OfflineFor many investors the excitement of real estate may lead them down difficult roads to success.
One such road that is fairily common with new investors is chasing every potential "deal" without actually knowing the chances of success on the deal.
Many spend their days and time chasing properties that have no real value, that most likely will not accept an offer from them and end up keeping the investor spinning their wheal.
There are a few ways of doing this but many successful investors have a way of grading a property to ensure a property is worth our time.
Here is mine:
You will normally look for motivated properties that have the following criteria
1) Properties that have been on the market a little longer than normal.
2) Properties that have had at least one price reduction.
3) Properties that are vacant.
4) Properties that have a motivated seller
a. Bank owned
b. REO
c. Short sale
d. Divorced
e. Probate
f. Estate
g. Bankruptcy
5) Properties that are neglected or abandoned. Often this means repairs. May be shown as “as-is”, “needs TLC” or you may find repairs in the pictures.
6) Older properties. Normally 15-20 years old or older.
When you start finding properties with the criteria you will want to grade them.
"A" grade: Properties that have 5-6 of the 6 criteria.
"B" grade: Properties that have 3-4 of the 6 criteria.
Anything else is really a waste of time.
Here is the idea. This may be different in your area but suppose you made offer on just "A" grade properties alone. Your offer ratio may be 20-25 offers to get one accepted. If you offered on just "B" grade properties alone you may be looking at 30-50 offers to get one accepted. If you worked on other properties you may be looking at 100-200 offers to get one acceptance.
These numbers may not be entirely correct but it gives you a real understand of where you should be putting your time.
Most investors spend time on "A" grade and a few "B" grade properties.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Good to know information and to keep in mind when looking at properties so one can figure as which ones would be better to make an offer on and having a better chance of the offer getting accepted and if it would be a decent deal to pass along to some one else as well.
ba
I guess the lesson here is that it's not so much the motivation that we're after as the ability to "see" the right numbers that constitute a "good deal".
Am I close?
I'm finding opportunities all over the place and it's frustrating to know that there's money to be made and people to help, but I just can't seem to make scense of the numbers.
If I'm off, by all means let me know.
Less Talking, More Doing
Am I close?
I'm finding opportunities all over the place and it's frustrating to know that there's money to be made and people to help, but I just can't seem to make scense of the numbers.
If I'm off, by all means let me know.
Yes and No. You do want to easily and quickly decide whether a property is a good idea of not, but, you also want to look at the motivation.
Take each part of the criteria. They are define motivation.
- Days on market: Investors are getting ancy.
- Price Reduction: They are competing against themselves in hopes to sell
- Needs Repair: People understand they will get a lower price because of the need for repairs.
- Vacant: The property is a draw on someones checkbook.
- Motivated Seller: Well...enough said.
- A little older property: Older properties tend to get lower offers. The competition is not as heavy in this arena as well.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
I guess I misread the "motivation" seeing it as motivation for the would-be investor to keep looking despite the odds of hitting the bull's-eye, vs the actual motivation on the sellers part. Sorry, reading fast, I'll slow it down some.
Less Talking, More Doing
Of how to look for properties, and something that I overlooked when I started, but learned the hard way. You got to have motivated sellers to get good deals for the most part.
www.tw4homes.com website
https://tvallc.isrefer.com/go/RehabLite/reigirl/ FREE SOFTWARE FOR WHOLESALERS, REHABBERS AND AGENTS! Present professional looking deals to buyers and lenders as well as run your numbers and get the ROI.
This is a true statement. Motivation is very important.
We plan to make low offer. Many of us call them calculated offers or aggressives offers but to get them accepted you NEED motivated sellers.
I just did this breakdown with a client:
Value: $100,000
MINUS:
Investors profit: $15,000
Your Profit: $10,000
Rehab: $18,000
Holding Costs: $6,000
Closing Costs: $3,000
Realtor Fee: $6,000
EQUALS:
Maximum Offer Price: $42,000
Starting Offer: $38,000
Without a highly motivated seller the chances of acceptance are slim.
20:1 for "A" grade
40:1 for "B" grade
150:1 for "C" grade properties
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Breaking it down even further, coach:
Figuring holding Costs
http://www.deangraziosi.com/node/3975
Thanx for this one too Nate!
Less Talking, More Doing
That is good information to know. Thank you. I have several properties that fall under those very same guidelines and by doing my research I am on my way. Thank you once again.
I, as a coach, have clients succeed and some that struggle to succeed. Often those that struggle to find their footing in real estate, those that may have made 50 offers without success, it is because they do not use these grading guidelines.
If you follow some type of grading system to ensure that you are only spending time on the most possible / plausible investments you will receive the results.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Nate,great info.Thanks for sharing.All the best. Chuck
Great stuff, Nate! This goes perfectly hand-in-hand with Matt's 25:1 strategy (Thanks, Thomas!)
Vincent
"He who is mighty has done great things for me...He has...exalted those of humble estate; he has filled the hungry with good things..." Matt. 1:49-53
pertinent information such as this, so that I have it at my fingertips! Create files and then when you need something or refresher, you don't have to look all over the place for it, but simply go to your rei files! They can stack up fast, so keep them organized by material, such as, software, book, learning info such as this post, contracts, business info, etc.
www.tw4homes.com website
https://tvallc.isrefer.com/go/RehabLite/reigirl/ FREE SOFTWARE FOR WHOLESALERS, REHABBERS AND AGENTS! Present professional looking deals to buyers and lenders as well as run your numbers and get the ROI.
it's free of course from google. My mom puts in her groc list and then she can use her phone as her groc list while in the store. Thats pretty cool.
WALT
Thanks, Walt, for bringing this important forum up again. And thanks for the information on the ever present Google in our lives. That's pretty cool the way your Mom handles her grocery list. I go back beyond Post-it notes. Fortunately, you can't lose Google.
Patrick
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Be Your very best always-Judy Williamson
Change. Change is life giving. It helps make us better than we already are.