Real Estate Investing Operates in an Imperfect Market

You can find real estate bargains as if you were shopping at an outlet store. One of the features of securities like stocks and bonds is that they are sold in a way that at any given point in time most people who buy a specific stock will be paying the same price. Real estate is different. You can have two identical homes on the same block. One might be bought for $175,000, and the other might be purchased by an investor from a motivated seller for $140,000. When you use the negotiating strategies you'll learn in Chapter 3, you'll find that you'll be able to make a huge chunk of your profit the very day you buy your investment property.

One of our students in Ohio, Neil, bought his first investment property for nothing down at 30 percent below market value. He had found a motivated landlord who wanted to dump his rental property and was thrilled when Neil stepped in and took it off of his hands.

We found one of our deals from an ad we were running to get sellers to call us. It turned out the seller was three payments behind and facing foreclosure. We bought the house from her for $40,000 below value. This was a good deal for her because had she gone through foreclosure she would have gotten nothing. By selling to us, she made some money and protected her credit. If the house were a stock, we never would have gotten such a good deal. She could have sold it in 60 seconds and wouldn't have needed us to buy it from her.

Why can you as an investor get such great deals? You can do it because you have specialized knowledge to sell a house for top dollar, knowledge most sellers just don't have. You will acquire exactly this type of specialized knowledge in Chapter 5.

Imperfect markets don't just mean you'll be able to buy properties for bargain prices; it also means that you will often find great deals due to the financing you negotiate with the seller. Remember, in real estate you don't just make money by negotiating a great price; you can also make money by getting great terms when financing the deal.

One of our students negotiated a deal where the seller carried back half the purchase price at 2 percent interest! This meant that the seller got half his money up front, and then he accepted payments over time for the other half of his money. It's called a "Big Money Cash Close," and you'll learn about it in Chapter 2. Financing like this turns many of your properties into monthly cash machines because of the low monthly payments you make on them. Remember, motivated sellers don't care about getting the perfect buyer. All they want is a real buyer who can solve their immediate problem.

Best Investment Tips and Ideas

Best Investment Tips and Ideas

The dynamics of investing can be very emotional and stressful if not properly managed. When you are aware of what is all involved you give yourself the power to avoid those situations or at least manage them effectively. That will make your investments more exciting, rewarding, and enjoyable. Those positive factors will only lead to greater success in all that achieve with investments and life.

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