Create a Strategic Plan

Introduction

Now that you’ve built a foundation for your real estate investing business, and you’ve begun the process of building your real estate team, it’s time to create a strategic plan. Why is it beneficial to you to have a strategic plan? Everyone begins as a real estate investor from a different life situation. Some investors will be able to utilize any and all of the strategies, because they have more financial resources available to themselves immediately. Other investors will need to develop their financial resources by implementing the methods that require less of their own money and less of their own credit (for example, assigning contracts, double escrow closings, and other wholesale strategies).

Some of the real estate investing strategies require more of an investment of your time than others do (for example, “fix-n-flips”, or rehab projects). Some of the real estate investing strategies require more use of cash down payment and the ability to secure financing using your credit than others do. In order to create a strategic plan, it is important to understand the relationship between the exit strategies in real estate, and the financing methods used to facilitate doing them! Imagine your frustration if you identified a bank owned property that had serious profit potential, but because you couldn’t produce a letter of pre-approval from a lender which verified that you could obtain a loan to buy it, your offer couldn’t get accepted, and someone else bought it out from underneath you! Had you identified the strategies that would work for you, in your situation right now, you would have known the options you had for making money in that deal, even though you couldn’t qualify for a traditional loan! You would have already known that you could have “bird dogged” that deal away and been paid a bird dog fee, or you would have already found a credit partner or you would have already procured a hard money lender letter of pre-approval, in order to get your offer accepted! Can you see that identifying what you CAN do can empower you to be prepared to pounce?

No one wants to waste their time doing that which won’t work for them, and feel like a “loose cannon”, or a “run away train”! Neither is anyone benefited by being a “wandering generality” rather than a “meaningful specific”! . When you understand which strategies will work for you at this particular time in your life, with your particular financial situation, given your amount of allotted time, you will make better decisions that will yield a higher rate of return on both your money and your time!

Once you’ve developed your strategic plan, you’ll feel confident that you will be able to make offers on properties that you will actually be able to make money on! Understanding what will work for you, where to find it, financing methods that will work for you, and what you’ll do with it to make money in the deal, is an important part of overcoming the fear that has a tendency to paralyze an investor into doing nothing! Having a strategic plan will empower you to proceed to make offers on properties, knowing that you can be successful.

Obviously, your strategic plan will grow and change as your financial situation improves, and as you are able to include more of the real estate investment strategies. It will be important for you to review your plan periodically, and consider implementing additional methods in order to accomplish your ultimate goals. But we have to start where we are! Developing your initial strategic plan is what this coaching session is all about.

Objectives

After this coaching session and studying the related material, you should be able to accomplish the following:

– Identify and understand which strategies will work for you right now
– Identify and have a basic understanding of the financing methods available, and which ones will work for you right now
– Understand which strategies work best in which market conditions
– Understand how to choose where your properties should be located
– Target the right type of properties
– Know the characteristics of a strategic plan, and be able to write one!

Identifying and Understanding Which Strategies Will Work for You Right Now

In order to identify the strategies that you can implement right now, you need to have a basic understanding of the various real estate strategies, the primary financing methods that are available, some subtle requirements for their implementation, and why it may or may not work with a particular property and in a particular area. This is not intended to be an exhaustive training on each individual strategy, but rather an overview, so you can decide if you can implement it into your initial strategic plan.

First, it’s important that you understand what we real estate investors mean by the phrase “exit strategy”. You’ll hear this phrase often in investment circles! What we mean when we ask, “What’s your exit strategy?” is, “What are you going to do to make money in the deal?”
There are six primary exit strategies in real estate investing. They are:
– Number one, Rentals: Collecting cash flow every month on properties that you either control (as in sandwich lease options) or own.

