You Make Your Money When You BUY a Property
It’s a common gripe in real estate forums these days: “I can’t find any deals!”
But here’s the truth: It’s not that there are no deals out there. It’s that too many investors aren’t approaching the buying process the right way.
The key to making money in real estate lies at the very start of the investment process.
You make your money when you buy a property, not after.
If you jump in at the wrong number, you’re setting yourself up for slim margins, frustration, and long waits for returns.
Here’s what seasoned investors know, and what you need to learn, to make real estate work for you from day one.
Why Successful Investors Focus on the Purchase Price
During past downturns like the 2008 recession, savvy investors approached every deal with discipline.
They didn’t care about the seller’s asking price. What mattered was the return on investment (ROI) they were targeting.
Rather than hunt for turnkey properties or compete with owner-occupiers, they ran the numbers backward. Using their ideal ROI as a guide, they calculated what they were willing to pay and made low offers accordingly, often 20-30% below asking.
Was this approach aggressive? Absolutely. Did it work? Without question.
The old saying, “Your offer should be so low that you’re embarrassed to make it,” is truer than ever in this competitive market.
To succeed, you may need to submit 100 offers to land one deal. Finding an agent willing to hustle on your behalf is tough, but that level of persistence is what it takes to secure properties at the right price.
Unfortunately, many newer investors today treat real estate like a casual activity rather than a serious business.
Don’t fall into the trap of paying asking price or getting pulled into bidding wars just because you see potential in a property.
Remember, your investment starts strong or weak based on what you pay upfront.
Where to Find Opportunities
The good news? You don’t have to compete with emotional owner-occupiers making inflated offers.
Instead, focus on areas where motivated sellers are looking for quick exits. These types of deals are where smart investors thrive.
How to Spot Motivated Sellers
Look for these signs to locate investment opportunities with less competition and higher ROI potential:
- Listings on the market for 3–4 months or longer
If it hasn’t sold in today’s fast-paced market, there’s likely motivation to negotiate. - Properties in need of work
Homes that require updating or repairs are shunned by retail buyers but are gold for investors. - Agent remarks indicating it’s not turnkey
Phrases like “great potential” or “bring your vision” often suggest a property that owner-occupiers will avoid. - Distressed situations
Target listings connected to bankruptcy, foreclosure, divorce, or estates where heirs are eager to sell quickly.
By focusing on these properties, you position yourself where there’s less demand from emotional buyers and more room to negotiate favorable terms.
No matter your strategy—whether BRRRR, flipping, wholesaling, or buy-and-hold rentals—these kinds of deals set the stage for profit.
Why Overpaying Sabotages Your ROI
Investing is about maximizing your returns, and that starts with protecting your margin during the buying phase. If you overpay for a property, it’s nearly impossible to generate cash flow or rapid returns.
Sure, real estate values tend to appreciate over time, and some argue, “Time fixes all mistakes in real estate.” While that’s true in the very long term, it’s not a sound strategy. Waiting years to see ROI isn’t practical, especially if your goal is to BRRRR or realize consistent rental income quickly.
By locking in a property below market value, you create room for profits from the beginning, whether through appreciation, cash flow, or favorable refinances. Put simply, the deal isn’t in the exit—it’s in the entry.
Treat It Like a Business
If you treat real estate investing seriously, you’ll understand that deals are made or broken long before tenants move in or properties sell. Developing a methodical, ROI-driven approach to purchasing sets you apart from hobbyists and ensures long-term profitability.
Start by asking yourself these questions:
- What ROI do I need to achieve to make this deal worthwhile?
- Does this property align with my investment strategy?
- Am I willing to walk away if the numbers don’t work, even if I love the property?
That discipline is what separates seasoned investors from those who struggle just to break even.
Want to Find the Best Neighborhood Opportunities?
If you’re serious about real estate investing, your first step is to locate the right opportunities in the right neighborhoods. For seasoned advice and a deep-dive into Detroit’s most profitable areas for landlords, we’re here to help.
Want to find out which neighborhoods in Detroit have the best opportunities for landlords?
Our Deep Dives take you through the numbers in detail, so you can find the best location for your next rental investment.