Defining the Deal - Investment Criteria
What makes a good deal?
I intend on investing BRRRR style in MA. I've run a few analyses on the BP calculators and have learned that high cash flow and the 70% rule are hard numbers to get to. I know these are guidelines, not hard rules. I am wondering though, in the beginning, how did you define an acceptable deal? What are good ways to learn the average returns in my target market?
To actually find a deal, I am going to need to be flexible with those numbers, but do not want to go so loose that I risk losing on an investment.
What do you all think?
@Shane Burlingame My qualifications were 12%+ COC return and $200/month per door. This doesn't even take into consideration the tax benefits, appreciation, etc. It's different for everyone, but I tried to keep it simple.
The best way to learn the average return in your market is to analyze deals! Analyze deals over and over again. You can share your results with local agents, investors, or on BP to get feedback.
Hey @Shane Burlingame in order to answer these questions you first need to know what your goals are. Are you investing for appreciation? Are you investing for cash flow? Both? Figure out why. Once you figure out why you can change your criteria based on your goals. You'll change your criteria several times over the years as you get more experienced. I think another thing is to get plugged into your local real estate groups. You can find your local meetups here: https://www.biggerpockets.com/... Once you start networking and talking to other investors, you'll get a good sense of what will work in your area. Some may even walk you through how they do it! Lastly, I would say don't overthink it. A good deal for me is not necessarily a good one for you. Keep analyzing and tweaking until it fits what you're looking for. When you find it, jump on it! Best of luck, looking forward to a success post in a few months!
Quote from @Jon Kelly:
@Shane Burlingame My qualifications were 12%+ COC return and $200/month per door. This doesn't even take into consideration the tax benefits, appreciation, etc. It's different for everyone, but I tried to keep it simple.
The best way to learn the average return in your market is to analyze deals! Analyze deals over and over again. You can share your results with local agents, investors, or on BP to get feedback.
Thank you for providing the numbers you used as well as an actionable step I can take to better understand my own area. I will use the advice you gave and see what numbers will stick that I can use as my own criteria.
Quote from @Michael Scott:
Hey @Shane Burlingame in order to answer these questions you first need to know what your goals are. Are you investing for appreciation? Are you investing for cash flow? Both? Figure out why. Once you figure out why you can change your criteria based on your goals. You'll change your criteria several times over the years as you get more experienced. I think another thing is to get plugged into your local real estate groups. You can find your local meetups here: https://www.biggerpockets.com/... Once you start networking and talking to other investors, you'll get a good sense of what will work in your area. Some may even walk you through how they do it! Lastly, I would say don't overthink it. A good deal for me is not necessarily a good one for you. Keep analyzing and tweaking until it fits what you're looking for. When you find it, jump on it! Best of luck, looking forward to a success post in a few months!
Thank you Michael! I look forward to my success post in a few months. I was contemplating the idea of joining some meetups and getting to know investors in the area. I was overthinking how I could provide them value and vice versa. Meeting new people sometimes feels outside of my comfort zone, but that is what I need to be doing to continue to grow. Thanks again for the advice, and I can't wait to share the good news!
I am definitely investing for appreciation and cash flow. I will gain appreciation through renovation and adding equity to my properties. I am a carpenter, so can easily do this piece. I want cash flow so that I can sustain my real estate business and myself. The goal is to grow a business and systems around purchasing distressed properties, fixing them up, and holding them to rent. Similar to how Brandon Turner started out his career.
Quote from @Shane Burlingame:
Quote from @Michael Scott:
Hey @Shane Burlingame in order to answer these questions you first need to know what your goals are. Are you investing for appreciation? Are you investing for cash flow? Both? Figure out why. Once you figure out why you can change your criteria based on your goals. You'll change your criteria several times over the years as you get more experienced. I think another thing is to get plugged into your local real estate groups. You can find your local meetups here: https://www.biggerpockets.com/... Once you start networking and talking to other investors, you'll get a good sense of what will work in your area. Some may even walk you through how they do it! Lastly, I would say don't overthink it. A good deal for me is not necessarily a good one for you. Keep analyzing and tweaking until it fits what you're looking for. When you find it, jump on it! Best of luck, looking forward to a success post in a few months!
Thank you Michael! I look forward to my success post in a few months. I was contemplating the idea of joining some meetups and getting to know investors in the area. I was overthinking how I could provide them value and vice versa. Meeting new people sometimes feels outside of my comfort zone, but that is what I need to be doing to continue to grow. Thanks again for the advice, and I can't wait to share the good news!
I am definitely investing for appreciation and cash flow. I will gain appreciation through renovation and adding equity to my properties. I am a carpenter, so can easily do this piece. I want cash flow so that I can sustain my real estate business and myself. The goal is to grow a business and systems around purchasing distressed properties, fixing them up, and holding them to rent. Similar to how Brandon Turner started out his career.
I know the feeling... I am a pretty introverted person, what helped me break through was I actually went to my first meetup with a buddy. That way I knew at least one person there. Once you get to know the people that come it gets a lot easier! Generally speaking most of the experienced investors that attend want to help people just like you and your situation.