Successful Real Estate Investors know that they “make money when they buy a property”. They know what it is worth, what they will pay for it, how much expenses are and what the market rents are. They know how they are going to make their money from an investment before they enter into an agreement.
When acquiring Real Estate Investments, you should always be looking for motivated sellers. Motivated sellers are motivated for a number of reasons. Check out my previous post “Create Your Own Motivated Seller” for more information on motivated sellers.
When you find a motivated seller, you will be able to negotiate a good price for their property. If you are able to negotiate a lower price then you already have built in equity and a built in profit. You made your money or profit when you buy the property. Of course this profit is always subject to down turns in the economy such as the one we have seen lately, so make sure your investment has a positive cash flow. Again, you make your money or your profit when you buy, knowing what your cash flow is and allowing for all expenses. This is where inexperienced investors make their mistakes. They don’t include all of their expenses because they want the deal to look better than it really is or because they just don’t know how to calculate what those expenses are.
In addition, when you buy, you will be able to negotiate good terms. Good terms include vendor take back mortgages, deferred closing dates, Lease Options, etc.
Don’t buy a property and then figure out what you are going to do with it. Always know how you are going to make your money before you acquire an investment.