How I Decide Which Real Estate Deals Are Worth It

I was recently asked to be a guest on Cubicle to CEO Premium, a private deep-dive podcast with Ellen Yin. And when I saw her slide into my DMs, my immediate response was HELL YEAH, I’m in! Let’s just say a few of my girlfriends got some very excited texts.

You see, Ellen is a brilliant entrepreneur, savvy angel investor, interviewer, and all-around sweet person. I’ve been following her for a while, and I knew this chat was going to go deep…and it did.

We broke down how I find land and develop commercial properties, my investment strategy, how we got $1.2 million in equity before we even closed a deal, and even how much my approach to real estate has changed over the last decade. You should definitely check out the full 50-min episode or the free 18-min clip.

But when I think back on the conversation now, I realize there was one area we talked about that I wish more people understood: how to tell whether an investment opportunity is actually a good opportunity.

Ten years ago, if a deal could make money, I was interested!

Residential rentals, Airbnbs, flips, development. I tried a lot. Some of it worked really well and some of it taught me important lessons. 

But after doing this for over a decade, I’ve learned that “can this make money?” is not enough of a reason for me anymore.

Now I’m asking different questions, better questions. And I want you to be able to ask those same questions too.

How Much Work Does It Actually Require?

Let’s start with one of my BIGGEST lessons. I no longer look at a deal and only ask, “Can this make money?”

I want to know how much of my life it’s going to take, too.

Because Arthur and I aren’t getting any younger, and I don’t want every dollar we make going right back into another business that requires us to grind until 2 a.m. At this point, the way an investment fits into our life matters just as much as whether it can make money.

That doesn’t mean a flip or rental is a bad deal. It just means I know myself better now.

If I’m going to take on something operationally heavy, the return needs to justify that level of work. Otherwise, you’re just buying yourself another job.

Is There More Than One Way to Make Money on This Deal?

This was one of the topics Ellen was the most interested in. I could see her gears turning. And honestly, it’s one of the reasons I love land and commercial development so much too.

I no longer look for the obvious use for an asset. That means I’m not just looking at what something is worth today; I’m looking at what it could become.

For instance, I was telling Ellen about a recent property I found that was the last five acres available on that road. We negotiated the deal for a month or so, went through rezoning, and the appraised value jumped from around $1.3 million to about $2.5 million before we even finished signing the contract.

Now we’re walking away from the signing with $1.2 million in equity. We could sit on it, try to turn it around and sell it, or develop it. (But between you, me, and Ellen – I think we’re going to build a commercial property on it! So stay tuned for when that opens.)

That’s the kind of opportunity I pay attention to now.

Can we create value through rezoning? Can we develop it? Can it produce cash flow? Can we hold it and sell later? Is there equity we can create before construction even starts? Is there a creative way to finance it (more on that in the full 50-min podcast) so you have more cash on hand to do something with?

I like deals where there’s more than one path. Because if the only way I make money is one very specific outcome happening exactly the way I planned, I’m probably going to look harder before saying yes.

Who Am I Trusting With My Money?

Question #1 may have been my biggest lesson, but this one could be your most expensive lesson. So write this one down! This becomes even more important when you’re doing private money lending.

You have to ask yourself how much you trust the person behind the deal or investment, because they’re the ones who hold your money in their hands.

I’ve done private lending where someone else handled the deal and I got to sit back and collect the return. And I’ll admit, when you’re usually the person doing all the work, it’s very nice to be on the other side for once.

But I’ve also turned down a deal in the past year that I recently heard went south. Their investors weren’t being paid on time, and the project took longer than expected. That could have been me if I didn’t walk away!

And I know Ellen does her due diligence, too. Passive investing doesn’t mean you’re hands-off before you invest. I want to know who I’m giving my money to.

You need to be able to ask yourself:

• Do I know them? 
• Do I trust them? 
• Do they have licenses or experience that make me more comfortable? 
• Do I know any of their other investors so I can hear what it’s actually like working with them? 
• Can I text them and get an answer, or do I have to go through three people before I reach the person actually handling my money?

And never be afraid to go above and beyond. I do. If they tell me about other properties they’ve done, I’ll go look at the tax records and make sure the story lines up.

You have to be selective when it comes to your money.

I turn down opportunities that don’t feel right. A good return is not enough to make me ignore a bad operator.

What’s The Timeline To Get Paid?

Different investments pay you on very different timelines, and I want to understand that timeline before my money goes anywhere.

For rentals, the timeline to your first return depends on how long it takes you to buy the property, get it ready, and find a renter. Then you start collecting smaller monthly checks while the property hopefully builds equity over time.

Take the private lending deal I talked about with Ellen. That was a six-month deal paying a 10% return, with payments coming in monthly. The return is smaller, I usually see residential deals with 10-12%, and this one was on the low end, but I knew exactly how long my money would be out and when I expected to start seeing it come back.

Or look at commercial deals like what we do at Blueprint. Our typical construction-to-exit timeline is 12-36 months, with returns from 15-25%. We usually exit at that point, but if we choose to hold a commercial property and collect rent instead, we can be looking at $10,000+ a month in cash flow from one building, instead of the roughly $900/month we were used to seeing from a residential rental.

That’s a BIG difference.

It doesn’t mean commercial is automatically better, or that the shortest investment is automatically the best one. Everything has its pros and cons. 

What matters is whether you understand the timeline and the return.

Ask yourself: Does this timeline and return fit what I’m trying to do with this money?

If yes, great! If not, there are a ton of other opportunities out there that will.

What Does the Exit Look Like?

I’ll admit, I care a lot more about this now than I used to. I never invest unless I understand the exit strategy and the backup options. And you shouldn’t either.

Be ok with asking directly. I always ask people how I get my money back.

I want to know:

• Are we selling the property? 
• Refinancing? 
• Holding it for cash flow? 
• Developing it and selling later?
• Do you have multiple exit strategies if your first one doesn’t play out?
• And if so, what’s the timeline on getting paid for those alternatives?

If they can’t answer these questions in a way I understand? I walk. It’s a sign they aren’t clear in their own exit strategy. 

If they seem very confident, but the logic seems a little off? I walk. Every operator is ultimately a sales person. Their job is to get you to buy in. But if it doesn’t make sense, it doesn’t pass the vibe check.

I’m not looking for one guaranteed path. I need to know there are good paths available.

My Filter Is Different Now

I still love real estate. Even after the identity shift I went through, going from being an agent to an operator, it’s still my jam!

I’m just much less impressed by a deal simply because it can make money.

I care more about who I’m trusting with my money and how I can put my money to work without it putting me to work.

That’s what kept coming back to me after my podcast chat with Ellen, and that’s what I want you to take with you the next time an investment opportunity lands in front of you.

If you want to hear Ellen put me on the spot about the actual ins-and-outs behind all of this, go listen to my episode of Cubicle to CEO Premium. We get into the creative financing behind that five-acre land deal (spoiler – I explained how I scooped that $1.3 million piece of land for only $10,000 down), private lending, commercial development, and a lot of the inside details I don’t usually get to yap about anywhere else.

Then, if passive commercial real estate has you curious, come look at what we’re building at Blueprint and see whether one of our current projects makes sense for you.

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