Investing in real estate in the Salem Oregon Metropolitan Area
I want to rehab homes. What do I need to do to get started?
First of all, in Oregon, you need to be a licensed contractor or developer if you intend to purchase a property where you “fix and flip” several homes a year. Click here for a link to the OARS. The first thing you need to do is get your contractor’s license. Second, find a mortgage broker that you want to work with in the long term. The broker should have access to private loans called “hard money loans” as well as traditional loans.
Should I work with a real estate agent or not?
When investing in real estate in Salem Oregon you need to pursue all prospects. If you choose to work with an agent, pick ONE. Many investors figure they will have several real estate agents looks for them. Unfortunately what tends to happen is the agents stop looking since they are putting in a lot of work and risking the chance of not being compensated. Looking for properties for investors is very time consuming and difficult due to the intense competition. Many people go into real estate in order to invest, so choose an agent whose primary goal is not to invest or has a different strategy than you. You don’t want to be competing with your agent for investment properties.
How do I buy a home at foreclosure auction in Salem Oregon?
In order to buy a home at a foreclosure auction you must have cash (cashier’s check). You cannot buy a home at auction with a loan. There is a lot of competition for homes at auction so be prepared. Have a maximum price that you are willing to pay and don’t exceed it. Sometimes people get caught up in the auction and winning part, they forget that this is a business transaction. Overpaying for a property does nothing for your bottom line.
I’m having a hard time finding a lender and agent to work with. Why?
Investors contact real estate agents and lenders all the time saying they want to invest, but they don’t have a plan. They tell agents “look for whatever looks good.” There are many types of properties from flips to partitioning land to rentals. Not having a solid idea of what you want to do is a sure fire way to have nothing happen. Be focused and pick an investing strategy.
Why do I need an accountant?
There are many tax issues for investors in real estate and people that rehab homes are treated differently from those who develop properties. Meet with an accountant prior to investing in real estate to know how your plans will affect your taxes. Your plans may change due to the tax implications.
What is an APOD?
If you are looking at rental property ask for a copy of the APOD (Annual Property Operating Data). This will give you the actual expenses and vacancy rates and not the projected ones. It is easy to overpay for a rental based on projected rates.
What is a cap rate?
The capitalization rate (cap rate) is a ratio used to compare properties with different asking prices, and to also place a value on a property based on the income it generates. The Cap Rate is computed by taking the rental net operating income (NOI) and dividing it by the property’s fair market value (FMV).