can represent major expenses.  Again, the investor eliminates surprises. Check the following systems thoroughly and be safe rather than sorry by calling in experts for structural inspections.

·    Roofing
·    Basement
·    Heating and cooling
·    Exterior
·    Windows
·    Plumbing
·    Pest control
·    Asbestos mitigation
·    Elevator
·    Electrical

The successful investor will expand these basic lists.  Get behind the numbers to repair or upgrade these systems and use structural experts to help clarify the property’s true, not emotional value.  Your due diligence to these building systems could well determine the success of your investment.

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Regardless of what you are purchasing, real estate or otherwise, practicing due diligence should be of the utmost importance.  We’ve all been there at some point, excited about a new purchase, later to find out that it wasn’t what it was made out to be in some way or another.  This is not a situation you want to find yourself in as a real estate investor!

If you are unfamiliar with what due diligence is, it can be summed up with the word research.  When it comes to practicing due diligence in the real estate business, it simply means to find out everything you can about the property and the surrounding community.  It involves fact-finding that can be very time consuming and tedious but will ultimately paint the picture of whether or not a specific property is a wise investment. 

Here are just a few things you want to find out while researching a property (there are more):

• Before you purchase any property, make sure you gather sales and ownership information.  Your local tax assessor or recorder of deeds office should be able to provide the information you need for this purpose.
• Municipal records will tell you if and when a property owner has applied for rezoning or land development approval.
• One bit of information that is often overlooked is to find out if there are any approved land developments or new community construction plans near your potential property.  This includes any new highway projects.  You can find this out by contacting the local municipality office or land development offices.  This is crucial to researching future property values.
• If you are purchasing a home off the beaten path, make sure you look at your local floodplain maps available through FEMA.  You should also contact the municipal sewer and water authorities in your area to see whether or not your property can be serviced by public water or sewer.

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Every real estate investor knows that they need to do a lot of scouting to find good deals.  However, not every investor finds their deals in the same way.  With online sites such as Twitter, Ebay and Craigslist becoming the norm, the most popular method of scouting real estate these days is definitely the internet.  But keep in mind, there are many other ways to find real estate goldmines. 

Perhaps one of the best ways to find your million dollar deal is just to go driving.  Of course, for this to be effective, you have to know what you are looking for when you do it.  Scouting your neighborhood does not mean you should be looking for homes with “for sale” signs.  Instead, you should be looking for neglected properties.  Pay attention to homes that have overgrown bushes, weeds and lawns.  Look for garbage and a general “trashy” appearance.  You should also look for multi-units and apartment buildings that do not appear to have proper upkeep.  The point here is to scope out properties that appear to be falling by the wayside.  You will want to make sure that you do not make yourself highly noticeable.  Think of yourself as a detective and do not purposely interact with anyone on a property you are checking out. 

Once you find a property that looks like it may be a good investment, the next step is to get the parcel number from the local zoning office in your town.  Once you get the parcel number you can look up the owners’ information and prepare a professional letter to them regarding a possible purchase of the property.  If the property owners happen to live out of state, the chance of you working out a successful deal just got that much greater. 

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