949-392-1999
Real estate investing is always good and sometimes it’s red hot. When it’s hot, dozens of real estate seminars begin rolling across the country and thousands of people spend thousands of dollars for investing education.
It’s startling to learn that of all those thousands of eager folks 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 four tips that will enable anyone to begin building financial independence through real estate investing.
1. Buy properties below full market value
Yes, people really do sell properties for less than the full value. The key is to understand that most sellers will only consider a purchase offer that is all cash and within 5% to 10% of their asking price.
The successful investor learns to find financially distressed sellers who have no choice but to sell for less than market value. They have had difficulty with tenants; they are getting older and managing the property has become too much effort; a mortgage balloon payment is due; the family has been overwhelmed with medical bills or other expenses and need the cash now!
Those are examples of motivated sellers. They have to sell and they will accept something other than a conventional, all cash offer.
2. Find Motivated Sellers
How do you find motivated sellers? You work at it! Like any business it is important to develop a little marketing plan. One that is simple, yet very effective, and generates a stream of potential seller leads
You are selling your skill as a real estate investor 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. Whether you are using direct mail, cold calling or contacting potential prospects online, you need to dig deep and use various approaches.
You can watch public notices for the announcement of foreclosure sales. Meeting with a seller right after they’ve received a foreclosure notice allows you to be a hero to a very motivated seller. Other public notices, auctions, etc. that provide buying opportunities include probate, tax liens and bankruptcy. You can follow the For Sale By Owner (FSBO) listings in your local newspaper or Internet site.
You can telephone the names found in these notices or, and this is the least time consuming, send a postcard or letter expressing your interest in buying their property. It will produce buying opportunities.
3. Frame the Offer
After you’ve found a motivated seller, you must understand how to frame offers that provide benefits for both you and for the seller. A good 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 seller is in a tight spot of some kind and you can save them from public embarrassment and, in most cases, give them at least a little cash to get a new start.
No investor can afford to leave cash in every deal. No one but Bill Gates has that much available money. You must use creative techniques 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 stores or on the Old Dawg’s REI Network site. The same education that seminars sell for thousands of dollars.
4. Make your profit when 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 income generate strong cash flow? Will you sell the deal to another investor for fast cash? Will you do some fix-up, hold it for a few years and sell the property for full value? Have a plan before you buy.
There you have four simple steps that even a part-time investor can execute in three to four hours per week. Of course, we highly recommend continued education, developing a strategic plan and mentorship to be successful. What’s the missing ingredient? Your determination and perseverance. If you will unfailingly move forward you will be well on your way to financial independence.
Bill Manassero is the founder/top dog at “The Old Dawg’s REI Network,” a blog, newsletter and podcast for seniors and retirees, that teaches the art of real estate investing. His personal real estate investing goal, which will be chronicled at olddawgsreinetwork.com, is to own/control 1,000 units/doors in the next 6 years. Prior to that, Bill and his family lived in Haiti for 11 years as missionaries serving orphaned, abandoned and at risk children.
