REI Success Mastery
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REI SUCCESS MASTERY
Become a Highly Paid, Professional Real Estate InvestorTODAY!!!
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WATCH THE FREE VIDEO BELOW THAT REVEALS HOW... A CONSTRUCTION
WORKER MADE $52,000 HIS FIRST MONTH IN REAL ESTATE
INVESTING FORMULA FOR WHOLESALING PROPERTIES TO BUY AND HOLD INVESTORS
Hey everyone! Jason Nedrow here with REI Success Mastery, where we
teach you how to become a highly paid, professional real estate
investor. Now today we’re going to talk about your investing
formula for wholesaling properties to buy and hold investors. If you
remember correctly we talked about three primary buyers you wholesale
properties to. You have your buy and hold investors, your fix and
flip investors which are also your rehab investors, and then your
retail buyers such as homeowners.
Now today, we’re going to focus on buy and hold investors. Now
their buying formula is quite a bit different than fix and flips
investors or retail buyers. It’s a little bit trickier but it’s
not too bad once you get the hang of it. Now buy and hold investors,
their strategy is obviously to hold a property long term. You know
and they’re going to rent it out and so forth, so their more focused
on return on investment. Now you probably know how you figure return
on an investment is you basically take the total invested in a deal.
You divide that into the net profit, the net gain on a deal, you got
your return on your investment, So a buy and hold investor, how they
look at it is total capital invested, they divide that into their net
cash flow because that’s their net profit, and that’s how they get
their return on their investment.
Now because of that, they have what’s called a cap rate formula
that they use for figuring their buying price on a property and their
total invested. Let me show you what I’m talking about here.
Maybe you’ve heard of cap rate, maybe you haven’t, but how they
figure this is total capital invested into a deal, divide that into
the net operating income. That’s how they end up with their cap
rate.
Now if you haven’t hear of net operating income, how you figure
that is you take the rent of a property, you subtract all the expenses
such as insurance, property management, property taxes, all the
expenses, except for the debt service. That stays in there. You
subtract that from the rent, you’ve got a net operating income.
You’ve got to multiply it by 12 to get your annual net operating
income. Then you take that number and you come up here. You divide
total capital invested into it and that’s how they get their cap
rate.
Now when a buy and hold investor comes to you , they’re already
going to know what their cap rate is or what their desired cap rate
is. You are going to figure out the net operating income on a
property, so the only unknown in this equation is going to be the
total capital investment, generally speaking. So you are going to
have to reverse engineer this formula just a little bit to figure out
their investment and their buy price and how are you going to do that
is you’ll take the net operating income that you figured out, take
the cap rate that they’re desiring, divide the cap rate into the net
operating income, and that’ll give you the total capital invested.
Now I’ve got an example here to help illustrate my point so
let’s talk about that.
So again, let’s take our buy and hold investor, let’s say the
desired cap rate is 12%. You find a deal and let’s say the rent on
this property is $1,100 and the expenses is $335, again, everything
except for the debt service. And we end up $765 net operating
income. We’re going to multiply that by 12 so we get an annual net
operating income, which ends up $9180 in this example. We bring that
over here, and again we reverse engineered our cap rate formula, so we
take that desired cap rate, divide that into $9180 and now we have
their total capital invested in a deal. Now let’s say in this
example, the repairs are $18,000. You’re going to take that
$18,000, subtract it from, again, the total capital invested, and that
shows you their buy price as a buy and hold investor.
Now we still have to figure your wholesale profit on a deal, so
we’re going to take their buy price, subtract your profit, let’s
just say it’s $10,000, and that’s going to show you your buy price
as a wholesale investor.
Now you’ve got to keep in mind, when you’re looking at a
property, you’re doing an analysis, and you’re running your
numbers, it’s all about the numbers. You never get emotional about
a deal. If the numbers make sense, you do it, if they don’t, you
move on.
Now if you can adjust the numbers just a little bit to make it work,
that’s okay, but again, don’t push your numbers too much because
that’s how you end up in trouble. There are only a few places on
here that you can really make some adjustments. For example, you can
always adjust your profit if you’re desperate or hungry enough, I
mean heck. You could make 5 grand instead of 10 grand if that’s
what it takes to make the deal work, that’s up to you. Same thing
with the buy and hold investor, if he’s willing to adjust his cap
rate a little bit, if he’s a little bit flexible, that’s obviously
going to make a difference in the formula.
But really, again, you don’t have a whole lot of room other than
that. Repairs, you might be able to make a little bit of an
adjustment there, depending on the contractors you’re going through.
Again, rent and expenses, that’s fixed so you really can’t do
anything there. I just encourage you, don’t push your numbers too
much, and try to keep yourself just a little bit of wiggle room, just
in case. But that’s how it’s going to look if you’re looking
at cap rate.
Now cap rate is generally what buy and hold investors focus on if
they’re more, higher end rentals like multi-family investors, they
talk a lot about cap rate, duplexes, four-plexes, more your high end
rental investor’s focus on cap rate.
Now there is a second formula that we’re going to talk about here.
