Enthusiasm is one of the most important traits any successful person can have. But it’s also dangerous for new investors who are so eager to get a deal they’ll buy anything. I’m talking about war zones with crack houses on every corner, the type of place you wouldn’t want to go at night.
Perhaps you’re saying though, “Jason, there are great deals there. I can buy a property for $10,000.” Well… that’s great you can guy a property for $10,000 but how are you going to get rid of it? Most likely you’re not and you’re going to be stuck with a terrible property.
You see, I’m pretty much a ‘buy and hold’ investor these days. So when some wholesaler tells me about this great deal they have that will cash flow a ton… but is in a war zone, I immediately walk away.
Because what type of tenants is that property going to attract? Most likely, the type of tenants who are going to be more trouble than they’re worth. When I pickup a property I’m hoping a nice family will move into it and rent from me for the next 20 years.
How many nice families do you know that want their children living next to a crack house? I don’t know any either. The point I’m trying to make is that just because you can pick up a property for next to nothing, that doesn’t mean it’s a great deal if you can’t wholesale it, or if you can’t find tenants to live in it.
Then you’re stuck with a house you can never get rid of.
For example, there’s a neighborhood about 40 minutes from me that is very less-than-desirable. And I get emails all of the time from investors who want to sell me a property there. But of course I never do it.
When I first started business years ago, I was in that particular neighborhood. I asked a cop what he could tell me about it and he said, “if a shooting or stabbing happens in the area, it happens right here in this neighborhood”.
My point is, don’t get too greedy. When evaluating a deal don’t just look at the numbers, look at the location, the type of property and if you think you’d be able to get the type of tenants that will pay their rent on time every month and stay with you for the next 10-20 years—that’s my goal and I hope is yours too.