Single Family Homes - The No Risk Investment! - Part 4 Exhibit 3-C
In many Sunday newspapers there is a classified section that lists
homes for sale that will be open for inspection that weekend. That gives you
an address to mail to. Many metropolitan newspapers also list those ads on
the Internet as follows:
NEW TO MARKET
PEORIA $126,500
Pioneer Village OPEN SUN
6914 W Beryl Ave: Vaulted ceilings, newer tile, and French doors lead to sizable
backyard. Newer air conditioner in a cool block home. #2006562. Bob Young
623-640-1486/623-584-5384.
SURPRISE $145,000
PEORIA $155,000
Westfield Gardens BY APPT
Beautiful starter home. New wood flring, new play pool, frpl, frml lvg & din rm,
open flr pln, wood blinds, professional landscaping in front & back. #2006065.
Phil Cea 602-770-1819/623-298-0623.
PHOENIX $155,000
Los Paseos Condos OPEN SUN
3150 E Beardsley Rd #1067: Condo living at it's finest. Brand new end unit w/3
bdrm/2.5 bth. Upgrades galore. All bdrms have prvt. balconies. Wash/dry
included. Close to 101, 51 & Desert Ridge. #1997163. Bill Watkins 623-7645786/
623-298-0623.
NORTH PHOENIX $157,900
Legacy Villaas OPEN SUN 12-4
1947 W Carol Ann Way: Very prvt gated comm. 3 bdrm/2 bth, 2 car gar. Open flr
pl, perfect for entertaining. Eat-in kit, grt rm w/frml dining, ceiling fans thru-out.
Easy care yard. #2005356. Rosie Crowley 602-677-0095/623-594-2300.
SURPRISE $184,000
Roseview OPEN SAT 10-2
13423 N Acapulco Ln: Beautiful split bdrm flr plan. 3 bdrm/2 bth + den. Built-in
entertainment ctr. in huge fam rm. Gorgeous open kit w/eating area. Cov'd patio
overlooks great children's play area. #2004506. Jerry Stewart 623-229-6228/623584-
5384.
SCOTTSDALE
SCOTTSDALE $167,000
Exhibit 3-D
Whitepages.com
At this Web site click on “REVERSE ADDRESS” found in the violet
colored bar near the top of the page. In the “Street Name” box enter the
name of any street. Just the name - no “West”, “Avenue”, “Drive”, etc.
You will get a list of the names and house numbers of everyone on that
street.
To find an address when you have only a phone number click on
“REVERSE PHONE” and then enter the number in the box.
Exhibit 3-E
PROSPECTING QUESTIONS
1. Where is the house located?
2. What is the address?
3. The ad says there are ____bedrooms, is that right?
4. How many baths?
5. Is there a two-car garage?
6. When could I see the house if I’m interested?
7. How much are you asking?
8. How did you arrive at that price?
9. What are the neighbors like?
10.Why are you selling?
11. Do your children attend local schools?
12. Are the schools close by?
13. Are they good schools?
14. How soon do you need to sell the home?
15. If you don’t sell the home what are you going to do with it?
16. Is there anything wrong with the house I should know about?
17. Is there a mortgage on the property?
18. Are your mortgage payments current?
19. Have you had the house appraised? If so, by whom?
20. What appliances are going to included with the sale?
21. Is there a homeowners association? How much are the assessments?
22. Are there any problems with the roof? Has it been replaced recently?
23. Is the lawn and landscaping in good condition?
24. Does the house have air conditioning?
25. Are there other houses for sale in the neighborhood? About how many?
Why so many?
26. How high are the property taxes?
27. If I buy the home could you help with the financing?
28. What’s the least you could accept as a down payment?
29. Could you take part of the down payment now and part later?
30. Would you consider renting the property to me?
31. If I decide to buy the property now could you make me a good deal?
Remember; work the questions into a friendly conversation.
Exhibit 3-
F
April 1, 2010
Harry Homeseller
1234 Street Drive
Tombstone, AZ 99999
Dear Mr. Homeseller,
Thanks for taking time to talk on the telephone with me about
your home. It sounds like a very nice property.
As you may remember, I buy houses to rent and I am always
looking for good homes like yours. Since I do this for my living I
understand ways to buy homes that can benefit both the buyer and
the seller.
If you decide that you are ready for a quick sale please Call
Billy and we can get together and find out just what I can do to help
you get this house sold, so you can get on with your life.
Sincerely,
Billy Buyer
600 456-7890
Exhibit 3-F (Follow-up letter)
May 1, 2010
Harry Homeseller
1234 Street Drive
Tombstone, AZ 99999
Dear Ms. Homeseller,
You may remember that I called you about the home you have
for sale a few days ago. I wanted to remind you that since I am in the
business of buying and renting homes I can often close a sale very
quickly to meet the needs of a seller like yourself.
