In this episode of Get Real Wealthy Season 2, Quentin discusses the BIG DEAL Formula.
There is a BIG DEAL Formula scoring system on DurhamREI.ca, which is a free tool that can be used to analyze properties. In the BIG DEAL Formula, ‘B’ stands for below market value. You want to buy properties that are below market value so that you can have some instant equity. The idea behind this is that you're usually solving some sort of problem. Next, ‘I’ stands for income-producing property. We want to see cash flow, because cash flow helps us to hold on to an asset. If we can hold on to an asset for a long period of time, we're going to be able to see that hockey stick growth.
Lastly, ‘G’ stands for good fundamentals. We want to see an area with a population that's growing, has infrastructure investment at the municipal, provincial or state, and federal levels. The next thing we want to see is job diversity. As for the DEAL, ‘D’ stands for the downpayment. How are you getting the downpayment for your asset purchase? ‘E’ is for equity. You should be equity owners of a property if you are simply getting interest from a private loan, as equity is important to have in any deal.
‘A’ stands for asset value, which we want to build. Adding value is an important part of the BIG DEAL Formula. The last one is location. You can do a lot of things to a property, but one of the things you can't do is change the location. So, having a key location in a good area of town or a city makes it a lot easier for you to see appreciation and growth in an area.