Walk Away Power... Do You Have It?

Every month I send out a "Book of the Month" to my clients.  Some of the titles have included Napoleon Hill's "Think and Grow Rich", Tim Ferris's "The 4-Hour Work Week", and many others.  But one in particular that I believe has provided my clients with some of the best practical insight is a legendary book by Roger Dawson titled… "The Secrets of Power Negotiating".

As a real estate investor your ability to become a master at negotiating will often times make the difference between making a great profit, a small profit or living through every investors worst nightmare… a loss.

Every successful real estate investor that I know has worked hard to master negotiating with sellers, lenders, contactors (this is critical), agents, buyers… you name it and they have mastered those negotiations.

Take for example the recent negotiation of one of my real estate investor clients.  He found a well priced 2 unit property that would gross around $1700 per month in rent.  Asking price was in the low $60's (property was being sold by a wholesaler) and upgrade costs around $15K.  Great deal right?  You bet!

But it gets better... as good a deal as this property was at the asking price this client drove the price down to the low $50's and too boot, had the wholesaler chasing him all over town to get the contract signed.

When was the last time you had a wholesaler chasing you around to get a deal done?

Great story... one with lots of equity and cashflow. 

So... why do you think this client was able to move so confidently on this deal and was able to get the wholesaler to drop the price so low?

Simple... this client knew exactly what this deal needed to look like and when he saw that even at the asking price it was a great deal... he had nothing to lose by negotiating for a lower price.

What was the worst that could happen?  He would have to pay the full asking price!  

What do you think the BIG lesson is in this story?

If you guessed having clear criteria to take the emotion out of the negotiation.... I would say maybe.

If you said knowing how to evaluate the cashflow of a rental property... I would say no.

 If you said something like... the wholesaler gave away their walk-away power you would be correct!  This wholesaler needed to get this deal done more then the buyer needed to buy it. 

Very powerful stuff... and just one of many concepts explored in Dawson's book.

Get it, read it, use it... you will be glad you did.

To Your Success...

Pete