Hi everyone. So I have really been putting a lot into my real estate education lately. I am almost finished reading Millionaire Real Estate Investor by Robert Keller and have a question. In the book he stresses the importance of figuring out your criteria for a property and sticking to it, no matter what. Dont chase deals, use your criteria as a filter to weed out properties that will waste your time. On the other hand one of my favorite podcasts talks about putting in a massive amount of offers and adjust the price or terms of the offer to make the deal work for you. Its a kind of "anything is a deal if you know what you are doing" mentality. I was just wondering what real investors on the front lines of investing think of these two different strategies. Thanks in advance
@Whitney Tyson Setup your criteria and stick to it. When you start straying from it you also start rationalizing deals and will make a bad one. Those deals that do not follow your criteria, are what I call "shiny objects of distraction".
Having said that, that doesn't mean you can't have more than one set of criteria, and you should, simply because you should have more than one exit strategy that you analyze every property for. Just make sure that you have at least two exit strategies that will work, without rationalization, before you more on any property.
@Whitney Tyson There are two parts to my answer. Definitely stick to your criteria. Always. A deal is a deal, and a bad deal is a bad deal. That said, if you truly know the numbers, and truly know what you are doing, you can be flexible in what criteria you use. So am I saying to stretch the numbers? No, I am saying that when the numbers you are using don't provide any opportunities, re-evaluate whether you can live with adjustments. But don't stretch the numbers on any one deal just to make that deal work. Always stick to what you know you need to get in order to make it profitable.
One way to think about it is to prioritize your criteria. Once your criteria are prioritized; you can draw a line through the list of where your current price gets you. So for [a bad] example:
1. $100 cash flow per door
2. Updated fixtures
3. Newer roof
4. Newer furnace/AC
Each property can fall on the list to the first criteria it misses; but you can adjust this based on the 'deal' you get on the property. You can lower the offer by the cost to bring your priorities to the table yourself, or otherwise negotiate.
But never just give up a criteria; you must meet them all in some way or the property doesn't qualify. Some things (like location), can't be brought into the deal through negotiation. Others can.
Thank you all for your responses. I think i will just stick with my criteria with just one property type and as my experience grows add one criteria at a time until I feel comfortable doing lease options, wholesales, wrap arounds, etc.
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