Foreclosure Investing Basic Tools
There are five basic tools required for successful real estate and foreclosure
1. A notebook (I like the subject notebooks, wirebound on the side)
2. A pen kept in your car(maybe two, cars seem to eat pens)
3. A calculator (Nothing too fancy, just to do simple figures without making mistakes)
4. A phone with internet mapping capability
5. A mind willing to change behaviors and to learn new things.
The first three are fairly self-explanatory, you aren't going to be able to remember everything you see and everywhere you've been, so you'll need to make notes to refer to later, the calculator will help when you are running numbers on a property.
Let's start with an exercise in behavior. Take your Thomas Guide and follow the routes you take to go to work, go to the bank and go to the grocery store. How many neighborhoods do you drive by that you never actually drive through? How many streets with how many houses are there that you haven't seen in the last six months? The last year? For the next week, leave for work 15 minutes early, pick one of those neighborhoods and drive through as many of the streets as possible at a fairly slow pace. LOOK at the houses, what condition are they in, how are they maintained, what kind of cars are in the driveways, do a lot of people park on the street? Any houses that are listed for sale and have flyers in front, you should stop, take a flyer and take note of the condition and appeal of the home. Then, after work, do the same thing in the same neighborhood on your way home. Need to buy groceries? Drive through a local neighborhood on the way. Same thing on the way back.
If you always take different routes and see different neighborhoods, you will begin to see properties that don't fit in with the neighborhood. It might be the lawn isn't mowed or perhaps it's not maintained the same as the others, maybe there are too many cars parked in front or sometimes the house just looks empty. The point of the exercise is to train your eye and your mind to always look for property that doesn't quite fit with the surrounding homes. You take a flyer from the listed homes to start to build an idea of what homes might sell for in that area. Each day, switch to a different neighborhood, you'll see differences between neighborhoods and individual properties will start to stand out more when they don't fit the neighborhood. As you become more practiced, look at the style of building in each neighborhood. Does the style and quality of construction conform with the other neighborhoods you've seen? Even if all neighborhoods are maintained virtually the same, quality of construction can vary widely between adjacent neighborhoods. The ability to drive into a neighborhood you don't know and fairly quickly determine housing quality in relationship to surrounding neighborhoods along with establishing an individual property's quality to it's neighborhood is essential for successful investing. This will be discussed more in following chapters, but for now, start using tool # 5, your Mind.
What else can a map show you? Things look very different when you look at a detailed map versus driving in the same area. Look at streets and areas you know well. Identify the neighborhoods and how they change throughout the area. Major streets divide neighborhoods, neighborhoods usually get more desirable as they get closer to amenities (parks, open space, golf courses), they usually get less desirable as they get closer to impacts (freeways, commercial areas, high density residential). Look at your area on the map, then drive your area looking at the housing. Does it hold true? Sometimes it's just a little less maintenance, perhaps there are more rental properties than in other areas, but you will find that prices will also be lower for impacted properties. Properties nearer amenities will usually be highly maintained and sell for neighborhood top dollar.
If you've gotten this far, the two biggest problems of "I don't have the time and I don't have the money" have been addressed. 1. You can begin to learn about property and it's values by taking just a little extra time each day when you are going to be driving anyway. 2. You shouldn't have spent more than $35.00, most of that for the Thomas guide. Continue with driving different neighborhoods, expand into new neighborhoods and remember, you can't see what's there if you're driving 45 mph.
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