What are Gregg's Ten Real Estate tips?
1. You make money when you buy, not when you sell. Take your time buying. You only get once chance to do it right. This is the time you get to decide on the price. When you sell your buyer will decide the price he pays, not you; and many times you cannot control when you have to sell – but you can always control when you have to buy.
2. Always look at the alternatives. Once you have made a decision, take a step back and look at all the alternatives once more. For example. If you have settled on an offering price for a property – look at all the other options open to you to for that same amount of money.
3. Cost has nothing to do with price. For further clarification, see point one. What someone has invested in a property has no bearing on what some one else will pay for it; for example, just because someone inherited a property (essentially they pad nothing for it) they would not give it away because their cost basis was so low. Nor would a buyer pay more for a house that someone overpaid for. Also: look at the cost of ownership, not the price of buying. This means issues like maintenance, taxes, and HOA fees.
4. Leverage is a beautiful thing. Borrowing has its place, just not in investment real estate. If I buy a $100,000 investment property with 20% down ($20,000) and the value of the property goes up 2% in one year, I just made 10 percent on my investment. If I paid all cash, I only made 2%.
5. Look for the worst case scenario – the big, “what if?” If you can sleep with a worst case scenario – move forward. My long time attorney, Jack Donenfeld once told me it was his job to figure out what possibly could go wrong with a contract and then prepare for it in advance. As an investor, it is my job to figure out the worst thing that can happen with the property and the investment and see if I can still live with the consequences.
6. All real estate is local. Do not apply national trends, or even state and city wide assumptions, to a local real estate deal. The really cool thing about real estate is its unique nature and flavor. A few weeks ago I talked about how one retailer could succeed on one city corner and not another. Know your local real estate.
7. Buy Real Estate – they are not making any more of it. Here in Florida this is certainly true of waterfront land. I would also expand this to another rule – buy unique. By the top, the end, the view, the one with the big lot. Always strive to differentiate your property from another. I always tell condo buyers to buy the highest and best that they can afford.
8. People don’t buy a house, they buy a home. Sounds trite, but it is true. If you can get a customer imagining himself fishing off the dock with his grandson, or cooking in the kitchen with her family, you are now relating to the buyer. The number of square feet is meaningless if the customer can not relate to the home.
9. Quality endures; Poor quality is expensive. Small well built homes will always hold their value longer than large poorly constructed homes. Same thing with rental property. If you are buying sight unseen, you better read the specifications.
10. Consult an expert, but make your own decisions. There are many professionals out there, and they all have their place: home inspectors, real estate agents, accountants and lawyers; use them wisely, but remember, at the end of the day – only YOU live with your decision.
One of my favorite sayings is that you cannot steer unless you are moving. You will not know you are going in the right or wrong direction until you take a step. I made many mistakes in my life – and I learned more from them than my triumphs.
If you need help taking that first step. I would be happy to oblige. Perhaps you too can learn from one of my mistakes.