Over the past few weeks I’ve had several investors come to me and tell me that they can NEVER get sellers to give them seller financing terms. For me that makes no sense: I have plenty of success in getting seller financing terms on the properties I buy, over 30 years in fact. So today I’m going to help out those investors who are having little to no success in negotiating seller financing terms on their deals.
I’ve talked with some investors who are buying upwards of 35 houses A MONTH. They already have a network and a system of lenders that allows them to pay cash for each house. This podcast isn’t for them; it’s for those investors that don’t have the cash or the network to scale their business yet to such a high level.
Cash is never the only way to buy a house; I’m living proof. Even if you have money, eventually that money runs dry and your business shrivels up. So why not just save that money for other deals and negotiate seller financing terms whenever you can?
For all your real estate education needs, visit me online at LarryHarbolt.com.
Good Luck and Happy Investing!
Raising money through private lenders is crucial to your success. This is why Alan Cowgill is back on the podcast, he’s on the show to share his tips on raising private money for your real estate deals in a way where everyone wins.
There are a number of ways that private lenders can benefit from having a way to invest their money outside of the traditional vehicles. The average person knows about the stock market and things like CD’s and the pitiful or risky returns that they offer, but they probably don’t understand real estate and how they can get a substantial return that is life changing from them. That’s where you as the real estate expert comes in.
One of the best parts is that you don’t need a mortgage broker license in order to do this. In many states you can get a private lender in the next 10 minutes. Think about what having your own private bank would do for your business and your life. Even when you understand seller financing, there are still advantages to having access to private money so that you don’t miss out on deals.
If you follow Alan’s scripts on how to talk to private lenders and knowing how this process works, can put millions of dollars in your pockets. The key to remember is that private lenders loan you money based on trust, which is why having the scripts memorized is crucial.
Times are changing, but the techniques and strategies that make real estate investors successful are timeless. Every one of us needs to be diversified and learn as many ways to structure deals as possible to stay alive in the real estate investing business.
Too many people today believe there are only two ways to buy real estate, buying with cash or getting money from an institutional lender. The truth is you don’t need either. Any fool can buy real estate if they have a large sum of money available to them, that doesn’t mean they are making good deals.
To be diversified, you have to be able to buy any property that you go by, whether it’s up for sale or not. Being a one trick pony is not going to get you where you want to go financially. Anything you can use to provide value to the seller can be a form of currency that can allow you to make a higher profit.
This is a very important concept to understand since if you don’t know how to make offers once the market turns and you can’t access that money, you’re business is going to dry up.
Don’t get hung up on being technique driven, learn to be diversified in the skills that allow you to make offers, no matter what the market is doing or the state of the overall economy. There is no silver bullet to investing success, but by diversifying your skills you can thrive in any market at any time.
Real estate investing is like putting a puzzle together. To get a clear picture of what you need to do you need to use all of the pieces of the puzzle if you want to be a successful investor. I talk to many investors who don’t go through the seven steps of every deal and then wonder why they aren’t doing very many deals. If you leave out any important piece of the analyzing process you stand to either lose money or not make as much as you thought possible. In this episode I go through the seven steps every investor needs to address to ensure they always do profitable deals. My best advice to every investor who continues to push through the process with no strategy is, “stop trying to push a rope uphill”.
Carefully go through every step to guarantee your success.
Systems are the missing link in most real estate investors strategies. There are better things to do than waste your time and the way you avoid chaos in your business is with systems and checklists.
When Alan got into real estate he didn’t have any systems in his business, so he looked around the world for direction on what to implement. He found Michael Gerber’s E-Myth Academy and after spending five years working with Michael’s team Alan had streamlined systems for every part of his business.
There are 30 steps that you should always walk through when buying a house, which is why the checklist is so important. Skipping a step or doing them out of order will cost you money every single time. During this episode Alan goes into several different systems that he uses to reduce chaos in his business and accelerate the purchasing process including how he organizes his paperwork, how he hires people, and how he saves time making decisions about which property to buy.
When you implement the systems that are keys in your business it will change your life for the better. Without them you eroding your bottom line and creating chaos in your business that is very hard to overcome. You only have so much time in the day and implementing systems is how you become not only more efficient, you become more effective as well.
