Build your buy box
Start with the life you want the investment to support. A rental is an operating business with recurring expenses. A flip is a project with a deadline and resale risk. Wholesaling is a transaction business that depends on contracts, buyers, and execution. Land can require patient capital and specialized research. Choose one starting lane before chasing every opportunity.
Write down property type, location, maximum purchase price, available cash, acceptable condition, and your intended exit. Separate money you can invest from emergency savings and household obligations. Your purchase budget must also cover closing costs, repairs, reserves, and the possibility that the property produces no immediate income.
Treat your buy box as a screening tool, not a promise to purchase. Reject properties that require skills, capital, or time you do not have. An attractive price does not make a property a suitable first project.
An investor has $45,000 available. A $30,000 down payment, $5,000 closing budget, and $15,000 repair estimate already require $50,000 before reserves. The investor needs a different property, different financing, or more capital—not a more optimistic spreadsheet.
Decision checklist
- Define one intended exit and the property characteristics it requires.
- Total the cash needed through stabilization, not only acquisition.
- Write rejection criteria that you will apply before negotiating.
Check your understanding
Does having enough for the down payment mean you can afford the deal?
Show the answer
No. Closing costs, initial work, reserves, and household obligations must also be funded.
Your next action
Write a one-paragraph buy box and a separate cash budget. Include at least three reasons you would pass on a property.
Original teaching framework and hypothetical example. Source directory and editorial approach →