The first step to getting started in real estate investing is to determine your financing and see how much you can afford to spend on your first property. You should have at least a bare minimum of $30,000 in order to make a responsible real estate investment and look into authentic sources of financing to ensure you are capable of closing on any properties you put under contract. Many people think that in order to get started in real estate investing they need to attend a bunch of seminars and get some sort of expensive and secretive education. While there are some excellent real estate education providers, available it’s advisable for you to consider if the money could be better spent on a down payment for your first investment property. The knowledge that you will gain through actually doing a transaction could prove more valuable than the education you get in seminars that often times revolve around hypothetical investment techniques that may sound fantastic on stage but be unproven in reality. Many people go through education because they fear taking the first step and feel unprepared. Overcoming that fear should be one of your first priorities and the only way to overcome it is to jump right in and make your first investment. Always keep in mind that any investment in education that is never applied should be considered a loss of 100%.

Wholesale properties are properties that are sold to investors and are often rehabbed to add value. Wholesale properties are sold to investors by real estate wholesalers that do not sell to retail homeowners. Investmount is specifically in a wholesale market and does not provide properties to retail buyers. After acquiring an investment home from the wholesaler, the investor then rehabs the property and aims to resell it to a homeowner in the retail market or simply rent it out. Buying a property at wholesale can be thought of as the risk/reward middle ground between buying a property directly on the MLS and buying a property at a foreclosure auction. It’s certainly a higher risk than purchasing from the retail MLS in most instances because you will not receive an inspection period, but you will typically receive a better price with less effort and a much more efficient sales process. The foreclosure auction at the other end of the spectrum may represent the largest returns, but is reserved for heavily experienced investors because unlike wholesale properties you will not have access to the interior of the property you are buying and must pay cash within minutes of the sale.

A distressed property is simply a home that is typically being sold under fair market value. More distressed properties are in need of some type of repair, but they could just be from a seller in a distressed situation like a foreclosure or a divorce and they need to sell fast and are willing to accept a discount. Traditional financing is typically a bad fit for distressed sales due to the speed at which the seller is interested in selling and the condition of the property.

Investments understands that the investment home market fluctuates often and we did our best to offer the best discount possible at the time. Like any business in the wholesale trade our goal is to offer a product at a price where the customer will be financially successful at their value-add business. We offer investor investment homes at a set price through a sales process that cannot be bid-up past the point of profitability by less experienced investors. The discounts that we offer are dependent on the property, location, and the current market, but can range anywhere from 10% to 50%.

Investmount already offers the fair price to investors. By paying our price investors will avoid overpaying. When you go to an auction, it’s fairly common for beginner investors to chalk up the price because they don’t know what they’re doing. These inexperienced investors make it difficult to get a good deal on a property and take away what could have been profitable investments for more experienced investors. At New Western you won’t have to worry about negotiating because we will always give you a fair price. Our set-price model allows you to avoid wasting countless hours visiting houses and writing contracts that will never get accepted at your asking price in a competitive market.

No. Banks are often unreliable and can take more than 30 days to close and transactions for wholesale properties require that the closing time be much faster than that. Often times banks require contingencies that the property be repaired before they will do a loan, which is not possible for wholesale properties since they usually require rehab.

No. New Western simply requires that you have an in-office meeting with one of our agents before we will add you to a live property distribution list. In this meeting our agent will inform you about the full process of what to expect from our company and give you information to take home about how the transaction works. You will even receive a copy of our standard purchase contract so you have plenty of time to get comfortable with the terms before you ever visit a property. Our properties are discounted and sell very fast so the in-office meeting is an opportunity for you to ask all of the questions you may have and learn everything about our process before you start looking at deals. After the meeting we will begin sending you properties for you to evaluate. By meeting with one of our agents first it will give them a better understanding of your investment goals and what types of properties to send you.

The agents at Investmount do their utmost to find the best deals for clients based upon the knowledge that we have gained throughout years of experience. We start off by doing a basic estimate of repairs and determine the price point that we believe the property will generally sell for. We base this estimate mostly on what we see but also on a variety of additional factors. All real estate investment deals come at a varying degree of risk. Investors should understand that there are a lot of different issues that can come up that you do not initially expect. Our estimate is just a general guideline and should be verified in greater detail by a professional that will be managing the repairs. Even with the best estimates available this number is a challenge to predict. There are a number of factors that can change and affect the investment process: the labor market can change, the cost of materials can fluctuate, and the level of construction management experience of the investor plays a big part in the cost of repairs. The sales price of the home is also hard to predict accurately: neighborhoods can seem to change overnight, the estimated after repair value is directly proportionate to the level and quality of the repairs performed, poor design choices can add months on to marketing time and reduce the value of a home by tens of thousands. Although all of these uncertainties can seem quite intimidating, it is important to understand that real estate is high risk, high reward proposition and the occasional failure should be expected even for the most experienced investor.

