What's the more valuable skill, finding deals or finding the money to close deals?

Question

A lot of people put off getting into real estate because they don't have the money. I believe this is a huge mistake. Knowing how to find profitable deals (and analyze them) is a much more valuable skill than knowing how to raise capital. And once you master it, getting funding should not be a problem.

What do you think?

Sanderson Mittnacht · Answer

My immediate thought was 'finding deals; no argument' but I think the real answer is 'it depends.'

Good deals will find cash, but good cash will find deals.

I think the most valuable skill is networking. Regardless if you have skills in finding deals or have access to capital, without a good network, you won't close the deal.

William Harvey · Answer

@Marty Boardman I would agree. However, raising money has come fairly easy for me so I think it depends on who you ask. I've certainly found it harder to find deals than raise money.

However, I have a partner and we buy hospitality properties in the Shenandoah Valley in Virginia. He HATES raising money and dealing with investors, but loves sourcing deals. So, it is a great partnership where each of us has what the other does not. If you asked him he would say that sourcing deals is easier.

Overall, I think more people would say that finding deals is harder though, just my opinion!

William Graham · Answer

In my mind finding the deals is the most valuable skill for an REI. I want investors to find what they believe will be a good deal. As a private money lender, I will ask questions to validate the numbers. I review the figures with the investor to determine if this is a good deal. I want the investor to profit, not break even or lose money.  If the deal doesn't work, it doesn't work, and I don't want to go further because, to me, it is about relationships. I look at each deal for the win/win test, as I am not out to loan money for a lousy deal and put the investor under a financial burden. I believe this approach helps build relationships with REI and myself.  So finding the deals to me is the most valuable. I will get the funding if it is a good deal; if not, I will let the investor know I think it is a bad deal. I would rather disappoint an investor by not funding than burn bridges.

William Harvey · Answer

@Jacob St. Martin Awesome stuff! I'll dm you

Nathan Patterson · Answer

I agree, I think finding deals right now is the better skill.  They money is out there & would be easier to source from your network or from a lender.  But finding something that works is definitely a harder task, at least it is from my experience.

Marty Boardman · Answer

That's a great partnership! I train people to find deals for me, and then I go out and raise the capital. It's funny because the people I teach how to do this think I have the tougher job. I always tell them that finding deals is the more valuable skill. There's more money in the world than there are deals (and deal makers).

Marty Boardman · Answer

Couldn't agree more Scott! Any beginner with a great property and good margins will find the money. I train people all over the country on this and tell them that if they bring me a deal that makes sense, there's a 99% chance I'll fund it myself. Good deals jump off the paper to investors/lenders that know what they're looking at. At the very least a beginner will get an assignment fee out of the deal.

Bob Stevens · Answer

Buyers are the easy part, finding a deal, and knowing its a deal is where you make the money

Good luck

Marty Boardman · Answer

My strength has always been finding/analyzing deals, and then presenting them to an investor/lender in a way that makes the decision for them to fund a no-brainer. When I first started I gave up a lot of profit to get the money to close these deals (up to 50%). But as my track record of success grew I was able to keep more for myself. It takes time but you'll get there Jacob! I hope you and William can do some business together!

Jacob St. Martin · Answer

I don't necessarily agree that funding is no problem. I am the kind of person who loves finding deals and am quite good at it but don't have the capital. I am working on developing a network to find partners and private capital but I find this end much more challenging. I have a deal right now where a capital partner would likely get 20-30% returns but I have not been able to find someone yet despite setting up lots of meetings. I know that once I have more established relationships this side will probably get easier but it is painful at this stage haha. @William Harvey I am in Charlottesville and looking at deals in Charlottesville and in the Shenandoah valley, we should connect!

What's the more valuable skill, finding deals or finding the money to close deals?

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