We are in an age of new investors to the Real Estate market. There are a lot of new, first time investors trying to get into the market. Some are just wasting time, never able to make a decision, because they do not take the time to write out a plan from beginning to end. Some have dreams, but not the skills to complete them. There are only a few new investors who will actually see a portion of the profits they dream of. What is the problem? What separates winners from losers in the Real Estate market?
Money is the number one factor. The second is preparation.
Many people try to invest in Real Estate based on stories, nothing more than rumors about making inflated profits in Real Estate investing. I lost count of the stories I heard from potential buyers. They usually go like this : “I have a friend who bought a house for $1000 and resold it for $100,000.” I ask, “oh really, what is the address for this house?” The answer is always the same. “Well, they didn’t buy it, they put in a bid.”
I don’t work with Real Estate investors whose only preparation is listening to rumors, nothing more than dreams with no substance. I work with qualified investors with skills to finish the job. About 1/3 of the foreclosed properties we view show evidence of a failed investment. The condition is evidence a first times investor purchased the property, tore it apart, started remodeling, but didn’t have the funds or skills to finish. Evidence of a lack of planning.
Evaluate your skills. If you lack in one area get a partner who can fill that void. Make sure all agreements are in writing. You will find the more you write, the more details you will prepare for before a purchase, the fewer obstacles you will have to face between purchase and resale.
In this particular example the investor was a seasoned investor who already purchased and remodeled four properties. He had excellent credit, worked with a local bank who actually viewed the property before we wrote the offer. The financing was set. We submitted the offer, but the asset manager for the foreclosed property refused to accept anything but a cash offer. Time for a plan B. We discussed the matter with the lender. The best course was to write a home equity loan on the Buyer’s primary home. The home equity loan gave the Buyer a line of credit, direct access to cash when he needed it. The lender provided a letter of credit stating cash funds are available. Now the Buyer was ready for the nice clean offer all asset managers are looking for.
Who in their right mind would begin a major project without having sufficient funds to finish the job? Answer: The same idiots who do not pay their mortgage and walk away from their moral responsibility to pay.