Real Estate Buying Strategies

Let me share with you right off the bat the strategy that every seminar, book, or Real Estate course will charge you hundreds or thousands of dollars for. Are you ready? Get a pencil and paper to write this down. It will change the way you look at a piece of property forever: buy low, sell high.

For all the hype or motivational speaking surrounding this concept it always comes down to: buy low, sell high. Those four little words are the basis of some of the most expensive Real Estate courses in the country. After the magic phrase is uttered in a thousand different ways the question comes up on how to accomplish this very simple goal.

In the previous two articles I've talked about some very basic market timing principles. Market timing has been a big topic of discussion lately because of the credit crisis, and fall of Real Estate prices. In fact the Real Estate market never changes so it's interesting to me how the price of Real Estate got to be such a hot topic. I think Internet hype had a lot to do with it.

Buying Real Estate needs to be a win, win situation. I mention that first because the next phrase puts people off. Some one divorces, dies, or goes crazy every day. Those are the three biggest buying opportunities talked about in Real Estate courses. If we look at property as a normal thing, it has normal circumstances. When a property goes outside of those circumstances it becomes a buying opportunity. The greatest norm is a young couple trading up into a house to raise a family then down sizing into retirement.

There are of course thousands of circumstances outside of the norm, investors being the next market segment, but for the sake of moving along let's work with the norm. I will address investor trading of Real Estate in the next article.

So divorce is the first I'm going to address because it was the hardest for me to understand. Divorce is a complete opposite of the norm I described. It also opens a door in a process that has yet to be fulfilled. People buy for a reason and that reasoning may be sound. They may have bought in a good location close to schools. By selling at a time of distressed circumstances the couple may not realize the return of the location, you might have children who would enjoy that school.

Many divorces start over money problems, some of them may be associated with the Dream Home concept. They may have secured that Dream Home or made improvements that threw the Dream Home into an economic hardship. Division of assets is hard. Many times it's best to cut losses in the division which means a property may need to be cashed out quickly, so remember to stay in touch with your lender.

Death is always hard. It's hard to take up some one else's grieving. There again I am a widower and would have been grateful for any help I could have gotten at the time. Win, win is when you help. In some cases a relative does not want to deal with any of it. The clothes, junk, furniture, or property. Many times there is deferred maintenance. There may also be encumbrances on a property due to a long illness that need to be sorted out. This is a specialized field and not for every one. If you are there to help great, if not, there are other ways to make money.

Crazy is my area of expertise. I love crazy people. OK I said it and stick by it. My first serious mentor in Real Estate investing was out of his mind. In the early 1970s he hated plastic because it was not bio degradable. How crazy is that? George owned several properties around the Ballard, Fremont area, and George also liked crazy people. Crazy people liked George.  George is worth several millions of dollars today as a buy 'em and hold 'em investor. George liked me because I could fix things.

George gave me a house as a gift. George was so crazy. It was a little house that needed a lot of work George would never do. To be more clear about the giving part is that I had to pay George back when I sold the house. I made two thousand dollars out of the deal which was good money at that time.

We've established some of the driving motivations to sell at a discount. Let's elaborate on some of those. Divorce can create bankruptcy, as can medical bills. If the house is the only asset or biggest asset it may be better to sell at a discount and get something rather than the seller getting nothing. A personal soap box of mine is that Medicaid, Medicare, Nursing Homes, and government subsidies look at assets. For nothing but to pay those government bills a property is sold, even then at a discount and the seller gets nothing.

Divorce can also create other hardships that are not a part of the property settlement. If you are there to offer solutions there are opportunities. Some people offer help in mediating a settlement between an estranged husband and wife. Some things might have to be paid outside of the real estate transaction. Cars are a big stumbling point in some settlements Where are we going to move the car has come up and it can stay in the garage until it sells or storage has been arranged. Little things that are helpful can make gains in a negotiation.

These are broad strokes of what's termed distressed property situations. There are the true distressed properties, those that need work, that will be addressed in an another article. How you find these properties is first by driving neighborhoods you like and looking for tall grass and unkempt yards. These are good early signs something is a miss. Second is Public Records. Divorce filings are always available, and you need to get those early.

Senior Tax Exemptions, tax data of whose behind, and length of time at an address are at the Assessors office. Bankruptcy filings or foreclosure notices are a part of court records. There is an industry of what's called pickers who go through these records and put out reports. You can buy these reports the same as any Real Estate agent can.

In the world of win, win there are plenty of opportunities. There is a deal a day in Real Estate, you just have to find it. To be clear there is a word of caution. Some programs tell you to be smart and aggressive, which are good traits in this business. Once you start messing with people, or the lives they have, it becomes a problem for you as an investor. Things get harder and the liability mounts. As long as you approach this business as a business it becomes easier to let other people win in order for you to be successful.