Being able to tell whether or not buying a specific wholesale property is a good “deal” or not is something that you have to be able to judge for yourself. In this instance, good judgment comes with experience. The agents at NWA will supply you with a packet containing all recently sold properties similar to the subject property. The information the we provide you with is based on repairs and while reviewing the information the investor must understand that there are a variety of different factors that can change. Before buying a property it’s critical that you do your own independent research in addition to the information that we provide you in the packet. It is recommended that you base your decision on the information you gather from multiple sources and do not limit yourself only to the information provided by New Western. Access to your own comparable sales information from the local MLS provider is critical and can be obtained either directly or from a real estate agent contact. We believe that all investors should follow their own good judgment based on their knowledge and experience with the real estate market.

Although this idea might sound appealing at first, cutting out the middleman limits the amount of sources available for you to find discount properties. New Western is a great source for finding discount properties because we have developed proprietary technology and tools that are unavailable to the general public. Our experienced agents are constantly in tune with the real estate market and are able to provide investors with a significant degree of knowledge that can only be obtained through experiencing a frantic volume of investment real estate transactions. Due to proprietary technologies and a high degree of experience with negotiation, the agents at New Western will likely be able to sell you the discount property for a better price than you would be able to get it for if you found the property yourself. As an investor, you need to have a variety of different sources for discount properties and maintain good relationships with all of them because a multitude of options is key to a steady supply of investment properties.

The buy/ fix/ sell strategy is when you buy a property on the wholesale market, perform repairs to it to improve the value and then quickly resell the property on the retail market.

Generally the average buy/ fix/ sell property takes about 90 days to resell from the time of purchase; however, if there is a project that is going to yield a higher return then it can take anywhere from six months to a year to complete the process and still be considered a good potential investment. As any good investor knows, it is important to allow time for delays in repairing and reselling a property that could make the process go on a little longer.

No matter what you do in real estate there are always risks involved, just like any other investment, and cannot be fully encompassed here. One of the biggest risks involved in a buy/ fix/ sell is a potential loss on the investment. Some risks, such as neighborhood changes, are out of your control. With proper planning you can help to protect yourself against the risk of not estimating repairs well. Other risks include not being able to resell the property or the contractor running off with your money, which is why it is always a good idea to qualify your contractors, never pay for a job until it is complete, and have multiple contractors in your network as backups. All types of real estate investing are risky but the buy/ fix/ sell is one of the higher risk / higher reward types.

What is deemed a good return on investment is different among all investors. Experienced investors are better able to assess what the risk is and have learned how to manage their business exceptionally well so they are sometimes willing to accept smaller returns in order to tackle a higher volume of transactions. Some sophisticated real estate funds are willing to accept return margins as low as 5%. Such a thin margin may seem petty to an investor with a goal of buying one home per quarter, but if a fund is able to purchase one thousand homes per year and turn them every ninety days then it represents a hugely successful business that can out compete a huge segment of the smaller market. On the other end of the spectrum there are also some discerning investors who refuse to look at anything that doesn’t have a margin of greater than 30%. The investors who only look at properties with large margins generally don’t find as many properties that suit their needs and therefore don’t do as much business or receive much of the gains attributed to the experience that a large volume of transactions bring. The discounts that you’re willing to accept are proportionate to the margin that you’re willing to accept. Successful investors are of course concerned with margins when they look for properties but they are realistic enough to know that they must do transactions to achieve results and gain experience.

The buy/ fix/ rent strategy is where an investor buys a property on the wholesale market, performs repairs to improve the value and then quickly rents it out to tenants. The exit strategy here is to retain the property as an asset and rent it out to a tenant for cash flow. It is a common opinion among investors that the buy/ fix/ rent strategy is the key to true long-term wealth and represents a lower risk proposition. One of the benefits of the buy/ fix/ rent strategy is that you can capture all 5 forms of real estate profit:

1. Unrealized capital gain if you buy the property at a discount
2. Positive cash flow
3. Long-term appreciation of the property
4. Debt reduction that occurs if the property is financed
5. Possible tax benefits such as depreciation

Every investor has a different opinion as for how long is the ideal time to hold a rental property. There are several factors to consider when determining your strategy: your ability to buy properties at a steep discount, your future capital needs, your future expectations of the real estate market and the cost and terms of your financing. After considering these factors you must determine if it makes more sense for you to rent out a property for 1 or 2 years and resell it for a profit or if you would be better off holding on to it for a longer term or possibly indefinitely. There are numerous other factors that could contribute to determining your strategy, however, many experts will agree that the main ones are the ones listed here

After a property is move in ready, a tenant should be found after about 30 days. The amount of time can vary however depending on the demand for rental properties in your area, which may make the process a little longer or shorter. The time that it takes to get a property leased can also be dependent on the desirability and marketability of the property. If you are able to gain access to MLS data or a good Realtor you will typically be able to get a good amount of insight about what other similar properties have rented for in the past and how long it took to find a tenant.

