The key to smart Real Estate Investing is having a specialized group of key people in your sphere of influence.
People like a good Attorney;
a good Realtor;
an excellent Mortgage Broker or Banker;
a good contractor if you can't do the work yourself;
a good painter, Tile layer, Plumber and Electrician;
a good Appraiser that's on the preferred list with most banks;
a good Home Inspector;
a good partner (either your spouse or a good friend that has the same desire and passion in Real Estate Investing); it just makes for a more enjoyable ride if you have someone to with which to share the ride
On the positive side of things, in Real Estate Investing 101, you need to decide whether you wish to do this investing on your own or with other people as partners. This could workout depending on the personality of the individuals involved. This positive side is the risk factor is spread amongst a greater number thus having the initial outlay reduced by dividing amongst the investors. Once your experienced and have completed a rehab or flip from start to finish and closed on the deal, it will allow you to have a greater confidence and purchasing power as know you could undertake two properties at a time.Then maybe three; then four, etc.
However, for your first venture it should be the test case to iron out the bugs and hopefully come away with a blueprint you could duplicate on the next real estate investment.
Will you be going after Rehabs, Flips, Foreclosures or Rentals for investment' Will you hold long term or short term' You need to decide, then plan your strategy because 'failing to plan is planning to fail'.
Where am I going to find these so called bargains' Well, you could try looking in the classifieds in the various publications where people try to sell on their own and save on the Realtor fees.
Most people have an inflated idea as to what their property is worth. So, before you even start to convince them to accept your offer, you must have gained a list of comparable properties that have sold in the same location as this property.
You can get this information from your Realtor in your neighborhood it's in his/her interest to work with you because at some stage of this investment you will want to sell this property and Realtors need properties to stay in business. Find yourself a Realtor that's a top performer or you could build a friendship with a rookie just starting in the business. Rookies tend to be more energetic than some full time Realtors that have been in the business for too many years and are set in their ways.
Build a relationship with your Realtor, discuss your plan to purchase property for investment and that you intend to close in 30 days cash. They will love you for it because Realtors don't earn a commission till the property has closed. So, the faster you close, the faster you and the Realtor make money.
Remember that Realtors have insight into the Real Estate market and the sellers motivation to sell. Having established this need they could recommend you as a cash buyer who could close in 30 days.
Back to looking at the classifieds ... you've done your homework and you're ready to call the seller. Try and build empathy with the seller. Hopefully, you will find out the amount of mortgage he has, when he would like to sell, etc. Be sensitive and conversational. Don't just blurt out question after question. Weave the information you require into the conversation. You never know you might just hit the jackpot.
Let's say the sellers are selling a rental property that has been vacant for a number of months and he just wants to get rid of it ASAP. Your advantage is that you can close in 30 days cash. Remember you have to arrange your limit as to the amount the banks are prepared to loan you. A safe guideline would be to have 20% as a down payment and have the rest organized from the bank either from an equity line of credit or a straight loan. That's your edge and that's why you're offering "X" amount off the asking price.
Always use the term "I can close in 30 days Cash" it's not subject to anything other than the attorney review period. Here in NJ, attorneys have three days to approve real estate contracts signed by both parties. If there's no title issues or liens on the property.
Now here's the rub, If the property is a rehab or fixer upper and you can quickly sum up the repairs upon inspection in dollar terms minus holding costs IE attorney and Realtor fees remembering that for every dollar you intend to lay out you want back as profit then you've bought yourself a bargain. example the property is being offered for $250,000 but it needs $40,000 in repairs and has holding costs of $10,000. So my out lay is $50,000 dollars so my profit should be $50,000 right' So then my offer would be $150,000 cash closing in 30 days.
Where else can you find a bargain' Look for yard signs stating "For Sale By Owner". Comb your neighborhood and look for the property that seems unkempt and homes with mail boxes full and over flowing with unattended mail. Ask your local landscaper if he knows of anyone selling in the area. Get friendly with your mailman let him know your in the Real Estate Investment Business.
Your first and most important key is to realize that this business is not about real estate investment but about relationships. You need to build relationships with your local store owner, gas pump attendant, landscaper, attorney, etc. Ask your attorney if he has any clients looking to close in 30 days cash to let you know. Hand out your personal business cards to your doctor, to the checkout lady at the local supermarket. Anybody that happens to be in your immediate sphere of influence. Open up a conversation with 'Hi! how are you'' spend time in general small talk then finish off with "listen can you help me out' Most of the time they will say sure. Hand them your business card and tell them "I can close in 30 days cash" if you know of someone that might need to sell their home right away. Please refer them to me' If you want, you can offer the incentive of a referral fee at the closing. You decide the amount but make it worth their while or they won't remember you.
Remember there are many many ways to find real estate bargains and you don't have to buy someones 'Get Rich List for $19.99'.
I can supply this information for free if you want, just drop me a line at
www.24seven-Realtor.com or send me an email realestateflipping@yahoo.com remember I'm only licensed in New Jersey but some of my techniques can be used in any state.
Happy hunting!
Hi Ho Hi Ho it's off to work we go!
Author:
TERRY MAIAVA Financial planning
