It’s a common expression, The Real Deal. We use it all the time, that guy is the real deal, this car is the real deal, that Gucci Bag is the real deal.
It means authentic, worthwhile, respectable, and it’s completely subjective.
So when it comes to real estate, how do you tell the deals from the real deals? Here’s how- you become a shopper of deals, not a buyer.
Successful investors are shoppers, and they understand that it’s far better to miss out on a deal than it is to buy a bad one. So how do you become an expert shopper who only picks up the real deals?
There are two parts to it.
First you establish your definition of a deal by answering these four questions.
- Am I looking for cash or cash flow? Buying for cash or cash flow will greatly affect what you pay for a property. You’ve got to know.
- What type of property do I want to deal with? This could be single-family residences, duplexes, condos, multi-unit. What is it?
- In what area do I want to search for these deals? Maybe it’s your neighborhood, a certain zip code, or a specific out-of-state city. Where are you investing?
- What price range are you looking for? It could be homes between $50,000-100,000, or anything priced below the median. What is it for you?
Now that you’ve got your criteria written down, you’ll know when something comes across your desk if it’s a deal for you.
The second part to being a shopper of deals is will the seller meet your terms? Ask yourself, What are the acceptable terms for your deals?
Do you have a specific dollar amount you need to make? Is there a minimum amount of cash flow you’ll accept? Your terms could be something as simple as: I require a 20% return on my investment in 90 days or less.
Meaning, can I purchase the property at a low enough price to return 20% on the money I invested? And, will I be able to get my money out in 90 days? Will the market and this particular deal support that?
All of a sudden, you have standards that make it really easy to sort the deals from the real deals. There is no gray. If the property doesn’t qualify, you move on. If the seller won’t give you the terms you need, then it’s not a deal for you. Next!
Don’t be a speculator. Don’t be a gambler. And most of all don’t get emotionally involved in your investing. I see people do it all the time, and that’s when they compromise their standards.
A real deal is defined as a property that meets your criteria and a seller that meets your terms. When you have your deal requirements and terms concretely defined, shopping becomes simple. If a real deal pings into your inbox, you’ll know it and you can act quickly, without hesitation.
Before you talk to another seller or make another offer, I want you to write down what makes a deal for you. Then go get your shopping on.