How many times have you seen a run down vacant property and thought to
yourself... that would be a good investment? You see it for several weeks or
months and do nothing about it and all of the sudden you see someone is now
rehabbing it and you see a “for sale” or “for rent” sign in the yard. Then you
say to yourself... “I knew that would be a good investment! Darn
Blaise
Matuidi France Jersey , I missed that one”! You just weren’t sure
how much you should offer and how much profit you should allow before making an
offer. Well, I want to take the next few minutes explaining exactly how much
profit you should allow whether you are buying a fixer upper or buying a
property that is already rented or ready to rent or sell. The bad news here is
that there are as many different ways to analyze a deal, as there are ways to
put a deal together. There is software programs that you can purchase that will
calculate your internal rate of return every year from now until the property is
ultimately paid off and beyond. There are spread sheets that you can buy to do
the same thing and you can even design your own. You can use a calculator or a
simple pen and paper method. My point is that no matter what system you use the
most important thing I can share with you is a simple computer term called
“garbage in – garbage out” It doesn’t do any good to have the most complicated
software program if you don’t know what kinds of margins you need or if you
don’t know your repair cost and closing cost. You have to know what numbers to
enter into your calculations to get the right answer. I’m going to butt heads
with a few people here but I am very much a big picture person. I don’t use all
of those fancy calculations when I’m buying. I basically need to ask the seller
or realtor a few specific questions and then I can make an offer on the spot
before we ever get off the phone. Is that great or what? This is why I can buy
10-15 houses every month on a consistent basis. Here are a couple of hard and
fast rules of thumb. And I want you to keep in mind that they are just what I
said... rules of thumb. The first rule of thumb when analyzing a deal is very
simple: “If you need a calculator
Benoit
Tremoulinas France Jersey , it’s probably not a deal”. Let me
explain. If you can look at a deal, knowing the after repaired value, the repair
cost and how much they are asking then you should be able to tell whether or not
it is worth pursuing. If the profit numbers are so close that you have to figure
it on the calculator then you probably need to say “NEXT” and move on to the
next property
Benoit
Costil France Jersey , after making your low ball offer of course.
Let me mention here that it is extremely important that your deals are home
runs, especially your first few. That is the critical stage in your investing
career that will make you stay in or get out. The next rule of thumb is also
very simple. “If you have to ask someone if it’s a deal it probably isn’t”. Lets
face it, you have at least read some books
Bacary
Sagna France Jersey , been to a seminar or two, taken an investor
to lunch, listened to a teleconference or training audio or something. You know
what to do for the most part. YOU can tell whether it’s a deal or not so if you
have to ask someone then it probably isn’t. Now
Antoine
Griezmann France Jersey , how do we put all this stuff to use? As I
mentioned I only need to ask a few specific questions before making my first
offer right over the phone. Here is what I need to know before making an offer.
I need to know the after repaired value, the amount of repairs and closing cost
and that’s it. And if it is a rental property then I want to know the rent or
potential rent. Sure I will eventually find out more information but we are
talking about getting our offer out there on the first call. I know what your
asking...How much should I pay. This is very simple. If you are looking at a
fixer upper then you don’t want to have any more than 70% of after repaired
value invested and this includes the purchase price, repair cost and closing
cost. Keeping a margin of 30% insures that when you are finished making the
necessary repairs
Anthony
Martial France Jersey , after closing cost you will still have 30%
equity. Then you can sell it, refinance it and pull out some cash on a refinance
or you can lease option the property. Now, if you are looking at what I call an
“instant landlord” property then you can pay a little more than 70% of value.
After all there are no repairs to do on your part. My rule is not to pay anymore
than 80% of value and maybe 85% of value if the cash flow is good and there is
good possibility of appreciation. I have used a simple calculator for years to
figure what to offer while on the phone but with having several people in my
office that work all day making offers and buying property for me
Andre-Pierre
Gignac France Jersey , I recently had a top notch programmer design
me a simple, easy to use computer program to use in our office to help my buyers
make the calculations very fast and accurate. One of my people who normally
makes between 8 and 10 offers a day told me that on the day he started using my
new “Ultimate Property Analyzer” he made 17 offers in that first day alone! The
Ultimate Property Analyzer is a part of my course called the Ultimate Buying and
Selling Machine that teaches how we buy and sell 10-15 houses month. I hope this
article has helped you to determine how much you should offer for a property...
FAST! You can find out more at http:
www.larrygoinsfreeoffer. Author's Resource
Box Larry Goins is licensed as a mortgage lenderbroker in NC & SC and he is
also licensed in both NC & SC as a Real Estate Broker and General
Contractor. Larry has been investing in Real Estate for over 20 years. Between
speaking engagements and mentoring other Investors, Larry oversees the daily
operations of Investors Rehab
Alexandre
Lacazette France Jersey , Inc., which buys and wholesales 10-15
houses per month to other investors at