And let me show that to you real quick so you know what we’re
talking about. Now some of your buy and hold investors, they will
focus more on a specific buy price formula. Now if that’s the
case, it’s a whole lot easier for them. Let me show you what I’m
talking about. So let’s just say, again, all they care about is
the buy price, that’s all they’re focusing on, this is a formula
that you’re going to use. You basically take their total desired
that they want to go into a deal, they’re going to know, these types
of investors, they know what type of areas they want to invest it so
and they’re going to have a pretty good idea what their cap rate is
going to be so, their rents, their expenses so, they’re going to
have a pretty good idea about all that stuff. So really, you’re
just going to ask them, what is the most they want to go into a deal.
Now let’s just say in this example, this investor, the most he
wants to go into a deal is $75,000. He knows the area, that’s the
most he can get away with. Let’s say he finds a deal, and
there’s $15,000 in repairs. You subtract the $15,000, and right
there you have buy price as a buy and hold investor. Pretty simple
huh? Again you take your profit on the deal, you subtract that and
now you have your buy price as a wholesale investor, a whole lot
easier formula.
And again, just like I said before, you can adjust this just a little
bit if you need to. Again, just don’t push it too much. But
again, much nicer formula and this, you know most of your buy and hold
investors that deal with your low end rentals, low end neighborhoods
and so forth. They’re more focused on a specific buy price.
That’s when you see a lot more of this.
Now a couple things to keep in mind as you’re looking at this.
You know first of all you’ve got to be flexible as a wholesale
real estate investor. In other words, you’ve got to get familiar
with cap rate, and a specific buy price so that way you can work with
both types of investors. Keep that in mind, and also when you meet a
new, a potential buyer, and you’re thinking about adding them to
your buyers list, obviously you are going to ask them a series of
questions, you want to get familiar with them and the more you get to
know them, the easier it’s going to be for you and for them as well,
so ask them questions like for example, you know, what locations do
they want to invest in? Specific neighborhoods? What type of
properties? Duplexes, four-plexes, single families, size of the
property, you know, as many specifics as you can get.
I mean some buy and hold investors don’t even want to focus on
repairs. They just want to buy a property that they can put renters
in and that’s it. They don’t want to do repairs. So you’ve
got to ask them those types of questions. And when it’s all said
and done, you got to make sure that their criteria for buying the
property matches your criteria for wholesaling because if it doesn’t
match up, it’s not going to work out.
You know, for example, maybe, you don’t want to work with buy and
hold investors that want a property that’s ready to go. You got to
be willing to have investors that are willing to do some repairs so,
keep that in mind. Another question to ask them is what is their
formula for buying properties? That’s a big one obviously, and
I’ll give you a little tip here. See what ever questions you ask
them, you’re more likely to lead them down that path. And you
definitely want to lead them down a certain path so for example, if
you really don’t want to focus on cap rate, don’t ask them what
their cap rate is because otherwise you’re more likely to have them
give you a cap rate formula and so forth and that’s going to make it
a little bit more complicated for you.
So what I encourage you to do is ask them, what is the most that you
want to go into a deal? You know, so ask them again. Location, are
they willing to do repairs on the property, what types of homes and
stuff, and then ask them, what’s the most that you want to go into a
deal? See if you ask them that type of question, you’re more
likely to get an investor who’s more willing to focus on a specific
buy price formula versus a cap rate formula. It’s going to make a
whole lot easier for you. So just, again, keep that in mind.
So that’s your investing formula for wholesaling properties, to buy
and hold investors and again, if you want to see the investing formula
for fix and flip investors or retail buyers, just go to our website,
you can watch those videos there, or you can go to YouTube and
subscribe to our channel but definitely go to our website because
we’ve got a ton of great information, some really powerful
strategies to help make a lot of money in today’s market, and I’ll
tell you, we’ve got a guy on our team that made over $50,000 his
first month doing exactly what I’m showing you right here.
Part-time! As a brand new investor and if you’d like to see how
he did it, go to our website, we’ve got a free video; we can see
exactly how he did it. Again, lot of great stuff for you, if
you’re serious about making money in real estate, we can definitely
help you make a lot of money right now. Now as always, dream big
dreams, and go to work. See you next time.
TAGS:
"rental properties" landlords "investing formula" "formula for
investing" "real estate investors" "buy and hold investors" ARV
"wholesaling properties" "investment properties" "investing in real
estate" "exit strategies"
INVESTING FORMULA FOR WHOLESALING PROPERTIES TO FIX AND FLIP INVESTORS
Hey everybody! Jason Nedrow here with REI Success Mastery where we
teach you how to become a highly paid, professional real estate
investor. Now today I want to talk about your wholesaling formula
for wholesaling properties to fix and flip investors.
Now if you remember correctly, we talked about the three primary
buyers that you’re wholesaling properties to. The first one is fix
and flip investors or rehab investors, they’re kind of one in the
same. The second one is buy and hold investors and the third one is
retail buyers or home owners.
Now fix and flip investors and buy and hold investors you definitely
want to build strong relationships with these individuals and the
reason is, they are repeat customers. If you take good care of them
and they’re making a lot of money doing business with you, they’re
going to come back and do a lot more business with you. which means
you’re going to make a lot more money. So take care of your
people. They’ll buy multiple deals from you on a yearly basis, or
even a monthly basis. Repeat customers are good.
