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How to Become an Ultimate Property Analyzer
The Ultimate Property Analyzer is a great little program that I personally had designed to help us in our business. All of the property analysis programs that I had found were very complicated and took too long to understand much less use. I wanted a simple program that we could use to quickly calculate how much we can pay for a property. I am so amazed at how fast you can make an offer when using this program! We always make our first offer before we get off of the phone and by using this program it allows us to make our offers with 100% confidence. All you do is simply enter the after repaired value and because you have already preset the closing cost, and other costs, all you have to do then is to enter the amount of repairs and it calculates your offer automatically! You can even list how much you want to make if you are wholesaling or retailing! Is this great or what?
Example of Analyzing a Deal Now let’s take a look at a deal. If they tell me the after repaired value is $100,000. I am going to take $100,000 times .7 and that is going to give me $70,000; that is what my investor buyer will have in the property after all of the cost added back in.
Then I am going to minus out hard money closing cost, which is an average of four points or $2,800. That brings me down to $67,200 and then based on my area, just from past experience, an average of taxes; insurance and attorney fees for this price range property are going to be $2,250. That brings me down to $64,950. Let’s say that they told me the house needs $15,000 in work, so I am going to minus $15,000. That leaves $49,950, now I need to subtract out what I want to make on the property if I am wholesaling it to an Investor. If I want to make $5,000, I cannot pay anymore than $44,950, so I am probably going to offer around $38,780. I always want to use an odd number; and the reason that I do this is because it lets the Seller know that I have done my homework and I have got it all the way down to the dollar. If I just say $38,000 or $40,000, then they think I am just throwing a number out. I always want them to think that I have done my homework and I have it down to the dollar. Below is a screen shot of the Ultimate Property Analyzer with the numbers already calculated for you from the example above. I have also included in the course a DVD tutorial on the Ultimate Property Analyzer to teach you exactly how to use it to get the most out of it. The tutorial is very short and you should be able to start using it right away.
But please bear in mind that we buy ten to fifteen every month and we never look at any of them. I do not recommend doing this to start out with; but once you get in the business and do it for a while you can too. Once you get this system implemented and have your machine set up, you can go into any market in any city, anywhere in the country and set up this system and buy and sell property. That is exactly what we do. We are setting up new markets every month in areas we have never been to before. In fact we just completed a transaction in Cleveland, OH and we have never purchased a property there before. We actually had it sold before we closed so we bought it and sold it the same day and made $8000. Now when buying a property as I mentioned in my market, I need to be in it at no more than 70% including purchase, rehab and closing costs. That is if I am rehabbing it. However, if I am buying a property that is what I call an “Instant Landlord” property, meaning that someone else has either already bought it, fixed it up and is re-selling it to an Investor or if it is a property that is already in good shape; I can pay up to 80% sometimes a little more depending on the cash flow. I would not recommend that you pay any more than 80% to 85% on a property. I would also not recommend that you finance it for anymore than 80% to 85%. You don’t want to get upside down, as you want to leave a little bit of room in the event you ever need to sell and need to sell pretty quickly. That way you will always be able to sell that property. Now remember these are percentages for my area however your area may be different. You will just have to ask other investors in your area and do some research to find out what the market will bear. If the property is in good condition and needs no repairs, you will not need a rehab loan. You can probably get a traditional loan up to 100% depending on what you can qualify for and that way you will be in the house for no money down. However, if your goal is to buy, fix it up and then re-finance and rent out, in most markets you will need to buy them at no more than 70%. Fix it up, re-finance it at 75% to 85% loan to value, and pull out the cash, which by the way is Tax Free cash, as you don’t pay tax on borrowed money. Then you can rent the property out at a positive cash flow and have Tax Free cash in your pocket.
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This intel was contributed by larryg
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May, 2012
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