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Where and How to Buy Real Estate

April 18, 2012 | Comments: 0 | Views: 171

So, you want to buy some real estate, but where and how should you buy?

We always buy local (both real estate and produce!). Why? Because that's the market we know. We understand the ups and the downs, we know where shopping is and the best schools, we know the trends and future growth plans. The best buying decisions come when you're informed.

Some people buy statewide, nationwide, even international. My feeling is that they're given a tip or, perhaps, following a frenzy. It's hard to understand the neighborhood and the trends at a distance - possible, but more difficult. The grass is not always greener on the other side, and it can be difficult to reach and enjoy. It's easiest and fastest to learn your local market and create a plan that works for you there.

What else do you look for? Pricing, of course. We ONLY buy properties that have equity, today. Never buy with the "hope" that values will increase. The past five years have taught us all that "betting on the future" is never a good idea. When you buy a property that has equity on the day you purchase, if the market continues to drop, you have spread in your value to allow for decline without devastation.

We like at least 30% equity when we buy. If a house is valued at $100,000, our goal is to purchase for $70,000. Those deals are out there, perhaps now more than ever. Foreclosures, short sales, free and clears (no mortgage). Much of the time, to get that much equity, the house is in pretty rough shape so it won't sell on the retail market. If you can buy a house that, repaired, is worth $100,000, you pay $50,000 and put $20,000 in repairs into it, you then have a $100,000 house for $70,000.

And, if we're planning to hold a property and rent it out, it must cash flow. After we pay all of our expenses on a property - principal, interest, taxes, insurance (PITI) - we must be able to rent it out for a minimum $200 above those costs. That $200 can then build a repair fund for the property to cover needs such as: new roof, new appliances, carpet and paint when tenants move out, etc. And, in case the economy continues to decline, it also allows us to reduce rent without coming out of pocket for monthly costs. In the not-to-distant past, we calculated rents at 1% of the purchase price. Today, however, calculate slightly less.

When buying, never box yourself into only one way to "sell" the property. Always plan for "multiple exit strategies." It's best if you can: price the property low enough to sell it on the retail market, be able to rent or lease it out, be able to flip quickly to wholesalers, and even be able to owner finance to a buyer who can't get traditional financing.

Where and how do you buy real estate?

My name is Karen Rittenhouse and I've been investing in real estate full time since 2004. In the past few years, I have bought and sold roughly 100 single family homes. Please check out my blog -

As a company, we buy, sell, rent, lease, owner finance and manage properties for ourselves and for others. Check out our site at

I also coach and train anyone interested learning about investing in real estate.

Source: EzineArticles
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