This topic has been discussed by so many investors on the Forums and written about on the blog by all of the blog contributors. I’m not one to miss a party so I thought I would “crash” it with my very own quick and easy process on buying deals.
As most of you should know by now, I own a turnkey real estate investment company that has over the last two years grown from a single desk in a commercial office complex hallway to now two 1,000 square foot offices, 12 full time staff members and operations in four different cities. “Humbled” would be an understatement of how I feel today.
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“The Journey is Always Better Than the Destination”
I mention this not to impress you but rather to let you know that I’ve been so busy meeting the demands of other investors that I literally have had no time to focus on growing my own portfolio. Ever single day I speak to a ton of investors from all over the world, and they regularly ask me questions like, “How many properties do you own in your portfolio?”
And what a great question that always is. I mean, how can you confidently sell something that you don’t own yourself? At the time of those questions being posed, I only had a “measly” three properties in my portfolio. It could have been a warning sign for many, but I genuinely explained that due to helping others out with their portfolios, I didn’t have time to focus on my own.
Today is a different story, and my goal for this year is to add 25+ buy and hold turnkey properties to my personal portfolio — and they all must be located in the same areas that we buy, fix, tenant and sell. I have already bought three properties this year that I’ll be keeping (to the disappointment of many investors), and below you will find the process on how I found, negotiated and evaluated these deals.
The Simple 3-Step Process I Use to Land Great Real Estate Deals
Step 1: Find the Property
This is quite easy nowadays, as my inbox gets flooded with deals on a daily basis. When people know you to be a true CIA of real estate, they will start sending you deals all day every day. For all of you starting out, make sure to network like crazy. Your network equals your net worth. Attend seminars, expos, conventions, and local meet ups — take it as far as asking grandma at Walmart if she knows of anyone selling.
At a recent expo, I connected with a company that has sent me 1,400 properties in Ohio that they are foreclosing on in April and that will be available for sale. Also, make sure to stalk Craigslist daily (I bought 30+ properties on Craigslist in 2014), Auction.com, Hubzu.com HudHomeStore.com and the MLS (I know the MLS sucks, but sometimes it doesn’t, as you will find out below).
Step 2: Negotiate
To get started with this step, check out a previous blog that I wrote about getting to the lowest purchase price possible. This is my favorite part of real estate investing and business in general, as I was once told by a previous mentor that “the more mud you throw on the wall, the more something will eventually stick.” And I loved playing with mud as a kid. Although negotiating can be very nerve racking and emotional at times, emotion is EXACTLY something that you never want to show.
Commit to the numbers and commit to submitting offers daily. By submitting hundreds of offers every week, I was just able to snag two bargain deals off the MLS. Yes, the MLS. Can you believe that? I’m still pinching myself. I low-balled both properties at half of the asking price and bought them for 60% of the asking price.
You have to be “in it to win it,” and don’t forget that when negotiating, you always must be in the right space of mind and willing to walk away at any moment unless you get what you want. Don’t forget that real estate investing is about making money and gaining financial independence — not buying a pretty house that you would like to live in.
Step 3: Evaluate
Last but not least, once you have hooked your bargain property, you now have to crunch the numbers and evaluate, making sure it’s a good fit for your portfolio. Because I’m so awesome, I’ve already written a blog about how to crunch real estate numbers using one simple rule. After you finish crunching the numbers like I explained in the article above, you MUST make sure that the net return on investment will be getting you a step closer to achieving your end goal.
Don’t make the same mistake as me when I first started. I was investing for quantity and bragging rights, such as, “I’m a real estate investor” and “I’m an entrepreneur.” This cost me time and money, as I added properties to my portfolio that weren’t doing anything other than costing me dearly. Every property you buy needs to get you a step closer to achieving your end goal. Never forget that your decisions should be based on the numbers in the deal as they stand TODAY and not predictions of future capital appreciation. No one has a crystal ball, so forget about focusing on those metrics.
My ending questions to you today are: What is your end goal with real estate investing? How much monthly cash flow do you need to start living life on your terms? What is your time frame of achieving your end goal?
Investors: How do YOU plan on achieving your investing end goals? What does your property acquisition process look like?
Leave your questions and comments below!