How to Spot the Best Real Estate Deals
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IRVINE, CA—Educating yourself, using mentors to guide you and doing property due diligence are the keys to success in real estate investment, say Robert Friedman, chairman and founder, and Rick Sharga, EVP, of Auction.com. The two participated in a webinar yesterday via Rich Dad World, a coaching program that helps people achieve their goals, and discussed smart investment moves for novice and not-so-novice investors.
Friedman spoke about the mentors who helped shaped him in his young pre-career days—mostly real estate executives who guided him and taught him the basics of real estate investment, enough that he purchased his own home at age 19. Both Friedman and Sharga distinguished the different types of distressed auctions, emphasizing that there’s no substitute for walking through a property with a contractor to assess its value and value-add costs before making a bid.
“In a short-sale auction, you have 30 days before the auction to go out and look at the property,” said Sharga. “Take advantage of that. Find out the fundamentals of what you’re seeing and what properties are renting for. You may find a lot of value in secondary and tertiary markets.”
Sharga added that there are three typical mistakes new investors make when bidding on a property: getting too excited about the process and overbidding, underestimating their cost to fix up a property to make it rentable. “A lot of people guess wrong on the rental rate. You need to do research on all of those things, and if you get all those right, you’re in a good position.”
Friedman stressed that real estate investment is not rocket science, but a matter of common sense and working through the process. “The beauty of that is that everything is factual and simple. If you do your homework, real estate investment is truly a nuts-and-bolts method of making money.”
The two discussed the importance of technology in how real estate transactions are done, from the advent of Auction.com to mobile apps. “I think we’re in the middle innings of a cycle where the Internet is going to change the complexion of real estate forever. Last year, according to the National Association of Realtors, 96% of buyers included the Internet in their real estate search. Auction.com is that crossing-the-threshold website. Fundamentally, the next generation of homebuyers coming up will have grown up buying real estate online. When we do this correctly, everybody can win.”
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