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Finding, Fixing, Financing, and Flipping - The Short Course
Most people get involved in Real Estate investing to make money. Pretty self-evident - or, is it? What would you say if I told you that everything you have been taught about Real Estate investing and making money "rehabbing" your real estate investments is wrong? Well, at least, much of it! Let's take a look at something that all too many people don't think about in their real estate investing - something that seems to be a secret formula to bringing in the most cash from your real estate investments. While it is often true that the total price of a property that has had a lot of work done on it is more than one that hasn't, what has that "price difference" really cost you, the Real Estate Investor? With enough time and effort, we could go through dozens of scenarios to figure out just what a loss of time, money and effort it is to go through a house and "rehab" it, but let's keep it short and talk about some things that really happen in real estate investments - a "reality check" if you will... I like to be sure to get everything out of a real estate investment that is possible, but, there is a balance between the Time, Money, Effort and Appreciation the customer will get out of what you put in, as opposed to what they would rather do themselves... And they are willing to pay you for the privilege! I call this the "M-E-A-T" of a real estate investing deal, and it is a simple equation you can apply to all your real estate investments. In the table below, look at the M.E.A.T. result for each Function. ____Function____ _M_ _E_ _A_ _T_ _Total_ Painting (full) _2_ _5_ _5_ _6_ __18__ Kitchen Redo _7_ _4_ _3_ _6_ __20__ Bath Redo _6_ _6_ _3_ _4_ __18__ Landscaping (full) _4_ _6_ _4_ _4_ __18__ Painting (LAZY) _1_ _2_ _4_ _3_ __10__ Landscaping (LAZY) _2_ _2_ _4_ _3_ __11__ You can see from these figures, the appreciation factor of the customer is often the same - whether you put lots of time, effort and money into this real estate investment or not. The reasons for this are as varied as the people looking at any given house, but how many times have you heard of people going into a house - just after it was fully "rehabbed" and they turned right around and put the paint they liked throughout the place? So, why did you waste your M.E.A.T. on doing it yourself? Because you thought it would be prettier? That you would get more money from it? Because you think that's what real estate investing is all about? I challenge you to think about this - every time you get involved in any real estate investment... Just how much more M.E.A.T. did you really get from your real estate investment - your total return? The cash you got was more - maybe - but so was the WORK. You can sell houses just like you get them - and get 90% or more of the price you will after all that effort, even without ever seeing the place! When you use the LAZY way, you put very little extra into any given real estate investment, but raise that return by another 5% (which means that it brings in almost the same total as you get otherwise - without the added cost and work! So, who makes more profit from their real estate investments? Those that do less work! Plus, there's more time, energy and money available to put into the next real estate investment - while those other folks are still remodeling their last deal! In a year's time, you can do 30-50 houses this way - by yourself! How many can you rehab in a year - by yourself? Now, where is the bigger profit? By now you can see just what I meant by the training you had before being 'wrong'... You've been taught to "fix and flip" your real estate investments - but, unless you are doing the fixing directly at the request of the end user, you are likely wasting your time, money and effort for no additional appreciation factor, so, overall, you are wasting it for nothing. You are throwing away the M-E-A-T of the deal! Just how much did painting that living room in your last real estate investment cost you? Since you missed another deal that might have $20,000, $30,000 or more in it, I would suggest you spent a LOT on it! Think about this before you start your next real estate investing "rehab" project - just how many other deals could you do if you didn't put all your time in on fixing? Then, add on the energy (effort) that it saves you. Most people think about the money part of real estate investing, but leave out the rest of the equation when calculating the total value of their real estate investments. I think that is a big mistake. When you can get 90% or more of the same price from any given real estate investment, but do 1% or less of the work, keep 95% of the energy for other projects and 95+% of the money it would cost you - why would anyone want to do any "rehab" job - ever - in their real estate investing business? Now, there may be times you find a house you want to live in that needs some work. That is a fine time to consider doing a "rehab" job - you aren't doing a real estate investment (other than for appreciation), but any time you are working your real estate investment business, take a serious look at the M.E.A.T. of the deal - before committing to spending all your time, money and efforts. Steve Majors - The Lazy Investor
