Selling your home to an investor is a relatively straightforward process in most cases. There are basically four types of investors: (1) buy & hold investor, (2) wholesaler, (3) flipper, and (4) the buy/flip/hold investor. In the Pensacola, FL and Cantonment, FL markets we serve, we apply a strategy of buy & hold and buy/flip/hold.
First things first…you are more than likely going to be offended by the initial offer you receive from an investor. Chances are they don’t know you, they don’t know the emotional memories you’ve made in that property and quite frankly, that’s not what the investor is buying. If they are a good investor, they have a specific investment strategy and mathematical formulas to support that investing strategy. The offer you receive on your property is just what comes out the other end of their formula. In most cases, as when we make offers, it is not meant to be an insult or devalue the memories you made in that home, it is simply the answer to an equation that makes that investment work for us (the investor). On your side of the deal, you more than likely have a property that is in disrepair and don’t want the hassle of making repairs that are traditionally required when using a Realtor. The investor is there to solve your problem: help you get rid of the house quickly.
Let me step back for a minute. There are basically 4 types of investors:
Buy & Hold Investors: simply put this type of an investor wants to purchase rental properties. They may manage their properties themselves (as we do currently) or outsource the management of these properties to a Property Management Company, but this type of investor wants to grow their real estate portfolio.
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Wholesaler: this type of investor has no desire to hold your property for long term, even short term really. Complicated concept to grasp, but this investor may only own your property for 10 minutes and then turn around and sale it to one of the other investor types discussed here. These guys obtain the best deals on properties and while we don’t wholesale, we will link sellers to other investors if the deal isn’t right for us.
Flippers: you’ve seen the reality shows on TV. These guys buy the worst house on the block for cheap, demo it down to the studs, move some walls, update everything they can and then hopefully sell a modernized home for profit.
Buy/Flip/Hold: this is a combo of Buy & Hold and Flipper Investors and where we tend to find our sweet spot. This is typically a distressed property that the owner has let go due to financial strain, divorce, foreclosure, job relocation, or inheritance. This type of investor buys distressed properties, flips them, but holds onto them and turns them into rentals.
Many investors do a combo of flips, rentals, or Buy/Flip/Hold, while some focus on just one area and others do all. How much the investor is willing to pay depends on a number of factors, including the specifics of your house and the market conditions of the area.If you list your house for sale, investors may come to you, especially if you use the words “fixer upper, handyman special, or needs TLC” in the listing description. Even if you don’t list your house for sale, there is a chance investors may come to you. If you have a home in Pensacola and surrounding areas, there is a possibility you’ve received one our cards or letters in the mail. Don’t worry, all the information obtained about your property is public record and savvy investors know how to obtain this info. You don’t have to wait for an investor to decide to contact you, though. You can reach out to investors in your area, like us in Pensacola – hint hint :). There are both companies and individuals who will come to inspect your home. They will look around, check out the comparable homes and their value, and potentially make you an offer if it fits within their buying criteria and investment strategy.
Again, don’t be surprised if the offer an investor makes to you is considerably lower than what you were hoping to get for your home. That’s one of the downsides to selling your home to an investor. You often have to take less. After all, an investor isn’t looking to find their dream home. They are looking to make money, and they can’t make a profit if they pay too much for the homes they buy. Sometimes offers are very low, at around 1/2 of the value of your home. Other investors will be more fair with the value. A lot of that depends on how the investor plans to use the home (flip or rental), and whether the value of other homes in the area is going up or down. Market conditions always play a factor, as does the work that is needed on your home.
Two BIG advantages to selling your home to an investor: (1) quick sale for cash and (2) no repairs needed.
Quick Sale for Cash: Investors don’t typically need to go out and get a mortgage, and you won’t be anxiously waiting for the bank to decide whether your buyer can get a loan. They typically pay cash, and because they don’t need a mortgage they can close the transaction much faster than a more standard buyer. Generally, closing is less than 30 days for an investor, and it can be within just a couple of weeks in a lot of cases. By keeping that in mind, you can decide whether the fast sale is worth the lower price you may have to accept. Depending on your specific circumstances, selling your Pensacola, FL or Cantonment, FL area home to an investor may be just the right choice for you.
No Repairs Needed: Unlike a buyer finding their dream home and wanting it to be in perfect, move-in ready condition, investors won’t ask to have repairs performed on your property. In fact, the more work needed, the better. Just realize this is one of those factors that affects the offer you’ll receive from an investor.
I have unintentionally offended a lot of people, but now that you know it’s all about a math formula and helping you get rid of that unwanted property. If you have a Pensacola area property you want to sell to an investor, Contact us today!
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