ver the last two weeks,
events have unfolded that That's when the wheels fell off.
have reminded me of an
important truism in real estate It seems my broker's money source
investing. decided he was only going to
invest in property valued at
"Always have a back-up!" $250,000 or more. Yikes!
This was played out in dramatic So, I went to back-up hard money
form with a deal I'm closing broker number 1.
tomorrow. A wholesaler friend of
mine brought me this great little The broker took his time...about
three bedroom one bath home 5 days...to finally tell me that
tucked away on a dead end street he only wanted to loan about 60%
where pride in ownership is alive of the as-repair value. No way.
and well. The electric and Not when I can do better (70%)
plumbing is already upgraded and with back-up hard money broker
this rehab is cosmetic with the number 2.
exception of adding a bath.
Back-up broker number 2 is
I'm buying it for $52,500 and the probably who I should have went
as-repaired appraisal came in at with in the first place. I've
$86,000. Not a bad spread. This borrowed from this source before.
is the kind of deal I like! It took one phone call, and the
money is there and I close in a
When I called my hard money couple of days. Wham-bam, the
broker, she was delighted and we deal is arranged.
moved quickly toward closing. I
was only waiting on the closing It looks like it's time to shift
time... around the players in my core
team a bit. Back-up number 2 is but I am striving to have 3-deep
now my starter. Back-up number 1 hot back-ups in each. Thing
(foot-dragger, happen. Life happens! Be prepared
doesn't-loan-the-70%-he-said-he-w for it.
ould) is benched.
Don't stop there. Have back-ups
I tell this story to illustrate when you rent or sell a property.
that it's absolutely CENTRAL to A property isn't rented until the
your business to have back-up rent and deposit (or lease/option
plans in all aspects of the fee) is paid and the keys are in
business. the hands of the new tenant. So,
encourage back-ups until the
I strongly recommend having two money is in your hands (in cash).
or three:
- Hard money brokers I've had appointments set up to
- Appraisers for quick value sign leases, and the potential
assessments tenants never show up, no call,
- Rehab crew leaders and they quit answering their
- Plumbers phone. This is despite being hot
- Electricians for the house an hour earlier! If
- Roofers you are in this business long,
- HVAC techs you will learn that people will
- Realtors disappoint you and they will fool
you. So, establish policies and
In fact, have two or three of any make one of them "it ain't rented
trade or profession lined up, until it's paid for!"
ready to spring into action as a
moment's notice. Sure, I have my Encourage back-up offers to
favorites in each of these areas, purchase. Deals fall through all
the time! Take as many back-up rearranging your core team is
offers as you can. thinking big and long term. It's
a constant process of improvement
Having back-ups is a mental frame and adjustment. This approach is
of mind that fits within being a crucial to your business! Apply
big-picture thinker portion of this principle and profit!
the Mind of the Real Estate
Investor. In addition,
About the Author:
Bruce W. Ford published the "Nothing Held Back" newsletter as a free service of http://Rehab-Real-Estate.com. Get his important Special Report entitled "12 Things Real Estate Investment Gurus Won't Tell You" at http://www.Rehab-Real-Estate.com.
Source: www.isnare.com
