Your first property purchase and the next several after it will be extremely important to your investing career. Although it’s very likely at the time you do it you probably won’t realize exactly how important. There are right properties and wrong properties available in the marketplace. Choosing the kind that makes long-term profits and short-term cash flow is what you want.
Making a good solid “first property selection” can easily spell the difference between establishing a strong permanent launching pad for your investment career or creating a deep financial hole that will quickly bury you. Your dreams of wealth can soon fizzle out and die if you purchase properties that cost you more than they’ll ever be worth. Buying the right property is the first step and it’s extremely important because it’s usually make or break for new investors. What I tell you next will provide valuable information on how to buy your first properties right and what to look for before you sign the deal.
Think Like an Investor
Before you begin looking at the specific types of properties to purchase, first it’s time to pause and think. It’s important to start out by adjusting your thinking to fit the situation. Ask yourself this question: “Who is most likely to sell their property for the best (cheapest) price and best terms?”
I’ll tell you who – IT’S SELLERS WITH SOME KIND OF A PROBLEM. Generally they won’t tell you about their problem. You will need to find out about the problem on your own. That’s the situation and that’s the kind of seller you should begin looking for.
I can assure you that sellers like that are out there. It’s important to purchase properties from sellers who really and truly need to sell. Not from sellers who may wish to sell. The seller you must find will have a strong motivation to sell; it can be one of many different reasons. I’ve found the most common of these to be financial problems, management distress, divorce and job transfers or moving. It’s not uncommon to find all these problems going on at the same time,
Forget “Blue Ribbon Deals”
Let me pass along some advice that works. Don’t overcomplicate getting started. Getting started ranks higher than finding the best deal in town when you’re first starting out. Don’t look forever trying to find a “blue ribbon” property. When you first start, chances are you’ll stumble over some good deals without even realizing they are! The point I’m making here is most of us don’t really know enough when we first start out to distinguish a real bargain from a dirty deal. The best approach in the beginning is to SPECIALIZE in whatever type of property you decide works best for you. I recommend the older fix-up types because profits come so much faster than with the nicer looking units. The reason is… you can quickly add value to rundown properties.