Managing real estate investment deals efficiently is key to making your target profits. Management of your deals will depend on your investment and exit strategy for the deal.
Wholesale Real Estate Investment Deals
Wholesaling is a way to make some quick cash in real estate investing. There are no property repairs involved and you generally do not have to deal with conventional buyers and renters.
The process is simply finding a good real estate investment deal, securing it and then selling it to a third party. What you are doing is selling your interest in the property and profiting from the referral fee that the buyer pays.
Here are some tips to manage wholesale deals: -
- Have a list of potential buyers ready to purchase. Knowing what they require is also great information so you can tailor your purchases accordingly.
- If your buyer is an investor, then establish a long term relationship and make them a repeat customer!
- Become great at estimating repairs. Just knowing the prices of large items such as roofs, windows etc. will help you tremendously.
Real Estate Investment Keeper Properties
“Keepers” are properties that you hold in your real estate portfolio for cashflow reasons, i.e. properties that pay you each month.
There are two types of keeper properties; rental properties and lease optioned properties.
Rentals
One way to hold your keeper property is as a rental. You would either purchase a property that is ready to rent or prepare it such that you can subsequently rent it.
Basically, once you have rentable property, you would go through the process of finding a tenant. You can either do this yourself or hire a property manager to do it; either way, finding suitable tenant is key to making a rental successful.
At some point, you will tenants that will stop paying rent. No matter what the excuse, you must initiate eviction proceedings as soon as local laws allow. I recommend on using an eviction service rather than trying to do it yourself.
Lease Options
A lease-option, sometimes known as “rent-to-buy” is a good way to buy or sell a keeper property and generate cashflow.
Prepare all the paperwork ahead of time so that you can option your property as quickly as possible.
Make sure you collect payments from the optionee on time and proceed with evictions just as if they are a renter.
Rehab
Rehabs or fixer-uppers, are properties that you purchase at a deep discount, fix-up/rehab, and then sell at a higher, fair market price. Your profit is the difference between the amount you invest and the final sales amount minus expenses.
Keys to successful include: -
- Buying the “right” property.
- Controlling the rehab costs.
- Let professional contractors and handymen handle the rehab for you! Do not use contractors for everything.
- Get all rehab and building permits ahead of time to ensure fast completion times.