First-time investors planning to buy a rental property will benefit from some professional support. The Boston real estate market can be challenging to navigate, and when you’re looking at properties that you intend to rent out, there are some specific criteria that must be met. You’ll need as much leverage as possible when you’re negotiating the purchase.
Even experienced investors will find themselves needing extra support. If you haven’t bought an investment property in a few years, you’ll likely find that the market and the buying process now is dramatically different than it was the last time you invested.
Having a great real estate agent on your side can help you negotiate the best possible deal. If you really want a competitive advantage, you’ll work with an agent who also provides Boston property management services (like us!). Our expertise will allow you to understand the strengths and weaknesses of a potential investment property as a rental.
We have some additional tips that might help you strategize as you approach a competitive and sometimes unpredictable Boston real estate market.
Is the Boston Real Estate Market Working with You or Against You?
When it comes to negotiating a deal, you must know where you stand inside the larger real estate market.
Market strength and competition will determine what you can ask for and how far you can push when you’re trying to get the price dropped. You’ll begin negotiations from a stronger position when you have the data and the comparable sales figures to support the price you’re willing to pay for a particular property.
Here’s how you can get to that stronger negotiating position:
- Conduct some thorough market research. Saving even one thousand dollars on your final price can turn into some pretty impressive returns over the years, especially as earnings compound.
- Know what homes selling for in the neighborhood where you want to buy.
- Compare listing prices to sales prices. How much higher or lower are those prices?
- Think about your first offer. Will you need to make an offer that’s above listing or can you offer something less than what the home is priced at?
With the right data and market evidence, you can support an offer that’s less than asking. You can also negotiate terms like inspection requirements, credits, closing date, and even closing costs.
Know Your Goals and Your Limits
You know the market numbers and you know what’s reasonable when it comes to an asking price and an offer. Next on your negotiating to-do list is understanding your own purchasing power and setting firm boundaries for what you can and cannot afford.
Before you begin making offers and looking at investments, you’ll need to have a budget in place so you know how hard you can negotiate and how much space you have when the seller pushes back.
Your investment goals will also drive where you are financially, what you’re willing to spend, and how you’re planning to structure the deal. Think about whether immediate cash flow is more important than long-term appreciation and equity.
A careful review of your finances and investment goals will tell you where you’re starting when you negotiate and how high you’ll be willing to go. Stick to those numbers because they determine your profitability.
Negotiating Tip: Ask for Inclusions
Negotiations often center on price, but remember that there are other ways that you can get what you want. The purchase price isn’t the only thing on the table.
Introduce inclusions as you’re negotiating. If you are leaning towards accepting the seller’s latest offer, ask for something in return. Maybe you can get them to leave all the appliances. This can save you money if they’re in good condition. Or, you can negotiate the repairs they’ll make before you close the deal. You can offer to waive the requirement that the water heater is replaced if they’re willing to come down a thousand dollars on the asking price.
Using inclusions can help you get closer to your target price when you’re negotiating an investment property purchase.
Negotiating Tip: Don’t Look Needy
Real estate negotiations can feel pretty emotional, and if you want to succeed, leave your emotions behind. A good seller will recognize desperation and need. Don’t act attached to the property. Give the seller the impression that you’re considering a number of different properties and you’re not even sure you’re completely sold on this one.
You want to show that you’re interested, but not worried. Your energy should demonstrate that you’d really like to work out a deal that works for all parties, but if you can’t, you’ll simply move along to another home you’ve identified as a great investment possibility.
This doesn’t mean you should push too hard or be too demanding. You don’t want to lose the deal. The seller likely has other options, too. Instead, be complimentary about the property and express that it stands out to you despite having seen a lot of homes.
Negotiation is Actually about Compromise and Flexibility
You are unlikely to get everything you want unless the seller is in a desperate position to get rid of the property. But, you can get a lot of what you want, especially if you’re willing to compromise and be flexible. Give a little in the places that you can, but hold firm in the areas that really make a difference to you.
Always be ready to walk away.
That may sound cynical, but there’s no reason to try and force a deal into place if it’s just not happening.
It’s not always easy to say no when you’ve invested so much time and energy into negotiating what you think is a pretty good deal. If you’re not ready to walk away entirely, tell the seller that you need some time to think about what their final offer looks like. You can continue negotiating after all parties have cooled off and thought about their positions.
Or, you can go ahead and walk away. It’s difficult but sometimes necessary.
We know how stressful the process of negotiating an investment property purchase can be, and we’re here to help. Contact us at Platinum Realty Group and leverage our experience.