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

Knowing what a Good Deal is ? Is the Key to Success in Real Estate.

Dear Investor,

Take this little survey: The most important key to Real Estate Success is:

1. Finding Motivated Sellers

2. Funding Your Deals

3. Negotiating

4. Knowing a Good Deal when you see one.

Yes all of them are important. And if you answered #4 ? you're right on the money. Why, because if your deal is a not good one, all your other skills and marketing and power will not make you money, and may even lead to disaster.

On the other hand, if you can unfailingly target good deals, you will always be successful and all the other skills and your marketing 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? Because it depends on many factors like:

- Market value and purchase price

- Expenses, carrying costs, repairs

- Cashflow and profit

- Holding time

- Loan terms

- Risk factors

- And more . . .

And most importantly, it depends on the type of deal you're doing. For example, if you have a loan on a property that you intend to rent or sell on a lease option, the terms of the mortgage, future tax increases, and current area rents are critical to consider in insuring a positive cashflow. However, if you are planning to do a short rehab job, and sell or just flip to another investor, rental income is irrelevant 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 enthusiasm to do a deal that we've found, we don't take into consideration "hidden" costs.

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

Or if you're using a realtor to sell the property, have you calculated the effect of a 6-7% commission and the closing costs the seller will pay on your bottom line. A 10% profit margin can shrink pretty quickly to zero under those circumstances.

Read Those Loan Terms Carefully

Or have you taken into account, not just 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, have you calculated how long you should hold the property to receive a significant profit from the pay down of the mortgage. With a new 30 yr loan, you may have to wait 5-10yrs to get the same pay down you'd get after a few years from a 30yr loan that's been seasoned for 10 years.

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

Checklists aren't Enough

A number of courses and real estate gurus will give you checklists. That's helpful in not forgetting something, but it doesn't help you with the laborious and complex task of putting all the numbers together.

There's just something about working with the actual real numbers, that brings the reality of the deal into actual focus. Our hopes and wishes dissolve before the actual profit and loss calculations.

Moreover, the numbers can pinpoint the weaknesses in a deal, and point the way to a solution. No mere checklist can do that.

What About Risk?

I think you'll also agree that a Good Deal, is not just High Profit, but also, most importantly Low Risk. Many a dream of a golden future has come crashing down because some little thing went wrong.

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

The successful investors do deals with low risk. Deals that are so robust that even if almost everything went wrong they'd still come out with a profit.

Build In A Safety Margin

For example, suppose you have a rental with a positive cashflow. Is your cashflow high enough or your option payment big enough, that even if you had to evict your tenant for non-payment and it took you 2 months to fill it with another cash-paying customer, you'd still come out ahead?

Or, is your investment to value so low that even if you had to offer your buyer a big discount for a quick sale, you'd still walk away from the closing table with a fat check?

In real estate things can and usually do go wrong. It's Normal. So, wouldn't you like all your deals to have these kinds of safety margins?

Fixing the Problems with Your Deal

Now, if you knew in advance that your risk was too high, or your cashflow was too low, or your profit over the life of the deal wasn't enough, you'd want to think of solutions.

This is what is meant by being a "transaction engineer". Find the solution, fix the problem, test it on the numbers, and then negotiate it into the deal.

And if you can't find a solution (but there always is one) or the seller won't accept it-NEXT!

I can tell you from real experience, a bad or risky deal is NEVER WORTH DOING-no matter how enticing the vision. The personal stress, heartache, and loss of confidence can be even more harmless than the potential financial loss. In the words of an ex-president's wife, if you are faced with doing a bad deal-Just say No!

What's the Answer?

Some experienced investors have a feel for good deals, and can avoid trouble most of the time. Others only do a particular type of deal and use a rough "rule of thumb" to evaluate their risk and profit.

However, what's really needed is a "calculator" or computer program that will take in all the variables and

1) Calculate the exact profit and cashflow for all kinds of deals.

2) Measure and Evaluate the financial risk in the deal

3) Use standard and safe criteria for what constitutes a good deal

4) Suggests alternatives to fix what is wrong

The Deal Evaluation Tool

We've taken tons of real estate courses and looked at all kinds of real estate software, and nothing has come close to what we as investors need. So we decided to create our own Deal Evaluation Tool.

Well after several months of testing and improvement, we now use it for all our deals-short sales, subject to, lease option, rehab, wholesaling, and even some commercial.

Since we can try out different "what-if" scenarios, it's kept us away from some real pitfalls, and helped us negotiate better profit margins. We wouldn't "leave home without it".

