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 Step #7 - Look At PropertiesRight now, you know the difference between yourself and the naïve investor. The difference is preparation. Your Step #7 is his or her Step #1. Who is better off? The first six steps may take you a month or two, but what a difference! Now, your research begins to reap benefits. A listing sheet is a property information sheet used by agents. Ordinary agents feel compelled to guard these listing sheets with their lives. The information on the sheet is really all that separates you from them. The professional agent, the Nardo type, doesn't worry. He has established a relationship with you. Nardo isn't worried that you'll steal the information or try to cut him out of a commission. Nardo is a successful businessperson. He's busy; he's organized. You have a question, fine. You want to see a property, fine. You want to discuss a property, fine. Nardo isn't interested in wasting time by taking you on a haphazard cab ride around town. A professional agent isn't afraid to give you access to the listings. A professional agent wants to deal with a knowledgeable consumer.  You know the type of properties you want. If you don't own anything, your first purchase will be a single-family house, a condo or a small multi-family. The obvious advantage to owning and living in a multi-family is that you will have rental income to support your debt service, your mortgage. 
If you're handy, you might consider a property that needs cosmetic upgrading.If you're more conservative or don't have much management time, look for newer properties where all the work has been done. Ask Nardo to help you compile a list of properties that meet your criteria. Take some notes: address, price, rental information, etc. Ask for photocopies of all the listings that look interesting. After you purchase your first property through this office, using the copy machine, computers or anything else you want will be no problem.
You don't need Nardo to drive you by the properties. Drive by yourself, taking additional notes. With your drive-by and your notes, you have a good basis for discussion with Nardo. Nardo will understand if you're not ready to buy immediately. He will understand that you're still educating yourself. Nardo and Jones must fill the role of enthusiastic advisers. If not, move on. You are in charge. You are in control. You are making the choices for yourself and your family. As you narrow down your choices, you'll be ready to begin looking at properties from the inside. Single-family houses and condos are usually sold by owner-occupants, who are motivated to sell. Therefore, making showing appointments shouldn't be a problem. Tenants may be more reluctant to show their units. Tenants quite justifiably fear that a change in ownership will signal an increase in rents. As a policy, tenants are given 24 hours notice before a showing; asking for less is asking for a favor. Nardo will handle making the appointments and will accompany you to the property. These first showings are, again, just educational. When you are dealing with tenants in a multi-unit building, it may take more than one trip to see all the units. Accept this. It is part of your new business.  Print the following form and use it to record your general impressions. Nardo is your agent. Let him show you the property. Let Nardo lead the discussion while you're at the property. Don't embarrass the tenant or the seller of a property by making critical comments while you're in someone's home. You'll have plenty of time later to make comments. You may not want to buy this property. That's all right. You're going to look at many properties before you buy. The number of properties you should look at before getting serious depends on your experience. A first time buyer should reserve about two months. You might love the first property you see. You might have to wait to love the twentieth property you see. You know yourself and your finances and your downpayment situation. You'll have to decide when the time is right for you to proceed to the offer and negotiation stage.
Your collection of General Observation Forms is an excellent educational resource. Study them. Use them to clarify your thinking and objectives. When you have a question, call the appropriate member of your Mastermind Alliance. Of course, if you're tech savvy, you can do all this note taking on a Palm Pilot. GENERAL OBSERVATION FORM Address______________________________________ Date___________________ 1. Rate the location: Excellent Average Below Average 2. Is the type of property in character with the neighborhood? Yes No 3. General physical condition relative to the neighborhood: Better Average Worse 4. Overall exterior physical condition: Few improvements needed Average Many improvements needed 5. Layout of rooms or apartments: Excellent Suitable Needs revision 6. Overall interior physical condition: Few improvements needed Average Many improvements needed 7. Major components: 8. List amenities: 9. If income property, do present tenants appear: Excellent Average Below Average 10. Does property warrant further consideration? Yes No Other comments: Use back of this sheet.
 Some homeowners have found a safe and management free way to invest in residential real estate called the home reinvestment method. The home reinvestment method is based on the simple business premise that you try to buy low and sell high. It is most popular with single men, single women, and couples without children. The method presupposes an ability to judge property values and a willingness to move on short notice. Reinvestors put their personal housing preferences aside. They don't look for their dream house. Instead, they look for a house that is listed or can be negotiated to an excellent price, for instance, a transferred executive who wishes to sell his home quickly. This owner knows that if he were willing to take the time to go through the regular selling process, the house might bring between $180,000 and $190,000. However, he has to move and he has to buy a new home. So, in exchange for a quick sale, he is willing to sell the house for $160,000. The reinvestor buys the house for $160,000 and moves in. Now, the reinvestor, who has the time to wait, places the house back on the market for $210,000. When the house sells for $210,000, in two months or two years, the reinvestor realizes his or her profit and looks for the next property. Some reinvestors will buy and sell two houses a year. Each time they will move into the house and make it their principal residence. The reinvestor also attempts to keep buying more expensive property each time, thereby avoiding any capital gains tax.
Go to Lesson 4
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