Have you ever been writing an e-mail or a report — pouring your heart and soul into each and every word — when, POOF, it vanishes? Maybe it was a computer glitch or a wrong keystroke. Either way, your work is gone. And you can’t retrieve it. (more…)
Have you ever been writing an e-mail or a report — pouring your heart and soul into each and every word — when, POOF, it vanishes? Maybe it was a computer glitch or a wrong keystroke. Either way, your work is gone. And you can’t retrieve it. (more…)
I grew up in a small farming town in Alberta, Canada. For 17 years, I was surrounded by farmers – and I never met a single one who’d even consider eating his seeds instead of planting them. They just wouldn’t do it. Neither would they harvest a crop early.
Yet that’s what many real estate investors do when they spend every penny their rental properties make, or when they sell as soon as a property has appreciated to just a fraction of its potential.
Sure, they’re better off than if they had never invested in those properties to begin with. But they’ll never get rich that way.
Instead of spending every penny a property makes for you, save it. Instead of selling as soon as a property has some equity in it, use that equity – and the money it made for you – to buy another property. That’s how you maximize your profits. If it’s making you money, let it keep making you money.
In his bestselling book Automatic Wealth, Michael Masterson says: “Here’s a promise: If you haven’t ever invested in real estate but you start this year, you’ll be glad you did. If you keep investing – buying at least one new property a year (which will be easy once you get going) – you will be a real estate multimillionaire when you retire.” Of course, Michael cautions that you don’t want to buy just any real estate. You have to do your homework and “buy right.”
Invest in real estate the way a farmer invests in his land. Plant your seeds. Let them grow. Keep an eye on them, giving them a bit of water and fertilizer here and there and doing some pest control. Then – when the “season” is ending in that market area or you’ve got a dozen houses that are making you rich – reap your rewards.
[Ed. Note: For more insider strategies for getting started as a real estate investor, sign up for real estate expert Julie Broad's free monthly newsletter. Get your free report for making money with real estate here.
For a unique, nearly automatic way to make money in real estate during the ongoing foreclosure boom, check out the Bandwagon Raiding Machine.]
When negotiating to buy a property, I increase my chances of getting the exact deal I want by giving the seller options.
One way I do it is by negotiating the financing terms I want at the same time as I negotiate price.
Let’s say I wanted to buy a certain property for $200,000. If I can convince the seller to provide financing at a reasonable rate, I’d probably be willing to pay 5 percent more just to avoid the hassles and fees involved in finding and securing a lender. To avoid having the seller say “no” to my offer, I would say something like this:
“The best I can do is $200,000 if I have to go to a bank for financing. They’re going to require me to prove the rental income, pay for an appraisal, and do a ton of paperwork to qualify for that loan. So if you’ll accept my $200,000 offer, I will close on the date you want.
“But if you are willing to provide at least 70 percent of the financing, I can offer you $210,000. And I would still be willing to close on the date you want.”
By giving my seller these two options, I make him feel like he is in control of the outcome of our negotiation… even though either one would be a great deal for me.
[Ed. Note: For more insider strategies for getting started as a real estate investor, sign up for real estate expert Julie Broad's free monthly newsletter. Get your free report for making money with real estate here.
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My brother is a talented carpenter. Before becoming a carpenter, he was an amazing chef. He is also extremely good at repairing and rebuilding cars. In fact, he’s good at anything that requires patience and attention to detail. Except, that is, when it comes to his finances.
He just turned 32, and says he is happy to keep working for the next 30 years or more. But as his sister, I worry because he’s saved only a few hundred dollars for his retirement. So I decided to help him.
Here’s the plan I came up with – and it’s one you might be able to use too.
By taking on some odd jobs on weekends (people are always asking him to build fences or help with kitchen renovations), I think he will be able to save enough money to get into real estate within the year. All he needs is 10 percent to put down on a beat-up house that he can buy for, say, $200,000.
For a couple of years, he can live in that house while fixing it up and continuing to save money. After turning the house into a property he can rent out for about $1,400 a month, he can then buy another beat-up house that he can fix up and live in permanently.
