Real Estate Deal Maker: Real Estate Deal Maker: Winning Strategies to Find and Finance Successful Rental Properties in Any Market

By Henry Washington

KEY SELLING POINTS

• LEAD TITLE MARKETING—As our key lead title for Q2 2024, this book and its author will get full marketing attention from our internal channels.
• AUTHOR EXPERTISE—Henry Washington has invested in more than 100 rental properties and flipped more than 75 houses, all in just 6 years. He quickly built his business around solving the two biggest problems: finding real estate deals and funding those deals.
• THE BIGGEST OBSTACLE—In our annual member survey, finding properties (42%) and funding deals (48%) have been the two biggest obstacles to investing for years. This is a key focus of the investor audience, and this book is written to solve those two problems specifically.
• RELIABLE STRATEGY IN A CHANGING MARKET—With rising interest rates, inventory shortage, high inflation, and high home prices, real estate investing is becoming more difficult. The best way to protect yourself from risk in the current market is to do your due diligence upfront to buy a good deal, so it's more important than ever to learn these skills.
• AUTHOR STAR POWER—Henry is a recognized educator in the real estate space with 120K followers on Instagram and 40K on TikTok. He's a co-host of the BiggerPockets On the Market Podcast, which gets 180k downloads per month.

• Language: English
• Publisher: BiggerPockets
• Release date: Jun 11, 2024
• ISBN: 9781960178152

Henry Washington

Henry Washington is the founder of Independence Realty Group and the co-host of the BiggerPockets On the Market podcast. Henry built his rental portfolio and achieved financial freedom in just three and a half years. Now an investor of seven years, he has done more than 200 deals—a wide variety that includes buy-and-hold rental properties, fix-and-flips, mobile home parks, and commercial properties. Henry has been featured in numerous online and television publications, where he enjoys showing others the power of real estate investing and financial freedom. He has over 200,000 followers across social media, including 40,000 on TikTok @thehenrywashington. Born and raised in California, he now lives and invests primarily in Northwest Arkansas.

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INTRODUCTION

If you were to ask one hundred real estate investors about the biggest challenges they face when starting out, I bet most would say the same thing: finding deals and funding them. Typically, these are the two roadblocks people encounter the most on their journey to building wealth through real estate. Fortunately, neither of these challenges are insurmountable. While finding and funding deals requires work and consistent effort, both are relatively simple to achieve. The best news is that if you excel at one of these skills, the other becomes much easier.

Most real estate beginners focus on the final number—the amount they’ll cash in when they sell a property. That number is important, but it’s not where you should be putting the bulk of your attention. The foundation of every real estate exit strategy, regardless of how you choose to make money, starts from a great deal. Whether you choose to flip properties, wholesale them, assign contracts, or rent them out on a short-term or mid-term basis, success in any of these strategies hinges on buying a good deal. Learn this single lesson, and you’ll be well on your way to a successful real estate investment career.

The better the deal you have, the more funding and lending options will be at your disposal. A solid deal reassures lenders that their investment is secure, making it easier to obtain financing. It’s a healthy cycle. The more you consistently bring strong deals to the table, the more you cultivate trust with lenders, unlocking even better financing options as a result.

It’s understandable why people perceive finding and funding deals as the primary barriers to success in real estate. To grow or scale any real estate investment business, you must solve for deal flow and money flow. Consistent deal flow ensures a steady stream of undervalued asset leads, enabling you to analyze and make offers on potential deals regularly. Consistent money flow, on the other hand, guarantees the necessary funds to purchase the deals you want. With both elements in place, you can grow and scale your business at your preferred pace, without any extra obstacles.

In this book, I will show you proven methods for finding exceptional real estate deals and the funding options for purchasing those deals.

Locating a great deal is the most crucial aspect of obtaining financing for your investment. But this book is about more than that. These pages are not purely a sales guide, aimed at teaching you the best tactics to get the best prices. Rather, it will show you how to act with integrity, honesty, and transparency. The real estate business is not just about buying and selling properties. It is a people business that transacts in real estate. This book will teach you how to keep people at the forefront of your mind in all that you do. This will help you succeed.

