They are the finds that people brag about for years to come. When you hear the story, it sounds almost like magic. You are almost tempted to hang around on the same street corner where it happened, or at least drive by there a lot. They are the bargains that just fall in an investor’s lap. These are the properties that are 50 percent below market, in reasonable condition, and big money-makers from day one. You wonder how someone could ever get so lucky.
You think, “if he pulled it off, I could too!” Trouble is, these are deals that come along once in a lifetime. That’s why your investor friend is still talking about it ten years later.
A successful investment program doesn’t even consider stumbling across once-in-a-lifetime deals. If you’re active, though, you will come across one (or even two) in your real estate investment career, providing you have trained yourself to spot them when they leap up at you. Without preparation, you couldn’t spot a once-in-a-lifetime deal if it dashed out in front of you, tripped you, held you down and shoved a spreadsheet in your face proving its worth.
The two points I am maneuvering toward are: In order to get the good deals, one, you have to be out in the real estate marketplace actively looking at properties; two, you have to know a good deal when you see it, and if the deal is good for you.
Good deals happen to people who stir up the possibility of good deals happening to them. Sitting at home, wishing and hoping that the phone would ring where someone is calling you with a real estate bargain just doesn’t get it. When the phone rings it’s probably a phone solicitor asking “How are you today?”
The correct answer would be, “Not very well, nobody’s called me with a once-in-a-lifetime real estate deal.”
How do you get out in the market and find things? Lots of ways. You religiously read the real estate ads in the newspaper; you check the internet newsgroups and web sites for properties; you have your personal real estate agent looking out for you; you join landlord and real estate investment associations. The key is to actually talk to people and see properties.
Look at enough properties, and you’ll spot a bargain when you drive up in front. In fact, many times just the ad will give you a giant clue as to what a potential money maker it is.
Another benefit is that you will get a concrete idea of the sort of property you want to buy. Every investor works off of different goals and ideas about the sort of investment properties that will work for him or her. For example, one investor buys nothing but small plexes. Another buys apartment complexes of 20 units or more. Still another buys single-family homes, with an occasional duplex thrown in. These are properties he or she feels comfortable with and equal to managing.
One investor plans on keeping the properties she buys for at least 15 years, so doesn’t mind having to put some work into them. She calculates the dollar amount of the updating and upgrading into the budget. Another investor wants fairly quick turns. He almost never keeps a property more than five years. So he doesn’t want to have to put much into them in the way of capital expenditures.
What kind of property you want to invest in and how long you’ll keep it will become clear the more property you see and buy. With experience and preparation you’ll start thinking in terms of making deals rather than happening across them. You’ll become an investor who doesn’t mind taking on a property that other, less-experienced investors have turned down, because you can spot the real value and potential; and you’ll pass on some properties that the less experienced think are the “deals of a lifetime,” because you know they aren’t. It won’t be long before you are bragging about the deals you put together, rather than the deals that “found” you.
