Some simple rules for investing

Thinking about investing in the Phoenix market? Here are some simple suggestions:

Rule #1: Leave your ego at home, this is not about you. It’s about your money. What do I mean by that? Simply this, 99% of the properties on the market are bank owned right now. As an investor, you’ll be one of hundreds of people vying for these properties, and the banks don’t care what the name on the purchase contract is, as long as the numbers are what they want. If the numbers are right, you’ll get the property. That’s the only thing that matters. Your last name, how nice a person you are, how fair you think your offer was, these things do not matter.

Rule #2: Cash means nothing. Let me repeat that: CASH MEANS NOTHING.

There is no real advantage to sellers for them to accept a cash offer over a conventional loan offer. No one is walking around with suitcases of cash, and even if they were, the sellers (the banks) have procedures that don’t speed up for anything (banks have one speed: slow, and at their pleasure). So the myth that a cash offer can close more quickly is just that, a myth. And in an environment like what we have now, where a decent condition property is getting 6, 10, 14 offers in a few days, the idea that cash will give you advantage is ridiculous, especially when they’ve got more than one cash offer.

Rule #3: Ask yourself what you intend to do with the property once you’ve purchased it. Do your intentions match market conditions? There are two basic scenarios when you’re talking about investment property A) “fix and flip” , this is when you buy a distressed property, rehab it, and sell it for top dollar. B) “buy and hold” this is buying an undervalued property, possibly, though not necessarily needing rehab, putting tenants in it, and holding onto the property for multiple years until market value has increased.
Right now, the market we’re in is more conducive to “buy and hold”, although there is still opportunity for a “fix and flip” strategy. But which is more appropriate for your goals?

Rule #4: Keep your emotions out of it. People tend to get emotionally invested in the properties they buy, understandably so. Once you’ve put time and energy into purchasing the property, refurbishing it, and possibly owning it for a period of years, it is very easy to develop an emotional attachment to a property, rather than keeping the investment aspect in perspective. You’ll save yourself from a lot of potential heartache if you remember that these properties are investments, nothing more.