It doesn’t matter whether you’re buying a home or selling it. Acting with integrity is always the best practice. This book will teach you many ways to find deals for under-market value and ways to get access to the funding you need to purchase those deals. I’ll also show you how to do it in a way that is decent and honorable.

It is essential to remember that while you are in the business of housing, you are, in reality, dealing with people’s homes. Oftentimes you are buying or selling a piece of property that means a lot to the person who owns it. It’s more than boards and nails to them. It means family dinners, basketball games in the driveway, sleepovers and birthday parties, a child’s first steps, and long-standing family traditions and memories. If it feels like you have to be dishonest to get a deal or land some funding, then it is best to walk away with your integrity intact. There will always be other opportunities, but you only get one life to live and only one reputation.

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Early on in my real estate career, I received a lead on my website for a fairly newly built home. Typically, when I get these kinds of leads, it’s just a seller looking for retail value without having to pay a Realtor. In these cases, I usually return the call and make sure they know that I’m an investor and that my offer will likely be much less than what they would get if they listed with a Realtor.

In this case I did just that, and the seller told me that she still wanted to hear what I could offer her. When I went to her house, I could immediately see that her property was in great condition. It was clean, well kept, and only mildly dated. If she listed the house on the market, she could get close to retail value without having to make any updates.

If she listed with a Realtor, I knew she could sell it for at least $265,000, but in order to make the numbers work for me, all I could offer her was $175,000. When I presented my offer, she said yes almost immediately. However, I never want anyone to feel like I am taking advantage of them, so I felt obligated to tell her what her other options were before she signed a contract with me.

I told her that if she were to list with an agent, she could likely sell for $265,000, maybe even more! Even after paying the Realtor commissions and closing costs, she would still walk away with about $244,000, which is $69,000 more than what I was offering. My words to her were, If I were you, that’s the option I would take. Yes, it will take longer, and you’ll have to deal with agents and people walking through the house. But in exchange, you could make an additional $69,000. Brandi thanked me for being up front and honest with her—and then ended up going with my offer.

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Where Are We Going?

I find, in any scenario, it helps to know where I’m headed. Let me tell you what you can expect to learn from the pages of this book.

First, I’ll talk about how to get your mind right. You have to have your mindset in the right place if you are going to get really good at finding great deals. This includes understanding your goals, so you know the target you are aiming for.

I’m going to help you unlearn a few old things that have been drilled into your brain about real estate and then learn some new concepts about finding great deals and getting them funded.

Once we’ve covered a few basics, we are going to dive into finding deals.

I’ll talk about the Three Ps of finding deals: persistence, patience, and perseverance and how they will help you achieve your investment goals.

I’ll break down the three levels of deal finding: on-market, off-market with other people, and off-market for yourself, so you can then choose the level that will be most effective for you.

In the second half of the book, we are going to dive into funding deals.

I’ll cover how to prepare your personal finances in order to get the best funding options.

There are a million different ways you can fund your deals, and I’m going to break down the pros and cons of all these different strategies. I truly believe that there are many kinds of leverage available to you. You are not going to hear me say one type of funding is great and another is terrible. Each tool can work differently based on the person and the situation. Each option is unique and can be effective. You simply need the right tool for the right job at the right time. I will talk about the pros and cons of each type of funding so you can wield them for optimum power.

Finally, I will dive deep into some of my favorite funding strategies and talk about some advanced strategies for getting your deal funded.

Why Me?

Why am I qualified to lead you on this roller coaster of a real estate journey? I’m glad you asked.

Early on in my real estate investment journey, I made finding and funding deals the foundation of my business. I learned very quickly that no matter who you talk to, where they are located, or how long they have been investing, every investor would say the same things.

I’m a real estate investor, I’m looking for a deal.

I’m a real estate investor, and it’s hard to find a deal.

