Take lots of photos, videos are even better

Take a digital camera or your cell phone or video camera with you whenever you visit a property you are considering buying.  Take pictures of EVERYTHING!  All exterior sides of the building, all kitchens, baths, and all mechanicals including heating, water and electrical panels.  Pictures of each room and don’t forget the exterior shots of the houses immediately around this house.  And if there is a view, don’t forget that either.
 There are lots of reasons to take these photos:
1.  They will help with your rehab estimate when you are home and can’t remember one property from another, because they all blend together.
2.  If you sell the property, you’ll have documentation of the “before” when the buyer’s lender questions why the value went up $100,000 in only 3 months
3.  If you have an insurance claim during the course of ownership, these may be helpful.
4.  You won’t have to go back to the property later to take the photos that you should have taken in the first place. 

Provide a complete loan package

When we are missing critical information, it slows the process.  If you don’t have all of it, contact us to discuss it, so we can jointly determine the best way to get it.

  • Application spreadsheet ( fill out all pages)
  • P&S or Signed Offer (if they are not signed yet, send the unsigned version with what you have verbally agreed to)

Have a stake in the outcome

It’s called ‘skin in the game’.  You must have either cash in the deal, or provide additional collateral (another property you own) to demonstrate that you have something to lose besides the profit in this deal.

Consider cross collateralization

If you need to borrow more than is normally warranted by the LTV, or don’t have enough cash, consider cross collateralizing another investment property.

Be conservative in estimating values

In a declining market, your profits can evaporate quickly.  And an improving market can turn.  Be conservative in estimating both the current ‘as-is’ value of the property, and the After Repaired Value or Completion Value. 

 Have multiple exit strategies

If the market changes, and you can’t sell your property as planned, have a back-up plan.  This will insure you can make money regardless of the market.

Consider all expenses when evaluating a deal

A well-structured deal takes acquisition, carrying, financing and selling costs into consideration, since they add up quickly and can dramatically impact your profit.  And don’t forget opportunity cost:  What you would be making with the money if you put it in your 401k, or stock market account, mutual fund, or your mattress.  Scratch the mattress, you can’t make anything in a mattress.

Expect the unexpected

You actually CAN plan for the unexpected.  Assign a dollar amount as a miscellaneous or contingency expense in your rehab budget.  If it’s your first deal, plan for an extra 20% of your rehab budget.