Photo: 40 Wall Street, The Trump Building by Donald Trump. Bought for 1 Million dollars, valued today at 400 Million dollars.
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Almost every day I get asked by one person or another; "how do you find great deals?"
My answers are always vague:
- Deals come from ads I put up
- They come from my network
- They come from bird dogs or wholesalers
- Inside connections with centres of influence
- Deals come from my blog
- Or one of my realtors
Every week I look at more than a dozen deals and send out offers. I keep very active and can often get great discounts or no money down deals that are not offered to the general public.
Just because a deal is no money down or at a "discount" doesn't mean that it's a good deal.
The truth with deals, whether in real estate, business or dating is that they are often cherry picked before you get access to them and the best ones are usually taken.
Even a private deal goes through at least a dozen sets of eyes before it gets to you privately.
If a deal is so great, then why hasn't anyone bought it yet?
The answer to the question is: There is no such thing as a good deal because - the best deals are created, not bought.
The formula for a great deal is simple:
- Find a great opportunity
- Add value
- Collect profit
The key with this formula is step #2.
Adding value is the hardest part of this cycle and figuring out how to maximize the opportunity takes the most skill.
I would estimate that the average person gets 8 great opportunities every day (real estate or just personal life opportunities). However, it takes a certain pair of eyes to recognize the 8 opportunities that fall into our laps and a very sharp skill set to add value and collect profit.
At the stage I'm at in my career, I have deals coming to me daily and the biggest challenge I have is figuring out which ones to pursue and which ones to drop.
When evaluating deals, I ask myself: which opportunity can I force the most value out of? Which deals take too much time or effort? Which deals can be done the fastest? Which deals will align with my mission in the best way?
Often i have found that the more creative I can get with a deal, the higher my profits go. However, just because I get creative, doesn't mean that I am ensured a profit.
There are many times when creativity doesn't work, we have to be very careful and look at creative approaches with a sober second look.
The questions I always ask when someone approaches me with a deal is:
- Why is this a good deal?
- What is everyone else failing to see?
- What mistakes did the vendor/seller make?
- What is my unfair advantage with this deal?
- How can I maximize my profits?
- How fast can this deal be done?
- What is the effort required on my part?
- How safe is my partner's capital?
- What threatens my position in this deal?
- Can I negotiate further on the price/terms?
- How can I get creative with this deal and make it even more valuable to me and my organization?
- Can I repurpose this deal and sell it to another audience (rezone, repurpose, assembly, commercial/residential)?
The wonderful thing about real estate is that there is a very high degree of control.
A real estate entrepreneur controls just about every aspect of a deal and value can be created in an infinite number of ways.
I was at a Real Estate trade show this weekend and looked at 40 different real estate companies who were promoting their products and their deal inventory.
I was very impressed with the creative and innovate ways that the 40 different companies were able to find unique and innovative ways to create deals, create value and in turn, create profit.
The ability to create a deal is an entrepreneurial skill that very few people are actually competent at.
When I think of a person who can create a deal, I think of Donald Trump. If you study Trump, you will find that almost every one of his deals is created, engineered and highly innovative.
Every deal is different and he can see value where no one else can see it.
One deal that comes to mind is 40 Wall street that Trump bought for 1 million dollars and is now worth close to 400 million dollars. Some people say that it is the best real estate deal of all time.
Most real estate entrepreneurs make amazing returns when they double the value of a property. Through creativity and deal engineering, Trump was able to increase the value of the property by 400 fold.
What deal can you multiply the value by 400? I do not have the skills to create a deal like that yet, and very few people in the world have a skill set like Trump. This is why Donald Trump is a billionaire and the rest of the world is not.
When you are analyzing a potential deal, think of the ways that you can "create" a great deal where most people fail to see a profit.
The best deals of all are missed opportunities that are often obscure and mis-marketed.
Get a hold of a mis-marketed opportunity, create value and reap the rewards. The formula is simple.
Thanks for reading,
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