MORE RESOURCES: Landmark Settlement Breaks Up the Real Estate Cartel The American Prospect Top real-estate CEO sees decades of housing pain ahead: 'What the Fed did will have a 30-year tail on it' Yahoo Finance Commercial Real Estate's Systemic Threat: Separating Fact From Fiction Commercial Observer Rules that helped set real estate agent commissions are changing. Here's what you need to know The Associated Press Refined Real Estate: Historic Queen Anne Polson House lists for $6,950,000 seattlerefined.com Luxury's Latest Battleground: Real Estate | BoF The Business of Fashion The Realtors' Big Defeat The New York Times Local real estate agents face uncertain future with new negotiation rules WJHL-TV News Channel 11 Seabold Construction Ties Demise to Dispute with Real Estate Developer Engineering News-Record Investigation underway after 44-year-old real estate investor seen on video firing shots off boat docked at Lakeview ... WSVN 7News | Miami News, Weather, Sports | Fort Lauderdale Will March bring more madness to Craven County's real estate market? New Bern Sun Journal Rules that helped set real estate agent commissions are changing. Here's what you need to know Lufkin Daily News What National Association of Realtors agreement means for Texas real estate KAMR - MyHighPlains.com Rules that helped set real estate agent commissions are changing. Here's what you need to know KXLY Spokane A luxury agent on how the NAR settlement will change his business The Washington Post Cities Face Cutbacks as Commercial Real Estate Prices Tumble The New York Times National lawsuit could shakeup housing market, cut into real estate agent commission 11Alive.com WXIA Swimmo Invest Opens up a New Chapter in the Real Estate Industry Markets Insider CrewBaltimore’s mission to accelerate women’s success in real estate Afro American Newspaper What Seattle-area homebuyers should expect after national settlement The Seattle Times Realtor group will pay $418M to settle commission lawsuits The Associated Press Realtors Reckon With a Seismic Shift to How They Get Paid The Wall Street Journal Settlement will affect Iowa homebuyers KCCI Des Moines Realtors settlement to lower home sale costs, alter commission structure - The Washington Post The Washington Post Israeli real estate event: Legal complaints escalate NorthJersey.com Making Sense of New York's Confusing Luxury Home Market The Wall Street Journal A commission settlement may affect housing market 9News.com KUSA What the death of the 6% real estate commission means in D-FW The Dallas Morning News Real estate commissions, unassailable for decades, could crumble after landmark settlement The Denver Post Once America's Hottest Housing Market, Austin Is Running in Reverse The Wall Street Journal Illinois real estate: Home sales in Peoria, Tazewell, Woodford counties Peoria Journal Star Bay Area Real Estate Executive Charged with Wire Fraud, Identity Theft in Investment Scam - Hoodline Is the Era of the Celebrity Real Estate Agent Over? Industry Reacts to Settlement That Could Slash Commissions Hollywood Reporter Pension funds snap up real estate at steep discounts Financial Times China's Real-Estate Market Just Set a Record—but Not a Good One The Wall Street Journal Foreclosures Are Rising—Especially in This One State—but Not for the Reason You Might Think - SFGATE National Association of Realtors Agrees to Slash Commissions to Settle Lawsuits - The New York Times Rules that helped set real estate agent commissions are changing. Here's what you need to know KOB 4 Real estate lawsuit settlement upends decades-long policies that helped set agent commissions WQAD Moline Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes The Wall Street Journal Chicago Voters Face Choice on Tax to Fund Homeless Programs The New York Times Manhattan Real Estate Update westsiderag.com The NAR Settlement's Impact On Commissions And Home Prices Financial Samurai End of 6% real estate commissions could mean lower home prices The Atlanta Journal Constitution A Look Into the Future of Home Buyers' Agent Commissions The Wall Street Journal Bridgemarq Real Estate Services (TSE:BRE) Share Price Passes Above Two Hundred Day Moving Average of $12.93 Defense World National Association of Realtors to cut commissions to settle lawsuits. Here's the financial impact. CBS News Blackstone, World's Top Alternative Asset Manager, Eyes Record Highs Amid Real Estate Bottom Investor's Business Daily Agent Migration and the Power of New Mike DelPrete 4 Ways a Settlement Could Change the Housing Industry The New York Times Antitrust ruling rocks real estate: Buyers brace for shift in commission structures Straight Arrow News Colony Ridge violated deceptive trade practices, Texas says The Texas Tribune Real Estate Stocks Drop As NAR Agrees to $418 Million Settlement Markets Insider |
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