Kokomo Investors Avoid These 8 Mistakes:
They Can Bite You in the Wallet!
By
Considering Investing in Real Estate in Kokomo?
Thinking of scooping up bargains to “flip” or to “hold and rent” in Kokomo? Whether you are a seasoned investor or just starting out, this is for you!
Kokomo has the dubious distinction of being among the most affordably housing markets in the country. There are some real bargains in Kokomo and the surrounding areas; but, you have to know what a bargain looks like around here!
A bargain is a lot more than just the price. Just like everywhere else, whether a property is really a bargain depends on three important factors: LOCATION, CONDITION and PRICE.
- Bite #1: The lower the price, the worse the condition. If a property is being sold for $20,000, you can almost guarantee it needs MAJOR rehabbing – not just paint and carpet and a few little fixes. If these cheap properties were real bargains, local investors would have snapped them up the day they hit the market.
- Bite #2: Beware of the internet. (See Internet Warning) I’ve seen properties on eBay, Craigslists, etc. that tout their low price compared to similar houses in the neighborhood. Many of the comps they are using are dated and not in the same neighborhood.
- Bite #3: Paying too much for a property. Believe it or not, a $15,000 property may be overpriced! If you aren’t familiar with the area and our current real estate market, you need to find someone to help you protect your financial interests.
- Bite #4: Do your due diligence!
- Study local market conditions. There is a reason we are so affordable!
- Study the immediate neighborhood. Check local crime statistics.
- Know what repairs are needed. Get a home inspection and/or system inspections.
- Get an appraisal or accurate, market-based comps.
- Investigate the local rental market
- Bite #5: Misjudging your cash flow.
- If you are planning to rent the property, you need enough cash flow to cover not only remodelling expenses but also maintenance, property management expenses, etc.
- If you are “flipping” the property, don’t forget to factor in holding time and its associated costs – maintenance, taxes, insurance, etc.
- Bite #6: Underestimating the time and money needed to get “market-ready.” If you are new to “rehabbing,” double the amount of time and the amount of money you’ll need to get the property ready for market – either resale or rental.
- Bite #7: Have a backup plan. Let’s say you are planning to resell the property. What if it doesn’t sell in 30, 60 or 90 days? Will you consider renting it or perhaps a lease option?
- Bite #8: Don’t be the Lone Ranger! To be successful you need a local team of professionals:
- a real estate agent
- an appraiser
- a home inspector
- an attorney
- a lender – for your deals and to assist prospective buyers
- contractors – plumber, electrician, roofer, HVAC contractor, general contractor, etc.
Investing in real estate can be very rewarding – just make sure you have done your homework and know what you are getting into when you plunk your hard-earned money into a property.
If you are comfortable navigating the intricacies of real estate transactions, you may benefit from occassional professional services of a REALTOR – without paying a commission. My real estate consultation services may be just what you need!
Whether you are a long time investor or just starting out, my services are tailored to your wants and needs:
- Need basic market research?
- Need an analysis of a specific property?
- Need research for rental properties?
- Need research for resale potential?
- Need other services?
If you answered “yes” to any of these questions and you are ready to invest in Kokomo, call me at 765-513-0354 or email me today. We will examine your wants and needs and determine what services I can provide to help you accomplish your goals.
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