Finding Property - Considerations

I find that locating a good deal in real estate can take a fair amount of effort.  As a rule of thumb a good deal is a property that can be purchased at a price that after rehabed yields a profit - yes that makes sense, I know.  

When looking for real estate we focus on a lot of factors some of where are listed below.  By no means is this intended to be an all inclusive list, just some items quite honestly that make sense and are tried and true on our end. 

1. Is the neighborhood desirable and do people want to live there?
• Even in this current real estate market there are neighborhoods that are desirable and where people what to live.   An easy example is Lido Key in Sarasota that has only slipped 20 - 30% in average sales price compared to areas in Port Charlotte that are selling for more less than $0.30 on the dollar. 
2. What is the demographics of the property and neighborhood in general?
• Understanding your buyer profile and under what type of terms they are capable is important.  The easy question is "Are they typically cash buyers?"  If they need to finance it can be a problem these days unless they are using hard money lenders.  Believe it our not there are still neighborhoods where people are willing to pay cash.
3. What is the sellers motivation?  Is it due to foreclosures or are there other factors?
• This is by far the most important consideration and sometimes the most difficult to understand especially if you are dealing with a real estate agent.  Typically this means we submit a large number of offers looking for that motivated buyer to fall out.  It also is not uncommon to submit the same offer until the property sells depending on the sellers motivation.    Property in Trusts or in probate are excellent targets that typically have out state owners that are highly motivated.  This type of information is usually publically available on government web sites such as http://www.clerkofcourts.com/ for Manatee county and http://www.sarasotaclerk.com/  for Sarasota.
4. How does the property compare to others in the same or similiar neighborhoods? 
• The rule of thumb it should always look like the worst on the streeet however sometimes the problem is inside and not outside.  The question really should be "can I add curb appeal at low cost"? 
5. What conservative price can you reasonably obtain for the rehabbed property? 
• This means pricing the property competively such that it sells quickly after the rehab is completed.  It also means you're lowering risk by pricing it competitively.  Obviously the bigger the gap between what you buy a property for and what you sell if for minus the rehab and carrying costs equals the profit.  Be overly conservative on your estimates for what you can sell the rehabed property for.
6. How quick can it be rehabed and back on the market? 
• Although some people feel the market has bottomed do not assume it has.  If you can't complete the rehab and have the house back on the market in 8 weeks seriously consider a different property.  Faster the better, it also lowers your carrying costs which is money in your pocket.

Just a few thoughts and considerations from our experiences..