How to Turn a Good Deal into a Great Deal: Creative Real Estate Investing
Good deals just don’t cut it for me anymore. To do a deal in today’s market, it has to be great! I would suggest that you prescribe to the same philosophy. If you’ve been reading the blog lately, you know that we’ve talked a lot about minimizing risk and maximizing returns. By turning a good deal into a great deal, you are accomplishing both.
7 Simple Ways to Turn a Good Deal into a Great Deal
1. Get “The Stuff” Thrown In
Let your imagine run wild. The appliances, the furniture, TVs, really anything in or around the property that could be thrown in to sweeten the deal are fair game. If the seller seems to be stuck on a certain price or terms that don’t quite do it for you, a 64″ plasma and leather sofa could do the trick. There is nothing wrong with asking.
2. Negotiate Seller Financing
Every bit of seller financing that you can negotiate adds value to the deal (assuming the terms aren’t outrageous). As long as you are working with a motivated seller, this should be your reality in every deal you do. You are the boss here. Give a little on price when it makes sense to get the terms you want. Most investors spend all their time on the price side when the terms side of the negotiation can explode your wealth.
3. Put Less Cash Down
Typically, if you are putting less cash down, you would be compensating a seller with a higher sales price, higher interest rate or shorter time frame. BUT, less cash in the deal can definitely turn a good deal into a great deal.
4. Get Paid to Buy It
Go ahead and decide now if this will be a possibility for you. The naysayers will tell you that this is impossible, but all that they are saying is that it is impossible for them.
I know that it’s possible because I’ve done it. I bought a house a year ago last May, and the seller sends me a check every month, without fail. They owed far too much on the house for me to buy it for what was owed. I offered $17K less than what was mortgaged and bought the house without coming out of pocket. Now, I get a check for right under $200/mo. every month. I have the house lease optioned with about a break even cash flow with $25K in profit on the back end.
5. Rezone the Property
I do not have a lot of personal experience rezoning property, but it can be extremely profitable. There are investors whose entire livelihood comes from contracting properties, getting them rezoned, and flipping them for hundreds of thousands of dollars.
How about that for a way to minimize risk and maximize returns?
6. Use OPM
Always a good way to turn a good deal into a great deal, using other people’s money. Just remember, the point would be to maximize your return on cash. If it makes sense to use some of your own money, by all means do it. But, if you can employ your funds to work harder for you than the price at which you can borrow, use OPM.
7. Sell or Fill the Property Before you Close
I love this strategy to turn a good deal into a great deal. When you have a buyer or tenant lined up for a property before you even close on it, you are positioned to do very well.
Make sure that your purchase and sale contract includes the right to market the property during the contracted period. You should have it built right in.
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Patrick Riddle:
Dusty Keefe:
I really like that first one. “There is nothing wrong with asking.” There have been a number of situations that I have seen someone get a favor, an item, a service, just because they asked. I had also wanted that “thing”, but I was apprehensive, and look where that got me. One never knows until one asks.