Black Friday and Real Estate Investing.
Well today is “Black Friday” which is the beginning of the Christmas shopping season. It’s called Black Friday because this is typically when retailers go from red numbers to black numbers on their balance sheets. I’m not sure how this translates for real estate investors. It’s sort of business as usual. People are selling homes, people are buying homes. This year with the economic conditions, people are a little hesitant in their decision to do something. This drives me nuts. Either do or don’t, but make a decision. Be proactive not reactive in your situation. Once you make a decision, regardless of which way you decide, things will start to “line up” for you in accordance to your decision. But you MUST decide.
I was at a MO/KAN REIN (Missouri/Kansas Real Estate Investors Network) meeting this week and the discussion focused around tightening market trends. By the way, if you are in the Kansas City metro area, contact me about coming to our meetings. If you’re looking to buy for all cash and quickly resell for all cash, then you’d better be low low low on your purchase price. Cash Is King right now. If you have cash or access to cash you can dictate extremely low purchase prices. It used to be the M.A.O. (maximum allowable offer) for all cash was 70% minus any repair costs. That number could easily be 50% now. So if you’re looking at a property that will be worth $100,000.00 ARV (after repair value) and it needs $20,000.00 in rehab costs, your MAO would be $30,000.00 or less for all cash. That sounds brutal but if you don’t adhere to these kinds of numbers for all cash, your going to have trouble reselling that property quickly for all cash to someone else. You can rent it out or do a lease to own, but you need to know your exit strategy BEFORE you acquire the property. Otherwise, you’ll buy it wrong and then won’t be able to get rid of it.
The time is great for getting into real estate investing. However, as I always mention; get trained and plug into a mentor or a group to help you along the way. Anyone can easily go out and overpay for a property and then you’re in the trick bag trying to get rid of something you own for too much money. Check out: Cash in on the Biggest Financial Windfall in America’s History! Getting training keeps you from committing “stupid”.
As always, let me know what you think.
Hope you had an excellent Thanksgiving!