Assuming he adds about $25,000 in value to his investment property and it appreciates by 4 percent each year, in 25 years he will own a place worth $576,743. And his tenants will have paid off the mortgage for him! It’s almost like having someone else put $1,900 a month into his retirement savings account! ($576,000 divided by 25 years divided by 12 months = $1,920)
Even if the property doesn’t appreciate by 4 percent every year (which has historically been the average), his tenants still will have paid off his mortgage in 25 years. Plus, he will be enjoying the rental income he gets each month – and that rental income will keep increasing.
Of course, he also will have paid off his own home by then… giving him more than $1 million worth of property that he can cash in for his retirement.
My brother has already sold one of his cars, pocketing a few thousand dollars from the proceeds, and has begun to save about $500 a month just by having one less vehicle to insure and maintain. He’s also done a few weekend jobs that have added up to about $1,500. At this rate, he will be ready to buy his first property in less than 12 months and start his retirement plan in earnest.
[Ed. Note: For more insider strategies for getting started as a real estate investor, sign up for real estate expert Julie Broad's free monthly newsletter. Get your free report for making money with real estate here.
For a unique way to make money in real estate –-taking advantage of the foreclosure boom - check out the Bandwagon Raiding Machine here.]
Years ago, I spent several months backpacking around Guatemala. As my Spanish improved, I enjoyed going to markets to bargain for Mayan souvenirs or fresh fruit. My goal was to pay the same price as a local.
I was having fun playing this little game until my new Australian friend witnessed me in action, bargaining for a beautiful hammock. As I was walking away because the vendor wouldn’t lower her price a little more, my friend said, “You realize that you are getting all worked up over what is about 10 cents. At home, you would pay 50 times that much for a hammock like that, so this is a great deal.”
I suddenly felt a bit silly. But it helped me learn an important lesson that I try to remember when doing real estate deals.
As soon as your negotiation becomes about winning, it becomes emotional… and good judgment goes out the window. If you’re not rational, you are much more likely to enter a bad deal for the wrong reasons. And you’re quite likely to miss out on a good one.
I was trying to win by “buying at the same price as a local,” just like many people negotiating real estate deals try to win by selling at the absolute highest price or buying at the absolute lowest price.
Instead, figure out what would be a good deal for you before you enter the negotiation. If, for example, a house is listed for $325,000, anything under $300,000 might work for you. So if you can negotiate the price of that house down to, say, $295,000, consider it done. Don’t feel that you have to try to force the seller to take just a little bit less. Leave the emotion, specifically the desire to be a “big winner” in every deal, out of it.
[Ed. Note: For more insider strategies for getting started as a real estate investor, sign up for real estate expert Julie Broad's free monthly newsletter. Get your free report for making money with real estate here.]
Have you ever been walking down the street – focused on getting somewhere in record time – only to stop dead in your tracks when you spot a penny and are tempted to stoop down to pick it up?
That’s not the only way we allow low-value objects, goals, or priorities to distract us from more important things. We interrupt conversations with family members to comment on silly commercials on television. We check our Blackberry in the middle of a workout. And we allow e-mail to interrupt higher priority activities on the job.
I call it shiny penny syndrome.
Early in our real estate investing days, shiny penny syndrome nearly cost me and my husband our investments. We’d been working on buying good quality cash flowing properties in good neighborhoods and were doing just fine, but we suddenly stopped and started moving toward different options. We saw all those shiny pennies and thought we could turn them to gold nuggets.
In “The Problem With Fire,” I described how we started chasing no-money-down deals, flips, and property assignments. It turned out badly. Meanwhile, we lost our focus on what had been working for us.
It’s a good thing to consider your options, but don’t let them distract you from what’s been working for you and helping you achieve your goals.
If you have an investing strategy that is working for you – stick to it. Master it.
Though there are plenty of ways to make money in real estate, the optimal route is to find a strategy you like and get really good at it. Stay focused and become a specialist in your investing niche and you, too, will find your wealth grow very quickly.
[Ed. Note: For more insider strategies for getting started as a real estate investor, sign up for real estate expert Julie Broad's free monthly newsletter. Get your free report for making money with real estate here.
Losing focus in your personal, social, or business goals? Achieve all you want in life with ETR's Total Success Achievement program. Learn more here.]