4 Key Strategies When Leasing Real Estate
To learn How To Be A Real Estate Investor, you must first learn the different types rental agreements.
In real estate, there is no universal “right way” to invest. Instead, you need to be able to change your strategy to fit the ever-changing market.
Sometimes, if the market is on a down turn, or if it is plateauing, the best option is to do a standard fix and flip. You buy, renovate, and quickly sell the property before you loose money on it.
However, if the market is on an up swing, you might consider doing a buy and hold. The idea of a buy and hold is to let the property appreciate in value over time, and then sell it at a higher price. While you are holding onto the property, you can rent it out to make up for the ongoing costs of insurance, property taxes and maintenance.
To learn how to be a real estate investor, you should know the different ways in which you can rent out a property. Below are some simple techniques you might consider trying.
9 Blunders You Need To Avoid As A Wholesaler
If you are interested in Real Estate Wholesaling, you should learn the most common mistakes in the business, so that you can steer clear!
Real estate investing is an incredibly popular field with immense opportunity for profit. Many people believe that wholesaling is the best way to get your career kick-started before entering the flip and fix game, or before becoming a landlord.
While this is true, it doesn’t mean you should go in blind hoping to figure out everything along the way. If you learn the mistakes that others have made, you can take the correct action to avoid them.
Reverse Wholesaling | What You Need To Know
Reverse Wholesaling is an innovative way to approach the wholesaling business.
As you may already know, a great way to get your house flipping career kick-started is by wholesaling properties. Wholesaling is great because you often do not have to spend any of your own money.
Essentially, the process entails you, as a wholesaler, finding a property and putting it under contract. Then, you will find a buyer and sell the contract to him or her. The buyer closes in your place and you do not have to spend a dime. Additionally, you do not have to worry about the rehab and all of the costs and troubles that are included with it. Instead, it is the investor who you sell to that will usually do the rehab. You are given a sort of finder’s fee for locating a good property for the buyer to invest in.
As long as you can find a buyer, you should be in good shape.
But what if I can’t find a buyer?
Finding an investor to buy your property is often the trickiest part of the process. Each buyer has his own needs and demands. Some buyers don’t have a lot of money so they’ll only want to work with smaller properties. Other buyers want a property that is in their own town so they can stay close to their other obligations in life.
If you are not able to find a buyer in time, you will have to close and buy the property yourself. That means, if you don’t have enough money to buy it, you could run into trouble.
Luckily, there is a way to avoid this problem. The process is called “reverse wholesaling”, and it’s a fairly simple idea.
Why I Took $10K Less to Make More Money On The Carver Flip
Sometimes it doesn’t really matter what the offer is if the bank comes back out and appraises the property at less than what they offered.
I figured this may backfire if we accepted the higher priced offer.
Plus, we had a very good idea of what the Carver property was worth and we just knew that we couldn’t get greedy.
But more importantly, there was another player in this whole deal…the bank.
The bank is and always will be the ultimate “wild card” in any deal you do – especially now. And since this offer $10,000 over our asking price was higher – it was actually more risky to take it.
Huh?
Higher Offers Aren't Always The Better Offers
Yes, the higher offer was a more risky one because for all we knew, the financing could break down and the bank may reject the loan entirely.
If they did that, then the buyer was out of luck and may need to shop around for different financing.
If that was the case, what would happen to us? Wouldn’t this break down all our carefully crafted numbers and projection?
All good questions.
See this video here to see why the full priced offer was better than the one that was OVER asking price.
Did I Really Give Up $10K?
Not only were we concerned about the bank financing falling apart, but we were also concerned about a few other factors:
- If you have a bank-financed offer, it takes more time to get the money and to close – usually 45 – 60 day if not longer
- An all cash offer would take only a few weeks
So if you take a finance offer, you'll automatically get additional charges to the net profit such as:
- Interest on the promissory note: $1,000
- Taxes: $200
- Electrical and utilities: $200
- Maintenance (lawn care, etc): $150
- Staging costs: $300
- Additional costs $2000
So right out of the gate, we are down $2,000 form that additional $10,000
Not so good.
Best case scenario would be that we made an extra $8000
Additional Concerns
When someone goes for a loan it’s not just what the buyer and seller agree on a price. There are more people involved than just that 0 especially when dealing with a bank
The bank sends out an appraiser to determine whether or not the property has been sold at a fair market price. The bank (especially now) does not want to lend money on a property that is overpriced.
And if that price comes in below the offer, then we are back to square one.
You can one of two things:
- Kill the deal and put it back on the market
- Lower your price to accept the lower CMA form the bank
When all is said and done, when you can eliminate the inclusion of the bank, then you should take that offer.
Cash offers don’t happen all that often – so when you get one, you should seriously consider it. In fact, we’ll make more money and less stress than we would have.
Let me know what you think? What would you have done?
How to Handle Deals that Fall Apart at the Closing
John: Hello, I’m John Fossetti, here with Michael LaCava, from House Flipping School. We just got done talking about the property in Middleborough, and the disappointment you had there. Are there any other disappointments you have encountered in the real estate investing world?
Middleborough Part 3 | SOLD
Hey, guys it’s Mike with House Flipping School here, and welcome to this week's whiteboard lesson. You heard me talk about the Middleborough deal, and breaking that down. We are now at the stage where we have the property under contract.