?I am a W-2 buy and hold investor. I am in it for the long-term cash flow. I also use a real estate agent and work full-time. To make my real estate business work with my time constraints, here is what I do to find buy and holds:
I stay away from pre-foreclosures. Foreclosures are great, but in my area, they are pricey and need work.
I like short sales! They are great little gems for many reasons. To learn more about short sales, check out my previous article here.
I buy cookie cutter houses, and this is my process.
How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties
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The Home Buying Process I Use for Maximum Efficiency
- Define My Area: I buy in very specific areas based on age, school districts, locations, etc. These are all terrific buy and hold areas fitting my goals and represent great deals if bought for the right price.
- Define My Ideal House: I define the type of house I am looking for and a “no higher than” price for the area.
- Have a Target Price Per Square Foot: The MLS in my area has the price per square foot listed. Many people use this to compare apples to apples. After two years in my market, I know what a good price per square foot is compared to a high one.
- Utilize MLS Automation: My realtor is amazing and one of the best. Therefore, to not “abuse” her, we have a system. Our system is she adds me to the automatic list with only my area and house selection criteria. This allows me to do 2 things: a) watch for houses that are in my “price per square footage” criteria and b) to generally watch the market. I look at every house that pops up on my phone, but only ask about that ones that fit into my “zone.”
- Follow Up on Those That Fit: If it fits into my zone, I then follow up with my realtor and ask her “Why is it so cheap?” Most of the time, she says, bad area, not your type of house, etc. But enough of the time, she says, this is a short sale, and it is perfect for our numbers.
Making the Offer
Once it is perfect, we than discuss strategy, what price I should offer, etc. This is all virtual and done quickly. Than we offer on the house, site unseen. She sends me over everything electronically, we put in the lowest price possible, and then hit submit! Occasionally we talk in person, but most of the time it is all done virtually. We have a good enough relationship that I trust her.
I only look at the house once it is approved by the bank at the price we are looking for. I have enough houses that fall through before this time that it doesn’t make sense to waste anyone’s time. Remember, you are a investor and want to earn money. At the same time, your realtor’s time is money! So you need to save her energy for when you really need it.
If we don’t like the house at this point, then we walk away.
My realtor works in a small area, so most of the time, she has seen the house or knows it very well. So after working with her on 9 transactions together — mine or helping her with others’ — I trust her. Plus, most of the time she has already been in the home.
Some More Pointers
A few more things to note in the process:
- We have had more short sales go through than don’t. You don’t want to over-offer and become “that” buyer. On the other hand, you need to have backup because they take 9+ months. I have heard a lot of talk with investor that the magic number is 2.5 for every one. Again, you will know the short sale area, etc.
- My houses are cookie cutter, so if you have seen one, you have seen them all.
- We buy based on neighborhood and location! These are the biggest importance, which helps narrow the houses down.
- The houses are newer — most less than 10 years old. So while there definitely can be issues, they tend to be cosmetic and not as much of an issue as other things can be in older homes.
- Not only do you need to be efficient, but you have to remove all emotional attachment. So don’t follow in love with a house! Wait until the number come back and make sure they work for you!
- Short sales are dramatically increasing in price. So look at all houses and figure out the deals that work for you. While we have yet to buy a traditional sale, we are working on one right now. Remember, it is important to close deals! So while you definitely want “good” deals, if you never close anything, you won’t be successful either.
By having our processes concise and to the point, we are able to continue investing while working full time and having busy side jobs.
What about you: What are your best tips for investing while working a full time job? What would you add to my tips?
Leave a comment below, and let’s discuss.