I’m seeing too many people overpaying for properties today, well after the Recession hit the real estate market in 2008. Today’s market conditions are what we call a “seller’s market”; home prices are going up and keep rising. Most investors don’t qualify for conventional financing from banks, so they’re finding other sources of funding with higher interest rates. Another issue is that properties are only staying on the market for a short time. Before the downturn investors could put in a full-price offer, but were rejected because sellers knew that the next day they’d get an even higher offer.
Have you ever been to a real estate auction? Most investors there have no real limit or budget and constantly overpay. You MUST know your numbers! If you don’t know the numbers, don’t buy it. Without that information, done accurately, you will continue to lose money in this business.
Sometimes, when I’m bored, I’ll watch one of the popular flipping shows on HGTV. These so-called “experts” are just guessing at the numbers, without really understanding their own market or the neighborhood of the property they’re looking to buy. They’ll either offer full asking price or just under, and they ALWAYS end up paying beyond their rehab budget and go beyond their original timeline.
This is because they DID NOT KNOW THE NUMBERS. They just guessed and ran with it, throwing dollars at the deal and assuming they would make a huge return. That rarely happens, if ever.
STOP OVERPAYING FOR PROPERTIES!
Visit us at LarryHarbolt.com for all your real estate education needs.
Good Luck and Happy Investing!