How to Analyze a Rental Property & Make an Offer

this is the bigger pocket podcast welcome everybody if you didn't know you found your way into the biggest the best and the baddest real estate podcast in the world today we've got a unique show for you I'm going to be talking about how to evaluate and offer on rental properties if you're somebody who's ever said hey I want to get into real estate investing or I'm already in it but I'm not really sure how I got here and I don't know how to get more properties you're in for a treat so today's show is going to be all me teaching all of you how to be better at evaluating and offering on rental properties and saving yourself time when you do it before we get into it today's quick tip is very simple if you want to do a job faster get better tools Bigger Pockets has a calculator that will help you analyze properties very quickly and weed out the wrong ones without burning up all your energy and wasting all your time Bigger Pockets Pro members can use these calculators an unlimited amount of times whenever they want from wherever they are and if you would like a discount code because you're a podcast listener I've got one for you so get ready get out your phone take a note write it down but the code that you're going to want to get 20% off a Bigger Pockets Pro membership is going to be eo2 that's EO like evaluate and offer 20 E20 all right let's get into it folks so welcome and thanks for coming this should be fun so here's what you're going to learn today today I promise to teach you exactly how to analyze a rental property to determine just how much you should offer on it even if you aren't good at math even if you have no experience in real estate even if you don't have any money to start with and even if you don't know how to find any deals I'll give you my seven sneaky tips for improving the chance that your offer will get accepted and how one of those tips helped one of my friends recently as a bonus I will give you the slide deck that we are going to be going over today so you can go over it yourself if you wait until the end so if you go to the wait till the end I'm going to give you the URL where you can download the deck we're going over today here's our agenda we're going to start with the humble truth about my own real estate story then we're going to get into leads on and off market then we're going to go into anal analysis how you analyze deals a real life one we're going to do it together and then tools that will help you buy more with less risk then we're going to get into part three which is making offers that's where you'll get the seven sneaky tips for improving your chance of your offer being accepted and then some Q&A so let's start off with this why are you here today did you show up because you want this kind of a life you want a house in Miami on the water with a yacht you want to spend all your money on designer clothes are you hoping to have a really nice Ferrari that you can take pictures with and step up your Instagram game that's not why I'm here and that's not what we have Bigger Pockets really are pushing people for what we're actually looking to do is help you live a better life that would involve traveling to more places and getting to see the world that you want to see it would involve going on vacations with your family and your loved ones and making memories that will last forever it will involve spending more time with that family and growing a deeper Bond you see it's all about making memories and living a better life and when you make money through real estate you can make money anywhere you don't have to be locked in one place at one time now you're still going to work I don't want to give anyone a false impression there's no free lunch okay but the kind of work you're doing is a lot better when you're doing it through Building Wealth in real estate as opposed to other Med means the most important thing you're after is your time we want to help you get your time back time is the most valuable asset on Earth so let's talk about Bigger Pockets a little bit well there's over two million members it has the number one podcast for real estate investing more than 40,000 Pro members more than five million Forum posts of people asking questions and over 40 million total YouTube views and Counting Bigger Pockets believes that real estate investing is the greatest tool in the planet for the average person to build wealth and passive income that it's not get rich quick that the goal of real estate is not to Simply get rich but to live an amazing life of freedom to do what you were meant to do anyone can invest in real estate no matter how much money experience time or connections that they have so who am I why are you listening to me well if you don't listen to the podcast you might not know my name is David Green I'm a real estate investor I live in the Bay area of California I own rental properties I flip houses I invest in commercial real estate I'm the co-host of the Bigger Pockets podcast I've written a couple books for Bigger Pockets the bur book by rehab Brent ref Finance repeat longdistance real estate investing and I am the author of their our sold Series where the first book has been released it's every agents's guide to building a profitable business um I also own some shortterm rentals and like you I was once a newbie to real estate but the truth is I almost gave up in the beginning I was unsure how to analyze deals I tried to manage everything myself and I was Spread Way Too Thin I was afraid of losing money and I didn't know how to manage the properties that I was buying it made me want to almost get out of it and I nearly did but then I found Bigger Pockets and I started to learn from other people over time I discover the truth about evaluating and offering on deals I'm going to share it with you today so you can cut short the learning testing and failing time get the good information without the embarrassing bad experiences that people like me already had to find today I own rental property I flip houses I invest in commercial real estate oh I also do some short-term rental I'm the owner of multiple real estate businesses and I'm financially free so it's a big difference from the person who bought their first house and said I don't ever want to do this again I would sell it if I could this was terrible to where I own several different real estate businesses I'm investing all over the place I just put a property under contract today with my partner Rob at 3.25 million I believe in the Scottdale area and it's it's a single family house it's not even a commercial property and I closed on one yesterday in at 1.5 million in Tennessee so I'm I'm actually still buying today and I'm going to talk with you guys about why I think you should be buying today as well that I'm not just uh saying this as someone who's a real estate agent because I do have a real estate team I'm saying this as a person who's a real estate investor who believes very strongly when I look at the entire economic background the entire picture of finances in our country that real estate is the best way to be Building Wealth and right now is one of the best times ever to be getting involved in it now what would you do with financial Independence if you had it well here's the thing if you can get better deals you can get to faster Financial Freedom that's what this is really about okay buying real estate holding it for a long period of time and the better the deal the faster you'll get there faster Financial Freedom