Have you ever had a dream of making money from a renovation only to be sobered by the reality of high house prices and low profit margins?
We’ve all heard stories of people who buy a bargain property, renovate it and sell it for a profit. But how do they find the bargain in the first place?
Outlined below are three simple strategies for bagging a bargain when purchasing your next investment property.
1. Build good relationships with selling agents
If you’ve spent time scouring the internet and attending “home opens” but that elusive property deal is not materialising, consider strengthening your relationships. Real estate relationships, that is.
It is not enough to have a friendly chat during a home inspection. Let agents know you are a serious buyer. Ring and visit them regularly so they remember your face. You want to be first in their mind when that discounted property from a motivated vendor appears.
By doing just this, I was able to earn over $30,000 from a five week renovation. The combination of motivated interstate vendors with difficult tenants and a strong relationship with my real estate agent created a discount buying opportunity that I was quick to act upon.
2. Use internet tools to search for discounted property
Finding a discounted property can be as simple as typing the right keywords into your searches on realestate.com.au or domain.com.au.
Try typing “discount”, “discounted”, “motivated vendor” or even “deceased” into the keywords tab on your favourite real estate site. You’ll be surprised at how easy it can be to find that previously unreachable property.
By employing these tools, a young couple I know were the only registered bidders at an auction and were able to purchase the property well below market value. When complete, the renovation will further increase their rental return and capital growth resulting in a very profitable deal.
There is a wealth of information on finding discounted property online which you can access by clicking below.
Negotiation skills can be the key to securing a discounted property. Always remember that the most successful negotiations result in a win/win situation for both parties.
Outlined below are some tricks of the trade to help make that dream renovation into a reality.
• Make a low offer
As simple or obvious as that sounds this needs to be your starting point. But make sure you provide a credible reason to substantiate your position. It could be that the roof leaks or the house needs modernising. Highlighting anything that reduces the appeal of the property can work in your favour.
• Offer terms that will be attractive to the vendor
If possible, find out as much as you can about the reasons and emotions behind the sale. For example, a quick sale with a short settlement period will be appealing to vendors who are eager to move on quickly. Sometimes, however, a longer settlement period may be required if a vendor needs time to find their new abode.
I recently negotiated on a 1960’s property that was originally built by the pioneers of a seaside town. The vendor had owned the house for over 30 years and was proud of its history as the first home in the area. I made it clear that my intentions for the property were to restore it to its former splendour. Tapping into the vendor’s emotional attachment to the home paved the way for a positive reception when my offer was presented.
• Get there first
If you have fostered good relationships with agents and used your online tools to receive real estate alerts, you have every chance of being the first to make an offer on a property.
Vendors often react to the myth that “the first offer is often the best”. Some fear that if they reject the first offer received, they may be stuck with the property for months with no guarantee of fetching a higher price.
In the words of real estate millionaire, Dymphna Boholt,
Real estate investing isn’t just about “buying properties”…
Anybody can buy a property…
Real estate investing is about buying them at the right price.
So start clicking, chatting, tuning in and before you know it you’ll be renovating your discounted property.
Please let us know your experiences by commenting below.