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The 8 Critical Components of a Real Estate Deal

Aug 17, 2007
Every real estate investment consists of eight parts: generating leads, initial examination, decision making, negotiating, professional inspection, closing the deal, improving the value, and re-selling.

1: Finding potential deals
Finding suitable properties is the first part of the real estate investment process. During this phase you look for potential deals, employing whatever tactics works best - from reading magazines to car trips around your neighborhood looking for promising properties.

2: Research and initial property examination
When you find a potentially interesting target for your real estate investment, perform some initial research about the property in order to check if the deal is possible and potentially profitable. During that phase you have to (1) take a closer look at the property and its neighborhood, (2) ask around about the property and its status, (3) meet the seller(s), (4) research market values for similar properties.

3: Making up your mind
At this stage of a real estate investment process you must make a decision - buy the property or leave it for another real estate investor. Take the time and write down all pros and cons of the deal. If you determine that the profit potential is large enough and you can cope with everything involved, proceed to negotiations with the seller.

4: Negotiating with the seller
Negotiating is the critical part of every real estate investment. Here your profit margin is determined and the whole deal takes its (almost) final form. It is very probable that negotiations will involve making several offers and counteroffers. When you and the seller finally agree on the price and terms of the contract, the offer is put down in writing and you can start preparing to close the deal.

5: Professional inspection
However, before you close any real estate deal, you have to perform a professional inspection of the property in order to find any potential problems that may affect your plans/profits. It is recommended to hire a professional to do that. Even the most experienced real estate investors cannot find everything, especially if problems are deeply hidden.

6: Closing
If the inspection goes well, it is time for you to close the deal. For the agreed price you will become the owner of the property. Then, you may proceed to the next phase of a real estate deal - renovation.

7: Improving the value
A quality rehab is crucial for increasing the profit of every real estate investment. Unless you are really good at it, you should leave this job to hired professionals. It takes up your precious time and there is always a chance that you won't be able to fix everything right, which will cost you more money than you save in the long run.

8: Marketing campaign
When the renovation is over, the property is ready for sale. It is time for you to start your real estate marketing campaign, find a buyer and then finalize the real estate investment by SELLING THE PROPERTY!

As you see, the construction of a real estate investment is relatively easy. If you do it step-by-step always remembering about the final goal (selling the property for a profit), your chances for the success grow. On the other hand, if you decide to skip or swap places of any of the phases, you will fail 9 times out of 10. For instance, if you start your marketing campaign before you improve the property's value, additional costs of a prolonged campaign may all of the sudden make the deal unprofitable.
About the Author
Sal Vannutini is the owner of http://www.fixerupperfortunes.com.
Did you know that he is giving away a 14 part e-course for free!
Visit now and grab this amazing opportunity, to find out how
you too can make profits from your fixer
upper home
.
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