Now homeowners, you definitely want to take care of them too, but the
thing is, they’re not as likely to be repeat customers. It does
happen but not as likely.
So today, we’re going to focus on fix and flip investors. Now
they have a different buying formula for acquiring properties than buy
and hold investors do. Now most fix and flip investors, their buying
formula goes like this. It’s ARV which is after repair value,
multiplied by 65% minus repairs. That equals their purchase,
that’s what they’re looking to purchase the property for.
Now as the ARV increases, the 65% can also increase. You know you
can bump that up to maybe 70%, but this right here is pretty much a
standard rule that you want to go by. Now the other 35% in the deal,
that basically takes care of the profit for the fix and flip investor
and also takes care of their expenses, such as realtor fees, closing
costs, peroration of taxes. They probably had to borrow the money
from a hard money lender, or some private investor, so they have some
costs associated there. So they’re looking again, to have a profit
spread of about 35% before any expenses.
Now this is their buying formula, this is not your buying formula.
Again, keep in mind, you still got to make a profit on the deal, and
how you figure in your profit is simply take what you’re looking to
make from the deal and subtract it from their purchase.
So let’s say you’re making you want to make ten grand on the
deal. You’re going to go ahead and subtract $10,000 from their
purchase and that’s going to equal your purchase as a wholesaler.
Pretty simple. Now let’s take a look at an actual example to
help kind of bring this home and make sure you understand this.
Let’s say you find a property that has an ARV of $150,000.
We’re going to multiply that by 65% and let’s say there’s
about $25,000 worth of repairs on the deal. So go ahead and subtract
$25,000 that’s going to equal again, their purchase as a fix and
flip investor. In this example it’s going to be $72,500. Now
again, let’s say you’re looking to make $10,000 on the deal. So
you’re going to go ahead and subtract your $10,000 profit for the
deal and that’s going to equal your purchase as a wholesaler which
is $62,500. So you want to purchase it here so again, you can make
about $10,000 so after all said and done, the fix and flip investor
can purchase it here. They do the repairs, they still got about 35%
profit margin there. That’s how it works.
Now, again, this is how most fix and flip investors figure their
formula for acquiring properties. However there are some fix and
flip investors that don’t have this formula. Or they don’t have
a formula at all.
So what you want to do as you meet these investors, you start
building relationships, the first thing you should do is obviously ask
them a series of questions. Ask them if they do have a formula for
acquiring properties, ask them what it is, it may be a little bit more
different than this, but again this is a pretty standard rule, but
find out what it is. Again their profit margin may be a little bit
different. Also find out what type of properties they’re looking
to acquire, what areas their trying to acquire those properties.
Find out as much as you possibly can about them, because, the more
you learn about your investors, your purchasers, the easier it’s
going to be for you to go out there and do what you need to do and
make money.
Once again, one of the really important keys to making a fortune in
this business is take good care of your buyers. I can’t impress
that on you enough. If they’re making a lot of money by doing
business with you, and the easier it is to do business with you, the
more they’re going to keep coming back, and again, the more of these
repeat buyers you have, all around your area, all these investors,
again the more money you’re going to make, and it’s going to be a
whole lot easier for you. So that’s your investing formula for
whole-selling properties to fix and flip investors.
Now again, we’re going to talk about buy and hold investors in
another video but hopefully you found this information helpful. If
you did, please go to our website at the bottom of this video, we’ve
got a ton of information, a lot of great content and it’s free. We
got some really powerful tips and strategies to help you make a ton of
money in real estate and if you’re serious about making money in
real estate, especially making money right now, definitely go to our
website because we got some training there that will absolutely blow
your mind. We’ve got a gentlemen on our team that made over
$50,000 his first month wholesaling properties. Just part-time! If
he can do it, you can do it too.
Also go to YouTube and check us out there, and make sure you
subscribe to our channel so you can get more free videos as we
continue to roll out more great information down the road. Other
than that, as always, dream big dreams and go to work. See you next
time.
TAGS:
investing formula, formula for investing, real estate investors,
rehab investors, fix and flip investors, ARV, wholesaling properties,
investment properties, investing in real estate, exit strategies
13 POINT PROPERTY CHECKLIST FOR HOMEOWNERS AND REAL ESTATE INVESTORS -
PART 2 OF 2
Hey everyone. Jason Nedrow here with REI Success Mastery where we
teach you how to become a highly paid, professional real estate
investor. Now today we’re going to cover a 13 point checklist that
homeowners and real estate investors should use when evaluating and
purchasing a property. Now this checklist will work for you if
you’re buying a property for your own personal residence or if
you’re a real estate investor and it’s strictly for investment
purposes, either way it will work.
Now if this is your first video, this is a two part video series and
you’re going to want to pause this and go to youtube or our website
and watch part one first and that way it’s going to make a whole lot
more sense to you. You can get our web address below this video or
tail end of this video but please, watch the first video and then come
back and watch this one, it’ll make more sense to you. Also keep
in mind that there is so much content and information that this video
series, part one and two covers the exterior checklist of a
property. We have a whole other video series that covers the
interior checklist, so keep that in mind.
