WealthBoy - Latest Comments in The Number One Mistake that Would-be Real Estate Investors Make

Re: The Number One Mistake that Would-be Real Estate Investors Make

TerryT2 — Wed, 07 May 2008 21:31:34 -0000

Good post. I would add that the number two mistake is not understanding the numbers and the four ways you actually make money investing in real estate. Number 3 is not having a clear gameplan plan to either increase income or decrease expenses. I invest and write about commercial real estate investing where the NOI (Net Operating Income) driven by "Number 3" dictates the worth of a property.

Re: The Number One Mistake that Would-be Real Estate Investors Make

Chrisfs — Sat, 12 Apr 2008 14:07:45 -0000

It seems that at this point in time, it would be easier to find undervalued real estate than in the last few years. Real Estate, especially primary residences, are different from stocks because the sellers has a much greater emotional connection with his house than with his shares of Thornburg and selling stock doesn't require you to find another place to live,not are your stock losses as exposed to the whole world. Some buyers will take advantage of the sellers time limits and lack of experience in real estate (this may have been the seller's only experience in real estate ever).
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.

Re: The Number One Mistake that Would-be Real Estate Investors Make

Erik — Tue, 18 Mar 2008 10:14:55 -0000

Good advice. I agree that you need to "steal" a property for it to be worth while as an investment property that actually makes money. Although, paying cash doesn't hurt either. I know it sounds foreign for people to think about saving up enough money to pay cash for an investment property, but I think it can be done.

Re: The Number One Mistake that Would-be Real Estate Investors Make

Anh F — Tue, 18 Mar 2008 08:59:42 -0000

Jorge,
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

Re: The Number One Mistake that Would-be Real Estate Investors Make

Mike-TWA — Mon, 17 Mar 2008 19:17:23 -0000

Wealthboy,

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."

Re: The Number One Mistake that Would-be Real Estate Investors Make

Investing & Passive Income — Mon, 17 Mar 2008 14:12:34 -0000

In response to the previous comment by Ian, when you buy anything as an investment, you expect to make a profit.

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.

Re: The Number One Mistake that Would-be Real Estate Investors Make

Investing & Passive Income — Mon, 17 Mar 2008 14:10:41 -0000

In response to the previous comment, when you buy anything as an investment, you expect to make a profit.

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.

Re: The Number One Mistake that Would-be Real Estate Investors Make

WealthBoy — Mon, 17 Mar 2008 14:03:17 -0000

Ian:

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).

Re: The Number One Mistake that Would-be Real Estate Investors Make

Ian Valenzuela — Mon, 17 Mar 2008 13:40:12 -0000

Well, it's quite easy to find real estate for 60 cents on the dollar. Just find someone who is desperate, and take advantage of them. Remember, their pain is your opportunity. It's not stealing, why, you're actually helping people by taking their homes off their hands! Thanks for the tip; from now on I won't think of people being forced to sell their homes because they're facing foreclosure as people, I will think of them as "widgets". And that's how I can make my millions, just like Wal-Mart, or Enron.

Re: The Number One Mistake that Would-be Real Estate Investors Make

Allen Taylor — Mon, 17 Mar 2008 12:34:12 -0000

Nice writing. You are on my RSS reader now so I can read more from you down the road.

Allen Taylor

Re: The Number One Mistake that Would-be Real Estate Investors Make

Eric Hundin — Mon, 17 Mar 2008 12:32:26 -0000

I found your blog on MSN Search. Nice writing. I will check back to read more.

Eric Hundin