Cheap Property - Buy To Let Real Estate & How To Source Your Own Cheap Property

Buying Real Estate to buy to let used to be the flavour of the month or in fact the flavour of the decade. Many people have not been put off investing in real estate and buying good, cheap property and decent buy to let property because of the economic downturn.

There are ways to safely build your own highly profitable property portfolio by taking less risk, and knowing up front what you can expect in terms of rentals, costs and ultimately profit. Investing in real estate can still be very much worthwhile, if you know how to source your own cheap property or heavily discounted property investments.

Today I'm going to talk about how to invest in real estate, and how to source your own cheap property. It's a method that really can't help but guarantee success in real estate investing.Before you go and buy properties, it's vital have a method or strategy. Discount property and even land investment, can start you with immediate equity in the deal if you do it properly.

Investment properties are very different to the property you'd choose to live in and it's important that you approach finding discount property in a systematic and discerning way.

Make Money Real Estate with Repossessed & Discount Property

There are some great ways to buy properties and get amazing buy to let real estate in a way that guarantees success. Don't spend a fortune on overpriced "property investment" courses and "profit from real estate riches" courses that strip you of the few thousand dollars or pounds that could actually be used to buy your first buy to let real estate.

So forget about those generic bullshit property gurus, most of that information can be sourced from other experienced and helpful property investors, real people with real lives. Learn from there successes and failures and adopt the methods that have really worked for them to build profitable real estate portfolios.

Build a Profitable Property Portfolio with Discount Property

Most people go into property investing and buy to let investment with the totally wrong mindset. It's going to take a mindset change, but it's a method I've used myself to bag some great cheap property bargains.

The whole key to good property investment is to buy good rental property, which you can rent out and make a profit.  When talking about discount property, repossessed properties and residential property investment, you will often hear the professionals say; "You make your profits when you buy".  This is because they have discovered that you can make money in real estate and make profits upfront in residential property investment if you buy correctly.  That way you are not dependent on a rising market in order to make profit; you have already made it by buying at a discount to the market value, of below market value (BMV).

Where Amateur Investors Typically Go Wrong in Buy To Let

Amateur investors normally make a very big mistake, let's look at what they do wrong.

Typically they choose an area they'd like to live in and then look on the Internet or walk into estate agents. They decide on a few nice properties and maybe view a few properties. They choose a particular one or a shortlist and then put in a low offer. And the are surprised when it gets rejected.

The amateur property investor knows nothing about the circumstance of the seller, or why they are selling! They are operating BLIND and hoping to stumble on a Below Market Value (BMV) bargain. Investment properties and residential property investment are businesses and need to be run as businesses; they are not charities!

Or maybe they'll pay out thousands and go to a slick property investment/ buy to let seminar and buy a property complete with finder's fees and membership fees. Or maybe they'll find one through an estate agent at $7,000 - $12,000 below market value (one that's on the market at an above true market price no doubt). They'll put down a massive deposit and now they own their first investment property and now they are a property investor. Great, awesome ah-whoopee.

After a while the mortgage payments, agent management fees, tax, insurance, gas certificate safety checks and other expenses come in. They find the rent doesn't quite cover all the expenses so the "investment", startes to become a drain on their monthly income and they have to feed it to keep it alive.

Yes, but it's a long term investment, property always goes up it'll be worth loads more in a few years. That is not guaranteed; it might happen or it might not. But how many properties can this amateur buy? How many $10,000, $20,000, $30,000 deposits can they afford. How many monthly contributions to meet expenses can they afford? And when the interest rates go up, or their income reduces what are they going to do? They do not really have true discount property, bought at below the current offered market price.

The problem is they don't know why they are buying other than to "make money", it's too vague a goal and actually they now have themselves a new liability which takes money out of their pocket every month; not an asset. They have no objective, goals, strategy or plan.

Investment properties to an extent, need to simply be viewed as a "box to generate cashflow", they are after all a business first and foremost. Property investments and buy to let deals need to meet you criteria before you actually buy the property; otherwise don't buy!

Don't Make This Property Investment Mistake

Most people buy rental property to make a passive income each month, but do not buy a property that will be liabilty and cost you money each month! Do not buy a rental property with a net liabilty,  unless you are very confident on the economic situation and future capital growth of the area i.e. regeneration area.  Cashflow is King!

