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Evaluating your deals before you buy them is crucial to the success of any real estate investing business.

 It is therefore important to learn how to evaluate your deals no matter what your business model is.

This article walks you through some tips that will help you make offers that get accepted at the same time offers that make you a profit.

 Obviously the way you evaluate your deals is determined by your business model.

So in this article we will look at some general scenarios which should be a rough guide as to how you make your offers.

 Let us take each business model at a time:

1)    Wholesale real estate investing
 When buying properties to flip to other real estate investors, the general rule is to buy at 65 cents on the dollar minus repair costs minus your profit.

In other words when you flip a property to another real estate investor, you must make sure there is enough profit in it for them, or they will not be interested in buying it.

 You must also factor your profit into it. This means that your profit after you flip the deal must be taken into consideration before you buy.   Otherwise there will be nothing for you or cannot even flip it if nobody is interested in buying it.

 In a depressed real estate market, I prefer to buy below 65% after repaired value. The lower you can get it the better.

2)    Buy fix and sell
This one is more like wholesale real estate investing, except you do not have to cater for the profit after you flip.

 Since you sell properties at a discount when the market is poor, I still recommend you use the formula for wholesale real estate investing.

3)    Subject to's and lease to own real estate investing
When taking over payments, you have more flexibility and can afford to buy the properties at a higher price.

 Do not be tempted by deals that have no immediate equity even though some people may argue you can still make money.

The perfect scenario is the one where you make some money when you find a lease to own buyer, get a positive cash flow and finally end up with a big payday when you cash it out.

 The final cash out comes when your lease to own buyer refinances and owns the house.

Therefore it follows that your lease to own buyer should be able to refinance at an acceptable price that lenders can accommodate.

 You must therefore buy houses with equity in a downward real estate market.  This equity will shield you if the market goes down.

 More so, these properties should not require repairs and should have at least 25% equity.

4)    Rentals
The general rule of thumb for rentals is that your buying price divided by your yearly rent is less than 10. The less the better.  This assumes no repairs are needed.

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