| |
| |
|
Real Estate Information |
|
|
|
High Profit Real Estate Investing--Make a Good Deal Every Time!
Knowing what a Good Deal is - Is the Key to Success in Real Estate. Dear Investor, Take this little survey: The most important key to Real Estate Success is: 1. Finding Motivated Sellers 2. Funding Your Deals 3. Negotiating 4. Knowing a Good Deal when you see one. Yes all of them are important. And if you answered #4 - you're right on the money. Why, because if your deal is a not good one, all your other skills and marketing and power will not make you money, and may even lead to disaster. On the other hand, if you can unfailingly target good deals, you will always be successful and all the other skills and your marketing methods will serve to increase your success. What is a Good Deal? It's a lot easier to state the question than give the answer. Why? Because it depends on many factors like: - Market value and purchase price - Expenses, carrying costs, repairs - Cashflow and profit - Holding time - Loan terms - Risk factors - And more . . . And most importantly, it depends on the type of deal you're doing. For example, if you have a loan on a property that you intend to rent or sell on a lease option, the terms of the mortgage, future tax increases, and current area rents are critical to consider in insuring a positive cashflow. However, if you are planning to do a short rehab job, and sell or just flip to another investor, rental income is irrelevant as are future tax increases. It's What You Don't Think About that Can Get You The thing that trips up many investors, is that in our enthusiasm to do a deal that we've found, we don't take into consideration "hidden" costs. For example, if you're doing a renovation and you've done your due diligence on contractor costs, have you also considered your carrying costs such as mortgage payments, utilities, etc. not only during the renovation, but also the time it will take to sell and close with a new buyer? Or if you're using a realtor to sell the property, have you calculated the effect of a 6-7% commission and the closing costs the seller will pay on your bottom line. A 10% profit margin can shrink pretty quickly to zero under those circumstances. Read Those Loan Terms Carefully Or have you taken into account, not just your loan to value ratio on the property, but your investment to value ratio (e.g., the total of all outstanding loan balances plus the additional funds you've put in from your own cash or borrowed from your home equity line or friends and family)? And on the income side, have you calculated how long you should hold the property to receive a significant profit from the pay down of the mortgage. With a new 30 yr loan, you may have to wait 5-10yrs to get the same pay down you'd get after a few years from a 30yr loan that's been seasoned for 10 years. And did you carefully read the note contracts to take account of adjustable rates and pre-payment penalties? Checklists aren't Enough A number of courses and real estate gurus will give you checklists. That's helpful in not forgetting something, but it doesn't help you with the laborious and complex task of putting all the numbers together. There's just something about working with the actual real numbers, that brings the reality of the deal into actual focus. Our hopes and wishes dissolve before the actual profit and loss calculations. Moreover, the numbers can pinpoint the weaknesses in a deal, and point the way to a solution. No mere checklist can do that. What About Risk? I think you'll also agree that a Good Deal, is not just High Profit, but also, most importantly Low Risk. Many a dream of a golden future has come crashing down because some little thing went wrong. Many a would-be mogul, is now working at a 9 to 5 because their killer deal was wrecked by an unforseen glitch. This is what we mean by high risk. The successful investors do deals with low risk. Deals that are so robust that even if almost everything went wrong they'd still come out with a profit. Build In A Safety Margin For example, suppose you have a rental with a positive cashflow. Is your cashflow high enough or your option payment big enough, that even if you had to evict your tenant for non-payment and it took you 2 months to fill it with another cash-paying customer, you'd still come out ahead? Or, is your investment to value so low that even if you had to offer your buyer a big discount for a quick sale, you'd still walk away from the closing table with a fat check? In real estate things can and usually do go wrong. It's Normal. So, wouldn't you like all your deals to have these kinds of safety margins? Fixing the Problems with Your Deal Now, if you knew in advance that your risk was too high, or your cashflow was too low, or your profit over the life of the deal wasn't enough, you'd want to think of solutions. This is what is meant by being a "transaction engineer". Find the solution, fix the problem, test it on the numbers, and then negotiate it into the deal. And if you can't find a solution (but there always is one) or the seller won't accept it-NEXT! I can tell you from real experience, a bad or risky deal is NEVER WORTH DOING-no matter how enticing the vision. The personal stress, heartache, and loss of confidence can be even more harmless than the potential financial loss. In the words of an ex-president's wife, if you are faced with doing a bad deal-Just say No! What's the Answer? Some experienced investors have a feel for good deals, and can avoid trouble most of the time. Others only do a particular type of deal and use a rough "rule of thumb" to evaluate their risk and profit. However, what's really needed is a "calculator" or computer program that will take in all the variables and 1) Calculate the exact profit and cashflow for all kinds of deals. 2) Measure and Evaluate the financial risk in the deal 3) Use standard and safe criteria for what constitutes a good deal 4) Suggests alternatives to fix what is wrong The Deal Evaluation Tool We've taken tons of real estate courses and looked at all kinds of real estate software, and nothing has come close to what we as investors need. So we decided to create our own Deal Evaluation Tool. Well after several months of testing and improvement, we now use it for all our deals-short sales, subject to, lease option, rehab, wholesaling, and even some commercial. Since we can try out different "what-if" scenarios, it's kept us away from some real pitfalls, and helped us negotiate better profit margins. We wouldn't "leave home without it". Constantly Meeting The Needs Of Investors Well, some other investors wanted to try it, so we put it on our website. Much to our delight we now have a community of users and a users group that shares their insights about doing deals and creative ways to use the Deal Evaluation Tool. Their suggestions, are leading to a rapid improvement of already incredibly useful tool. There is just nothing out there like it. We've also put a demo up for those investors who would like to get a feel for using it. And we hold classes for new users. Knowing all the numbers, and having evaluated our risks with the Deal Evaluation Tool gives us more confidence in negotiating deals with sellers and more consistent high profit real estate deals. And that's what we all want, isn't it. Richard Odessey along with his wife Michelle have the premier site on the internet - http://www.InvestorWealth.com for training and teaching real estate investors to do high profit deals. They offer regular Free Teleseminars by the top real estate investors in the country, the best tools to enhance your real estate success like the Deal Evaluation tool. They also offer 4-8 hands-on training seminars with personal advice from experts that investors can take from the comfort of their home. Richard and Michelle have been investing for over 5 years and personally teach and mentor other investors.
