I am new to real estate investing and I’m just beginning to dig in. I have a couple issues. I was wondering if anyone has them too. I am a very literal person. I also look at properties and become emotionally involved. This emotion seem like it becomes a purchase factor. The emotional issue is I look at a property and see all that’s wrong and if I can’t live with the way it is, then I will not make an offer, unless I can gouge the offer so I can gut the project and start new. It might be a touch of OCD. Any one have any advice?
Michael, are you thinking like a home buyer or an investor? If you were buying your own home to live in, the emotional connection makes sense. But investing in real estate as a business comes down to some pretty unemotional factors like location, number crunching, market demand, best use, etc. You certainly don't want to buy a property that will require a lot of renovation unless it comes with a solid ROI. And, you don't ever want to over-pay. But it may be that you're not at the right starting point.
My recommendation is to find a realtor who works with seasoned investors to help you navigate the process and to add bench strength to your search. Have that realtor show you "like properties" that are not for sale - maybe currently for lease - that you can use to gauge "marketable condition to marketable rent." A big pitfall for new investors (actually even seasoned ones) is over-improving a property. What you put in, you won't necessarily get back.
Once you have better understanding of what renters in your market expect in your market for various rent price points, you'll be in a better position to analyze and select investment properties.
Hope this helps...I have a feeling you're going to have your first rental very soon.
Focus on the numbers and not on the home.
Pretend you are walking around a furniture store looking at the variety of furniture. Some of it might be ugly to you, but someone else will love it. Houses are the same. People want to rent a house that is clean, in good condition and in a good area. If you find a place with 60s wallpaper, look at it as an opportunity to add value through paint.
Take a friend with you who isn't afraid to tell you if you are wrong. Also work with a realtor that is used to investment properties.
@Michael Hadvab We do buy and hold and usually have planned renovations at purchase. You just have to be sure you know how much you plan/need to spend and calculate that in up front and make sure the numbers still work. We plan renovations that save money and allow us to raise the rent. They usually look better too.
Thank you for all your responses. Everyone has good points that I will take to heart and use. I do like the analogy of the furniture store.