means more time to live the life that you were meant to live 99% of the properties out there are wrong for your goals that's one of the first things I want you guys to understand you know I didn't mention this already but please we're going to take a second to stop here take out your cell phones I know most times you're listening to a speaker they ask you to put your cell phones away because it's disrespectful to the speaker to have a cell phone out I never ever think like that when I'm listening to a speaker I feel like if you can't keep my attention then you're not a very good speaker if my cell phone is more interesting than you then you shouldn't be demanding my time so I'm not that way I'm happy for you guys to have your phones out the reason I want you to take it out right now is because there's parts of this presentation where I'm going to ask you to take a picture of the screen this is one of them that I want you to take a picture of the screen especially if you're new and you haven't bought real estate before the phrase real estate refers to a lot of different things okay it's not not all the same imagine that you're an athlete and you have a very specific sport you're training for not every machine in the gym is going to be helpful for you to get good at your sport in fact some of them might be developing the wrong muscles or the right muscle in the wrong way that's actually going to stop you from achieving what you want you could go backwards real estate's like that too some properties will stop you from achieving your goals other properties will not do much and others will push you forward what we're going to talk about is how to identify the right property for the goals that you have isolate it and then pursue it so how do you find that right one well the first off we're going to talk about the lap system this is a very simple way that you can get anything done anytime I start a new business I run through a mock setup of the lap system right so this works for Real Estate but it works for anything else where you're going to try to accomplish your goal goal you start off with leads what is a lead a lead is an opportunity that could work for what you want now if you're looking to get into real estate investing this could would be a seller of a house that wants to sell it that would be a lead for you because you want to buy a house you don't know if you want that house you don't know if you want the house at the price or the terms they're giving but you know that there's potential here that's what a lead is a lead symbolizes potential towards your goals then you're going to analyze it the next step is analysis this is where you find out would this specific property work for what I want is this a good thing for me to pursue pursue is step three of the deals that you've analyzed and you've decided yes this works you're going to pursue the ones that pass your criteria and I'm going to share with you guys a very easy way that you can analyze deals I'm going to share with you some ways that you can get leads this is not rocket science and then when it's time to pursue that would include writing an offer and then the last is success that's the that's the s in lapse you write enough offers you pursue enough deals you're going to be successful now here's the good news to you even though this is a four-step system success is not really a step it just happens you only have to do the three things find leads analyze them and pursue them success is the result so there's really only three steps you have to take if you want to be a real estate investor and those of us that do this all the time just build systems around those three steps where do we get leads how do we analyze deals and how do we decide what to pursue and how to pursue it so are you ready to learn are you committed to focusing because this isn't any good if you just sit here and listen to this information and don't do anything about it are you committed to taking action all the knowledge in the world doesn't matter if you don't do something with it you can be an expert at using those machines in the gym you don't get stronger you don't get more fit if you don't go use those machines so let's get into part one leads four lead sources you can Implement starting today well my favorite one is I use the multiple listing service through a real estate agent now I am an agent so I help people this way but more importantly I use agents when I'm looking to buy I think this is the tried andrue best method a lot there's other ways to do it but I like this one the most especially if you understand how to do it now if you guys are in California I want you to reach out to me because I'm an agent here and I can help you and if you already are an agent reach out to me anyways I'll see how I can help you with your business in that way if you're not someone who lives near me that's okay I still want you to reach out you can find me on social media at David green24 and you can email me through the Bigger Pockets messaging system just by looking at my profile and sending me a message I've written some good articles for Bigger Pockets that would be worth looking up about how to find an agent how to work with an agent what goes on in the agent world so you can be more successful because this is my favorite method number two you can build your own website or have search engine optimization where sellers find you this is stuff where people go say how to sell my house fast in Louisville Kentucky and you put a website together where they find your site and they fill in information for you to buy it you can do driving for deals this is where you literally drive around in your car look for houses that are in distressed condition that you think the seller might want to sell them look up their address skip trace the owner and contact them directly and see if you can buy the house and then there's direct mail this is just like it sounds you send letters directly to the sellers of properties you want to buy telling them that you want to buy their property part two is analysis so we've already talked about some ways you can get leads well let's peel apart the onion right because that's what you're really doing when you're analyzing a deal is you're pulling it apart and you're looking at what's underneath the layers here's the five layers of the deal analysis number one you need Crystal Clear criteria that means you don't want to just be looking at everything you want to know I want to find this type of property in this price range in this area I'm only going to look at those properties so that you're not overwhelmed what's the property type is it a multif family property is it a single family property is it a is it residential is it commercial are we talking a Triplex are we talking a town home are we talking a condo you have to know what kind of property you want to look for this would be another screen for you guys to take a picture of good ones for you to be thinking of especially if you're a newbie next up is the location what area am I looking in then you've got your price range you're probably not looking at houses that are 100,000 up to 10 million there's going to be a range that you've been pre-approved for that you're comfortable with that you're going to be actually working within then you're going to look for the condition do I want a house that's a fixer upper do I want one that's TurnKey do I want one that just needs some kemetic changes cosmetic changes am I going to adjust the floor plan am I going to add an Adu what type