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Last night I spent some t me playing a real estate investing s mulation game and I was reminded th t the quantity of the offers you m ke to purchase property really does d termine the quality of the real state investments that you will eventually wn. In this particular game, my str tegy was to acquire a large mount of real estate in order to r sell the ones with significant equity mmediately to make large chunks of c sh. In this way, I built up my c pital while also keeping the occasional pr perty as a long-term rental. I b gan by making an offer or two th t would allow me to make a n ce profit. I did this by f ctoring in the cost to purchase and my c st to sell, as well as my h lding costs while I was trying to s ll it. If you do some v ry quick, big picture math, you can see th t there are about 3% in c sts when you buy, about 5% in h lding costs while you are trying to s ll and about 10% in sales c sts when you do sell. So, in rder to get profitable deals, I m de offers of about 25% below c rrent fair market value in this p rticular game. What occurred to me as I m de one or two offers was how few of th m were actually accepted. I needed to m ke more offers. I started to m ke offers on every property that b came available, because every property, at a c rtain price, could be a deal.
Ultimately, I ended up making bout eight offers for every month in the g me and ended up with a g od number of properties that I was fl pping for nice little chunks of c sh. It got easier and easier to k ep doing this. Money was coming in. I had pr perties that I was buying. I had pr perties that I was selling. I had m st of my offers declined, but I w uld get the occasional deal or two ccepted and that kept the whole m chine rolling. What was interesting to see was th t even the deals that I d cided to keep as long term r ntals were only good because I had riginally bought them at a discount w th the intention of selling them q ickly. The ones I kept had xceptionally good rental income, but I n ver would have gotten them had I not m de a lot of below market ffers. This was something I already kn w but it was really striking to see how br lliantly it worked over the course of the g me. So, a gentle reminder that the m re offers you make, the better the r al estate deals you will get.
The article Quantity Of Offers Leads To Quality Of Real Estate Investments Owned was Submitted by James Orr through Articles.GetACoder.com network. Here's the additional information: James Orr is a professional r al estate investor, marketing expert and f under of the LearnToBeRich.com on-line investment game. He works with a network of real estate agents, brokers and real estate investors across the United States through the AnalyzedDeals.com website.
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