You need to factor in management/maintenance costs, and potential interest rate rises i.e. in the UK interest rates are low at the moment, but will go up. I would always aim for at least a minimum of a 7% yield for property in the UK.

Do not just take the estate agents word for this; call 3 different rental agents to get a true reflection of the rent you could get.  If you're buying off plan, investigate what else is being built around it.  Because at the moment rental demand may be high, but within a year it may be oversupplied.

Most offplan buy to lets are marketed and sold on supposed discounts, and potential capital growth, with little focus on the rental expected, and often inflated rental figures given. This is crucial, the rental income keeps the investment alive; it is the most important figure in any rental investment.  If the rental return is not attractive, do not buy and look elsewhere.

How To Invest in Real Estate to Make Money Real Estate

My main point here is an incredibly important one. Amateurs target properties not sellers. Let me say that again. Amateurs target properties not sellers. They go about things the wrong way and find a property they like, and TRY to make it work as an investment property. They don't look for deals by looking at the figures or understanding why the seller is selling. If the seller has no motivation to drop the price, they won't The amateurs below market value offer will be rejected every time unless they stumble across a motivated seller by chance.

Most amateur property investors cannot even tell you how much monthly profit they make from their fantastic property investement or buy to let.

The key issue is that the normal way of investing means you have to rely on capital growth, and you money is tied up, so it takes ages to build a portfolio and achieve sufficient monthly income to be financially free. In truth you HAVE to source cheap property, cheap houses and discount property, in order to make the monthly cashflow of rents and expenses work!

What You Must Do To Find Great Investment Property and Buy To Let Real Estate

This simple method will help you buy property at anything from 10-25% Below Market Value and help you avoid one of the biggest mistakes amateur investors make.  It is a lot easier to find property for investment if you follow these rules.

The key to buying cheap property and real estate below market value, is to find motivated sellers. By that I mean sellers of property that NEED to sell their home quickly (i.e. there is a motivation for them to sell) and they are therefore willing to accept an offer below market value as a result.

A truly motivated seller will always have:

1. A strong reason to sell

2. A looming deadline they need to meet

3. And for you to have the chance of a decent deal, they need to have some equity in their home. No good they are selling a property for $300,000, but they owe $295,000 on it because they won't be able to give you a below market value price.

If you want to buy below market value property, you have to deal with motivated sellers otherwise you are WASTING YOUR TIME.

Once you find these motivated sellers, then you evaluate the investment potential of the property, and decide whether it is going to be worth your while. You will make a much better investment than finding any old property you like and trying to negotiate down the price.

So How Do You Find Discounted Property and Motivated Sellers?

Estate Agents!

Yes, get the estate agents on your side, make sure that you are organised and able to buy quickly and they will start referring motivated sellers to you. Look, they're in the business to sell homes and they want to do it as quickly as possible with the least fuss.

If they're struggling to sell a particular property and know that with the right discount, you will buy, then they will work on your behalf to negotiate the price down. I bought a lovely property in Wimbledon, London at a 20% discount simply because I worked well with the estate agent, the seller was motivated to sell and hadn't had a decent offer in months and didn't want the hassle of renting out the property anymore, so they were losing cash. The agent even told me what the last offer was! Rapport building works. I also always ask "what is the circumstance of the seller?" or "why is the owner selling?". These questions really provide you with key information.

Network With Other Property Investors

It's amazing how genuine property investors will often share a good thing when they find it. Sometimes another investor will be offered a flat at a discounted price, but doesn't buy flats, only houses, and they will gladly hand this on to you for an incentive.  This can be a great source of discount property and genuine residential property investments.

Find Cheap Property With a Leaflet Drop

Design and print your own leaflets explaining how you buy property quickly at a discount, and can move quickly. Have these distributed in you chosen area and have a seperate cell phone to handle those calls. I will be writing another hub on how to do this!

Get to know the Local Busy-Body

Whether that person is the local store owner, granny or just a well connected person, get to know them. They can let you know when somebody in the community needs to sell a property quickly. Even offer them an incentive each time you buy a property due to their "lead"

Know You Property Profitability Calculations

You need to know the expected rentals, monthly mortgage costs, management fee, and other running costs, before you even go to view the property. You need to get comfortable with basic property calculations so you can make quick decisions. More on this in another hub!

Investment property calculators and property investment formulas are one of the most closely guarded secrets for buy to let success.  Professional property investors use them to GUARANTEE the profitability of each residential property investment.