Becoming a Real Estate Investor – The First Step
I know, you have stayed up at night and have seen all these great infomercials on how to make a million dollars buying real estate and now you want to try. Maybe you have even gone one step forward and even paid for a seminar but just not sure how to apply it to our local market in Los Angeles. Well, I hope if any that you have realized that for the most part, they are all based on the exception and not the rule. At least that was my conclusion.
I paid and attended the Robert Allen seminar years ago, my instructor was from Florida and had great success in buying property and then flipping in Florida. The only problem is that in the City of Los Angeles, you didn’t find property priced so low. Florida like Vegas and other parts of the country at times has had so much inventory that you can pick someone up at a ridiculous price.
Los Angeles is slightly different in the sense that inventory-to-population ratios are always low. For example, I ran a search for bank-owned property yesterday and there were 135 single families in the City of Los Angeles, considering the population is 3.9 million ranging from $ 199,000 to $ 6,500,000 that doesn’t seem like a lot of property.
So what should a new investor do?
1) First pick a few areas that you want to focus on.
2) Work with an agent
3) Secure finance
4) Make sure you have seen at least 25-30 properties in a specific area
5) Make decisions fast
Why pick a few areas? Like in everything else it pays to be an expert instead of a generalist. You need to know the numbers in your selected areas.
Work with an agent. Agents get paid by the seller not you so in essence you have a high-caliber assistant working for you for free. I rather get a great deal that saves a few bucks in commission.
Secure finance. If you don’t have a pre-approval or cash you have nothing. This is the most important tool you have to structure a deal. Pre-qualify is not going to work.
Make a decision fast. If you have done your homework this should be easy. You need to know your stuff. You need to be able to come to a conclusion very quickly based on the inventory and pricing you have seen.