I have experience in solving home buying and selling problems
that most others just can’t match. If you feel I can be of help to you
please Call Billy. I am always happy to talk.
Sincerely,
Billy Buyer
600 456-7890
FOUR
You Make Your Profit When You Buy!
It is of the utmost importance to never over-pay for investment
property. You will make your profit when you buy! If you buy a property
based on its investment value it will rent for enough monthly income to
cover your financing, upkeep and often give you a little cash left over. It
will be a price that is at or below fair market value.
If you pay too much for a home you will have negative cash flow.
That means your monthly expenses will be more than the property can
produce. You will have to take money out of your pocket to service the
mortgage debt and any other expense that may arise. This is not a happy
situation and it has been the downfall of many beginning investors. Don’t
let it happen to you!
Generally speaking there are three methods used in appraising real
property. They are:
1. The cost of reproduction.
In other words, at today’s prices
how much would it cost to build a property comparable to
the one being considered? With this method you would
estimate the cost of building the same home, then add the
cost of the land and subtract any wear and tear. The result
would be the value of the home based on the cost of
reproduction.
2. The net income method.
This is used with larger properties.
The greater the net income produced by the property the
higher is its value.
3. Comparable sales.
This is the method you will use for
single-family homes. You will find the sale prices of similar
homes in the neighborhood that have sold recently. Make
adjustments for improvements like swimming pools. If the
comparable sale property has a pool and the home you’re
considering does not, you would subtract about 12 thousands
dollars or so to estimate the comparable value.
Modern, single family homes in good neighborhoods are the easiest
of all investment properties to value. There are many of them and they are
all very much alike. If you are considering a custom home in an area of
custom homes or houses in rural areas finding a true value is more difficult.
But you should not be looking in those places when you are a beginning
investor.
As you begin talking to FSBOs you will find that they arrive at the
sale price of their homes in strange ways. You will hear things like “I need
this many dollars to buy a motor home” or “I want to invest in a business
franchise and it takes so many dollars” or “I heard that Bob down the street
was asking this much”. In other words, they don’t all have a rational idea
of what their home is really worth.
How can you find what other homes in the area sold for? If you are
dealing with a real estate agent they can use their MLS computer to search
for comparable sales in the area. Or you can walk up and down the block
and ask other residents about the value of the homes. Just tell them you are
considering buying in the neighborhood. They will also tell you about any
nuisances or drawbacks to the area. Some newspapers print the address and
sale price of homes every week. You can begin collecting those.
Many counties now offer access to many public records through your
home computer. Maricopa County in Arizona is an example of this modern
service. Your county may offer the same. Do a Google search for your
county. In the Google search window enter the name of your state, followed
by the name of your country and then “recorded documents”, like this:
AZ+Maricopa+Recorded Documents
You may be taken to the County Recorder’s Web page where you can
enter the homeowner’s name and search for any liens that have been
recorded against the property.
You may also do a search of your property tax assessor’s Web pages.
Here in Maricopa County the assessor lists comparable sales figures for
homes that have recently sold in that neighborhood. Just enter the house
number and street name in the “By: Street # & Name” box. If the name of
the street is “Willow Ave” just enter “Willow” and drop “Ave”.
If you keep clicking on the appropriate choices you will be taken to a list of
comparable sales figures for the subject property. Click on “View Comparables”:
And you will be shown a screen like the following:
This is another illustration of how real estate investors are able to do more
and more of their research from the convenience of their home computers.
Let’s say it again - when you are buying property it is very important
to know what it is worth in the current market.
Comparable Values - The first place to get comparable values is from
shopping the area yourself. If you know that 3 bedrooms and 2 bathrooms
homes often sell for a certain figure, you'll have a good idea of where a
particular home fits into the price range.
There are places on the Internet that do comparable price searches.
Some are free, some have a small fee.
Homeprice.net: About $25. This service gives an accurate, detailed report
with meaningful comparable sales, a map pinpointing each comp's location,
info about surrounding neighbors and shopping in the area.
SmartHomeBuy.com: $4.50 per report or $14.95 for 10 reports during a 90
day period.
What about Homegain.com? Test results appeared to be simple "radius"
searches. Reports also appeared to give a great deal of weight to the last
price the home sold for; that can be highly inaccurate. Free is nice, but
spending a few dollars might save a few thousand.
Warning! These services are only accurate if target home is in an area of
very similar homes, and turnover is frequent enough to make the
"comparables" recent and numerous.
Always:
A) Use only comparables that have sold within the past 6 months. The most
recent sales are best.
B) Use only similar homes in nearby neighborhoods. Stay as close as
possible to the target house.
C) Try to use houses built within 5 years of the target house and within
about 300 square feet of the size of the target house. Also check the lot size
for any large variations. This document and accompanying materials are designed to provide authoritative information in regard to the subject matter covered in it. It is for illustration purposes only and presented with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional opinions. If legal advice or other expert assistance is required, the services of a competent professional should be sought. |
