Real Estate Investment Articles

The Art of the Deal

By: Hughes Brothers

Introduction
Goals
Make the Conversion
Action Plan

Whether you are new to real estate investing or have reached a plateau in your investment life, learning how to structure a “deal” is imperative to your success. Oh sure, just about anyone can “make an offer” and apply for a loan but, will the deal be good for you in the long run? Will you have immediate positive cash flow? Will you be able to rent to quality tenants over a long period of time and then cash out with lower taxed capital gains rates and LOTS OF PROFIT?

The answer to these questions depends on your ability to organize yourself, set in place a “plan of action,” network valuable connections with all the “players” involved and follow through to the closing. However, it is also critical to your long-term success to learn and develop management skills. Without good management, everything else you do will be less profitable---if not an actual loss.

Creative real estate acquisitions are nontraditional. Most of the people you will encounter are accustomed to the old standby traditional methods of buying real estate. This is because most people only buy one or two houses in their lifetime. Therefore, it is not important for them to understand the buying process better. It is also not important for them to establish a “system” to buy Single Family Homes for Profit. But, if you are serious about this business and want to make very large sums of money, you need a Master Plan for success.
You Need a Master Plan

GOALS

Business Plan

Mission Statement – Buy, Build, Rehab, & Hold real estate for Profit.

Investment Vehicle – Single Family Houses (ranch style preferred)

Goals for 2006 – Buy, Build, Rehab (12) houses

Buy for Hold (8)
Build (2)
Rehab (2)

Financing Sources:

* Bank – Line of Credit
* Cash
* Money Partner
* Mortgage broker
* Self-directed Pension Plan

MAKE THE CONVERSION

(VIA CASH FLOW)

EARNED INCOME TO INVESTMENT INCOME

Income needed per year (gross) $50,000

Income needed per month (gross) $ 4,166

Net Income needed with no tax $ 2,916

Per House Statistics Monthly:

Gross Cash Flow $1,250
Maint.,Mgt.,Taxes,& Ins. (28%) 350
Debt 120K,30yr,7.5% 767
Net Cash Flow per mo. 133

Results needed:
# of houses needed to be FREE 22
Average Value of each house $150,000
#of houses currently owned 5
# of houses needed for goal 17
# of years to meet goal (five) 5
# of houses to purchase each year 3.4

ACTION PLAN

* Remember to convert earned income to 5% Capital Gains

* Set up your buying machine first

*Spend 20% of your time on the property until it requires more

*Set up banking Connection -preferably to pay cash for houses

*Develop a investor partner/mentor with funds for deals

*Develop three realtor relationships and meet one a week

*Mail 100 prospecting cards a week to your farming neighborhood

*Place add in paper (I buy houses) run every other two weeks

*Join an investor club, network with investors and educate yourself

*Start making offers on properties you have researched

*Buy one house a month for next twelve months

One other point. You may be wondering, “Can I really make any money in this hot seller’s market?” The answer is YES! Here are some basic keys that we will be covering today:

1. Make your profit “going in”
2. Buy “right”
3. If you buy for the “long term hold,” it doesn’t matter when you buy
4. Avoid buying in areas tied to one industry
5. Buy in areas with job growth and job diversity

PUT THIS GOOD INFORMATION TO WORK!
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