Finding a property can take a long time in this market. But there are lots of things that you can work on while you’re looking for your next deal.
Have a specific area to target
When you are first starting out, having a small, specific area to target can help you get a grasp of what is going on in that market. Rather than learning all the neighborhoods of your town/county/state, you can focus on one area and really learn the ins and outs. One of the best ways to get started is to “drive for dollars,” or drive around and look at the houses in your target area. Look for things like tall weeds or grass, weathered door hangers, and stickers on the door informing of code violations or utilities that have been turned off. Check out the status of the roof, siding and window panes. Old windows, metal siding and curling shingles can indicate a lack of interest in the property.
Build up your credit score.
Unless you have a giant pile of cash sitting around, you will probably need a loan. Lenders are happy to give you a loan, provided they feel you will pay it back on time. Your credit score is built on your past financial experiences, and the higher your score, the more confident a lender is that you will give them their money back. When was the last time you looked at your credit score? You are entitled to one free copy of your credit report every calendar year from each of the three credit reporting agencies.
Establish relationships with lenders.
Most mortgages are sold as investment vehicles called mortgage-backed securities. Every mortgage that is sold has to comply with Fannie Mae/Freddie Mac regulations. But not all mortgages are sold. Sometimes a smaller lender will keep a loan in-house, known as a portfolio loan. Portfolio loans have different criteria — pretty much anything the lender wants. Having a relationship with a local lender who offers portfolio loans can be a huge asset to your business, but that relationship doesn’t happen overnight. Start by opening a simple account with the lender: checking, savings or both. Sign up for every free program they offer, like bill-pay and direct deposit.