Go to privatelendingmadeeasy.com and click on Real Estate Management Made Easy to find out more about how you can implement Alan’s systems in your real estate business. You can also reach out to Alan at email@example.com
Today I am hearing all too often is, so many investors are telling me that the reason they aren’t making many offers to buy houses, is because they feel current market conditions are just too risky for them not knowing what direction the market is going.
Believe me I understand why those inexperienced investors are having little or no success as a real estate investor.
I get why they aren’t actually making very many offers to buy property, if they are making any at all. I remember those days when I was afraid to make offers. I was broke and if I got an offer accepted, I had no way to close the deal. I had no money and I had lousy credit.
I would set up half the night praying the sellers would accept my offer. This was because, if they did except my offer, I had no way to close the deal. It took me years to overcome this fear.
Listening to this podcast will show you why it won’t take you years to overcome your fears of making offers. Learn what to say and what to do to eliminate your fears of market conditions you think are too risky to buy real estate today.
I am constantly talking to all too many investors who are worried about what the real estate market is going to do in the near future. Any savvy real estate investor should know that market conditions only affect a certain part of real estate investing business, but not all areas. I talk to inexperienced investors almost every day who believe the real estate market is going to slow down and prices are also going to also go down. This may be true in some areas.
Having personally lived through several economic cycles over my 40+ years in the real estate investing business I have experienced several market changes where some markets went up in price, and some markets the prices went down. Today’s podcast is about how to read the real estate market and every economic cycle to be sure you make money in any economic cycle. How some parts of real estate investing are affected, and why other parts are not affected by market conditions and economic cycles.
When the real estate market prices go up and up, you can make money retailing properties, but you need to be aware, when house prices continually go up, fewer people can qualify to buy a house to live in. When this happens those people, who are unable to buy usually become renters.
When the market prices go down the intelligent investor knows that if they plan to sell the properties they buy at a retail price, may not work as well as planned to make as much money as the investor thought they were going to make when they bought the property.
If you want to magnify your real estate profits you must start thinking like a seller instead of a buyer. There are a number of reasons why a person may want to sell their home and for each reason you have to customize the way you structure your offer if you want them to sell to you.
If you’re only thinking about creating a deal that’s good for you, you’re going to have a very short career in real estate investing.
Take the idea that sellers always want cash for their property. That’s not the whole truth, sellers don’t really want the cash, the want what the cash will do for them. If you dig into the desires, hopes, and dreams of the seller and offer them a way to get those things you are much more likely to win that deal.
There is one important principle you have to keep in mind when it comes to real estate. If you do what everyone else does, you’re going to get what everyone else gets. You have to get creative with your offers and consider what the seller needs from the situation.
Asking them “what are you willing to accept other than cash?” is a great way to start the conversation and figure out what the seller is looking for so that you can structure an offer that gets them what they need.
If you understand the four parts of making an offer; the purchase price, the interest rate, the length of the payback period, and the payment amount, you can always create an offer that will get the seller what they want.
Ask questions, find out why they’re selling and what they really want, and you will be able to do more deals than you thought possible simply because you are thinking like a seller.
When it comes to buying properties, there are a number of things you have to think about in order to make the best decision for your business.
Knowing the highest and best use of a property is probably one of the most important factors that will go into your decision making process on whether to buy a property or not. Is it the kind of property that you buy and wholesale the deal to someone else? Is it one that you’re going to make beautiful and sell retail? Are you going to hold it long term and keep it as an income property?
Once you figure that out, you also have to assess the desirability of the property as well. Is it a property that even after fixing it up it will never be a family friendly property because of the neighborhood it’s in?
The highest and best use of the property is what will determine the kinds of repairs and renovations you’re going to want to do, if any. If you get this part wrong and don’t calculate your costs accurately it could mean losing money instead of making a profit.
For properties you intend on holding on to, one of the best tips I can give you is to spend some time looking at higher value houses to see what kinds of amenities and materials they use so you can incorporate them into your property. Being cheap on the repairs can cost you later on in the price you can charge.
If you plan on doing some sort of rehab on your property in the future, my Tricks of the Trade course will give you the tools you need to make sure you don’t get ripped off.
Get your free phone script on how to negotiate with sellers over the phone by going to larryharbolt.com/register
Most people don’t have a clue how important it is to inspect a property they are interested in buying before they buy it. If you wait until after you purchase a property to actually take a look at it you run the risk of discovering something that could completely wipe out your profits and end up losing you money on the deal. Something we definitely want to avoid.
