Total newbie: Normal to trust numbers from seller?

Question

Hey everyone,I'm a total newbie and learning everything I can. I'm currently studying for my upcoming Real Estate exam, too.Question.. as a thought exercise, I've been analyzing deals that I have no intention of buying yet (still getting my personal finances in order), but I'm a kinetic learner so I'm doing deal analysis as practice and to learn my market.A lot of the ads I see for properties include a lot of rehab estimates and ARV values from the seller of the properties. Apparently, every deal on the market is a slam dunk, right!? :) I'd imagine these numbers are taken with a huge grain of salt, and a diligent investor wouldn't pay any attention to them and do their own analysis, right? And if that's the case, are they there just to hype a careless buyer? What's the point?

This is my first post, and I've had a lot of questions like this that I think are probably "dumb question" but life is short so here I am.Thanks in advance for your input! :)

Josue Vargas · Answer

@Christopher Arter

Good tip about Google Street View.  Also, if you can, try Google Earth, there is a clock you can turn on and look at different dates, like a history back from, well, depends on the city.  But if you are looking to newer areas, you can see how construction has progressed.  Also you can do the street view 3D and everything, and you have a grasp on how steep or flat are the streets/areas also.

Regarding books, I don't have one specific book for deal analysis.  But, I like the Book on Rental Property Investing by Brandon Turner and how he presents the different scenarios of investing and analysis.  Thanks for the recommendation on the book you are reading now, I'll take a look at it.

Christopher Arter · Answer

Hi @Josue Vargas,

I'm finding these primarily on Loop Net and Craigslist. I'm avoiding Realtor.com / Zillow as that seems to be full retail. I haven't visited the properties yet. Primarily I'm practicing getting used to running the numbers and getting my deal valuation skills 100% on point. I am, however, using Google Street View to have a "virtual" drive through the neighborhood to get a feel for the area. As you probably know, you can click your way through the neighborhood just as you would driving through it in person (almost). It's a great tool that I used when I was a regular joe looking for his first house that I bought last year.

But, those images are out of date, so once I start to analyze a real deal, I'll most certainly drive it and have a look in-person.

As for the Realtor, I'm actually studying for my RE license myself now. I'm doing this mainly so I can have unmitigated access to MLS. I've found some rather hands-off virtual brokerages that will allow me to basically do my own thing.

Do you have any books you'd recommend for deal analysis? I'm currently reading What Every Real Estate Investor Needs to Know About Cash Flow. It's great!

Josue Vargas · Answer

@Christopher Arter Its great you are analyzing properties and have a good grasp now... Question, where did you find these properties?  Do you have a realtor?  Or you are just looking in the famous websites?  The famous websites do not have the really good deals, because they are gone within days.  Have you visit the properties you analyzed or comparables? By doing this, you will learn so much about the properties you are looking to, and then the other property that seemed good in the add but, its not that really good in reality once you see it in person (maybe the neighborhood is not what you thought...

Doug Woodville · Answer

Hey @Christopher Arter, Welcome to posting. Trust me, I've seen "dumber" questions and I've only been around here a short time. Your question is valid though. I'll preface this by saying I've not purchased a property but have analyzed them myself and I would absolutely do my own due diligence on an estimate, ARV etc. I would never take a sellers word for it unless I'd done multiple deals with them and their numbers check out good after the rehab is finished. I honestly think it's just good business practice.

Nathan Lovero · Answer

Hello Christopher,

I personally don't look for major rehab properties, but I would start connecting with contractors to get more understanding of costs of repairs. At the same time I would start looking up sold fully renovated houses in the area and find what the asking prices are and then watch for what they sold for.

Hope this helped,

Total newbie: Normal to trust numbers from seller?

Most Popular Reply