Hi Kristi,I'm going to give a bit of advice that has been hard-earned over the years, and almost a dozen doors (property dwellings... mostly single units.) It is advice is virtually guarantee you will ignore, *AND, if you stick it through and survive, it is advice you will have wished you had taken from the very moment you got serious about the topic.My advice;Never buy retail.What does that mean?If a seller has spoken with *anyone* other than you... the deal is retail (with very close to, but not absolutely, zero exceptions.)What about just checking sellability with a realtor? That makes it a 'retail' sale.What about strictly running a FSBO ad in Craigslist, not on the MLS? Retail.What about if they only stuck a 'For Sale' sign in their yard, behind a tree, on a cul-de-sac?Retail!OK, but what if they didn't advertise anywhere... they only talked about it with a few of their closest friends & family?... THAT IS STILL RETAIL!Why is this an issue?Because the profit of every deal is captured at the buying price and terms... *not* in the subsequent managing nor selling of the business.Price... and *TERMS*....You can afford to offer a very reasonable (even approaching retail market) buying price, *IF* you can also structure favorable finance terms (which are better than you could get from banks... a very real scenario in the current markets, even despite traditional mortgages being so cheap at present.)When a seller is speaking with you FIRST... rather than floating their ideas by non-buyers, friends, agents, Craigslist, etc.... you are far more often in a position to mutually craft a deal that solves whatever their real-life problem is... *AND* keeps you in a profitable position from the beginning.HOW DO YOU GET SELLERS TO TALK WITH YOU FIRST?(This is how & why I know you'll likely ignore this advice...)1. Ignore *ALL* deals that have already been exposed to anyone other than you (same as above,)2. YOU advertise (papers, Craigslist, etc.) that *YOU* are a buyer/investor with immediate cash to solve immediate problems,3. You build out a farm list of specific addresses in your target neighborhood that you strongly suspect you would like to buy. Do your diligence of their current market values, their comparable rent rates (keeping a list & chart, perhaps of a few dozen at first, but always searching & adding to your farm list,) and having your Title Agent feed you the owner contact info for each property. Additional research might be necessary (you can use cheap helpers, school kids, etc. to rummage out the data) to get phone numbers, personal addresses (when the owners are also investors renting out to tenants... a valuable seller prospect!)*THEN*You 'advertise' by hand-writing a simple, short letter directly to the owner of each property in your farm list, saying basically "Hi Mr. Jones, my name is Medgoddess, and I live here in your neighborhood with you. I am not a real estate agent, and I don't buy or sell properties for commissions. I am a local real estate rental property investor trying to build my portfolio of homes, and I really like yours. I would like to talk to you about buying it, if you are ready to sell. I can offer cash closings for great pricing, OR I can offer very advantageous terms if you prefer to get a higher price paid out as cashflow over time.Can I buy your home? SincerelyMedgoddess, 425-555-1234 (my cell number, call anytime!)"I've done this, and sent out the exact same handwritten letter, to the exact same farm list of owners, repeatedly every 6-8 weeks for about a year... and consistently got responses around 8-10% of the list... for up to 3 years after my last round campaign even!The SELLERS have courted ME...I have been the one in the selective drivers' seat.They have called me *FIRST* in most cases (though not all.)Many retired real estate investors decide to unwind their own portfolios at a certain time or age... and although they are far from suckers (they are actually extremely sophisticated,) they are also empathetic and appreciative of fellow creative-term real estate investors... often times offering advice & "taking under a wing" type attitudes... even as we have negotiated on THEIR OWN property sale.WHAT IS THE DOWNSIDE:A) You have to work... *YOU* have to put yourself out there for the SELLERS to find you,B) You have to work... YOU have to do your diligence to build out your prime target list in your preferred farm area,C) You have to work... YOU have to really dig in and learn financing terms (especially the terms that can work to your advantage, *and* a sellers advantage, which traditional banks DO NOT USE... and therefore you can't learn from them... but which sets you apart as a problem solver!)D) You have to work... you must approach this *AS A REAL BUSINESS*... not a speculation.Of course... the latter 4 points are why I'll lay my dollar bet on the table that you'll ignore this advice ;~)Helpful, though?Dave DonhoffLeverage Planner
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