Real Estate Investor Tips For Hunting Out Undervalued Properties

Before starting a search for an undervalued investment property to buy, it pays to start by setting some guidelines. Don't just think about what you want - write things down.

Calculate precisely what profit margin you want to achieve in each a real estate transaction and remember to budget for agents fees, closing costs, real estate solicitors fees etc. Always allow a buffer to cover any cost over-runs and allow a budget for your own time associated with each task. You will probably want to calculate how many hours you are prepared to work on the bring the deal to fruition and how many hours you might need to spend working on the property. Put a value on each hour - do you want to work for $10, $20 or maybe $50 or $100 per hour. You don't want to undervalue your time!

Hidden costs can be a problem for the inexperienced property investor (and someimes the experienced investor too!). Things don't always go to plan and a property returning a $4000 profit might end up taking months of extra work. Preparing a budget for your time won't mean you alway get it right, but it will make you think about what is likely to be involved and perhaps save you from forgetting to allow for something.

That is why it is so important to write things down and do the investment math - it becomes a form of personal discipline.

Developing an action plan and a budget for both time and money will help to determine the likely profit level before you even purchase the property. If the figures don't stack up - you don't buy the property. You simply move on to other potential investment properties until you find one that is undervalued and where the numbers do stack up.

The main thing when buying investment properties is not to be driven by emotion. Don’t be in too much of a hurry or be over-eager to close the deal. It usually pays to have a couple of experts you can call on if you are unsure of how much work might be required to bring the undervalued property up to standard. Finding an undervalued property is only one part of the equation, the potential profit can quickly disappear in unforeseen building repairs, plumbing, electrical work, replacement of fixtures and fittings, landscaping, legal costs...the list goes on.

When negotiating a property deal both the property investor and the seller come under a lot of pressure. If you have done your property research and investment math in advance, you'll know exactly how much you can afford to pay for the property. The pressure can come off you, because you know your limits and won't be pressured into accepting something that is not in line with your investment budget. Remember too, just because an investment property is undervalued doesn’t mean the seller is resigned to getting the short end of a deal.

Successful real estate investors usually focus on the investment properties that will net them the biggest return for the least amount of time and effort.

It is often said that you make your money when you buy not when you sell. The key is to buy right and not be driven by emotion in to paying more than you can afford.

Here is another useful real estate investment resource.