Tuesday, January 6, 2009

Real Estate Course: Day Two of 30 Day Action Plan

Day Two
1. Research your market
  • Sales
  • D.O.M. / C.D.O.M.
  • Inventory
  • Buyers Discount
  • Average listing price
  • Average Sale price
2. How are you going to buy
  • Conventional
  • Seller finance
  • Private money

Day Two can be called “Getting to Know You”, just like the song. You need to get to know your market. Your market is the area you are going to operate in when buying your properties. You will need to do some research. A lot of the information you are looking for is right on the Internet. Just Google the topic with the city and state and the information will just jump right up. A better way of getting the information and one that will begin your relationship with others in the field is to just contact a realtor. You are going to want to do that anyway (See Day Five). A realtor can be a wealth of information that can help you get to know your market.

Right now what you are looking for is the following:
  1. Sale of homes last month: this tells you the activity and the type of homes that were sold last month.
  2. D.O.M./C.D.O.M.: Days on Market and Cumulative Days on Market. This tells how long it took to sell homes that are listed. The average C.O.M. will tell you the strength of the market. If a house has a COM of 30 – that means it took 30 days to sell the house. That would be very good.
  3. Inventory (Listings): This is the total number of houses for sale in your market. You can see what types of houses are for sale. This is your competition when you put your house up for sale. How are you going to differentiate your property from the others on the MLS.
  4. Buyer Discount: This shows up as the percent difference in the sales price and the listing price.

How are you going to buy? Are you going to buy conventionally with a lender and qualifying for a loan on the property? If you are then put the book down and step away. The following ideas could cause a mental breakdown. We never use banks. Ok! I am sure sometime in the future we will use a bank for financing. But right now we are not going anywhere near a bank for financing. We use Seller (owner) financing and private money. We will go more in depth on these two topics later in the book. But the short answer is – we use the seller to give us use of their equity as a note on the property to buy the house or we have private individuals that we pay an interest rate (better than their CD) on their money that is secured by the property. This is a very powerful and scalable program. We will be talking about private money on Day Four.

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