HOW TO START BUYING AND FLIPPING HOMES IN SOUTHERN CALIFORNIA TODAY

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Abraham Logan
6 years ago
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1 HOW TO START BUYING AND FLIPPING HOMES IN SOUTHERN CALIFORNIA TODAY

2 Community Restoration Group Teaching Real Estate Investing Through Partnership Presenter: Stephen McKee Phone: (951)

3 ? How am I going to teach years of practice in ONE hour? I m not. I ll be teaching you how to put together the perfect deal package to attract seasoned investors as partners.

4 ? LET S START WITH THE EXCUSES The real 4 letter words Don t. Can t. Won t.

5 ? I really want to do this but I don t have any time. I think you mean I haven t made the time. Use a google calendar to schedule your month and find the time.

7 ? I don t have a company setup yet. You don t need an LLC, a website, business cards, a corporate bank account, or million s of dollars. Those are self imposed barriers so you can make excuses as to why you can t get started.

8 ? But I don t know where to start. org/ and download my Go to presentation 40+ Ways to Find a Deal.

9 ? I don t know what to say to the seller? What if I sound stupid? This presentation will give you all the right questions to ask. You re job is to LISTEN for the WHY. Why would anyone want to sell a nice home like this?

10 ? How do I get a discount so I can make a profit? I don t want to rip anyone off. Is this a scam? Why would anyone sell their home at a lower price?

11 Mentor Mentee You re not ripping anyone off. You re trading knowledge, experience, or resources for a piece of the deal. Seller

12 Now that we ve gotten a few excuses out of the way. Let s dig into the meat and potatoes of the business. DUE DILIGENCE You passed more deals today, just driving around, than you have time to buy. You just didn t know what to look for. Learning how to analyze a deal is the key opening your eyes.

13 DUE DILIGENCE PIECE BY PIECE Property Characteristics What is the subject properties address? What type of property is the subject property? What is the total square footage of the subject property? What is the subject properties lot size? How many bedrooms does the subject property have? How many bathrooms does the subject property have? What year was the subject property built? How many stories is the subject property? Does the subject property have a garage? How many stalls? Ongoing Costs Does the subject property have an HOA? What is the monthly HOA Fee? What is the current assessed value of the subject property? What is the tax rate of the subject property? What are the total annual special assessments for the subject property? What is the estimated closing date of this transaction? Valuation and Balances What is the asking price for the subject property? What is the current market value of the subject property? What is the Fully Rehabbed Value of the subject property? What is the cost of repairs to bring the property to a rentable condition? What is the cost of repairs to bring the property to "turnkey" condition? What is the combined balance of all the current mortgages? Are their any other liens or taxes that need to be paid off upon the sale of this property? If Yes: What is the total combined balance of these liens? Occupancy and Lease Rates What is the market rent for the subject property? Who currently occupies the subject property? If rented, what is the current monthly rent? If rented, what is the ending date of the current lease?

14 HOW TO FIND THE PROPERTY CHARACTERISTICS What is the subject properties address? What type of property is the subject property? What is the total square footage of the subject property? What is the the subject property s lot size? How many bedrooms does the subject property have? How many bathrooms does the subject property have? What is the year built of the subject property How many stories is the subject property? Does the subject property have a garage? How many stalls?

18 HOW TO DETERMINE THE VALUATION AND BALANCES What is the asking price for the subject property? What is the current market value of the subject property? What is the Fully Rehabbed Value of the subject property? What is the cost of repairs to bring the property to a rentable condition? What is the cost of repairs to bring the property to "turnkey" condition? What is the balance of the current mortgages? Are their any other liens or taxes that need to be paid off upon the sale of this property? If Yes: What is the total combined balance of these liens?

19 What r they askin for the place? What is the asking price for the subject property? Ask the seller: How much are you asking for your house? Then shut up and let them tell you.

20 Let s go lookin at houses! What is the current market value of the subject property? What is the fully rehabbed value of the subject property? Start by printing or saving a list of all the recent sales in the area. Then it s time to drive.

26 Use a route planner and drive by every comparable sale on your list.

27 After you drive your comps, adjust your ratings and determine your value. ADDRESS CITY STATE ZIP Rating 1185 Lyndhurst Dr Riverside CA Current 5, ARV Le Conte Dr Riverside CA La Subida Ct Riverside CA Wainwright Ct Riverside CA Lyndhurst Dr Riverside CA Le Conte Dr Riverside CA Chequers Ct Riverside CA Wainwright Ct Riverside CA

28 What s it gonna to cost to fix this place? What is the cost of repairs to bring the property to a rentable condition? What is the cost of repairs to bring the property to "turn-key" condition? All though every contractor's bid is different, we can use guidelines to get us in the ballpark. Here s a good starting point.

