949-392-1999
SHOW NOTES FOR EPISODE 036 – ANALYZING RENTAL PROPERTIES – PART 1
Property analysis is the single most important stage in a real estate investing transaction. In this episode, Bill uses a metaphor to outline the key role property analysis plays in a real estate investment transaction. From first view to closing documents, he explores the analysis process and it’s critical importance to any property purchase.
Introduction
Before you start analyzing
- Need to make sure you are first looking in the right place, in other words…
- You have carefully researched this market and know it has promise
- It’s a market you know
- That you’ve researched
- And you know it’s a good d
- I am just going to give you a quick overview today and then I will have multiple parts – separate podcasts — detailing key elements of property analysis
Overview
Property analysis is the most critical stage of the investment process:
- This is where you can make or break your chances of success
- That’s why I am going to take my time on this
- I want to keep it simple
- Bite-sized portions so you thoroughly understand
- This is not rocket science – but you do need to know how to do this right
- Way too often, people spout out terms like CAP rate, ROI, IRR, and it throws people off
- Yes, there is some important math you NEED to know but don’t let it throw you.
- Start off simple:
Know What Your Key Goals Are
- Most Important — Cash Flow. Cash Flow. Cash Flow. – That is the money left after all the bills are paid. That’s what you put in your pocket
- Next – Am I Buying a Good Property?
- Condition of the property
- Appreciation – The equity gained as the property value increases – Important for your exit strategy
- Value – Is it below value. Is it priced right? Is it a good investment? (ROI, etc.) If I put my $20 grand into this house I am going to receive what I would from other investments out there, how long before I earn my money back?
What Does Property Analysis Look Like?
- What am I looking at?
- You might want to listen to Episodes:
- I’m looking at properties
- Online – sites like the MLS, realtor.com, Zillow.com, Trulia.com, loopnet.com, costar.com, etc.
- Emails – from my lead sources
- Property executive summaries
- Pictures, financial info, other data on propective properties
Now, when I’m going online to go “prospecting for properties” usually have my little 3-minute analyzer on my computer. You can get your own copy of my 3 minute property analyzer at my website FREE!!! – at olddawgsreinetwork.com. Using my analyzer, I usually do a quick summary of the numbers FIRST then I go into the 5 phases
I’m using a metaphor to help you remember the basic process
THE FIVE PHASES OF A RENTAL PROPERTY COURTSHIP
1. First Glance – Property Appearance
-
- What does it look like to you?
- Look at it (broker materials, online, REALLY RECOMMEND Google Maps to look at the neighbor. Can tell a lot but keep in mind sometimes the images are old. It may be 2011 view)
- Look at it on a map
- What’s nearby? (restaurants, businesses, transportation, schools)
- What “part of town? (eastside, downtown…) Learn what section of town so you can talk about it’s location with others who know the city
2. The Conversation – Critical Calls
- Ask someone who knows her better than you
- Speak with broker – let’s really find out what he thinks
- Call the Chamber of Commerce
- Call the Economic Development deaprtment
- Ask questions like – good part of town?
- Is it in a good/decent area
- Crime rate
- Jobs, services nearby
- Is the price right (under-market, over market, declining prices, etc.)
3. Get her number and ask her out – Due Diligence
- Collect the detailed numbers?
- Dating – spend time with her (fly out to the property)
4. The Proposal – Making the Offer
- Submit offer/LOI
- Inspection
- What’s the condition of property in good shape – no surprises (asbestos, foundation crumbling, on a toxic waste site etc.)
5. Marriage – Closing
- Closing documents
- Take possession of the property
NEXTWEEK (Part 2) we will go more into the specific numbers — what they mean and why they are important
Well that’s it for today!
So, until next time, remember CASH FLOW IS KING AND REAL ESTATE INVESTING THE MEANS. Thanks again for listening and God bless!
IF YOU LIKED THIS PODCAST, we would love if you would go to iTunes, Stitcher or GooglePlay and Subscribe, Rate & Review our podcast. This will greatly help in sharing this podcast with others seeking to learn real estate investing as a means to achieve a successful retirement.
Check out our other podcasts at olddawgsreinetwork.com.
Get a FREE copy of our 3-Minute Rental Property Analyzer at olddawgsreinetwork.com.
Episode Sponsor: Meno Studio – menostudio777@gmail.com