of condition do I want this house to be in and then finally is the profitability what kind of a return are you looking for and later in this webinar we're going to show you how easily you can figure out the profitability number two cash flow how much money is this property going to be making every month here's how you figure out cash flow it's really simple guys in fact I have this theory that almost every single metric that you use in real estate math not everyone but most of them have two parts to them you can always reduce it into two parts income minus expenses now to be fair expenses are often made up of more than just one thing okay so from that perspective you're GNA have more than one entry into an Excel spreadsh sheeet when figuring out your cash flow but they can be classified as money coming in and money going out that's a business this is what we're looking for when we're buying a house how much money is going to be coming in which is typically the rent and how much is going to be going out which are all of our expenses be careful because there's something called Pure cash flow it's very easy for a spreadsheet to tell you how much money you're going to make because it's all theoretical but Real Estate Investors know that there's more expenses involved in owning real estate than what you think about you've got Capital expenditures you've got money you need to set aside for maintenance when something breaks you've got times where your tenants are going to stop paying rent or they're going to leave and break their lease or their lease is going to end and they're going to leave and you need to find another one where you're going to have vacancy so pure cash flow is what we actually expect to keep of the cash flow that we make then we've got a cash on cash return this phrase comes around a lot all right and don't be intimidated by it if you're a newbie cash on cash return is pretty much a the real estate way of saying return on investment or Roi they all mean roughly the same thing the reason we have the specific phrase of cash on cash return is because you make money in real estate in weighs more than just cash flow so if you're looking for the return on your investment you might include the appreciation from what's got up you might include you paying down the loan you might include some of the money you saved in taxes by buying that property so Roi is kind of a general term that can be used for a lot of different things a lot of different asset classes and because real estate makes you money in so many ways it's hard to know which ways we're including in our math so cash on cash return is a way of saying hey for the money that I put in the down payment the rehab the closing costs how much did I get back in cash flow so we take our annual cash flow how much money this property makes in a year and we divide it by the total cash we put into it which would be your down payment your rehab and your closing costs the number you get is going to be what we call our cash on cash return very very simple math money that came in divided by money that we put in here's my rule of thumb you can get an 8% cash on cash return that's a base hit I'll go for that you can get a 12% cash on cash return that's a home run awesome deal you get a 15% cash on cash return that's a grand slam now I want to highlight these metrics are a base hit a home run and a grand slam if I'm buying a property that's meant to cash flow sometimes I buy real estate that I know is not going to cash flow right away but has a ton of equity I'm getting it at a great price sometimes I buy real estate in an area that I believe is going to go up a lot and it's not going to cash flow right away in year one okay but if I can get that cash flow to these numbers in the future I'm good with it in fact what I found is almost all of my base hits have turned into Grand Slams after just two three or maybe four years of owning the property they all became Grand Slams because I own real estate for enough time and time is so important we're going to get into that later number number four is equity what is equity David I hear this phrase thrown around it's really simple you take what your property is worth the value you subtract what you owe which is your debt the difference is your Equity so if a property's worth $500,000 and you owe $400,000 your Equity is $100,000 and then you've got your total return this is what I was talking about earlier where sometimes Roi or return on investment is a vague term and you don't know what it's including but the total return is your average annual return you take your total profit now that might include all of your cash flow for the year but this also now includes the equity that youve built this also includes the amount of the loan that you paid off with your tenants money this also includes taxes that you save buying this property and you divide that by the total cash invested sorry that is your total cash invested and then you divide that by the years that you've owned the property so here's what the experts know it's not about timing the market it's time in the market this is why I've done really really well with real estate is I bought good properties in good areas and I waited this is why many people don't build wealth because wealth comes over time if you guys ever if you haven't already done so just Google any article about compound interest and what you learn is that compound interest is radically unimpressive when you first start in the beginning but by the end it becomes insanely good like too good to be true so what everyone tells you is that in order to experience the magic of compound interest you got to get in early and you got to wait but for those that can wait they'll crush it it's like planting a tree when you're a little kid like an a big oak tree or Redwood or something amazing for the first 10 15 years it's not going to do a lot but like 20 25 30 years in that tree is something impressive and incredible you can't do anything to rush it so you have to understand that taking action now is the best thing you can do to build wealth for yourself in the future focus on what your portfolio will look like 10 years from now I want you guys to take a picture of this screen and here's why 10 years from now your portfolio is going to look exactly like it does right now which for the majority of people here probably is no houses maybe a handful unless you do something different today that puts you on a different trajectory for 10 years from now there's nothing you can do in my opinion to make yourself a Millionaire right now okay it's just like you can't get in shape you can't lose 50 pounds or put on a ton of muscle in a day that your body is not designed to work that way it won't work it doesn't matter how hard you go work out at the gym you're not going to gain 50 pounds of muscle you're just going to be incredibly sore the next day it's consistency that does it right so what we're talking about is Building Systems and models around being consistent now let's try this in real life okay so we're going to analyze this deal right here using some tools that Bigger Pockets has and you guys can see how easy it is to figure out what kind of a return you're going to get now in order to do this I'm going to have to change the way that I'm sharing my screen to do this so we're going to start off by going to biggerpockets.com this is what it looks like we are then going to click on tools rent estimator all already forgotten what the address was of the property that we're going to