The Dangers of Real Estate and Late Night T.V.

For months we have seen infomercial after infomercial on late night television and cable stations throughout the day on how to take advantage of the foreclosure markets. There now seems to be more authorities on how to make a quick buck in real estate with little to no risk than in any other market place. We’re here to tell you that getting sold on this nonsense is setting yourself up for disaster. There are a lot folks out there selling strategies that sound great, but are not quite as easy as they may seem.

The buying and selling of foreclosures for a profit is a game for professionals not for the novice or new real estate investor. That being said there is a tremendous opportunity to take advantage of a fractured real estate market. Professionals will tell you that no one can pick the exact bottom of any market, whether it’s stock, bonds or real estate. To be successful in anything you must have a plan. In the real estate foreclosure market you must be able to identify value, have a plan in place and the right partners to execute.

Just because a property has dropped significantly in value does not make the purchase of that asset the perfect decision. There are numerous factors to take mind prior to your purchase.

Are you planning on selling the home or holding and renting?

Who is doing your analysis on the market place to make sure either of these are viable options?

In the buying and rehabbing market in order to be successful you have to have the right team in place. We’ve been to several seminars where the so called “professional” who is selling their strategy to newbies in the market will actually have people trained on measuring drywall, counting cabinets etc. What a waste of time.
In order to be successful you need to assemble a “team.” This team should consist of:

1) Your person who helps you to identify the property you plan to purchase. Possibly a real estate agent dealing with foreclosures or a property wholesaler.

2) A licensed and bonded contractor with the capability of performing the necessary work in a timely manner who is experienced in the city where the rehab is being done is familiar with the local zoning and permitting regulations.

3) A short term “hard money or rehab lender” whose business is partnering with real estate investors to allow those individuals to, leverage their money and achieve significant returns on their investment. These institutions also come with expertise, including the ability to value the property correctly through before and after appraisals to protect both the lender and the borrower.

4) Exit Strategies- If you plan to sell, do you have the right realtor who is specific to the area you are dealing in and can sell the property in a timely fashion? If you plan to refinance and hold your property for rental, are you set up with a seasoned expert in the exit financing arena that can get you the correct loan necessary to be able to hold and cash flow your property on a positive month to month basis, do you have tenants ready to rent you property as soon as construction is done (banks will generally not refinance an investment property without a renter in place) and do you have tenant and property managers in place who will collect the rent and deal with the day to day problems that might occur when owning a rental property?

These are some of the basic necessities needed for success when dealing in the foreclosure market. And believe me, there are many more we have not even covered.

Select Funding LLC, Northfield Il. Is a trusted partner to rehabbers and investors in the Chicago marketplace. Our consultative approach is a unique advantage helping to give our borrowers the best chance at success in a very volatile real estate market.

For more information on how to become a partner with Select Funding, e-mail us @ alan@selectfundingllc.com or call us at 847-386-6783. We look forward to helping you build a successful rehabbing strategy.