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When it comes to real estate, how can you differentiate the deals from the REAL deals – you know, the one’s that graduate you from dabbler, to legitimate investor? Here’s the thing, successful investors have one thing in common; they don’t buy everything that comes across their desk. They shop for the deal that makes sense to them. See, the secret is there’s no single definition of a real deal. A real deal is completely subjective. There are two parts to determining if you’ve got a great deal in front of you. First is, know your criteria. You’ve got to define the standards of your great deal. There are four questions you must ask yourself:
- Am I looking for lump sum or cash flow? This will greatly affect your purchase price and deal type.
- Why type of property do I want? Are you looking for commercial, single family, duplex? You’ve got to know.
- Where am I looking? Don’t say anywhere. Narrow your hunt down to specific areas; you’ll be more successful that way.
- What am I willing to pay? You need to know your price, and stick to it.
You need to write down the answers to those questions and have them on your desk at all times. Then, when something comes across your desk, you’ll know if it’s a deal for you. It’s easy to stray from your standards and chase shiny deals around if you don’t have your criteria cemented in your mind. Another secret we’ll let you in on, great investors always master one deal type at a time. Focus, master, repeat. The second part to finding a great deal is know your terms. Your terms could be an specific dollar amount you need to make, or a percentage, or a time frame. For example, maybe you only do flips where you profit a minimum of $30,000, or maybe you need a 18% return on your money and to be out of the deal in 90 days. When you know your terms, you can better evaluate your deal. If it doesn’t meet your terms, then it’s not a deal for you. Solid criteria and terms are what separates the buyers from the shoppers, the dabblers from the pros. Don’t be a dabbler, don’t gamble with real estate. Gamblers tend to lose. Know your parameters and stick within them. Not only do they keep you focused and make it easy to spot a deal when you do see it, they set you up for success in a way that most people never achieve.