Last Tip in case you missed it
Some investors always seem to get great deals. The properties they buy are always below market value. They get terms that seem impossible.
Is it just luck? Are they simply in the right place at the right time? Do they just have the “touch”?
None of the above.
Like anything worth doing, buying property takes practice. It is something that anyone with persistence and determination can succeed at. You simply have to master the techniques.
Here are the rules:
1. Know the market.
2. Find out the seller’s real need or needs for selling.
3. Make an offer which solves the seller’s immediate needs.
4. Focus on making the deal, not dickering over details.
KNOW THE MARKET
People usually got into the rental property business with the idea of making money. Obviously some people are more successful than others doing it. The most successful are those people who make good buys. In order to make good buys, you have to know what a good buy is.
No matter what the condition of the real estate market , there are good buys available, especially in the lower end. But, that’s where most of the rental property is.
A good real estate agent can and will keep you updated on what houses are selling for. There is a big difference between what houses actually sell for and what some people try to sell them for. Six months of data for the area where you’re looking for houses will give you an accurate picture of the housing market.
A good real estate agent, if you work with him or her regularly, will also not even call you about properties which are over-priced and/or wouldn’t help your investment program.
FINDING THE REAL NEED TO SELL
One investor, who specializes in single-family rentals, saw an ad for a three bedroom home in a good neighborhood for $79,900. He knew that sounded like a good price for the area. He called his agent to find out more.
After some investigation the agent got back to him. He had talked to the listing agent, who had told him that she had just presented a full-price offer to the sellers that afternoon. But the sellers wanted to think about it.
That had immediately sent up a red flag to the agent. Why would a seller have to think about a full price offer? With some more digging the agent had discovered that the price wasn’t the seller’s biggest concern. There were some repairs that the other offer asked for.
The offer wanted the sellers to paint the kitchen, fix a dripping faucet in the bathroom, polish the hardwood floor in the dining room and clean the rug in the master bedroom.
The sellers were balking at the offer because the husband had to be on his new job (an important promotion) in 10 days in another city. He was training his replacement at the time, and that demanded that he spend even more time at work. His wife was leaving in 48 hours for the new city to look for housing.
It was quickly apparent to the agent, and to the investor when he heard it, what the real problem was.
SOLVING THE SELLER’S NEEDS
The investor looked at the house. Saw that it was in good condition and a good value. He immediately wrote another full price offer, but without the contingencies for cleaning and repair.
His agent presented the offer. The sellers accepted on the spot.
The investor wasn’t concerned about the minor things such as dripping faucets and scuffed floors. Every time he had a vacancy, he had to fix those.
Real estate agents’ job is to solve people’s problems. There are those who don’t do it, many create more. But that doesn’t mean that isn’t their job. In this case both the investor and the agent were able to do just that, and everybody was happy. The sellers got their home sold with no hassles and the investor got a good piece of investment property.
MAKE THE DEAL,
DON’T GET HUNG UP ON DETAILS
The investor won on this sale because he focused on buying the property, not worrying about the small stuff. The reason the people who made the first offer lost is that they wanted everything to be perfect. That is despite the fact that all the repairs they demanded could have been taken care of in a few hours over a weekend.
They were buying the home on emotion. The investor was making an investment. He knew that the real profit was in owning the house, not over quibbling over a dripping faucet.
And it paid off for the investor. The appraiser said the house was worth $89,000, and the investor was able to rent the property with a positive cash flow.
The above example is just one of the reasons a seller is “motivated.” There are numerous others.
- An owner is facing foreclosure.
- An elderly couple is “house rich,” but cash poor.
- An owner has already bought another house.
- A couple must sell their home as part of a divorce settlement.
- A property must be sold to settle an estate.
Remember, as well, that while you want to get a good deal, you don’t try to steal the property. Even when you buy from a distressed seller, the best approach is to try to make the deal appealing to both sides.For example, if you were to buy from an elderly couple in need of cash, you might consider letting them stay on as renters. They would undoubtedly be excellent tenants, and would probably give you excellent terms in exchange for helping them keep a familiar roof over their heads.
When you use these buying techniques, you get a tremendous amount of satisfaction and profit from buying right. And the excitement is just as much fun as profit.
After a while, others will be referring to you as the investor “who’s in the right place at the right time.”
