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.
photo credit: Juanedc