If you want to be a successful investor with the ability to make large profits you must know what the repair costs of every property you look at will be. It doesn’t matter what you plan to do with the property, the repair costs will always factor in, whether you think you’re going to wholesale it, sell it retail, or rent it out.
This is why I bring a walkthrough inspection sheet to every property that I look at. You can get your copy by checking out my course Tricks of the Trade. Anything that needs to be addressed gets checked off on the inspection sheet and then I use that sheet to work with the contractors that will be doing the repairs. This keeps everyone accountable and on the same page for what needs to be done.
When doing the inspections, you need to give careful attention to the outside of the property as well as the inside. I take two walks around the exterior before I take a look at the interior of the property and I’m always asking myself a series of questions about what needs to be fixed.
You have to answer these questions for every property you look at because they all impact your ability to ultimately make a profit. And by documenting everything that needs to be addressed, you are also protecting yourself from being taken advantage of by unscrupulous contractors.
There is one key thing that I always want to hear when one of my coaching clients calls me up to talk about how to structure a deal they are considering. I want to hear why they are trying to buy that property and specifically what they plan to do with it if they close the deal.
The reason you need to make plans for a property before making an offer is that there are four types of houses: bank owned houses and foreclosure properties, houses you don’t personally want, houses that you can fix up and sell retail, and houses you’re going to hold long term as rental properties.
For the first type you’re probably going to have to come up with the cash or use an institution to fund your deal. You’re also going to have to factor in repair costs to make sure you can actually make a profit on the deal. Typically I don’t look for these kinds of deals because I don’t want to have to use an institution for funds. There are better ways to finance your deals.
For houses that you wouldn’t personally want to live in, they are perfect candidates to flip the purchase agreement to someone who does want it. The secret to being a good wholesaler is making sure you take care of the buyer and set them up to make a profit. You have to factor in all the costs involved to make sure the buyer can make money too, if you don’t you’re not going to be in the wholesaling business very long.
With houses you plan on selling retail, again, you must factor in repair costs and holding costs into the deal. If your numbers don’t work out, that property is not one that you want to buy.
The last type of property is calculated differently than the rest. You base what you can pay for a property on the rent you can get from it. It doesn’t matter what the seller wants for it, the house has to pay for itself. Paying more than what the house can generate is not how you and your family can get ahead.
For each property type, it’s vital to be realistic when calculating your costs and running the numbers. You can’t be out to lunch on your numbers or you’re going to run into major problems down the road. The most important part of the plan is calculating how much you can afford as a payment, since every rental property is a business unto itself. You have to get the price that will work for you, or the terms. If you can’t do that, you don’t buy that property.
Alan Cowgill is one of the leading experts in the private money space and he teaches people how and when to use private money to finance their real estate deals. Not everyone has access to a bank’s money, so it’s important to know how private individuals can help you fund your real estate deals.
In many ways, private money can be a real win/win/win situation for everyone involved. You can get your deal funded, the seller gets their property sold, and the lender can get a much better return on their money than they would with their existing portfolio.
The process can be very simple, and you don’t need to be a licensed mortgage professional in order to borrow private money. Basically, the private lender becomes your bank and imagine how that can change your life and the way they do business.
Private lenders aren’t in the business to loan money like money lenders, and they don’t ask for your credit report. They loan you the money and wait for a bigger check, trusting you to take care of things. When you raise money in this way there are also other ways to use the money as long as you make sure the lender is protected.
Every once in a while you will need money, and it’s always better to use someone else’s money. Private money can help you get deals that would otherwise be impossible but it’s key that the lender trusts you. When money is a phone call away, you can close real estate deals faster and that can give you a major edge over your competition.
There is one big difference between hard money and private money, hard money is where the lender sets the terms and private money is where you set the terms. Alan has a simple process that he uses to find new private money lenders where the big focus is in the follow up. 60% of your money will come from follow up. Alan shares his proven scripts that will put you miles ahead and can put millions of dollars into your bottom line.
Give Alan a call at 937-390-0816 or by email at firstname.lastname@example.org.
Not very many people take the time to think about the positives and negatives about financing. The generation that grew up in the shadow of the depression learned that living on credit can have terrible consequences, but people today are more in debt than ever. Which one is right?
The answer is somewhere in the middle. Using credit can be a good thing, but it can also be a bad thing if it’s used improperly.
