Myth 1 You Have to Already Be Wealthy to Invest in Real Estate

People think they need to have a large lump sum of money to invest in real estate. They think it is like saving for their first home or that it's something they can only do once they have made their fortune elsewhere. Both of these thoughts couldn't be further from the truth. You don't need hundreds of thousands of dollars in the bank to invest in real estate and you certainly don't need millions. All you need is a good real estate deal that makes sense one that has profit potential and is...

Step 5 Calculate the Loan Payment and Your Profit Cash on Cash

Assuming you and the seller agree to the price of 256,000, now is time to figure out what the loan payment might be. This is where your finance team member or broker could step in, but I did it myself in a matter of seconds. I just went online and typed into my Google search engine the words mortgage payment, and up popped numerous mortgage calculators. I entered two numbers, the loan amount and the interest rate. Instantaneously the mortgage payment schedule appeared I love the twenty-first...

Actual Potential Income

The main source of income on most any property is usually the rent existing residents are paying. That's the actual potential income of the property. For that reason, you'll want your rent figures to be as accurate as possible based on the information that you have. The easiest way to get this information is to get the existing rent roll or schedule of what each resident is paying, put the units in numerical order, and add up the rent amounts. Another way is to physically review each lease at...

Letter of Intent

Once you've established the valuation using the five steps in the last chapter, you are ready to draft the letter of intent or a purchase and sale agreement. I prefer to use a standard letter of intent to map out the deal points between myself and the seller before moving to a formal purchase and sale contract. Letters of intent save me a lot of money in attorney fees because attorneys are not usually involved in letters of intent negotiations. Further, the work done during this process makes...