There seems to be a lot of hot air and expensive courses promising amazing property deals that fall fom the sky into your lap if you will only buy their course but typically there are only 2 ways to achieve success. We will ignore for now the more traditional methods of purchasing property (even with vendor finance) then either renovating, reselling or renting out although all of these stategies have made a lot of people very wealthy and are explored fully in previous articles. A. The basis of "flipping" is that you find someone who is motivated enough to sell their property that you can buy or option it at a price low enough for you to either onsell it to a developer/renovator or renovate quickly and sell at a profit. That's it, everything else is hot air. B. A lease/purchase deal is where you lease a property at a cost that covers the owners repayments plus their insurance and rates for a set amount of time (usually 1 - 2 years) and they give you an option covering that time to purchase the property at a price you agree on now. You then lease/sell this on to someone who can't get a traditional loan right now but who is keen to buy their own house and agrees to give you a deposit plus pay rent. The money is in 3 places; the deposit they pay you (you pay next to no deposit, the difference between your lease repayments and your buyer's (their's are a bit higher to give you positive cash flow), and the difference between the price you negotiated for your purchase option and the price your buyer agrees to as their purchase option if and when they purchase. (Hint: Don't be greedy, be fair in your dealings with people and word of mouth will spread) Of the two it is easier to find more sellers willing to lease/purchase as there are more people in this category. Here then are the 9 beginners guidelines for success in this game. 1. Choose, know and like your area, and if it isn't an area you like don't look there, no matter how much people tell you it is ripe for deals. This will be what you do in your spare time, as a part time or full time job, and I guarantee if you don't like the area you are looking in you won't do the work. You know how there are some areas which just agree with you, maybe the people are different or the streets are tree lined or that bit wider or maybe you prefer narrow streets with interesting cottage houses, whatever it is, go with what you enjoy. As a rule of thumb it is a good idea to choose an area near where you live because you will be spending a lot of time here. 2. Speak the truth, there is this perception that to do well in real estate you have to be some sort of fast talking shark. The best policy you can adopt in business and life is to speak the truth and be true to yourself. 3. Do your Homework. This doesn't sound very sexy as plenty of seminars would have you believe these deals fall fom the sky but you have to decide what type of property you are going to focus on (eg 3bdrm homes) and become an expert on this type of property in your area. There used to be a lesson taught in real estate investing called the hundred house lesson. That being that you can't make any offer on any property until you had properly looked at and listed the details of 100 properties. 4. How to find motivated sellers. The application of Direct Marketing Principles are the key to success here. Jay Abraham and Jay Conrad Levinson both have excellent books on this subject you can pick up secondhand on Amazon.com. The basis behind the sucess of all these courses is finding people who want to sell bad enough to do some creative deal with you. Your goal is to get 100 calls per month. You WILL get 1 deal per week if you place classified ads, put up signs, write letters to local financial planners, develop good relationnships with the real estate agents in your areas, send regular postcards and the other strategies outlined in these books. Hopefully this has given you enough information to think about whether you really like this enough before you go spending big money on overpriced information. Part II of this article is now also available from EzineArticle.com All the best, Stephen
StephenHenryConsulting.com |
