Nov 09
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If you want to make money in real estate there are some good techniques that will help you work more effectively. It may not be in the cards for you to become a full time investor, however, it is still worth your time and effort to know a few techniques to save money on property. Here are the 7 most important real estate investment secrets for free that will make or save you a lot of money on your next home purchase.
1. Property must come with a discount
There are many ways to obtain a discount on a property. One example is getting your property for favourable terms as many buyers do not realize that price and terms are essentially the same thing. The important thing is to understand what variables would cause a seller to sell their property for less than it is worth. You will find it is much easier to profit when you know this. That’s the advantage to a good set of real estate investing secrets. Great deals come about as a result of circumstances of the seller, not because of where the home is located. Great investors are always marketing to attract the right circumstances.
2. Find out just how low you can go
Many people confuse an “asking price” with a “selling price.” Asking price means almost nothing if you ask any experienced real estate investor. The asking price would be the “getting price” if it did mean something but that rarely happens. Here’s a simple way you can find out how low a seller will go without ruining the negotiation. If you like a home, have someone else go into the home and make a lowball offer under their own name that they can escape or void. Your buyer won’t actually go through and buy the property, it will just help you determine how low the seller is willing to go. The actual bottom line price of the seller may be revealed through this trick. The asking price will often be countered at 10-20% off. It really helps to know that when you walk in with a clean slate to begin your negotiations.. When you know ahead of time that your seller will come down 10%, you can save yourself 10s of $1000s and a lot of wasted time. The best part is that they will never get offended by anything you’ve done either as they think the lowball offer came from a completely different source.
3. Write a contract that has an escape
Most residential real estate deals have clauses that say things like “offer contingent upon inspection of home within XX days.” Make sure you have a similar “escape” clause. You don’t actually have to show that you really did a home inspection. 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. Because you can back out of a deal that you haven’t already sold for more money first, there is actually a lot less risk most investors think.
4. Don’t play the lottery with homes
“Hey, I sure like the brochure of that mutual company so I think I’ll buy some shares.” It sounds “investors” don’t give much more business analysis than that to real estate investing. Don’t ever buy a home unless the numbers show you that it will be profitable. Buying a 2nd home that loses money or makes very little is not worth all the time you’ll have to commit. Buying a home without performing the analysis on the numbers is just like using the brochure to buy a company.
5. Have multiple exit strategies
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. If you buy and then go looking for a renter, you’ve already lost. Make sure you at least know how to rent-to-own, hold a secured 2nd mortgage note and assign a contract before you just buy and hold.
6. Landlording is rarely as good as it’s professed 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 about $100 profit per month. How much is your time worth? Are you willing to fix toilets, walls and plumbing for $100 a month? Creative investors use creative strategies for a reason. Think about how the bank collects on your property without having to physically manage it. Learn to make a profit without spending all of your time.
7. Marketing
You can market to have great deals find you or you can go out and look for great deals day after day. business professionals like mortgage brokers and realtors 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 that the best deals go through investors who market to attract them instead of through realtors.
The most prevelant secret is that the best real estate investments always go through investors who know how to dig them up.
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