It’s a difficult time to find a deal, so if anyone has a deal, send it my way.

It doesn’t matter where the real estate market is in the cycle, whether it’s back in 2020, when prices were high and interest rates were low, or if you’re getting into the game right now, when prices and interest rates are high—the conversation and the narrative always sound the same. People are always struggling to find a deal or are always looking for their next one.

To me this means opportunity. If there’s a problem, then there’s an opportunity to create a solution. Once you figure out the solution, you can monetize it. I decided early on that if I could figure out how to be a source of deal flow, then I would always have a way to make money. I started my real estate investment journey by telling myself I just had to find good deals. I knew if I could find good deals, I would be able to make money. I knew all it would take to get started was one good deal. So, I started looking.

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The first rental property I ever put under contract was an asset worth $165,000. It wasn’t a terribly expensive piece of property, but I made it a moneymaking deal because I only paid $115,000. However, I didn’t understand the true value of my deal until later. All I knew was that I couldn’t afford to pay cash and would need to secure a loan from a bank or lender.

I was so new to the game that I didn’t even know how to pick a bank. Honestly, I thought they all did the same thing. When it was time to look for a loan, I just went to the bank closest to my office. One day after work, I walked in with the physical contract in my hand and asked for the commercial loan officer. I asked if they could take a look at the contract and let me know what type of lending options they had available. Upon examining the contract, the loan officer recognized the value in the deal immediately and readily agreed to finance it. With significant equity already in place and minimal work needed, I was unaware of the true value of the deal, but the loan officer saw it.

This experience showed me the importance of securing a good deal. The loan officer hadn’t even reviewed my credentials, credit score, or payment history but was already eager to fund the deal based on the asset alone. In the space of a single meeting, I learned why lenders would be more inclined to finance certain projects over others.

But the good news didn’t stop there. The banker, who had more experience than me, realized there was more to gain from this situation. The banker instructed me to take out a line of credit based on this property’s equity. Then he explained that I could use that line of credit as a down payment on my next deal. That got me researching. Why would the lender want me to do these things? The answer is simple: I proved my ability to find good deals.

I don’t know what would have happened to my real estate career if I hadn’t fallen into such a good situation my first time around. This valuable lesson set me up for success, and now I want to share it with you, as well as additional knowledge I’ve gained along the way.

My original goal was to buy one house a year for five years. Instead, I ended up doing five deals in my first five months. I now have a portfolio of over one hundred doors and also flip between fifteen and thirty houses a year. I am consistently doing deals and consistently buying and selling properties, all because I’ve solved the problems of finding deals and funding them.

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That is what I am going to help you do in this book, right here, right now. By the end, you’ll be leveraging these strategies to become a true deal maker.

CHAPTER 1

MINDSET

The brain is a powerful thing. Once you put yours to work in the right way, big things are going to happen.

What Is Mindset?

Mindset is a powerful thing, but it isn’t magic. Some people believe that if you just think the right way, you will magically get the results you desire. It’s not that simple. You can think positive moneymaking thoughts all day long, but you still have to put in the work to achieve your goals.

I prefer to define mindset as a mental tool to help you remain physically disciplined. What does that mean? It means training your brain to help you solve problems and take action toward your goals.

While money can sometimes be a taboo topic, I don’t feel that way here. Real estate investors (and most humans) want to earn money. But money for money’s sake isn’t the point. The point is what you can do with the money you earn. Refining your mindset will help you get to the core of what investing means to you, which will in turn help inform the business decisions you make. The beauty of it all is it’s up to you.

This book will give you the blueprints, plays, and practical applications that you need to succeed in real estate. But let me be clear: None of that practical application will matter if you don’t have the right mindset. Mindset is critical for being a successful real estate investor or entrepreneur because there are going to be many ups and downs. The thing that truly separates successful real estate investors from those who fail is that the successful ones don’t quit. They just keep going, even when it’s hard.

