Advice Needed: Identifying "Good Deals" in Real Estate Investing
New to Real Estate · Denver, CO · Member since 2025 · 11 posts · 4 votes
Advice Needed: Identifying "Good Deals" in Real Estate Investing
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Tim DelaneyPro Member
Buffalo, NY · Member since 2018 · 790 posts · 530 votesAt the most basic level a good deal makes you money with minimal cash and effort. Sometimes you have to bring a little more cash, others a little more effort. Ideally not too much of both.
The best way to learn what makes a good deal is to just keep analyzing. Find properties, and plug the numbers in the BP calculators. It may be helpful to analyze each deal as a flip and a BRRRR so you understand why sometimes it works as one but not the other.
There will be some people that say it’s not all about the numbers though, and I would agree. But the numbers is where it starts. Once you start learning how to identify a good deal financially you also need to make sure the property is not in a really crappy depreciating area or that the building is completely falling apart structurally.
Hope this helps.
14 Replies
- 1yTim DelaneyPro MemberBuffalo, NY · Member since 2018 · 790 posts · 530 votes
At the most basic level a good deal makes you money with minimal cash and effort. Sometimes you have to bring a little more cash, others a little more effort. Ideally not too much of both.
The best way to learn what makes a good deal is to just keep analyzing. Find properties, and plug the numbers in the BP calculators. It may be helpful to analyze each deal as a flip and a BRRRR so you understand why sometimes it works as one but not the other.
There will be some people that say it’s not all about the numbers though, and I would agree. But the numbers is where it starts. Once you start learning how to identify a good deal financially you also need to make sure the property is not in a really crappy depreciating area or that the building is completely falling apart structurally.
Hope this helps.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes1y
Quote from @Erick Pena:
A "good" rental property is one that covers all expenses (mortgage, taxes, insurance, maintenance, property management fees, and any other costs) and still leave a surplus (commonly referred to as cash flow).
- Calculate cash flow as: Cash Flow = Rental Income − Operating Expenses − Debt
There's much more to it, but that's the basic idea. Some properties actually lose money each month but gain value through appreciation. For example, a property in San Diego may lose $500 per month ($6,000 per year) but gain $60,000 per year in value, making it worthwhile to "lose" money each month in exchange for long-term gains.
I recommend you start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.
You need to get a firm grasp on two things: the ways to make money with real estate, and how to find deals that match your goals.
P.S. David Greene is preparing to publish a new book, "Better Than Cash Flow: The Ten Ways You Make Money In Real Estate"
The DIY Landlord Book4.7243 Reviews - 1yShawn AckermanPro MemberReal Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
Hello Erick a "good deal" is relative. Here is why I say that. Some investors look for cash flow and some look for appreciation and there are investors who need to merge the two in order for the deal to be considered good.
I think identifying what sort of investor you are looking to become should be answered first. I am not suggesting that you cannot diversify however are you looking for cash flow or is buying now, holding for appreciation and or forcing appreciation is your play.
Good luck on your journey! best of luck
- Property Manager · Downers Grove, IL · Member since 2012 · 99 posts · 40 votes1y
A good deal is different to everyone. Someone with $10M in the bank in cash just needs to put a lot of money to work and time value and tax write off is more interesting to them than a hungry investor in their 20s that has never found a deal.
Honestly, books are great, but they are about as "boiler plate" as you can get as I'm sure you're discovering. Personal criteria, building criteria and area criteria will all affect the way a deal appears on paper. two 100 unit apartment complexes, one in an A area and one in a C+ area will have very different financial breakdowns and interest groups.
Want to know if a deal is good (for you)? Run the numbers on a basket of deals you're looking at. Make note of some important ratios and percentages such as COC return, IRR, CAP, yearly maintenance vs acquisition price, etc. Build a big list of evaluation ratios etc. The best deals will all have a handful of financial ratios/percentages in a certain range. Once you've identified what's important and what ratios to look for to evaluate a property, all future deals should be weighted against those "good" ratios/numbers - and periodically adjust to suit your goals.
- 1yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
@Erick Pena who cares what the seller is asking?
Figure out market rents, deduct expenses to determine NOI, deduct cashflow you want, plug remainder into mortgage calc at current interest rate, then add lender's required down payment.
That is how much you offer!
It will almost ALWAYS be below asking price, so you will have to make 10s, if not 100s, of offers to find a motivated seller.
Then the property will have to pass inspection, appraisal, etc.
Logical Property Management4.9464 Reviews - Real Estate Agent · Wellington, FL · Member since 2019 · 33 posts · 19 votes1y
Everyone has a different idea of what a good deal is. For me, I care mostly about CoC (cash on cash return) and overall ROI (return on investment). I like 15% CoC and 30% ROI. Those numbers aren't easy to find, especially right now. I would say a 10% CoC and 15-20% ROI are reasonable returns. Some people just want to make $100 or $300 or whatever their number is per door. Varies by market and person. I agree with Michael, probably need to make 100 offers per 1 accepted to find a good deal.
- New to Real Estate · Denver, CO · Member since 2025 · 11 posts · 4 votes1y
Quote from @Michael Smythe:
@Erick Pena who cares what the seller is asking?
Figure out market rents, deduct expenses to determine NOI, deduct cashflow you want, plug remainder into mortgage calc at current interest rate, then add lender's required down payment.
That is how much you offer!
It will almost ALWAYS be below asking price, so you will have to make 10s, if not 100s, of offers to find a motivated seller.
Then the property will have to pass inspection, appraisal, etc.
This is great advice! I've been analyzing deals and the price I would need is well below asking for most.
