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