Is This Property A Good Investment?
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Is This Property A Good Investment?

So check it out. We get this question
from this young man that basically said, “alright dude, I’ve been reading your
books, you guys have been educating me, so I’m ready to go to town.” By the way, good
job! Good on you. I love it. But you’re out there on Zillow and you’re
like I found this house, it’s in Spokane Washington. Is it a good deal? So this what we’re going to do. Steven and I
we’re just going to actually hop in. We’re going to take a look. We’re going to crunch
some numbers and then we’re going to kind of give you an idea of whether what you
might be looking at. Here is a good deal. I got my calculator. Boom! And pull out
your own calculator and do the math along with us. And so we’re looking at a
home here it’s at 14517 East, Broadway Avenue, Spokane
Valley Washington. It’s a four-bedroom two-bath 2,400 square feet. So we’re
talking about a really basic home here. And it’s really interesting because in
the description they say Great Valley Rancher, three bedrooms, two baths. I’m
like, “oh fourth bedroom non-conforming under space for a fifth one below.” Great Valley
Rancher that gets me hungry. Oh yeah. Makes me think of Hidden Valley Ranch and my grand cherry beans. Okay,
so it’s easy to look at something like this. We can check out some of the
pictures and it’s like, okay the only picture. Let me see there’s more here.
Check this out. Oh yeah huh, blue walls. Check that out someone likes blue into
hand and turquoise chairs. I would only do the deal if the chair comes with it. The green
walls, we got a lot of colors in here. This is great. This is why
you’re getting it for a discount. No everyone’s it’s just pink dude. They’re missing a light bulb right? I mean this
is a super basic home right? You got standard cabinets, everything’s oak. Yeah, it’s linoleum. Looks like
that’s probably the linoleum right there. Yeah. Moving along here, I think they used
a wide angle lens to make everything look bigger.
Yeah. That space is probably forth. Now, you got your backyard grass. I got
everything. So really good basic house and for a friend that’s asking… Probably
really good rental. Yeah absolutely. And the question is, is this a good deal? So
let’s look at the numbers. Yep. Okay, so first of all, it’s for sale for a $185,900 and Zillow has a Zestimate of $208,468. So what we’re going to
do is we’re actually going to take the price that it’s for sale. We’re going to
divide it by what Zillow is saying it’s worth and we’re just going to say well
based on Zillow does it look like there could be some equity? And so if you punch
in the numbers, a $185,900 and then divide
that by what you think it’s worth, $208,468. It actually ends up saying show me.
89%. So that .89, you could multiply that by 100 and then
it would basically say we’re at 89.2%. Now, if you
subtract 89 from one, it’s really going to reveal that you have around 11%. equity if Zillow is accurate and their
estimate here and their zestimate. So before we actually talk about that
part, what I want to tell you is that, yeah, it doesn’t look like… if that were a
true zestimate, that we are at 11% equity then you’d say? Yeah, that’s a decent
equity. Yeah, so you’re talking about what is that? $20,000, like $22-23,000 Yeah. And by the
way, if you then go and make an offer saying, “you know I’m really trying to get
to 15% equity like we talk about the book.” Then all I need to
do like for example take $208,468 you too, $208,468. Yep.
And we’re going to multiply that by 0.85 and if we’re 85% of
value, that tells us that we would need to get the home for $177,000. So that’s only $7 or $8,000 dollars off if you want a 15% equity position. So I might come in on this deal and say you know what,
we’re going to offer $170,000. 15 grand below, it is a little bit of a
lowball offer. It’s not necessarily disrespectful, it’s not $20,000
below, 30,000 below. I would put that offer out there. See I have a
different opinion on this. A little bit which is offer whatever you want to
offer. I mean there’s people out there that get offended or they want
to get offended at your offer but honestly, I have also known people that
have made massive lowball offers and just said, “look, I’m not trying to offend
you. Here’s my offer. If you can take it, great! If not, that’s fine.” It never hurts.
