So I mentioned to you in the last article that you don’t need cash to make money in real estate and talked about the people that can help you on your real estate journey and also some structures that may help you secure a deal without cash.
By now you are possibly wondering how does one find these deals? Before I go into that I need you to think about a few things that are important before you go into anything.
What are you trying to achieve with your real estate deal?
Do you want to find properties that are under market value to buy and hold?
Do you want to find a property that you renovate and flip?
Do you want to find a property where you are the property manager?
Do you want to find a property where you are a money partner?
Do you want to find a property where you subdivide?
What risks are you willing to take?
How comfortable are you with managing a renovation?
How comfortable are you with letting others do the deal on your behalf?
How comfortable are you in dealing with property that is not in your area?
There is no point in going into a deal that will stress you out to the max!
What returns are you looking for?
I loose a lot of possible new partners here, because of the fear of losing their hard earned cash. But let me ask you this, if you had a deal where if you invested money into, has more than enough security to pay you back and you can get 11.25% return guaranteed within 6 months, isn’t that better than the nominal bank interest you would earn?
I certainly think so!
How much involvement do you want to have?
Do you want to be the hands on manager of your project?
Do you want others to negotiate the terms and then you take over the deal?
Do you want to be the negotiator from the time someone finds the project for you?
Or do you even want to be the one that finds the deal?
What duration should your project be?
So if you decided that it doesn’t have to be a buy and hold project and you are happy to go with shorter deals, what duration are you comfortable with? Do you want short term, say 6 months or medium term, 12-18 months?
What structure do you need to have?
Before you go into any deals talk to the accountant (and in some cases, your lawyer) to find out how you need to structure the deals. What entity is the best legally and for tax purposes?
How can you secure your cash? Because you don’t always have your name on the title.
What agreements to put in place? With whom? And in what name?
What do you need to lodge and where to make things happen?
And if you are the person that is putting together a deal for others to consider, think about what would make them want to opt in?
Prepare a pack on the property, its potential, what work needs to be done to it, how much money you would need, what profit margins you estimate, what structures do you recommend, any previous property deals you have done successfully.
Phew, there are a few things to consider… It may seem a lot at first, but once you start getting into property deals a lot of these questions drop off since you start creating parameters for you to work in.