How to Drain the Risk from Your Real Estate Deals

September 18, 2009 | By | Reply More

Real Estate Investing Risk

In today’s post, Julie Broad of RevNYou tells us how to drain the risk from our real estate deals … (if you missed it earlier this week, make sure to check out the video review I did of Julie’s Real Estate Millionaire: The Essential Starter Course)

Real estate investing can be risky. We’ve all heard the stories of the losses, the bankruptcies and the stress caused by real estate investing missteps.

As a savvy real estate investor, you should always be looking for ways to drain the risk from your deals. And the real big risks arise when you buy a property that nobody wants to live in.

Empty units can suck the profit from a property in a single month, and consecutive months of vacancies can sink you. And, if you’ve bought a place that nobody wants to rent from you, you’ll probably have a hard time selling it too!

So – how do you drain the risk from your deal and buy a property people are sure to want to live in? Instead of chasing the hottest deals …

Find the Starving Crowd!

If you were going to open a restaurant, where would you want to be? You’d look for an area where people with money to spend on food are starving. Even if there are other food choices in the area, if there is enough demand for food and there’s a hungry crowd waiting for it, your chances of success are much higher.

Of course you have to make sure you’re serving the right food at the right price, but let’s face it, when you’re really hungry you’re a lot less concerned with what you’re eating and how much it costs than if you’re well fed.

The same happens in real estate. If you find an area where people want to live, and you find the property type they want to live in, everything gets much easier. Your prospective tenants are much less price sensitive and there’s a larger pool of people to choose from. And, if you do decide to sell the property, even if the market is slow, you’ll find the sale process quicker and more lucrative than in less desirable areas.

The Secret to Finding the Starving Crowd

It’s starts by knowing where to look. Do a little market research. Find a community that has growing demand being driven by new employment, a college or university, or something significant that is drawing people in. Sometimes the significant thing can be a new transportation hub like a new subway station or a new highway. Other times it might be a new ski resort or some other form of recreation expanding or developing.

Basically, you’re looking for population growth, increasing household incomes and a shortage of places to live.

Once you find an area like that, start visiting open houses. Chat with the realtors. Ask them about the houses that people are buying – and why they’re buying those houses. Ask them about must-have features. Call a few local property managers. Ask them about the people who are renting. Ask both realtors and property managers where people in the neighborhood usually work, and what attracts people to that area. You can even ask about rental rates and popular apartment buildings in the neighborhood.

Then walk around and chat with people in coffee shops and parks. Find out where they work, what they like about the area, and other general information. And pay close attention to apartment buildings with no-vacancy signs. What size units do they have? Where are they located – near a subway or bus stop, across from a park or something else that might be drawing tenants? Do they have any special amenities?

Finally, you can go online and read the ads people are posting. You can even call some of them and ask questions. Find out what features everyone highlights. Be curious.

Pretty soon it will become apparent what it is that tenants in the area are hungry for – maybe 2-bedroom units with dishwashers, or 3-bedroom homes with a fenced yard near George Washington High School, or 1-bedroom condos off Granville Street. Once you know what is hot, and you understand why, then that is the kind of property you want to buy.

And when you do that … when you find the starving crowd and give them what they’re hungry for, you’ll find it’s very easy to find good quality tenants, make tons of money from your property and eventually sell it for a very nice profit.


Julie Broad and her husband Dave started investing in real estate several years ago and have amassed a mulitmilllion dollar investment portfolio. Julie was able to retire last November to a life of real estate investing and helping others follow in their footsteps.

Julie and Dave have a real estate investing course specifically designed to help beginning investors get started the “right way” … check out the video review I did of their Real Estate Millionaire: The Essential Starter Course … (I give it two thumbs up!)

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Category: Property Management, Real Estate Investment Buying Strategies, Tips and Tricks

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