BiggerPockets

The Three Parts Of The Deal: Buy, Manage And Sell

There Are Three Main Parts of every real estate deal. In order to be a success, you need to be a master of all three of them, or know enough to know that you're not an expert, and either outsource or partner with someone who can step in where you are not strong.

As crazy as it sounds, I have dealt with a lot of people who are great at one or two but lousy at the third. No matter how you play it, you need to excel at all three, or you need to find a solution to your weakness and/or make sure you have strength on your team where you are weak.

The First is the Buy: You need to know market values, trends and how to negotiate a great deal. Many other things are included in this. For example, if the property needs work, you need to know how much work is needed in dollars and cents, how long it will take to complete the work, who is able to do the work as well was financing it.

The Second is to manage the property. This includes property management, cash flow management, fixing up the property, if needed, and dealing with contractors and tenants, which is an experience in itself.

The Third and final stage is the Sale or Disposition of the property. Again, knowing the market and working with realtors and buyers is critical here. In both the buy and the sell is the art of deal making which you need.

Many years ago when the markets where nice and steady, I dealt with someone. I will call him "Bill." Bill had amassed a hundred or so great properties, all purchased at great prices in up and coming areas. I, as well as most lenders in the area, had financed some of his purchase. Whenever anyone looked at his portfolio, on the surface it caused tongues to hang out, including mine. But he went down in a trail of flames losing everything because he did not know how to manage or sell anything, and he was a real hothead. It is a sad story because he was a real talent. He could have saved himself if he would have tried to work it out, but he just could not help himself and made every wrong move in the book. (I often wonder what happened to him.) Do not repeat the mistake of "Bill" and learn that you need the complete package.

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