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Letter from Dan (Continued from Page 1)

Their increase in price was not worth the aggravation of installing central AC, so we accepted the
lower priced offer from the doctor.
There are two lessons in this story:

1. Don’t Fear the Number of Days on the Market(DOM).  We were at 90 days on the market
when we received our first offer.  During that 90 days we had a slow, but steady stream of
showings.  We NEVER dropped the price during that time on the market.  

I hear many rehabbers, especially newer investors, talk about how they MUST SELL their flips in
30 days or less.  Not every market is a 30 days or less market.  When you are evaluating comps
and considering a flip, make sure to pay attention to the number of days on market that each
comparable sale had taken in order to produce a buyer.  

We knew going into this deal that other “just rehabbed” houses had taken between 90-150 days
to produce a buyer at a fair price.  With that knowledge in hand, we confidently held our initial
offer price and are now on schedule to close out the deal at a strong price.

2. Don’t Fear the Loss of a Buyer.  In the beginning of my real estate investing career, I
remember being ready to accept the first offer on any deal.  Honestly it was because I was not
used to making money in large chunks.  I was so happy to be making a strong payday that I didn’t
even think to go for more.  Thank God for my partners who had more experience and guided us
through those early negotiations at MUCH HIGHER PROFITS than I would have earned on my

I was afraid of losing the “bird in the hand”-the initial offer from the buyer.  It is a much stronger
negotiating position to be able to walk away from a deal at any time.

Remember that being ready to walk away from a deal puts you in a position of strength.

                      “So you want to become a landlord, huh?”

I remember wanting to buy houses and rent them out ever since I was a little kid.  I was 7 years
old and my dad was buying houses in the city, renovating them, renting them out, and then
refinancing them to get the investment back out.  I remember the rent he was collecting was $350
per month and the mortgage payment was just under $200 per month (1987).  

I remember thinking to myself that this beat the hell outta my paper route!!

I watch my dad get out of the landlord business as fast as he got in.  He placed the wrong tenants
and I witnessed the horror story you often hear about nightmare tenants.  All that aside, I knew I
was going to be in the real estate business one day.  I would figure out how to do it right.

According to Warren Buffett, an investor should have a written set of rules by which he/she
purchases and owns assets.  He called this his Investment Philosophy.  He said this referring to
stocks, but I’m a real estate investor, so I understood this to mean houses.  Rental houses are
assets too.  

I discovered that the most successful real estate investors I know had rules as to where they
purchased houses.  They only bought in certain neighborhoods.   Eventually I wrote down my own
REI Philosophy-to orchestrate and close as many deals as possible.  This month I have 33 deals
on my whiteboards either for sale or sold & waiting to settle.  I focus on volume and flip houses.

That’s my philosophy.

                                      “What is Your REI Philosophy?”
This month’s REIdea is to FIRST formulate a solid plan for building a rental portfolio.  
The answers to these questions should help you define your Real Estate Investment (REI)
Philosophy.  I suggest writing this REI Philosophy down before you buy any property.  Use this as
a written set of investment rules so that you don’t accidently become distracted by some “great
deal” that is outside of your comfort zone.   You gotta know what your rules of engagement are
before you enter the battle.

Before you ever buy a house (or your next house) ask yourself:

Why am I buying THIS House?  

Why are you investing in the neighborhood where you are looking?

Is there potential for gentrification in the neighborhood where you are buying?

To Continue Reading go to Page 3)
REI Diamond Interview
Interview #1
Joe Scorese
Area Manager
Monument Bank
"Real Estate Investment Jewels of Wisdom"
Issue #1
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