Real Estate Investment Commentary REIC: carrying costs

There is a saying among Real Estate Investor's - "You Make Your Money when You Purchase the Property not When you Sell It."

There are so many things that can go wrong so it is important to make sure you buy the property right.

Smart Real Estate Investors need to develop an Action Plan before they are going to purchase an investment property. This plan should include the following:

Identify a possible property for investment.
- Make sure your SELLER is MOTIVATED to do the deal.
Perform a market analysis.
- What are going to be your carrying costs for the next 90 Days. Principal, Interest, Insurance, Taxes, Utilities, HOA fees....
- After Repair Value ARV - What is the property worth after repairs. Look at the COMPS! Yes, the comparables.
- Calculate your repair costs.
- Calculate your Fair Market Rent FMR. See if the property is going to cash flow.
  - See previous posting and video about calculating Fair Market Rent FMR
Secure Your funding for:
- Purchasing the Asset.
- Carrying Costs.
- Repairs.
Note: Don't forget to pay yourself for all this work you are doing!
Make an OFFER based on the Maximum Allowable Offer MAO Rule, using ARV, Carrying and Repair Costs.
- See previous MAO post at Using the MAO rule for determining your Investment Property Offer Price.
What are you going to do with the asset? Develop an EXIT Strategy:
- Flip the property for a profit or
- Hold the property for Cash Flow.

This is the basic action plan which needs to be very fluid. Things change and you need to adapt.

Turnkey Property!

One of the more successful Action Plans we have used is to bundle a Section 8 or Plan Ocho tenant within the property FOR SALE. The tenant is part of the BUYER's Turnkey Package.

TURNKEY means the BUYER simply needs to turn the key to the front door and start making MONEY.

All the hard work has been done for the BUYER:

Buying a Property that will Cash Flow.
Rehabbing the property and brought up to Code.
All utilities are functioning.
Finding a reliable tenant.
- We use Section 8 as a great resource for tenants because it is a very popular program for housing.
- Section 8 Web Sites for listing Your Investment Property.
Asset Protection strategy is already in place.
Selling the Investment Property with minimal Closing Costs.
Optional: Have it already furnished.

Investors should provide a turnkey solution for all their properties they plan to sell in the near future.

BUYERS like the idea of purchasing a property that comes bundled with a tenant.

Action Plans allow for Immediate Cash Flow and no Headaches!