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​Real Estate Investing Analysis: Expert Advice and Deal Breakdowns 2024

Welcome to another exciting episode of “Grant Teach Me Something!” Today promises to be a unique episode because we’re honing in on your deals, evaluating your numbers, and giving practical advice for real estate investing. At Propelio, we believe in the power of community, which is why we encourage you to #JoinTheConversation.

Grant and Ryan: Your Hosts and Mentors

Grant is an experienced real estate investor specializing in creative financing strategies. He’s the go-to guy for turning difficult deals into profitable ventures. Ryan, on the other hand, is an expert on leveraging data to make informed investment decisions. Together, they make a formidable team committed to helping you succeed.

What to Expect

In this episode, we’ll be analyzing real deals from viewers like you. Whether you have a deal you’re currently working on, one you missed out on, or even one you regret, get ready to dive deep into the numbers.

Analyzing Deals Live

We’ve lined up a few calls to demonstrate how to properly analyze deals. Let’s get started!

Call with Chris: Clovis, New Mexico Deal

Property Details

  • Location: Clovis, New Mexico
  • Condition: Pre-foreclosure listed as a rehab
  • Listed Price: $148,000

Numbers Breakdown

  • ARV Calculation: $195,000
  • Rehab Estimate: $80,000
  • 70% Rule Explanation: 70% of ARV minus repair costs
  • Maximum Offer:
    • ARV ($195,000) * 0.7 = $136,500
    • $136,500 – $80,000 (rehab) = $56,500

Negotiation with Seller

  • Potential Short Sale Approach: Seek legal help to negotiate down the liens.
  • Highlighting Repairs: Be transparent with the seller about required repairs.
  • Proving Numbers/Comps: Always use factual, proven numbers to back your offers.

Unique Situation with Medicare Lien

  • Explaining the Issue: The seller’s Medicare lien complicates the sale.
  • Potential Solutions: Consider options like a second lien or consulting an attorney for lien negotiations.

Call with Sean: San Antonio Probate Deal

Property Details

  • Location: San Antonio, Texas
  • Condition: 1978-built, probate lead
  • ARV Range: $170,000 – $180,000
  • Rehab Estimate: $25,000
  • Seller Motivation: Probate with two heirs, one living in the house

Determining ARV Range

  • Challenges with Comping: The lack of similar-size, fully-updated homes makes precise ARV tricky.
  • Calculating Offer Range:
    • Conservative ARV: $170,000 * 0.7 = $119,000
    • $119,000 – $25,000 (rehab) = $94,000
    • Aggressive ARV: $180,000 * 0.75 = $135,000
    • $135,000 – $25,000 (rehab) = $110,000

Next Steps and Negotiation

  1. Initial Offer: Start at $94,000, making faces and notes to drive the point.
  2. Counteroffers: Be prepared to move up based on seller’s response.
  3. Psychology of Negotiation: Always frame your discount as a “convenience fee” for avoiding hassle.

Call with Corey: Bryan, Texas Creative Financing Deal

Deal Overview

  • Purchase Details: Originally bought for $147,000
  • Appraisal Value: $190,000

Buyer’s Offer

  • Terms Breakdown: $50,000 down, 10% interest rate over 15 years
  • Underlying Lien: First lien of $147,000 at 6% for 20 years

Cash Flow Analysis

  • Incoming Payment: $1,081.84/month
  • Outgoing Payment: $1,059.65/month
  • Amortization Mismatch: Need to re-amortize first lien to match the wrap, increasing outgoing payment to $1,250
  • Net Cash Flow: -$191

Equity Position and Risks

  • Negative Equity: Potential $47,000 out-of-pocket risk if buyer pays off early
  • Potential Solutions:
    • Raise sales price to create better equity spread
    • Refinance first lien to match buyer’s terms

Alden’s Deal: Houston Free-and-Clear House

Property Details

  • Location: Houston, Texas
  • Condition: Free-and-clear house needing $15,000-$20,000 in TLC
  • Asking Price: $200,000
  • Other Offer: $150,000
  • Seller’s Negotiation: Might let it go for $180,000

Calculating Max Offer Price

  • ARV Range: $275,000 – $320,000
  • Maximum Offer Calculation:
    • Conservative ARV: $275,000 * 0.75 = $206,250
    • $206,250 – $20,000 (rehab) = $186,250
    • Offer Range: $180,000 – $186,250

Factoring in Local Market

  • Houston Inventory: Post-flood market glut may require a more aggressive offer.

Overarching Investment Principles

  1. Always Run Conservative Numbers: Avoid overestimating ARV or underestimating repair costs.
  2. Account for All Costs/Fees: Hidden costs can kill a deal.
  3. Know Your Criteria: Stick to your ARV % and cash flow thresholds.
  4. Vetting Deals Thoroughly: Use real numbers, solid comps, and realistic rehab estimates.

Final Thoughts

In this episode of “Grant Teach Me Something,” we’ve delved into real deals from our viewers, providing expert advice and practical strategies for successful real estate investing. By analyzing diverse scenarios, from pre-foreclosure rehabs to probate leads and creative financing deals, we’ve highlighted the importance of thorough deal analysis, conservative number crunching, and strategic negotiation.

Remember, the key to successful investing lies in understanding your numbers, being prepared for negotiations, and always factoring in potential risks. By joining the conversation and leveraging the power of community, you can gain invaluable insights and support on your real estate journey. Keep learning, stay informed, and don’t hesitate to reach out with your deals—Grant and Ryan are here to help you turn challenges into profitable opportunities.

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