-Number two, Lease Options. As an exit strategy, a lease option is a strategy for “selling” your property to a tenant who has an option to buy it at a later date. You continue to collect cash flow every month on the property as a rental, until said “buyer” goes to closing and buys it from you. It is a way of finding your “buyer” more quickly, as it will attract buyers that cannot currently qualify to get a loan. A lease option can also be a financing method, as we will see later, and as a financing method, it is referred to as a “sandwich lease option”.
-Number three; Rehabbing; Fixing up a property, then finding a “back end buyer” to sell it to, at a profit. Investors often refer to this as “doing a fix-n-flip”.
-Number four; Wholesaling, which is an umbrella term that covers:
-Double escrow closings; what is a “double escrow closing”? Simply put, a double escrow closing is when you put a property “under contract” (which means that you make a formal written offer to a seller, and he signs it as being accepted), then immediately start marketing to find a “back end buyer” at a higher price, but still a wholesale price. Then, when you find your “back end buyer”, you write a contract with him at the higher price, so that you now have TWO CONTRACTS on the property. Then, you call the title company (or escrow attorney if you’re in an escrow attorney closing state or country) that will be performing your closing, and schedule the first contract, wherein you are the buyer, to close at, say, 9:00 in the morning, and your second contract, wherein you are the seller, to close at, say, 10:00 in the morning. Then, your back end buyer’s money funds YOUR transaction, and you collect the profit margin you had built in! How much of your own money and your own credit do you need to do this strategy? NONE! Exactly! (Well, except the small amount of money that we call “seed money”, which you’ll use for earnest money.)
In some states, double escrow closings don’t work directly, due to various state laws, however, even in those states, we can still do one of the four back up plans to double escrow closings, so we still refer to the strategy as “doing a double escrow closing”.
-Assigning contracts; This is where you put a property “under contract”, then SELL THE CONTRACT, and I mean the piece of paper, not the property, and the person who buys your contract will use your contract and go to closing to buy the property! Usually, it will be another investor that will buy your contract, but it could be a buyer who’ll move in to it and make it their primary residence. The typical payment you’ll receive when you’re assigning contracts is $3,500. to $5,000., but could easily be more, based on the profit margin and the terms you built in to the deal when you wrote the offer to the seller. How much of your own money and credit do you need to use this strategy? NONE, except the small amount of money that we call “seed money” which you’ll use for earnest money.
-Wholesale re-selling; This is offering the property for sale at a wholesale price immediately after taking title to the property, without doing any fix up to the property.
Some investors refer to assigning contracts and doing double escrow closings as “wholesaling”, because they do fall under the umbrella of “wholesaling”, but for the purposes of creating your strategic plan, we will break it down into three individual methods of wholesaling, so you can more specifically identify which ones you choose to use.

-Number five; Buying Tax Liens and Tax Deeds on properties wherein the owners have defaulted on paying their real estate taxes. For the purposes of creating your strategic plan, we will separate these two into two separate strategies, because they are markedly different. The basic difference between the two is this: When you buy a tax lien, you are only buying a senior lien on the property, and may not actually get the property, if it is redeemed by the owner during that state’s redemption period! You are guaranteed to get either the property OR the high rate of return, in the double digits, that you were awarded the day of the tax lien sale. When you buy a tax deed, you are definitely getting the property, just for the price of the back taxes and the fees that city or county incurred to bring the property to the tax deed sale (which includes the fees they incurred to foreclose on the property.) Some states use the tax lien method of collecting the property taxes from the delinquent owner, and some states use the tax deed method of collecting the delinquent property taxes. One is not necessarily BETTER than the other; they just come with different rewards, and require different amounts of money to invest in! Tax liens are usually far less expensive than tax deeds, so less money is required to get started.

-Number six; Note Buying and Selling; this is where you don’t buy the property, you just buy the lien against the property! That way, you don’t have to function as a property manager, having rentals, in order to collect the cash flow every month on them, and gain the benefit of the compounding interest! One needs to have enough money to purchase the notes in order to utilize this strategy, or as we will discuss later, at least have a credit partner who has the money to buy the notes!

Each of these Exit Strategies identifies what you will do to make money in the deal, but there is still another question; How will you finance it in order to buy it? Each exit strategy works best when coupled together with the financing method that most effectively magimizes your potential profit! There is not just one financing method that will work with each exit strategy; Rather, the financing method you would choose to implement in each various deal, will depend primarily on one thing: How much profit margin you can create in the deal, by writing a lower offer that gets accepted! Some of the financing methods require a larger profit margin in order to implement them. Some financing methods require just a small profit margin. Also, some of the financing methods could work with a certain deal, but may not necessarily make the most sense for the exit strategy you’d like to use! In order to make decisions about which financing method best fits the strategies you choose to implement, it is necessary for you to understand what the primary financing methods are.