look up let's go back here all right it was 185 Landings Drive now here's what I want you guys to notice if you can see on the screen it's an eight-bedroom Four B property that means that this is four units and each unit has two bedrooms and one bathroom so it's 421s and the address is 185 Landings Drive in Frankfurt Kentucky so we're going to type in 185 Landings Drive frankfor there it is click on the button hit search address okay two bedrooms one bathroom search address this is what I wanted you guys to see thank you for being patient with the little login issues I was having there the median rent is $625 a month and there's High high confidence that this this uh formula is going to be correct so Bigger Pockets the website is going to search all the surrounding properties and figure out what their rents are and then tell me what to expect and if I want to verify it all I have to do is go to this map that I'm at right here let me see if I can make it a little bit bigger for you hopefully that helps you guys and I can see what other properties it's using to compare this one too right here's your list you can look up that that prop that six 75 look up this will Williamsburg Road Apartment 1 it's also a 21 same square feet or very similar I can go on Zillow or redin or some other site and I can see what the pictures of that property look like very cool because this is how you can find comps so I know that I can expect to get 625 a month and it's usually going to be higher than what this thing shows because rents have been going up it's pulling from old data which means If I multiply this times four because there's four units that 625 * 2 is 1250 take that times 2 is uh 2500 so we know that this property is going to bring in around $2500 a month and that's why we started off going to this uh rent estimator right now let's click on the rental property calculator so we were at tools we were at rent estimator we're just going to click on rental property calculator start a new report all right here's where this gets super fun and super easy we're going to put in the same address 185 Landings Drive Frankfurt we're going to hit next the purchase price of this property was they were asking 240,000 [Music] so we're going to put that in assuming we're giving a masing price let's take the closing cost make those around $5,000 now if you're sitting here saying but David how would I know what closing costs are I'm not a real estate agent that's okay Bigger Pockets has you covered if you go over here to calculating closing cost under the help and you click on it they'll tell you right here closing costs are around 1 to two% of the purchase price of the property but can differ depending on location of financing if unsure 1.5% of the purchase price is a good number to begin with okay this explains what closing costs are now we went closer to 2% on this thing uh just to be safe but you could get them to be less you can also ask for the seller to pay for them for you so that you keep a little more cash in your pocket let's click on loan details now we're assuming we're going to buy this as an investment property so we're going to put 20% down but if someone listening here wanted to buy this property and they wanted to house hack it they could actually put three and a half percent down 5% down much less buy it as a primary residence and and you would just run your numbers but instead of using 2500 for the rent you'd use three of the units so you take 625 per unit times three units and that number whatever ever that would be like 18875 or so that would be what you would use for your income then you would add what you used to pay in rent because now you're not paying rent because you're living in one of these units you'd add that to the 1875 and that's what you would use for your Revenue but in this case we're looking at buying it as an investment property which means we're putting 20% down now part of this is having a loan officer that's going to walk you through what to do and I have a company that can help you guys with that so if you're confused on financing send me a DM or send me a message through bigger pockets and and let me know hey I want to get started I watched your webinar I want to get pre-approved I'll put you in touch with the people we can take care of that for you if you already have a lender then you probably know because they probably already told you that it's about 20% down when you're buying an investment property but you could do 15% 10% 5% three and a half perc or anything in between when you're buying a primary residence for the interest rate since this is an investment property we're going to use let's say 4.5 to be a little safe because rates have gone up a little bit and no points so a point would be money that you pay extra to get a lower rate for the loone term you should just always put in 30 30 years that's how long your average conventional loan is going to go for now remember how we ran the rental income earlier right this is where we're going to put that in $2,500 a month in gross monthly income remember how I said cash flow is income minus expenses well we figured out our income now we just have to figure out our expenses so for property taxes how to determine your property's tax bill where here's all the ways that you can do it now I know that in general if you take the value of the the property which in this case would be 240,000 times 0.15 which is 1.5% that's about $3600 a year so that's what I'm going to put in here and that's probably higher than what it's really going to be 1.5% is on the high side Insurance um I know for a property like this it's going to be probably right around $30 a unit so let's go ahead and make that $120 a month for insurance repairs and maintenance we typically budget 5% of the rent to cover that 5% to cover the vacancy 5% to cover Capital expenditures and on this one we're going to put 8% under Property Management fees now if you're trying to figure out how much you should put in you have all of this right here that will tell you how to do that the tenants are going to pay their own electricity gas water and sewer yeah and there's no HOA fees and there's no garbage here so we don't have to worry about any of those expenses for this property we're going to click finish analysis here's what's awesome all right before we get into this whole thing I want you guys to think about something if you were a contractor and you had to build a deck you got two ways to do it you could grab a hammer and some nails and start hammering away or you could go buy a nail gun load up the nail gun and then start putting nails in really fast now let's talk about the pros and cons of each way if you take the hammer and the nail by hand method you are going to make more mistakes because you're less effective and efficient than a machine those mistakes are going to hurt you more you're going to hit your thumb with the hammer you're going to go slower it's G to take a lot longer to do this and it's going to be more expensive in the long run because you're going to ruin more Nails doing it by hand now if you only have to put up a fence board it doesn't make sense to get a nail gun you just grab your Hammer grab your nails and you're doing it if you're going to make a business decision if you're going to make this a goal of yours you're GNA want to buy tools a nail gun will help a a contractor build a deck much faster and they're going to build a lot of decks they're going to always want that tool so why am I talking about construction if you're