So we had a motivated seller call come in off of a Craigslist ad. My son the brand new real estate investor took the call, he was fresh out of a real estate training workshop where the instructor was explaining how to ask the buyer if he would take payments. Son did exactly what the instructor said and asked the guy if he would talk payments over time instead of cash today. Guy said ok. Son come to tell us about the deal, but because it did not fit in our box, we said no. . . . not a good deal. He went ahead with the deal any way, put a couple of $1000 down, had an AC ripped off and then replaced. Sat vacant for a long time. . .BUT it is now rented and cash flowing and I believe that if he can keep this deal going, paying the seller a payment every month which is less than what he is collecting in rent and with very little money out of his pocket, he will eventually have a free and clear house . . . . so did who knew a good deal?
Larry Harbolt shares the same sentiment,
Do Most Real Estate Investors Know what a Good Deal IS?
It amazes me how so many so called real estate investors who have been in the business for less than five years think they know enough about investing in profitable properties to be able to create a fortune. Think about this for a minute, if you have been an investor for 5 years or less the majority of your investing knowledge is based on trying to buy pretty houses, pay cash for them, or get institutional financing to fund your deals and at the same time believe you will eventually become wealthy using the plan you are currently using. If you got into the business when money was easy to get, your perception of what is a good deal is probably is not an accurate assumption.
Another important mistake beginning investors make is using dollars per square foot to determine the value of any property is not a prudent way to give you what any property is worth. Another reason I say investors who have been in the business less than 5 years is, almost everyone I meet who is trying to become a successful real estate investor think the only good deals are short-sale deals. In my opinion, this is failed, but constantly used way to buy property beginning investors use. Why you may be asking is investing in short-sale properties a failed plan? Here is some facts most potential short-sale investors don’t think about. First, if the investor needs fast money, short sales probably won’t be the answer to your needs. Most short-sale deals take months to close. Many take six to nine months to get through the short sale process.
Other newer investors want to be Wholesale investors. Being a wholesaler is not being an investor, believe it or not, you have a job you must continually repeat if you want to survive in the business. Let me ask you a question. If you had $100,000 or could borrow $100,000 and could buy a property worth $150,000, how many of you think this would be a good deal? I personally think that deal would stink and here is why. If I had $100,000, why would I put it all in one deal when I could divide that money into $5,000 increments and control twenty properties worth $150,000 if done correctly?
Here is another reason I don’t believe beginning investors would know a good deal even if it slapped them in the face. Let me ask you some questions…
You find a property worth $150,000 that is in great condition in a good neighborhood. Would you be interested in that deal? It is a 3 bedroom and 2 bath house, are you still interested in this property? The property will rent for $1,500 per month, would you still be interested in that deal?
The seller I asking $1,000,000 for the property. Are you still interested in the property?
Maybe not but, what if the seller would be willing to take $500 per month until paid in full and you could cash-flow that property with $500 of the $1,500 for the property expenses of the property leaving you $500 each month to put into your pocket. Now are you interested in buying that property? Remember, you must get either “Price” or “Terms” to make a good deal. You must think about only doing profitable deals. The price is less relevant when the terms of the deal allow you to profit handsomely month after month. It’s just common sense most beginning investors don’t have.
All of these questions are extremely important for every investor to answer if they plan to create wealth. Join me on Tuesday September 9th, 2014 at MAREI in Kansas City where I will explain how you can become a seasoned investor with some of the important information that can allow you to do so in the shortest period of time. I will share with you what a seasoned investor knows and why they are successful regardless what the market conditions are month after month and year after year.
You surely don’t want to miss what I’ve got for you at MAREI.
Real Estate Investor
Larry Harbolt is the nation’s leading Creative Seller Financing expert as well as a popular national real estate speaker and teacher whose time-tested strategies and nuts and bolts teaching style has helped thousands of aspiring real estate entrepreneurs realize their financial dreams with little or no money and without the need for credit. Larry has been successful creatively buying and selling real estate for over 30 years and has written numerous popular articles and real estate courses. Larry also has been running a meetup group for real estate investors in St Petersburg, Florida for over 13 years. Larry is the real deal!
Larry’s will be in Kansas City on September 9th at our Monthly Meeting discussing Creative Financing for Real Estate Investors and then he is coming back on Saturday September 13th, 2014 for an all day Deal Structuring Workshop. Please visit our calendar of events to learn more about these and other events at MAREI.