Yes, I did say recipe, not a cookie cutter formula. You see in my humble opinion cookie cutters are good for one thing – making cookies! Each real estate transaction that you will do will have some things in common, however, most have different logistical and or legal considerations, which make each transaction unique.
Sense most recipes usually have one or more interpretation by the chef(s); here are my essential ingredients to a successful real estate transaction.
1. Know Your Market: This can not be stressed enough in these challenging investing times. Know what investing strategies and techniques will work for maximum profit and leverage in your geographical area.
2. Know Your Exit before you go in the Entrance: Another words, know what you will do with the property before making an offer or instituting a leveraged investing strategy such as a lease option.
3. Budget 20% Above “Fix Up Cost” Estimates : Why? Unforeseen circumstances! In contractor lingo that means “we didn’t know the walls were horse hair plaster, when we gave you the quote”. You get the idea, it’s better to over budget and pocket the overage, rather than start financially hemorrhaging because your profit margin is shrinking faster then the balance in your IRA account due to “unforeseen circumstances”.
4. Be Pro Active: Stay in the game. If you’re working with a real estate agent don’t leave it to them to handle the deal. This is especially true with short sales; most real estate agents don’t know how to facilitate a short sale, so in order to get a YES from the bank you must insert yourself into the equation. Ask questions, demand answers and know who the players are and how to contact them.
5. Have Your Buyer or Tenant In Place: Contrary to some modern day gurus who tell you to find and complete the deal, and people will magical appear to buy or occupy your property – that just doesn’t make good financial sense. Does the movie “Pacific Heights” ring any bells?
My take is to have someone waiting in the wings who is already pre-qualified and is looking for that particular property, in that particular neighborhood. This ingredient goes hand in hand with ingredient # 2 at the beginning of this article, so before you sign on the dotted line for any property make sure you have a winning investing plan in place.
There you have it my essential ingredients to a successful real estate transaction; use them and never worry again about coming out on the short end of the real estate investing stick.
To your success…
