The Best Real Estate Investment Nobody Knows About! - Part 7 by Mark & Lloyd Walters 7-1
"WILL THIS SYSTEM WORK WITH RESALE HOUSES?"
What if you want to work this system with resale houses? Much of what you've
learned here does apply. You can determine price per square foot exactly the same.
You can decipher what houses are deals and why; and which ones aren't. You can
employ the same logic as mentioned when considering financing. Plus, if you purchase
housing that isn't that old, say from 1-5 years old, many of the same benefits apply.
The builder may still be responsible for the construction. Check in your area to make
sure the warranty period still applies. In most cases it will.
We bought a house that was only 6 months old. The original purchasers had to
move due to a job transfer. Since purchasing the property, the builder has fixed all
problems that were still under warranty. In fact, our tenants were the ones that brought
the problems to our attention. They said we shouldn't have to fix it because the builder
should be responsible. With that, they contacted the builder and got the ball rolling.
Remember when I told you people feel a certain pride of ownership in nice property
even when they're renting? This is a perfect example.
When we first held this particular house open for people to come through to
look inside and fill out applications, these people made a statement that surprised me.
This was a great property offered for a terrific price. The place was hopping and
everyone was acting their best. This family said to me that they would be willing to
landscape the backyard if we supplied the materials. Remember that this house was
only 6 months old. Builders often offer front yard landscaping but not for the back
yard. This back yard was nothing but dirt. The offer they made was not why I chose
these people to move in, but it didn't hurt. By the way, the backyard looks great. They
put in a sprinkler system, lawn, rock, shrubs and flowers. Believe me when I say these
people are going to take care of the yard. It's their sweat and muscle that made it look
good. They are going to keep it looking good. Plus, if someone goes to this effort, do
you think they're going to stay in the house a long time? These people live in this
house for over 5 years. We wrote to them one day offering to sell them the house at a
certain price. They jumped at the chance. We paid nothing to market this home and
profited considerably!
Another benefit to purchasing a resale house versus a brand new one is that the
window coverings and other improvements may be in. This can be worth a lot to you
especially if you have to supply and install them yourself. New housing is great, but
remember it doesn't come with window coverings and complete landscaping without a
heavy price.
7-2
"A New House for You To Live In"
A house so good you want to live in it yourself
8-
1
"WHAT IF YOU’RE LOOKING
FOR A HOUSE TO LIVE IN?"
Terrific! This system is perfect for you as well. You now know how to look for
a great property that has real value. You can choose to look for brand new housing or
houses that are only a few years old. When you begin breaking down the cost of the
houses you’re looking at by the price per square foot, you can really tell which ones
are deals and which ones aren’t. Try to determine if there is some extra value in the
houses that support the more expensive per square foot cost. Is it location, closer to
town, better schools or better outlining area, near a mountain or water? You get the
idea. All this might affect future appreciation.
When you start analyzing these differences, you’ll begin to recognize when a
house is just flat overpriced. Conversely, you’ll also notice a real value. Zone in on
that. When you find new home developments that seem to be good buys, try and
narrow down your focus to the models with the best value. Many times, if your area is
experiencing growth, it’s the developments that are on the outskirts of your city’s
limits that are the better value. That is if they’re modest homes. I’m not talking about
the luxury home market. Just scan through your Sunday paper’s new home listings to
find out what price range the new home market starts from. Then see if that is a range
that is affordable to you. If not, you may choose to look at homes that are 1-5 years old
that are closer to the range you can afford.
So often we’re interested in the floor plan and architecture of the outside of the
house. That makes perfect sense to be attracted by those features. They are important
without a doubt. But we often don’t look much further than that. You will find many
homes that once you walk inside you know it’s not the house for you. That’s because
the feel of the floor plan just doesn’t work. If you feel that way, chances are many
other people will too. Even if you’re looking to purchase the house to live in yourself,
consider the benefits and drawbacks from a resale standpoint. Someday you’ll
probably sell it. You may even rent it out. You will want to get a house that has
universal appeal.
A house can’t please everybody, but some models please more people than
others. That’s good enough. Look for features that agree with you that you think will
agree with others when that time comes for you to move out. Ask a friend to walk
through the house with you telling you the things they like and dislike about the house.
This may give you a different perspective on the house and how others perceive it.
If you combine what you've learned here with looking for distressed sellers, you
will be adding equity to your net worth with every purchase. Distressed sellers are
people that are “don’t wanters” for some reason. I’m not suggesting that you take on a
problem property that is in need of major repairs. That’s a whole other technique to
investing in real estate. But, if you happen to be looking for a house when someone is
experiencing one of life’s struggles, it could mean a negotiating advantage for you.
These struggles could be divorce, job transfer, death in family, they’ve bought another
house and are making 2 house payments, etc. You get the idea. They need and want to
sell their house.
In situations like these, you can often offer a lower price than you might
otherwise. You just never know when someone is willing to accept a low offer just to
get on with their life. With this in mind, it’s usually always a good idea to make a low
offer with the thought of receiving a counter offer that’s a little higher. Then you can
negotiate, as you feel comfortable. Most often, it’s the sellers’ realtor who’s telling
them to counter and at what price. If you don’t go up much higher than your original
price on your response to their counter offer, you’re letting them know you aren’t
going to budge much.
They may choose not to respond again to your offer and not accept it, or they
may finally take what they can. All this negotiating boils down to their motivation and
how badly you want the property. If you don’t want to lose out on what you know is a
good deal, you may be willing to take their asking price. These things take practice.
We are human and have emotions in these situations. We often find ourselves really
wanting something. Sometimes that desire can play against our better interest. Take a
step back when you feel yourself getting excited. Try to think about the opportunity
rationally. Think how much opportunity you may lose if you try and skin the seller a
bit too much. Are you really gaining enough to justify the possibility of losing the
deal?
You may be able to learn what it is the seller is really in need of. In other words,
find out what their problem is and try to solve it. When you go about it this way, you
may be able to create a better deal for yourself.
Also, when the seller realizes you’re trying to help solve their problem, they’re
going to be a little more willing to work with you. You won’t be able to solve
problems on every deal. But, try to recognize if problems exist and see what you may
be able to do about them to make the deal go your way.
8-
3
"Market Impact"
How the real world dictates the strategy This document and accompanying materials are designed to provide authoritative information in regard to the subject matter covered in it. It is for illustration purposes only and presented with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional opinions. If legal advice or other expert assistance is required, the services of a competent professional should be sought. |
