“Deal Shopping” tends to lend itself to the rose-colored glasses effect, everything is great, no worries here, this place is just under-rented, all ya gotta do is buy it and POOF double the rents and get rich right? WRONG
Before we go any further, let’s discuss the two types of vacancies.
Physical vacancy applies to actually empty units (nobody living in them)
Economic vacancy identifies the difference between the potential (proforma) rent and the actual rent.
As a passive investor investing in someone else’s deal, it’s a good idea to perform your own independent market research. Your findings should align with the finding of your deal sponsor.
If you are buying a property yourself as an active investor, the same is true. You can’t count on the Wholesaler, Broker, or Seller to be accurate with the information they provide.
It’s not that they are lying necessarily, instead, it’s more likely that they simply were not willing to do their homework if they are the Broker, Wholesaler, or Deal Sponsor. If the seller is off, I often find they are conveying what the “feel” it will rent. Let’s keep in mind that they never actually get that much, after all, they don’t want the tenants to leave right?
In this episode, I’m going to break down how you can assemble the most accurate information available. Its making decisions based on facts that will keep you safe during your investing journey.
If you want to learn more about what I am up to in Key West as far as my upcoming deals, go to keywestcashflow.com/call and schedule a time to get on my calendar to discuss our plans down here and how we might be able to work together in the future.