After having written my last several articles on current happenings in our market, I came away with the impression that I had become as bad as the regular media only focusing on the negative and never looking for the positive. Overall, this negative crap just doesn’t work for me… but regrettably I acknowledge that it is not prudent to keep our head in the sand either!
With that in mind I am going to focus this article on an event that is positive news to those real estate investors who buy and sell into the homeowner market.
How to Analyze a Real Estate Deal
Deal analysis is one of the best ways to learn real estate investing and it comes down to fundamental comfort in estimating expenses, rents, and cash flow. This guide will give you the knowledge you need to begin analyzing properties with confidence.
The Homebuyer Tax Credit Extension
For those readers who keep abreast of these things, and it better be all of you, you know what I am about to discuss – the recent extension of the Home Buyers Tax Credit. The new bill was signed into law on November 6th and essentially extends and expands the program. The details of the program can be found in the UPI story, How the New Homebuyers Tax Credit Works.
In keeping with my commitment to focus on the positives of this bill, I want to discuss how each of you, as real estate investors, can position yourself between now and May 1st 2010 to profit from this program.
I will start with this premise…
There is a predominant opinion, supported by sales data, that we’re in a buyers market. Meaning, that at certain price points, buyers are willing to buy in this market and, in my opinion, they will continue to buy as long as interest rates and prices represent value and affordability.
So, how do you profit?
- Find a great deal! A great deal may be one that needs few repairs and can be purchased at 70% or less of comparable properties. Or it may be a deal that needs more extensive repairs in which case you need to purchase it at less then 50% of the selling comparables. Actually, I would be more comfortable with 40% or less as a purchase price.
- Assuming it needs little in the way of repairs you can do what many investors are doing today and list and sell it immediately to a homeowner buyer.
- If the deal needs more work, you have the entire Winter to make the repairs. You’ll want to get it on the market in time for Spring, and under contract before the May 1st deadline.
- If you are only in the position to wholesale deals, the Homebuyer Credit plays right into your hands because many rehabbers don’t have the time to look for quality deals. And since it looks like homeowner buyers are going to be kept in the market as a result of the credit, you know rehabbers are going to be very active.
While I realize that this is just an overview, the bottom line is this.
The Government has just given us a huge gift… even if we are paying for it with our taxes. Take advantage of it in every way that you can.
Photo Credit: aussiegall