Creating Deals

There are so many people today who complain that there are no deals on the market. These people will run the numbers and say that a deal does not exist in their city. The reason may be that property values are too high or that rent levels are not high enough. These people will complain that there is no way for them to invest right now and will go ahead and sit on the sideline. I would argue that these people are wrong. Yes, they may be right that their market might have high prices or low rents, but it does not mean that there is no way to get a deal. These people fail to realize the power of creating a deal and miss out on numerous opportunities right in their own market.

There are many ways a deal can be made and I would like to share one of my favorites in this post.

Creating another unit

Here in the midwest, it is extremely prevalent for homes to have a basement. Many times these basements are unfinished and do not serve much of a purpose besides storage. I see these properties as a gold mine. I will look at this and ask if can I add another bedroom or two or can I go ahead and create another unit. If the space is large enough, I will look at creating a separate unit with its own kitchen and bathroom. This way, I can get a separate tenant in there and have a second source of income coming in. By doing this, I will have two streams of income on my one singular mortgage. This will greatly improve my cash flow and help me to save for future investments.

Upon creating a second unit, you as the landlord are left with a choice. How are you going to rent the property? There are multiple approaches you can take with your now duplex. You can use it as a STR if your market has a demand. Or you can use it as a MTR and rent it out to traveling nurses. If neither of these two options appeals to you, you can go the traditional route and rent out the units as long term rentals.

A technique that has been in my head a lot recently would be a MTR and House Hack combination. First, I would purchase a single family home with a large unfinished basement. As a college student, I would house hack it by renting out the other bedrooms to friends and could even live in the unfinished basement for some time. While living in this property, I would work on finishing out the basement and furnishing it. After this, I would rent it out as a MTR to traveling nurses throughout the year. By doing this method I would have most if not all of the expenses covered by my roommates and then be cash flowing even further by having the basement rented out as a MTR.

This is an example of a property I am currently looking for and I encourage anyone reading this to look for something similar. You have the power to get creative and make a deal. It may take some work but that is what can set you apart as a successful investor. Don’t say “I can’t find a deal” say “How can I make a deal.” You’ve got this!