Rehabbing a property is one of the most flexible expenditures in real estate investing. Expenses to fix a house or furnish it can vary according to the extent of what needs to be rehabbed. Most real estate investors usually have a hard time looking for contractors or rehabbers that can give them the lowest cost for the rehab.

But there is a way to lessen the cost of rehabbing up to 40% less!

Lowering the Price

In business, one reason that the prices of similar products are so close to each other is because of competition. If company A, for example, has their product on an average price range, company B would follow the same price range. Most would actually prefer their product to be lower than the usual price. This is because they know that customers would want to save and spend their money on lower-priced products whenever they can.

To get a lower price, or a lower estimate (as rehabs are first estimated), this concept of manipulating competition among the many contractors is applied. Your try to bring in more contractors, more estimates, for more competition, which will ultimately give you lower prices.

Here’s how it exactly works.

Look into the yellow pages for a material supplier, for example a supplier of paint, and then go to that supplier’s store. Ask the supplier whether they know some people who can give an estimate on your property. There is a very big chance that the suppliers know of many people, especially their regular buyers who buy their equipment from the supplier and has built a good work relationship with the supplier.

The supplier would naturally refer you to his friends or his best customers. There is very little chance that he will refer you to a vague customer of his. For one, he’ll get a kickback if he refers his best customer to you. The referrals he made will give further boost his work relationship with his buyers and gain him more recommendations, and possibly a commission.

Once you’ve determined that the supplier has got good contractors buying from him, determine at which time you can catch most of them. In meeting them, you introduce yourself and ask them if they can do an estimate and when. Some of these people may already have appointments for the day and would decide to come to your property some other time. There is nothing you can do about that. But after that first contractor, there may be another one that will approach you and offer his services instead.

You ask for their estimates. On your initial survey, get three contractors to give an estimate on the costs of rehabbing your property. When you’ve gotten these estimates, pick out the lowest of the three and use that as a basis for the next batch of estimates.

Two Groups Of Three

The next batch of estimates?

Getting three contractors to give you their estimates will have naturally toned down the price by more or less 15%. As you pick out the estimates, each one of them will offer a lower price than the other.

Now if this group has given you an estimate at a price that has been lowered to 15%, what do you think will happen if you compare the lowest price of this batch to new one?

After you have surveyed for the lowest price in the first three contractors that you met, you are now set to meet three more contractors to give you their estimates. When they give their estimates, explain that one of the contractors you have talked to have given this estimate and it is by far the lowest among those you have received. Naturally, when the contractor hears of a lower estimate than his, he would be tempted to compete with it.

Again, you meet with three more contractors and get the lowest estimate. Then you compare and talk of the contractor in your first batch that he gave you a lower estimate. As the competition tightens, the contractor would give a lower estimate.

By this time, you would have already cut your costs for about 30-40%! It’s a simple tactic that’ll take time, effort, and simple analysis. But it will result in less costs for your estimates.

You’ve heard their stories, you’ve heard of their paychecks, and undoubtedly you think that real estate investing will make you rich in just a short amount of time. Well, this isn’t really the case.

Most beginners want to become real estate investors because of the prospect of making more money and making it fast. While there is a chance that this can happen in someone’s early tries in his or her career, ordinarily it takes a lot of time and effort to be successful in the business.

It is not easy to be successful in real estate investing. For one, it takes some time to understand the needed requirements in starting and finishing a deal. Another reason is that it takes months to settle your first deal. It also takes up a lot of time, effort, and some money.

When you want to invest in real estate, you will also have to invest in educating yourself on how the business works. There is not a single successful real estate investor that will tell you that he or she did not spend money on attending sessions or buying guides and audios about real estate investing. And they do so even until now when they’re already at the top. Real estate investing has its basics, but it also has its flexible strategies and tactics and to use these strategies one has to know what goes on in the business environment. Just by researching and gaining knowledge, you can see how much you have to invest of yourself in the business.