When I first heard of hard money loans, I thought they were highway robbery but after speaking to another investor I realized that hard money loans have their place, you just have to know where and when they make sense. Hard money loans are meant for the short term and when used right, can generate more profit than the cost of the loan. When used right they can be a wonderful tool, but only if they are applied properly.
Lots of very successful entrepreneurs have built their empires on credit, that is to say debt. Debt allows them to buy skyscrapers and factories, things that they never would have been able to buy if they were just saving up their money. Robert Kiyosaki, the author of Rich Dad, Poor Dad, said that wealth is built on good debt and I have to agree. But you have to be careful when it comes to debt, bad decisions in businesses that are leveraged with debt can lead to losing everything that you worked to build.
There are a lot of different options for financing, but understanding the pros and cons of each is critical. Traditional financing has its place, but come with a lot of conditions. Hard money loans and private money are good in certain situations but not in others. One of the most important types of financing you can understand is owner financing. The best piece of real estate in the world can become the worst piece of real estate in the world if you have bad financing.
Understanding the financing you can use makes a massive difference in the profit you can make in your business. If you don’t have to use credit cards for lifestyle money, don’t. Wait until you have the cash flowing properties to pay for the lifestyle you want. If you can master owner financing, you’ll find that the profit margins are so much greater because you can come up with a deal where both parties get what they want.
The biggest take away is you have to know what you’re doing with financing if you want to get the best deals and create the lifestyle you want for yourself and your family. So master seller financing and start building a business that does just that.
One thing will always improve your success rate when buying real estate. Every time you sit down to have a face to face conversation with a seller, you must ask yourself the following questions:
“Did I take adequate time to build an adequate rapport with the seller?” You’re not going to have a very successful negotiation if the person on the other side of the table doesn’t believe in you.
“Did I find out why they are selling?” Without that reason, you’re going to have a difficult time negotiating. How can you know what to provide if you don’t know what they need?
“Did I determine what the highest and best use of the property really is?” Are you going to flip the property wholesale or retail, or alternatively, are you going to rent it out long term? It’s going to be one of those three and you must figure out what the best option is.
“Did you find out what the sellers really want?” Maybe you can give them what they want, but you will never know if you don’t ask.
“Did I find out what they need the money they are asking for?” If you find that out, maybe you can solve their problem a lot easier.
“Did you find out where they want to go?” If you know that, maybe you can help them buy a property or move into the area they are looking at.
“Did I do a thorough inspection of the property for repairs?” If you don’t do that, you are going to be sorry later if you end up buying that property. Even if you have to bring in a contractor to give you that quote, you need that info in order to make a good buying decision.
“Did I thoroughly explain why I need terms that will allow that property to work for me?” If you’re going to rent out the property, it has to pay for itself from the rent it brings in after expenses. To get that you have to get a payment that will cover you costs and allow for cash flow.
“Did I give the seller several options to buy their property?” Cash is not the only thing that people want. Once you know what they want, you can present several options that will help the seller get exactly that.
“Did I thoroughly explain each of your offers and how it will be good for them?” There are a lot of advantages that seller financing comes with but you may have to lay them out for people to see them.
“What offers did I make?” If you have access to funding, did you offer all cash? Are there other things other than cash that you can also come up with? There are hundreds of ways to structure an offer that can make it better for you and the seller, but you have to know what they want.
Never leave until you’ve exhausted all your options and you will have considerably more success in your real estate investing career.
A lot people say they need to have a partner in order to run their business. While there are people out there that can make a good partner, you have to be very careful about who you trust with your business. There are a lot things that can make a partnership go south and when that happens, that usually means big trouble.
I’ve had three partners over the course of my 40 year career in real estate investing and in all three, the partnerships eventually went bad. So bad in fact, that with my first partnership I basically lost everything I had worked for and built. The biggest lesson I learned was that you have to get back in the game, even after a major failure. You’ve only truly failed when you give up.
And a partnership failure can happen to anyone, even the experts. You can structure great deals and build a great business, and all of that can still fall apart if the partnership doesn’t work out.
It’s important to remember that just because you don’t know what you’re doing, that doesn’t mean you need to take on a partner. If you start with smaller deals and gain the experience you need one property at a time, you become more resilient. You will build a business slowly that’s more robust and less likely to fall to pieces just because one of your partners back out.
