Offline1. Not Knowing the Market Numbers
Knowing your market is as important as any other factor in real estate investing. This means having a neighborhood by neighborhood analysis of the supply curve and average days on market. Both of these data formulas can be found through the assitance of a real estate broker using the MLS.
2. Mistaken Value
Most new investors use Zillow, e-appraisal, or Trulia (or even worse, an average of the three) for determining the value of a property. This is fatal – learn to do a “comparable sales” analysis.
Get your own data, too. Relying on the listing broker to give you comps for properties is like asking the barber, “How’s the haircut”. Learn to find your own comps using public data websites like Trulia.com.
3. Underestimating Repairs
If you have no experience in rehabbing homes, then you shouldn’t be estimating repairs yourself. Get at least 3 difference contractors to give you bids. Get these bids in writing, with detailed breakdowns of labor and materials.
4. Poor Choice of Contractor
A bad contract won’t have a license, will bill you by the hour, and/or won’t work by a written contract drawn by you. A good contractor agreement is essential, have a local attorney draw one up for you. Make sure you get signed lien releases every time you write a check.
5. Bad Contract
Most real estate courses have crappy contracts because they are not written by attorneys. My advice is to learn your local Realtor form and draw up a few addendums. An attorney can help you with this.
6. Wrong Legal Entity
Most investors form an LLC for their investing practices. Is this right? Maybe, maybe not. There any many tax issues involved in choosing an entity that should be review with a tax professional, NOT just an attorney (unless the attorney in question has tax knowledge, like me!).
7. No Marketing Plan
Most investor hire a real estate agent to find them deals and that’s it. There’s not enough good deals on the MLS to make a living on so you need a better plan to market to FSBOs, foreclosures, estates, divorces, and other sources ofmotivated sellers.
8. No Script
OK, so got a motivated seller on the phone and now what? Uh, uh, uh – what questions do you ask? Have a written script you keep by the phone so you always know what to say.
9. No Business Plan
If you fail to plan, you plan to fail. You’ve heard that before, but how many investors actually write a business plan? The truth is very few. Take some time to write a good, detailed business plan that you can follow as your goal.
That’s 9, but I can think of at least 100 more. Don’t make mistakes, get a mentor on your team to guide you through the process.by Bill Bronchick
Im confused on the whole filling out contracts part. Sorry,
so when i find a motivated seller do we fill out an Assignment of Contract
which is a whole different document then the contract we sign with the buyer.
And when that is all done do we hand all documents to the escrow agent all at once.
If God gave you the ability to dream, he also gave you the ability to
achieve that very exact same dream.
-Unknown
Yes, you are correct.
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
you will initially fully execute a purchase agreement with a Seller where you are the Buyer. Then if you find a an investor to take the deal you will execute an Assignment of Contract (AOC) with them. Both documents will be given to the closing entity.
Make sure you include a reimbursement (or preferably 2X) of your Earnest Money as a part of the AOC.