digest
Short Summary
Main recommendation: To understand what a good deal looks like in your market, use four methods: ask seasoned investors, ask investor-friendly real estate agents, study comparable sold properties (comps), and learn the 70% and 1% rules of thumb. The speaker presents these as practical starting points rather than guaranteed indicators, since location, crime, and other factors also matter.
Key Points
- The promised list of 4 ways to understand a good deal: (1) Ask a seasoned investor, (2) Ask the pros (investor-friendly agents), (3) Look at comps, (4) Know the rules of thumb.
- Successful investors are valuable sources because they can share what they bought, paid, renovated, and sold or rented properties for, and building rapport can lead to partnership opportunities.
- Investor-friendly agents are closer to deal flow and may have pocket listings, which are properties not publicly listed on the MLS.
- Comps reveal what investors are paying; sold-property records showing LLC or corporate owners can point to active investors whose purchases may inform local pricing.
- The 70% rule and 1% rule are rules of thumb, not laws, and do not replace analysis of location, crime, and other statistics.
Details Worth Noting
- Concrete instructions:
- Find an active local investor and ask what their last deal looked like: purchase price, market and city, renovation costs, sale price, and whether it was rented and at what rent.
- Ask an investor-friendly agent what investors typically pay and sell for, and what rents they charge, by neighborhood.
- Find investor meetups by searching Google for "real estate investor meetups" in your city, or check local meetup listings; create your own meetup if none exist.
- To find comps, filter Zillow for sold properties in your target neighborhood over 3, 6, 12, or 24 months, note the lowest-selling addresses, then look up owners in county records or tools like PropStream or DealMachine.
- If an owner is an LLC, look up the LLC on the state website to find the owner or registered agent, then use a people-search site such as TruePeopleSearch to find contact information.
- Use the 70% rule: maximum purchase price = 70% of after-repair value minus repair costs (example: $100K value, $20K repairs → max $50K).
- Use the 1% rule (for landlords): monthly rent should be at least 1% of the all-in purchase and renovation cost (example: $70K all-in → about $700/month minimum; $1,000/month is above that threshold).
- The speaker's example uses round numbers for simplicity and notes that many viewers will not find $100K properties in their market.
- Investor-friendly agents typically have pocket listings, which can be a source of off-market deals.
- The speaker suggests finding investors and agents at meetups, where the most active deal-makers are often visible.
- The 1% rule's threshold is described as roughly break-even, so exceeding it indicates likely positive cash flow.
Bottom Line
Understanding a good deal comes from combining relationships with local experts, hands-on research into what investors actually pay, and quick math checks like the 70% and 1% rules, while still weighing location and other market factors.