Now for those of you who have already seen part one, hey, welcome
back, and let’s get to it. So like I said before, keep in mind,
minor overlook can lead to a major expense. That’s why each one of
these points on this checklist is just as important as the other, so
keep that in mind.
Now number 7 on our checklist is the garage or car port. Listen,
now days, this can be a deal breaker for a lot of people. Most
people want to have a garage. People spend a ton of money on their
cars, they want to protect that investment, they want to have a place
to park their car, and there is no garage or if the garage is too
small, then they can’t park their car that could be an issue. So
if you’re trying to flip the property, you may have a challenge
there. A rental property, it may not be as big a deal and that’s
why you always want to take into consideration, your exit strategy.
I mean, if you’re going to rent the property versus live in it, or
try to flip it, some of these factors may not be as big a deal, and
you might not spend as much money as you would otherwise, but I will
tell you if you’re renting the property, if it’s got a car port or
garage you’ll probably rent a lot quicker and easier that way.
That’s something I want you to take into consideration.
Number eight, sprinkler system. Now I will tell you this isn’t as
much really as a deal breaker as other factors, it really most of the
time isn’t a deal breaker. But most homes do have a sprinkler
system, that why you want to add it to our checklist, and most people
want a sprinkling system, and your property will sell quicker if it
does have one. Now again, rental properties, you may not think its
big deal but I prefer to have a sprinkling system in my rental
properties because I know my tenants are more likely to take care of
the land and landscaping and that’ll save you a lot of money down
the road, and a lot of hassle. Once again, take a look, does it have
a sprinkling system, does it need one, is that something you want to
invest in and put one it, I mean that’s up to you and it depends on
your strategy. If you’ve got one, does it work properly, again,
take a look at that because that may or may not be a big deal to you.
Number nine, window wells. This is something that I see people
overlook all the time. I remember the first property I bought years
ago, I didn’t pay attention to the window wells and they weren’t
dug deep enough and what happened, the first major rain storm, all my
window wells filled up, my basement flooded, and it cost me a ton of
money in carpeting and it was just a huge headache. Don’t let that
happen to you. Unfortunately, some builders out there don’t care
about their reputation, I mean some states, don’t even require
builders to have a license unfortunately, and so you get these
builders that just build homes as fast as they can, they don’t care
about the quality, and when it comes to window wells, sometimes they
don’t dig the window wells as deeply as they should. And what they
do is they just fill them up with dirt and is not what you want. If
the window well has got dirt, that is a problem. You want to make
sure it’s got the proper fill, rocks in the bottom so it actually
drains, that’s what window wells are designed to do. So again, if
it has dirt, a rain storm or in the spring time after all the snow
melts, your window wells are going to fill up, it’s going to flood
your basement, and again, a minor thing that’s going to cause a
major expense for that, so pay attention to that and that will help
you down the road.
Number 10, rain gutters. Again this is another thing that people
overlook so take a look at the rain gutters, does it have rain
gutters, if it does, what kind of condition are they in? Are they
sagging? Do they need to be repaired or are they bad enough they
just need to be replaced? You know, because again, all these factors
we’re talking about here is going to make a big difference in your
rehab costs and your purchase price. Something else about your rain
gutters too, is where do they drain? Now that may sound kind or
ridiculous but you know, if your rain gutter drains right next to your
window well, again, a major rain storm, it’s going to fill up your
basement. That sounds ridiculous but there are builders out there
that don’t pay attention to that, they just build homes and that
does happen, I’ve seen that. Also, again, my first property,
again, I was novice, I didn’t know what I was doing. The rain
gutter actually drained out right there on the front sidewalk, right
there by the front step going right into the front door. Well again,
that may not seem like a big deal in the summer time it wasn’t, in
the winter time though, if we had a warm day, some of the snow would
melt and run down the sidewalk and in the evening it would get cold
and freeze and it would create a perfect sheet of ice. I can’t
tell you how many people would slip and fall going up the front step,
now again, you don’t want that. If you’re fix and flipping a
property and you’re trying to show it in the winter time, that could
really cost you a sale if someone slips on that ice. Now on a rental
property, you may not think that’s a big deal, I will tell you this,
and I’m not trying to scare you, but we live in a very litigious
society. If one of your tenants walks into your property during the
winter time and you got a rain gutter right there that’s over the
sidewalk and doing the same thing. If they slip and fall, they may
find you liable, and try to blame you and try to sue you. I’m not
trying to scare you, these minor things, pay attention to, it can save
you so much time and headache down the road.
Alright, the driveway and the sidewalks. That is something else.
People are so focused on the home they don’t pay much attention to
the driveway and the sidewalks. Obviously over age, they crack and
so forth but if so old you got a lot of cracking or part of the
driveway is starting to sink, or tip a little bit, you know, you could
have some problems. You may want to consider patching it. You know
there are companies or remedies that can actually patch it up and
it’s just fine but if it’s bad enough, you may want to replace the
whole thing and that could be a major expense. Now, one of my
buddies bought a property and the driveway was sagging a little bit,
and it didn’t seem like a big deal but we dug down and come to find
out, part of the driveway was completely eroded underneath, there was
no foundation underneath it and it was about ready to cave in so
again, pay attention to those thing because it could make a big
difference. You know if you figured so much into your purchase price
and after words you got a $5,000 expense you didn’t consider, that
eats up a ton of your profit and makes a big deal.