And I’m telling you, this will get hard. It will also get boring, infuriating, and even deflating. You’ll struggle; money might go out the door before it comes in. Or a lender screws up and a deal falls apart at the closing table. Maybe a contractor runs off with your money, or a tenant doesn’t pay rent and destroys your property. These things can happen—and they do happen! It takes a certain kind of mindset to trust in the process and know that it will work out in the long run, but only if you don’t give up. The key to all of this is truly believing that you can do it.

The Power of Decision

Overcoming obstacles is no easy task, but it’s possible with the right mindset. We often fail at a task because we have not been taught to decide on an outcome unless we know precisely how we will achieve the desired result. This puts the brakes on many great ideas before we even have a chance to start. Instead of jumping all in and really going for it, we are taught to try something. However, trying and deciding send completely different messages to your brain.

When you tell your brain to try something, it will do just that. The moment you hit a roadblock that you can’t immediately see a way through, your brain stops working to solve the problem. Why? Because it already achieved the goal you gave it. It tried!

However, if you tell your brain that you have decided to become a successful real estate investor, you are asking it to help you figure out how to become a successful real estate investor. Now, when you hit a roadblock, your brain will help you find a way around or through that obstacle because it has not accomplished what you instructed it to do… yet. It will keep supporting you until you reach your desired outcome.

I know it seems like a ridiculously small shift, but the brain is a powerful thing. Once you put yours to work in the right way, big things are going to happen. It’s time to stop trying and start deciding. Decide what you want and commit to it. The decision alone will set your brain in motion to help you achieve your goal. Don’t wait for everything to fall perfectly into place before making a decision. Instead, make the decision, and the universe will conspire to make it happen.

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Let’s take a trip down memory lane, before my career in real estate investment began.

In 2017, before I knew anything about real estate investing, I found myself feeling unsettled. I was unsure of how I was going to provide my wife with the life she deserved—the life we both deserved. Jessica and I were newlyweds trying to achieve the American dream of homeownership. We spent countless hours scouring real estate apps, scrolling through pictures on the internet, and touring homes. Finally, we found it: a three-bedroom, two-bathroom, 1,700-square-foot, all-brick ranch. It was a builder-grade home, but we got to pick upgrades along the way, putting our own little spin on it. We chose modern light fixtures and a beautiful granite countertop. We upgraded the shower to include extra shower-heads. It was a starter home, but we got to make it our own. It was the home we wanted and could also afford, or so I thought.

We applied for a loan to purchase the house, crossed our fingers, and said our prayers. We waited, and waited, and waited. It was only three days, but it felt like forever. Finally, my phone rang. It was the lender. He was calling to say that, during the evaluation process, they discovered my credit score was negatively impacting our ability to get a loan. Plainly put, my credit score was too low, and I was hindering Jessica’s approval. If we wanted to buy a home—specifically this home—my name could not be on the loan. After all we’d gone through to build a life together and find a home, I was the one standing in the way of achieving our dreams. Up until that point, I thought I had done everything I was supposed to do: I had a college degree and a good job earning six figures, but it wasn’t enough. I felt like I’d been run over by a truck.

Not long after that call, Jessica ended up buying that house. One night, nestled into the couch of our very own home, Jessica and I discussed our future goals and aspirations. We talked about the number of kids we would have, the school district we would want to live in, and the kind of dream house we eventually wanted to call our own. While this conversation should have been an exciting one, I was freaking out inside because I knew I couldn’t afford any of it. How could I dream about a house when I couldn’t even be on the loan for the starter home we were in? That night, I had a full-blown panic attack. I woke up at 3 a.m. in a cold sweat, worried about providing for my new wife and creating the life of our dreams.

I did what anyone would do when they’re panicking about money at 3 a.m.: I Googled how to make extra money. That Google search changed my life. That’s when I discovered real estate investing. Most of the results were articles from a website called BiggerPockets. The information I found opened my eyes to the fact that every day, normal people could invest in real estate. People like me. Until then, I had just assumed that only superrich people or corporations owned real estate, but BiggerPockets showed me that anyone could do it. They showed me that I could do it.

I