If you are going into a partnership, there are a few things you need make sure are in place. The first thing is a written contract, you must have everything in writing. It protects you as well as your partner and lays out what everyone involved is responsible for. Make sure everyone is compensated for what they bring to the table and keep the conversation going. Don’t hide if something goes wrong and stay in contact.
The bottom line is if you say you are going to do something, then do it. The same goes for any partners you work with too.
There are a lot of things you need to know about before you can do a subject to deal. The first of which is you have to know what the term actually means. Subject to is by definition simply a disclosure to any exceptions to a free and clear title. You also have to understand that the terms that you create with the seller in your deal, has nothing to do with the lender.
There are a number of court cases that have established that subject to deals can’t be considered fraud. Another important aspect of subject to deals is that many investors use a unique structure called a Land Trust to get them done. A Land Trust is a special version of the trust that only holds the title of a property and is a simple way to keep the title out of view of the public.
The biggest risk of a subject to deal is for the lender to call the loan on the property, but in all the years that I’ve known of investors doing these kinds of deals I’ve only seen a couple get called. It’s rare but it is a risk that you have to be ready for. Keeping that in mind, one of the most difficult parts of your subject to deal may be just finding an attorney that understands the Land Trust and will help you close the deal correctly.
For most subject to deals there is a loan balance on the property and attorneys will usually tell you that you need to pay off the loan first, but that’s just not true. There are ways to structure the deal without paying off the existing mortgage, which is the main focus of the Land Trust class, an event I hold a few times each year.
If you’re going to be a good investor, why would you want to come up with the money to pay off the first mortgage if you don’t have to? As long as you understand the risks, doing a subject to deal is an established way of getting a deal closed. So find an attorney that understands a Land Trust and what you’re trying to do if you’re going to do subject to deals.
Too many people skip doing the math before they jump on the short term AirBNB rental properties and the numbers are critical. If you don’t do the math before you buy you could end up with a property that only costs you money. Do not base your buying decision on what you can supposedly rent it out at with AirBNB.
If you’re going to buy an AirBNB property, don’t use the AirBNB rent to make your calculations. Instead, think of it as a regular rental property, because there are a lot of factors that could cause you problems if you rely on AirBNB to make that property profitable. You especially have to know the area, not all cities make sense for the short term rental market.
The trouble is AirBNB’s are hot right now and people have stars in their eyes about how much money they are going to make. Never listen to the dreams, do the math and find out for yourself what the realistic numbers are going to be. Each rental property is a business unto itself, so make sure you run it like a business. If it can’t pay for itself, don’t buy it.
You also have to consider that no property is rented 100% of the time. The tenant will always move on eventually, and with short term rentals you have even more turnover and less guarantee that it will be rented at any given time. Combined with possible noise complaints, property damage, and cleanup issues, short term rentals are more involved than most people think. Just like a regular rental property, you should screen your tenants and make sure that you always follow the laws in your area.
Sometimes you also have to manage your property manager. Just like your tenants, you have to do your homework on potential managers to make sure that you find someone that will take care of your property right and not take advantage of you.
Getting started in real estate investing can be hard, especially if you don’t know what you’re doing or have someone to show you the ropes. When I got started, I made a lot of people angry by making low ball, all-cash offers. I quickly realized that if you don’t know the numbers on a deal and you make an offer on it, you’re a fool. Throwing dollars at deals doesn’t guarantee you’ll make money.
People want to buy based on price but that’s a surefire way to a bad deal. You have to get face time with every seller and ask them the important questions about their property. You can do much better making creative offers to sellers that help them get what they want instead of just offering cash.
Not everybody has someone behind them that is willing to lend as much money as they need to make a deal happen, and it can actually make your deals worse. Solving the seller’s problems is a much better approach. You can make a lot more money by leveraging what you have and figuring out terms that work for both parties.
I see things totally different today. When you talk to a seller, learn what the seller wants and try to come up with several solutions to those problems. Always make an offer and don’t let the broker get in your way. Even for sellers that want all cash, there are strategies you can use where you don’t have to put the cash up front like writing a note for the property. There are creative ways to get a deal done that make everybody happy, you just have to think outside the traditional box.
Don’t make the mistakes I made, make your own mistakes. Even better, learn from the mistakes of others so you don’t have to learn things the hard way.
People are always asking “why don’t you talk about selling properties?” The reason is you have to acquire properties before you can sell anything. Let’s not get ahead of ourselves. If you don’t own anything, how are you going to make a profit?
