Epic Real Estate Investing - Which Deals Should I Take, and Which Should I Avoid? | 3rd Degree Thursday

Episode Date: August 28, 2014

If you’ve been listening to the show for any length of time, you’ve likely heard about the importance of setting your minimum deal standards.  These standards are the litmus test that you filter all of your potential properties through.    Today Matt is explaining the importance of getting clear about your ultimate goals with real estate investing, and then walks you through the step-by-step process of creating deal standards that will help you reach that goal.  Enjoy! ----- The free course is getting a facelift and the new version will be released soon!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678.   What interests you most? -         E ducation -         P roperties -         I ncome   -         C oaching   Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello and welcome. Welcome to Third Degree Thursdays. This is the show where I subject myself to you giving me the third degree. All righty. So today I got a question via email from Joseph Block and Joseph wants to know what deals should he invest in and which deals should he avoid. Okay. Are you ready, Joseph? The answer?

It depends. It depends on a whole lot. But most of all, it depends on. what you want out of your real estate investing. You got to answer that question first. And I don't have that information, so I'm going to do my best to give you something. I'm not going to leave you hanging. But it does depend.

It depends on what you want out of your real estate investing. Now, the good news there is you get to choose. You get to decide what it is that you want. There is no right or wrong answer here. It's your choice. And you should make this decision up front before the deals start crossing your desk, not after. You want to make this decision up front. You want to be a, you want to be a shopper of deals, not a buyer of deals. You know, the best investors, the most successful investors, the wealthiest

investors, they know what they want before they go out looking for it. They are shoppers. And here's what I mean by that. You know, if you were set up with the task to go and buy your grandma something special for her birthday, and you knew she wanted this very special little antique that was, you know, maybe it was made in a certain year and it came from a certain country and it performed a certain function. And you set out, you're going to go look for that. And then you decide, okay, I'm going to go look for this. And when I find it, I'm not going to spend one penny over X, whatever that may be.

So you're going from antique store to antique store. You're looking for it. You don't see it. So you walk out and you walk to the next one. I got to find this thing and you don't see it there. And you walk out, you go to the next one. You just keep going to antique stores until you find it. And once you find it, boom, there it is.

I'll take it. Right? That's what a shopper does. Now, a buyer would walk in, hey, my grandma would like this little antique. It does this and this and this. So let's go find her antique. She likes antiques. All right, so you walk into the store and the first antique store and you kind of look around.

This looks nice. Oh, this looks nice. She might like this. Oh, this is cool. Okay, well, all right, I'll get this. She'll like this. That's what a buyer does. Okay.

And you end up with a different result with grandma. She might have been a bad example. She's probably going to love anything that you'd buy her, right? But you get the point is that there's something specific that grandma would have wanted, and you knew where to get it, but you decided you weren't going to spend over a certain penny there to get that for her. So that means that that's just shopper. And a shopper is elated and delighted and ecstatic when they find what is that they're looking for. But they're also equally satisfied when they walk to.

into that antique store and they said, okay, it's not here. I got to go to the next one. They know they didn't buy the wrong thing. And that's sort of the difference what I'm trying to say between a buyer and a shopper. Now, this is a very important step in getting started in real estate investing, defining your criteria, knowing what it is that you want so you can go shop for it. You must be clear about what type of deal is going to move you forward towards your goals. okay, we're not talking about making grandma happy anymore. We're talking about your financial goals. And if you're not clear, you'll chase every opportunity that crosses your desk only to find

yourself, you know, confused, overwhelmed, frustrated, maybe even further away from your goals than when you started. You don't want that. You see, a confused mind does nothing. You've got to get clear on what it is that you're looking for. So here are the steps for getting clear, all right, in defining your investment. criteria. First, you got to establish what you want out of your investing. Okay. Are you looking for cash or are you looking for cash flow? Do you want to make piles of money or do you

want to make streams of money? Or maybe you're looking to make cash first and then turn that cash into cash flow somewhere down the road. That's pretty popular path. Doesn't matter. Okay. You just have to decide what it is that you want out of your next deal or your next deals. Right? That's your starting point. begin with the end and mind. So that's the first step. Know your objective. Cash or cash flow. All right, we'll just keep it simple.