Put the offer out. Yeah. It never hurts. So put it out there. Yeah. Like
Kris said, if you want to offer a $170,000,
Make the offer. The very worst thing that will happen is they’ll say, “forget you.”
right? The best thing that could happen is they’ll say, oh, I like that offer, yeah,
we’ll do that” But chances are something in between what happened. Where they’ll
come back in the go she ate a little bit and say, “you know, would you
do 180? ” You’ll say, “well, I could do 175.” Well, what about 182, I can do 177.”
You know and you’ll land right there around your 15% probably.
Now just two things that you need to know about this. The first one is when
you negotiate, try to do as much of it verbally as possible, if you can. Because
you can write up an offer, send it to them and say, “you’ve got 48 hours to
respond.” And then they’re like, “well, I’ll meet you in the middle, you got 48 hours
to respond.” And then weeks gone by and someone else bought the house because
they did this really cool thing called telephone. And they actually say, “hey how
are you doing? Good. I see you have a house for sale? I do.” “Listen, it’s a
little crazy but I got a client that they’re qualified and they really just
want to pay that 170 mark.” “Be honest. If we submit that offer, do you think we
got a shot? I think it’s worth putting the offer in. Really? Yeah. Do you think
they’re going to counter? They might. Come on dude, what are the numbers?
What do you think they’re really needing to be at? Just get real with
me. Let’s save some time. Yeah I can’t tell you exactly what they’re looking
for. Of course you couldn’t. But you could probably put
that offer in and they make counter with a little bit. They make counter with a
little bit. Sure. Awesome! Hey, we’re going to get your offer, thanks. Okay, sounds good.”
Click. What do I know right now? That they’re going to counter a little bit.
And so by the way… Or you could put it a little bit higher offer in. Thank you. So
instead I might say well I could even be on that phone call be like, “so I’m just
saying let’s just say that we submitted for 173, do you think that there would
still be a counter? You could try that. Okay,
awesome!. Thank you. We’ll see your offer shortly. Okay. Okay.” What we’re doing right here is…
Listen, videos not even supposed to be on negotiating this. Dude, this is how
actually you get in on some of the really great deals without needing to
waste a lot of time messing around. But anyway, that wasn’t what we want to show.
This is what I would really want to talk about. The question is, is this thing
really worth? Does it have 11% equity. Is it worth $208,000 and would I
ever trust Zillow? Steven, do you trust Zillow? I don’t trust Zillow. With your life bet?
I don’t. What if you had to put all your children on it, would you
bet on it? Some of them. No I’m just kidding. No. Okay, so here’s the deal guys, Zillow, this
whole ideas estimate, I’m glad they gave it that name because estimate means pile of
crap. It might be right on, but it might be 20% high, it might be 20% low. Because here’s the deal,
the only way to know what something’s worth is what someone’s willing to buy
but dang it! You’re the buyer. You don’t know if you really came across a
really good deal here. So what you need to do is get with a competent realtor
and actually get him to do a CMA. Comparable market analysis and say, “hey,
find me a half a dozen or three other comparables. Things that have sold. That
are closest similar nature just like it watch your other video on CMA, we talked
about this. And if it comes back and they’re like, “actually, we did to see men and
it came back at not too away to came back at 2:11.” “Oh
Zillow may have been actually short by three grand.” or that happens sometimes.
Zillow fluctuates right? Anyway..Yeah or it could go the other way. And it could
be like, “Oh actually we’re showing that this home is worth 187. You’re like, “hah!
Zillow almost snagged me there. This thing’s got 1,100 of
equity not 11% of equity right? So, you got to get that CMA so that
you can put in an offer based on where you want to end up. And we hope this
video has been useful for you and just saying wow! when you think picture… And by
the way, how easy was it? Dude, you all can go onto Zillow, you can all go to your
local MLS and start you know screwing around with some of the information we
give you. You can get out there and start learning how to crunch… Do you see how
simple it was to crunch those numbers? You also see the thought process. So I’m
really appreciated this video because I think it’s a good example for all of you
to know what happens in an investor’s mind and you’re actually looking at
doing some like this. you


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