Unfortunately, most real estate investors don’t know what to offer on a property or how to properly structure offers with the least amount of risk as possible to them.

There are really two parts to making sure you don’t commit this cardinal error. Part number one is, knowing what to offer. And part number two is structuring your offer.

So, I’m going to tackle part one first. Knowing what to offer really comes down to knowing what your exit strategy is going to be. By that I mean, do you plan on wholesaling this property? Do you plan on retailing this property and rehabbing it? Or do you plan on keeping this property as an investment property and renting it out? All of those things you need to have in your mind so that way you can make your best offer to the seller.

Additionally, the last thing you ever want to do is pay too much for a property, because really you make your money when you buy and you realize your money when you sell. And what you do with that property in between that timeframe is going to depend on the offer that you made and your exit strategy.

Part two of this mistake is, knowing how to properly structure your offers with the least amount of risk as possible. What I mean by this is a lot of times as a real estate investor, you’ll be focusing on buying distressed properties, properties where somebody may be in foreclosure, people are behind in payments. There might be a divorce or job loss. And you want to make sure that the sellers’ problem is not becoming your problem.

And a lot of that has to do with how you structure your offers and how you make your offers. You always want to keep the risk on them. There is no reason why you should have to bare their risk, bare the risk for their problem.

I’ll give you an example. I bought a property from a seller one time and I bought it with seller financing. There was no mortgage on the property and I asked the seller to finance the property for me. I got great terms on the property and I knew the house needed some repairs.

So, what I did was I asked the seller to give me six months before I made my first payment to them. She agreed. And by asking that and structuring my offer that way, I more or less reversed the risk. So, that way I had time to put some money into the property before having to start making payments on the property. And in return, it did turn out to be a great win/win all around situation with that house. That example is just one of many on how you can structure offers with sellers.

If some of the information that I’ve gone over with you in this step or mistake sounds a little bit confusing to you, then you may want to go back and brush up on some of your acquisition skills. So, that way you can confidently make offers and structure offers. Ultimately, in that respect you can be successful as a real estate investor.