Why More Real Estate Deals Don’t Fall Into Your Lap

Even the easiest of the hundreds of deals I’ve purchased did not just fall into my lap.

Aug 23, 2014 at 6:30PM

Why More Real Estate Deals Dont Fall Into Your Lap

Have you heard the news on the BP Podcast, in the blogs, or on the forums?

People are doing lots of deals! Investors are making money again!

So isn't it time for you to get more deals too?

Maybe you've tried. You've followed the MLS daily. You've sent out direct mail. You've made your business card. You've built your team.

Why don't those good deals start falling into your lap?

Is there something wrong with you and your investing?! Are there just no deals in your town?

Well, there is something wrong, but thankfully, you can fix it right now.

Here's the take home:

Good Deals Don't Fall into Your Lap! Deals are Found, Nurtured, and Created Using the Skills that I Will Share Here.

Even the easiest of the hundreds of deals I've purchased did not just fall into my lap.

Just like fishing, I had to know where to fish, how to get the fish on the hook, how to reel him in, how to bring out the net, and how to get the big fish into my boat.

Some fish struggled for hours before finally being caught. Others swam right toward the boat and made it easy. Still more than I care to admit broke my line, laughed, and swam away!

So, the first thing to fix is this expectation that deals just happen or fall in your lap.

Becoming good at buying real estate deals is like mastering any craft or trade. The better you become, the more effortless the process will appear from the outside.

But the secret is in the fundamentals!!

It's about the skills that you practice, practice, and practice until you start to master them.

This doesn't mean you can't go fishing for deals right away. The opposite it true.  That is how you get better.

This mind-set of mastery is completely different from the impatient, results-now mind-set we tend to inherit from gurus and get-rich-quick nonsense. And ironically, it tends to get results faster.

In the rest of the article I will share 5 critical skills that I consistently practice and try to master.  If you practice them too, I think you'll find more and more deals "magically" falling into your lap.

1. Market Knowledge
If you don't master your target investing market, not much else matters. This is the equivalent of studying the locations where you are most likely to catch the big fish. You can have all the best bait and equipment, but first you need the fish!

Here are some questions that will begin to get you thinking about the best fishing holes for your deals:

  • How are big picture demographic trends affecting your local market(s)?
  • What do your local buyers and renters really want?
  • What local features are most desirable? Schools? Amenities? Community centers?
  • What types of properties are most in demand for your market?
  • What price ranges and locations represent the best value?
  • What price ranges and locations have investment grade (income producing) properties?
  • How do other investors in my market make money?

In addition to those big picture questions, I find real estate valuation to be a critical skill.

Even if you don't plan to become an appraiser or a real estate agent, you need to learn how to predict the likely rental or sales price of a property by studying comparable sales or other income properties.

If an experienced appraiser, real estate agent, property manager, or investor will let you shadow them while they do valuations, I highly recommend it. You will learn a lot.

2. Lead Generation
Deals might not fall into your lap, but you sure can choose good bait that attracts the right fish.

Lead generation is the skill and habit of consistently planting seeds that will later grow into opportunities.

The possibilities are endless, but I have used all of the following lead generation channels successfully:

  • MLS daily searches
  • Driving For Dollars (or pushing strollers for dollars, my current favorite:).
  • Business cards
  • Direct mail
    • Non-Owner occupied
    • Owner-occupied with equity
    • Probate/estates
    • Local Professionals (attorneys, CPAs, etc)
    • Eviction landlords
    • Tax sale owners
    • Preforeclosures
  • Radio advertising
  • Signs
  • Car magnets

The list could go on and on.

Interestingly, some people think this one step is the secret to finding a lot of good deals.  Unfortunately, many investors waste a lot of money when they work this skill but don't strengthen the other skills, like #3. Negotiation.

3. Negotiation
When an opportunity comes your way, can you turn it into a deal? If you get a fish on the hook, can you reel it in?

I will write a lot about negotiation in future articles, but for now know that three different things often get lumped together:

1. Haggling

2. Power/control/manipulation

3. Negotiation

I am not a good haggler. It's fun at the flea market or yard sales, but starting low and meeting in the middle is hardly negotiation.

And my stomach turns at the slimy mind-control and manipulation tactics that get passed off as negotiation by many so-called experts.  If you want to control other people with intimidation, scripts, and subconscious suggestions, go start a hypnosis show in Vegas.

True negotiation is not magic.  It's not secret.  In fact, the best negotiators I know are very transparent and vulnerable, and as a result, people trust them.

Trust is a currency in high demand in our world. If you can learn to earn trust with people, you can then get the opportunity to present solutions to their problems.

Sounds simple, but it's a rare and valuable skill for real estate deal making.

4.Deal Analysis
If you are in this business to make a profit, you must sharpen your deal analysis skills.  You need to be able to identify a good deal and run the numbers, just like you would identify when a fish is a keeper or one to throw back.

There are many analysis short cuts or rules of thumb, like the 2% and 1% rules.  But you also need to develop more in depth analysis skills using spreadsheets.

BiggerPockets.com contributor J Scott wrote an awesome Introduction to Deal Analysis that I highly recommend as a starting point. I will also write more about this big topic.

5. Real Estate Tools (Legal/Paperwork)
If you can't choose and execute the right tools and paperwork for a purchase, you've wasted your time with all the other skills.  This is like losing your fish while trying to get it into the boat.

Real estate laws and contracts are the foundation of the real estate market.  You don't need to be a lawyer, but you do need to understand at least the basics of the contracts and tools you will use.

Where do you start?  I suggest the real estate licensing classes in your state.  Even if you don't ultimately get your license, you will learn a lot about the basics of contracts and real estate law.

After that, study in more depth some of the primary tools that real estate investors use to purchase properties.

Some of my favorites are:

  1. Private notes/mortgages (especially self-directed IRAs)
  2. Seller carry-back financing
  3. Leases and options
  4. Conventional mortgages (until they cut you off)
  5. Local/portfolio mortgages (in moderation)

I will be writing a lot more about how to use these tools on my BP blog.  But you can also search on the BiggerPockets forums to get started on these subjects.

This article originally appeared on Bigger Pockets and is Copyright 2014 BiggerPockets,

How to get even more income during retirement
Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers