If you have been even remotely paying attention, the current real estate market is white hot just about everywhere. This is the time when many people fold and lay their cards on the table. Deals were plentiful just a few months ago right? Now? Crickets…
Are you trying like heck to buy something? Anything? Just to get a deal? Are your offers getting outbid, or worse, refused all together? Have the realtors and wholesalers become impossible to deal with? Crazy demands, asking you to waive inspections and contract contingencies and then asking you to sign contracts that only favor the seller and not you?
STOP!
Breathe.
You lived a long time without that investment property you are about to overpay for. It is times like these I must remind you of why you are investing in the first place..and that is to build wealth. You simply cannot compete against the undereducated or emotional investors and ever plan to get ahead. The old timers have always said, and this is very true even still today..you make your money when you buy. That means if you buy wrong, the situation only tends to get worse.
I just spoke with a young kid a few days ago who was all excited to buy his first property. Good kid, mid twenties, wide eyed and tickled pink about the thought of being a real estate investor.
He dove in head first, spent time networking, learning, investigating and found a property in which he decided to buy. This young man is one of those kids that tends to restore your faith in humanity, just a great guy all around.
I was happy to take a look at his deal about a week before closing. He did his homework, negotiated a good price and got it under contract. We covered the specific closing procedures he should follow, to include working with the title company to clear a bunch of issues with the title. He listened intensely, took copious notes and I was excited for him embarking on this journey.
During the discussions a week before closing I had suggested he delay closing until the title company could assure him that the title issues could be cleared. Closing day came and went, and I did not hear anything from him..until a few days after closing he messaged me saying that he closed on the property.
The problem was that he was embarrassed that he folded under pressure from the seller, who claimed to be a mentor of his. He also succumbed to pressure from the title company and closing attorney to just get the deal wrapped up.
Stories like this are common in today’s society, we want / need / expect instant gratification and are not willing to wait for errors to be corrected. I can’t begin to tell you how dangerous this is.
Let’s hit a few bullet points shall we?
You WILL survive without that property if the deal does not go through.
Cutting corners in due diligence will almost always leads to financial loss
You make your money when you buy, that means title issues need to be corrected before you buy.
Only buy with good financing: Don’t use instant LLC loans, credit cards, hard money, ect to buy rental property. Jimmy Napier said “a good deal can quickly become a bad deal with bad paper on it” which means don’t agree to lousy financing.
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