1. Property must come with a discount
Getting a property for lower than market value can be achieved a number of ways. One example is getting your property for favourable terms as many buyers do not realize that price and terms are essentially the same thing. Understanding what would cause a seller to give a big property discount is the most important thing. You will find it is much easier to profit when you know this. That’s the advantage to a quality set of investment secrets for real estate. The circumstances of the seller will determine when a good deal is possible as the home location is usually irrelevant. Great investors are always marketing to attract the right circumstances.
2. Find out just how low you can go
The “asking price” and the “selling price” are completely different things. Any good investor will tell you that an asking price is relatively meaningless. If it really meant anything, asking price would be the “getting price” and it rarely is. It’s important to get a cheap price without ruining the negotiation so here’s a good technique that will help you. Have a third party (that knows you) make a void-able lowball offer. It’s a “temperature taking” offer that will allow you to find out just where the seller is at is far as what they will accept. You’ll have advanced insight on how low the seller will go on their price. The asking price will often be countered at 10-20% off. Your negotiation will be unaffected but you’ll have that advanced knowledge. If you seller comes down even 10%, you can save yourself 10s of 1000s of dollars. In their mind the lowball offer didn’t come from you either so if they get offended, they won’t be offended at you.
3. Write a contract that has an escape
It is typical in a residential real estate deal to include clauses like “offer conditional upon home inspection within XX days.” Include those terms on your purchase and sale agreement. You do not need to prove you did a home inspection or that it actually met your terms. You can use this as an escape to make an offer and then back out if you are unable to sell the home for a higher price. Controlling a property through a contract is just like owning it which is why good investors make escapable offers all the time. The risk is actually minimal when you can back out of a deal that you haven’t already resold.
4. Don’t play the lottery with homes
“Hey, I really enjoy the brochure of that mutual fund company so I am going to buy some shares.” It sounds stupid don’t give much more business scrutinizing than that to purchasing real estate. It the numbers don’t indicate that it will be profitable, actually crunch the numbers or just don’t buy it. A second property can have a large time commitment involved so just imagine if you were going to lose money on it. Buying a home without analyzing the numbers is just like using the brochure to buy a company.
5. Have multiple exit strategies for all your real estate investments
The mainstream way of thinking says “buy, fix up, and flip.” Unfortunately, most spoon-fed ideas to the public are really not that profitable. For instance, without the management time involved, holding secondary financing often pays the same thing as being a landlord. Before you take title on a property, know at least of your creative options. You’re already well behind if you go looking for a renter after you’ve already invested in a piece of real estate. In your repertoire, at least know how to lease-purchase, hold secondary financing and assign a contract before you just buy and rent.
6. Buy and hold is not all it’s cracked up to be
Typically, 10% profit on rents is what’s expected on a 2nd rental property. That means that if you’re renting for one thousand dollars per month, you can expect around $100 profit per month. How much is your time worth? Are you willing to fix toilets, porches and heating for $100 a month? There is a reason creative strategies were invented. Think about how the bank collects on your property without having to physically manage it. Don’t spend all your time to make a profit.
7. Market to have good deals come to you
You can market to have great deals find you or you can go out and look for great deals day after day. You’ll probably never find a great deal if you don’t market for one[spin]. At the very least, you should have [spin]industry specialists like mortgage brokers and real estate agents keeping their eyes peeled for you for the right fit. If you’re really serious about making money in real estate, take hold of your own creative marketing strategies. Realtors and brokers don’t really do any investing so although they can find some good deals, the best deals aren’t something they are accustomed to investing in. That means the really great deals never go through them and it’s up to you to develop a marketing system to capitalize on those very lucrative deals.
The major secret is that the best real estate investments always go through investors who know how to find them.
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