The first of the three traits is the ability to find great deals. What is a great deal? I define a great deal as at least 30% built-in equity the day you close on the property.
The only exception to this rule is if the terms you are getting with your deal are so good that they negate any price considerations.
The consequences of not having that built in equity are obvious when you look at the exit strategies:
1. For buy, fix, and flip, if you don’t have at least 30% equity, you will not show a profit when you sell the property.
2. For wholesale flip, if you don’t have at least 30% built-in equity, it’s highly unlikely you will be able to find a buyer you won’t be able to pass off the deal at a wholesale price.
3. For buy and hold, if you don’t have at least 30% built-in equity, you won’t be able to get decent financing on the property because banks want you to have at least 20% to 30% equity. Also, it’s going to take you a long time to pay off the property.
What you need to do in order to buy deals with built-in equity are motivated sellers. That’s not ALL you need. You also need to be able to present offers that make sense to this guy.
What is ironic is that most of the techniques that are taught to real estate investor who just don’t know any better actually attract mostly unmotivated sellers.
For example, the first real estate investing course I bought was the Carlton Sheets “no money down” system. The number one way they presented in that system for finding motivated sellers was by calling for sale by owner advertisements in the classified section of the newspaper.
Don’t get me wrong, you can actually find deals from the classified advertisements in the newspaper. But you will find a much higher concentration of sellers who are just not motivated enough to take an offer that will land you 30% built-in equity.
Bottom line is, if you can buy the deal with at least 30% built-in equity, don’t bother buying it.

Finding these types of deals is the challenge here. To find out how, check out some of the blog posts on finding deals.

What is your favorite way to find motivated sellers? Leave a comment below.