What the pros know
Beginning property investors often ask me for advice on how to obtain the 
best “deal” on any piece of real estate investment. The problem is that this assumes there actually is such a thing as a “deal” on investment property. In reality, there are smart moves one can take to place yourself in the position of acquiring a specific piece of investment property at below its current market value. That is all that you can hope for…since there is no magic formula for making an investment property “deal.” So step one – forget about trying to find such a thing as a “bargain.”
No substitute for numbers crunching
I always suggest that there truly is no substitute for doing your due diligence on any given property – and simply crunching accurate (and not estimated) 
numbers on the actual income and expenses on the property. If you do have to estimate (for example, if you have a vacant apartment in the building, and need to input a number for estimated rent), you damn well better have done your research and checked out rents for like apartments in the area. Otherwise, you’ll just be deluding yourself into a “hoped-for” number that may not be realistic. The same theory goes for all expense items as well. Everything needs to be verified.
Once you have your accurate numbers, and you run a simple cash flow analysis (see prior articles here on how to achieve this), you’ll be able back 
into a number that you’re comfortable with for acquiring the property. In essence, you determine what is a good “deal.” And what’s good to you may not be good to me, and vice-versa. That’s why the concept of a bargain is bogus. I always say that your top limit on what you should offer should not be affected by even a dollar. So, if you think you should only go as high as one hundred thousand dollars on a property, your line in the sand is one hundred thousand and one dollars. Let someone else buy it for that. You’ve already made your decision not to crack your upper limit. Setting limits is terribly important in property investing. It’s called having buying discipline.
Throw out emotionality
Closely aligned with buying discipline, is the ability not to get emotionally attached to any given property. Once you bend your rules, especially your upper limit rule, you’ll be overspending. While it’s definitely OK to re-run your numbers to double check your upper limit, it is not OK to fudge some of the numbers during the re-check process in order to make the upper limit soar…just so you can actually acquire some kind of “trophy” property. That’s called being emotional – and a great way to eventually lose money.
Find a buyer’s agent to work with exclusively
Who do you think is going to hear about properties that are just being placed on the market for sale? Real estate agents, of course. As a crucial member of
your “crew” (see my articles here on crew formation), you’ll need to work with one exclusively, preferably acting as your buyer’s agent. In this way, you’ll get calls, emails, texts, etc. as soon as your agent hears about anything that hits the market that he or she thinks would be a great fit for you. The more you work together, the more opportunities will be sent your way. In addition, they will offer their expertise in research and negotiating that will prove invaluable over time.
Using time to your advantage
In any competitive bidding situation, let time be your ally. You can make better “deals” by having done your research and numbers crunching well before your competition. A seller that receives a lower offer from you today may not want to wait for a hoped-for buyer’s offer tomorrow that he thinks might be higher. He’d rather agree to your offer today. The adage “a bird in the hand” definitely applies here. When you can act fast to place an offer, you tend to make acquisitions happen – faster…and at a better price.
Consider attending property auctions
Auctions have the potential to allow you to purchase investment property at below market values. However, I suggest you attend a few without the 
intention of buying anything first. Just observe the process. There’s a lot to take in. And your competition will be fierce. The expert property investor really knows how to work an auction. In addition, you’ll usually need a cashier’s check for some minimum amount just to gain entry into most real estate auctions. And, as mentioned above, you’ll really need your numbers crunching to be exceedingly accurate, and your discipline (especially for that upper limit) has to be well-honed. With auctions, the best attitude is: let this one go, there’s always the next one to bid on. If you have this disciplined approach to auction buying, you should never get burned financially.
photos courtesy of anchoragehomesearch.com, thelastembassy.blogspot.com, yaerd.org, quickenloans.com, ericksonsdrying.com, thomsonlawplc.com
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