As you begin to learn the real estate investing business, you will quickly discover that you are investing more than just money, you are investing a great deal of your time. And the investment of your time is made in an effort to protect your financial investment. But a great many new real estate investors will walk away from any deal that is not perfect just to be sure they don’t lose money. But what could actually be happening is that you are passing on a great opportunity.
What you need to learn is that no deal is perfect and you are going to need to take a few calculated risks and learn a few hard lessons. Sure, you want to do your due diligence and learn all that you can about the property and the area around it, but some serious renovations or a slightly lower ranking on the school system should not be a deal breaker. Once you have invested your time in a deep dive into the property, you need to have a way to make your money back on the time that you invested.
This is when knowing the market and the area become critical. You need to know how far you can push the seller to get the price down to cover your purchase cost and your renovation investment. In addition, you could face a situation where you are ahead of the curve and might need to buy while the property values are low knowing that they are about to increase. If you have an opportunity to buy a property that you know will not rent for the full mortgage cost each month but has the potential to increase greatly in value after a new manufacturing facility is built next year, then you need to take the risk and make the purchase.
There are not going to be too many properties that are perfect on paper. And there are not going to be too many projects that progress perfectly on budget. But having a little bit of flexibility will provide you with many more opportunities to turn a solid profit on a flip or on a long term rental property. The secret is to get into the business by working with a seasoned professional who can teach you the business on your first few investments.