BUY RIGHT! IT’S THAT SIMPLE. YOU MAKE YOUR MONEY IN REAL ESTATE WHEN YOU PURCHASE THE PROPERTY.
I know this isn’t brain surgery here, but it’s so simple that many people miss it. They think that the property will go up exponentially in the future, and therefore paying today’s market value won’t hurt them. But that’s a mentality that will set you up with a bunch of rental properties that you don’t make any money on, and have to sacrifice time and resources to maintain. It just isn’t worth it.
The smart money says to buy in well below market price, factoring in all repair costs, etc., leveraging your cash with mortgages, and then recouping that money as soon as possible through renting or flipping the property.
You have to find properties with motivated sellers. You have to find properties where owners are willing to part with the property for less than market value, significantly less.
The target price usually falls around the 60-70% of market value range, depending on your valuation method. Now, when looking for long term rental property, many investors go by the 1% rule.
What in the world does 1% rule mean? It means that whatever the investor thinks they can get in gross rent should be about 1% of the total cost of acquisition (purchase price + closing costs + any additional post closing repairs). We recommend get more than 1%, not because of greed, but because the market has driven the prices of property up so that the 1% rule doesn’t cash flow. It just makes good business sense.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125