While it is true that you need to know the basics and how things start in real estate investing, it is not true that you need to know everything before getting started. You don’t need to stuff yourself with every information there is on real estate first before finally looking for your first deal. All you need for your first deal is to know how to find it, how to talk and negotiate to get it, and how to finish it. Along the way, you can ask help from mentors and colleagues on some pointers. Gain more knowledge and more tips as you work on your first deal!

Don’t Waste Time!

Time is very important to a real estate investor. On your first deal, it would take some time for you to finish it. But as you go over many more deals, you will quickly learn that there are some things and habit that you have to let go of in order to optimize and not waste your time on the deals.

• Avoid overpreparing

Many are guilty of this. Worrying over things that might go wrong tend to make us get more absorbed in the preparations. Preparing is good. But focusing too much in the preparations will cost you time that you can use for better purposes.

This is why successful real estate investors make use of systems. These systems are made by themselves, something that they use over and over to optimize their time working on a deal. In making your own system, make sure you spend time, money, and effort well. Balance your priorities and do something. Do something! Preparing isn’t enough when you’re not doing it.

• Allocation of tasks

You do not really have to do everything that needs to be done in a deal. For example, creating websites and stamping envelope for your mail doesn’t have to fall on you.

In a deal, you are not the only that is working. Learn to cooperate with the seven important people in real estate investing:

• your real estate agent

• mortgage broker

• appraiser

• home inspector

• escrow agent/closing attorney

• contractor

• staging professional (sells the property)

Learn to recognize that there are thing that you may not be good at. You may not be an expert at looking for a house’ defects, for example. You’ll be needing a home inspector for that. In creating a website, you might want to outsource or hire a temp.

Some More Pointers

Learn the value of your time. Making your own system, a system that you are comfortable with and can encourage you to be more efficient, will greatly help.

Don’t worry too much. Fear will stop you from being successful. When the fears start getting to you, focus on you end goals and immediately brush the fears aside.

Look around and observe how the market fares. There’ll always be something new for you to learn about and use for real estate investing.

The real estate business can be scary to a beginner. The idea of completely embarking on real estate is overwhelming. Real estate investing, after all, isn’t really just like any other job you have had over the past years. In a normal job as an employee for a company, all you had to do was do as you are told to do by your boss and get a regular salary. In real estate, however, you’re going to be the one calling the shots and making a deal that will give you a profit.

So it is only natural that a beginner in real estate investing would be having fears, and that they would have to overcome these fears in order to ensure their success in the business.

Knowing What Type of Investing To Do

In your first deals as a real estate investor, focusing on a certain real estate niche is best. When you’ve found your way in this niche and mastered the strategies to be successful in it, you can venture into the other niches and learn about them too!

But choosing an initial niche and knowing what type of investing to do can be tricky when you know little about the different niches and strategies to use.

There will be a lot of factors to consider in making up your mind. Make your personal decision base upon these:

• core competencies

• goals and desires

• time and money available

• knowledge of the real estate business

• type of market

• comfort level

Examine your goals and desires and why you want to enter the real estate business. Examine the time and finance that is available to you too. Do you need more money in a specific period of time? Can you afford to wait for a few months for a paycheck? Can you afford to hire consultants or get help from successful real estate investors? In evaluating your goals, you’ll be able to straighten out what you want the business to do for you. When it aligns itself to a real estate niche, then you’re off to a good start!

Once you’ve settled these things, the next step is to take a look at the real estate market. Determine which market you are comfortable with and which aligns itself closely to your needs. For example, if you’d rather have a monthly income and you’re not that keen on selling properties just yet, you can start off with landlording a property you just bought. Or you can opt to lease the property.

Once you’ve found the right niche for you, all you need to do is learn about that niche and get to know some of the real players in that area. Asking for help from the successful real estate investors will give you a boost on where and how to start.

How To Find the Deals

There are a lot of ways to find deals. You can first drive around your area and look for properties that are within your market. For example, if you want to focus on abandoned properties, then drive around town and see if there are abandoned properties that you can invest in.

Other ways can be through marketing strategies such as referrals and direct marketing. Many real estate investors nowadays do direct mail marketing and campaigns as a way to look for deals.