going to be a casual real estate Observer a hammer and a nail is fine if you're only going to to analyze a deal once a year when it happens across your path and you can just do it on the back of a napkin or with the calculator of your phone you're good if you're serious about wanting to change your life to Achieve Financial Freedom to have 10 years later look different than where you are right now you need tools me the people I partner with the people I work with the agents on my team we're professionals and so we all use tools we analyze deals using methods like what I'm showing you right now letting software do the heavy work for us we don't swing Hammers and Crush our thumbs so I'm encouraging you if you guys are interested in real estate if you're getting kick out of this webinar if you want to learn more if you want to actually own some real estate you need to get some tools and we'll talk about how expensive or how inexpensive they are but in the meantime let's get back to our presentation and I'm going to show you guys what this tool did for us so here's our address that we just analyzed if you wanted to find an agent to help you write an offer you could click on this button and Bigger Pockets will take you there let's look at the monthly cash flow this is this is your cash onh return that we talked about earlier this property we are estimating would bring us in $532 a month which is a 12.06% Roi now just this is a preliminary analysis but remember we showed an 8% was a base hit a 12% was a home run and a 15% was a grand slam so out the gate with an income of 2500 a month and expenses of 1967 a month this looks to be a home run deal from a cash flow perspective now it's not only cash flow you're going to have to look at other things like the area the demographics the the people you're going to use to manage it what kind of tenants you're going to get that all has to go into this decision but just from this first step it's looking really good the calculator is doing all the work for us it's telling us we're going to need a total of $53,000 because that's going to be the down payment plus the closing cost that we're going to be having this is our monthly expense breakdown you see the majority of it is blue that's the mortgage that will be paid off someday and that will all go away which will increase your cash flow by $973 actually yeah 973 the next would be the taxes that's $300 a month and then these orange part here is your variable expenses this was your maintenance your your vacany your Capital expenditures all those things the property management the stuff we set aside that we were going to have to pay for now we can see this property's net operating income is going to be $188,000 a year that's very easy you don't have to be good at math you see if you have a tool the tool does all the work for you the cash on cash return on investment is 12.06% and this here is a graph that shows us what to expect over time remember I said time in the market so when you first buy this property it's valued right around 240,000 it'll slowly go up based on current projections of inflation until you hit this part right here right before year five where it starts to go up significantly more and then it start that's compound interest okay now let me tell you guys a little secret that no one else is going to tell you we at Bigger Pockets are trying to be very very conservative we're assuming like a 3% annual growth rate the way that our government has been printing money there's no way it's only going to be 3% these properties are going to increase in value an insane amount a lot over time it's going to be much more in my opinion than what we're looking at on this graph now at the same time that your property is going up in value your loan is going to be paid down okay the loan starts to get paid so you owe less and less money at the same time that your property is going up in value and if you remember from earlier in the webinar the difference here is called Equity this is how quickly you grow Equity that goes to your net worth that will make you a millionaire now these numbers here are the last thing the calculator will show us they're what we can expect to see over time okay so the property's value will start off at 240 if it goes up around 3% a year at year 30 you're looking at probably $435,000 I would expect that to be more than double in year 30 uh your Equity is going to grow to$ 435,000 the cash flow started at 6391 and it's going to grow up to 21,000 but I also I think that will be more because inflation is going to make rent go much higher than what we're assuming here okay so the point is if you want to analyze properties that's how easily and how quickly you can do it if you have the right tools so now that you see just how easy it is to analyze a property I'm hoping that all of you have a little bit more confidence than you might have before because like I said not every property is right for you but this is how you find out if it is we talked about how to find leads not that complicated it can start off with as simple as getting a real estate agent to help you now I've showing you how to analyze now this isn't everything but this is the majority of the work from this point what you do is you take all the information that you just analized and you would verify it you would call a property manager and say hey I'm looking at 625 a month for rent for this unit do you agree hey what what do you think the crime rate is like over here what kind of jobs do people work over here you do a little bit more uh due diligence to verify the information you got but at least you have a direction that you know what you're trying to verify now before we move on to part three which includes my seven sneaky tricks for getting your offer accepted let's talk about taking action do you know some strategies for finding deals do you know how to begin analyzing your next deal well I hope you do because we just went over that well that's great but it's not enough to just know it if more information was the answer we would all be billionaires with perfect ABS here's a message that Dennis sent my good friend Brandon Turner at Bigger Pockets I wanted to thank you in BP after attending your webinar on how to make a million dollars in real estate I got inspired to take action so last week I closed on my first deal I now have a triple that is rented he means a Triplex and will cash flow very well for me I can now call myself a real estate investor I have a plan moving forward and will make my business a success so are you committed to intelligently analyzing deals in your future do you want your life 10 years from now to be better than it is right now do you want to finally get your time back do you want to travel do you want to spend more time with your loved ones and less time in a cubicle well the next logical step for many of you is to become a Bigger Pockets Pro member this is this is how you become a better real estate investor just like I did figer pockets Pro will help you analyze properties and get your next deal faster remember time is the most valuable asset we have we want to do things quickly you can analyze investment properties in minutes and determine which ones are worth pursuing with unlimited access to deal analysis calculators this is what this is the calculator that we look like you guys saw an updated version of it this is what it used to look like but that calculator that we just Ed is free to Bigger Pockets PR members become a better investor with curated article and