Constantly Meeting The Needs Of Investors

Well, some other investors wanted to try it, so we put it on our website. Much to our delight we now have a community of users and a users group that shares their insights about doing deals and creative ways to use the Deal Evaluation Tool.

Their suggestions, are leading to a rapid improvement of already incredibly useful tool. There is just nothing out there like it. We've also put a demo up for those investors who would like to get a feel for using it. And we hold classes for new users.

Knowing all the numbers, and having evaluated our risks with the Deal Evaluation Tool gives us more confidence in negotiating deals with sellers and more consistent high profit real estate deals.

And that's what we all want, isn't it.

Richard Odessey along with his wife Michelle have the premier site on the internet - http://www.InvestorWealth.com for training and teaching real estate investors to do high profit deals. They offer regular Free Teleseminars by the top real estate investors in the country, the best tools to enhance your real estate success like the Deal Evaluation tool. They also offer 4-8 hands-on training seminars with personal advice from experts that investors can take from the comfort of their home. Richard and Michelle have been investing for over 5 years and personally teach and mentor other investors.

---

Real Estate Investing: Infomercial and Mentoring Scams

Flipping through late-night infomercials recently, I saw two real estate... Read More

Kings Bay, Saint Marys and Kingsland Georgia Real Estate - Mortgage Lenders

When looking for a home, it is important to first... Read More

What Homeowners Should Know to Stop Foreclosure- Speaking Your Lenders Language

Financial literacy is the means of empowering consumers to make... Read More

Get Rich With Mobile Homes

Does the myth that mobile homes depreciate in value keep... Read More

A Singles Game of Real Estate

This discussion leans toward answering questions asked most often by... Read More

Buying To Let Top Ten Tips

Buying to let is considered a serious investment and should... Read More

Florida Investment Real Estate and What Are Considerations Before Buying

Investment Real Estate, First Things FirstConsidering investing in property? What... Read More

Real Estate Growth: How Long Will It Last?

There has been speculation in the media recently about the... Read More

Prepare Your Rental Property for Occupancy

Among your many responsibilities as a landlord, the law provides... Read More

5 Simple Steps to Sell Your House Fast!

The decision to sell your house wasn't made on the... Read More

Death, Taxes, and Foreclosures

So how do you find the best foreclosures. Its not... Read More

How To Get The Best Rental Accommodation In The Area By Using Your Capital

My report is for you to use your power to... Read More

Refinance Rental Property - Dont Sell It

You own a rental property for years, and never see... Read More

Legal Information About the Real Estate Contract

The conclusion of final agreement between a seller and a... Read More

Greed Can Cost You Your Shirt!

The proper action when things are going well is to... Read More

How to Afford Your Dream Home

Is it your dream to one day own a holiday... Read More

Real Estate Investment - Why it is Big Business?

When examining the different asset classes, real estate is generally... Read More

Lake Property in Danbury

A lakeside vacation or second home can be a quiet... Read More

10 Important Tips to Successful Real Estate Investing

When it comes to investing, everybody has certain goals and... Read More

Tax Assessment/Appraisal: How Do I Know What My Home is Worth?

If you are in the home buying or selling market,... Read More

Why Real Estate?

Five months ago I was faced with a decision to... Read More

Beat the Crowd when Investing in Real Estate

We all are thinking about it and some of us... Read More

Purchasing Florida Investment Property And Various Considerations

Purchasing Florida Investment PropertyConsidering researching the purchase of Florida Investment... Read More

Howard Stern is Hot in Real Estate

Howard Stern has over 20 property related files in Queens,... Read More

How to Make Money from the California Real Estate Gold Rush

What do the Californians know that we don't?What is so... Read More

Home Staging: How to Make Your Tract Home Stand Out in the Crowd

Home sellers who wish to market their property in development... Read More

Renting a House

Renting a house or a room in your home is... Read More

What Can I Realistically Earn In A Lease Purchase Business?

If you're looking at Lease Purchasing as a business, you'll... Read More

Real Estate: A Strong Investment

Description: Even in uncertain economic times like these, history shows... Read More

Real Estate Investing - The Motivated Seller

How the heck do you find a "motivated seller?"The motivated... Read More

Popping The Real Estate Bubble Myth!

If you turn on the TV, listen to the radio,... Read More

Vegas: The New Frontier

Unless you have been living in Siberia, you know that... Read More

Rapid City Real Estate Agents

Take me Back to the Black HillsLocated in Western South... Read More