There is No Perfect Deal

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When I first started investing in real estate, one of the things that held me back from buying my first property was trying to find the perfect deal. As I looked at more and more properties, I could find reasons to kill just about any deal I was considering. Later I came to realize there is no such thing as the perfect deal and that looking for the deal of a lifetime was just another way to stay stuck in analysis paralysis.

If you believe me when I say that there is no perfect deal out there, you can loosen up and start to simply look for great deals instead. Then the question becomes “what makes a great deal?”

Know What You Want Out of Real Estate

In order to know a great deal when you see one, you need to be clear on what it is that you want out of real estate. Each investor has their own reasons for investing in real estate, and to find great deals, you must know yours.

You’ll see flippers who find great potential for generating active income through restoring neglected or rundown homes. Some investors prefer a more passive buy and hold strategy and invest purely for cash flow. Other investors may be more speculative and invest primarily for appreciation potential. Personally, I like to strike a balance between strong cash flow and excellent upside potential in properties that will attract great tenants.

Ask yourself what you want out of real estate, and tailor your strategy to snap up the type of deals that suit your goals.

A Great Deal is Just One That Fits Your System

There is no clear cut formula for a great deal, but here is how I figure it out.

First, I ask myself whether this deal will move me closer to my goals. If the answer is yes, I will consider it further.

Second, I compare that deal to any of the other deals that will also move me closer to my goals. A “great” deal for me is the best of any of the deals that move me closer to my goals at any given time. When I have the resources to buy another great deal, it’s time to submit an offer on the properties that make it to the top of my pile.

Just Focus on Buying Your Next Piece of Real Estate

While I always advocate working with your mortgage broker to plan out your purchases a few steps in advance, from an acquisition perspective, all you need to worry about is putting together your next deal. Once you’ve come up with a strategic plan to finance your next few properties, you only need to worry about buying one great property at a time. Keep writing offers on the best of the best, and you’ll be acquiring great deals faster than you can find the money to snatch them up.

Don’t allow yourself to get stuck in analysis paralysis by continually looking for the perfect deal. Take the time to get clear on what you want real estate to provide you with and start writing some offers on the type of deals that move you closer to your goals. Get the wheels moving and just focus on buying your next piece of real estate.

Creative Commons License photo credit: Juanedc

About Author

Andrew is a Canadian real estate investor and analyst who works with Joint Venture partners to create long-term wealth. With a focus on buying and holding positive cash flow properties in Canada's Technology Triangle, Andrew makes the benefits of real estate investment available to those who lack the time or expertise to buy and manage property themselves.

8 Comments

  1. Pingback: There is No Perfect Deal

  2. Mitch Stephen on

    Choose the deal inwhich you can mitigate the problems. The best creative rewsl estate investorse get paid to overcome problems. If you are scared of foundation issues, then don’t go there. But if you can overcome foudation issues, and you are an expert at overcoming foundation issues, then maybe that is where you can shine. If you are looking for perfectly good houses that you can buy for half price…sure, you can find one or two…but really being able to mitigate imperfections of different types is where the pros comes into play. It is a sciencel. We learn by jumping in! How do you learn about how to deal with foundation issues? … the next time you find a house with a foundation issue, give up half to a guy that’s done it a 1,000 times; and then learn how he does it! You may be partners for life…or you may eventually go on your own…but get hooked up with someone who’s done it! …and learn.

    • Sound advise you give about learning from mentors. It’s important not to make mistakes because in REI they can turn out to be VERY expensive and sometimes even put you out of business and maybe in the poor house.

      Write your contracts with contingencies that can let you bail if you run into a problem that you can’t handle.

  3. Andrew Koblick on

    Now, that’s a totally great principle about no perfect deal, I would wholeheartedly agree with this. And in deed looking for the best deal of all, it is so east to overlook some really treat and disadvantageous deals. My only two cents to the discussion would be that sometimes the deals is great, but you may not have all the funds at the moment, so time also needs to be taken into consideration. cheers!

  4. Great article Mitch. As I’ve gone along I have also found that there is no deal not worth passing up, no matter how far along. I seem to find potential in many properties and had to overcome not getting sucked in whwn finding things that diminish that potential. I’ve learned its better to walk away even when it costs money because that property with great potential is just one of many and the next one will most likely be even better. Great advice..

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