Showing posts with label buy a home. Show all posts
Showing posts with label buy a home. Show all posts

Friday, February 26, 2010

3 things to know before you buy a house

This week I interviewed Grant Cardone, author, international speaker, CEO and founder of multiple businesses including a real estate investment company to hear his take on today’s real estate market. Cardone also writes regularly for Entrepreneur Magazine, Huffington Post and Business Week.

3 things to know before you jump into the market

The property either makes sense, or it doesn’t. It shouldn’t have to make sense tomorrow; it has to make sense today. You shouldn’t have to calculate some expectation in the future,” Cardone says.

Some people argue that now is the right time to buy due to historically low interest rates, but Cardone says that interest rates should have nothing to do with the purchase of a house. If you are able to buy a property and this is the right time for you, that should be the driving reason behind the purchase.

“If people would have done that (bought when the property made sense for them) over the past five years, half the people wouldn’t have bought homes.”

And, when buying a home, cash flow has to be positive, Cardone says.

The third tip? “Don’t buy the house, buy the location,” he says.

Cardone just invested in 19 units of oceanfront condominium space in La Jolla that he intends to fix up. Even in the worst of times, he says, people will always buy in that particular location.

The home itself doesn’t matter as much as the location, he says. Updates and remodels can always be made.

“If a guy was looking at the Strand, I promise you there’s 100 feet in that area that is more desirable than all the footage (in the community), Cardone says. “It’s the difference between being on the corner to being 12 houses to the middle of the neighborhood.”

If you want to make a smart investment, Cardone suggests finding the home you want and doing ‘homework’ on every house on the street to study sales prices, which homes had how many bids, etc.

“You need to make sure that you can sell that property in any kind of market,” he says.

Cardone followed his own advice with his current residence in Hollywood. “The lot has always commanded the highest money in this neighborhood.”

Living nextdoor to Leonardo Dicaprio, you can imagine how desirable Cardone’s neighborhood is. But he still sought out the most profitable property.

In fact, he outbid Ben Affleck on his home, Cardone says.

“Even when times are difficult, if you have a property that is highly desirable and truly irreplaceable you will have a person that will say ‘I will pay up for that.’”

Real estate as an investment

“A home should not be considered a way to make money. It is not a way to make money. That was true for our parents who lived in their homes for 30 years.”

People were saving money then, Cardone says. Homeowners who live in their homes for only seven years, he says, aren’t saving money. Thinking of real estate as a ‘get rich quick’ deal is “a mistake that millions of people made over the last couple years,” he says.

Taking a look at coastal Orange County 20 years ago, Cardone says no one wanted to buy real estate. “If you bought then and still have the house now, you’re a big winner. You want to buy when other people don’t.”

Always think in terms of selling

“People don’t need to think in terms of buying, they need to think in terms of selling,” he says. In order to get the deal you want, Cardone says that you have to sell yourself as a buyer with your offer, you have to sell the bank on your offer, sell your family and friends on investing with you and lastly sell the seller on accepting your offer.

He says that those cringing over job-loss numbers and dreary housing stats need to see their opportunity if they are in a position to buy real estate.

“The bad news is your friend right now. You just need guts and a long-term view. It’s a marathon, not a sprint.”

Posted via web from The Newport Beach Lifestyle

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