video content webinar replays and exclusive articles covering everything that you need to make smart Investments and avoid the wrong markets this is all available to Bigger Pockets Pro members we call these Pro exclusive videos only Pro members can watch them we've got workshops on uh how to build a website with great SEO to grow your business uh finding and funding great deals master class with ansen young who wrote that book for Bigger Pockets uh we've got Jesse fali going over how to invest if you're a Canadian investor all kinds of experts talking about their specific Niche that you can watch learn and grow from if you're a pro member you can show the community that you mean business with a pro badge so Blaine here has this little Pro badge on the bottom of his uh image for his account and that's how you know that Blaine doesn't just talk about it he bees about it if I see that someone's a pro member or if you see a premium badge that means that they're like an agent or a loan officer or some kind of a vendor in the world Pro is how you let people know who you are it's how you let people know that you're serious about what you're doing you can save time and money and minimize risk with lawyer approved lease documents for all 50 states so Bigger Pockets has put together a standard lease agreement for every single state they have their lawyers put it together and if you want to manage your own property you get to use these if you're a pro member for free you can save thousands of dollars on loans and other tools that you'll use in your real estate business with Bigger Pockets perks plus you can gain access to our discounted educational boot camps these are all ways that you can get discounts if you're a Bigger Pockets Pro member roofstock is a company where you can you can look for uh properties being listed by other Real Estate Investors air DNA is a company that you use to analyze what you can expect if you have a short-term rental foreclosure.com is a website that helps track forclosure if you want to pursue One open letter marketing is a company that you use if you want to use the direct mail approach all of these companies help Real Estate Investors and you get a discount if you're Pro and then you can accurately estimate rental rates based on local property comparables listing recency at proximity to your location using the Bigger Pockets rent estimator tool which is the first tool that I showed you when we started when we looked up what we could expect for rent on that Kentucky property so this is an example right you're going to look up this property in East 39th Avenue in Denver you can see that the median rent on a one-bedroom onebro here is 1560 a month and then you can look below with the map like I showed you to make sure the way you're looking at is accurate and you can have confidence in it this is they're doing everything to make it so easy for you but what's the number one reason to consider Pro it works the Bigger Pockets calculators are my go-to for analyzing potential properties there's no way I could analyze the volume of properties I do without being a pro member I LG at my first three unit almost a year ago that I'm now selling for almost a $770,000 profit that will go towards something larger the Bigger Pockets calculators were a huge factor in making sure my numbers were right this is from Aaron Caro Patrick mene says back in June I intended one of your webinars right afterwards I sign up for Pro in the next couple weeks I analyzed a bunch of deals eventually I found a fourplex I got it under contract three weeks after signing up for pro and a week later I closed on another property that was six units big thank you to you and the entire team my final quick tip sign up for pro I made my money back at the closing table so here's some good news this is when where you want to take your phones out and take a picture of this screen because you're about to get some free stuff if you guys want to go pro and you sign up now and you use this code that's on the screen right here you can get 20% off of the the price of your membership so go a and take out your phone because you're going to want to need that code take a picture of it and I'm going to show you guys what to to do if you want to go pro then I'm going to go over some perks so how much is it first off well if you want to sign up for a premium account which is what I have it's $1,200 a year but if you want to go pro it's only $390 a year it's incredibly cheap for the the tool and the analysis that you get if you do this but if you sign up today it's not even 390 it's only 312 so you're getting close to actually this is less than the cost of one home inspection which you are going to be paying for several of them as you're analyzing deals and trying to get something under contract just to know is this a deal even worth pursuing right this is like one of the biggest tools you're going to need in your tool belt and it's one of the cheapest remember you're going to save 20% on that Pro anual membership if you use the code on the screen here right in addition if you sign up now here's some bonuses that Bigger Pockets will give you because you sat through this webinar and showed that you are serious about taking action number one you get this nine-part video series that I did with Brandon Turner in Hawaii where we break down our nine favorite strategies for investing with little to no money down this is in my opinion the best work that Brandon and I ever did in fact when we were making this we looked at each other several times and said I can't believe how good this is this is such good content this is a $200 value that you get for free if you go pro you're also going to get the finding great deals master class so this is four interviews that BR and did with different expert in different niches one of them on door knocking one on Direct Mail marketing one on relationships and one on driving for dollars that will be included plus this free ebook of the best ways to find real estate deals for investing success a $990 value will be yours for free you also get access to Bigger Pockets boot camps so only Pros can go to these they get exclusive access to BP boot camps which are 12we real estate investing classes your Pro annual members can join Alla Kart at a discounted price every week you get access to ond demand videos from Ashley care live Q&A sessions with real estate investing experts homework assignments to apply your knowledge and accountability group assigned based on your investing interest locations and more which is over a thousand dollar in value that you get included okay so if you're going to sign up today for pro here's what you're going to get it's over 200,000 sorry over $2,000 value in bonuses 20% off to ual cost of the membership the workshop with me and Brandon the how to find great deals masterclass the online boot camp access and all you have to do is go to biggerpockets.com slpro upgrade and enter that code that I just gave you so go ahead take a picture of this screen and if you're already committed and you know you're going to do it just open another browser window go to biggerpockets.com proo upgrade and put in that code all right so here's the last thing I want to add all these perks apply if you go annual if you go monthly you won't get the freebies so if you want those freebies make sure that you click on the annual option now what if you're already Pro well you're not going to get screwed over you you can find the video content that we just went over at biggerpockets.com