All Forum Posts by: Joe Villeneuve

Here is your mistake, and you are not alone in this. Stop looking for deals. Deals, in the sense you are looking for them, only exist when the overall economy is such that there are a lot of buyer's markets, like foreclosures. If that isn't the case, then "deals" are usually rationalized transactions that make the REI think they are getting a "deal", when in fact they are just manipulating the numbers with percentages signs to make the REI feel good.

In all cases, in every market, deals are not found,...they are made.  Deals comprise of two things:

1 - The lowest cost to the REI. This is the cash, and ONLY the cash, that comes out of the REI's pocket.
2 - How someone, or something else, pays for everything else.

It's really that simple. This means the key to "making" a deal, is to find "opportunities". The difference between an opportunity, and an obstacle, is the REI's ability to understand how money works. This translates to the REI's knowledge of strategies. the more strategies the REI knows, the more obstacles become opportunities, and thus deals. I might add, these new developed deals have little of no competition, due to the general lack of knowledge of how money works within the general REI community.

Quote from @Shem Varhaftik:

Hi, I see tons of potential with seller finance and subto deals. I want to get a good idea of whether an investor would deem as a good deal. Lets say you purchase a property for 900k and put 20% down and cover all closing costs. Your all in close to 230k. Lets say this property will cashflow 4k a month after making payments to the seller. Is this a favorable deal to an investor? is there a certain rule I should follow for entry cost: cash flow? 

My golden rule is the cumulative CF should recover all of the cash in within 3 to 5 years max. So, if your cf per year is around 50k, and your cash in at 230k, for me this would work

Quote from @Jake Andronico:

@Joe Villeneuve

Thank you for your input. This is just for Northern Nevada, with an MSA of about 600K now, but I hope you can find the data that makes you happy :) 

Best of luck to you. 

Narrowing it down to Northern anywhere doesn't change my post in any way.

The word "average" says it all.  The average is based on what is usually a wide range of numbers covering a wide geographical area.  This means you are talking about many, many micro-markets where each micro-market has NOTHING to do with any of the others.

Each micro-markets stands on their own.  Incorporating them together into a convenient number (average) is just a lazy, and yes "stupid" thing to do. 

One more example of how/why analysis based on percentages is stupid.

Wrong. Deals aren't found, they are made. Opportunities are found. Deals are made from Opportunities based on the strategy used. The more strategies you know, the Deals you make 

Quote from @Dexter Florendo Kalai Aspacio:

Have you ever combined seller financing with another strategy to close a deal? How did it work out?

Yes.  Repeated, with different sellers and the same sellers.  Works great.  Not for every seller though.

Each micro-market dictates the cost or rent per sq ft.  Each range of sq ftgs within that micro-market will have a different "per sq ft" number.

Quote from @Hector Surratt Sosa:

Quote from @Joe Villeneuve:

The general RE market only applies, or should only apply, to homeowners. Any REI worth anything, can invest in any "general RE Market", and make money. Deals, for REI, are not found...they are made. Deals comprise of two parts, cash out of pocket, and how someone/something else pays for the rest. This means REI look for markets that are specific, not general, and they apply the appropriate strategy to that property to make that deal.

 Great insight! I agree that successful REIs create their own opportunities by applying targeted strategies to specific markets. It's all about leveraging the right tools and knowing how to structure deals effectively. In your experience, what are some key strategies you’ve found most effective when identifying those specific markets?

Different forms of Seller Financing, using LLC's, using cash partners to buy/rehab, then having a different cash partner buy out the original one to hold the property, Lease Options, sandwich lease options, options,...the list is longer.

Quote from @Andrew K.:

This might be common knowledge but is there an average rent per square foot for single family that I could assume for quick estimates while looking for deals? Example 3-2 single family 1450 square feet. Is it $1/foot? $1.50/foot?  I'm in Ohio so I know LA and NYC would be way different. 

Yes.  Based on my experience, there is a magic number you can use to do guesses, I mean "estimates", on properties.  It applies to everywhere in the country, and yes, Ohio is included.  That numbers is somewhere between $1 and $5 per square foot.  I've seen higher and lower, but the majority of homes falls between those two numbers.