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The Number One Mistake that Would-be Real Estate Investors Make
Started by WealthBoy · 10 months ago
I met with my friend’s wife this weekend to learn more about her thriving real estate business. She helped to confirm what I suspected to be the number one mistake that new investors make: they expect to make good returns by paying “retail” prices for real esta
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1 year ago
Eric Hundin
1 year ago
Allen Taylor
1 year ago
1 year ago
There are certainly many such as yourself that feel as though investing in real estate requires taking advantage of others. There's no doubt that it requires a motivated seller to buy property at a significant discount, and the majority of the motivation does indeed come from those that are facing foreclosure. There are a lot of crooks out there that prey on individuals when they are most vulnerable and take advantage of them. Whether they do it in a legal or illegal manner, they are still crooks if you ask me. In fact those crooks may even be in the majority, but believe it or not there are a few real estate investors out there that know how to profit from a bad situation, as well as help others (other than themselves).
1 year ago
If you don't think that's right, maybe you should like at communist or socialist countries. Nothing there works!
Look at the difference between India and Japan. In 1945, Japan worked its way from scratch to be amongst the top 5 largest world's economies by adopting socialism. India, through various socialistic experiments that lasted until the late 80s, suffered tremendous economic stagnation.
Taking properties from people who bought homes they couldn't afford with neg-am loans is neither wrong nor right. If they could sell the homes at a profit, they would. but they can't. And the only way anyone can make a profit is buy paying 60 cents on the dollar. Its basic supply and demand.
1 year ago
If you don’t think that’s right, maybe you should look at communist or socialist countries. Nothing there works!
Look at the difference between India and Japan. In 1945, Japan worked its way from scratch to be amongst the top 5 largest world’s economies by adopting capitalism. India, through various socialistic experiments that lasted until the late 80s, suffered tremendous economic stagnation.
Taking properties from people who bought homes they couldn’t afford with neg-am loans is neither wrong nor right. If they could sell the homes at a profit, they would. but they can’t. And the only way anyone can make a profit is buy paying 60 cents on the dollar. Its basic supply and demand.
1 year ago
There is no question that, in real estate, you make money when you buy. Ultimately, I tend to shoot for around costs at 80% of below of improved value. My 80% figure would include rehab/improvement costs and transaction costs. Another related mistake is to consider cashflow as rents minus the mortgage payment. New investors seem to frequently forget taxes, insurance, and maintenance costs. Good article.
In response to Ian's comment, I have heard this opinion often, but it seems to apply only to real estate and not other investments. I have never understood this. A stock market buyer who purchases in a down market and who resells at a profit is never deemed to be "taking advantage" of the seller. Even in the context of sales of goods, the analogy applies. To borrow from your article, WalMart has purchased at a price below what it sells those goods. WalMart is not "taking advantage of" its buyers by doing so.
To the extent that any investor, real estate or otherwise, uses deceptive or unethical means in a transaction, it's wrong. To the extent they don't, it's what we call "the market."
1 year ago
I think you explained our meeting very well. Your writing is very clear and concise. Glad to help another one of my husband's friend and co-worker. By being analytical, you will not be too risky and that will keep you in the game.
Good luck.
Anh
1 year ago
1 year ago
I believe it's tough to look people in the eye and buy something they don't want to but are forced to sell and give them a price that's lower than what they wanted.
I recently read what was recommended as a classic book on the subject which despite it's name, "Make Big Money in Real Estate Foreclosures" by Ted Thomas, explains an ethical way of going about buying pre-foreclosure real estate.
Chief among his policies is that at any point before the actual sale, he assures the seller that they can back out at any time, if they get a better deal or have a way to pay the back mortgage themselves.
1 year ago