New Orleans Real Estate Investing
It seems lately like everyone is interested in New Orleans real estate investing. Some want to buy, renovate, and hold the properties in areas where prices are on the rise. Some want to buy, renovate, and flip right away. Then there are those who are just starting to dip their toes into the wild west world of investing and don’t understand why their offers are being rejected or their projects aren’t creating the ROI (return on investment) that they expected.
What newbies haven’t learned yet is that there are things that professional investor do that set them apart from amateurs.
Things the pros do
Have an experienced crew to perform repairs and renovations
Experts know that they are only as good as the team behind them, so they already have a crew put together to handle electrical, plumbing, HVAC, and finish work.
Have readily available cash or a line of credit so they are in a position to make offers immediately
You snooze, you loose is the motto of most experienced investors. They are always prepared for the possibility of a property hitting the market tomorrow that fits their business model.
Don’t waste time on needless inspections
Experts keep their offers clean and don’t waste time with inspection contingencies, knowing that they are going to gut a house anyway. Any inspections they perform are targeted to address specific problems that may exist with a property.
Have a working knowledge of repair costs
Experienced investors know the average costs of most repairs and updates. They have a formula for the amount they typically spend on kitchen and bathroom renovations, flooring changes, roofs, and more.
Don’t bother making offers on properties won’t give them the return on investment they need
It’s a numbers game for investors. They are aware of the market in the neighborhoods they focus on and are able to quickly determine if a property will provide the ROI they require.
Things amateurs do
Hire contractors for all repairs
If an investor is paying retail costs for repairs and renovations, they are cutting into their profits with every check they write.
Perform full inspections on a home they plan to renovate
There’s no need to do a full home inspection when what you really need to know is the condition of the structure, the plumbing, and the mechanicals. This is where having that expert crew comes in handy.
Ask for closing cost assistance
Since investors don’t buy at the same price points as owner occupants, it’s a stretch to assume that you can make a wholesale offer AND have your costs covered as well. You’ll be beat out every time by a cash buyer who is willing to close in 2 weeks with no inspections or appraisal. Everyone has to start somewhere, but you need some working capital to back up your offer if it’s going to be financed.
Don’t have a cushion for cost overruns, vacancies and repairs
There’s that working capital again. No matter what the project is, it’s going to cost more than you estimated. You need to have a cushion for the day that you discover the wiring is shot. You need to have money set aside to cover your costs when a tenant moves with no notice. You need to have available funds to handle repairs for tenant occupied properties. Believe me, the hot water heater is going to start leaking at the most inconvenient time.
Need some advice on finding the right investment property? Call us today at 504-327-5303.