I know hundred of people who made their fortunes in real estate. Very very few started wealthy. In fact, if you merely have a job, any job, you can usually qualify for a loan to get your first property. If you can’t qualify for a loan, it is possible to get a distressed seller to sell you a property for peanuts. I once bought a huge library that was being closed with a $10 bid because I was the only bidder. Here is a little report I wrote that usually sells for $9.95 — it s yours to read on Quora for free.
Want to become a successful real estate speculator? You can’t start from a position of ignorance. But you can become an expert. You can make money in any local market with this simple secret:
How to start gaining expertise? Start today. Take a month or two and look at 100 properties for sale in your town. After looking at all offers, acceptances and studying prices actually paid in recent sales you will really know the market as well as anyone.
After that you should make low ball offers (of less than half of what you think is the market value after cosmetic improvements) on all good (well located) properties. You’ll find many distress sales of homes and condo apartments. A few will be obtainable by you at prices perhaps less than half of market. Remember, a listing or advertised price can be anything. You can offer much less. You will often get the property from a distressed seller who must sell quickly. Sometimes the seller will give you a 100% loan just to get someone into the property who will look after it and prevent vandalism.
Don’t be discouraged. If you make 100 low-ball no-money-down offers, you may only get two or three. But make a dozen deals a year and you will be a millionaire—at least in assets. If you are going through a real estate agent who refuses to present an “insulting offer,” explain to the agent that if he presents your offer and asks the seller for a counter offer, he is likely to get closer to the true price the seller will really take for the property. That information is extremely valuable. It may even result in few sales to you on very good terms…
Once you take possession, you must immediately do the cosmetics needed. Don’t spend any serious money on things that don’t “show.” Forget about replacing foundations, plumbing or interior wiring. Don’t ever buy places that need expensive repairs. Stick with properties that are unattractive because they smell of cat pee or need paint. Simply clean and paint the place so it shows well to new potential buyers. Bring in some big potted plants and flowers before showing — so it doesn’t look so bare. On the days you will be showing it, bake some bread or cookies in the oven. Make the place smell warm and comfortable. If it doesn’t sell within a couple of weeks, then rent until you can sell at a good profit. Limiting what you pay for the buy and what you spend on the fix-up is infinitely more important than anything else except location.
Low price equals happy life!
Always buy the worst property in the best neighborhood, not the other way around. Seek out deals that require only cosmetics — never major reconstruction projects that will take up your valuable time. Your main focus should be looking for & finding bargain properties.
Homes are not like listed stocks with fixed bid and asked prices. If someone is asking $500,000 for a place you think is worth $350,000 they probably won’t have any offers. Thus when you come in and offer $200,000 you could get it for that, or a bit more after negotiations. A distressed seller does not have time to wait for a full price offer. If he has made the mistake of asking too much, yours may be the only offer he gets. Never fall in love with a place or chase a property.
You make your money on buying into a good deal in a good location, not on the sale. You must plan on selling at a price well below market. The fact is that you can (if you have a job and/or income) easily borrow 80% of the price, even 95% if you know how to do it. How to get a 100% loan? A distressed seller will always carry back a second mortgage, maybe with no payments due for five or ten years. Buy at a good price with none of your own money in the deal. Then, even if the local market drops you still will have a nice built in profit. Why? Because you can sell at a below market price with a small down payment. The new buyer can “assume” the existing loans. If local laws do not permit a sale without the mortgages becoming due, you must structure the deal so that legally there is no “sale.” How do you do that? By keeping title where it is and the buyer takes possession under a “contract of sale” or lease option arrangement. For a small fee I can explain this further: Contact me at firstname.lastname@example.org.
Your profit in USA is tax free if you do a 1031 Exchange by buying another good deal after the sale. Similar beneficial tax rules exist in many other countries. Usually sales of “residences” are free of capital gains taxes.
Books have been written on this topic, and one of the best is Think Like A Tycoon. You can pick it up used on Amazon for about €5. A digital version is available from me, cheap. My more lengthy and detailed “Distress Property” report now onlybin print can be scanned and sent to you for €200. But I’ll bet you can find a used copy online for pennies.
Now, let’s get back to your first deal and how you make money. Say you put $20,000 down to buy a $200,000 property with a purchase money loan of $180,000. You think it will be worth at least $350,000 after a bit of cosmetics, i.e., painting and weed-pulling. That may involve $200 worth of paint and a few days of your weekend labor. I always get my wife, girlfriend or kid to help in return for a gala lunch. That way I don’t get lonely on the job. Let’s say you sell it in 30 days way below market value for only $300,000. You have a tax-deferred profit of nearly $100,000 on an investment of $20,000. Is that a 500% return? Yes in a month. It’s 6000% a year on your money if you repeat the process every month. Maybe you can do similar or even better deals 3 or 4 times a month. Multiply that profit by 12. If you do only one property a month, that is a 6000% annual return. Beats the heck out of the 2% per year you get from the bank, or the minus 100% you will get as a trader, options investor, or multi level marketer.
There are many individuals I’ve taught, who have become multi-millionaires in a year by doing just what I advise here. I did it. Ended up with 250 properties that I liquidated years ago. Why did I sell out at the top of my game? Simple! I was just under 50 years old. I wanted to spend the rest of my life playing more and working less. I had enough money to support myself for several lifetimes. So I retired. If I had held on to all those properties even if I never did another deal, I’d be a multi-billionaire today. But when I had my “liquidity moment” and sold out — I was very happy. Who needs all the aggravation that comes with running almost any business? And believe me, managing properties is a major pain in the butt. Making the deals is much more fun.Being an administrator was a drag for me.
Sure you will make more money by holding on to property but unless you love any stressful job, you want to sell your business or “go public” eventually. The downside of real estate ownership is lots of stress. You are coping every day — dealing with bureaucrats, building inspectors, deadbeat tenants, miserable thieving managers, demanding lenders, vandals, crooked contractors and something worse: Socialistic regulations like rent controls. But the upside is clearly being able to retire in a few years as I did. If I could become a multi-millionaire with my IQ and lazy work habits, you could do it too! But—it will require persistence and attention to detail.
I retired over 30 years ago. Have been enjoying a little brown girl in our little “grass shack” (actually a great condo in Monaco) on the beach ever since.
If I could do it, you can do it. Opportunities always exist for entrepreneurs who have the sense to find good deals and grab them. Just reading this (or my other reports) will get you nowhere. You need to take action. The HUNDRED HOUSE RULE is a good place to start. This report was published by EdenPress and I have over 100 similar ones. Cheap.