Okay, number 12, porches and patios. Does it have porches and
patios? If it does, what kind of condition are they in? Do they
need to be painted? Something of that nature, does any repairs need
to be done there?
Now our 13 point on our checklist is any additional structures on the
property. Now we’re talking about fences, sheds, barns, shops,
swimming pools, now most real estate investors are not acquiring
properties that have swimming pools, or sheds or barns or shops, you
know, something like that. It does happen and some investors do
focus on stuff like that. It’s not the general rule of thumb.
But once again, if it’s your own personal residence or if it’s a
rental property, you may have some of that, but I want to point it out
anyway, because if you have a nice home but the fence looks bad,
it’s like having a nice car with ugly wheels. You’ve got to make
sure the fence looks as good as the home so, some people don’t
notice that. Same thing with the shed or the barn or the shop. You
may need to take the shed out if it looks bad, you may need to paint
it or do something with it, the swimming pool, once again, what kind
of condition is it in? Pay attention to those things, every single
thing I’m talking about here it doesn’t require a degree, you know
that’s why I’m saying this, is don’t get overwhelmed. You’re
brand new to real estate and brand new real estate investing, don’t
worry about any of this stuff, you can always call an expert, there is
plenty of experts out there that if you’re not sure if you can get
away with just repairing something or you have to replace the whole
thing. You know there are a lot business owners and contractors out
there if they know they’re going to earn your business, they’ll
come to your property a couple of times or at least the first time and
do a walk through with you to help you understand when you can repair
something or when you have to replace the whole thing, and that way,
going into it the next time, you know what to look for and now
you’re a little bit more of an expert. Also home inspectors, you
know, get a hold of them, they’ll come out and evaluate properties
with you a tell you again, what you need to do in certain
situations. So that’s all part of the process, and again, the main
thing is, don’t get overwhelmed you’ll get the hang of this.
Also keep in mind, each one of these checkpoints is really going to be
determined by your exit strategy. Listen, if you’re living in a
property, you’re obviously going to spend more money than if
you’re going to do a fix and flip. You’ve got to keep that in
mind. If you’re going to do a fix and flip it doesn’t need to be
up to your standard of living, it doesn’t mean you do a poor job on
the property, but it just simply means, don’t make the mistake of
getting so involved like you’re going to live in it cause you’re
not. The same thing with the rental property, you’re not going to
do as much to it as if you’re living in the property or maybe doing
a fix and flip, because you know, you’re going to have tenants in
there and your tenants generally don’t take care of properties like
you do so you’ve got to take that into consideration. It all
depends on your exit strategy. When you’re going to buy properties
in a neighborhood, make sure it fits in with the rest of the
neighborhood. You don’t want to have a home that sticks out and
that looks really ugly compared to the rest of the homes and you also
don’t wanna have a really nice home compared to everything else, you
want to have a home that fits in with everything else but if you’re
going to sell it, you want it to look just a little bit nicer than the
rest of the homes, that way it will sell a little bit quicker and a
little bit easier.
So, anyway, that’s a 13 point checklist for homeowners and real
estate investors when you’re evaluating and purchasing property and
that’s exterior, so make sure you watch the video series on the
interior checklist and as always, please, go to our website, check out
our videos and our blog and all the other information, we have a ton
of information, it’s all free, so we got some really powerful tips
and strategies to help you make a lot of money so if you’re serious
about making money in real estate, we’ve got a guy on our team that
made over $50,000 his first month wholesaling properties. We’ve
got a training system that will help you make a ton of money in
today’s market. Also go to youtube and check us out and subscribe
to us there, anyway, dream big dreams, and go to work. See you next
time.
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13 POINT PROPERTY CHECKLIST FOR HOMEOWNERS AND REAL ESTATE INVESTORS -
PART 1 OF 2
Hey everyone. Jason Nedrow here with REI Success Mastery where we
teach you how to become a highly paid, professional real estate
investor. Now today, I’m going to cover a 13 point checklist that
homeowners and real estate investors should use when evaluating and
purchasing a property. Again, this checklist can be used if you’re
purchasing your own personal residence or if you’re a real estate
investor and it’s strictly for investment purposes, whether it’s
buy and hold, wholesaling, fix and flip, rehab, this checklist will
work for any of those situations.
There is a lot of content, a lot of information here so we’ve
actually taken this video and we’ve actually separated it into 2
parts. This is part one of our series. As a matter of fact, this
covers the exterior checklist. Part 1 and Part 2 both cover the
exterior. We have a whole other training video series on the
interior checklist. So just to repeat myself, part 1 and part 2 of
this series is the exterior checklist. Again, there is a lot of
content I want to give you here. Now also keep in mind, even though
I may look young, sometimes I have to have some notes in front of me,
so if you catch me looking at my notes, please bear with me because
again, I don’t want to leave anything out. I want to do a good job
for everyone, I want to do the best job I can, and I want to cover all
of our basics.
