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Thursday, November 12, 2009

Seven Key Rules for REO / SHORT SALE Investing!!

Foreclosure flipping can be deceptively simple even for novice investors but that doesn't mean it is risk free.

Like any investment strategy, a bit of intelligence can go a long way. Here to help get you up to speed are the seven most important rules for intelligent investing:

1. The Greatest Risk to Your Return is YOU!
Repeat this every day until it sinks in. Nobody else is to blame for your failure or success but both are within your grasp. Recognize how your actions and attitudes either work for or against your success on a daily basis then get busy building wealth.

2. Don't Hire Advisors Without Value.
Mentors, information products and advisors are essential but make sure they will actually add value rather than just costing you more in the long run.(95% of the people that want to learn, work for you or partner really are only there for themselves and will only cost you time and money out of your budget.
**Ask your self this: Did this person bring money, credit, or physically work and rebuild the house with you. If the answer is no to any of these dump them like a hot potato. They are leaches and will do nothing but drain your budget.

3. Ignore Short Term Noise.
The media thrives on generating chaos - its entertaining but not necessarily good investment advice. Learn how to see beyond the madness to see true opportunity. They make money by telling stories, we make money by rebuilding the community. Houses don't lie reports and writers do!

4. Manage Expectations.
Learn how to crunch the numbers, generate profit potentials, remain liquid and tackle taxes to keep expectations in alignment. If you find your numbers are "off" then understand why and how..then fix it. If they are consistently off then you don't have a math have an attitude issue to work with. Likewise, learn how to manage the expectations of others - from sellers to bankers it is important to keep the lines of communication clear.

5. Don't Confuse Investing with Entertainment or Speculation.
Hey, REO's really are fun once you get a system in place but that doesn't mean you shouldn't treat it like business. Avoid ego trips, power plays or any type of games -keep the speculation for the tracks and entertainment for poker night.

6. Reduce Costs - Maximize Write-Offs and Enhance Profits at each and every step.
Do not allow yourself to fall into the pattern that it doesn't matter (Everything and every penny matter, speaking from personal experience I just had a project manager cost me 20k over budget because he just wanted to stand around and order people to do things instead of doing it himself).
A little extra here and a little extra there add up to big differences in the bank account over the long haul.

7. Focus on Real Returns.This isn't Monopoly money. Focus on after cost, after tax, after inflation, actual risk adjusted real returns on every dollar invested. That is the final measure of risk versus reward so make sure it accurately reflects your total investment. While the government might be satisfied to play games with inflation adjusted returns, don't believe it for a minute.

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