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Use this one business strategy to make property a great passive income business

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What makes a business strategy great? This is an important question to answer if you are serious about building your own wealth creation system.
 
How you answer will obviously depend on your personal situation and goals, but when it comes to a property business, there is one key ingredient or strategy that will make your strategy great.
 
And that is the motivated seller.
 
When was the last time you felt motivated? I’m sure you would agree with me that motivation is a powerful driving force to get one to act in a certain way, especially if you have a deadline hanging over your head.
 
A motivated seller is therefore somebody who has a damn good reason to sell something within a limited period of time.
 
Smart property investors know how to identify and profit from these sellers. Most investors believe that location and the condition of a property are the two critical things to look at.
 
Yes, they are important factors to consider, but one of your most important jobs is to find the right seller.
 
Why is this? You can realise handsome profits by buying property well below their market values. A person who really needs to get rid of an asset in a short space of time is more open to negotiating the purchase price. By buying low upfront you can lock in value and create ‘instant profit’.
 
Here’s how I made almost R50000 (~$7000) in ‘profit’ from my first residential property deal. The property was valued at R200000 (~$28500), but I managed to conclude the deal at a purchase price of R150000 (~$21500). The seller was desperate to sell and his property was on the market for quite some time. That made negotiations a lot easier. 
 
When it came to organising finance, my bank granted me a mortgage of R200000. That left me with access to R50000, which I used to pay for legal fees and monthly shortfalls. Essentially, I used the banks money to purchase the property and maintain its upkeep for two years. Not a bad way to spend other peoples' money.
 
Property has a major advantage over other assets when it comes to the buy low sell high business strategy. It is so much easier to identify a discount buy in the world of real estate than it is to identify a good deal in stock markets.
 
business strategy based on motivated sellers
 
You can easily identify people who are motivated to sell property as you deal and negotiate directly with individuals. This is not the case with stock markets.
 
Buying and selling takes place at arms length. In other words, there are no negotiations of any sort. Prices are set by the market as a whole, which means that it becomes very difficult to identify or obtain bargain buys.
 
Why would someone be motivated to sell property? There are quite a few reasons. The most common is financial difficulty. People get behind in their payments and land up in a debt trap. When times get tough, individuals or families tend to sell quickly at discount prices.
 
Other reasons include divorce or death in the family. Sometimes people want to sell their homes quickly to make a fresh start, downsize or break old emotional links.
 
And how do you find these sellers? For me it’s really simple. My team of real estate agents do all the hunting for me, and according to my requirements. I’m generally only interested in property deals where the purchase price is at least 20% to 30% below market value.
 
To summarise, motivated sellers form a central component of a residential buy-to-let business strategy. They enable you to:
  • Lock in upfront profits
  • Buy low and sell high

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