So in an earlier post, I outlined the 7 Steps you can follow to find great real estate deals, but the devil is always in the detail, so today we attack Step 1 – “Identify your End Product”. Read on for a blow by blow account of how you can apply this step!
Identify your end product
This step is often overlooked by novice investors, or at least is not given the attention that it needs, so make sure YOU don’t make this mistake!
When identifying your end product the main thing to remember is be specific! Write down exactly what you are looking to deliver as your end product.
Vague Definition of End Product
An example of a poorly defined end product may be:
“A property where I can add value, and on-sell for a profit”
Anyone who has tried to get an agent to send them only properties that they are looking for will quickly recognise that this description is so vague that an agent could bring you any property on their books and it would be difficult to say that it didn’t match your criteria.
Typically agents see profit in all deals (for someone else – they usually wouldn’t buy it themselves!) – but their idea of how to profit may be quite different to yours!
Good Definitions for End Products
A couple examples of good definitions of your end product would be:
“I am going to build a 145m2, 3 bed, 2 bath, 2 car single level villa on less than 400m2 of land, renovating the existing house that is already on the block”
OR
“I am going to create a renovated, 4 bed, 2 bath, 2 car home, on a block of at least 600m2”
Both of these examples tell you EXACTLY what you are looking to create, and by working back from these definitions, it is therefore easy to identify the raw product that you need to find in order to be able to create that end product.
As you can see, it only takes a few minutes to do this properly, but being very specific about your aim can save you hours of looking at deals that just don’t fit what you want to do.
To finish, I’ll leave you with a quote from the Wizard of Oz that certainly applies here, and one that I think of every time I sit down to set goals:
“If you don’t know where you are going, any road will get you there!”
Make sure you are clear on where you are going (your end product), so you can make the right choice about which road will get you there!
Action Time!
You won’t get anywhere until you start taking action so now don’t put it off any longer!
Identify the end product you are looking to create, and write down a detailed description – how many bedrooms, bathrooms, garages, how many m2 will it be, what size block will it be on?