Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
6y
Yes...if it wasn't a great deal. The way you're describing what could happen, is what makes it a bad deal...not a good one. A great deal is a great deal. You can't say "it's a great deal" anymore when you find roof problems, foundation problems, etc...after you analyzed it, and before you closed.
Rental Property Investor · Member since 2019 · 187 posts · 230 votes
6y
These are kind of conflicting things. A "great" deal, in my mind, would imply that the numbers work when taking all variables into consideration, such as the foundation example you provided. If it needed a $30,000 fix, and I've included that within the calculation and it still well exceeds my criteria, then it could be viewed as a great deal. Calling something a great deal then adding on all the things that are going to cost excessive amounts of money or compromise your criteria would inherently negate it being a great deal.
Rental Property Investor · Erie, PA · Member since 2018 · 84 posts · 462 votes
6y
Well the simple answer is if it is a good deal then it is a good deal and I will buy it if I have the means. But the longer answer is more about if it truly is a deal. For instance if the numbers are great but the foundation is bad, needs a roof, that could cause the profit to go way down. If after accounting for all the renovations being done it cashflows well then I would consider it a good deal. The other factor is neighborhood. In my town there are great cashflowing properties in low income areas, but they are a lot more work and headache than something in a nicer area that doesn't cashflow as well. No matter what the area is though, the number one question has to be are there people who would pay rent to live in the area. If you don't have a healthy group of consumers the property is not a deal no matter how you look at it.
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
6y
Yes...if it wasn't a great deal. The way you're describing what could happen, is what makes it a bad deal...not a good one. A great deal is a great deal. You can't say "it's a great deal" anymore when you find roof problems, foundation problems, etc...after you analyzed it, and before you closed.
Rental Property Investor · Gunnison, CO · Member since 2014 · 59 posts · 99 votes
6y
Two things immediately jump to mind- The person across the table and pending zone/use/neighborhood changes
If it’s not a traditional, bank financed deal and I may be tied to the other party for a considerable amount of time (seller finance for example), the person across the table matters.
As for use and neighborhood changes, etc. A great deal can go upside down real quick when the local tar/blacktop company moves in next door (true story).
There are two names on my list of folks I will not buy property from. Both realtors who have shown to be beyond shady. Just won’t do it. Always another bus around the corner.
Lender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
6y
I would not buy a great deal if it was in a high crime area, unless I was going to unload it quickly and had strong buyers already for that area. With all of the flooding my area has had, I have seen investors get wiped out after buying great deals due to mother nature and the location they were in. I would also think long and hard before buying a great deal next to a bad neighbor.
Rental Property Investor · Tulsa, OK · Member since 2016 · 50 posts · 38 votes
6y
If the numbers make sense, but it doesn’t fit with your lifestyle, it may be a great deal but a bad decision. You may have money or access to money but tapped out in your time as an example. So things like management and acquisition costs in regards to your time are very important factors. Also, if it’s a great deal by some sort of objective measure but you need liquidity of your investments it could be a bad decision. Finally, it could be a great deal because of speculation over appreciation in the market. A great deal in LA county right now may wind up being a terrible deal in 1 year if the upside is all in appreciation. It’s important to consider markets, your time, opportunity costs and lifestyle design with any potential investment. Just because it’s a good deal doesn’t mean it’s a good decision to own it.
Investor · Fredericksburg, VA · Member since 2015 · 10 posts · 3 votes
6y
@Shaun M. Person across the table is a big one.
I know of a great opportunity right now but it means dealing with someone who is highly unstable and would put a family member at risk of harm. Walked away from that one.