Why Successful Real Estate Investing Is All About Finding the Right Deal

In This Article

As you start to explore real estate investing, one of the first things you’ll hear about is the importance of finding deals. It’s a topic that dominates articles, BiggerPockets forum posts, YouTube videos, and conversations within the industry—and for good reason. Finding deals is the lifeblood of real estate investing. 

Here are four key reasons why a successful real estate investor focuses so much on finding the deal.

1. It Solves the Biggest Problem Investors Face

The No. 1 reason why real estate investors are all about finding deals is that it’s the biggest challenge they face. No matter who they are, every real estate investor encounters this problem at some point. It’s one of the biggest barriers to entry in becoming a successful real estate investor. 

Think about the most successful businesses in the world: They found a problem that most of their audience faces and then provided a solution. If you can solve the problem of finding deals, you can essentially make money for as long as you want.

Solving this core need is beneficial not only for you but also for those around you. A good deal is essentially making money in real estate. You often hear the phrase, “We make money on the buy, not on the sell.” This directly points to your ability to find good deals. 

If you can buy a deal properly, you’ve positioned yourself to make money. Successful real estate investors either have solved this problem or are actively working on it. As technology evolves, new opportunities for finding deals emerge, and the market shifts, requiring investors to stay on top of their game.

2. It’s the Best Protection Strategy

Investing in any asset, whether it’s the stock market, cryptocurrency, or real estate, involves risk. The most successful real estate investors are those best prepared for these risks and who position themselves to mitigate them as much as possible. The better you mitigate risk, the more profitable you’ll be.

When it comes to real estate, buying a deal with a good equity spread is the best protection against many risks. Overpaying for a property means there’s no equity in the deal, which can lead to various problems. If the market shifts and property values drop, having a property with a good amount of equity protects you. Even if values decrease, you’re still into the property for less than it’s worth, giving you options to sell or rent without taking a loss.

3. It’s the Lowest Common Denominator Among All Exit Strategies

All exit strategies—flipping houses, long-term rentals, mid-term rentals, short-term rentals, and wholesaling—require one thing: a good deal. If you focus on finding good deals, you can pivot among different strategies as needed, whether you’re flipping, renting, or wholesaling.

Buying a good deal means you can monetize the property in whatever way makes sense for you. If you want to be a landlord, you need a property that will cash flow. If you want to flip, you need a deal with enough spread to make a profit. 

The common denominator for any successful strategy is buying a good deal.

4. It’s the Trigger Point for Everything Else in Real Estate Investing

Finding a good deal is the trigger point that makes everything else in real estate investing relevant. To purchase property, renovate it, and rent it out, you need connections—financing, contractors, and title companies. But having a good deal makes lining up these connections easier.

Without a deal, getting banks to discuss loan products, contractors to provide bids, or title companies to assist is challenging. However, when you have a good deal, banks, contractors, and title companies are more willing to work with you. A good deal gives you leverage to get everything else in place.

Final Thoughts

Successful real estate investors focus on finding the deal because it’s the biggest problem new investors face, the best protection strategy, the lowest common denominator for 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.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.