Once you become good at buying, that’s when selling strategies become important. Being a profitable seller is also a collection of strategies and techniques and that’s the topic today. Your plans for a property are the most important because the numbers calculate differently depending on your goal.
When you buy a property, you have to think about what the highest and best use is going to be. If you don’t know that, how are you going to know how much to pay for it? You’re not in business to lose money, you’re in the business to make money. The repair costs matter, the appraisal matters, holding costs matter, they all impact your calculations and ultimately your profit margin.
Your selling strategy is very important. Are you going to sell for cash? Financing terms? Are you going to hold the property and rent it instead? Each selling strategy has to be assessed differently because they change the numbers involved in the deal. You should also know your exit strategy before you’re going to buy.
When you know your selling strategy and make those calculations, you won’t be buying as many properties but the ones you do will actually make you money. Be realistic with your sale price and make sure your buyer doesn’t go out and buy a new car before closing the deal. If you’re going to sell your properties, you must get to know your buyers and make an offer that gets them as much of what they want as you can.
People are always asking “what are the steps to be a successful investor?” Well, the good news is there are 9 steps that you can take to accomplish exactly that. One of the biggest lessons you can learn is that procedures are critical to your success. If you follow the procedure, you will find success.
You have to find deals that others aren’t seeing. Everyone looks in the Multiple Listing Service, but the deals you can find there are all the leftover properties that really successful investors have passed up. Rental property opportunities in the price range where the majority of the people living in the area could afford is what you should be looking for and you have to do your research beforehand.
Find out everything you can about the owner and the property before approaching them and before you sign anything, make sure you can bring in a contractor that can assess how much the repair costs will be. You will need that information to negotiate with the seller.
You have to figure out the highest and best use of that property. Talk to different property managers in that area what that property should rent for. Those numbers will determine what you will be able to pay for that property. Once you’ve done that, you can look on MLS for similar properties to understand what the price range for the property is.
Next step is to run your formulas, there are 8 formulas that you must use to figure out what you can offer for a property. Then look at other houses in the area and take pictures of the features of those houses. You can make your prospective property more enticing to renters by adding some nice features that make the home stand out.
Once you’ve done your research, you should ask the seller what they really want. There are a number of ways to make an offer that allows everyone in the deal to feel like they’ve won. When you get the purchase agreement signed, it’s time to close the deal. However you are going to finance the deal have it lined up before you even make the offer. Make a copy of your purchase agreement and take it to your title company, then make sure that the closing is progressing. Contact them every few days and stay on top of them.
Finally, never stop building your cash buyers list and never stop marketing. If you are buying property to wholesale, you need cash buyers. Never stop looking for opportunities and always make an offer on every property you look at.
When Larry first got started investing in real estate he had nothing and had to learn everything in the school of hard knocks. Hear the tale of one of Larry’s first deals and how he purchased a property without having any money. It was Larry’s first exposure to creative financing, he figured out what they wanted and found a way to give it to them.
When putting together the terms, Larry only knew that he had a deal on his hands, not whether or not he had a good deal. That’s why it’s extremely important to know what numbers matter to the deal before you sign anything. Just because you can buy a property at a “good” price, that doesn’t mean you’ve got a good deal on your hands.
One of Larry’s biggest mistakes has made and sees other people making is doing their own rehabs. Instead of doing all the repairs yourself, you should negotiate the price so that you can afford to hire a contractor. Remember, your time is worth something. Don’t just throw it away. You don’t make money swinging a hammer to save $12 an hour. Take a licensed contractor with you through the property before you make an offer.
Too many people throw dollars at deals and fail to factor in holding costs to their deals. Things like the mortgage payment every month, the property taxes each month, property insurance each month, and other monthly fees. If you don’t factor those into your buying decision, they are going to come out of your profit check at the end. It’s going to take at least 4 to 6 months to rehab a property, don’t fool yourself.
Negotiation has been used since the stone ages, ever since we first figured out how to form coherent words. We negotiate everyday without even realizing we are, we bargain with each other all the time in order to get things done and cooperate with each other. If you’re intimidated by talking and negotiating with a seller, you have to remember that they are a person just like you and you’ve been having similar conversations your whole life.
Think of a negotiation as two or more people trying to convince the other to give them whatever it is that they want. If you plan to be a successful real estate investor, being able to negotiate effectively is a must. You have to be able to talk to someone and get to know what they want, so you can offer them a solution that fits their needs.
