Pull The Proverbial Trigger!

My business is surrounded by both new and savvy investors. Dealing with new investors is a great part of my business. To see the excitement in their eyes, is a flash back to when I was preparing for my first rental property. Getting them on track to financial freedom, talking economic fundamentals, being a geographic specialist, all important parts of  becoming a savy investor.

Every so often, I get an investor who loves to throw low ball offers and see what sticks! Not only is this a waste of time for all parties, it may affect your final purchase price. That’s if the seller will even counter back to your dis-tasteful offer.

Investing in real estate is a business. I can’t stress that enough. Even if you own one rental property, you are now the C.E.O of a business. In order to have a successful business, you need to surround yourself with industry professionals who do their job well so you can do yours well ie. buy properties, raise joint venture capital, create relationships etc.

Throwing out low ball offers 10-20 thousand dollars below market value, just because you’re “entitled” to a deal, will do nothing but damage relationships and slow the growth of your business ie. acquiring properties.

“So how do I invest in real estate like a savy  investor?” Ask your professional realtor (who specializes in investment properties in your area) what market value is for that property. Once you have that number, calculate your operating costs and subtract that from the market rent. Operating costs include mortgage payments, property taxes, insurance, condo fee’s (if applicable) and your property manager (If you are going to be the property manager pay yourself! This is a business and your time is worth something, I know mine is).

Always calculate your mortgage payments at the full market value price to be conservative. If you cash-flow on that property and that amount is one you are comfortable with, buy it! That’s right, buy it! “You mean I actually have to submit an offer now!? You mean I can’t keep playing with my excel spreadsheet?”

Yes, buy it! And not only buy it, pay full market value on it too! “What happened to buy low sell high, beating down the seller, all the T.V show tricks?” Not here. This is about building your name and having integrity. Once the numbers work, you do not want to risk going into a bidding war against others. Give your best offer (market value) snatch it up and move onto the next.

Don’t get me wrong, I’m all for getting deals, but this is a business about building your financial wealth and building relationships. How hard will your realtor work for you if you throw out 10 garbage offers and don’t end up buying any because you didn’t get a “deal”? Even though they worked countless hours showing you property and doing research for nothing. How will you look to potential joint venture partners when you only buy one property every 5 years because you can’t find a “deal”? I love when I hear specualtors (people who think they know everything) say “If it’s not cheap, it’s not a deal, and you wont make money unless it’s cheap!” Funny how my clients and I are making money on properties in all cycles of real estate. If you think you can only make money from buying cheap real estate, your going to miss out on many opportunities!

Notice throughout this article I never once mentioned asking price? I used the term “market value”. Pay market value. Run your numbers based on market value. If a condo is listed for $150,000 but your realtor, who’s a specialist in the area, says market value is $145,000. Don’t offer $150,000. Pay $145,000! Just get it and move onto the next.

You’re a sophisticated investor right? You’ve done the home work already. The town you choose has great economic fundamentals. The job rate is increasing, the vacancy rate is low, there’s population growth, the property cash-flows, what more? You still want to beat the seller down 15 grand because you are entitled to a deal? This business is not for you, simple as that!

If you’re looking to expand your single-family investment portfolio in KW/Cambridge, feel free to contact me anytime! Visit my website and see me renovate properties for clients and watch video testimonials. I look forward to helping you achieve your goals!

Mat Piche

RE/MAX Real Estate Centre




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