Using the Web and social media to sell real estate

Many times I have people contacting me and offering a “fantastic deal that is perfect for my international investors”. More often than not it is simply some unsellable property that nobody would ever buy today, like an over-priced condo unit or a piece of vacant land in some war zone neighborhood. They think a foreigner would be willing to buy it at “full market price” just because he doesn’t know better. Of course this doesn’t happen because foreign investors pay people like me to do their due diligence and to bring them only workable deals.

Figuring your price backwards, starting from the buying power of your future home owners.

But sometimes there is a real logic behind the offer, and it is most usually some very expensive house that it is now worth one third of it original selling price and can be bought directly from a bank that wants to get rid of it. Let’s say for example it was originally paid $ 1,000,000 and today might be worth $ 700,000 and it can be bought for $ 500,000 or less.

There is indeed a substantial equity position for the investor and this can be enough sometimes to make him buy the property, specially if it is located in a city very popular in her own country. I am from Italy for example and Italians love New York and Miami, so they do buy high price properties at times in New York and Miami if they feel they are getting a good deal and they like the neighborhood. But it is the kind of sale that is most easy performed by a Realtor.

This type of buyer wants to be informed about all the details, wants to see the house in person and needs lot of professional assistance for the purchase: tax consultants, attorneys, money exchange services and so on. A transaction like this can easily take 6 months to complete and will also involve some foreign broker that acts as a middleman. Therefore it is not the type of business that an investor can target.

When dealing with foreigners as investor you are focusing on making them money and making sure that they make it whatever goes wrong. If you miss the boat with one of them you will pretty soon lose the others because they will talk one to another. It can be an awfully small world when you deal with Europeans.

So you must be careful in choosing the right type of property and the equity position is meaningless if it cannot protect your investment funds. Aside from avoiding bad neighborhoods and poorly built houses, you need to make sure that the total money you put in the house will not exceed the sum of the average rent you can get for the place in ten months. So, even if you can’t sell the property fast for some reason, you can still rent it and deliver to your investor a cash flow that will keep her happy while you wait for the sale.

So you start backward: you figure out the average wage of the blue collars in your area and then you figure out how much they would be able to pay of rent and now you can calculate to the maximum investment value for that property.

Roberto Mazzoni