Landing your 1st deal can be an exhilarating experience. In part one I went over some of the first steps towards finding it. If you missed it, check out How to Land Your First Real Estate Deal - Part 1.
Here is a quick summary of the steps from Part 1:
Determine how you want to invest
Line up your financing
Learn the local market
Build your team
Build your buyers list
Start a marketing campaign
Now onto the next steps in landing your first deal
Identify your Target
Make an offer
If your offer is accepted, then it is time to bring in the inspectors and go through it with a fine tooth comb. Be sure to carefully inspect the foundation, the roof, electrical and plumbing systems and the general condition of the appliances. It helps to get an idea of how old appliances are – most do not have a lifespan longer than 10 years. Anything older than that will likely need replacing in the near future.
This inspection period is also where you get a chance to find out how much your repairs are going to cost and how long they will take. This is why you want your contractor with you during the inspection process – they will be a big help for you to understand the scope of work that needs to be done. If there is too much work to do and it will cost too much to be profitable, you can negotiate with the seller to try to get better price
Here is where you can really make your deal shine. After you have seen the property from top to bottom and have a good idea of what your upgrade costs are going be, you can start to put all the pieces together to make a case for a lower price – perhaps the comparable sales you ran indicate lower home prices than the seller indicated – perhaps there is more work to be done than first anticipated. You may be able to get leverage by using these items to help you negotiate a better price or terms with the seller. If they are unwilling to work with you, then you may have to walk away – unless the numbers still make sense to you. Don't be greedy, but don't be so eager to land your first deal that you pay too much for a house that is going to lose you money. Don't fall in love with your deal and always be ready to walk to away if the numbers don't pencil out.
Once you have an accepted offer, are satisfied with the terms of the offer and have made all of your inspections, it time to fund the deal and close escrow. If you are buying with cash than this is a very easy and fast process – simply get a cashiers check written out to the title company for the final amount owed. If you are getting your funding from a lender , then there is a little more time to wait as the underwriters get all the paperwork together and do all of their own due diligence. They will likely ask you for information or signatures throughout the process . Normally , they can have you funded in 30 days or less.
Close the Deal
Once everything is finalized, all parties have signed off on the right paperwork and money is exchanged, you receive your keys and the deal is done. It just has to be recorded with the local county recorder office so that the law knows that the property belongs to you ( or your company)now. It's time to start getting your property ready for production- are you going to clean it out and rent it to some tenants right away? Or are you going to start demolishing the place to get it ready for a complete rehab? It's totally up to you – you've made it this far.
Congratulations – you've landed your first deal!
Please be sure to check out my others articles on real estate, investing , and cryptocurrency ( and some other random dog stuff)
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