How to Identify Good Real Estate Deals

  Finding and then capitalizing on good deals are key to successful real estate investing. The most important thing is to do your research to ensure that you are making an informed and wise decision. Finding good real estate deals can be accomplished by:

1. Looking for Motivated Sellers - The main focus of your search for good real estate deals should be to find motivated sellers. Motivated sellers need to get rid of the property quickly and are willing to sell for less. These types of sellers are motivated by a number of factors that may include divorce, death, bankruptcy, and job loss.

2. Farming the Entire Area -Focus your research on an entire area rather than a specific neighborhood. If everything in the area is going for 50 dollars per square foot and you identify a property that is $20 per square foot, this is a deal that is worth looking into. The key is to learn how to recognize a good deal.

3. Focusing on the Deal Itself - While specific neighborhoods should be considered when searching for good real estate deals, the entire search should not be focused entirely on that one neighborhood. Neighborhoods are not the driving force behind good real estate deals. The deal itself is actually the most important factor.

4. Getting it Under Contract - Successful and seasoned investors know the importance of acting fast when they identify a good deal. It is a very common practice to put a property under contract before even viewing it. This quick action allows successful investors to capitalize on good deal opportunities.

Skeptics and newbie investors view this action as reckless. It's important to note that the contract should give the investor enough time to perform necessary due diligence with the option to walk away if any problems are found. In order to be sure that your interests are protected, always consult a real estate professional or attorney.

5. Performing the Due Diligence - Once the contract is signed, set your internal clock ticking and arrange to spend the necessary money to determine if it is a good deal. Do the least costly inspections and investigations first with the more costly inspections aft wards. This will save you money throughout the year. Make sure to use a certified inspector to inspect the property. The due diligence phase is a necessary step to ensure that you are making an informed decision in declaring the property a good deal.

The truth is that you can find great real estate deals going on all the time. You just need to know where to look or have others on the lookout for you. Have you ever heard people say that "It's not what you know; it's WHO you know that counts"? Well this can be absolutely true when it comes to learning how to find great deals.

The quality of your network will ultimately have an important impact on your net worth. But your network should not begin and end with other real estate professionals. True, networking and getting to know other people in your field is essential to building your business. But don't overlook the other important people that are crucial to finding great deals. Take a few moments and plan out your strategy for finding these great investment opportunities by gaining the attention, cooperation, and loyalty of integral pieces to the investing puzzle: the people you never talk to that you see every single day.

These people hold the keys to your fortune (even if they drive a garbage truck). They may be the server who brings you a meal, the clerk who takes your dry cleaning, the person that cuts your hair, or your mailperson, among othershttps://www.penidaland.com/. You never know where your next lead is going to come from. The knowledge and inside information of who needs what, who has what, and who's looking for what lies untapped in the head of every single person you meet, and so you can find motivated sellers by networking.

You can find investors and private lenders by networking. You can find tenants by networking. You can absolutely have others help you find property by word of mouth, and doing all these things every day can make you a very rich investor. As you're mapping out your winning strategy for investing, keep this in mind: in this business, just like in life, your positive and strong relationships with other people are the greatest assets you can ever have. Thus, networking is an extremely important part of enhancing your investing success.

Networking with like-minded individuals, other investors, and professionals who can help you on your journey to success, can help investors like you and I find great real estate deals. However, it's networking with people NOT in the real estate business that can often bear the BEST fruit: the very best deals available.

Where others see a problem the best real estate investors create an opportunity. But, sometimes even experienced real estate investors can miss out on an opportunity if they don't look at it the right way.

I know, because I almost missed out on a deal that's made us $100,000 and counting!

I'm talking about a little house that looked more like a tool shed than a dwelling. Just a 600 square foot wood structure sitting on a concrete slab with no basement and no garage - it was darn near the last thing I wanted to own.

It looked like a nightmare to me. I had visions of constant repairs and never-ending tenant troubles. I really couldn't imagine anyone living there and figured it was a waste of time to even think about buying it.

But my husband told me to do a reality check - because there were a lot of reasons to like the deal:

That area, and specifically within a block of this property, was being totally redeveloped with mixed use properties.

The lot was large even though the house is not.

We could pick up the property for no money.

And, it was one of the cheapest properties we'd seen listed in the City for years and years,

The current rent would cover all carrying costs until we figured out what to do with it.

Five years later, that property - which essentially is a large chunk of land in an emerging area - has more than doubled in value and the rent has covered all the costs. My husband and his Dad have only spent one afternoon there fixing the porch but beyond that we've yet to have to put a single dime of ours into it.

It's just as easy to get excited by a property that isn't really a good opportunity as it is to miss out on the ones that are. So next time you are about to walk away from a deal or you think you've found a great one run through these four items in your mind before you make your final decision.

Will it rent easily?

I couldn't imagine myself living in that little shack but I was not the target market for that rental.

The same tenant has been there since the day we bought it. He loves the large yard. He doesn't mind the exterior appearance because he finds it cozy inside and the rent is cheap for the privacy and space he enjoys.

If there will be strong demand for the property as a rental, it doesn't matter whether or not you would live there. (Just make sure the target market you're after is one you're prepared to deal with because some tenants require more time and energy than others)

Are emotions driving your decision?

Emotions weren't involved in this particular purchase, but it's something to be aware of in every real estate deal. If, at any point in the negotiations, you feel emotionally that it's a deal you HAVE to have or a deal that you won't do because of some emotional reason (I'm afraid of losing money, I'm afraid of missing out) you need to take a step back, take a breath and review everything! When your emotions are involved, you can't make rational decisions.

What do the numbers say?

My Dad told me about a conversation he had with his accountant about one of his properties. He asked the accountant what the numbers said about the profitability of the building. The accountant said with a smile, "What do you want them to say?"

In other words - was this for a bank, a buyer or the tax man? The answer can be different depending on whom you want to appeal to because there are plenty of ways to make a property look like a good deal. It's up to you, as a buyer, to make sure the numbers really say what the seller says they say.

In this deal, the numbers sold me. The rent covered all the expenses and left a small cushion for surprises. And, the tenant we had in place was signed on for a year. We doubled checked all the utility bills and felt confident the numbers would be as we projected, but even if they were off a little bit we weren't investing any money into the deal to get into it, so we were able to set aside a little cushion of case just in case we needed it.

Before you purchase a rental property review each and every lease in place, and then double check the rent with the tenants, get copies of the bills direct from the vendors and check market rental rates for the area to make sure the current tenants aren't overpaying.