Although many real estate investors want the best for their clients, it doesn’t mean that they aren’t still in business to make profits. There is a lot of information that most of them will still hold to ensure that much of the process go their way. Here are the top secrets real estate investors don’t want you to know:
1. You are going to deal with future zoning regulations alone
No investor will warn you about zoning woes that await you when you finally buy a property. So, if you plan on making changes to the property, you should be ready to deal with zoning pains alone. Things like riverside docks, treehouses, or erecting certain types of fences could be governed by stringent zoning regulations.
2.Warranties don’t hold much weight
Investors and agents who represent them may provide warranties on new homes to entice buyers to buy the properties. However, such warranties are often carefully worded that any potential claim against them ends up null and void. So, always focus on the main contract when buying a new property.
3.It is not mandatory to use the investor’s lender
Most investors often suggest that you buy a property through their lender. While such lenders may offer a few perks and bonuses if you choose to finance your home through them, you have the liberty to work with any other lender. So, do your due diligence to determine whether you are getting a good deal or not.
4.You can (or should) be represented by a realtor
When buying a new property, you should always come with a realtor to represent you. If you contact an investor on your own, you somehow lose the right to have a realtor represent you, making it harder to negotiate your contract to deal with issues that may occur during the contract.
5.Real estate is a long term game
Never be misled by a cheap, get-rich-quick offer. Buying or selling a property is a long term investment given its illiquidity. You can’t get rich overnight but if you do things right, the return on investment is great. So, unless you specialize in flipping homes, buy-and-hold is always a good move.
6.Ready buyers don’t exist
Ready buyers that many real estate investors mention when negotiating deals just don’t exist. So, whether you are buying or selling a property, don’t be deceived that there are ready buyers who are about to buy a property if you meet or fail to meet certain conditions.
7.Not all valuations are accurate
The goal of many valuers is to add your property to their registers. So, some will give you a higher valuation to entice you to sign up. However, this might make your property hard to sell. Before working with a valuer, therefore, do your due diligence to ensure that they have a solid reputation.
8.Property viewers are often hired
Some investors hire professional viewers to look around a property being sold like potential buyers. This is usually done to make you feel that a property is in high demand so that you can close the deal fast. Don’t be in a hurry to buy a property before doing proper research.
9.Cash flow is critical
According to David Lindahl Real Estate Business Mentor, to succeed in the real estate industry, you need to pay yourself—not the other way round. Your rental income on a property, for instance, should cover all your expenses and not just the mortgage payment. Before buying a property, therefore, determine whether it will give you a positive cash flow after paying management fees, insurance, taxes, and vacancy costs. Never gamble only on appreciation as there is no guarantee that the property market will keep going up.
Always have a Comprehensive lease agreement
A hand-shake with an investor to seal a deal is great but it cannot protect you. Having a legally-binding, comprehensive lease agreement is a must. It shields you against any form of liability in the event of a dispute with a real estate investor or agent.
Investing in a new real estate property can be more fulfilling when you are up to date with all the information that the big players might be keeping from you. Hopefully, the above tips have shed some light on what you should be aware of when buying or selling a property in any real estate market. Strive to work with investors that care to help you navigate the process in a way that suits your needs.