How to evaluate Real Estate Deals


As a beginning investor one of the hardest parts about real estate investing is evaluating deals. How do you know if you are getting a good deal on a property? Most will tell you it takes experience and I truly believe it does. But there are steps you can take to help you evaluate deals even with no experience.



Initial Lead taking


First you get a phone call from a seller. What you want to do is, ask him a series of questions to really get everything you can about the property. You really need to try and build rapport with the seller, so they know that you are not trying to take advantage of them but there to help. Never take advantage of anyone, I personally will never work with an investor who has. There are bad investors out there and they give us good investors a bad name. So be kind and passionate with every seller and put their best interest first.



You need to ask for the address, beds, baths, square footage, any special features, ask them the reason they want to sell, repairs needed, the loan balance, are the payments current, if not the bank name and home many months behind, then ask them what they are looking to get for the property. There are other questions I ask sellers but these are the basics.


After they have said an amount they want for the house, always say if I can pay all cash and pay all your closing costs what is the lowest you can possibly take. Never be the first to say a price; always get the seller to say a price first. In a negotiation the first one to name a number always loses.


The reason you want to get why the property owner is selling is because you can determine their motivation. If a seller tells you there is an auction next week, then I would think that they are pretty motivated. Let the seller know that you will try and help them with what they need. If they are going to need a place to live once they sell the property try and find them something they can afford. Always try and understand their situation and know that everyone goes through tough times.


It is going to take you about 10-50 calls before you really feel comfortable with asking all the questions you need to ask. You cannot be afraid to ask tough questions, you need to know all the facts in order to save yourself money and so you can best help the customer.



Running Comparables


The next step you need to do is run comparables. This way you get a good feel for the area and what similar houses in the area are selling for. If you are a real estate agent you have access to the MLS which will allow you to see comparable sales. When looking at comparable sales always look in a half a mile radius of that property. Also take into consideration the location of each comparable. Some comparables can be a block away but because on is on a busy street it may not be a good comp.


Now if you do not have access to the MLS yourself you can contact a realtor and see if he/she can help you out. There are also some software programs out there that can provide you with comps. Just make sure that the comps you are finding are recent and accurate.



Go look at the property


Next you need to go out to the property and take a look at it for yourself. I also recommend driving to each of your comps and making sure they are similar to your house. You will never really know if a property is what the seller says it is until you go and look at it yourself. If the seller lets you take a look at the inside then you can determine around what the rehab cost will be. You will not know exactly until you have a chance to get some contractors in there or if you have done a lot you can kind of determine rehab price.



Determine you asking price


Now once you have all of your data piled together of what similar houses are selling for you can determine what you want to offer the seller. For doing rehabs you need to buy the property around 65% of what the after repair value would be. This means that if you find a property worth $100,000 in mint condition you need to buy the property around $65,000. But this will also depend on the amount of repairs that are needed. If the property needs $30,000 in repairs then it’s not a deal. Some deals you may have to buy at 40% of the after repair value depending on the repairs needed. It will just take some time to really get a feel for where you need to buy the properties.


There are also other fees, commissions, your profit and things that you need to consider into you deal. Make sure that you are very detailed about what your expenses are going to be. This should have given you some idea about where you need to start and the process of evaluating a deal.



Click here if you want to learn how to find the best real estate deals

Finding Real Estate Deals

How to Find Real Estate Deals, the Easy Version

So you decided to buy a real estate course on late night TV, studied up about Flipping Houses and then realized that you have no idea where to find houses to buy.  Then after a month of looking you give up, it happens more than people think.  How do you find people that you can help get out of foreclosure and get on with their life?

If great deals where easy to find then everyone would be multi millionaires and Billings Montana would look more like Aspen.  Maybe the Aspenites no where we can find motivated sellers?  I don’t think so buy ill look into it and find out.

Some say that you only find deals once in a while and real deals only come around every few years.  Do you believe that?  If I did I would not be in real estate.  There are hundreds of people out there just in Billings Montana that need our help, they need to get their foreclosure stopped, get rid of an unwanted property and save their credit. If you are one of those that need help Click Here!

So what makes a seller motivated to sell at a discount?

There are many reasons divorce, death of a family member, job transfer, job loss, bills piling up, or just some serious financial distress.  These things happen to people every day.  I bet these things have happened to several of you reading this article.  Your job at as a real estate investor is to help these people and create a win-win situation.   I stress to everyone to always leave a seller better off after you help them then they were before.  If you do this people will want to work with you and in a small city like Billings word spreads when you help people.

On first place to start your looking is the paper.  It’s easy, cheap and a good place to start.  Look through all of the for sale by owners.  Most will want more that you can buy the property at but every once in a while you will find a gem.  Look for key words for fixer upper and handy man special.

Next go to the local court house and look up foreclosure listing.  The county court house has hundreds foreclosure records for Yellowstone county.  You know these people need help, so this is another great place to find leads.

Another great source is real estate agents.  Realtors are dealing with sellers every day.  Some sellers want to get full price for their home and others just go to them because that is the only thing they know.  They do not know that there are real estate investors out there who can buy their house all cash and close fast.  Contact several realtors and find one or two that will work with investors.

Place classified ads.  I have had great success placing small classified ads.  Believe me place one and the phone will be ringing with everyone wanting to sell a home.

Also you can find that other investors want to sell their rental properties.  Sometimes land lords just get fed up with dealing with bad tenants.  Network with land lords and ask around to find out who is selling off their property and tell people that you are looking to buy a few houses in the next few months.

Networking is highly under rated when finding motivated sellers.  Just start asking everyone if they know anyone who has a house they need to sell fast.  I am sure you will find a few that do know someone.

Wholesalers

Wholesalers are a great place to find deals.  Wholesalers do all the marketing for you, find the deals, deal with the seller and lay the deal out for you.  You do none of the work and still get the same deal.   Most people think that wholesalers mark up the price too much, but that is the opposite.  They can get deals lower in price than you probably can.

Remember to Get My Free 7 Day Course, I explain Several More Ways to Find Motivated Sellers.

Also Get Preston Ely’s Wholesaling E-Book Click Here

Filed under: RE Investing

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