I want to teach you the most important lesson you can ever learn in real estate. Do you know what most real estate agents will tell you?
“Location, location, Location.”
If you were operating a cash-flowing commercial property, I would agree with you. Let me ask you this though. Would you rather have a property worth $50,000 purchased for $5000 in a crappy area or a property worth $300,000 purchased for $280,000 in a fantastic area?
Bill Bronchick said it best, “Invest in great deals, not great markets.” So just how do you find great deals in real estate?
The Motivated Seller
Like I said, you don't have to ever worry about finding the best home in the best area. The age old real estate mantra really ought to be “motivated sellers, motivated sellers, motivated sellers.”
The Silver Bullet in Dealing With Motivated Sellers
There's literally dozens of ways to cash out from each and every motivated seller you encounter. However, in today's changing market, there are more pre-foreclosures than in any other time in history. That's why I swear by the magic bullet – the short sale. Whatever you do, you must learn short sales. You'll be able to create equity out of thin air with each and every motivated seller.
Where to Find Your Short Sales?
Now here's something interesting. If you find a motivated seller with a great home in a great area, the banks will probably be less likely to give you a large discount on the property. While you'll still make a profit, it's less likely you're going to get away with a huge return. However, it doesn't matter in that sense because getting your money out through resale is much easier. If you get a “junker” home in a crappy area, that's okay too because it will be easier to negotiate a huge discount. However, resale will be tougher and you'll probably have to give up a lot of your discount to your end buyer to get it sold. Don't worry though because everything has a price that it can be sold at.
In both cases, you'll probably make roughly the same money reselling the home.
So what's the lesson to be learned here?
Find the motivated seller who must sell their home. It's the only thing you need to know in this business.
The next step is to enhance your marketing efforts.