The theme of today’s episode is keep it simple. Instead of just wanting to buy a house, you have to start simple and learn all of the aspects of this business first. If you don’t do diligence, you’ll wind up in trouble financially. Start out in real estate investing where you have less to lose.
Most of the time when I initially talk to a seller, they ask for cash. However, many times I can use negotiating techniques I’ve learned to show them they really are open to other forms of payment.
First, I ask them what they plan on doing with the money. If they tell me they want to put the money in the bank, then I know they are looking for security because the money is guaranteed. However, they aren’t going to gain anything.
I attended a real estate clinic recently, and everyone I talked to said that every seller they approach only wanted cash for their house. But I want to debunk that myth because it is absolutely not true. This is one of the greatest fallacies that real estate investors believe. I’ve learned getting all the money at closing is what sellers might think they need but many times it’s really not the case.
There are so many different ways to make offers based on the property and the seller’s needs. You have to learn how to think through deals and learn something new in each situation. For example, a real estate investor wanted to buy a condo as a rental property but the complex had a rule that a buyer must live in the property or it must be vacant for a year before they can rent it out.
One of the critical points in real estate investing success is negotiating the best deals. If you don’t know how to negotiate, you won’t be able to buy income properties where you have to talk to sellers. There are certain techniques you can use when negotiating a deal.
Many beginner real estate investors don’t know how to find properties that show signs of opportunity because they are only looking in the normal listings. You have to drive through neighborhoods and look at the houses that show opportunity. "Pretty houses" normally aren’t going to be a good investment. So you must pay attention to the homes that need work.
It seems like so many of my students and followers of my podcast have been falling into the default thinking, which is giving the seller all cash or borrowing money to finish the deal because that’s what the seller wanted. However, they didn’t ask all the questions that I give in my training materials to find out what the seller really wanted.
In today’s market, a lot of investors think subject to deals are the answer to everyone’s problem. It’s not illegal but some of the problems associated with these deals are:
Most people aren’t trained to look for opportunity. They are taught to do things a certain way and follow that "formula." Many years ago, I used to spend so much time building spreadsheets to analyze properties that would give me ultimate information that I thought I needed. The problem is those spreadsheets didn’t make me a dime to feed my family. I have found that people who love building spreadsheets are wasting time doing what they like to do instead of looking for deals that has a chance to make money to pay their bills. If you spend time doing everything except what you need to do, you’ll never be a successful real estate investor.
For those who want to be able to make deals without having to get financed through a bank, there are different ways to do this On this episode, I share the steps every investor should take in order to never step into a bank.