Identify and have a basic understanding of the financing methods available, and which ones will work for you, right now!

There are eight primary financing methods available to the real estate investor. They are:

-Number 1; Seller Financing; This is where the seller of the property accepts payments over time for the purchase price. Sometimes a buyer may need an amount of money for a down payment, but this is often a “nothing down” financing method, especially if the seller had little or no equity in the property!

-Number 2; “Subject to” purchasing. This is where the buyer takes over the payments on the previous owner’s loan, by titling the property to a Land Trust at closing, of which the buyer is the Trustee (or someone else, if they so choose), and the buyer’s LLC is the beneficiary. The Land Trust is used so the previous owner’s loan won’t get “called due” upon the transfer of title to the buyer. It is a type of seller financing, however, for the purposes of creating your strategic plan, we will identify it as a separate strategy. This is a strategy you can use even if you have no credit, and very little money!

-Number 3; Sandwich Lease Options; You’re in the middle between two lease options, collecting cash flow on properties you don’t even own! You control the property on a lease option, which makes it your financing method, then you also “sell” it on a lease option, which makes it your exit strategy! This is a way of having rental properties, without being able to get loans to buy property! It is a “nothing down” strategy. It is not advisable to plan for this to be your strategy when the property is not in good condition! Additionally, don’t use sandwich lease options when the owner of the property is nearing default, unless you also are willing to catch up the back owed amounts, and the seller will allow you to make the payment for his mortgage directly to his lender, and then any balance you owe for the rent can be paid to him. You don’t want your lease/option property to get foreclosed on!

Note that the previous financing methods are the three methods in which the seller must participate! Therefore, in order to be able to utilize one of these three methods, you first identify the property, then ask the seller if he’d consider doing one of these methods with you! It is not necessary, in fact it is impossible, to decide if you’ll use one of these three methods before you identify a property, and ask the seller! The financing methods listed below will require a bit of preparation on your part, in order to discover a source for this funding, and also to understand how much the loan will cost you, so you can write the offer low enough to allow for it.

-Number 4; Hard Money or Private Money Loans; This is a high interest rate, short term loan that can come from a company who identifies themselves as a hard money lender, or it can come from a private individual who happens to have a lot of cash, or a big self directed retirement plan! A hard money/private money lender is less concerned with your qualifying ratios and your credit, and is more concerned with how cheap you’re buying the property! Because they base their lending decision on how much potential profit margin/equity you have in the deal, they want to see proof that you’re buying it at substantially below current market value! (Usually 60% or so of current market value) This financing method requires the most profit margin, but requires less credit worthiness. Sometimes, you may still need to use a credit partner together with a hard money/private money loan, if the lender requires more down payment than you personally have.

-Number 4; Double Escrow Closings: This is both an exit strategy AND a financing method, because it is what you intend to do with the property AND it is how you’re going to pay for the property! Refer back to page three for more of an explanation of what a double escrow closing is. This method can be used when there is a moderate amount of profit margin in the deal, and it does not require you to have credit or cash!

-Number 5; Assignment of Contract: This is also both an exit strategy AND a financing method! It is both what you intend to do to make money in the deal, and also provides the funding of it. Refer to page three for more details about Assigning Contracts. You won’t need money or credit to use this method, but the deal will need to have at least a small amount of profit margin, as an investor needs to see reason to want to buy the property, and reason to pay you for having brought him the deal!

-Number 6; Home Equity Line of Credit; This financing method won’t require you to have cash, but you will need to have a home to base it against! The margin in the deal that will be required is moderate, and you will need to decide if the value of the deal is greater than the cost of the leverage.

-Number 7; Get a Traditional Mortgage; You will need to be able to get qualified for, and use a traditional 30 year loan in order to implement this financing method. This method is the traditional method of financing long term holds, otherwise known as “rentals”. This is the only one of the financing methods that always uses your money and your credit! If you can get qualified, you will find it easier to make offers on bank owned and bank controlled (short sale opportunities are not bank owned, but the bank does make the final approval decision, so they are bank controlled) properties, as bank want to see a letter of pre-approval before they will even consider accepting your offer! Consider partnering with another investor who can get the loan, in the event that you can’t. SEE BELOW.