prvide you can find the online boot camp information at biggerpockets.com booot Camp so for you're a pro member this is where you go to watch the stuff that we just went over now Bigger Pockets also has a guarantee so give Pro a try for 30 days if you don't love it you can email support biggerpockets.com and get a 100% refund here you go you just need to go to biggerpockets.com / pro upgrade you can get all the bonuses you get 20% off you get the calculators you get the rent estimator tool you get the landlord lease forms you get the discount at all the companies that Bigger Pockets works for all for a ridiculously low price all right now we're going to get into part two of the show now if one of you does sign up for pro I want you to go into the chat and let me know that you did it so we can all congratulate you because you deserve that so anyone here who is going to sign up for pro please let me know in the chat and I will move on with the rest of our webinar the first question to answer before making an offer how is the seller selling typically there's two ways one is through a real estate agent and if that's the case you can get your own agent they're free to you the seller will pay for them the other is without a real estate agent this is where you can make a verbal or a written offer the seven sneaky tips for getting your offer accepted one be the first for the first persons to submit an offer some sellers will just take the first offer that comes their way because they have anxiety and they don't like going through the home selling process good trip there number two be last some sellers wait until every single offer comes in before making their decision and in those cases this is what we use on my team often we find out what all the other offers are we go to our client say if you write this one you'll be the most expensive and the best one and you can get the deal number three keep it clean the less things you ask for the better it is for the seller so if you need a lot of time to make your decisions if you want 21 days to do inspections they're probably going to say no if you can get it done in seven days they're way more likely to say yes so look for ways to ask for less things especially in a hot market and especially if they're not important to you give them their price but on your terms so if they're asking for a high dollar amount you don't want to pay you may say fine you can give the price but I need you to do some seller financing I need you to give me a longer escrow period right there's I need you to fix these things in the house before I buy it there's things that you can do where you can give them what they want and you can still get what you want which makes it a win-win include a family photo or a letter now in some areas you can't do this anymore because uh of fair housing laws where the listing agent doesn't want to present that to the seller because it puts them in a position where they can get in trouble because they turn down a client maybe they could be accused of it being over red or something like that but you can definitely write a letter explaining how much you love the house and what you want to do with it give them multiple options this is another really good one say hey I will buy your house for this price under these terms but if you include seller financing I'll give you a little bit more and if you want to all cash offer I'll give you a little bit less you give them three options and you let them pick which of those they like and then the last one is you can just offer again if they say no and offer again if they say no I buy houses like this all the time I have my agents check in every week and see if it's gone under contract we just keep asking until finally they say okay fine we'll take your offer now I told you guys that if you waited to the end you could get this slide deck so all you have to do is go to biggerpockets.com slides and you can get the deck that we just went over right now can review these again all right let's see what questions you guys have and then again I'll let you know one last time if you want that 20% off if you want all those perks I highly encourage you go sign up to be a pro member everyone will take you more serious you will take yourself more serious you'll be invested into this you will be making a decision that 10 years from now will make you a millionaire you buy enough real estate and you wait you will do really really really well with it when you need these tools if you're actually going to buy this is from Miki I got my annual Pro last week listening to the webinar included all the free stuff you mention now thank you again David and Bigger Pockets amazing and valuable content keep up the great job all right so let's see what questions you guys have appreciate you sitting through that webinar these are the people that I know that are here that are listening right now that are absolutely going to have a life-changing experience and they're not just people who wish that things will happen they're people that make things happen Rodrigo says any financing ideas do you recommend to pull out Equity of current home well I'm doing that because I think we're in a market that's poised to see a run up in prices more than what we've ever seen I often say this and everybody else says the opposite they scream no no there's a recession coming and I look at all the fundamentals and say I don't think there is I think that I wish there was but I don't think so right now so I'm actually refinancing four of my California properties and I'm pulling out over seven figures from those four deals these are all deals that I bought 10 years ago remember I told you about that 10year thing so the decision I made 10 years ago I've lived off of increasing cash cash flow every single year I've paid off the their um notes pretty significantly on a 15-year mortgage for three out of the four now I'm refinancing them back into a 30-year mortgage pulling out seven figures which I will used to go buy more real estate and I'm doing it through my loan team so if you guys want to reach out to us you can reach out to me directly and I'll put you in contact with them myself you can do that by sending me an email you can message me on Bigger Pockets through the messaging system you can look us up at one brokerage.com there's a lot of different ways you can get hold of us but please do and we can do the same thing for you guys I really believe this is the best environment that I've seen in my lifetime for buying real estate I think that the dollar is going to be significantly inflated I don't think that's good I just think it's happening and when that happens you want to own real estate uh here's a really good follow-up question from rrio any particular states that you would recommend the Midwest the South why yes I'll tell you where I'm investing I'm investing places I see Californians moving to because everywhere that us Californians go we drive drive up the price so Texas Tennessee Florida I have agents in all of the states that I can connect you with if you guys would like just reach out to me and I'll put you in touch with the people that I use Arizona is another big one that I'm really really bullish on and we can get you pre-approved and we can send you there and you can buy the same stuff I'm buying if that's what you guys want to do so reach out to me here's what's really really important um okay redri I don't want to give my email out right now because I don't want it to get sold to spam Bots but if you go to my Instagram