It happened on a beautiful Sunday afternoon about three months ago. John & Peter hit the poolside bar at the same time. Both of them had just attended a Wholesale Real Estate seminar. All John wanted was a relaxing drink. He didn\'t have the slightest idea of what was coming...
Over drinks, they struck a conversation about their Real Estate Investing ventures. John revealed that he was a part time Real Estate Investor and had made about $4,000 on his first two deals over the last six months. He was pretty happy with his profits, because they supplemented the income from his day job.
\"That\'s great! So have you thought about going full time?\" asked Peter.
\"Can\'t afford it, buddy. I put in twenty hours a week on my real estate efforts. Even if I go full time, I will earn only about 2000 bucks a month. That\'s not gonna cut it\", replied John.
Peter was surprised...
He had been a full time Real Estate Investor for 3 years, and never put in more than two hours a day. Even though, his last month\'s profit was a nice $38,000. He knew that John had got it all wrong. He couldn\'t tame his curiosity, and Peter decided to drill a little deeper...
He said: \"I don\'t mean to be rude, but that\'s a lot of hours for too little money. If you don\'t mind me asking, what is it that you do in your real estate investing business?\"
\"You know, the standard stuff - send letters to absentee owners, post signs, driving for dollars, some free online ads. Just about everything that everyone else is doing\", replied John.
Peter got the idea. He knew in an instant that John had succumbed to the popular, yet wrong, notion about Real Estate Investing. Being a retired Professor from a Community College (he retired at 36), Peter was urging to tell John what he was doing wrong, just as he would with a misguided student...
The tales of Real Estate Investors often sound as unbelievable and potentially \"scammy\" as they are exciting and engaging our fantasies of rich rewards for little efforts. Are these just urban legends that are spun among buddies in pool side bars? Or is it true that you can find sellers who are willing to sell for steep discounts so you can \"make a killing\" flipping such properties, or even just save a boat load of money when you purchase your next residence or investment property?
These tales sure seem to defy common sense, and even most licensed real estate agents will tell you that you get a good deal when you get an offer accepted at three to five percent below the listing price on the MLS.
The most urgent and obvious question that stands in the way of outright believing in real estate investing tales is: \"Why would any seller take that much less than what they must know the property is worth?\"
Here are some answers that can explain this and shed some light.
First off, selling real estate is by far more difficult and more expensive than selling some other asset classes, such as stocks or bonds. In a slow market it can take a lot of time to get \"market value\" for a piece of real estate.
The cost of selling ranges between eight and twelve percent of the sales price, which includes real estate commissions, transfer taxes, and fees for escrow and title.
Then there is the condition of the property. It has to meet certain standards to fit in with conventional lending criteria so that a retail buyer can obtain financing. If it doesn\'t, chances of finding a retail buyer for the property are slim.
If a retail buyer cannot buy the property, the \"retail value\" is not the appropriate price to set in the first place - even if you make some adjustments for necessary repairs.
This is where Real Estate Investors can come in and create a real life experience of the urban legend. Helping sellers to get unstuck and getting the property sold very quickly is often the key to success as a real estate investor.
Thomas Bartke has been an active wholesale real estate investor for over 6 years. Sign up for his Nationwide wholesale distribution list at http://cawholesaledeals.com - You\'ll even get a free report just for signing up and great deals with tons of equity on a weekly basis!
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