Experts Advice - Buy property for investment without seeing it

 

Author: Steve Gillman

 

 

Why would you buy investment property without seeing it? It's a numbers game. Whether or not you see the property before you make an

 

offer isn't nearly as important as making sure the numbers make sense.

 

 

A man in California used to just send out offers on a hundred MLS listings at a time, offering 25% less than the asking price on each one.

 

Occasionally a few sellers would accept his offers. He never had to look at the homes beforehand. Including an "inspection and

 

approval" clause in the offer meant he could always back out of the deal later when he saw the house. Meanwhile, he efficiently found the truly

 

motivated sellers.

 

 

 

This true story demonstrates that with a good clause or two in the contract, you don't have to worry about making an offer before you see a

 

property. It's true when you buy investment property or your next home. When it isn't everything the seller says it is, you can reject the deal with

 

little or no loss. So why wouldn't you want to look at the property ?

 

 

 

Buy Investment Property By Numbers

 

The main reason you might skip looking at a property before making an offer is time. This is certainly true if the property is far away. If you

 

don't get a price that makes sense, why spend your time traveling to look at real estate investments? A price and terms that make sense - this

 

is what is important. Of course you\\\\\\'ll probably want to look at the actual property eventually, but looking at the numbers is how you invest.

 

 

Investors value income property according to current cash flow (or should if they want safe and viable investments), so start by verifying income.

 

Get the actual income figures for the past 12 months. Always consider the potential income if rents are raised, vending machines are added,

 

etc., but base your offer on the current income.

 

 

Verify all expenses with investment properties. If any expenses listed by the seller seem unusually low, they most likely are. Just substitute

 

your own best guess in place of any suspicious numbers.

 

 

After you determine the net operating income, apply the appropriate capitalization rate to arrive at the value. If you're not sure how to do this,

 

get help. However, you really should understand the principle of how to figure a cap rate. This is a numbers game you're playing.

 

 

Calculate loan payments (talk to your banker), and see how much cash flow you'll have. Then you can figure your cash-on-cash return

 

based on how much of your own money you put into the deal. Just divide the cash flow by your investment.

 

 

When the numbers work, you can safely make an offer. Inspections will tell you if there are problems that will affect the cash flow. You can

 

always renegotiate if there are such problems (assuming you made your approval of all inspections a contingency of the offer). Of course, you

 

can even go take a look now that you are truly ready to buy that investment property. (Parkinghk.com remarks : HK Government Buildings Dept

 

stipulates all car park size must be about 7 ft by 16 ft, height will be restricted by car park entrance, property inspection may be unnecessary)

 

 

About The Author

 

Steve Gillman has invested in real estate for years. To learn more, get a free real estate investing course, and see a photo of a beautiful house

 

he and his wife bought for $17,500, visitwww.HousesUnderFiftyThousand.com.

 

 

For reference only. It is not investment advice.