I often tell people that becoming a millionaire in the real estate business is an easy thing to accomplish. They usually give me a look of bewilderment. I say that you don’t have to understand every aspect of real estate in order to begin investing. The best thing to do is start with a basic buy-and-hold strategy purchasing whatever type of property you are capable of buying with as little money down as possible. How you buy something with as little money down as possible depends on your financial situation and what types of mortgages you’re capable of qualifying for. Since guidelines for mortgages and government intervention changes daily, it’s impossible for me to tell you the best way to do that. I can tell you how I did it for years using the all-money-down technique I described earlier in the book. But I’ll give you a quick refresher course below.If you bought $100,000 house through conventional means, you may have to put 20 percent down is $20,000 plus closing costs that will cost you approximately $3000. In this example, you put $23,000 down to buy $100,000 investment property. Using the all-money-down technique, you would buy a $100,000 property for cash putting all $100,000 down plus the closing costs of $3000. At this point, you have $103,000 down on the property and you begin to invest an additional $5000 to fix the property up. You now have a total of $108,000 of your money into the property. You put the property up for rent and you find a good tenant, so now you’re empty investment property is a business making money and shows a profit. Now you go to the bank and you get the property appraised with the intention of doing a cash-out refinance. Because you fixed up the property and it’s a money-making business, the property appraises for $114,000. The bank is willing to lend you an 80 percent mortgage on the $114,000 appraisal giving you a mortgage of $91,200. You originally put down $103,000 and received back a mortgage for $91,200 making your out-of-pocket costs $11,800.When using the all-money-down technique as compared to buying a property through conventional methods, you save $11,200. Now of course, you’re going to have a higher mortgage and less cash flow coming from the property, but you’re also going to have $11,200 to buy the next property with.Sometimes the homes you buy are going to cost you $10,000 to buy; other times you’re going to break even on the deal. You might even be lucky enough to actually get paid to buy a house, which has happened to me once or twice. The goal was simply to just keep buying as many properties as possible until you build up a portfolio worth millions of dollars. You will make a profit from the cash flow, but most likely that’s going to go back and do things like repairs and vacancies in all the other issues that come up with real estate. If you do end up banking $10,000 during the year from the cash flow of your buildings, there is your down money to buy an additional property and expand your portfolio further.I have constantly repeated that you’re not going to find the cash flow to be something of tremendous value to you. The cash flow will help pay for the necessary things and give you down money for future deals, but in the end you will work hard for very little money. The real surprise will come when you’ve ridden the cycle from bottom to top and created a gap between your portfolio’s value and the amount of mortgages that you owe for the building. Accruing equity in your buildings, you will slowly begin to see your net worth increasing as the years go on.For example let’s just say you bought one property a year for five years valued at $100,000 a property. Since the five years that you bought the properties, values have gone up somewhat and the mortgages have gone down, and your net worth is the equity in between. As you begin to see this throughout your investing career, especially when the market is on the rise, it can be an exciting time.Your expectations should be to live off of the income from your job while the profit from the rental property business is used to fuel its needs. You’ll usually get to a point somewhere when a real conflict will develop between your current career and your real estate investments. It’s hard to be in two places at once, and ultimately it will begin to catch up with you. For me this conflict was easily resolved since I only wanted to be doing real estate anyway, but if you love your day job and you plan to continue it through your life, you’re going to have to make some tough decisions. You could keep your day job, but someone is going to have to run your portfolio.I maintain that getting a seven-figure net worth in equity strictly in your real estate holdings is not that difficult to do. I recommend you join real estate investment clubs and read as many books as you possibly can. As you begin to make investments, you’ll find friends in the businesses that relate to your industry such as people in the mortgage business. I recommend that you associate with as many of these people as possible so that your knowledge of the industry expands tremendously.A friend of mine who’s an intelligent guy took some of this advice and began moving quickly. In his first year, I think he bought two properties, but by his second year he was already doing $300,000 flips and buying multiunit investment properties with a partner that he has. First of all, I’m not a big fan of partnership for the deal size he was doing, and second, I think he was growing a little too fast. If he didn’t have a job, I wouldn’t have a problem with the speed of his growth, but because he had a well-paying job, I cautioned him not to move too fast. The second half of 2009 was a rough year for him as his $300,000 flip was not selling, and he’s already had to do two evictions. Carrying the mortgage and his $300,000 flip was expensive and was already causing some tension in his partnership. It’s not going to be all fun and games; as your portfolio grows, your problems grow with it and the workload grows.Another thing I can say about the issues in the real estate business is that they seem to come in waves. Even when I