When the average person thinks about that ratio, they often can’t envision themselves really looking at 100 properties. Why 100? Simply put, good deals are hard to come by (hard, but not impossible). It may be difficult enough to find 10 properties worth putting offers in on in the first place. After looking at 100 houses, 10 offers might be submitted, and only three may be accepted. After applying for financing on these three properties, you choose one. So, in this case you have looked at 100 properties to successfully buy one.
An investor is able to look at real estate investment as a numbers game. The more properties a buyer looks at, the more likely they are to find a great deal. It is important to look at numerous properties, to get a feel for what is available. The buyer will begin to understand the norm- what is available for a certain price bracket. The buyer needs to develop criteria to find a property. They should try to differentiate between their need to haves and their nice to haves. For instance, does the property have to have a big backyard or would it simply be nicer if it did? After looking at ten or more properties, you are able to compare your list of wants and needs to each individual property to make a sound decision. Furthermore, you will have determined a price range- what is worth what, in what area. With your criteria becoming more defined, you will start to get a feel for what is a smart investment and what is not.
Many successful investors suggest that if possible the smart investor should buy newer houses in a lower price range, a price range where rent-to- property value ratios are the most profitable. A landlord will have a much easier time finding tenants, if he can offer a nice home in a fair price range. Ideally, a house that is ready to rent or near ready to rent is an investor’s best buy. Finding that first property may take time, but in the end the deal will last a lifetime
In a big city like Toronto, it may seem overwhelming to look at 100 properties. It sounds much more difficult than it really is. When you take advantage of resources such as the internet and a knowledgeable real estate agent, it becomes much easier to look at 100 properties. Some sites provide a virtual tour of the property and some provide pictures of different views of the home. Surf the net, take a Sunday drive, skim through the newspaper and before you even know it, you have looked at 100 properties, narrowed it down to ten and bought one.
Reference: Dolf De Roos, PH.D. Real Estate Riches. Warner Books Edition. New York: 2001.