High Profit Real Estate Investing--Make a Good Deal Every Time!

Knowing what a Good Deal is – Is the important thing to Success in Real Estate.

The most important key to Real Estate Success is:

1. Funding Your Deals

2. Negotiating

3. Finding Motivated Sellers

4. Knowing a Good Deal when you see one.

Yes the entire thing is important. And if you answered #4 – you're correct on the money. Why, because if your deal is a not fine one, all your further skills and marketing and power wont make you money, and might even lead to disaster.

On the other hand, if you can consistently target excellent deals, you will always be victorious and all the other skills and your advertising methods will serve to increase your success.

What is a Good Deal?

It's a lot easier to state the question than give the answer. Why? since it depends on many factors like:

Expenses, carrying costs, repairs
Market value and purchase price
Holding time
Cashflow and profit
Risk factors
Loan terms
And more . . .

And most importantly, it depends on the kind of deal you're doing. For instance, if you have a loan on a property that you aim to rent or sell on a lease option, the terms of the mortgage, future tax increases, and present area rents are critical to consider in insuring a positive cashflow. Still, if you are scheduling to do a short rehab job, and sell or just flip to one more investor, rental income is beside the point as are future tax increases.

It's What You Don't Think About that Can Get You

The thing that trips up many investors, is that in our eagerness to do a deal that we've found, we never take into consideration "hidden" costs.

For instance, if you're doing a repair and you've complete your due diligence on contractor costs, have you also considered your carrying costs such as utilities, mortgage payments, etc. not only during the renovation, also the time it will take to sell and close through a new buyer?

Or if you're using a realtor to trade the property, Did you calculated the effect of a 6-7% commission and the final costs the seller will give on your bottom line. A 10% profit margin can get smaller pretty quickly to zero under that state of affairs.

Read Those Loan Terms Carefully

Or have you taken into account, not only your loan to value ratio on the property, but your investment to value ratio (e.g., the total of all outstanding loan balances plus the additional funds you've put in from your own cash or borrowed from your home equity line or friends and family)?

And on the income side, did you calculate how long you should seize the property to receive a significant profit from the pay down of the mortgage. With a new 30 yr loan, you may have to kill time 5-10yrs to get the similar pay down you'd get after a few years from a 30yr loan that's been experienced for 10 years.

And did you carefully read the note contracts to take account of adaptable rates and pre-payment penalties?

What About Risk?

I think you'll also believe that a Good Deal, is not only High Profit, but also, most significantly Low Risk. Several a dream of a golden future has come crashing down since some little thing went wrong.

Many a would-be mogul, is now functioning at a 9 to 5 since their killer deal was wrecked by an unforseen glitch. This is what we say high risk.

The victorious investors do deals with low risk. Deals that are so strong that even if almost the whole thing went wrong they'd still come out with a profit.