Script is worth money! What does that mean? Scripts are basic outlines used initially to quickly evaluate a property's potential to satisfy our investing guidelines & objectives.
You have to be fast and efficient to quickly determine whether a property and its owner(s) have the right elements needed to warrant your further investigation. The following initial question and answer list is what I will often tend to do in order to either make an offer and temporarily lock it down (option) or quickly eliminate it from my list.
Keep in mind this is not the end all, be all list of lists. This is just my quick gage guide to begin digging deeper. If these initial questions reveal favorable circumstances relating to solving someone's problems for a profit I then take it to the next step!
One last note before we turn you loose, this script is just an outline for you to build on, it ultimately works best when motivated sellers call YOU! When they call you it puts you in the strongest position possible to be able to request the information outlined below!
Initial questions to ask sellers
In this report, I?ll skip the formalities of hi my name is, and yours is? Just remember you want to establish favorable relations from the start, so take a moment to use neural linguistic programming to your advantage in making the seller feel comfortable in all of your communications. NLP conveys respect, appreciation, concern and sincerity; it is used to establish mutual understanding, trust and repose regarding BOTH the positions and personalities of those parties to negotiation. Win/Win should be your motto.
Once you have established your NLP environment you can begin to ask the following questions of the seller without them feeling like your invading their space! What you are is a professional who may be able to help them solve their problem if it fits within your guidelines. Remember they must need you, more than you need them.
May I ask you why you are selling? Typical owner/seller replies may be: Live out of town, we are financially strapped, death, divorce, relocation, job loss, old, retiring, disabled, poor health, inherited property, frustrated landlord, under-market rents, high vacancies, seller needs cash, bought another home, partnership problems, other. Circle one and research the situation further.
How long have you owned the property?
? 5-10 years or more, seller may have equity to give or carry some financing
? 20 years they may sell on contract with you assuming balance of old loan(s)
? Short periods of ownership lend to lease options w/right to buy, sub 2's, short sales, contract for deed etc?
Do you own any other income property?
? What kind
? Where at
? How long
? Are or will any of those be for sale as well
Two reasons for asking the question above are, one; certainly to see if something else may be of interest and second to determine whether or not you are dealing with a savvy sophisticated seller. Do they appear to be in control? Yes or No (circle one). Remember! If your seller is not genuinely motivated, you're wasting time.
Could you tell me a little about the property?
? Be quite and let them speak! Open ended questions reveal important information
? What year was it built
? How many units and what type 3/2, 2/2, 1/1, efficiencies, block, wood frame etc
? How much total living sq/ft, also ask about garages, carports and outbuildings
? What are the current rents and lease agreements in force, month to month, annual
? Where exactly is it located and the physical address
What is your asking price?
? Is it listed with an agent yes/no, if yes when does the listing agreement expire
? How long has it been on the market 1 day week month 2 3 4 5
? Have you had any offers (yes no)
If yes, how many at what price?
What where the terms?
Why did they fall through?
If no offers, then ask: why do you feel know one has made an offer?
Can you be flexible on price or terms? Ask: Do you mind if I ask you 'what your plans are for the proceeds from this sale?? (Don't stop) The reason I ask is that your answers will help us create an offer that will satisfy both our needs. Using the information sellers give you to the questions above can open up the door to your creative problem solving vault, get the information and move on, don't try to solve the problem at this time!
Is this deal worth pursuing? If yes then set an appointment to see it as soon as possible! If no, beat self over head for not writing better ads! (Just kidding) :~)
Initial inspection upon first meeting
Your first visit to the property will be a general inspection only, don't nitpick or ask for detailed information at this meeting! NOTE: With effort it should take you no longer than six months to begin to be able to assess property values in your farm area very quickly.
Give yourself time to get to and drive around the surrounding neighborhoods of the subject property before your scheduled appointment time, start by driving by the property first to ensure you don't waste time in those areas if the property itself once seen has obviously been misrepresented over the phone or other conditions rule it out.
If the property is still a go then do your neighborhood inspection on wheels until your appointed time arrives, have pad and pencil and be looking for other homes, realtor signs, FSBO signs and so forth, make good use of your time and put on your real estate detective hat!
Your initial inspection begins the minute you pull into the drive, is it asphalt, concrete or dirt! Can you pave it, reseal it or pressure-wash it? Is there adequate parking, will it be well lit at night! Was the address easy to find, where the mailbox is, look at the roof, the porches, gutters and downspouts (does it have them?) If not has runoff created foundation problems? Look at the neighbors building is it well kept or not? You haven't even got out of your car yet and these things have been recorded subconsciously once you've trained yourself to look!
This is what I mean by initial inspection; spend a minute walking around the outside of the house with the seller when you arrive. Here again this let's you get comfortable with each other and you can work the NLP angle to establish trust before going inside. On your casual walk you'll be looking for separate meters for multi's, condition of paint, siding, mortar, wood, windows, soffits, doors, skirting, overgrown trees, broken down, rotted or rusted fencing, outbuildings and so forth, if your good you'll notice signs of pets, soggy septic fields, buried tanks, infestation, hazardous materials, encroachments and possible zoning violations, let's say your comfortable with the initial walk around.
On second thought, did you take notice where trash is stored? Where there any rats, ants, wasps, mice, termites, or other critters taking up residence? Evidence of water leaks or damage, are lines and fittings secured and sealed properly for wsg, electric, gas/oil, cable, phone and A/C unit. (Just when you thought you knew it all)
Now you ask to go in, are porches and decks sturdy, handrails to code? Is there a storm door with screens, look down to check the doorframe, threshold and casing, has the lockset been kicked in or jimmied, are there bars on the windows in back, is there evidence of high crime in the area?