Anyway, let’s go ahead and get started here. Now some of these
things I point out may seem kind of obvious, that’s okay. I’m a
firm believer being too informed is better than not having enough
information. You know, I’ve seen too many people get excited about
real estate, buying a property, they go into it unprepared, they
don’t go through their checklist they don’t do their diligence.
Unfortunately, too many times it comes back to bite them. If you
have any expenses later on, that can really, really hurt you. I
don’t want that to happen to you. Again, being too prepared is
better than not being prepared enough.
So number one on our checklist is the roof. Now again, obviously,
this can be a huge expense for you and it can make a big difference in
your rehab cost and the purchase price of the property, so take a good
look at the roof. Is it possible that it needs to be repaired or
replaced and again, you don’t have to be a rocket scientist, in
other words, you don’t have to be an expert to see if there is any
possible issues, and if you’re brand new to real estate, maybe there
are some of these things you are not sure about, don’t worry about,
because you can always call an expert. You know there are a lot of
business owners and contractors that will come take a look at the
property with you the first few times till you really get the hang of
it. You can get a hold of a home inspector that will come over and
take a look at the property. So the first few times when you’re
analyzing the property, if you feel like you need to have an expert
there till you get the hang of it, that’s okay, go ahead and do it,
but take a good look at the roof, because again, that can make a big
difference.
Number two, the windows. This is a huge selling factor for a lot of
people, because the fact is, people more, now than ever are conscious
about having an energy efficient home. So does the property have the
older, single pane wooden windows or is it the double pane vinyl
windows, you know, because if they’re the older windows, you may
have to replace those. Now again, some of these factors are going to
depend on you know, what you’re doing with the property, if you’re
going to live in it, rent it out, that kind of thing. Generally
speaking, people want newer windows and if it’s got newer windows,
what condition are they in? A lot of the time, if the windows are
stained people think they have to replace them, that’s not true.
There are companies out there that will come in and actually clean the
windows, they’ve got a special formula for cleaning the windows and
they can actually get them looking like new, and save you a whole
bunch of money. So take a good look at the windows.
Number three, take a good look at the exterior, just the general
exterior of the property. What kind of siding does it have, does it
have metal siding, vinyl siding, wood siding, has it got brick. You
know a lot of your southern states with heavier winds, tornadoes,
hurricanes, you know, you see a lot of brick homes. So take a good
look. Does the exterior need to be cleaned or does anything need to
be repaired or replaced. You know, when it comes to metal siding for
example, if you get a hail storm that comes through, a lot of times
it’ll really dent the metal siding so you may end up having to
replace some of the metal siding, and if it’s really poor quality,
if it’s old if it’s faded, you may have a hard time, getting the
color to match so, if you’re going to flip the property, you may
have to end up replacing all of the siding so it looks good. If
you’re going to rent it out, you may get away with replacing just
part of it. It just depends on what you’re going to do with the
property. Same thing with vinyl siding, if a hail storm comes
through, it damages it, and beats it all up, you may just be able to
replace part of it, or have to replace the whole thing just depending
on what you are going to do with the property. Alright, wood siding,
is there termite damage, again, you don’t have to be an expert, most
people can take a look and see if there is any possible red flags or
any possible issues. So just take a good look at the exterior, and
see if it needs to be cleaned, repaired, replaced, any damages,
anything of that nature.
Number four, the foundation. This is a big one, this is the one
that people get really leery about. Just taking a good look around
the property, you can get a pretty good idea, are there any cracks in
the foundation, and most foundations eventually will get a crack here
and there, but a lot of cracks, are they big cracks, you know,
that’s one indicator. Also, what’s the landscaping around the
property? Does the landscaping actually go towards the house or away
from the house, what I mean by that is for example, if you get a heavy
rain, if the water is going to actually role towards the house, that
means it’s going to go down by the foundation, you’re going to
have some erosion and you’re going to have some issues at some point
or another that’s not good. So you want obviously, a property
where the foundation is built up around or where the landscaping is
built up around the foundation so the water goes away from it. So
that’s a good indicator, and again if it goes down to it, odds are
there may be some foundation issues already. Something else, I’m
going to give you a little tip here. It’s what’s called the
marble test. Take a marble go inside the property, go to one side of
the house and see what happens. Now if it sits in one place that’s
a pretty good indicator that the foundation is okay, however, if it
starts to roll pretty rapidly, that tells you, you may have some
issues. So that’s a really good test for you. And if it’s a
bigger house, make sure you go to a few different sections of the
house because you know, if it’s a big enough house, big enough
foundation, you may have part of it that test okay, but the other part
you do that marble test it may not be okay. So keep that in mind as
well, but the foundation, again that’s important, it can be a big
expense in your rehab cost.
Landscaping, and by the way with the foundation also, if there are
issues, there are things you can do with that, that’s when you get a
hold of an expert and they can help you out there, anyway. Number
five, Landscaping. This is huge, a lot of people don’t really
think this is a big deal but it is, because curb appeal is your
biggest factor. They’ve done studies and they’ve found that
within the first 60 seconds when somebody drives up in front of a
home, they have all ready made a decision mentally whether or not they
are going to buy the home, 60 seconds. So you know, take a good
look, what does the yard look like, in the winter, two feet of snow,
you may not be able to get a really good idea so you’re going to
have to do the best you can. Again, what does the yard look like.
