If you’re just getting started buying and flipping homes or investing in rental properties, the learning curve can be steep—especially in a market where properties are moving fast. Even after all the work you put into researching neighborhoods and identifying properties with profit potential, you could miss out on a good opportunity if you aren’t prepared to make a same-day offer. Fortunately, there are a few best practices you can follow to help ensure that your offer is the one that is chosen.
Understand which types of loans work for same-day real estate offers.
Making a cash offer on the day you view a home is a sure way to capture the attention of the seller. If you can muster up account statements to show your capital, you can make a competitive cash offer to beat out traditional buyers. When possible, get qualified with an equity partner or investment partner. The second-best thing to having cash is to partner with someone who has cash.
The more you can prepare in advance for a same-day offer, the faster the process will be. Ideally, you should get preapproval before you make a deal so you know what your limits are and already have a relationship with a lender. If you need a loan, get preapproved with a private money lender. Experienced listing agents know that hard money is quick, and in many cases, as good as cash. Having a preapproval letter from a trusted lender will give your offer the edge it needs to get accepted. Listing agents will often look up the lending company or reach out to the lender who issued the note. Make sure you're working with a reputable and responsive lender.
Identify potential properties.
Research neighborhoods you are considering for flipping homes or buying and holding to generate rental income. Look for properties with proximity to schools, grocery stores, public transportation, and other amenities that are appealing to potential buyers or renters.
Consider the demographics of who lives in the neighborhood and who is likely to buy there, such as young families with kids, retirees, and so on. Evaluate properties as if you were a potential buyer or renter, and look for the features that matter most to your target demographic. This might be readily available parking, low tax rates, or good schools, depending on who is most likely to live there.
Look for properties that largely conform to the local neighborhood. Something too unique could actually be harder to sell. Find properties that need primarily cosmetic improvements and avoid those with structural issues. When possible, find homes that look like they would be expensive to fix, but are actually relatively easy and cheap to improve. Pay attention to your potential return on investment when flipping, or make sure your potential rental income is sufficient to cover your costs in a timely manner.
Make a competitive offer.
Your offer must be the most compelling to get accepted over all others. Price is obviously a consideration, but some sellers are willing to accept a lower price if they can close the deal faster. Making a same-day cash or cash-equivalent offer and having preapproval in hand demonstrates that you’re a serious buyer. Be available to discuss your offer. If the seller can’t reach you or your lender, they might quickly move on to another offer. Be prepared to negotiate and know your upper limits based on the purchase price, the cost to make improvements, and the amount you can borrow.
If you’re confident about your desire to purchase the property, put down more earnest money or even waive the contingencies to show the seller you are serious. Just be sure you do your due diligence before entering into a contract so you don't lose your deposit. It also helps to show that you did your research on the property by talking intelligently about the listing and neighborhood. Writing a letter to the seller to explain your financing and situation could give you the edge you need to lock in the contract. A listing agent will favor a buyer that has their ducks in a row.
Contact Socotra Capital for cash-equivalent loans for your same-day real estate offers.
Socotra Capital offers fix and flip loans, buy and hold loans, and cash-out refinancing to help you purchase distressed properties to improve and sell at a profit or rent for ongoing income. We’ll help you select the right type of loan based on your specific needs and the property you are considering. Approval is based on equity and the strength of the deal, not on your financial history. With the ability to close in a matter of days, you can make a competitive same-day real estate offer that will put you at the top of the seller’s list.
To learn more about borrowing from a private lender, read The Borrower’s Guide: Fix-and-Flip Hard Money Loans.