By: Ray Higdon
When you first start out as a real estate investor, a great way to spend your time is by asking more seasoned investors lots of questions.
Good people learn from their own mistakes, great people learn from their own and the mistakes of others.
A great question to ask these more seasoned investors is
“What was your biggest mistake when starting out in real estate” or
“Were you to start today, what would you do differently”.
After consideration, I would say my biggest mistake when I was new was being too one-dimensional in my real estate thinking.
My partner and I have focused on buying rental properties in low-moderate income areas and holding them long term. When I first started I would go to a property to look at it, see if it fit our numbers, if it didn’t, would move on. I suspect there were a lot of missed opportunities during those times.
When you are going out to look at a property, don’t just think of yourself. If you only buy houses to fix and flip you have to get them at a deep discount, well, you may know people that buy and hold long term and maybe that property would work for their numbers.
As most of you know the object in the game of blackjack is to beat the dealer, not get closest to 21. Such is so with Real Estate. Your goal is to make money, not just to buy properties.
Last week I got a call from a guy that had received one of our postcards. He had 3 duplexes he wanted to sell so I met with him and spent some time going through the duplexes and talking with him. At the end of our conversation we came to a number he would settle on for the duplexes and this number did not hit our buy numbers but the numbers were certainly below market value and I knew I could sell them to one of my investors I know so I put them under contract. Two calls later I had the three contracts sold for an $8,000 up front assignment fee.
As a bonus, I am also acting as the mortgage broker on the three deals giving me more profit.
When you go to a prospect’s property, be a Swiss army knife and try to discover if there is a way to make money on the deal.
These are the concepts you should take from this article:
1) Talk with other investors, best place to do this is at your local real estate investor club
2) Don’t think, “Is this property right for me”, instead think “How can I make money from this property”
3) From talking with other investors, build a buyers list and know what they buy so you can better be a transaction engineer
4) Don’t forget the magic questions,
“Do you have any other properties” and
“Do you know anyone else that is selling any real estate”