How To Negotiate and Structure the Deals

One thing you need to build on when you’re a real estate investor is your manner of conversation and communication skills. The words you choose, the delivery, your mannerisms, and the way you speak are great factors in settling a good deal.

It is not only the words. You also have to generate an aura of confidence and respect. It will not do if the seller, or the buyer, thinks you’re not up to the job and that you’re not sure what to do.

There is also the issue of the documents and necessary papers involved in making the deals — the deed, the contract, legalities, etc. These are important components in making a deal and making the deal successful. When in doubt of how to proceed with the documents, you can always ask for assistance from your mentors, real estate lawyers, or other professionals.

How To Fund the Deal

Successful real estate investors would say that funding a deal should not be an excuse why you can’t do a deal. Get this into your system. There are a lot of financial resources for real estate investors out there — banks, hard money lenders, private money lenders, line of credit, etc. Funding a deal should not be a major cause for worry.

Selling the House

Real estate investors don’t usually hold on to a property they bought. Sell what you buy. With this, keep in mind that you’re making a profit at the very beginning when you’ve bought a property. You don’t buy what you can’t sell.

There is not that much to fear in selling a house. Check on the house if it needs further rehab and furnishings. When you’re finished with the outside of the home, you can start advertising (the interior of the home can wait to be seen by the public when its done).

Advertising the house would require some effort and money. There are a lot of options, too. You can advertise on the Internet, or send out flyers, or do word-of-mouth advertising. In any case, you can choose which would fit with your time and money.

Finding the Next Deal

A beginner’s worry isn’t over with the first deal. You may have let out a relieved sigh when you’ve finished your firs deal ever. But that doesn’t mean you’re not fearful of what comes next.

What if I’ll have no such luck on my next deal?

What if I can’t keep this up?

Will I even get to find another deal that can be successful like this?

There’s no need to fret that much. Sure, the worries won’t cease. You know that there are still things you need to learn and catch up to. There is also the probability that you can make a deal that will even be more successful. And you’re afraid to blow these chances.

Stay calm. Wrapping up the first deal has surely given you some pointers and guidance on what to do when you get your next deals. When new questions arise, you’ll find that your mentors haven’t abandoned you. There’ll always be new things to learn about in real estate and they know it as well you do.

Part-Time or Full-Time

The most common problem that beginners ponder on is whether to be a part-time or full-time real estate investor. You would think, “Is working for a boss worth some of my time when I can invest in real estate?”, “What will happen if I quit my job and I won’t be successful in real estate investing?”, “Can I afford not to have a regular salary and instead depend on the deals I have to make?”

Such questions, and many more, are most likely swimming around the mind of a beginner. With this problem, you can always go back and base your decision on your end goals — what you want in life and what you want from your business. If you have decided to be a full-time real estate investor, then embark on lots of education to learn how real estate investing works. Once you’ve taken the basics to heart and continuously take in advice from your mentors, then there’s a big probability that you will succeed in real estate investing.

In today’s housing market, success isn’t that easy to reach. The primary reason for this is that the real estate market has gotten more competitive and more and more real estate investors keep coming up.

We can hardly blame why a lot of real estate investors have appeared. Foreclosures have doubled, and there are fortunes awaiting those who know where to find them. Real estate investors can surely say that this time is the right time to invest in real estate properties.

But among the many real estate investors vying for the greatest deals and looking for many successful feats in the real estate niches, how do you emerge as one of the successful ones?

5 Keys in Becoming Successful in Today’s Real Estate Market

Key # 1: Arriving at the Property Owner’s Doorstep FIRST

This is already an obvious step for every real estate investor. Getting to a seller first will make you the primary person on the seller’s list of who to contact when he or she is ready to sell.

Being the first will also give a lasting impression to the seller. He or she will be able to remember you more as compared to the other investors that have come after you. Make sure that you market yourself properly, making yourself the “go to” guy when there is somebody who want to sell their property.

