The Real Estate Coach by Bradley J. Sugars

Author:Bradley J. Sugars
Language: eng
Format: epub
Publisher: McGraw Hill LLC
Published: 2006-01-15T00:00:00+00:00

Long-Term Finance Loan Structures—

Positive cashflow deals should use interest-only loans over as long a time frame as I can get, and capital growth deals should use an offset or revolving credit mortgage facility so I can manage my cashflow, my fees, and my borrowing capacity.

Part 6

Profit at Purchase

Brian knew that the profit they make on any investment property would be determined by the purchase price. The Coach had made mention of this a few times now. Sarah had remarked that this made the negotiation process all the more important.

It also made her a little more nervous.

Brian kept reassuring her that it wasn’t a case of being nasty or anything like that; it was merely a business transaction and that was the way they had to view it. This also highlighted the importance of doing their homework properly. It also highlighted the importance of having their own clearly defined set of rules.

They were still discussing this when they pulled up outside the Coach’s office, parked, and made the way to his front door.

“Hello, folks, come on in,” the Coach said as he opened the door. “And how are you?”

“We’re just fine, Coach,” Brian replied as he followed Sarah in.

“Today we are going to go through some of the variables that will help ensure your real estate purchases are as profitable to you as possible right at the time of purchase. After all, getting a return is the sole reason we invest in real estate, isn’t it?”

“When you come to think of it, I guess that’s it, Coach,” Sarah responded. It made it sound so mercenary, yet logical at the same time.

They took their seats in the now-familiar office and sat back, waiting to hear what pearls of wisdom the Coach had for them. Brian was fairly sure a few more common misconceptions were about to go out the window.

He was right.

“The game begins right at the beginning, when you find a suitable property that meets the requirements of your plan and the conditions of your rules. The first thing you do at this stage is fill in an offer to purchase. Now bear in mind that what happens next is like a game. The seller will have a price in mind and so will you. The only difference is the seller’s will be based on emotion while yours will be based on an investor’s logic.”

The Coach paused, then continued.

“This is potentially disastrous because as you know, these prices can be worlds apart. The seller will have built in some room to maneuver on the advertised or listed price, and your task is to find out what the limit is. The last thing you want to happen is for the seller—or the agent for that matter—to get you to start dealing on an emotional level as well, because this would mean that you would no longer be objective in your decision making.”

“So we must start off offering low,” Sarah added. “We need to shake the tree to see what falls out.”

“You learn fast, Sarah.

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