-Number 8; Use a Credit/Financial Partner! This is a financing method, because your credit partner actually qualifies for the loan, not you! If you want to make offers on bank owned and controlled properties, but cannot qualify for financing yourself, consider finding a credit partner who will allow you to use their qualifying letter! Even if you double escrow the closing away or assign the contract away (there is a certain way to make contract assignment work on bank owned properties; Be sure to learn the details of this method before you spend time making “assignable” offers to banks!), the credit partner’s letter of pre-approval will enable your offer to get accepted, so you can implement the chosen exit strategy!

Now that you have a basic understanding of the exit strategies and financing methods that are available in real estate investing, make a note of the ones that will work for you, based on your current situation. I recommend that you start by identifying which financing methods you can use when you find deals (or rather I should say, when you make deals) that have sufficient profit margin to implement them, as that is always a determining factor in whether or not you implement any financing method; Can the deal afford it, and still leave sufficient profit margin?) Doing the analysis to make this determination is part of the market analysis process, which process will be discussed in detail in a subsequent coaching session. Then, after you’ve identified the financing methods you can use, you’ll be able to pair them with the exit strategies that those methods will work with.

Understand which strategies work best in which market conditions

At this point, it is necessary for you to have an understanding of which exit strategies you could use with properties that can be funded using those methods, and which types of properties and market conditions those financing methods and exit strategies work best under. For example, if you find a hard money lender and get qualified, knowing that this is a short term, high interest rate loan, would you ever match that financing method with the exit strategy of holding the property as a rental? Certainly not, unless you knew in advance that you could qualify to re-finance that same property with a traditional lender after you owned it. Rather, you would choose to fix-n-flip it quickly, or wholesale it away using one of the wholesale strategies. As another example of the importance of matching the financing methods that you can use with the most appropriate exit strategy, let’s suppose you know that you don’t qualify to get a loan, and you’ve found a property that won’t cash flow every month as a rental, and is in need of repair, which is why the seller hasn’t been able to get it sold. What could you do, provided there is enough potential profit margin/equity in the deal to make it worth doing? You could take over his payments, which is the “subject to” financing method, so you don’t even have to go get a loan, while you are implementing the fix-n-flip exit strategy! This would be an even more cost effective way of financing fix-n-flips than going and getting your own loan, because you save all those closing costs and financing fees! Spending the time to think through which financing methods you can pair with which exit strategies will help you more quickly analyze the potential deals as you find them, and will help you recognize the deals you can do, and prevent you from spending time on deals you can’t yet do. It will also help you identify the activities you need to spend time on, in order to position yourself to be able to utilize strategies that you currently aren’t positioned to utilize.

Determining which type of properties to look for

In addition to matching the strategy you can use with the financing methods that you can use, it is also important to determine the type of properties that best fit those methods. For example, if you don’t yet have a credit partner, and know that you cannot yet get a letter of pre-approval from a lender verifying that you can obtain a loan, you should not waste your time trying to make offers on bank owned or controlled (as in short sale opportunities) properties! Banks don’t accept offers unless the offer is submitted with a letter of pre-approval from a lender verifying that you can obtain a loan! Until you find a credit partner who can submit the pre-approval letter, you are wasting your time making offers on bank owned or bank controlled properties, as your offers will not get accepted. If bank owned/controlled properties the most prevalent source for finding (making) great deals in your chosen market, first spend the time necessary to find your credit partner, OR spend the time necessary to find a hard money or private money lender who will give you a letter of pre-approval!

