Special Trade Secrets for Real Estate Investing
These simple tips have been learned through years of success. Make a mental note of them and do not try to reinvent the wheel.
1. When a potential buyer calls and does not give any pre-qualification information, it usually means the person has some sort of bad credit as opposed to being careful about giving out information. All sorts of reasons surface, but the real objection is credit. Explain that bad credit does not always prevent them from getting into one of our houses.
2. The early bird gets the worm! Sounds corny, huh? Well, the sooner a cash offer is made on a property, the faster it is acquired. You must beat other investors to the punch. This is not always true, but it will help you establish a good work ethic.
3. Being organized will enable you to be more prosperous. The business can be complex due to figures, profit, and paperwork. Get a file cabinet and start a folder on every property or area of your business. Use a computer when possible.
4. Never be afraid to make a low offer on a home. What’s the worst that can happen? They say no. This is similar to asking that person in school out for a date when you’re scared. The worst thing he/she can say is “no.”
5. There is a buyer for every property. If the numbers fit the spreadsheet, then it is most likely a good deal. Do not let the cleanliness of a home affect your judgment. Look for the condition of things, as they can always be cleaned. Remember, one man’s trash is another man’s treasure.
6. Do not underestimate renovations or overestimate the resale value of the home to try and make it fit the spreadsheet. All you will do is spin your wheels and waste everyone’s time. The deals are there. You will not have to stretch them out to try and make them work. If the numbers do not work, walk away.
7. Work smart and not hard. Never show a property to anyone unwilling to pre-qualify first. Do not waste time viewing a potentially good deal without all the necessary information on the property.
8. Never burn bridges. You will find that even though you may live in a large city, you never want to get on anyone’s bad side in this business because, rest assured, that person will come back into the picture somewhere down the road.
Thanks John for the great article, gives us a lot to consider.
How do you prequalify your buyers?
Gary
I do this all over the phone first.
When you handle the pre-qualification process you must speak clearly and listen well. Legally you must abide by local, state, and federal law for credit authorization, rights and confidentiality. If you have any questions defer to a professional lender. Normally there is not a fee to pre-qualify someone with an “in-file” credit check especially if you have previously worked with them. Some mortgage companies require fees to cover at least the credit report or you can get them online.
Questions that should be asked during a pre-qualification include:
What price range are you considering?
What monthly payment do you consider?
Is this going to be your first home purchase?
Is it just you or do you have a family?
Are you working with a real estate agent?
What amount is your down payment?
How much money do you have for closing cost?
I also tell them I will need to ask you a few other questions in regard to your income, assets and liabilities.
What is your annual or monthly income?
Is your spouse’s income going to be included?
Are you salaried or self employed?
How is your credit? Any problems?
Have you filed bankruptcy?
Do you have any late payments?
Describe your monthly payments for any credit accounts
Good information here John Michael. Thanks for taking the time to share!
I am currently working as a bird dog and I am curious to know how you estimate needed repairs on a house. Before I wholesale a property I'd like to know this information, so how would you advise me to go about doing that?
Andrea