Monday, May 08, 2006

Be sure it's a deal...

I was reminded today how important it is to do your research before leaving your house to look at a potential purchase.

I received a call from a new real estate investor who told me he had a pre-foreclosure deal that he could not fund. He asked if I was interested in taking over the transaction from him.

He told me that the house was worth $350,000.00. The house is in a nice section of town, so it didn’t sound unreasonable. He told me the owner was willing to walk away for just a few thousand dollars and only owed $230,000.00.
He said that it needed some paint and carpet, totaling about $10,000.00 worth of work.

Some quick math indicated a cost including purchase and renovations of $240,000.00 and a resale price at $350,000.00, which sounded good. I arranged to meet with him and drove about a half an hour to see the property. I had my realtor print out some comparable sales and hit the road as it was getting late in the day.

I arrived at the property to find that it was on a busy street and very dog-eared. The property needed a complete cosmetic redo, including carpets, paint, lighting and a new kitchen. The work would cost at least $40,000.00. I took a careful look at the comparables and found that the value was closer to $300,000.00 maybe a few thousand less. In further discussions with the investor, he informed me that the property had been appraised within the last month at $295,000.00.

The trip was a waste of my time and helps me to remember that it always pays to ask questions and do your research before getting in the car to go see a property.

Don’t forget your goal is not to purchase a property, but to locate a property you can buy at a cheap price so that you can make a profit. The profit is the goal, not the acquisition of the property.

At my basic seminars and in my books, I teach how to accurately gauge the value of properties from the comfort of your home.

Until next time, good investing,
Bob Diamond


For more informations visit:
http://bobdiamond.com


About Me

Philadelphia, PA, United States
Bob Diamond is a practicing real estate attorney, real estate developer, and published author of three books on foreclosure investing. You may be familiar with Bob from his appearances on FOX, NBC, or CNBC or on his real estate radio show. Inside the investor world, Bob is known as the ‘guru’s guru’ and teaches advanced real estate investing techniques including buying discounted liens, notes and judgments, buying out of bankruptcy, short sales, taking under and subject to, straight equity purchases, multi-units and even condo conversions.