Many of the risks involved in a buy/ fix/ rent are the same as the risks involved with repairs and contractors: not estimating repairs well, not being able to resell the property, neighborhood changes, contractor runs off with your money, and potentially having to take a loss on the property. With the buy/ fix/ rent strategy you also run the risk of liability on tenants being injured in the property you own because it’s not safe. For example: experienced landlords often avoid properties with swimming pools for liability purposes. Local safety requirements for landlords may vary based on location. Smoke detectors, door lock security, staircase safety, etc. are all safety precautions that landlords have to be aware of. If any safety requirements are violated, landlords are put at a huge risk because they can be held liable if an injury occurs. When renting out a property landlords must also face the risk of tenants damaging the property, failing to pay the rent and leaving the landlord with an asset that has diminished in value. When evicting tenants for violating leasing agreements, litigation may be required. For this reason, it is highly recommended that all prospective tenants be thoroughly screened prior to occupying a rental property. Landlords should be willing to accept that rental property represents a management proposition that can be time consuming and somewhat stressful at times but may offer a return substantially higher than other investments if done right.

This is the investor’s choice. Some investors choose to review and qualify each tenant themselves, while other investors let their experienced and licensed real estate agents filter the applications and only present qualified potential tenants for the investor to approve or deny. The third option is to have a professional management company review and approve the applications.

When purchasing a buy/ fix/ rent investors should typically avoid the low end and the high end of the price spectrum. Although properties that are too low in value may look to return a high margin of cash flow on financial review, there are some risks that come along with this such as elevated maintenance costs and properties in high crime areas can be subject to a higher degree of vandalism. Theft of copper plumbing pipes are quite expensive to replace and common in some areas every time a tenant leaves or is evicted and the property is left vacant. On the other hand, in most markets there is generally a lower demand for rentals in higher valued properties. The rents on higher valued properties are usually not proportionate to the ongoing expenses related to the property, which could result in negative cash flow. Negative cash flow can result in a non-performing asset that could produce a negative return on investment if it outpaces appreciation. A good range for buy/ fix/ rent property is commonly thought of to be between $80,000 and $250,000 after repair value.

Although retail real estate agents can be a good source, most of them are not accustomed to working with investors so they will not yield as many results as a specialized company like New Western. Working with retail real estate agents will take up a significant amount of time, which is why there are specialists that exist that work primarily with investors. Some of the best sources to use are professional acquisition companies and wholesale real estate brokerages that specialize in distressed investment real estate. Professional acquisition companies and wholesale real estate brokerages will consistently provide you with qualified investment properties that can be purchased at an immediate discount and save you a significant amount of time. Often times new investors will look into marketing techniques such as mass mailing, letters to homes, door hangers and other online marketing techniques that are commonly taught as the newest fad at real estate investment seminars. These techniques are rarely proven and can be exceptionally expensive with no guarantee of success, the results can vary widely and they often take many years to perfect even for professional companies that have large budgets dedicated to the task. Some investors with a significant amount of experience are able to find distressed properties at foreclosure auctions, which involves a high degree of risk and is not recommended for novice investors.

Knowing if a product is worth purchasing is a very important step in the investment process and is often times the most overthought. With all of the right tools and resources you should be able to make this decision in a period of less than 10 minutes. Before you make this decision, experts advise that you have access to MLS comps to see what other similar surrounding properties have sold for recently, which will help you determine the after repair value of your property and what repairs will be required to achieve that value. It is also advised that you determine how many days those other properties remained on the market for before they were sold so that you can then determine what your approximate holding time and related cost will be. The next step is to determine the cost of the required repairs, which is where it comes in handy to either have a good knowledge of home repair yourself or have a good, trustworthy general contractor that will be able to determine the repair cost for you. After obtaining all of the important figures you’ll need to have access to a tool to calculate your expected return on investment. The majority of professional real estate investors develop their own Excel spreadsheet to determine return on investment and use it to quickly underwrite properties and ensure they aren’t missing any associated costs. By using this tool they are able to quickly and easily evaluate the property. If the projected return on investment meets their desired requirements they can then act fast before their competition gets the chance to purchase the property.

There are 5 simple steps to evaluating a property. Make sure you know what investment strategy you are going to use before you start.

Step1. Determine the rehab cost.

Step 2. Determine the ARV based on comps.

Step 3. Determine if this property will meet your investing goals (buy /fix /sell, buy / fix /rent, or your own unique investment strategy).

Step 4. Determine expected days on market based on comps and market conditions.

Step 5. Evaluate the potential risk. Are there any unusual circumstances that may prevent you from selling this house for what you have estimated its worth, or renting it quickly and at the appropriate price. Once you have all this information you can make an informed decision on whether or not to purchase the property.