In butcher shops it is not uncommon to see a chart of a cow in which all the cuts of meat are diagrammed. The idea is that you’ll have a better understanding of what you’re ordering when you shop. I view potential real estate deals the same way. If you were to map out the “cuts” on a home, ten of them might include (1) capital appreciation, (2) tax benefits: (a) write-off of depreciation, (b) Section tax-free sale proceeds 121, (c) Section 1031 Tax-Free Exchanges, (d) Amortization Cancellations (3) Loan Payments, (4) Liquidity and Leverage through Low-Cost Loans, (5) Options, (6) Income from (a) leases and (b) sandwich leases; or from (c) installation sales, (7) gains from (a) short-term changes, (b) long-term gains from sales, (8) use, personal or business ownership and/or occupancy, (9) repair opportunities, (10) equity participation with investors I would try to structure both my acquisition and sale to give the minimum number of these “cuts” to a buyer , or leave them with a seller, and keep the rest through negotiation.
If you can learn to see all the variable benefits of trading, buying and selling at a profit is much more than just trying to bet on the best price. See if you can figure out how I benefit from the following:
A. I’ll be happy to give you whatever price you want as long as I don’t have to pay you until I’ve sold the property at 110% net of that price; Prayed
B. I’ll give you any interest you want as long as I can buy your house cheap and pay you in full when I sell it; Prayed
C. I will sell my house to you for less than I paid for it, if I can hold an Option to buy it back for exactly the same price at any time in the future; Prayed
D. I will pay you the highest rent in the city for a period of five years and I will pay for all repairs and maintenance as long as I can sublease the property; if you give me a 125% credit for every dollar I spend against today’s purchase price; Prayed
E. With high equity, I will make your payments while living in your home rent-free if you give me a credit based on fair market rents for your equity; Prayed
F. I will pay you the maximum retail price, if I can pay half now, and the balance in one lump sum over ten years with zero interest and zero payments; Prayed
G. Put a new roof on your house and buy you a car if the fair market value of is counted toward a 10-year option on your house at the current appraised price; Prayed
H. I will pay for your child’s 4-year college tuition and you can continue to live at home for a 125% credit against the going price for every $1 you spend; Prayed
I. I will buy you a $250,000 insurance annuity for life starting at age 65 if you deed me your $250,000 clean house today; Prayed
J. I will pay your hospital bills in exchange for equivalent equity in your home; Prayed
K. I will lease your house, pay all costs, and pass on all rents to you, if I can have half of the proceeds when I sell the property in no more than five years; Prayed
L. I will give you a $10,000 zero payment private line of credit to pay off credit cards in exchange for $20,000 credited against an option on your home today.
I have done all of the above. In each case, the seller accepted the offer because I was solving a problem that was more important than the equity in their home. In almost all cases where you take the time to discover the real personal reason (other than simply a desire to make a profit on a sale) why an owner is selling, you can better negotiate while buying and selling at a higher price. price. profit.
