Chapter 4: Secrets Of Success
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Discussion in Chapter Two focused on some of the unscrupulous methods that unsuspecting investors are often subjected to when purchasing investment properties. This Chapter builds on those warnings. Located below are the three cornerstones to my real estate success. By implementing these principles, you will maximise your chances of locating profitable deals. Know Your Target MarketDon’t ever sign a contract before thoroughly researching the market in which you plan to invest. Locate and analyse any and all relevant statistics and speak to several selling agents to compare their opinions. Until you become knowledgeable, avoid impulse buying at all costs. You may miss one fantastic deal procrastinating, but it?s worth it if you avoid purchasing a bad investment property for the same reason. A good idea is to establish a way of rating one potential property against another. If you are an Inner Circle member then you can use the online tools to analyse the deal from various viewpoints. Knowing your target market means you become an expert in that location. You'll be able to pick up the newspaper and know whether a deal is overpriced or not and importantly, you'll have an established network of advisers to help put the deal together. It costs nothing to start researching an area, but you could lose thousands in the blink of an eye if you purchase a property that you don?t know much about. You can make a start by looking at properties within an hour's drive from where you live. No Emotion - Buy Houses Other People Want To Live In.There should be little or no emotion involved in buying an investment property. All houses are “bricks and sticks”, not “homes” – at least not until you try to rent them out (or wrap them). Human emotion is what selling agents prey on to bleed a few thousand dollars more out of you as a purchaser. One of the first things you'll need to appreciate is that you are buying property for other people (and not you) to live in. So long as the properties are “safe and comfortable”, who cares if there is a modern stove or what colour the walls are? Often, investors will use their own standards as a benchmark for determining what is a “good house”. Indeed, it could be honorable to only buy quality properties which you would be proud calling your own home. But my experience is you'll have higher standards for your own “home” than other people will have living in a “rented” property. This translates into paying too much for investments because you've bought unnecessary emotion into the deal. Most opinions you'll hear are really statements of emotion. Let the facts speak with more authority than the opinions. Making Offers - Motivated Sellers Provide The Best Buying OpportunitiesWhen you submit an offer on a property there are only three possible outcomes. The offer is either accepted, rejected or counter-offered. If all your offers are accepted, you're paying too much. If they're all rejected, you're offering too little. Counter-offers mean you're in the ballpark. Many real estate home study courses oversimplify the buying process, suggesting anyone can go out and easily buy a property at “wholesale prices” or “80% of valuation”. Such deals exist, but by no means are they the normal transaction. You'll be able to negotiate a discount when you find a motivated seller. The more desperate the seller is, the less you'll have to pay and the more creative you can be with your offers. The first question you should always ask is “How motivated is the seller?” You want to know how motivated they are, because the more motivated they are, the more likely the success of the deal. Unmotivated sellers are, in general, a stubborn lot and you can waste a lot of effort trying to sway them. It?s just not worth it. Always try to find a motivated seller and solve their problem. Some of the topics which I'll discuss in more detail in the Inner Circle in the coming months are:
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