29 It s a rule of thumb, not a rule of law. Excellent Condition I can eat off the floor right now Rentable Condition $0 Per SQFT Turn-key Condition $0 Per SQFT Fair Condition Barely livable. Some major mechanical issues. Moderate to heave cosmetic repairs. Rentable Condition $25 Per SQFT Turn-key Condition $30 Per SQFT Great Condition Poor Condition Lived in but clean. A few minor mechanical or cosmetic repairs. Unlivable. Major mechanical issues. Needs throughout cosmetic repairs. Rentable Condition $8 Per SQFT Turn-key Condition $12 Per SQFT Good Condition Livable. No major mechanical issues. Moderate to heavy cosmetic repairs. Rentable Condition $18 Per SQFT Turn-key Condition $22 Per SQFT Rentable Condition $30 Per SQFT Turn-key Condition $40 Per SQFT Let s look at some examples.

30 Excellent

31 Great

32 Good

33 Fair

34 Poor

35 How much do they owe and to whom? What is the combined balance of all the current mortgages? Are their any other liens or taxes that need to be paid off upon the sale of this property? If Yes: What is the total combined balance of these liens? You can really dig and find these through public record but it s so much easier to ask the seller.

36 HOW TO CALCULATE THE ONGOING COSTS Does the subject property have an HOA? What is the monthly HOA Fee? What is the current assessed value of the subject property? What is the tax rate of the subject property? What are the total annual special assessments for the subject property? What is the estimated closing date of this transaction?

37 Does this darn thing have an HOA? Does the subject property have an HOA? What is the monthly HOA Fee? HOA s are a little hard to find if you don t know the area. Here s a method for finding them most of the time.

39 Taxes schmaxes What is the current assessed value of the subject property? What is the tax rate of the subject property? What are the total annual special assessments for the subject property? 11 months out of the year you can get this information from the tax assessor website. You ll need the following links.

40 These SoCal tax assessor links might save ya some time. Los Angeles Orange Riverside San Bernardino San Diego Ventura

How to read your tax bill. Tax Rate - The tax rate is set by the county assessor. The amount stated is multiplied by the assessed value to determine your annual tax base.

41 How to read your tax bill. Tax Rate - The tax rate is set by the county assessor. The amount stated is multiplied by the assessed value to determine your annual tax base. Assessed Value - The assessed value is determined by the county assessor. This amount is determined by your purchase price or their internal appraisal. Whichever is higher. Special Assessments - Special assessments are create by your local municipality to pay for infrastructure. All these added up are added together on top of your tax base. They do not adjust with your tax rate.

42 When can we buy this thing? What is the estimated closing date of this transaction? Ask the seller: When would you like to close escrow. See if there s some flexibility just in case.

43 DETERMINING OCCUPANCY AND LEASE RATES What is the market rent for the subject property? Who currently occupies the subject property? If rented, what is the current monthly rent? If rented, what is the ending date of the current lease?

44 How much can I get a month for this place? What is the market rent for the subject property? Rentometer.com is the easiest way to determine the market rent. It s not 100% but it will get you in the ballpark. Let s check out how to use the site.

46 Who lives there, at what rate and for how long? Who currently occupies the subject property? If rented, what is the current monthly rent? If rented, what is the ending date of the current lease? The only way to get these answers is to ask the seller. Leases aren t recorded documents.

47 I ve got all this info, NOW WHAT?

48 75% of After Rehab Value (Fully Rehabbed Value) Minus Repairs Equals Purchase Price It s that easy!

49 ? The seller agreed to my price, now what? If you don t know what to do at this point, you need a mentor. Different deals require different terms that only experience can teach you. Leverage someone else s mistakes.

50 If you don t have a mentor, you can always partner with us. CRG.DEALS You can submit your deal and we ll joint venture with you.

51 Four phases of transformation

52 1 Inception - The AHA! Moment You're inspired and excited. You're going to lose weight and get that six pack you always wanted. You're going to start that new career. You're going to do something awesome. At this moment of inspiration you're "unconsciously incompetent." You haven't considered all the work this is going to take. You're ignorance on fire.

53 2 Deception - The Inspiration Hangover The idea of drinking green smoothies instead of pizza sucks. You wrote down all the things you need to do to start your new business and it's 10 pages long. Your brain begins fighting against you. You've become "consciously incompetent" Your ego likes things the way they are. You really want to quit and go back to the familiar. Even if it sucks, at least you know what to expect. You're inner dialogue turns to self-doubt. At this moment the real battle begins. You're fighting an inner war against an opponent that knows you better than anyone.

54 3 Transformation - The First Sign of Results If you fight hard enough, for long enough, you and the people around you begin to see the change. Your pants fit a little better. Some of the tasks of your business have become second nature. You are becoming "consciously competent". You re aware of the work you re putting in but it s a little easier now. You've come far enough now that you can look back and see the incremental changes you've made. The voice of your ego isn't as loud and the naysayers voices fall on deaf ears.

55 4 Identity - The New Normal Finally one day you just wake up and run. It's not a push any more. It's just what you do. You are "unconsciously competent." Your new business is running full steam and you can't remember the feeling of having a boss. Going back is no longer safe, it's a tragedy. You are what you set out to be. This is the new normal.

56 Get To Work and keep working until it s no longer work

Deal Analyzer For Flips

Deal Analyzer For Flips Preview Of What You Will Learn Sections: Introduction...5 Using This Manual...7 Section 1: General Property Information...8 Section 2: Property Values & Pricing......9 Section 3: Financing Costs...12 Section