Real Estate Investing – Are You buying at the Year-end Clearance Sale?
The end of the year can be the best time to buy real estate investments if you know where to look, have the money lined up, and are prepared. Like last minute Christmas sales, real estate also goes on sale at the end of the year. Banks try to get troubled assets off their balance sheets before the New Year brings new regulator visits. Private investors want to cash-in on their investments before new tax regulations coming in 2013 take a bigger chunk of their profits. Sellers can be especially motivated if you can close quickly and help them solve their potential problem.
Big opportunities come to those who are prepared and can manage the challenges that will be presented. The key to buying real estate investments at big discounts is being prepared when the opportunity presents itself. While you can find some amazing deals at the end of the year, most of opportunities come with a “string attached”. That “string” is being able to close by the end of the calendar year, which in some instances can be only a few weeks. The discount purchasing opportunity exists because of the short timing window (must be closed by the end of the year), but it can also present some real challenges.
It’s not enough to just find the opportunity, you must perform. The opportunity will be lost, and your potential profits, if you can’t get it closed. In order to take advantage of the big discounted deals you need to do the following things in advance:
- Build key relationships with banks and property owners that have the types of properties you’re looking for. Make your list of banks, property owners, and others that can help you find deals. Bank workout officers (bank officials in charge of disposing of troubled assets) need to know who you are so that when they have a property they need to liquidate, you’re on their short list of investors to call.
- Have the money ready, in the bank, and ready to deploy. Having the money is key! You must have the money in place before finding the property if you are going to close quickly. Take the time to raise it ahead of time and your next deal will be a much less stressful one. Do not wait until the last minute or you will lose your deal.
- Make sure you have financing in place (if you are using it). Banks and financing companies are typically not on the same schedule you are. If you need financing, make sure you are in communication with them and that they can move as fast as you need to. Hard money lenders and private lenders are usually much easier to work with on a quick deal and you can bring in long-term financing after you close. The key is to get it closed.
- Have a plan, team, and be ready to move quickly. These deals do not happen unless you already have your team in place. If you don’t and you need to close in a week, it’s going to be really hard for you to get it done. Save yourself the headaches and make sure your team is in place and ready to go.
The end of the year and holiday season can be one of the best times to find and buy deeply discounted real estate investments. If you are prepared, have your money and team in place, and are ready to move quickly, you can do deals in a matter of weeks that will pay you for years to come. Nothing is better than closing a deal on December 31st and toasting New Year’s in the office of your new investment property knowing you just made a lot of money. Be prepared and make the end of the year, the start of your future investing career.