Kris Krohn here with REITV. And, today
we're going to talk about whether or not
you got your hands on a good property.
Like, how should you even know did you
get a good one? is it an ok one? should
you pull the trigger on it? There's a lot
of time and effort and money and
commitment that goes into making this
happen are you really ready to marry a
property for six months or six years?
based on whether you think it's a good
idea well guess what today we're going
to teach you how to know whether you got a
good idea or not
Okay, now you think you've got a good
deal right in front of them here's the
big question, is it a good deal?
Should you get really excited about
getting it under contract? Well first of
all, whether you do or don't get excited
let's just remember lesson number one
you're not falling in love with what you
see, you've got to fall in love with the
deal. That means the numbers and so how
do you know if there's equity in this home?
well this is kind of a strange
thing about real estate that you need to
know. Technically, a home is only worth what?
what somebody's willing to pay and
that's you for ninety five percent of
our real estate but you see, where you
and I come in is that, there's deals in
the marketplace but for whatever reason
someone needs to sell them for a
discount. You need to know how to verify
that discount. Because, an appraisal is
not going to do it for you. The world's
not going to do it for you. A bank is
going to tell you that you're buying it
for what it's worth because that is what
you are willing to pay. So here,
as investors, you and I, we've got to have
something we can rely on. Here we call
it a CMA. A comparable market analysis.
In all 50 states in all the different
counties you have accessed through
realtor's of something called the
multiple listing service mls and what an
allow you to do is see all the homes for
sale on the computerized systems and
they always have a function where you
can compare home against homes.
Well, let's just say that you're buying a
short sale or foreclosure or maybe it's
not distressed maybe that maybe there's
a death in the family and they need to
just liquidate the asset they don't mind
letting it go to twenty percent discount
so you go through and you find all of
the similar homes that look like that
home and maybe you find five in that
neighborhood that's sold in the last six
months.
This one's over 99,000
This one sold for 101,000 and this one sold for
a hundred thousand this one sold for a
hundred thousand, this one sold for
98,000. And, you can compare the square
footage and the age and renovations and
basically say alright if we were to
compare all of these homes that have
sold so the one that I'm trying to buy
it for seventy eight thousand dollars
how much equity could be there? and let
them do cool little subtractions
additions to help figure that out but
ultimately you're going to get to a
percentage which is this,
alright,
This, CNA says that, "this property is worth a
hundred thousand and they are asking
90,000 for it on a totally at ten
percent margin ten thousand dollars but
i'm going to offer 80. And your regular
offer for 80 based on this question how
much equity is there well 100,000 value
$80,000 offered if you get that offer
accepted when you got you have a twenty
percent margin that's a 20-person equity
position that's twenty thousand dollars
in this scenario so if you lock that
down and actually get your hands on that
property that CMA is helping you ensure
that you have that position and we've
got a video here that actually talked
about how to do a detailed analysis on
the cma because you want to make sure
you don't get hosed by anyone who is
manipulating the numbers intentionally
or accidentally.
So I just got back from Africa and in Africa they have the big
five right? The ones that you are trying
to see on Safari? let me share with you
right now the big five in real estate
when you're doing a comparable market
analysis.
Number one, you want to be looking at square footage. I don't want
to compare the home I'm trying to buy on
to other homes unless they are similar
and I look for maximum of fifteen
percent difference. The next one number
two is bedrooms and number three is
bathrooms. I don't want to compare a
three-bedroom home to a nineteen bedroom
home. I want to compare a home that is as
similar as possible. Number 4, I'm looking
for a home that is similar in type I
don't want to compare two story to a
Rambler I don't want to compare no, no, no,
no, a condo to a mansion
compare like houses
And the last one is age.
Is this home-built in 1950? and the one I'm comparing
it to is built in 1980? and
the system will take it into account but
you and the realtor get to pick which
ones you compare don't compare things
that are already too different from each
other. A little bonus here by the way, if
you're ever looking at a property and
there are no good comparables be very
afraid no good parables means that when
it's time to sell if you still don't
have good comparables for that type of
house in that area then it doesn't
matter how much equity you think is
there or you fudge the numbers to make
yourself believe is there unless there's
comparables then you're just waiting on
someone else to determine the value
without comparables they really don't
know what that is so be smart buy
homogeneous real estate. real estate is
very similar to each other.
don't make it more complicated than it
needs to be. Go out there and do real
estate. And when the numbers make sense
pull the trigger. Thanks for watching
today. Subscribe to our channel watch
more of these videos I hope they're
helping you and let us know what videos
you'd like to see more of so that me and
my team can go make those happen and
help you out. Thanks.
you
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