When you start exploring real estate investing, one of the first things you hear is the importance of finding deals. This topic dominates articles, BiggerPockets forum posts, YouTube videos, and conversations within the industry, and for good reason. Deal hunting is the lifeblood of real estate investing.
Here are four key reasons why successful real estate investors focus so much on finding deals.
1. It solves the biggest problems investors face
The number one reason real estate investors are keen on finding deals is that it is the biggest challenge they face. No matter who they are, every real estate investor will encounter this problem at some point. This is one of the biggest obstacles to becoming a successful real estate investor.
Think about the most successful businesses in the world: they identified a problem faced by the majority of their audience and then provided a solution. If you can solve the problem of finding deals, you can basically make money if you want to.
Addressing this core need will not only benefit you, but also those around you. A good deal is essentially making money in real estate. You often hear the saying, “We make money buying, not selling.” This is a direct indication of your ability to find good trades.
If you can buy a trade correctly, you’re ready to make money. Successful real estate investors have either already solved this problem or are actively working on it. As technology evolves, new opportunities for finding deals emerge, and markets change, requiring investors to stay ahead of the curve.
2. This is the best protection strategy
Investing in any asset, whether it’s the stock market, cryptocurrency or real estate, involves risks. The most successful real estate investors are those who are best prepared for these risks and mitigate them as much as possible. The more you can reduce your risk, the higher your profits will be.
When it comes to real estate, buying deals with good stock spreads is the best protection against many risks. Paying too much for a property means there is no fairness in the transaction, which can lead to a variety of problems. A home with substantial equity can protect you if the market changes and property values decline. Even if the value drops, you can still buy the property for less than it’s worth, giving you the option of selling or renting it out without incurring a loss.
3. It’s the lowest common denominator of all exit strategies
All exit strategies — house flipping, long-term rentals, medium-term rentals, short-term rentals and wholesaling — require one thing: a good deal. If you focus on finding good deals, you can adjust between different strategies as needed, whether you’re flipping, leasing, or wholesaling.
Buying a good deal means you can monetize the property in any way that makes sense to you. If you want to be a landlord, you need a property that generates cash flow. If you want to flip, you need a trade with enough spread to be profitable.
The common denominator of any successful strategy is buying a good deal.
4. This is the trigger for everything else in real estate investing
Finding a good deal is the trigger that makes everything else in real estate investing become relevant. To buy, renovate, and rent properties, you need connections—financing, contractors, and title companies. But if a good agreement is reached, these connections can be made more easily.
Without an agreement, it can be challenging to get a bank to discuss loan products, a contractor to provide bids, or a title company to assist. However, banks, contractors, and title companies are more willing to work with you when you have an offer. A good deal can give you enough leverage to make everything else fall into place.
final thoughts
Successful real estate investors focus on finding deals because that’s the biggest problem new investors face, the best protection strategy, the lowest common denominator of any exit strategy, and the trigger point that makes everything else easier.
I hope this helps. As always, I’m Henry Washington and I’ll see you at the closing table.
Find and fund incredible deals, even in tough markets.
exist real estate dealmaker, in the market Podcast co-host Henry Washington shows you how to close incredible deals, expand your network, and enhance your investing approach. Learn from him on over 130 rental properties and take your trading skills to the next level!
Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
