How do the successful people make money on Real Estate? Here is one example of a successful approach. It involves talking the seller down below the appraisal value. You need to get them to commit below that value to serve as a cushion between what you can borrow from the bank and what extra expenditures may arise during ownership. Perhaps the plumbing could go out or something.
It looks like you need to find some desperate sellers to be successful. Or you need to be damn good at negotiating. So, your skills in being sharp and sincere are essential. The seller has to agree to your price and if they don’t, you must walk away from the deal.
I found this little crime book at a thrift shop. I didn’t know what to expect of it. But there have been a lot of interesting business lessons written into it. Of course, the man who practiced these strict business techniques was shot dead. Apparently, a lot of people didn’t like the man because he was so shrewd. But, in turn, he was well respected for his abilities as well.
He would go in and buy property at a good price. He’d find a $100,000 piece of property that was worth $100,000. Well, he’d go in and talk the owner down to $80,000. If he couldn’t, he wouldn’t buy it – but he could do it. And then he’d go to the bank and borrow the full amount, based on appraisal. See, the bank will give you 80% of appraisal. Well, in fact, if he talked the seller down to $80,000 -and he usually did -he’d get 100% financing. He’d borrow the whole damn $80,000. He wouldn’t have a nickel in it. Then, he’d go out and rent it or something, and make his payments. That’s why Dean grew so big and so fast and was able to obtain the credit he did -because he always found some way to pay his bills when he said he’d pay them…
-The Hunting of Cain, by Dan Moldea 1983