- You make money when you buy, not when you sell. Take your time buying. You only get once chance to do it right. This is the time you get to decide on the price. When you sell your buyer will decide, and many times you cannot control when you have to sell - but you can always control when you have to buy.
- Always look at the alternatives. Once you have made a decision, take a step back and look at all the alternatives once more. For example. If you have settled on an offering price for a property - look at all the other options open to you to for that same amount of money
- Cost has nothing to do with price. For further clarification, see point one. What someone has invested in a property has no bearing on what some one else will pay for it; likewise, if someone inherited a property for free - they would no sooner give it away nor would a buyer pay more for a house that someone paid $400,000 for when an identical home can be bought for $150,000. Also: look at the cost of ownership, not the price of buying. This means issues like maintenance, taxes, and HOA fees.
- Leverage is a beautiful thing. Paying cash has its place, just not in investment real estate. If I buy a $100,000 investment property with 20% down ($20,000) and the value of the property goes up 2% in one year, I just made 10 percent on my investment.. If I paid all cash, I only made 2%.
- Look for the worst case scenario - the big, "what if?" If you can sleep with a worst case scenario - move forward. My long time attorney, Jack Donenfeld once told me it was his job to figure out what possibly could go wrong with a contract and then prepare for it in advance. As an investor, it is my job to figure out the worst thing that can happen with the property and the investment and see if I can still live with the consequences.
- All real estate is local. Do not apply national trends, or even state and city wide assumptions, to a local real estate deal. The really cool thing about real estate is it's unique nature and flavor. A few weeks ago I talked about how one retailer could succeed on one city corner and not another. Know your local real estate
- Buy Real Estate - they are not making any more of it. Here in Florida this is certainly true of waterfront land. I would also expand this to another rule - buy unique. By the top, the end, the view, the one with the big lot. Always strive to differentiate your property from another. I always tell condo buyers to buy the highest and best that they can afford.
- People don't buy a house, they buy a home. Sounds trite, but it is true. If you can get a customer imagining himself fishing off the dock with his grandson, or cooking in the kitchen with her family, you are now relating to the buyer. The number of square feet is meaningless if the customer can not relate to the home.
- Quality endures; Poor quality is expensive. Small well built homes will always hold their value longer than large poorly constructed homes. Same thing with rental property. If you are buying sight unseen, you better read the specifications.
- Consult an expert, but make your own decisions. There are many professionals out there, and they all have their place: home inspectors, real estate agents, accountants and lawyers; use them wisely, but remember, at the end of the day - only YOU live with your decision.
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