What to do AFTER your offer has been accepted?

[Brian Garrett]

This is a very basic question. I have never purchased a home before so I am not sure of the standard procedures or proper protocols. On a flip property for example, once you have an offer accepted do you then coordinate with a contractor or inspector to come walk the property? I'm not sure what the process is. Do you have an inspector come out and make a list of any and all issues? What do they charge for this? Do you then have a contractor come afterwards to give you a bid on the rehab costs? Do you have them both come at the same time? Do you just have a contractor come and not an inspector? I'm a bit confused on this aspect of the deal. Can someone please give me a simple run down of the standard process? Thank you in advance for helping clarify!

[Joe Villeneuve]

Here is your list in order of the process of buying an investment property...flip or hold:

1 - Put your Power Team together first.  Rehabber, RE AGent (investor friendly), title company, funding sources, partners if needed, etc...

2 - Analyze the property's Asking Price (AP) against the sold comps in the area (make sure you're analyzing "apples to apples".  Same immediate area, same size home, etc..).  Subtract your profit (always pay yourself first) from the Sold Comps in that micromarket, subtract your desired rehab cost based on what the maximum rehab you can/will do, subtract any other costs such as cost of money (Hard Money, etc...), and that gives you the maximum offer.  NEVER GO OVER THAT...EVER.

3 - Have your RE Agent make your offer.

4 - Negotiate price to buy, but NEVER agree on ANY price (and don't rationalize here saying, "I can get my rehab lower") higher than the maximum you calculated out to be in Step #2

5 - If you don't get an accepted offer to your liking, move on to another deal.  Don't negotiate against yourself.  The goal here isn't to get the property...it's to get the deal.  Big difference.

6 - If you get YOUR number/offer accepted, now go and inspect the property within the agreed upon inspection period with your rehabber to see if the property "plays nice" as far as the needed rehab matching up with your maximum rehab estimate.  If it doesn't...pass.  That's what the inspection period is there for.  Just make sure you do this during the inspection period so you get your Earnest Money back.  Never inspect a property before you make an offer....big waste of everyone's time, and by the time you decide to make an offer, I've already got the property.

7 - If your inspection gives you the "thumbs up", your RE Agent will set up closing.  Make sure you have the funds ready for closing.

8 - Close

9 - Rehab

10 - Exit strategy...either rental or flip

Before you do any of this, you should have found your "micromarket" doing market analysis.