Today’s real estate market is turned on its ear. Nothing is like it was three years ago.
In 2006, I had to knock on A LOT of sellers’ doors to find someone wanting to sell their house under the terms and conditions I needed in order to make the deal work. Today, about 75% of the sellers I meet with are willing to just give me their house!
Take yesterday for example: I met with a seller who literally begged me to take her house. She said she’d give it to me if I’d just take over her mortgage payments. She needed to immediately sell to avoid foreclosure.
If you are a new real estate investor, this may sound like an incredible deal that needs to be jumped all over. But a word of warning from an old, baldheaded, grey-haired guy who’s been around the block. Sometimes the best deals you do are the deals you don’t do.
This is worth repeating: Some of the best deals you do are the deals you don’t do! Burn this into your skull. It will save you a lot of time, heartache and money. (Ask me how I know!)
In the same light, I’m reminded of something Jack Miller (God rest his wise soul) said: “Bill, when you’re looking at a deal, oftentimes “No” is the right answer.”
Each week, I get phone calls from investors who are in deep dookie. Most are in trouble because they did a deal that they shouldn’t have done. As we discuss their deal from the beginning, they quickly see that the deal was cancer from the start and was one from which they should have walked away.
Why do most real estate investors – including myself – get into bad deals? Here are a few of the reasons:
I think experienced investors get cocky and lazy. If we do fifteen good deals in a row, we think: I’m a real estate god who can do no wrong! Wanna bet?
New investors often get stuck in a bad deal because they don’t know any better. Instead of partnering up with a been-there-and-done-that investor to guide them, they say to themselves: I’m not splitting my profit with old so-and-so. I can do this without any help! Wanna bet?
All investors come across sellers who tear at the heart strings. The seller is in a bind, which is not of their own making. The seller needs her house gone right now! Even though the investor knows he should pass on the deal, he buys it anyway because his pride tells him he’s good enough to make the deal work. Wanna bet?
As you meet with a seller, be sure to carefully analyze the deal. In this market, it needs to be an absolute grand slam of a deal. If it’s not, it’s better to let it pass.
Do you seek real-world real estate investing information? Go to BillandKimCook.com. It’s packed with free creative deal structuring techniques and strategies. Bill and Kim Cook have been investing in real estate since 1995. Their portfolio consists of single-family rentals, a small mobile home park, plus notes and options. If you have questions, give Bill a call at 770-815-8727.
