‘Tis the Season to Pick Up the Best Holiday Gift: A New Property
Some of the best investors I know are in “ABB” (“always be buying”) mode. They’re always looking for good deals and always making offers (“’cause if you want to do more deals, make more offers”).
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But I have to admit that as my wife and I are looking at properties to potentially pick up, this is our favorite time of year to get a real estate deal. There’s something about the holidays—maybe it’s knowing that there’s a long, cold winter on the backside of all the festivities—that seems to slow the real estate market down in the Northeast where I live.
Winter Is Coming
For most people, after Thanksgiving, the focus is on the holidays and seeing family. Then, after Christmas and New Year’s, you’re in January, and Old Man Winter has a grip on you. Like the Starks at Winterfell, who know that “winter is coming,” even other investors seem to want to hole up and ride it out.
I like to zig when other people zag. This is why it’s my favorite time to head out and strike up a deal.
Making a List, Checking It Twice: How to Get Ready to Buy
So, now that you know one of the best times of year to buy if you live somewhere that has a real winter—and you like the thought of picking up the best holiday gift of all (a new property)—my next question is, “Are you ready to buy?”
Related: 5 Ways the Holiday Season Reminds Me to Be a Better Entrepreneur
If you’re paying cash instead of using financing, do you have a private or hard money lender lined up and are you clear about their requirements? Alternately, do you have all the money saved up to buy the property, including closing costs?
If not and you’re using a traditional form of financing, have you sat down with a lender and reviewed all your financial numbers—and maybe even had your credit pulled to get pre-approved? Or if you need a cosigner for bank financing, have you done the work ahead of time to line everything up?
Be aware that if you’re financing a deal, now it’s much more complicated, as the bank will not only make you apply for a loan, but they’ll make you document and validate all the information you’ve given them. They’re basically looking for things that express financial stability, like W-2s, tax returns, several months’ bank statements, etc. They’ll want to verify all the information on your application, such as residency (for at least the last two years), as well as work history. This is why getting prequalified is so valuable in enabling you to move quickly when that deal drops into your lap.
Knowing Your Market
Getting prepared also means knowing the current real estate market. What are houses selling for? What are rents? Are they going up or down? What does market time look like (is it four months or six months on average)? You get the idea.
What’s your timeframe like? Will your next purchase fit into you and your crew’s schedule? My buddy who does a lot of direct-to-seller marketing sometimes has so many deals that he ends up wholesaling some out due to the fact that he doesn’t have enough capacity to take on another project. In my opinion, there’s nothing worse than getting all the resources lined up, finding the deal, funding the deal, only to realize by the time you close that you’re too busy to work on the rehab.
Or worse yet, you might discover that by the time you do get around to doing the rehab and are ready to flip the property that the market shifted and your planned exit may not work. Getting good help in a timely manner, even if you have to pay a little more, can sometimes make or break what you once considered a good deal.
So, whether you just found a quick paint and carpet turnover or a full gut job, how are you ready for your next deal? Do you consider the “slow” period between Thanksgiving and spring a good time to buy?
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