1. Review & Action Steps 2. Setting Up Your MLS Searches 3. Screening & Accessing Properties 4. Estimating Repairs 5. Assignments for next week

Transcription

1 Session 2 Generating, Screening, and Analyzing Leads What We re Covering Today: 1. Review & Action Steps 2. Setting Up Your MLS Searches 3. Screening & Accessing Properties 4. Estimating Repairs 5. Assignments for next week 4 Tips to Get the Most Out of this Call: 1. Follow Along: This is your study guide for this session. Print this sheet so you can write and take notes during the call. Don t multitask! 2. Action Steps: Think of specific ways you can quickly implement the information revealed on the call. (You re here to actually apply what you re learning, not just learn it!) 3. Goal Deadlines: Make a deadline to complete at least 3 action items and tips you ll learn from the call 4. Assignments: Do your homework! (assigned at the end of the teaching session) - 1 -

2 A Brief Review of Session 1 Generating Leads Review & Action Steps: We had 6 Action Steps, time to check yourself. Did you Get Analyze the MLS and Identify a Market(s) Identify your targets Focus on your Opp. Market by viewing properties and driving by comp? Let s review our Targets for Royal Oak: City/School: Royal Oak Sq Ft: and 3 bedroom with basement Basement: Yes, Garage: No, Lot: 40 ft Lakefront/District: Possibly walking distance to downtown Date of construction: 2 separate categories (pre and post 2004) Wholesale #: $60-80k, Wholetale #: $90-$120k Retail #: $ k Days on Market: Wholesale: 10 days Wholetale: days Retail: days Setting Up Your MLS Searches The MLS is going to screen of the deal for you Search Criteria: Listing Price per Sq. Ft. Listing Agent All listing under a certain price Distressed listing (REO s, Probate, As-is) We want a simple business, with minimal. In other words we want to Cherry Pick and ideally pay full list price. we will run the MLS Searches - 2 -

3 MLS: Listing Price Per Square Foot We don t care about overpriced REO Listings Looking at and submitting an offer on a house within 30 days of list date at ½ list amount is not simple, it s stupid With that said, we can have the MLS and only show us the discounted properties In order to be accurate with this you must first determine your:, and Price per sq ft. Huh? Not a math major? I swear this is simple stay with me! We only need to ballpark Example: Royal Oak Retail range was $110-$150k, so let s use $125k. $125/1100 sq ft = $113 In other words, the average retail house in Royal Oak sells for about $113 per square foot (This is a term builders use a lot) Let s do the Wholetale Numbers: $95k average sales price/1100 Sq Ft = $ Wholesale: $65k/1100 sq ft = $59 per square foot Ok, let s look at a foreclosure that just got listed (live search) Let s calculate the List Price per Sq Ft of 629 Helene, R. Oak $65,000 / 1600 = $40 a sq ft. Is this a discounted property? Ok, what about 3224 Ferncliff? List Price per Square ft is $110k/1500 = $75 per square foot Is this a discounted property? All we are trying to do is keep the amount of deals to analyze to a.to keep things simple LESS is BETTER! How do we create a search? Key To Fill In All Active Listings City Sq Footage LP (List Price) Per Square Foot Min (to keep out rentals) and Max Key Fields to Not Fill In Basement (We want basements but the Listing agents are lazy or lie) - 3 -

4 Bedrooms (Same as above) Bank Owned, Gov Owned (We want to see everything discounted) I Like to Use in All of Oakland County (So does Jon!) Each Area is Different Let s set our up for Royal Oak (Live Demo) What s our LP Per Sq Ft number?? $80 per Sq Ft Lets run it and see what we get Run that every day. Let s look at Altadena. Would that have been screened for you? MLS Search: Listing Agent Some Agents tend to have more listings in a certain area because they have a physical location nearby It s actually strategic and agents pick an area for a reason See any trends? Cal Fowler (In Royal Oak) William Adams (1 Mile) Darryl Sanders (HUD) Key Fields To Fill In All Active Listings City Sq Footage Listing Agent We can t run a search on this MLS System (used to) This is really nice for across a Metro Area to see all their listings MLS Search: All Listings Under a Certain Price Cherry Pick Strategy With Royal Oak, what s the desired wholesale and Wholetale price? $60k to buy, $100k to resell So, would we even consider looking at something over $90k? So, much like LP per sq ft, you are screening by price Key Fields To Fill In All Active Listings City Sq Footage List Price Min (to keep out rental) and Max Let s set up a search (Demo) - 4 -