which is David green24 and you look at connect or contact I think it's contact it has my email right there and you can just send me an email through there or you can send me a direct message or both would be best um what I was saying here's what's really important to me you guys got to buy something and you got to buy good property in good areas and wait that is the strategy that we use right now you delay gratification in the right spots so I would really like for you to sign up to be a Bigger Pockets proom member so that you don't buy the wrong property you don't buy a property that's going to lose money every month you want to buy something that's going to make youy money every month and that tool will ensure that you make a wise decision now once you are equipped to make good decisions I want to give you the resources that you need to go make those decisions right this would be the agent the the loan the little pieces that you need then I want you to go start investing in real estate and waiting and watching as your wealth builds this is the simplest way that your average person can build wealth in America right now you don't have to be a rocket scientist you just have to be patient and wise and everybody here has the tools in order to be able to do that all right Brian says hi David we are currently looking for our first property in Southern California and has been a challenge getting offers accepted it seems like most offers are waving appraisal contingencies is there a situation where waving appraisal contingencies make sense and when it doesn't also can you explain how a pre-appraisal would work and would it help in getting offers accepted well Brian I actually have a real estate team in Southern California and if you were working with us we would have already gone over this with you don't know what agent you're using or why that isn't coming up but maybe you want to reach out to me and get connected to my team so we AG go over that long answer short every property is different if we can get our client an appraisal contingency we will in other cases it's not that here's how you should look at it if somebody else wants to buy that house and they don't need an appraisal contingency the sellers aren't going to give you one okay you can only ask for as much as nobody else is willing to give up so if you want an agent that can explain this stuff to you you got to find an agent that knows what they're doing you should be reaching out to us and letting us help you with this one thing that we often do if we aren't going to get an appraisal contingency is we say that we agree to pay x amount over the apprais price so if for some reason it appraises low instead of you being on the hook for 100 grand you're only on the hook for 15 grand we do that kind of stuff up front so our clients don't have to worry about like an incredibly low appraisal and the sellers know that they're still going to get a little bit over the appraise price it ends up being a win-win so reach out to us we'll work that out for you um Kev are you familiar with loan guys for financing no I'm not um I have my own financing that I use Malcolm what do you think of Burr but rent to own instead of renting okay Malcolm here's why I don't love that method if we were in a method where prices were just stagnant rent to own makes sense because you're taking all of the expenses of the property you're putting them on the tenant so that they're responsible for it and not you that means your cash flow is higher the problem is you don't get the upside of the property going up in value I don't like that method in this environment because we're seeing so much appreciation in prices and that's what you want not your tenant so at an environment like this you tend to make more money from prices going up than you do just from cash flow in a stagnant environment you tend to make more from cash flow so you kind of just have to play your chips the way that they're dealt to you and your strategy will change over time so hope that makes sense all right I'm going to get this wrapped up because we've gone a little bit over our hour and Malcolm you're welcome thank you for asking that question a few ways that you guys can uh get your questions answered if you weren't able to here one go to biggerpockets.com David you can submit a question there and I will answer it on the Bigger Pockets podcast for you number two if you're in California reach out to me and I will get you connected when we do meetups number three if you're not in California follow me on social media send me a DM or find me on the Bigger Pockets website and send me a message through there number four you can check out my website davidg green24 comom it's got a little bit of all the stuff that I'm interested in that you guys can see and on all the ways that I can help you with your goals and then number five help me catch up to Brandon Turner who has his own text letter called behind the beard I started one called behind the shine because of a bing shine on my bald head you can get that by going to dgt live text letter sign up for that it's totally free tells you what's going on in my world and then six follow Bigger Pockets on social media as well follow us there we can follow us on YouTube you can follow us uh on our podcast you can follow us on Instagram but look for Bigger Pockets there's a lot more information than just what you're seeing on this webinar and just what you're seeing on the podcast that I don't want you to miss out on all right thank you very much to everybody who sat through this I really appreciate your time make sure you reach out and we will stay in touch so there you have it that is my blueprint for confident deal analysis and winning in negotiations most importantly you can save time and analyze deals faster than other people as well as learning how to throrough out deal that are not worth your effort time or energy to analyze remember if you like this stuff to check out my book longdistance real estate investing that will help you choose the market in which you should analyze deals in or my book by rehab rent refinance repeat the Burr rental property investment strategy Made Simple that will teach you how to be a black belt real estate investor find the best deals and add value to everything that you buy thank you for joining me today I hope that you learned something and I hope that you're charged up to go find your next deal remember that you can refine your analysis using this seven-step deal assessment framework once you've committed it to memory you can accurately calculate your Roi and then negotiate from a position of strength when you know what you're buying and fund deals creatively even with limited Capital by using these tips and one more time if you'd like to get a bigger Pockets Pro membership like me you can use the code E20 to get 20% off all right thanks everybody I will see you on the next [Music] show [Music] wo

Channel: BiggerPockets

Views: 25,411

Keywords: rental property, how to analyze a rental property, rental property investing, rental property analysis, how to analyze real estate, how to analyze a real estate deal, how to invest in real estate, income property, investment property, buying a rental property, first rental property, how to buy your first rental property, how to calculate cash flow, cash on cash return, rental property calculator, real estate investing, real estate, biggerpockets, biggerpockets podcast, podcast

Id: WSuKfD3A2Xg

Length: 57min 41sec (3461 seconds)

Published: Fri Oct 20 2023