What is a good deal?

#Initiator of the Week Dan Shimoni

# Post 3

10% yield.

Or maybe 12.2%?

7% but in a good neighborhood?

33% but in the flip.

What is a good deal gentlemen?

After all, my Excel can show any possible percentage (it also knows minuses).

After all, I am standing today and writing Excel that talks about tomorrow. But tomorrow is unknown.

After all, there are other options for investment - Greece, or Cyprus, Portugal, Haifa and Ruham... you know - there are options.

Well, you can also invest in the capital market and there in general, there are a lot of options.

I am not an investment advisor and there is no recommendation whatsoever. I am an investor and I share how I approach this question.

A nice guy named Warren once said: "The first rule of investing: never lose money." The second rule: never forget the first rule." (Warren Buffett).

This rule carries many liabilities when it comes to real estate. About the property and its condition, about the DEED, about the spread of the risks, about the estimates in Excel and the truth - also about inflation (because if we didn't "beat" it - we actually violated the first rule).

We are buying properties. Whether it's a share in the Netflix company or whether it's a duplex in West Allis, Wisconsin (a great town by the way). And my basic question about them is:

Is this thing I bought going to be here for another 30 years?

This is by the way, why real estate friends. Because for Netflix it is more difficult to answer this, but for an apartment there is a higher probability (in my opinion and I believe you will agree) that it will still be with us in 30-40-50 years.

Now, with your permission, we will talk about Excel. or a business plan. or pro forma.

The good deal is (in my opinion and I emphasize all the time) not the one that says 12% CoC IRR ROI next to it - that's important but that's not it.

The good deal is that every number written in Excel is conservative. stringent. And it is still profitable (and more than inflation). A good deal is one that has a low chance of violating Warren Buffett's first rule. This, in my opinion, is a good deal. And these are the deals I buy.

It started from my first property. which ended in a serious fire and a viral post that you probably read (there's a link in one of the comments if it's interesting to anyone who hasn't read it). Who burned the property there? And luckily no one was hurt and also that the insurance was excellent.

The ones who burned were the tenant's children (unintentionally, accidentally with fireworks... yes. Really). Now you will understand. I bought a house and the yield was important to me. After I flew to it for the first time I realized that I would look in other neighborhoods.

Because it is not the yield that is important. The stability over time of the transaction and of the repayments is important.

That's my focus today. And that means a lot. The condition of the property and its mechanics, the attractiveness of the neighborhood and the tenants we expect there, the relationships that will sustain the deal for years.

The only rule is the one written in the quote above - but it carries a lot of responsibility.

The week goes by fast for me, thank you for the amazing feedbacks. See you here again tomorrow.