Cash or cash flow. The second step in defining your criteria is to define what will create the type of cash or cash flow that you want. Okay? You'll want to identify the area of which you want to work. You want to identify the type of real estate that you'll target. And then you want to identify a price range of which you'll work within. And you can get more specific with additional criteria. But in the interest of keeping the real estate that you'll target, but in the interest of

keeping the process simple, for this example, in this discussion, and getting you on the field and into the game the quickest. That's my, I don't want you to analyze too much, but I definitely want you to have a criteria established. I would recommend just sticking with this basic criteria and start playing the game. You can refine and clarify as you go along. So just stick with the basics, the property location, property type, and the property price range. All right. Now, again, there's no right or wrong way to go about this, meaning that there's no right or wrong criteria, okay? But if it were to, if it were me, if I were to start my investing today from scratch,

here's how I define my basic property criteria. I'd look for single family residences of three bedrooms or more, within a five to 15 mile radius of my personal residence, right at or just below the median sales price for that. area of which are owned by people who need to sell. I like the people who need to sell, where they're often referred to as motivated sellers. Okay, so the reason I like that criteria,

that basic criteria, well, single family residents, they tend to exchange hands the most of all the real estate out there. So that's why, so there's more likely to get a transaction and done. And the reason I like three bedrooms or more, because whether it's tenants or it's a buyer, those are in more demand.

And then within a five to 15 mile radius of my personal residence, that means from my marketing materials that I'll be able to get up and it's rather convenient for me to go look at the property if I have to. And then right at or just below the median sales price for that area,

the reason I like that is because that's where most of the demand is. That's where most of the market demand is. And if that's where the demand is, it's probably going to be a lot easier to find a buyer. So if you've got single family residence, have the highest demand, three bedrooms have the highest demand, and then right at or just below the

median price range, that's the highest of demand. Chances are good if you find a deal like that with someone that needs to sell, you're not going to have any issue converting that into a profit for yourself. Okay, so now regarding the distance, if you can't find your criteria or enough of your criteria within a five to 15 mile radius of your personal residence, I'd recommend expanding your radius before altering the bedroom count or the price point and the level of motivation of the seller to try and make it all fit. Okay? So if you can't find it in your own backyard, then you just got to go to somebody else's

backyard. That's just how it works. But stick with the three bedrooms. Stick with single family residence. Stick with the median right at the, or just below the median sales price. That's what I would do if I were getting started because that's where the demand is. If you got to travel a little bit to get to that, then that's what you got to do. But don't try to resist adjusting those other criteria before adjusting your,

the radius from your personal residence. Okay, got it. Sorry, I had a brain fart there. Anyway, getting clear on your criteria is not only important with, you know, regard to achieving your goals faster, but also with regard to beating your competition to the best deals. You know, if you're not clear on what you're looking for, you're going to chase every opportunity that crosses your desk only to find yourself confused, overwhelmed, and frustrated.

And you don't want that. Okay? because when you are confused, overwhelmed, and frustrated, you hesitate. I said it earlier. A confused mind does nothing. You hesitate at best. And when you hesitate, your competition will snatch properties right from under your nose. You know, the ability to make quick decisions in this business is a huge asset.

The ability to make quick, educated, and responsible decisions. I should clarify, the ability to make quick, educated, and responsible decisions is a huge asset. being clear about what you're looking for, that's how you do that. You just got to create that clarity and you can make those educated and responsible quick decisions. You know, when what you're looking for

crosses your desk, it's easy to make that quick decision. And it's a responsible decision at that because you did all of your thinking and planning in advance. Meaning, it'd be a good idea to do it right now if you haven't done it before.

Don't ignore this. You might want to even pause this, podcast to write your criteria down right now. You can always change it, but at least establish what type of property and what area or areas and at what price point that you're going to pursue. At least have the basics, all right? And so Joseph, I hope that clears it up for you. The answer to your question, you know, the answer to your question is going to be different for everybody. Thus, I can't speak to your situation specifically because I really don't know your specific situation. However, if you go through this exercise,

of defining your criteria, what you'll be left with at the end is an answer specific to your situation. And that goes for each and every one of you as well. All righty. So, Joseph, thanks for the question. And should you have a question, comment or concern that you'd like me to address here live on the show, send it to me at Matt at epic real estate.com and type third degree in the subject line.

Or leave me a voicemail on the epic hotline at 1-888-9-1-7203. All righty. So I will see you tomorrow, bright and early in the morning for a new episode of financial Freedom Friday. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.