As a residential property manager, you dream of finding an investment property with this much allure. You want it. You have to have it. It’s a cute, single family home on a big corner lot. Recently updated it even includes an entirely new kitchen. If you could add that property to your portfolio you just know you’d have potential renters beating down your door.
1 – Winning When the Competition is Fierce
There are several approaches you can take to ensure you’re the winning bidder of a highly desirable property. The most obvious tactic is to simply be the highest bidder. Do your homework. Research the value of comparable homes in that neighborhood. Find out what typical rent payments are for similar homes in the neighborhood. As a property manager you need to know what you can reasonably charge monthly for rent. Compare the data you compile with what your budget is. If you beat out the competition only to have a monthly mortgage payment that’s higher than what you can charge in rent, you haven’t won anything.
2 – Offer Cash
In some instances, a cash offer can beat out a higher bid. By paying cash for an investment property you are streamlining the entire purchasing process. With no mortgage paperwork to complete and process, the entire transaction is conducted much faster. And as the saying goes, time is money! Your ability to save the seller time could be the point that tips them in your favor.
3 – Earnest Money
If you can’t finance the investment property entirely with cash, another way to grab a seller’s attention is to offer a large sum in earnest money. Earnest money conveys how eager you are to purchase this property. If you’re really earnest, show it by putting down as much earnest money as you can possibly afford.
4 – Be Prepared
Having all of your paperwork in order and ready to present to a seller goes a long ways towards scoring you the investment property you want. As a residential property manager you should have your loan prequalification documentation available. Not requesting any contingencies on the property can also make you a more attractive buyer.
5 – Dual Agency
Dual Agency is when your real estate brokerage firm is the same firm that is handling the property. Make sure this doesn’t violate any conflict of interest laws that may exist in your state. If allowed, dual agency can sometimes help you get your dream rental property. Because the broker is the listing agent they will know the property better than anyone and can give you invaluable advice. They also may take a cut in commission since they’re working for both the buyer and seller. However, it’s important to note that if dual agency is illegal in your state your broker won’t be able to negotiate the best price on the property for you since they cannot negotiate with themselves. There are pros and cons to dual agency but it is another means that could help you get an edge on your competition.
Even a highly sought after investment property with serious buyer competition can be won. With some ingenuity on your part you can make your bid stand out from the pack of would be buyers and get the investment property you desire.