Is there a lot of weeds, can a little TLC bring it back into a good
condition and again are you going to rent the property, are you going
to sell it, are you going to live in it? That also depends on what
you are going to want to do with the landscaping. Sometimes, you may
just want to replace the landscaping, the flowerbeds, the trees, if
it’s a nice house, but all the trees are dead, well obviously that
doesn’t look good so you got to take that into consideration as
well. Here is something else about the landscaping. Now I already
mentioned around the foundation of the house that landscaping is built
up or whatever, but here is something else, is the actual home built
up? Here is what I mean. A lot of the older homes, years ago, they
would build, the homes, pretty much level with the streets. So if
you’re in an area where there is a lot of flooding or during the
wintertime when you get a lot of snow and in the spring it starts to
melt, and what happens, a lot of those homes would get a lot of
flooding. Especially if they have basements, it was a regular
issue. You don’t want a property that is always flooding, if
you’re renting it out, that’s going to be a pain in the neck and
if you’re living in it, that’s going to be even worse, so you want
a home that’s actually going to want to be built up, even with some
of your newer homes you’ve got to pay attention and I’m telling
you, a lot of people don’t notice things like this, but you see when
you’re driving in a neighborhood, you’ll notice some
neighborhoods, the homes are level at the street and some
neighborhoods the homes are built up. Your newer homes, generally,
they’ve been built up, not always. Sometimes you get these really
shady contractors that kind of fly by night; they don’t have a good
reputation. They go from state to state, they’re building homes,
they build a whole bunch of homes, they move on. Unfortunately some
states don’t require builders to have a license. And some states,
they’re not as strict about their codes as other states are. So
the fact is, you’ve got to pay attention no matter how old or how
new the property is. Good quality builders take their time to build
up the home so that it sits up a little bit from the street, that way,
even, especially if it’s got a street that’s especially
important. That way if you get a heavy rain or a heavy runoff with
the winter, you don’t have to worry about your property flooding, so
that’s a really good tip for you.
Number six. Central air conditioning. Now look around the
property and see if there’s a central air conditioner or if
there’s hook ups for them. Now, I kind of chuckle at this because
if the properties been vacant for a while, you’d be amazed at how
many times, air conditioners get stolen, so pay close attention to see
if there’s actually an air conditioner that’s supposed to be
there.
Alright so anyway, so this is six out of our thirteen checklist
points for homeowners and real estate investors for evaluating
personal property, and again this is part one, so make sure you go to
youtube and check out part 2 of our checklist or even go to the
website at the bottom of this video and check it out there. Plus
we’ve got a lot of free content, a lot of free information on our
website. So go to our website no matter what, but make sure you go
to part two and finish this off because I got some really good
information that you’re going to want to hear about in that
particular video as well. So as always, dream big dreams and go to
work. See you soon.
TAGS:
"property checklist" "buying checklist" "real estate investors"
homeowners "property evaluation" "property analysis" "buying property"
"real estate investing"
HOW PROFESSIONAL REAL ESTATE INVESTORS PRESENT A STRONG OFFER ON A
PROPERTY
Hey everyone! Jason Nedrow here with REI Success Mastery where we
teach you how to become a highly paid, professional real estate
investor. Now today I’m going to share with you how professional
real estate investors present a strong offer on a property. As a
matter of fact, I’m going to give you 5 keys to making a strong
offer, so pay close attention. Also keep in mind, these points I’m
going to share with you really are going to vary from deal to deal
because each deal is different. You’re not always going to want to
go in there with a strong offer. So again, only use these if you
want to go in hard and heavy and make a strong offer on a deal.
Alright so key number one, make a cash offer. If you have a
financing contingency that’s a much, much weaker offer. Think
about from the sellers standpoint, cash always is better. cash is
king. So when you make a cash offer that’s much stronger. And
also keep in mind if you are using hard money or private money,
that’s still considered a cash offer. Now if you do make a cash
offer you’re going to have to have proof of funds, and even if
you’re using hard money or private money, you can still get proof of
funds for that offer, but again, make a cash offer it’s going to be
much stronger and it’s going to get you the results.
Number two, go in with a high EMD which is an earnest money deposit.
Now again, this is only if you want to make a strong offer.
You’re not always going to go in with a lot of earnest money, but
again keep in mind, if the seller’s got two offers on the table, one
from you and one from somebody else and each one of you are offering
$200,000, however if you’ve got $10,000 earnest money and the other
investor’s only got a $1000 earnest money, which one is the seller
going to take. Obviously your offer. So the higher the earnest
money, the stronger the offer is. Now again, if you don’t care
about the deal and so forth, then go with low earnest money.
That’s all part of the strategy. These are only points again on
those deals you really want to get a hold of.
