If you haven’t done your first real estate investing deal yet, there’s a high likelihood that you have a ton of questions, are nervous, and are questioning if you can handle it. These feelings are normal because unlike other careers, you have no playbook!
You aren’t given 2-weeks of training to learn the ins-and-outs of the business. You don’t have someone overseeing your decisions when you’re new. You have to rely on your knowledge and connections in the industry to get you through at least the first few deals. That is unless you have a mentor, but we’ll get back to that later.
Financials are probably the biggest concern when you want to get into real estate investing. Most don’t have liquid cash to pay for a property in full, and if they do, it might seem like you’re putting all your eggs in one basket and you’re hoping that you don’t mess it up.
Here’s a secret…
Most investors don’t use their own cash, and if they do, it’s not for the full purchase price. They use OPM or “Other People’s Money”. These are typically hard money lenders or private money, which is typically friends and family. These lenders want passive income, meaning they don’t want to go out and find the deals and don’t mind making a percentage in profits for you borrowing the funds.
This works well for investors.
You do the hustle and they fund the deal. You both make a profit and are using your capabilities for a win-win.
Another huge obstacle is finding the deals and knowing what to offer.
The best investor deals are typically always going to be off-market deals, meaning they aren’t on MLS.
The perfect investment property is going to need to be fixed up, is outdated, and the seller has the motivation to sell the property quickly. Letting the seller know they don’t have to do any repairs and they don’t have to clean out the property if they don’t want to can put their mind at ease.
Some sellers will say they can spend the money to upgrade the property but it’s good to remind them of the time it takes, the headache it can be, and that they’d be paying retail pricing on the rehab whereas you are able to pay wholesale, which allows you to pay more for the property (you are deducting the retail value of the repair in your offer).
Most sellers don’t want to deal with the property anymore and are ready to move on with their lives. Your job is to make their transition as smooth and painless as possible.
When making an offer, you need to take into consideration closing costs, holding costs, repairs, and your profit. Most investors have a set formula they use for their offers and it can vary depending on the market.
Still seem a bit overwhelming?
There are so many scenarios when it comes to buying an off-market property that it’s best to have someone who’s been in the industry who can help you navigate through these deals. They can share their experiences and recommendations to help reduce your risk and become more confident in your decision-making.
FlipNerd Investor Coaching is a 6-month program that is group based and allows to have multiple platforms to get your questions answered and provides a 12-week, step-by-step guide to get started.