Many real Real Estate Investing Courses taught by well known instructors will teach you to go out and make 100 low ball offers to find a good priced deal on property. The instructors create this sensation that makes you feel like the only way you’re a successful real estate investor is if you are practically stealing rent houses you’re getting them so cheap.
Many of the techniques they teach are very effective – if you have time to make 100 offers in search of a cheap rent house. But, while you’re obsessing about finding that wickedly low priced rent house, you are missing out on really good deals that could be putting cash in your pocket right now!
Let me give you an example of this. Together with my investment partner (who happens to be my husband), we purchased a duplex. This duplex instantly added $20,000 to our net worth and put $500/month positive cash flow in our pockets. And we didn’t do it with 100 offers.
Notice I didn’t say anything about making low ball offers, hard nose negotiation tactics or crazy clauses to squeeze every ounce of blood from the seller? All we did was look for a problem to solve.
The property was bank owned. We learned the outstanding balance on the mortgage by digging through some public records. We pulled a bunch of comparable properties and analyzed that the property was worth about $20,000 more than the outstanding balance on the mortgage.
The bank had two problems. They needed to sell the duplex quickly to get rid of the debt, and they had to sell it at a price that would allow them to recover the outstanding mortgage amount. Most other bidders went in with low-ball offers and lost out on this high-quality income-generating property. But my husband and I took a different tack. We offered a quick close and a price equal to the amount of the outstanding mortgage and we had the winning bid.
This property puts $500 of positive cash flow in our pockets every month and added to our net worth the day we bought it.
When you are looking at buying a piece of real estate, instead of focusing on making a steal of a deal, turn your attention to finding the vendor’s biggest challenge and figuring out how you can solve it. When you take a problem-solving approach to deal making, you are more likely to create an even better deal for yourself than if you had focused only on the price. And, no matter what, you’ll be saving yourself the headache and pain of making 100 different offers!