Tools for Foreclosure Investment
Get the Right Tools
In order to become a knowledgeable investor, you will need to complete enough research to familiarize yourself with the variations of properties and what features make or break a deal when it comes to selling homes. There are 5 basic tools you will need as you begin:
- Binder - You will need a quick and convenient place to both take notes on the properties that you see and keep them organized. Regular spiral-bound notebooks will work, but a binder allows you to quickly move pages to labeled sections for easy and efficient comparison and retrieval of information.
- Pens and Pencils - Keep several of these readily available. It does no good have your note-taking system if you have nothing to write with. Consider getting a small zipper case to fill with pens and store it at the front of your binder.
- Calculator - The basic type is fine, just something to quickly work with figures.
- Map - As you begin investing, you will be spending much of your time learning what is available on the market and what the value is. There are many uses for maps, beyond finding your way around. They make great records of where you’ve been. You can highlight potential areas you want to focus on more and/or black out “dead” areas.
- Prepare to Observe and Learn -If you’re new to investing, you will spend most of your time initially, learning the market and what is available. It’s important to keep an open mind to new areas, observations and ways of gathering information. Once you’ve established a good “bank” of information, you’ll have a solid base to make wise investments.
Exploring and Observing Neighborhoods
After you have gathered all of your tools, you are ready to start exploring the properties around you. Begin by taking a slow drive around your own neighborhood. Be sure to visit those roads that you don’t normally travel. Take note of the following:
- Houses - Take a close look at the houses, look at both those that are on the market and those that are currently occupied.
- Condition - What is the condition of the homes in the neighborhood. Are there certain features (positive or negative) that make a house stand out? Is the property well maintained or are there several areas that need special attention?
- Occupants - What can you tell about the occupants of the homes? What kinds of cars are parked near the houses? Are the cars in covered spaces, such as garages, or are they parked on the street?
- Amenities - Amenities are structures or areas that would make a home more desirable. What amenities are available near the property? Is it located near a school, park or large open area?
- Impacts- Impacts are things near a home that would make it less desirable. How close is the property to impacts such as railroad tracks, factories or major highways?
- Space - How dense is the area with homes? Are houses packed in very close to each other, or are there several acres, blocks or even miles between homes?
- Parts of Neighborhoods- Most neighborhoods will have areas that are better maintained and have a “higher quality” look and feel. Neighborhoods can also change quickly from street to street. Identify which parts of the neighborhoods are the most pleasant (well maintained, closer to amenities) and which parts are less desireable (rundown, more rentals, closer to impacts). Use your map to identify and record where these areas are. An easy way to do this is with different colors of highlighters, giving a certain color to each part.
After you have thoroughly explored your neighborhood and have learned to watch out for the more minor details, continue on to other neighborhoods. Take a few minutes before work or during your lunch break to explore a new road and see what properties it has to offer. If ever there is a home for sale with informational flyers out front, be sure to stop, get a flyer and jot down some of your own observations on it. These are great opportunities to start putting an estimated price on homes. As you gain more experience observing, and your binder of notes begins to grow, you will be ready to start comparing prices and practice determining market value of the homes.
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