For the purpose of this book, I define a below-market purchase price as a price that is at least 20 percent below the market value of a property in its current physical condition. And in order to have a reasonable expectation of earning a profit when using real estate options, you must buy options only on properties that can be bought at prices that are 20 percent or more below their current market value. For example, under my formula, you could not pay more than $230,000 for a property with a current market value of $287,500. Based on my experiences, 20 percent below market value is the bare minimum that will allow you to earn a reasonable return on the time, effort, and money involved in completing a real estate option transaction. Unless you want to work for below minimum wage, you had better walk away from any property that cannot be bought at a minimum of 20 percent below its current market value!
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Discover the Jealously Guarded Insights of Real Estate Tycoons and Hot Dealers! Back in the days of the wild, Wild West, when easterners traveled across this vast country looking for opportunity in the newly opened territories, they were often referred to as a ‘tenderfoot’.