Key # 2: Funding the Deal Fast

It is important for deals to be negotiated on as fast as possible. So when you get yourself a deal, the next move is to quickly fund the deal. Now you can either turn the property to cash quickly, put it on subject-to, or turn to a private money lender.

Among the three choices, private money is generally the most popular alternative. Among the many money lending lines, private money lending has the least problems to deal with. There will be no documents and requirements like that asked of a bank, and there will not be a high interest like that asked of hard money lenders. Private money lending is a big thing for real estate investors who need funding without so much of a hassle.

Key # 3: Conducting Business in a Competitive Vacuum

Another way to be successful is to be the first in specific niche that you know will become more competitive in the future…. a competitive vacuum! Being the first have its advantages. You’ll also get to be the first to create marketing strategies out of the business and more profit.

Key # 4: Having a Much Higher Level of Business Sophistication Than Other Investors

The main principle of business sophistication is ruling over your business and not let the business rule you. A lot of people nowadays lat their world revolve around work, neglecting their family, fun, and life. In the end they have forgotten that the primary reason why they entered a business is so that they’ll be able to provide for their loved ones.

Real estate investors especially should have time for breaks and relaxations. Their work schedule is how they want it — no wake up alarm, no traffic jam to work, no bossy boss. The real estate investor makes his own time doing business. Now the high-level real estate investor knows when to work and when to step back. These real estate investors are the ones that you will see are truly in control of their lives and their business.

With this high sense of sophistication, it is easy for many people to recognize who’s successful and who is not. The main keyword is “control.”

Key # 5: Sell the House Fast

Selling the house fast is what all successful real estate investors would recommend. You sell it quick, then you get real money quick. Negotiations would become a burden if they carry on too long. Plus, you’ll have more time to work on another deal once you’ve sold a property. Success can’t be reached with just one or two properties sold, after all.

Direct mail marketing has been popular with real estate investors who target specific prospects and properties, not just because of its efficiency with budget and effort but also because of the high rate of good responses from the prospects.

Of course, failure or success in real estate would also depend on how you do your direct mail marketing. There are three very important things you need to have if you want to be successful in this strategy:

1. You need to have the right prospects or targets.

2. You need to get your envelope to be opened and read by your prospects.

3. You need to make it easy for the sellers to reach you.

Finding the right prospects and sellers will require some research and statistics. You need to learn which niches, which properties, and which areas are most likely to have motivated sellers that can come to you.

For your mail to be opened and read, you can first make some experiments on which of your mails received responses and which did not. But the general advice for your mail would be that:

a.) the envelope used is a no. 10 business letter envelope

b.) you hand address them including the return address

c.) you only put your address on the return address and not include your name

d.) you use first-class postage stamps

e.) you make your handwriting neat and legible, with correct spellings (especially the names

Putting only the address and not your name on the return address will make the prospect curious as to who the mail is from. Hand addressing them will make them seem more personal than businesslike. Chances are, when curiosity takes over, they’ll open the mail and read your letter.

When using first-class postage stamps, choose the ones that will make your letter more personal. Don’t hesitate to use cute ones with the flowers if it comes down to it. These kinds of stamps can have a very personal effect on the letter.

Your handwriting should be legible and readable. Your mail isn’t going to be read if the prospect can’t understand what you’ve written. Spellings and grammar are also important. You need to be imply upon the letter that you are a serious professional real estate investor willing to offer help.

Response Rates Gets Higher!

Direct mail marketing may have a slow start at first, what with all the preparations and the waiting. Preparing the letters aren’t all that hard to do. You can always pay someone copy letters, get lists of prospects, and post the mail for you. It’s the waiting that can sometimes be worrisome.

But as time goes and as responses come, you’ll find that with every mailing you do, the response rate gets higher and higher!

On the average, on the first mailing you might be receiving around 5% to a 9% response rate. But when you get to the fourth or fifth mailing, you’ll find that your response rate has gone up to 18% and probably more!

And this is just the usual direct mail marketing you use. Now what if you add to that creative direct mail campaigns and look for more referrals? Your target list would increase for sure.