The following is a video from Zillow talking about how accurate Zillow’s automatic valuation model is in your market.
I have discussed this concept before and talk about possible ways it can be wrong in each of my deal analysis posts, but this video gives some additional information straight from Zillow.
Enjoy the video.
Until my next post,
James
I want to build an image for you, but I am going to tear it down by the end of this article so be prepared.
If you’ve been looking at property, you may have seen people advertise a house with so much in cash flow per month and thought, “hey, that sounds like a pretty good amount of cash flow” and then you read more to discover their idea of cash flow and your idea are very, very different.
Here’s an example… if I ran an ad that claimed to have a property with $1,000 per month in cash flow after expenses for only $100,000 you might get pretty excited. You called on the house and asked some questions to find out how they were getting $1,000 cash flow.
The seller goes on to tell you that they pay about $200 per month is taxes and about $100 per month in insurance and they collect $1,300 per month rent. They happen to own the property without any debt, so they conclude it is a $1,000 per month cash flow property. Hmmmm… I’m not so sure about that on several levels.
First, if you have read any of my articles on deal analysis about how I believe deals should be analyzed you will see there are more to expenses than just taxes and insurance. There’s property management (whether you do it yourself or hire it out–there is still a cost), property maintenance (even for lease options and rent to owns), marketing costs to get and keep tenants and vacancy expenses including utilities while you are finding tenants. So, the $1,000 per month cash flow that is advertised is subjective at best.
Could you buy that house–even for all cash–and see a true $1,000 per month cash flow? No.
I see them all the time and you probably have too: properties advertised as great cash flow properties and when you actually look at them, yes they are cash flow properties: NEGATIVE cash flow properties.
Some properties that are offered for sale as cash flow properties are NOT good cash flow property prospects while some unsuspecting properties really are great ones. You need to be able to run your own numbers on them and determine it for yourself.
Until my next post,
James
P.S. For a very limited time you can download our real estate investing course on deal analysis called How To Analyze Deals Volume #2.
Whether you are just starting as a real estate investor or an experienced veteran, it is often helpful to eaves drop and listen in as another investor talks to motivated sellers. Today, I am going to share with you some very basic tips on how to talk to motivated sellers and share with you some resources I have available for doing more of that.
First, whenever you are talking to motivated sellers and that includes on the phone and in person, I strongly encourage you to use a script. On the phone, it is usually the Property Information Sheet (links for Real Estate Investor Bronze Members that are logged in) as your trigger of what to ask. When in person, I strongly recommend you use an in-house presentation binder to make a formal presentation. We call ours the Seller Presentation.
This week I am giving away training I did with an employee I hired who was making these calls for me. If you want to download it, you can download it here: Real Estate Investor Daily Training Volume #1. It will be like me training you on how I would have you make the calls to my motivated seller inquiries. Of course, you can then adapt them to your own business and personality.
Third, professionals practice off the field. You don’t practice on real sellers. You practice in front of a mirror and/or video camera making a pre-planned, written presentation. Your presentation should be essentially the same each time (with minor variation depending on how certain questions are answered). If you insist on throwing money away and practicing on live motivated seller prospects, why not throw $20 bills out of the window of your car on the way to talk to them. It really is the same thing.
Fourth, I do have two additional audio training CDs on talking to motivated sellers. Each one has a separate roll playing call to a motivated seller and then a full analysis of the call for you to understand why I say certain things and what I am thinking during the call. If you are interested in those, Real Estate Investor Bronze Members can download both of them for free with their membership.
With the information you have have above… and A LOT of practice… you should become very good, very quickly with talking to motivated sellers.
Until my next post,
James
Over this last weekend, I hired someone to take the existing PDF version of the Property Information Form that we’ve had for years and used to gather information from motivated sellers and to make a new version that is both available in MS Word and PDF for our Real Estate Investor Bronze Members.
The Property Information Form is a form that you’ll end up using a lot because this is the form that you use whenever you talk to a new seller about their property. When you call on a For Sale By Owner, listed property or when motivated sellers call you on marketing that you have out. This is the sheet you grab for and use to take down all the notes about the property in one organized place.
While I am sure that, over time, I will be tweaking the new version of the form, the reason why I wanted to include the form in MS Word instead of just the PDF that we had been offering in the past is that with the MS Word file you can easily adapt the form to include questions you always ask. Maybe in your market there is something odd about school districts that you need to include. Maybe you can take away one section that you don’t use and replace it with a section you do need.
With the new editable MS Word version of the Property Information Form, now you can.
Until my next post,
James
Yesterday, I shared with you the newest form that we added to the Real Estate Investor Wiki for you to use when looking at the inside of a property. We call it the Property Inspection Checklist – Interior (link for our Real Estate Investor Bronze Members).
With the word “Interior” at the end, you had to expect it was coming and so here it is: Property Inspection Checklist – Exterior.
Unlike the interior inspection checklist, the exterior inspection checklist is used as a checklist when you are looking at the outside of the property. In all but a few rare exceptions, you will likely be using these two forms together… one when you are inspecting the inside and one for the outside.
Like I mentioned with the interior one you can use these on all properties you are considering, on the ones you plan to make an offer only or as a checklist for inspecting properties you already own to determine what work needs to be done to get it ready to rent or sell.
Having forms like this help you remember all the things you should be checking and help you document what needed work and what did not as you save these forms in your property file.
Until my next post,
James
I’ve been spending a lot of my afternoons working on the Real Estate Investor Wiki the last few days and I just updated the Seller Property Information File page that shows everything that we want to have in our Seller Property Information Files. The links are for our Real Estate Investor Bronze Members and requires them to be logged in to access them.
I have had samples of the Property Information Sheet, a Net Operating Income Worksheet, sample of what the Public Record Information might look like and some links to some other information about what to include on the site already, but on Wednesday I added a sample of what the deal analysis sheet looks like as well.
I will also be adding examples of the additional things to include as well in the near future. The ones I currently use in my own business are ones that I have purchased with various real estate courses, seminars, books and so on so I need to create my own unique versions to be able to include them on the site for all of you.
Until my next post,
James
