House Buying Criteria: Why You Should Set Up As Well

If you are into real estate investing, it is critical that you define your house buying criteria. Formalizing your house buying criteria keeps you focused on the goal that you are looking to achieve. Whether your goal is buying cashflow properties, or buying high-priced trophy assets for potential appreciation, the buying criteria keep your goals in check.

Quick tip: While somewhat counter-intuitive, I find narrow, well-defined buying criteria will bring in more deals than the wide, murky ones.

There are couple reasons.

  • The clearer your buying criteria is, the easier other professionals (e.g. realtors and wholesalers) can look for a deal for you.
  • If your buying criteria are clear, whenever a good deal comes across to a realtor or wholesaler, he/she will be more likely to relate you with the deal. Hence, he/she is more likely to give you a call first rather than somebody else.

I’m going to use mine as an example.

The city in which I operate is Jersey City.  While I will look in the city as a whole, the primary focus is the west region of Jersey City, West Bergen.  If it is West of John F Kennedy Blvd., even better.  The price point is roughly $70k to $125k per unit, all-in (ie. including renovation).  For example, if it’s a 2-unit house, it will cost around $140k-250k all-in.  If it costs $30k to fix, I would expect to pay anywhere between $110k-220k.

Would you agree these are narrow, well-defined criteria?

After you have set your criteria, you should go back to review it.  It’s simple — Ask yourself.  Just imagine that you are an agent, how easy is it for you to go through your listing and see which ones fit The Criteria?  If the answer is “YES, it’s easy.”, then congratulations, you have just nailed it!

For all wholesalers and realtors in our (NY/NJ) region, please send any deals that fit the criteria below to wongcanhelp@realestatedoer.com and we can discuss if suitable.

Location Jersey City, NJ (Zip Code: 07304, 07305, 07306) [see Map below]. Special interest in West Bergen area.

Exclusion: Between MLK Dr. and Ocean Ave.

Type of Property 1-4 Family Residential Property and Small Commercial multi-family property (6-10 units)
Price Expectation [All-in price] 75% of After-Repair Value (ARV) or below. $70k-100k per unit. [Rate of Return] 8%+ unlevered after reserves and expenses.
House Condition Both move-in-ready and distressed properties.

Exclusion: houses with major structural problems

Status Either you have it under contract or you are the listing agent

JCZips_2

 

What do you think?