- New to Real Estate · Denver, CO · Member since 2025 · 11 posts · 4 votes1y
Quote from @Hunter Purnell:
Everyone has a different idea of what a good deal is. For me, I care mostly about CoC (cash on cash return) and overall ROI (return on investment). I like 15% CoC and 30% ROI. Those numbers aren't easy to find, especially right now. I would say a 10% CoC and 15-20% ROI are reasonable returns. Some people just want to make $100 or $300 or whatever their number is per door. Varies by market and person. I agree with Michael, probably need to make 100 offers per 1 accepted to find a good deal.
I'm noticing that trend and where I was getting confused with things. Every "good deal" would have to be well below asking to get the figures I would want.
- New to Real Estate · Denver, CO · Member since 2025 · 11 posts · 4 votes1y
Quote from @Nathan Gesner:
Quote from @Erick Pena:
A "good" rental property is one that covers all expenses (mortgage, taxes, insurance, maintenance, property management fees, and any other costs) and still leave a surplus (commonly referred to as cash flow).
- Calculate cash flow as: Cash Flow = Rental Income − Operating Expenses − Debt
There's much more to it, but that's the basic idea. Some properties actually lose money each month but gain value through appreciation. For example, a property in San Diego may lose $500 per month ($6,000 per year) but gain $60,000 per year in value, making it worthwhile to "lose" money each month in exchange for long-term gains.
I recommend you start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.
You need to get a firm grasp on two things: the ways to make money with real estate, and how to find deals that match your goals.
P.S. David Greene is preparing to publish a new book, "Better Than Cash Flow: The Ten Ways You Make Money In Real Estate"
Thanks! I'll look into that material more! Things are starting to make more sense to me the more I'm reading up on it.
I no longer want to work as hard as I used to and I do not need to. I have more money than I will ever need and almost every toy I could want.
But when I was willing to work harder than I am now, I targeted good value adds. They are work and often have risk. But i was able to achieve the elusive infinite return on a majority of my RE and all of my investment RE that I purchased prior to 2020.
Infinite return has the benefit that the finances are not the hindrance to scale. The limit on scaling is your deal flow (mine never was that good) and time it takes to perform the value add (I got fairly quick for example, my last rehab did all new plumbing, electrical, and flooring. Redesigned a bathroom and kitchen with all new interior. added a new half bathroom. took down 6 walls including a load bearing wall. added 2 walls, added an eyebrow porch, removed an exterior door. Added 2 windows. Removed a fireplace. Added an electric fireplace. Added mini split. Painted 100% of the exterior. It took 2 months and 1 week, including unfurnished and furnish (so from guest out to guest in was 2 months and 1 week). The permits and architecture was done prior to start.).
For most people the finances are the limitation to scale. As indicated, I never had that issue due to the infinite return. My limit was deal flow, delegation, and limits to how hard I wanted to work (and I was working very hard). Was it worth the sacrifice? I have no w2 job, a lot of toys (need to get a plane), can do what I want, can assist my son to find his way in life (he is leading his 2nd rehab) and if I wanted I have generational wealth (I have given away a lot money the last few years). So probably, but I do not want anyone to think it was not a lot of work. I worked more hours than possibly anyone I knew.
If you do not want to work hard, then value adds may not be the best path for you.
Good luck- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
hello. good but broad question. it's going to vary depending on the market and what you're looking for to meet your goals. it looks like you have found out - correctly - that the vast, vast majority of properties for sale aren't good deals from an investment perspective. so kudos to you for figuring that out. that is accurate.
i skimmed the responses and didn't see anyone mention house hacking. can you house hack? not everyone's family situation or commute or lifestyle permits it, but it's a great way to get started.
it's also just objectively tougher to find good deals now than it used to be. high prices have made properties expensive and high rates have made money expensive. and, something that doesn't get discussed enough - a record number of properties don't have any debts on them. so those owners are pretty comfortable - no mortgage payment - and they don't need to sell, and they don't care where an investor "needs" the price to be to make money. so - tough environment. still worth investing in but tough.
- Real Estate Agent · Waxahachie, TX · Member since 2022 · 40 posts · 32 votes1y
Agree with pretty much everything said above. I'm no expert, but do know for a fact that you are much more likely to find "good deals" off MLS – through mailing, cold calling, off market groups/connections, etc. I also have some investor agents that send me off market deals via email on a weekly basis – which are also good to practice deal analysis.
Deal analysis is a huge factor and takes practice. Will be doing the same thing myself with land on the team I joined at Keller Williams. - Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes1y
Quote from @Erick Pena:
Hi everyone,
I’m new to real estate investing and just finished reading Brandon’s book on investing with no money down. I’ve found myself particularly interested in multifamily properties, but I’m struggling to grasp what exactly defines a “good deal.”
When evaluating listings, should I primarily focus on properties that seem undervalued? Are there specific market indicators or property traits I should be paying attention to? I feel like I’m missing the bigger picture of what makes a property a great investment opportunity.
If anyone could share some pointers or insights on how to identify a “good deal,” I’d really appreciate it!
Thanks in advance for your help!
A "good deal" is in the eye of the beholder. In my opinion, you have to establish your own investment objectives. Do you need or want monthly cashflow, tax write-offs, betting on appreciation,....
We invest in some deals because they meet our Hurdle Rate/Return on Investment objectives. There are times when we see deals on the table that won't produce any cashflow or not enough cashflow to meet our target hurdle rate but the tax benefits or appreciation potential may make the deal attractive. The bottom line for us is that the financial benefits associated with the deal must far outweigh the risks.
- 1yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@Erick Pena Hi Erick. Start by analyzing LOTS of deals. If there’s not enough deals in your market go to Crexi or Zillow in markets other than your own.
If you’re not already join BP Pro so you can use their calculator infinitely.
Once you’ve analyzed 50-100 deals you will start to get a feel for what YOU think is a good deal.
This can not be achieved if you’ve only analyzed a small number of deals.
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