Let's go inside, after all we have already spent 15 minutes just walking around outside.
We're going in general Joe! (Homeowner) O.k. You now get the idea of how the rest of this initial inspection is supposed to go once you're inside. Let's take it from the moment you step over the threshold, what do the smells tell you; mold, pets, grease, smoke, or fresh paint, carpet and saw dust? You should be allowed to see every room, so don't be shy, you'll be looking at ceilings for water damage and repairs evident, floors that are level (bring marble), walls that are square and doors that are solid and close properly as you exit and enter rooms. Carpet, wood, tile and vinyl floor coverings may or may not be in good condition, just know that the sub-floors are in good shape, if you're stumbling, missing steps, bumping into walls and so forth then you will also get the impression that design features may not be to desirable either.
How does the floor-plan flow, does it make sense or was this place built one stage at a time, do the bedrooms conform to code, with minimum square footage, a built in closet and an egress window? Do sinks around water facilities have GFCI protected outlets, is the tub rusted out with rotten floorboards underneath, check that feeds and drains flow fast, under sink cabinets aren't water damaged, faucets and toilets work, ventilation fans actually vent to the outside, smoke detectors work? In addition to ensuring window seals aren't broken and they open and close properly you'll want to keep in mind energy efficiency, regarding appliances that will stay, the type of heating and cooling installed and its condition etc.
How about insulation values and quality of materials used in all areas, circuit breakers 200-amp minimum main service, with three pronged grounded receptacles throughout. Now as a general recap and mind meld, scan the building as a whole for plumbing, electrical, structure, roof and foundation items that agitate your gut instincts.
You'll get the hang of this after you do a couple of walk throughs with a certified home inspector, before long the preliminary interior review won't take more than a half hour, so between the 15 minutes you spent outside and the 30 minutes you spent inside, you can take another 15 minutes to formulate a beginning point for an offer contingent upon everything under the sun at this point, just to lock it down while you begin your due diligence phase of checking into things further.
The key here is to quickly gage whether it's a steal, a deal or a possibility and lock it up contingently so that you have the sole option to consider it for the short period of time that your option takes it off the market from other swift investors.
Once you have your option period (contingent offer accepted) then is the time to do a
? Title search
? Check zoning, easements, restrictions, permits & homeowners association rules?
? Taxes, assessments, grandfathered use and utility & insurability costs
? Run your numbers and do a pseudo CMA or AVM to get a price fix!
? Scrutinize sellers 1040 form schedule E against rents and leases provided
? Get disclosure filled out by seller & bill of sale for personal property that conveys
You will no doubt have other things to add to the lists above, as I mentioned at the start this is only a general outline for you to begin your journey, you too shall discover things to be looked into on your own.
Insights
I thought these items could help you as well, so if you're still with me, we'll discuss some general market signs that can lead to further insight and wise decision making.
The six reasons property values go up!
? Inflation
? Supply and demand
? Economic conversion
? Capital improvements
? Increased bottom lines
? Improved infrastructures
The seven reasons property values go down
? Urgency to sell
? Lack of proper maintenance
? Decline of surrounding neighborhoods
? Adverse infrastructure changes
? Economic obsolescence
? Government controls and regulations
? Supply and demand
Reasons why properties fall into disrepair
? Absentee ownership
? Owners have other more pressing priorities
? Bad management
? Owners cannot afford repairs & maintenance
? Tenants not responsible
? Ownership disputes
General observations
These general observations are more like notes to myself, but you're more than welcome to look over my shoulder while I try and figure this game the rest of the way out. :~)
Doing a general market study:
? Check occupancy rates
? Determine true rental rates
? Employment levels
? Population growth
Look for signs of mismanagement and deferred maintenance, estimate cost to cure neglected items and try to deduct it from sellers' asking price, systematically rehab property and rotate tenants while increasing rents and value, eventually obtain true fair market rents and best Gross Rent Multiplier possible (GRM) backed by quality tenants and binding lease agreements.
Old industry nugget grasshopper! (Don't mind me I?m talking to myself) Buildings like these allow you to have a strong pool of pre-screened buyers for rehabbed homes you can sell by various methods as your tenants become financially able. When tenant becomes a buyer, raise rent to reflect current market rents and find new tenant!
Note: Excellent management and fair rental rates = low vacancy rates and allow building to increase in value while building potential buyers trust and limiting risk.
Local, state, public and private projects lead to opportunity, obtain community master plans (planning & zoning) which establish priorities for growth, write offers in recovering areas and contact owners annually of property you would like to own. Look for distressed property in good neighborhoods and improve the property to match, multi-units with minimum 2bed 2bath units away from other poorly managed or maintained property is best. (40% off retail is a good number to shoot for)
Nuggets
? Network with people who love real estate, they are often great consultants
? Invest in things you understand while not rushing to by more just to acquire
? Learn to recognize what creates value, have one partner who is an appraiser
? Stay away from all rental areas and bad neighborhoods, life is to short
? Fixers in gentrifying neighborhoods offer greatest returns, must cash flow
? Never allow yourself to be in the position of being forced to sell, maintain control
? Owner finance using land contracts to create own form of private I.R.A.
Signs of good locations
Area is growing with new business moving in, neighborhood is safe has good, roads schools, police, fire, hospitals, churches, parks, employment, shopping, restaurants & entertainment. Amenities that add value can be lakes, rivers, streams, springs, ocean, mountain views, old growth trees, land with hard to find or recreate features.
That's it folks hope you had as much fun reading this as I had writing it!
