Real Estate Buying Tips Part 3

Consistently follow through in your marketing activities. Your investing business will thrive or die based on your ability to consistently find great deals.


The key to structuring a winning deal is to plan both your way into and out of any deal

Intelligent investors know that they make their money when they buy, not when they sell.

The key lesson here is that you will never enter into any deal that you don’t have a clearly laid out strategy for gracefully exiting.

The point to understand is that any time you give cash to a seller, you need to get something of equal value in return-like a deep cash discount

In a cash deal that way you get rewarded is by getting a deep cash discount

Cash=bank

If the seller is receiving all of his money at the closing, then you are buying for cash

I’ve already built in my profit on the deal from the moment I purchased the house by getting a deep cash discount or by getting excellent terms of financing

Cash Price Formula = Highest “All Cash” price you can pay = 70% of the “As Is” value of the property

When you are buying for cash, never pay more than 70% of the as-is value

“As Is” Value = The after-repair value of the property less the CONSERVATIVE cost of getting the house in the condition so that it will SELL in 90 days or less

The bottom line is this: when you are buying for c ash you need to be using the Cash Price Formula.

Ideally you’d be paying 60% or less of value. But as long as you don’t pay more than 70% you should conservatively be making a profit in all you cash deals.

Using your own money still costs you in three big ways. First, you take on magnitude more risk. Second, using your money isn’t free (arbitrage). Third, be careful about using your own money is the opportunity cost of tying up your cash.

You are going to have to begin your cash negotiations at 50-60% to leave yourself room to negotiate up if you need to. This will kill many deals. That’s okay; the ones that do work out will be easy to find the funding for because there is plenty of potential profit to warrant an outside party funding your deal.

The most important point is to understand that if the deal is right, you will find the money. Never lose sight of that.