Number three, wave your inspection. Now this one I really, really
got to caution you on. This is not something you’re going to make
a practice of, you shouldn’t make a practice of, and something I
recommend except in those rare situation you really want to go in hard
and heavy on a deal. And only, I repeat only do it if you’re
absolutely confident about the deal and the numbers and you know
it’s not going to hurt you. Alright so if you do want to make a
strong offer, this is something, this is an option is really what it
boils down to, and when you go into a deal, you don’t have to use
all these points, you can only use a couple of them, you can put in a
lot of earnest money, you can go in with cash offer and still have an
inspection contingency in there. So keep that in mind, but this is
another point you can add to your arsenal if you do want to make your
offer really, really strong.
Number four, close quickly. Again, from the sellers standpoint,
which one looks better to them. If you close in 15 days or 30, or 45
days, obviously the sooner you can close the better it is for the
seller. That’s a lot stronger offer. And if you’re a real
estate investor, especially a wholesale real estate investor, it’s
nothing for you to close in 10, 15 days. Now ideally as a wholesale
real estate investor, you want to close in 30 days. That’s what
you want to have your target date for, that way you’ve got plenty of
time to get your buyer in place. But see, this is another reason why
we teach and train you to build your buyers list continually.
You’re always building your buyers list and you should actually
build a buyers list before you acquire any properties, and that way
once you’ve found a really good deal, you’ve already got a list of
buyers and it’s nothing for you to close in 10, 15 days. So
that’s just another tool or a tip of the trade to really get the
results you’re looking for. But keep in mind, if you find a really
good deal and you hurry and get on the phone and you get a hold of 10,
20, 30 fix and flip investors, or rehabors, or buy and hold investors,
within an hour or two, odds are if it’s a good deal, you can find a
buyer, and you can close within 10, 15 days, even if you don’t have
a buyers list. So keep that in mind, but close quick, that’s also
a great way to present a strong offer.
Number five, reputation, reputation, reputation. Now you can
probably tell since I repeated that three times, why that’ so
important. It’s is important. It’s probably the most important
thing on here. There’s an old saying and that is your reputation
will eventually you or it will help you, and that is absolutely true.
Listen, as a real estate investor, everything you do, everybody you
deal with, you always make sure it’s a win/win situation. Don’t
get greedy. Okay you definitely got to make money on these deals but
make sure that your buyers are making money, make sure that everybody
is making money, make sure the sellers making money, and so forth.
The fact is you take care of your people, you’re going to have an
amazing reputation, people are going to want to do business with you.
Don’t get greedy, take care of your people, make sure it’s a
win/win. I’ll give you a great example of this.
You know, there’s an investor out there that he goes out there, he
puts an offer down on a deal, and he has an inspection contingency.
What he does is he has a 10 day inspection contingency, he’ll
bring in some home inspectors, some contractors, and give a full
detailed report on the repairs on the property, then he’ll go back
to the seller and he’ll say hey listen, I need you to come down on
your price. I’ve got a detailed list of repairs here and I need
you guys to lower your price. Now legally, is that okay? Well
sure, there’s nothing wrong with that but the fact is, because again
he’s got a contingency in there, but ethically, it’s not right.
The fact is you tick a lot of people off that way, you’re going to
upset a lot of people and nobody likes him, no one wants to do
business with him because he’s always trying to find a way to take
advantage of them. So don’t do that.
As a matter of fact, when it comes to like, closing on a property,
don’t make an offer, and set a closing date, unless you actually
plan on closing. Because again, if you backed out because of
contingencies, the more you mess up your reputation, and again, less
people are going to want to do business with you so really protect
your reputation. It is so valuable, and again I will give you one
more example about this.
There is a guy on our team that has an awesome reputation. He’s
been a wholesale investor for years. He takes good care of his
buyers, his sellers, I mean people love to do business with him. As
a matter of fact, there have been times, I know one time in
particular. He made an offer to the bank through his REO agent, and
his offer was $20,000 less than the other investors. Obviously the
bank was going to lose 20 grand taking his offer over the other
investors. But you know what? They actually took his offer even
though it was $20,000 less, and the reason is, is because of his
reputation. That’s it. It was his reputation. Because when he
says he’s going to close, he actually closes. He does what he says
he’s going to do. So even the banks will start to learn about your
reputation, and because of that, they’ll start feeding you deals and
they’ll actually want to do business with you. Your reputation
will save you and make you a lot of money down the road.
I know I spent a lot of time on that, but it is so important because
I think a lot of people out there really don’t care about their
reputation. They think there’s plenty of people to do business
with, they think you know what? There’s thousands of people to do
deals with in my area, I don’t have to care. Listen, I don’t
care who you are, I don’t care how big an area you live in or
you’re doing business in, your reputation will catch up with you.
So anyway, those are 5 keys, that professional real estate investors
use to present a strong offer on a property. So thanks for taking
the time to watch our video and please, go to YouTube and subscribe to
our channel and that way you can get more free videos as time goes on
and also, go to our website. We’ve got a lot of videos, a lot of
training, and it’s all free, and we’ve got some really powerful
tips to help you make money as a real estate investor. As a matter
of fact, we’ve got a gentlemen that made over $50,000 his first
month as a wholesale real estate investor. Just part-time! So if
you’d like to know how he did it, there’s a free video you can
check out at our website. You can see exactly how he made over
$50,000 his first month. So once again, thanks for joining us and as
always, dream big dreams and go to work. See you next time.
TAGS:
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