owned dozens of homes, I would go six months where I wouldn’t need to change a doorknob and then all of a sudden all hell would break loose. I’d be dealing with an eviction, two vacancies, and apartments that were destroyed. When it rains it pours in the real estate business; at least that’s the way it worked out for me. I remember on two separate occasions during the summertime one year followed by the next summer a year later I was bombarded with all kinds of issues. In this business, you can’t let a vacant property sit and wait because you’re losing money every day it’s not rented. The process of getting it renovated and re-rented is the highest importance.As bad as I make it sound, I think you’ll find it all to be worth it in the end. It seems that no matter how much money I made, I have learned in my career I never really save. As you earn more money, your lifestyle increases and you begin to upgrade your homes and cars to the point where your bills go right along with your salary. The real estate business is almost like a bank account you really can’t touch easily without selling a building, so it continues to grow and feed off of itself. It’s a terrific feeling when you realize that your $550,000 portfolio experienced a 10 percent increase in values in the last year and you’re up an additional $55,000.I’m using the same principles today in the commercial arena buying larger buildings with similar strategies. I can’t buy a $3 million building with the technique, but there are many other things that can be worked out in the commercial world. Nowadays I use strategies that involve complex negotiations with the sellers where I convince them to carry paper or lease option the building. I can also borrow money from banks for commercial investments giving the bank that piece of real estate I am buying as collateral as well as existing pieces of real estate as collateral. I call it redundant collateralization and am seeing more and more of it every day from banks.If you can go from broke to seven figures in one real estate cycle as I’ve suggested easily making yourself $1 million during your first real estate cycle, then just imagine what you can do in your second real estate cycle. I plan to be carrying a real estate portfolio with the value north of $10 million and have that portfolio under my control before the real estate market begins to show any gains. I expect the gains will begin to show sometime around 2013 or later. Can you imagine if you’re holding a $10 million portfolio and the real estate market goes up a meager five percentage points? It doesn’t matter how much money I made that year in income because as long as I can keep my business afloat I am up half a million dollars in equity in one year. If I’m ever lucky enough to see the crazy increases that we saw in 2005, can you imagine what it will feel like to see a 20 percent increase in values in one year when you’re holding a portfolio worth eight figures?”Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the gray twilight that knows neither victory nor defeat.” Theodore RooseveltLet’s dream about holding a portfolio worth $12 million when the market goes up 20 percent giving me a one-year tax free gain of $2,400,000. I believe that this is a realistic expectation for my second cycle of the real estate business. In the year 2025, I will be sixty years old. I feel certain that if I continue to just do what I’ve been doing my whole life, I surely should have a net worth of many millions of dollars strictly for my real estate holdings. I know of no other way to make money in these types of numbers as easily as I do in the real estate business. I don’t deny that other people have the means to make this kind of money or even more, but I am not familiar with those methods. I consider myself an expert on real estate, and I certainly feel as some of the things I’m talking about here will happen to me as long as I’m lucky enough to still be breathing when 2025 rolls around.This is why I love the real estate business, and this is why I’m pumped every day to get out and keep it going because I can see my future is filled with bright and sunny days. I feel terrific about getting up in the morning and going to work, and when you have that kind of attitude, there’s no way you can fail. This morning I woke up at 5:30 a.m. and went to my office building to reorganize some equipment in our communication room. I’m spending some afternoon hours on a Sunday working on my book and feeling great about my possibilities. If you love what you do, you will be much happier and much more successful at whatever you try.I don’t even consider the things that I did this morning or writing this book as work in the regular way people think of it. Obviously, it is work that I’m doing, but I don’t have a negative feeling about the word work or what it entails. I get a terrific sense of accomplishment from getting up in the morning and making things that happen furthering along my career each day in baby steps toward the ultimate goal of massive wealth accumulation. I hope that some of you reading this book will really grasp the things I’m talking about above. I feel that may be the most important message in the entire book.Here’s an idea you should think about after you buy your first property. Make sure that you take some time after you bought it to really analyze what’s going to be involved in being a real estate landlord. If you like it or even love it, let’s get the party started, and if you don’t get out right now. If you’re going to proceed in the business just for the money but despise dealing with tenants and working on buildings, you really have to be careful and reconsider what you’re about to do. This business is not for wimps, and it takes a heck of a lot of guts to be a real estate investor. To get to the level that I have achieved, you may have to take half of your net worth and roll the dice on some large commercial building risking the twenty years of hard work on one deal. Until you go through that process, I can never truly explain to you what that will feel like. My name is Phil, and I’m addicted to real estate.
