If you're searching for a good deal and can't find any properties that show up as a "Green light" deal, don't get frustrated. 


If it seems like there's not any good deals out there at all, make sure to read all the way thru this article.


RED LIGHT DEALS
You can expect to find a ton of red light deals. These are properties where the seller is not motivated. You'll see properties where the rehab work has already been done, but property is fully leased up and the rents are all market rates. 


There's zero upside in a deal like this - and (this is important) there's no reason at all for the owner to make a deal, discount the property, or be open to something like creative financing. 


Don't waste your time on red light deals.


YELLOW LIGHT DEALS

You should be finding a smaller amount of yellow light deals. This is where savy commercial investors end up getting most of their deals. While a yellow light deal might work as is, you'll need to look for ways to make the deal better by doing things such as:
- researching the market rents to find properties where you can raise the rents

- adding paid laundry
- instituting RUBs (Ratio Utility Billing System)

- adding additional units
- adding storage
- Adding garages, carports, etc
- How about "valet trash service" - $25 per unit eacn month to have your trash picked up and taken out to the dumpster
- reducing expenses 

In addition to this, we almost always ask for a repair allowance from the seller, or in come cases we'll go back and either ask for a price reduction or ask for creative financing (if the property has higher vacancy or some other issue that makes it hard for ANY buyer to get traditional funding)

So the point is - You very well may have to "find the deal within the deal." The evaluation tool is a rough sort to get you focused on the deals that make the most sense. Most of your deals will come to you looking initially like a yellow light deal, but then after you find ways to increase the NOI, can often become a green light deal (Although this may take you 6 to 12 months) 


GREEN LIGHT DEALS

These are great to find, but don't expect to see very many of them. When you do, make sure you double check your numbers and get that baby signed up ASAP!

What if everything I'm finding is red?
Two common reasons for this. 

1) You're only looking at Branch Two listed properties on places like Loopnet that are full retail deals. Create some connections, do some networking, get to know some residential realtors (That's one of our favorite tricks)  - Market to Branch One properties, directly to the property owners. Find an owner who's motivated. 


2) You may be looking in a hot market where cap rates are really low. If this is the case, consider working another market where things are not quite as competitive.