I am Too Lazy to Visit Properties

Beginning real estate investors make the mistake of being enamored with visiting properties. They think they can determine whether the property makes sense to buy by visiting it. WRONG. Visiting properties way before you have an accepted offer on it is a waste of time. That may come as a surprise to you. But...I am NOT conventional...meaning I don't do things in the same way as the majority of real estate investors. I don't waste time visiting properties as the first thing I do to evaluate whether the property makes sense to buy or not. In the Philippines, it's called property "tripping". In Metro Manila where it will take you at least 1-2 hours to travel because of the horrendous traffic, property tripping will waste at least 4 hours of your life...DAILY!


Instead, here's what I do first: I ask questions.
What questions? I borrowed this from Tim Mai, a Vietnamese-American real estate investor. He calls it the WOWWW questions.
Here they are:

1. What is the property worth?
2. how much do you Owe on it? (what's the mortgage balance, monthly amortization and interest rate)
3. What are the repairs?
4. Why is the seller, selling the property?
5. if you offer all-cash, or spot-cash to the seller and pay all the closing costs, What is the least price he/she would accept?


Asking the WOWWW questions can take you as little as 5 minutes. Yesterday, during John Calub's Money Magnet seminar, a motivated seller approached me and she revealed the answers to the WOWWW questions but she also talked about her family issues...so it took about 15 minutes (longer than what I would like but one characteristic of a good real estate investor is the ability to listen very well).


Once I get the answers to these questions - OVER THE PHONE - or in an email from the seller, the second thing I do is EVALUATE whether the deal makes sense or not. This takes me another 5 minutes for simple deals and about 10-15 minutes for more complicated deals. How do I evaluate deals? Let's discuss the simple deals.


Here's what I do. I compare the answer to the first question: "What is the property worth?", with the answer to the last question: "What is the least price the seller will accept?". If there's NO "spread" or difference between the two, the deal is a BAD deal (period). If it's a bad deal, I don't waste any of my time. I just follow up the seller after one or two months to see if he is more motivated to sell and more realistic with his price.


If there's at least a 20% spread, then I check the repairs - "What are the repairs?" and I use the following formula:


MAO = ARV x CF - Repairs - Profit


Don't get intimidated by this formula.

MAO stands for Maximum Allowable Offer.
ARV is the what the property is worth and stands for After Repair Value.
Repairs is the cost of labor and materials to fix the property.
And Profit is how much money you want to make (and if you're wholesaling the property or selling it to another investor...it also includes how much money you want your buyer to make).


I described the formula in detail in my book "Think Rich Quick". You can request the nearest National Bookstore so they can get one for you (my book is now becoming a 'rare collector's item' given the fact that it's already sold out in a lot of bookstores all over the Philippines). The bottomline is this: if my MAO or my Maximum Allowable Offer (or the most I would pay for a property) is at or even above what the seller is asking for...then the deal is a good deal.


If it's a good deal...do I immediately visit the property? YES...if I am familiar with the area and I know the area is a HOT one. I also visit the property if I have buyers lined up. After I inspect the property, two things will happen:

1. If the repairs are in line with what the seller gives me, I will write an exclusive purchase contract to buy the property from the seller.

2. If the repairs are more than what the seller gives me, I will talk to the seller and negotiate with him and convince him to sell the property to me at a lower price. If I convince him, I will email him an exclusive purchase contract.

After I get the written accepted offer from the seller, I will call my buyers in my database and show the property to all of my buyers...at ONE TIME. Doing this saves me a lot of time and gets my buyers to compete against one another. This technique is how my students sell properties in a few weeks...even in a few days.


If I am not familiar with the area, I will make a written offer to purchase the property with the seller. This is usually, a non exclusive option to purchase. To download a sample contract, click HERE (note: I am not a lawyer...please consult one when using legal documents). Once, I have a contract that gives me the right to buy the property...and therefore the right to sell it, I will market the property online. As soon as I get several buyers lined up...I will then set up a time to inspect the property and I will bring my potential buyers with me. By doing it this way, I visit the property and show it to my buyers at the same time. I save time by visiting the property only ONCE or at the most TWICE.


If my buyers are NOT OK with the price, I will renegotiate with the seller to buy the property at a lower price. If one of my buyers is OK with the price, I will write a sales contract with me selling the property to him at a higher price than my purchase price. Doing it this way, I make money from the difference of what I am selling it for versus what I am buying it for.


You might be asking: how do I market the property online? I have no space to discuss it here but I have good news. On March 9, this Wednesday, I am going to give the very first "Quick Cash Real Estate Seminar."


What is my seminar about? The seminar attendees will learn how to acquire properties with "no money down" (or in Filipino, we call it "Laway lang ang puhunan") AND how to sell properties very quickly. My students who learn my system of selling properties have made money on properties in a few weeks, sometimes even in a few days.


Yesterday, at John Calub's seminar, I also met a real estate investor. She followed a system of buying foreclosed properties by bidding at a bank auction. There's only problem: she couldn't sell this foreclosed property (she bought a piece of land). She followed a flawed system. She became enamored by visiting properties and making offers...without understanding her market and learning how to market properties first. As a result, her money is stuck in the property.


The danger of NOT learning before you leap is that you can lose money just like this real estate investor I met yesterday. Don't be like her. Attend my "Quick Cash Real Estate Seminar"...and although, this might be self-serving...here's the truth: I am NOT making money from this seminar. I am doing this seminar in order to teach more people how to invest in real estate in the right way. Here's my profit motive: I have a real estate lending company and I lend money to my students. The more I train you to invest in the right way, the more money I make in lending you money. Win-win.

I remain...


dedicated to your success,
Trace
P.S. What is cool about this seminar is that it is soooooooo cheap and affordable. My highly popular "Think Rich Quick" seminars are sold out at P7,000 and yet my "Quick Cash Real Estate Seminar" is only P250. Over 400 people are already signed up and there are only 91 seats left. To sign up for the seminar NOW, click HERE.
P.P.S. The danger of NOT signing up NOW is that this blog is being read by over 12,000 people. With only 91 seats left...I won't be surprised if we run out of seats and will need to turn some people away. To avoid being kicked out of the venue, click HERE.