|
REAL ESTATE |
Although marketing out business is very crucial, we're going to make that the topic for next month. This month I want to concentrate on Real- Estate.
First thing I want to focus on is the business of Real Estate.
The opportunity for success is absolutely the best it has ever been, or could be, in my lifetime. (I am 48 years old.) Now, I know the talking heads are saying the market is terrible and there are more foreclosures to come. Yes, I also feel that there still will be hundreds of thousands of foreclosures, but that may not be a bad thing. The markets in some states were so over inflated that a complete correction is the only way to get those markets right again. Also not all markets are suffering massive out-of-control foreclosures. And there are some markets that are stable with homes that are still very affordable.
Due diligence, knowing your market, and your exit strategies will go a long way towards making your business profitable.
Once again you must know what your exit strategies are or you could get caught up in the frenzied battles to purchase REO'S or SHORT SALES.
As an example, here's a deal I recently put an offer on. This deal met my short term ownership strategies. The rehab was around 35K or so. Comps were around 100K to 110K. My initial offer was 37K cash, close in 10 days. The realtor I was working with forwarded me an e-mail from the listing agent saying there were multiple offers and they wanted each person's highest and best offer. The listing agent had everyone's e-mail in the "TO" section of the e-mail and I counted 14 other names. So this told me I was in a battle for this deal and I really better check my numbers and make sure I could turn a fair profit. They gave 24 hours to present your best offer or you were no longer in the running. I went out to look at the house again and had my carpenter re check his bid and make sure we were on track with the numbers. We made a few changes to the bid and the rehab work and I upped my bid to 40k. That was all I could do and still make a fair profit and have funds in case of an unexpected problem or if I had to hold it longer that anticipated. My bid wasn't the winner. Three weeks later I was driving the neighborhood looking for other deals and the new owner of the house was there working on it with his crew. I told him I tried to purchase this house and was out bid. He told me he paid 59K for it was hoping to flip it. I asked how much on the rehab he was doing and he said he planned to spend 40k or so. I wasn't sure where he got his comps, but he was hoping to make 30K profit on it. I wished him luck and drove to the Dunkin Donuts around the corner because I needed a coffee. I also thought that pretty soon he'll need a drink if he's counting on that 30K profit, and it won't be coffee he'll want. So you must know your numbers and be willing to walk away from a deal if the numbers don't work. Too many investors get into the mind set of "I can make it work I know what I am doing". Remember, the true value of your home is only what someone is willing to pay for it. Period.
You must feel comfortable with the market you're in. I like the market I am buying houses in at this point and feel it will be good for the next 7 to 10 years. I've already closed on 3 deals that I will soon be listing for sale.
You must do your homework on the market you're buying houses in. I have talked about it in detail before but here is just a quick list:
Tier 1
Major City and surrounding area up to 10 mile radius
Good Highway systems
Medical facilities and care available
Mass Transportation (With a lot of Loading areas and stops)
Schools
Major Colleges (Private and Public)
Jobs (Industry and Professional, not just Service Jobs)
Recreation areas (Entertainment)
Arts and Culture
Good Rental Market and Home ownership
Shopping (Retail and Grocery)
Strong Commercial Market
I could go on and on about real estate in this market. But the bottom line is this: Now is the time to be buying. You just have to do your homework and pay attention to the details. Good luck and we will meet again next month. Paul
|
|
BOOK OF THE MONTH |
|
This month's Book is
IRA WEALTH
Revolutionary IRA Strategies
BY Patrick W. Rice
What a great book! If you every wanted to learn all the tips and tricks to make your IRA over flow with profits this is one of the best books I have read. The first few chapters are very slow, dealing with setting up your team (which Mr. Rice goes into detail about.) After that the tips and strategies never stop. I have read the book 3 times and each time I find a better way to use my IRA or a smarter way to make money. I have passed this book on to some of my friends and I suggest you get this one quickly. With the new changes coming for IRA's in 2010 you will have a chance to make your IRA sing with profits.
You can buy this book now
http://astore.amazon.com/pajdaco-20/detail/0757000940
|
