Are you new to real estate investing or not finding the success you want? If so, this blog post is perfect for you. In this post, Ryan breaks down his 6-Step Checklist to find profitable real estate investing deals.
If you follow these 6 steps and you are still struggling, you can either change your strategy or change your area for investing. We have all the tools, strategies, and training to help you succeed in real estate investing.
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Today, we're gonna be talking about the checklist to follow to find a profitable real estate deal.
So one of the first things you've gotta decide is when we're dealing with this, it's you have to understand your personal financial situation.
Okay. What this means is if you have, credit challenges, you may not be able to do takeout financing.
That means that you wouldn't be able to do any type of a DSCR or any long term financing, which means that you would be wanting to do fix and flips.
Okay? Or you may be wanting to do wholesale deals.
Let's say that you've got some challenges, where you're in have a bankruptcy or you've been foreclosed on recently or something like that.
That's gonna put you doing wholesale deals or put you doing land deals, but may prevent you from doing fix and flips because of those things.
But you could do wholesale and you could do land deals.
The other thing that you can look at is BRRRR deals where you're gonna buy, renovate, refinance, rent and then refinance. And so that is a combination of a fix and flip and a combination of a long term finance. Well, you've gotta have decent long term finance. You've gotta have decent credit to get the long term finance, although the credit is less of an issue when it comes to the fix and flip. So the very first thing you've gotta understand is your personal financial situation, and the questions you need to be asking yourself is could I qualify for takeout financing? For the takeout financing, typically, you're gonna need a credit score somewhere between six twenty and six sixty.
If you're brand new, you're probably gonna need to be around the six sixty. If you've got experience, somewhere around the six twenty. So this isn't, like, phenomenal credit, but it's okay credit.
So if you don't have a six twenty to a six sixty, the idea of doing BRRRR deals or doing any type of takeout financing isn't going to be there, unless you have a business partner or somebody else you're doing this with who does have those credit scores. So if your credit situation is below the six sixty or six twenty, depending by if you have experience or not, you're going to wanna do things to get your credit score up, but you're gonna wanna invest in the meantime, which means next thing you're gonna look at is, hey. Can I do some fix and flips? Well, as long as you don't have any collections, judgments, charge offs, you're not in a bankruptcy, you haven't been foreclosed on recently or done a short sale or a deed in lieu in the last three years, as long as you haven't done those things, and and there is a little bit of flexibility. I'd say you can't be in an active bankruptcy, and you can't be in a foreclosure in the last year or two.
So those are things we're looking for on that. But the credit score is less of a concern because this is an asset based loan, so then you're looking at doing the fix and flips. Well, let's say you do have some of those things. Let's say you do have some collections or you have some judgments or you have some charge offs. You have those types of things. Well, then what you're gonna be doing is you're gonna be doing wholesale deals.
You can do land flip.
Okay.
The next thing you're looking at is the fix and flip, and then you're doing, like, a BRRRR deal, which includes the takeout financing. So everyone can do wholesale and land flips. Fix and flips can only be done by people who don't have collections, judgments, charge offs, bankruptcy, foreclosure, those things. And then the BRRRR deal can only be done by people.
You first get this loan and then you refinance. So it's got you've gotta have somewhere twenty six twenty and six sixty credit score. There are some other qualifications. It's a DSCR, which is debt service coverage ratio.
So you've got those things, to to keep in consideration. But for the most part, if you've got that credit and you've got a decent deal, then you'd be able to do that type of a deal.
Now, the next thing based upon that we're gonna be asking ourselves is what type of deal should I be going after? Well, it depends on if you need a hundred percent financing or if you have some money that you could put into the deal.
If you don't have money let's see here.
If you don't have at least ten percent down that you can put into the deal, then you would want to plan on doing a hundred percent financing. Now to do a deal that has a hundred percent financing is gonna take more work to find that right deal that will qualify for a hundred percent financing because the lender's taking on more risk. So that's something else that you need to ask yourself is, okay. The hundred percent financing is what I need to do. Realize it's gonna take you a little bit longer to find a deal than if you had some money to to work with, and that's okay.
But that might change your decision and say, you know what? I wanna do some land flips or some wholesaling.
In the meantime, while I'm building that up because with a hundred percent financing, the deals need to be under three hundred thousand.
The purchase, the rehab, the closing costs, the payments all need to be under three hundred thousand to get the hundred percent financing. So if you're going for deals that are over three hundred thousand of the purchase, the rehab, then you're gonna need to plan on at least ten percent as a down payment.
