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Investing in single family property is the first step in the natural progression of the real estate investor, and is actually a pretty simple process. Where it gets complicated is when new investors try to apply the wrong map and knowledge to their real estate investing careers. They develop emotional attachments to homes leading to costly rehabs and mistakes when selecting tenants. Their lifetime of wrong messages from family, friends, and even mentors also may instill a fear in them that is hard to break.

Real estate investing mentors who work with beginners hear the same excuses over and over “I don’t have enough money to do deals,” “The timing isn’t right,” and “I’m too busy,” all of which arise from fear and kill their potential success.

The logic behind making an offer on single family property is easy- you need to make sure your offer on the property is less than or equal to its “market value” minus any rehab or transaction expenses and the amount of equity you wish to capture. It’s when people’s emotions get in the way of coming up with accurate numbers for each of these variables that things get tricky.

The way successful investors arrive at the “market value” of a property is by looking at comparable sales. This means analyzing the neighborhood of the house your looking at- what do similar properties in that area sell for? Make sure the properties you look at were not foreclosures, as this can skew the comps downward.

Other than that a comparable single family home should have around the same square footage and number of bedrooms. You can get comps through the Multiple Listing Service or MLS. While you can gain access to this through a Realtor, if you don’t have access your self it’s best to ask them for an unfiltered report and then look through it yourself or with your mentor for an unbiased value.

When figuring what your rehab expenses should be- think of how much it would cost to make the property perfect. If anything in the home will need to be fixed within the next 5 years do it now. This includes fresh paint, carpet, and foundational or plumbing problems. A good rule of thumb is that you should strive to offer the “best product at the best price.” If you fix these things now it will be much less costly for you in the long run.

Finally, the amount you wish to capture in equity is known as your profit standard. Simply put, what would you like the difference between the amount you paid for the property and the amount you’ll sell it for to be. This number is completely subjective and varies from investor to investor.

Many people real estate investing in San Antonio and other Texan cities are primarily interested in cash flow and will go forward with a deal even when they think they’ll be able to capture only $10,000 in equity. It’s entirely up to you!

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