Last Thursday, before the Memorial Day weekend, on The James Orr Show we discussed deal analysis and deal structuring when considering doing “subject to” and lease options real estate deals. It was a follow up to the previous day’s podcast where James talked about what “subject to” and lease options deals are, the differences and similarities between them and the pros and cons of doing them.
In this live recording with Q&A of the show, you can hear how James would structure a typical “subject to” deal, how to determine the most he would be willing to pay when buying it with no money down and just making payments with very attractive terms, how he would deal with any needs for cash on the deal and much more.
You can download the podcast using the link below or subscribe the all the real estate investing podcasts of The James Orr Show from iTunes.
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