So that's the other thing you need to ask yourself. So it's like, you know what? I need a hundred percent financing. Great.
Let's look for deals that are under a hundred thousand or let's go back and say, no. Let's do some land flips or let's do some wholesales. If I want stuff that's over three hundred thousand, then I need to make sure I've got some of that money. If I don't have that some of that money, I've gotta go back to doing the wholesales of land flips or do deals that are under three hundred thousand.
So the second thing which we've been talking about here is identify your strategy. What strategy are you going to be using wholesale land fix, fix and flip, and BRRRR? Now when we talk about BRRRRs, BRRRR also could be vacation rentals, like your VRBOs, your Airbnbs, because you could refinance and do that, or you could do long term rentals.
So when we talk BRRRR, we're talking vacation rentals. We're talking long term rentals.
We're talking all those things as we talk about the BRRRR methodology here. So so now we've identified our strategy. Now depending upon what strategy you're doing, wholesale land fit, fix and flip, and BRRRR, then the next thing you've got to do is you identify your area.
Okay? And one of the ways you identify your area is by using Investors Edge software.
Let's just say that you're in Georgia.
I think the easiest thing is to try and invest close to where you're at.
The only reason why you wouldn't invest close to where you're at is if you're doing land deals because you can do those anywhere, or if where you're at is a rural area, which is gonna be more difficult to get the rehab done, to sell the property, financing, all those different types of things. And so that's when you'd wanna drive.
So I would start where you're at and you'd you'd work your way out.
If you need the hundred percent financing and the average in your area is more than three hundred thousand, then you're probably going to need to be looking somewhere else. Now keep in mind, at three hundred thousand, that means that the after repaired value of this property, if we take three hundred thousand divided by point seven four, it's gonna be about four hundred and five thousand, somewhere in there. So if the median price range is four hundred and five thousand, that's fine because you're gonna be buying that property for somewhere around three hundred or less than three hundred. So
that's what we're looking for. So let's just come and let's just Atlanta, Georgia. Let's just go here. One of the first things I wanna know in Atlanta, and you can go this by ZIP code is, okay.
What is our price per square foot?
Okay. We're about two hundred eleven dollars price per square foot. What's happening on these sales price versus acting price, preforeclosures, gives us a pretty good idea what is going on in the area, market trends, changes. Let's we can look over the last ninety oops. Let's look last ninety days, and let's look last ninety days here as well. Just so we have an idea, average monthly rent, average days on market, all very helpful. Days on market versus inventory, we see that's coming, down.
Let's see here. So on average, sales price, four hundred twenty one thousand.
So four hundred fourteen thousand. So, I mean, we're close on that, but I'm not gonna rule out, Atlanta because of that. Frankly, I'm gonna look a little bit deeper. So that's where we say this is the area.
Now let's say that Atlanta was seven hundred thousand, then I'm gonna say, okay. Where is the next where is the next place I'm gonna wanna go? Now, obviously, Atlanta is a big a big area, so, that might make up so Decatur or I could come up and say, hey. What are things looking like in some of these other areas?
Cumberland, Marietta. You know? So I would go and look at these areas that are close by and make these terminations. What's happening, days on market, price ranges, what's the average price range? And that's what's gonna help me determine my area and where I'm gonna be going after. Now if I'm doing land type deals, there's a different strategy. You wanna file follow that along with the land course.
Now once you've determined your area, the next thing you're going to do is you're going to put your plan together.
The plan is basically what are you going to do to end up with a deal. And so we use a next deal blueprint, which basically you put in the details of, your experience and what you've done, and then it'll build out a week by week plan of things that you need to do. Part of that plan is making a determination if you have money for marketing.
The idea here is if you have money for marketing that you're willing to spend, it speeds up the process. If you don't have money for marketing, that's perfectly fine, but it's gonna take you a little bit longer to make a deal happen because you're gonna have more manual efforts. Think of it as like sweat equity. You're gonna spend more time trying to do deals, which means it's gonna take you longer to find a good deal. So you need a plan for that. But that's why you put the plan together, the next deal blueprint, and then that will put together a strategy for you. Part of that strategy is, going to number five, it's your marketing strategy.
How are you gonna get in touch with these people? So I can come in here and I can find, vacant homes that are residential that are not listed on the MLS that have twenty thousand dollars worth of equity, or even even here. This is probably easier. Non owner occupied.
There are forty three thousand non owner occupied homes, residential single family, under half a million dollars or thirty percent or more of equity. So I can go get those.
The question is, how do I contact these guys? And there's one of a few ways to do that. I can knock on their door.
