Scott Wilkinson, owner/broker, Uptown Dallas Properties
Prices are at an all time high, inventory is down, multiple offers are common, even above asking price.
Prices begin to fall, compensating for the over-building and high-precies. Foreclosures begin rising, as homeowners cannot sell due to owing more than their home is worth.
Confidence among home buyers improves, leading to more sales, decreasing inventory and higher prices.
Prices continue to fall, foreclosures flood the market. People are fearful of buying, causing even more inventory and driving prices down.
Prices bottom out, causing investors to start purchasing much of the excess inventory. Deals are plentiful and cashflow is at an all-time high.
Though most often used by house flippers, the 70% rule can be used for any strategy when you want to find a good deal. The 70% rule says that you should only pay 70% of what the after-repair value is, less the repair costs.
Using the 70% rule
Remember, a Rule of Thumb like the ones above, is used only to quickly and efficiently screen a property and decide if it's worth further investigation. If a property passes the above rules (or gets close), it may be worth a more detailed analysis. Don't confuse a rule of thumb for a license to skip doing your homework.
NOTE: Check out the www.BiggerPockets.com 70% Rule Calculator to run 70% calculations on potential deals.
Perhaps the most common investment for most first-time investors
Small multifamily properties (2-4 units) combine the financing and easy purchasing benefits of a single-family home.
Buildings are made up of between 5 and 50 units. These properties can be:
This creates a huge opportunity for adding value by
By specifying ahead of time what criteria you are willing to look at, your search becomes much more manageable. In the same way, you can more effectively communicate your desires to others who may help you buy property. If you simply told people, "I am looking for real estate," the most likely response would be, "Good for you..."
However, if you instead mentioned that you were looking to buy a 4 Plex in the East Dallas area for under $500,000, you enable others to think of properties that might match that description and get you connected with the deal.
We hope this helps you understand the importance of having a clearly defined set of criteria before starting your shopping, These criteria should include both personal & financial requirements.
This well-defined criteria list will help