Actionable Steps to Getting My First Deal

[Vince Espiritu]

Hello BP members,

My name is Vince and I am a rookie investor. My goal to purchase my first Rental Property by the end of next year (June 2022- the latest). After reading "How to Invest in Real Estate" by Brandon Turner & Joshua Dorkin and "The Book on Rental Property Investing" by Brandon Turner, I have created this checklist for myself to have clear actionable steps on getting that first deal. I'm also planning to house hack and self-manage this property.

I would like to post it here so I can get your opinion and answers on the checklist I have created. I would greatly appreciate any comments and suggestions that I should add to my checklist.

The question that I have to answer on my checklist right now is "How to buy a foreclosure property?"

What are the steps I have to take and consider when buying a foreclosed property? Are there any extra steps here compared to buying a non-foreclosed property? Or is this a completely different process?

I am attaching a link here to my checklist: 
Getting My First Deal Checklist (biggerpockets.com)

Thanks in advance!

-Vince

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ACTION PLAN: Getting My First Deal

Necessary Steps to Take to Get My First Property:

Step 1: Educate Yourself and Practice.

Learn about:

• How to Find an Off-Market Deal
  • Absentee Owner List
• Drive for Dollar
• How to Purchase a Foreclosure Property

• How to Quickly Analyze a Deal
• How to Estimate Rehab Cost
• How to Estimate After Repair Value
• How to Forecast the Property’s Value and Performance

• How to Obtain an FHA 203k Loan (or other loans that can cover the rehab cost)
• How to Do Your Due Diligence
  • Title Inspection
  • Document Inspection
  • Physical Inspection
  • Other Inspections

• How to Close the Deal
  • Title Company
  • Lawyer
  • Escrow
  • Insurance

• How to Rehab a Property DIY or through a Contractor

• How to Find a Tenant
• How to Screen a Tenant
• How to Evict a Tenant
• How to Manage your Property and Tenants

• How to Refinance Your Property
• Exit Strategies
• How to Find the Members of your Real Estate Team
  
  

Step 2: Assemble Your Real Estate Team.

Find your local:

• Real Estate Agent
• Contractor & Handyman
• Private/Hard Money Lender & Conventional Lender Specialist
• Property Manager (for future use)
• Lawyer
• CPA
• Bookkeeper (QuickBooks/Rental Property Software)
• Insurance Agent

Step 3: Get your Loan Pre-Approved.

• Shop for Loan Options. Compare Interest Rates, Down payment, Premium Mortgage Insurance.
• Contact Lender Specialist to Ask for Requirements
• Prepare All the Required Documents
• Submit All the Documents and Get Pre-Approved

Step 4: Find Your Property.

• Know your Market
  • Types of Neighborhood
• Crimes
• School Ratings
• Businesses
• Vacancy Rate
• Unemployment Rate
• Laws on Rental Housing (Tenant & Landlord)
• Typical Property Price Range
• Typical Rent Price Range
• Analyze Deals

Source of Deals:

• MLS through Real Estate Agent
• Portals
• Absentee Owner List
• Drive for Dollar

Metrics:

• 2% Test
• 50% Rule
• CoCROI (more than 10%, which is the average return on Stock Market)
• Total ROI

• Offer Up on Deals
  • Negotiate on Purchase Price
• Accept the Deal (with):
  • Inspection Contingency
• Financing Contingency

Step 5: Get Your Loan Approved.

• Submit the Property Information
• Appraisal
• Submit More Documents
• Loan Approved

Step 6: Due Diligence.

Hire a Lawyer/ Title Company for:

• Title Inspection
• Document Inspection

Hire a Property Inspector for:

• Physical Inspection

Other Inspection:

• Plumber (Inside Drainpipes)
• Pest Inspector
• Asbestos
• Lead-Based Paint

Step 7: Getting Ready to Close.

• Order Insurance from your Insurance Agent
  • Homeowner’s Insurance or Rental Property Insurance
• Setup your Business Checking & Savings Account
• Preparing all the Necessary Forms on Managing your Property
• Preparing Bookkeeping
• Final Walk-through the Property
• Plan the Rehab (Do this while doing Physical Inspection)
• Double Check the Documents and Sign it

Step 8: The Rehab Stage.

• Present the Rehab Plan to the Contractors and ask for a Bid
• Hire the Contractor with the best service, qualifications, and project history, and reasonable price.
• Create a Checklist for the Project and Give to the Contractor (only pay the contractor each time they get something done on the checklist)

Step 9: Find Tenants.

Advertise your Rental Property:

• For Rent Sign
• Craigslist
• Newspapers
• MLS
• Portals
• Rental App (like Apartmentlist.com, RentCafe.com, RentSpree, Pocketlist)
• Existing Tenants

Step 10: Screen Your Tenant.

• Set your Rental Criteria
• Background and Credit Check
  • Prior Felonies within 7 years
  • Prior Evictions Filed
  • Prior Evictions Carried Out
  • Bankruptcies
  • Judgments
• Criminal Issues or bad financial History
• Verify Income & Renting History

Step 11: Accept Tenant.

• Lease Agreement
• Move-In Condition Report
• Security Deposit and 1-month rent payment

Step 12: Train Your Tenant.

How to handle these scenarios:

• Late Rent
• Neighbor Conflicts
• Moving-In Unapproved Pets or People
• Breaking a Lease
• Drugs

Step 13: Manage Effectively.

• Track Expenses and Income (Bookkeeping)
• Create a System of Action when an emergency repair/non-emergency needs to get done
• Weekly Housekeeping (Common Area & Private Rooms)
• Schedule House Maintenance Check
• Maximize Income Each Year
• Minimize Expenses

[Brett McManus]

As important as I believe it is to have a runway, taking real action on steps on 2-4 far exceed building out step 13. Pick-up the phone, call a realtor and a mortgage broker, and get the ball rolling to see what can actually be achieved in your market with your personal situation.