Let me talk for a moment to those of you who DO qualify to obtain a loan; Get your pre-approval letter, and get to work responding to ads offering properties for sale, because the sky’s the limit as to what you can do! It’s important, however, that you realize that just because you CAN get a loan, that doesn’t mean you should use that financing method when one of the other methods may be better suited to your market and to your exit strategy. For example, the property that is available to buy “subject to” the previous owner’s loan that needs repair; Even though you can get a loan to buy it and then fix it up, you’d make more money in the deal if you didn’t, and just took over his payments during the time when you’re fixing it and locating your back end buyer, because you’ll save all those closing costs and fees! Never miss an opportunity to use one of the more creative methods when you can. There is one exception; using a hard money lender! Sometimes, it’s more beneficial to use your own credit and pay the lower interest rate and closing fees of a more traditional loan.

For those of you who CANNOT get a letter of prequalification from a lender, the market you chose to invest in and the types of properties that you seek out should be markets and properties that are favorable to finding sellers who can accommodate those financing methods. For example, if using lease options is a strategy you can implement, recognize that you will not want to look for lease option opportunities from the lists of people who are sliding into foreclosure, or your option money could go down the drain when the property gets foreclosed on! Also, would you want to do a lease option on a property that is in need of repair? Probably not, unless you don’t mind fixing up a property that you don’t own! If you encountered a property sliding into foreclosure that needed repair, provided the deal has enough profit margin, your options for the financing would be “subject to” financing (after you catch up the back owed amounts to bring it current), using hard money or private money loan, doing a double escrow closing, or assigning the contract away, or find a credit partner. Now, with this same scenario, what if the seller were upside in his loan, because the market had gone down? What could you do then? It would need a short sale to be accepted by the bank, so you’re back to needing a credit partner who has a letter of pre-approval, OR do a double escrow closing, or assign the contract away. In the second scenario, a “subject to” won’t work, because after the bank approves the short sale price, they will expect you to buy it with an original loan, and not just catch up the payments to bring it current.

Are you beginning to see the interrelation between the financing methods, the exit strategies, and the types of properties you can apply each strategy to? If so, then you’re beginning to “think like an investor”, and the possibilities will begin to formulate in your mind for each property that you find!

Next, to develop your strategic plan, it will be necessary for you to identify real estate markets that optimize your potential for finding properties that fit the methods and exit strategies that you’ve selected!

Understand how to choose where your properties should be located

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“If you give a man a fish, you’ll feed him for a day, but if you teach him HOW to fish, you’ll feed him for a life time!” Rather than telling you where you should invest, which would change over time and eventually be obsolete information, I want to teach you to “think like an investor”, analyze the market data, and be able to match the financing methods and exit strategies you can use together with the markets in which those methods will yield the highest return! That way, you will know where to start your search for properties, and where to find the information upon which you will make your decision.

There is an underlying precept that you need to adopt in order to “think like an investor”, and maximize your profit potential, and that is this; Put your money and your time where it will yield the highest profit potential and that is NOT necessarily in the market where you live! There are strategies you can use in any market, including wherever you live, but they might not be available to you, if you can’t qualify for the financing methods that make them work (or havn’t yet found a credit partner!)! Investing in a different area can feel a little scary to a new investor, but as you proceed through this education, you will learn how to make it work. So there’s really nothing to be afraid of! Just “hang with me here”, and realize that you have to learn and adopt new skills and news ways of thinking to successfully undertake any new endeavor.

Why is this a necessary paradigm for you to accept? Let’s explore that for a moment, so you can understand why it’s so important. Not all markets lend themselves most effectively to utilizing all the strategies. Let’s suppose that you have already determined that you want to own rental property, so you can create long term, passive income. If you live in Hawaii or Malibu or Connecticut or another market where, currently, the prices of properties almost never allow for monthly cash flow (because they are so expensive that the payment is more than the rent you can collect), what are you going to do? Buy them anyway and lose money every month in hopes of eventual further appreciation? That would be ridiculous! Rather, you could choose to buy rentals in a market that is currently undervalued, and buy several cash flowing properties for the same amount you would have spent on just one property in the more expensive market where you live!

