Business 101: Supply and Demand

When talking with other investors, I am surprised how often the very basics of business are missing from their investing plans. Supply and demand, being led by the customer not telling them what to buy. We as investors are so wrapped up in getting a "good deal" we've lost touch of what makes a good business. That's offering a service that is in demand to a customer that is willing to part with their hard earned money to buy it.

Investors ask me all the time "I found this great deal, but no one wants to buy it from me, what am I doing wrong?" If no one else wants it, what makes you think its a great deal? We've been taught to look at things like appraisals and discounts, but what really matters is what a buyer thinks the property is worth, not how high you can inflate the appraisal.

The problem these days is that the buyer pool has been severly handicapped by difficult financing and negative economic factors. Deals aren't hard to find, they are everywhere. But where are the buyers for these deals? Truth be told, a deal is not a deal until you have a buyer (unless you plan to keep it at which point your tenant becomes your client.)

Stand back for a moment and try to look at the real estate market from a purely business opportunity standpoint. Where are the supply and demand opportunities. What is more valuable a house or a buyer? If you have a house you have what is in low demand and high supply. If you have a buyer you have what is in high demand and low supply. Which situation is a stronger position?

What if there was a way to find and develop buyers rather than deals? If you had 10 approved buyers looking for property to purchase and you announced it at your local REIA? You would need an armed escort just to get you out of the building. That is what this blog is all about, creating what is in low demand and high supply, buyers for properties.