MORE RESOURCES:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
Real Estate Web Design - 3 Items You Must Include on Your Site Real estate web design requires you to do things a little bit differently because you are selling either your services or actual homes, so there must be several things present on the web page to make it user friendly. Unfortunately, many real estate web sites are poorly designed, ask visitors to supply tons of personal information before being able to view any information, don't provide enough information not to mention photos, and are all around a pain for many visitors. Property Investing Secrets 9 Property Investing: Here Are Two Important Tactics You Must Do When Buying Real Estate Off The InternetYou can purchase property off the internet. The off line fundamentals of property investing apply on line. Basic Tips for First Time Home Buyers Choosing a first home can be a daunting task, but following a few key steps makes it a lot less confusing.An essential part of the process for every home buyer is to simply do the math. Wealth Building - An Advantage of Home Ownership As you grow older, the issue of wealth building comes front and center. Wealth building simply refers to increasing the net value of your total assets. Why I Love Country Living As somone who has lived in both places, I can tell you that country living certainly beats the hustle and bustle of city life! Living in a rural area has advantages that simply can't be bought at any price.In the city I was bombarded with the sounds of horns blowing and sirens blaring. What Does It Take To Be A Donald Trump in Real Estate? Since you are a business oriented person, you might be thinking: "oh, great, here it comes another fad that sounds to good to be true and I don't have time for this now." Well, the fact is, like gravity you do not have to believe in Feng Shui for it to work. What You Can Do To Sell Your Home Fast Yes, you want to sell your home and you want to sell it fast. It may be a seller's market and every other home in your neighbourhood is selling and you think it's going to be a cakewalk selling your home. How To Create A House Buying Wish List For Your Dream Home Buying a house is one of the most exciting things you will ever do. But there are LOTS of little details involved - details which can be very costly if they are overlooked. Part 1: FAQ's From Media Interviews With Real Estate Author Do you feel there is going to be a real estate bubble?Nash: No. Are some coastal and resort markets over-heated, yes. Joint Ventures In Real Estate Development; So How Do They Work? There are many reasons why you would consider joining with another person to undertake a development project in Joint Venture. Usually the most basis reason reveolves around something you don't have. How To Buy Property in Spain Safely Buying property abroad is not an undertaking one should embark upon lightly! It is not wise to assume that the entire purchase process will follow the rules we're used to 'back home' and generally speaking there are usually a whole new set of rules and regulations, traditions and traps to learn, understand and watch out for.Spain is absolutely no exception and has a tangled web of laws and legislation seemingly designed to trip up an unwary real estate buyer. How To Give Yourself A $20,000/Year Raise Without Asking Your Boss Why without asking your boss? Two reasons, one, he or she will most likely say no; and second, he or she will probably have you committed for asking. So what do you do. Realities of Real Estate Investing If you are anything like me, you are always looking for a good way to work for yourself and make tons of money. Is this not the dream of millions of Americans? Of course it is, and I am willing to bet that you have considered getting into the real estate market at some point. A Few Easy Ways To Take The Headache Out Of Moving Moving from one house to another is always a challenge, but it doesn't have to be a nightmare. Here are some simple tips on how to get it done with minimal stress and strain. Why it is Important to Hire Just One Real Estate Agent to Buy a Home In our fast paced and frantic real estate market, buying a home takes quick action and strong representation. Some buyers decide to involve several agents in their search for a home, assuming that there is strength in numbers. Dont be Tempted by We Buy Houses (Updated) Do you want to sell your home right away? Don't be tempted by "We Buy Houses" or "Sell Your House in 9 days for Cash" ads and billboards.Savvy real estate investors run these ads and put up posters looking for sellers under duress. Real Estate Remains A Strong Investment Opportunities to make big, quick profits in residential real estate tend to come and go in cycles. When a local market is hot, families may find it possible to buy a house at an attractive price, fix it up, and watch its value rise in just a few years. Real Estate Investment Requires A Team I had a hard time at first with real estate investment. One of the reasons was that I tended to be a "lone wolf," trying to do too much myself. 5 Hot Tips for Successful Real Estate Investment The last downturn of the global stock market saw millions of 'every day' investors having their fingers badly burned. Overnight life savings were eaten away, retirement funds went into decline and the economic forecast for all of us who had any money invested in stocks and shares was gloomy to say the very least. How Much Home Can You Afford In Todays Market? If you haven't figured your credit worthiness and borrowing power lately, you might be surprised at how much home you can afford to buy in today's market! Mortgage Lenders are very optimistic about the future of the real estate market and as a result they are willing to loan more on properties than you might expect! And, lenders are making loans at rates not seen since the late 1960s.We,as your Realtor, will be most willing to align you with one of our favored lenders for a private and complete analysis of your borrowing power.
|
 Home  Contact
|
| Real Estate Information © 2006 |
