Deal analysis is one of the most important skills real estate investors can acquire. One of the worst things that can happen to an investor is to buy a bad deal. It is far better to say ‘No’ to 10 good deals than to say ‘Yes’ to a bad deal.
Of course, at some point, investors have to pull the trigger in order to make money. You can’t just turn down everything that comes your way because you don’t know with absolute certainty whether everything will work. That’s what the investment world calls risk.
Risk can be managed. Investors use all kinds of tactics to manage risks as they work on rehabs or run rental properties. Some examples of risk mitigation include:
- Contingency clauses in contracts (financing, inspection, etc.)
- Third-party inspections and appraisals
- Low loan-to-value investments to make it easy to get your money back
- Milestone payments to contractors
Before an investor puts all those controls in place, they must see if they…
JP Moses
is a real estate investor in Memphis, TN, with experience ranging from land lording to note buying, rehabbing, and wholesaling. However, wholesaling is the area that he enjoys most and where he bring the most experience and expertise to his students.