5 MLS Search: Distressed Listings & Remarks This can work well with writing offers You are not as concerned about price but Days on Market, change in listing agents, etc. etc. If a house has been listed for, lets lowball the crap out of it (You ll probably build a relationship) Key Fields To Fill In All Active Listings City Sq Footage Bank Owned, Gov. Owned, Short Sale Remarks if you don t have these fields Remarks: Flashlight, As-Is, Addendums, Corporate, Probate, Handyman Let s set up a search (Demo) MLS Review The MLS is an and we want to utilize it to: o Screen Deals o Comb it thoroughly to find something that may not hit a normal search Example: Stupid realtor clicks private owned vs. bank owned (oh wait, wait, they were stupid, it was just an accident???) Your main goal is to Cherry Pick. That is simple. By having 2-4 searches in your Opp. Market, you won t miss any mistakes Let s review Royal Oak s 4 Searches: We have a Search set up for LP Per sq Ft of $80 or less We have a Search for all listings under $90k We have a Search for all distressed listings (no matter price) We don t have any Realtor Searches (MLS System glitch) Screening Deals To keep Flipping Simple, you have to have a disciplined screening method Most investors tend to get flustered when a potential deal comes up and spend way too much time analyzing a deal - 5 -

6 There is to go look at a property until you have screened it. 2 Simple Steps to decide if a deal is worth inspecting o a clear Wholetale Clean REO price (Make sure you have 60 day old comps or less) o the following formula: 75% of your Wholetale number Formula Focus THIS IS NOT MY PURCHASE FORMULA It s my should I go look at formula Why? o Let s say a house has a Wholetale number of $100k (R. Oak) o The repair numbers to bring to Clean REO condition are Ø o It s not unreasonable that I might be able to get 10% off of list price, putting my purchase price closed to 65% of my Wholetale Number We ll get into details about my Purchase Formula later on Assessing Properties This is kind of a no brainer o You need to get a lockbox code ASAP if it s a hot deal o If you are not a Realtor, don t wait for the agent, just go out to the property o How bad are you willing to make money? Call them on the way and ask them to call and get the lockbox, the listing agent isn t supposed to give out over phone Um, get your license. You ll probably be double dipping and using another agent causes headaches - 6 -

7 Estimating Repairs Overview We have one Goal: Figure out it s going to take to get the property into Clean Condition. Simple. The Clean REO condition depends on your location, Southern Utah is granite and tile, $300k in Michigan is still Formica, vinyl This is a, please take the time to learn numbers in your area I also know that your numbers are different. ALWAYS use the Inspection Checklist SWAG doesn t work to well Exterior Estimates Roofs: $3 per square foot Siding: $ per square foot Doors: $500 Front, $1000 garage Windows: $300 a window Driveways $2.50 per square foot (driveway, not house) Misc: o Landscaping (Mulch etc) $1000 o Front Porch $ o Gutters (Tear em down!) We want them to be in mortgage condition! What do I do? o Replace roofs o Make sure siding isn t flapping in the wind o Lay mulch and clean up weeds o Make sure the front door is painted and looks clean - 7 -

8 o Make sure all doors open and close well o Replace broken windows only o Replaced severely heaved or broken section of driveway only o Scrape loose paint o Shutters! Mechanical Estimates: Furnace: Make it work! If I can t: $1500-$2000 Plumbing: $2 a foot (includes snaking) Sewer Line: $2000 Electrical: $1.50 a foot to cover major stuff only All these seem to be necessary to get a mortgage Cosmetic Estimates: Kitchen: (If it s gone) $3 a foot, otherwise $500 Bathroom: Total Replace (Full Bath) $2500 Total Replace (Half Bath) $1000 Tub & Surround $1500 Toilet $200 Vanity/Sink $500 Flooring: $2.50 a foot to replace, otherwise $500 cleaning Paint $1.50 a foot, $2.00 if lots of minor patching Doors/Trim (Total Replace) $2 a foot, Doors $150 a door Drywall $500 for a 10*12 room (total replace) - 8 -

9 Miscellaneous Estimates: Scrape and Paint a basement: $1-$1.50 a foot Mold Remediation: Cost of Replacing Materials + $1000 Bowed Basement Wall: $3500-$5000 Kilz entire house (Cat pee): $1-$1.50 a foot Demo: Light $500 Heavy $2 a foot Anything Else or if you are uncertain: Get a quote from your We will discuss how to find Dream Contractors in Session 4 Your assignments for this week Next week Thursday, March 5, 2009: Module 3 of 4 K.I.S.S. Flipping: Negotiating & Controlling Deals - 9 -