Real estate investing is every time beneficial and occasionally it’s red hot. When it’s hot dozens of real estate seminars start rolling across the country and thousands of people spend thousands of dollars on investing education.
It’s startling to learn that of all those thousands of eager people who attend these seminars only about 5% buy even one investment house. Why? The real estate gurus sell the “sizzle” and make profiting from real estate sound easy. The truth is that it’s simple, but not easy.
Here’s a quick plan that will let anyone begin building financial sovereignty.
There are basically four formulas for investing in single-family homes:
1. Buy homes lower than the full market amount. Yes, people really do sell homes for less than the home’s full value. The key is to know that nearly all homeowners will only assume a purchase offer that is all cash and within 5% to 10% of their asking price.
The profitable investor learns to locate financially distressed homeowners who have no selection but to sell for less than market value. They have lost their job or been suddenly transferred; they are divorcing; they been living beyond their income; the family has been overwhelmed with medical bills and, not uncommonly these days, their money has gone to support a drug habit.
Those are examples of motivated sellers. They have to sell and they will accept something other than a conventional, all-cash offer.
2. How do you find motivated sellers? You work at it! Like any business, it is essential to develop a modest marketing plan. One that is simple, yet very useful, is the one that was tested 75 years back by the Fuller Brush company; door to door sales.
You are selling your skill as a home buyer to people who must sell. You are there when they need you and you have the skill to help them solve at least part of their problem. With door to door prospecting, you will gather extra and buy more homes more rapidly than any other method. However, most people just won’t walk door to door for three or four hours per week. OK, there are other ways.
You can see public notices for the announcement of property sales. Meeting with a homeowner right after they’ve got a notice that they are about to lose their home allows you to deal with a very motivated seller. Other public notices that provide buying opportunities include probate, divorce, and bankruptcy. You can follow the Homes For Sale listings in your local newspaper or Internet site.
You can telephone the names found in these notices or, and this is the slightest time consuming, send a postcard expressing your interest in buying their property. It will make buying opportunities, just not as many as personal contact.
3. After you’ve found a motivated seller you must know how to frame offers that provide benefits for both you and the homeowner. A skilled real estate investor quickly learns that this is not a business of stealing property, but of solving problems in a way that benefits the seller.
The homeowner is in a tense spot of some kind and you can save them from public embarrassment and, in most cases, give them at least minor cash money to get a new start.
No investor can afford to leave cash in each deal. No one but Bill Gates has that much available money. You must use creative solutions like, leases, options, and taking over mortgage payments. Little or no cash is needed for those deals. You can find plenty of reasonable priced educational material on those subjects in book shops or on eBay or realestatevally.Com. The same education that seminars sell for thousands of dollars.
4. You make your profit once you buy! Never make a purchase until you’ve carefully determined exactly how you will get to your profit. If you hold it as a long-term investment will the monthly rental earnings more than cover the monthly mortgage payment? Will you sell the deal to another investor for fast cash? Will you do some fix-up and sell the property for full value? Will you quickly trade it for a more attractive property? Have a plan before you buy.
There you have four formulas that even a part-time investor can execute in three to four hours per week. What’s the missing ingredient? Your determination and perseverance. If you will unfailingly follow the plan for a few months you will be ok on your way to financial sovereignty.