Another example is this; If you’ve living in a depreciating market, where prices are falling and most sellers are now upside down in their homes (meaning that they owe more than it is currently worth) would you want to take over the payments on the previous owner’s loan? Certainly not! Another option you would have on that scenario is that you could work with the seller and the lender and get the bank to accept a short sale (which is when the bank accepts a lesser payoff than they are owed). Be aware, however, that after you get the short sale accepted, the lender will expect you to fully pay it off, so you’ll need to be able to acquire original financing on the property. Remember, if you don’t qualify to do that personally, you can get a partner who can, and split the profits. If you know that taking over the payments (the “subject to” financing method) is a method that you can do, why not look in real estate markets that have been flat, non-appreciating markets for the last few years? It’s more likely to find a motivated seller in a flat market who is willing to allow you to take over his payments, because he has no margin for hiring an agent and paying a commission, since his property hasn’t gone up in value! An example of a flat market is Texas; Many cities in Texas have not had appreciation in several years! So, the sellers are frequently not upside down in their properties, but they don’t have equity either! The result is that you can offer to take over their loan, and often do so without having to pay them for their equity, because they don’t have any equity! Make sense? It’s a true “nothing down/no credit required” deal! I’m not saying that you can’t find properties in a downtrending market that are not upside down to take over the payments on, but rather that it is more likely to find them in markets that are flat! Looking in the markets that are flat increases the odds per ad that you respond to!

So, you see that different strategies work better in different markets, and whether or not you can do those strategies in the market where you live, will depend on your financial ability to perform on those methods. You certainly CAN invest in the market you live in, just be sure that you qualify for the financing that will be required to make that market work, or find your partner first! If you consider investing in other markets, your money can yield a higher return, and the strategies you are prepared to utilize may be more efficiently and effectively utilized in those markets.

Perhaps you’re wondering, “How would I do that? Do I have to travel there?
Let me briefly explain how you would make a long distance real estate investment work, so you won’t be so afraid of the concept.
The basics about how you make it work are these; Use real estate agents or FSBO websites to locate properties, then when you make an offer, build in as long an inspection “due diligence” timeframe as the seller will give you, and hire a professional property inspector to inspect it for you during that inspection period. Have the inspector e-mail you lots and lots of photos, and also give you estimates on any repairs that need to be done. He will charge a bit extra for this extra service, but it’s worth it! You can find an inspector through a real estate club in the area where the property is located, or through a referral from your agent there. The reason this works is because you can get out of the contract during the inspection timeframe you wrote into the contract, or you can re-negotiate the purchase price, as long as you’re inside that inspection deadline!

Now, let’s talk about where to collect information that will help you determine where your properties should be located!

There are many reliable websites you can use to learn real estate market statistics and read real estate market news. A first step should be getting to know the market where you live, so you can determine which of the strategies work best there, then, check out other areas and decide which is best for you.

The first website to check is Realtor.com!
In realtor.com, click on “market conditions report” for your city. Also, agents can pull specific statistics for you from their MLS website, that has more detailed information. Ask them for a copy of that report!
Streetadvisor.com is a website that assists you in determining which neighborhood in that city make the best rental neighborhoods. You can find details about the neighborhoods, and information written by people who live there, and what they say about the area!

Keep your finger on the pulse of the real estate markets around the country, so you can decide where to invest! Here are some websites that you can use, and I suggest that you sign up for their free news releases to be sent to you e-mail:
– cnnmoney.com, cbsnews.com, forbes.com. These sites have original real estate news articles.
– realtytrac.com, economy.com, yahoorealestate.com. These sites are re-sellers of the news, but often have links to news articles from cities all over the country!
While these are all reliable sources of information, I like to check several of them to verify what the others are reporting, like a “checks and balances” system!

All Countries will have market news websites. Do an internet search for your country and find them! In Canada, you can use, zoocasa.com, and realtytimes.com.
International real estate news for residential and commercial sectors include The International Real Estate Digest, who’s website is ired.com, and also worldrealtynews.com, and commercialpropertynews.com.

