What criteria do you follow when looking for a deal?

[Kelsay Ann Richards]

Hi everyone! 

I've been studying real estate investing for a couple of months now (read "Rich Dad Poor Dad" and it changed me forever, as it has everyone else) and I'm looking to purchase my first deal before the end of the year. 

The thing is... I'm a travel nurse; this is obviously wonderful as I have a great DTI and the capital for a down payment, but I'm feeling lost when doing my deal analyses as to where I should purchase first... I'm originally from Utah, and I feel that because I'm the most familiar with that area, that purchasing a property there first would be ideal. However, I'm just not sure where to start as far as what I'm looking for, so... What do YOU look for when you're looking for a rental property deal? How do you narrow down your search? Do you typically try to stay within your area in which you live to purchase properties or do you venture outside your state?

Any and all advice is welcomed and appreciated. :) 

Thank you in advance! 

Kelsay Richards 

[Account Closed]

Since you make decent money don't be anxious to jump into real estate. Don't make a purchase until you are so positive you are buying the best deal you can where you don't need to ask for advice because no real estate broker represents you and you should not trust advice from friends, relatives, attorneys, or any person this planet. If you want to be successful you need to know enough about what you are doing so that you can tell others what is right and wrong.

Since you made decent money, you should stay away from single family homes and duplexes. Don't buy anything less than 4 units because when you purchase a home the value of the home does not increase when you increase the rent. But, when you purchase a 4-unit property, or something larger the property is not considered to be sort of a commercial property and I like to think of a 4-unit property the same as a business like a liquor store where the higher the sales the more the liquor store will sell for.

Four units or more will appreciate in value sort of exponentially when you increase rents and a single family property will not. You need to learn how to do all the math for real estate and there is a book called '50 Real Estate Investing Calculations' that every real estate investor should have, but the serious problem with every book is not one book explains how the value of properties increase when rents are increased and how to stretch the numbers out 5, 10, 20 and 30 years. If you don't know how to do the math and when broker or friend will help you then you should stay out or the real estate business or just cross your fingers and pray.

As for the area you invest in, I would definitely stay away from investing out of your area and I can write books on the reasons why you lose a huge percent of your potential income, or even lose money and hate the real estate business.

Never forget that nobody represents you. Your broker does not represent you because he will tell you that every property he has is great. Don't be loyal to one broker. Contract every broker and you will get different listings and more choices.

A higher number of units always gives you more cashflow plus a safety net for when 1 or 2 tenants move out and you still have cashflow to pay the mortgage.

The more patience you have the more money you will earn. I can personally find you a thousand deals today, but it can take 1 or more years to find a goldmine and when that goldmine comes along you will wish you had waited and waited and waited. I purchased about 28 homes at auctions between 2008 and 2010 and made several million dollars because when the market crashed I had a few million in the bank because I am a patient person and did not blow my money when prices were rising. I am like an alligator who stays still for several days before making a strike.

Be patient and wait until you know what you are doing. Don't trust nobody when it comes to your money because your are not supposed to invest based on trusting someone else. You need to invest based an what you know.