Below is our list of the top ten mistakes made by private house sellers and how to avoid them:1) Over-price
Everybody wants the best price for their property. However, what you think your property is worth and what people will be prepared to pay can often be two very different things. It is vitally important that you research similar properties in the area and make sure that you get your price right. Sites such as houseprices and rightmove will help you to see what other properties are marketed at and what they have sold for. Some sellers like to think that if they price their property higher, they will generate offers and gauge the maximum price someone would pay. However, if your property is over-priced, you simply want get anybody through the door and you won’t get any offers whatsoever. The best strategy is to market at a realistic price from the word go.2) Over Enthusiastic
During a viewing, it is very off putting for the potential buyer if the owner is constantly talking at them. Let your viewer know that you are happy to answer any questions they may have and make sure that they feel comfortable in doing so. The majority of viewers don’t want to know when you last painted the ceiling, had the loft insulated or decorated the front room and if they did, they would ask. I have often witnessed an over enthusiastic seller completely throw away any chances of making a sale because they seemed desperate and didn’t let the viewers just look in their own time without any interruptions.3) Be Prepared
There are certain questions that you are likely to get asked and the more prepared you are, the better the chances are that you can address the question there and then. It is a good idea to know which boundaries are yours and where they lie and what council tax band you are in. Sometimes, particularly first time buyers, may be interested to know the cost of your utilities (gas, water, electric) so have your most recent bills handy to show them. Be prepared for questions such as “what is the area like” and make sure you have an excellent pre-prepared answer to any issues or questions that you think may arise.4) For Sale Board
I am always amazed to find a house for sale which has no for sale board. It is by far one of the most important ways of attracting interest from potential buyers. You simply never know who may know someone who could be interested in buying your property. To put it simply, if you do not have a for sale board, you are missing out on a potential purchaser. Make sure you have one if you are serious about selling your property.5) Finding a house
I will often speak to people who do not want to market their property until they have found a place that they like. This is not the way to do it. If you find somewhere before you have started to market your property, the chances are that the property will have sold long before you are able to sell your own. If you are thinking of moving, make the decision to do it and get your property on the market now. Instantly, you are in a better position to arrange viewings, make offers etc and you can be actively looking for your next home whilst generating interest on your own. Don’t wait for the right property, it doesn’t work that way.6) Solicitors
Firstly, one of the best ways to find a good solicitor is to ask family and friends for recommendations. Secondly, you should always shop around and never accept the first quote. Solicitors are often willing to reduce their rates in order to secure the business so make sure you obtain a few quotes from local solicitors and compare them before making a decision.7) Mortgage
The same rule applies for your mortgage. There is an incredible amount of variety in the mortgage market and it would be very unwise to get quotes from just one lender. Independent and fully independent advisors are able to search lots of lenders for you whilst banks and building societies will only offer you their own products. You wouldn’t buy the first house you viewed and you shouldn’t go with the first mortgage lender you see for exactly the same reason. It can pay huge dividends to shop around for your mortgage (always make sure that you study the costs of the insurances as well, there are massive differences in the price you will pay).8) Chasing up viewings
When you arrange a viewing, always make sure that you take the viewers contact details. If you are unable to make the appointment, you are able to let them know and re-arrange. Also, if they do not turn up, you can call them to find out why. A big mistake that private sellers will often make is not to chase up the viewing after it has been carried out. This can sound quite daunting but it is very easy and will give you a much better chance of securing an offer. If you have not heard anything from your viewer 48 hours after the viewing took place, simply give them a call and say something along the lines of “We were just wondering what you thought of the house and if you would like to make an offer”. Be friendly and polite but don’t be pushy.9) Low Offers
It can be very disheartening to receive a low offer. However, it is very important that you do not let your emotions come into play when dealing with the offer. Stay calm and collected and simply say that you are not prepared to accept that price. Many people will try a cheeky offer just to test the water. They may well decide to increase and give you the price you want, however, they won’t if you are rude to them. Read up on how to negotiate a good offer to help you get the best price out of your viewers.10) Pets
Your huge Great Dane may be cuddly and warm to you, but to a little old lady that wants to have a look round, he can be very off putting. If you have pets, make sure that they are kept out of sight and out of the way. If possible, leave them at a family member or friend’s house for the duration of the viewing. I have heard of it happening so many times and seen it from my own experience where a viewer walks into the house and they are greeted with a dog jumping and slobbering all over them. Many people are quite nervous around animals. If they do not feel comfortable in your house, the chances of them making an offer are 0.So there you have it. If you’re property is for sale by owner or you are thinking of selling privately, make sure you avoid these common mistakes and give yourself the best chance of getting your property sold!!RegardsCustomer Service Team
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