A website that can be used for more detailed analysis and market projections, use Bestplaces.net!
– First, read the “Overview” about any selected city.
– Then, look at the chart under “economy” to see projections on job availability and the cost of living index. Look for a low cost of living and jobs coming in!
I also look at the percentage of people who rent in comparison with how many buy their homes. The statistics on the vacancy rates can help to project if you would have any trouble finding a renter! Low vacancy rates mean that there aren’t enough properties available, so you would probably have less difficulty finding a renter.
– Then, Look at the “Housing” chart to see the trend, and the median price range. Is the market in a downtend or uptrend, and how significant is the trend? It is shown as a percentage, and can help you determine how far under the current market value you need to offer in order to hedge the market’s downtrend, and not be upside down in the property a few years from now! The value of the housing chart is that you can decide approximately what the middle price range is, and look for properties that fall in that median price range, or lower, so you can bring it up to the middle price range after you rehab the property. I prefer to invest in the middle of any market’s price range, as the upper end usually doesn’t cash flow, and takes longer to find a buyer, and the lowest price ranges may be neighborhoods where I don’t want to have rentals! The safest price range is most generally in the middle.

There are four primary criteria used to project if a market will recover from a downtrend quickly, and most probably appreciate in value. Those criteria are:

1) Are there jobs, or are jobs coming? Bestplaces.net has statistics regarding how many jobs are projected to come to any market, and that info is located in the “economy” section of that city’s statistics.
2) Is it a major airline hub, or a port, or at least within a reasonable commute from a major airport or port?
3) Is it already low priced? You don’t want to invest in areas that are already inflated, with a high cost of living, unless you can get a really low price! Bestplaces.net can also give you info regarding the cost of living, in comparison with the national averages.
4) Does the area have likeable weather? Extremes in weather are generally less desirable, although whether or not the weather is likeable is a matter of any person’s subjective opinion! Number four is the least important criteria, but an employer will consider weather in determining if they want to locate their business there. Their primary concern is whether their employees will be able to make it in to work everyday!

Know the characteristics of a strategic plan, and be able to write one!

“What are the principal characteristics of a Strategic Plan?”, you might wonder. A strategic plan is made up of the following decisions:

1. These are the Real Estate Exit Strategies I can use:
(And then you list them!)
2. These are the Real Estate Financing Methods I can implement:
(And then you list them!)
3. These are the Activities that I must do to prepare to implement the Financing Methods
that I can currently implement:
(And then you list the necessary activities you must undertake to enable the financing methods to happen! This is your “to do” list! They will be activites like; Find, and then apply for a loan with a hard money lender; Build a pool of prospective Assignees to buy my contracts; Find a Credit Partner!; Place ads to attract lease option buyers, etc…)
4. These are the cities and neighborhoods that I will look for properties in: (And then you list the cities and neighborhoods that you’ve decided upon!)
5. These are the types of properties that I will look for: (And then you list your identified price range in the various cities; whether you are looking for properties in good condition, or properties in disrepair, or both, for the implementation of different exit strategies;)
6. These are the Activities I must undertake to find properties: Write your “to do” list! (Contact an agent in X city, and get “autohotsheets” sent to my e-mail; Register for lists of auctions coming to my cities; Bookmark the following websites that have real estate advertised for sale; Find a title company to send me the N.O.D.(notice of default) lists; etc…)

The highest probability of attaining your goals occurs when you break it down into activities that you must undertake in order to reach your goals. You need to “write it down and break it down” into what you’re going to do every day. Your activities should include things like how many calls your going to place every day to both sellers and to investors you’re building into a pool of prospective assignees. Your plan should include how many offers you’re going to make each week, and then in order to hit that goal, break it down into how many you’re going to write each day.

A few statistics may help you in the goal setting part of developing your strategic plan. Members of the National Association of Real Estate Investors were polled about what the average profit margins were that they have earned on different types of real estate deals. These are the averages that were reported:
– Assigning contracts yielded an average profit of $4,500.
-Double Escrow Closings yielded an average profit of $11,000.
-Fix-n-Flips yielded an average profit of $18,000.
-Rental cash flow on the average single family rental was reported to be $250. per month.
-10 offers equaled 1 closing.

Take the time to write out your Strategic Plan! Print out copies of your Strategic Plan, and post it all over your home and office in areas where you’ll see it, so it will always be on the fore front of your mind and you’ll be reminded to DO IT! Have a copy of it next to your computer, so you can refer to it when you look at various websites for finding deals. Have a copy of it in your car, so you can refer to it when you are driving neighborhoods, looking at properties. Use your Strategic Plan!

Janeen J. Detrick