In bad times you’re king when you’re the buyer.
In good times you’re still a desired person because there are usually more buyers than sellers!
When you buy in bad times, you pay lowest dollar for a property.
When you sell in good times, you get top dollar — making your profit large.
Two readers who wrote me recently tell of a deal that well illustrates what I mean. They say:
In July my partner (a first-time investor) and I took ownership in a very profitable single-family dwelling. This was my third deal in four months with no money down. My partner found the house, and acting as a consultant, I structured the transaction to net us $3,000 each at closing. The terms and conditions of this transaction gave us a rented house before closing, positive cash flow, and lifetime control to profit when we no longer own the property by inserting the clause contract to survive deed. In addition, the seller took back a fully assumable second deed of trust with no payments for 7 months, no early payoff penalty, and we have the first option to buy or sell the second deed of trust. Again, thanks for your books and creative financial thinking in real estate.
(Note: A second deed of trust is much like a second mortgage, which is a second loan you get on a property. The first loan, or first mortgage, is usually a long-term loan running anywhere from 15 to 40 years with interest and principal repaid monthly. Second mortgages, or second trust deeds, are usually short-term instruments, 3 years to 5 years at the longest.)
What You Need to Do
When times are bad everyone runs scared. Your daily rat race becomes more unbearable. That’s the time to get out and:
- Look over what’s available in local income real estate that fits your interests.
- Get prices from sellers, brokers, and real estate agents handling properties you like.
- Ask for the income and expense statement on each property that interests you.
- Study the income figures. See if they make sense in terms of rents in your area. See if any other sources of income listed (such as garage rentals, washing machine and dryer income, etc.) are realistic for your area.
- Review the expense statement very carefully! Why? Because an anxious seller will shave expenses to make the property look more profitable. Look hard at fuel and maintenance costs. It is these two costs which permit big “adjustments” to make the building look more profitable. Don’t be fooled by very low fuel or maintenance costs!
Recognize — here and now — that taking the first step toward your real estate fortune will be frightening. You’ll get worried as to what may happen. All sorts of bad outcomes may flash across your mind.
But don’t panic!
Why? Because in my years in real estate I’ve never seen any BWB go broke, go bankrupt, or lose money if he or she used a sensible approach to buying and selling real estate. Further, in the worst of times, only about 1 percent of real estate loans go bad. This compares with 6-percent or more of business loans that go bad in tough times.
Real estate is one of the safest businesses you can enter!
Knowing that you will be scared helps you forge ahead. Being able to handle fear makes you a better businessperson. Meanwhile, of course, the fear makes you more alert and helps you avoid mistakes. How can you let fear hold you back when you see real-life results like these:
- A property bought at $74,500 brought an offer of $800,000 ten years later.
- Land bought at $95 an acre sold for $3,000 an acre four years after the purchase.
- A $45,000 house bought for zero cash down sold for $80,000 just a few months later.
Buy in bad times and sell in good times. Do this while you’re working and you’ll never become a “puppy” — poor urban professional! What’s more, you’ll be able to shed the office or plant daily drudgery once you get a few profitable properties putting money into your bank every day of the week!
Then you can write me, as this reader did, saying:
Just a note to let you know that, based on my few telephone calls to you, being a steady subscriber to your International Wealth Success, and following your advice, my net worth is $3.5 million.
Buy in bad times and sell in good times and you’re almost certain to get rich. The world’s best business won’t do you wrong!
IWS-204 : How To Make Sky-High Cash Profits In Today’s Rock-Bottom Low-Priced Real Estate
Another Tyler G. Hicks classic! How — and where — you can borrow all the money you need for your real estate business — no matter how bad your credit rating may be.