I can send a postcard.
I can skip trace and call.
I can send an email.
Okay? Those are the ways that I can get in touch with these people. And even if I'm doing, like, a driving for dollars campaign where I'm driving to find properties that have issues and we've got content on how to do that, I still have to get in touch with those people by doing one of these strategies. And that's what this plan is going to do, is you're gonna determine what marketing you're gonna end up doing and how you're gonna contact those people, and I'll give you an idea of what you'll have to do in order to get a deal happen.
Now this isn't a guarantee, but it gives you a good idea based upon the twenty years experience we have. It's gonna be different based upon area. It's gonna be different based upon your skill set, how good you are, because someone that's really skilled is gonna have an easier time getting a deal than someone that's not. But you're not gonna get skilled unless you use the training, follow along, and go out there and try some things, and then you'll improve as time goes on.
So that's the next thing is we determine the marketing and the plan that we're going to put together.
Now after that, what we're doing is we are working our plan.
That's the next thing. It works if you work it.
A lot of people put the plan together. A lot of people never even make the plan. A lot of people don't even start with the courage of investing. So you're heads and tails above most people. So the next thing that we've gotta do is we've got to work the plan.
What does that mean? It means every week we're doing the activities or spending the money on marketing or doing our list checks or making the phone calls or whatever we've decided in that plan. Now maybe in that plan you're saying, I don't really wanna make phone calls.
Great. Then let's build a plan differently. You get to decide what goes into that plan and what doesn't on how you're gonna contact. But at the end of the day, you are gonna have to talk to people one way or another to make some of these deals happen.
Then as as we work the plan, a a little side note, we have another called MLS Sniper.
And if you really don't wanna talk to people, MLS Sniper is how you can work through agents to find deals.
You use Investors as software, and you use agents to find that. That's more for you if you don't wanna make any calls, minimal calls, I guess you could say. You'd be working with agents rather than calling people that own their houses. MLS Sniper is a great way to do that.
We've got training to show you how to do that as well. Okay. So now we're working the plan. What that means is every single week, I'm doing the activities that I've said I need to do in order to get my deal, and I have to do it week in and week out very consistently.
Now how long will it take you to do a deal? Again, depends on the market you're in, depends on your skill set, depends on how much money you're spending on marketing, it depends on how the price, all those things play into this. So this will build a plan out for you with how many weeks, and then you'll be working this plan and doing it consistence consistently.
Now if you work this plan and you haven't found a deal, so let's say it's a eight week plan or it's a twelve week plan or whatever the case is, and you don't have a deal or a prospect of a deal, the next thing that I'm gonna say is we need to focus on follow-up.
K? Follow-up, follow-up, follow-up. The money is in the follow-up. So do you have things that have potential that you need to spend more time following up on because the money is in the follow-up? Now let's say you've done all the follow-up, you're still following up like crazy, and you still don't have a deal.
This is where we need to say, okay. Do we need to change our strategy, or do we need to change our area?
Okay. Strategy or area. So maybe we were going after wholesale deals, and it's just not working for us for whatever reason. Then we say, okay. Maybe we should change our strategy, and we should go after land deals where where we actually change the strategy once we've worked our plan.
The other question we ask ourselves is area. Maybe instead of, Atlanta, Georgia, maybe we should go to Alpharetta, Georgia, and so we're gonna change our area. Once we do that, we're gonna put a plan together again. We're gonna then work our plan.
Okay?
And if we have to, we'll start the process again. We'll change the strategy or change the area, and we'll keep working the plan.
So you keep at this. The key to this is not giving up.
It takes time. Sometimes you'll find a deal in a couple of weeks, and it just kinda falls into your lap. Other times, it may take months and months and months. I've had deals that have taken me three years to get, and I've had deals that have just fallen into my lap within a week.
You really just don't know. But at the end of the day, it becomes a numbers game, and doing consistent things on a regular basis helps the numbers average out to give you a higher potential of making one of these deals happen. Now as long as you use the right strategy, as long as you're doing something that's going to work for you based on your personal circumstances, and if your personal circumstances change, you can come and say, I wanna change my strategy. Maybe, you had some issues with some charge offs and you had some issues with some credit scores, but those have improved, and now you wanna do some rentals.
Well, great. We can change the strategy, and we can start going after properties that we wanna do BRRR or vacation rentals with, which is all part of this plan. The commitment to staying with it is number one, and following and working this plan and this order and this checklist is how you will get there and find the success that you're looking for to make your next deal happen.
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