Finding Deals Real Estate Investment Deals… Systematically
The step of acquiring properties is the “nuts-and-bolts” of real estate investing. The places where you will find properties will to some extent depend on your goals, and your investment and acquisition strategies.
Investment Strategy is Important
Before you can acquire properties, you have to understand and choose an investment strategy. A strategy is a long term plan of action designed to achieve a particular outcome or a goal. It is planned out ahead of time and is adaptable.
We have identified several investment strategies available to you as a real estate investor: -
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Wholesaling properties, also known as “bird-dogging”, is a strategy you can employ immediately to kick-start your real estate investment career. It’s a strategy that does not involve any repairs to the property, or dealing with conventional buyers and renters.
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“Keeper” property. These are properties that you hold in your real estate portfolio for cashflow reasons, i.e. properties that pay you each month. Shelter is one of the most fundamental human needs, i.e. people will always need a place to live so making money on a rental property should be relatively easy.
There are two types of keeper properties; rental properties and lease optioned properties.
Each one of these types of properties is very different in nature and need to be approached in a specific way. There is a set of criteria which must be met in order to qualify a property as a keeper property.
For example, one way to hold your keeper property is as a rental – ideally you will want to purchase or control a property that is in a condition ready to rent. Once you have rentable property, you would go through the process of finding a tenant.
You can either do this yourself or hire a property manager to do it.
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Rehabs, also known as fixer-uppers, are properties that you purchase at a deep discount, fix-up, and then sell at a much higher price. The difference between the amount you invest (property cost plus fix-up cost plus holding cost) and the final sales amount is your profit.
The rehab strategy can be very lucrative provided you follow some basic guidelines.
Again, there are specific criteria which should be met in order to qualify a property as potential rehab or fixer-upper.
To summarize, there are three main strategies for real estate investing – wholesaling, keepers, and rehabbing.
Which one should you choose?
Well, this really depends on your goals (we said this was important, did we not?), how much time you allocate to the business, and if you’re comfortable dealing with sellers and buyers.
These strategies can be used individually, or in combination to form a hybrid. The strategies you employ will depend on your personal and business goals.
Acquisition Systems
There are several systems that will open the flood-gates as far as potential deals are concerned. A system is basically a process that takes data input to produce the desired results. In this respect, it is more specific and rigid than a strategy. It is operates in a shorter timeframe.
Here are some of the acquisition systems that we have defined: -
- Wholesale. This is quickest, and easiest way, to get started in real estate investing.
- Keeper properties – rentals.
- Media ads.
- HUD and FHA properties.
- Foreclosure
- For Sale By Owner (FSBO)
- Realtors
- Federal Government
- Banks (Real Estate Owned (REO) properties)
- Auctions
- Tax Sales
- etc….
The details of each one of these and other systems can be found in one of our special reports.
The systems that we have defined will make the property acquisition process simpler to understand, implement, and manage. Each system is designed to work in a particular type of market. In other words, you have to change the systems you use given the local market conditions.
Universal Buying Formula
There is a relatively simple, yet a very powerful, profit formula that virtually guarantees healthy profits when purchasing properties.
The formula is designed to net profits of 10% – 15% of the gross sales price of the property. Of course, you will have to do your necessary market research in order to make this formula work for you as well.
Next, read creating offers and funding deals.