Finding motivated sellers is your number one priority, which is why the ability to communicate is so important. You have to get to know someone and identify if they are the kind of person that is worth your time and effort, and that means building rapport. You only learn when you’re listening so ask questions, and not just about the deal. You should connect with them on a human level before you start talking numbers.
You will run into objections, but you have to understand that objections are not the end of the conversation. Too many people only know how to make one offer, but if you find out what they need you may be able to help provide that. Nobody likes rejection, but that’s what you are going to get when you are talking to people about buying their house. Overcoming objections by getting to the heart of the matter is crucial to your long term success.
Tyler Sheff guest hosts Larry Harbolt’s show this week to talk about how Larry’s teachings and information have impacted his life and his business. Tyler has sat across the table from Larry many times and has learned an incredible amount of valuable information over the course of the last few years and today he shares several key tips that will change the way you approach real estate investing.
Being face to face with people is probably one of the most powerful skills that Larry has taught Tyler. Understanding the personality type of the person you’re talking to is the best way to negotiate effectively. Electronics and fancy jewelry are just going to be distractions from creating the connection you need to create with someone.
Leave the Rolex behind and dress respectfully. You don’t want to spook the seller by dressing like a hotshot, but you also don’t want to look like an amateur by dressing like a beach bum. Always be polite and respectful of the seller’s property while you’re there. A lot of people have forgotten what it means to be polite and have good manners.
Understand that the kitchen table is where relationships happen and memories are made. The kitchen table is the ideal place to discuss the seller’s options and do business so always try to navigate the discussion to the kitchen. If that’s not an option, make sure that wherever you meet the seller feels comfortable. Most deals fall apart even before the negotiations can really happen because the other person isn’t comfortable in the situation.
Remember above all, that you can only buy a house that can pay for its own expenses. You don’t want to pay into your own investments, they are supposed to pay you. Just because you have the opportunity to buy a property, that doesn’t mean it’s the right property for you. Always do the math and make sure you tailor your offers to fix the seller’s problems. When the seller has choices, they feel like they’re in charge and that makes it easier for them to make a decision.
Once you understand why the seller is selling the house, you can solve that seller’s problem and provide a great deal that will put a smile on their face and ink on your contract.
A lot of people complain that they can’t find any deals, but all that really means is they just aren’t doing their homework. There are people who are buying plenty of properties because they’re putting in the effort. If you want to succeed in real estate, you have to be willing to do your due diligence and put in the work.
Every deal is different, and if you don’t know what your plan is for a property there is no way to know how to approach it. If you don’t run your numbers, how do you know your deal is a good one? Don’t forget to factor in your holding costs of a property into your buying decisions, otherwise you’re not going to make the profit you think you’re going to make.
Negotiating is one of the most powerful techniques you can master when it comes to your long term success in real estate. Just because a seller says no to your offer, that doesn’t mean that’s the end of the conversation. Nobody just wants cash, they want what the cash can do for them, and that’s what you have to find out during the negotiations to put together a great deal.
You can’t figure out what people want unless you ask questions. Learn what they are looking to achieve, what their goals are, and see if you can structure the deal so your goals and theirs are in line. Always ask. Take your time and don’t rush the process if you’re just starting out.
This business isn’t about getting rich quickly, it’s about doing the work, learning the ropes, and putting in the effort. If you want to learn what you need to get started now you can check out the courses on larryharbolt.com.
There are two things that you have to take into consideration when thinking about buying a property. You need to think about the income level of people in that area and the desirability of the property. Too many people only look at the price and that’s a big mistake.
You have to know what is desirable or you’re going to end up sitting on that property without being able to rent or sell it. The house should be affordable and desirable for people living in that area. You have to give people the properties they want and that may mean that the numbers are just not going to work out.
Little amenities will make a big difference. You can spend a little extra to make a little extra and increase the perceived quality of a property compared to others in the neighbourhood. If you’re going to rent the property out, make sure you use quality materials and spruce up the space so that your tenants will actually want to live there.
Too many people think they can clean up and repair a house in 30 days, but it’s probably not going to happen and that means their numbers are going to be all wrong. From the day you buy the property to the day you close it, every day costs you money in contractors and time.
Before you pull the trigger on a property, do your research and learn what the income levels are in the area and what kinds of properties people are looking for. This will greatly increase your odds of picking the right property instead of losing money on a property you can’t sell.