FAQ - order of operations for getting a property under agreement

[Jonathan Bombaci]

I'm not sure what the process is like in other states but in Massachusetts our real estate transactions start with an "offer to purchase" we then have 7-10 days to do our inspection/due diligence and then we enter the formal "Purchase & Sale Agreement".

Given the order operations this is the normal path our clients take:

1. Get comfortable running the numbers in BP calculators with generic plugs.
2. Find properties worth looking at, go look at them.
3. Adjust numbers based off of highlevel estimates ($10k per kitchen, $5k bathroom, $5 per sqft flooring,...).
4. Submit offer with a $1,000 deposit, inspection and mortgage contingency - OFFER REJECTED.

5. Repeat steps 1-4 a few times until offer is accepted, in the current MA market that could easily be 5-10 times. Once offer accepted move onto #6. 

6. During inspection bring home inspector and contractor through the property to make sure nothing is getting missed.
7. Get a firm estimate from contractor for repairs and updates. Gather actual expenses for taxes, utilities, insurance, water/sewer, upkeep, etc. 
8. RERUN NUMBERS based off of updated information. 
9. Decision time - do we move forward as is, try to renegotiate, or back out of the deal?

- If deal doesn't connect or make sense go back to step 1. If deal goes through then move into financing and to closing.

The hard part is finding the property, doing the du-diligence deciding to move forward. Starting and throwing in offers is the easy part, you just have to get going. If they accept your offer and you find out something about the property that makes it not make sense then you don't need to buy the property, of course assuming you have the right contingencies in place.

They talk about this a lot on the podcasts, you should focus on building a strong team. Once you find your agent they should be able to help you find comps. You should get your own agent, don't just work with the listing agent. I am a real estate agent and do tons of transactions but when I invest in areas I don't fully understand I use the strongest buyers agents I can find. The commission is a small price to pay if they save you from making a BIG mistake.

There should be comps out there for mobile home parks, multi-families, and mixed use properties. A good agent should be able to pull these together for you, if they can't then you're probably not working with the right agent. Plus you should have the mortgage contingency in place the bank will find comps or do an income based appraisal so if you're way off they'll deny you the loan.

I hope this helps some of the people looking to get started! Best of luck and let me know if you have any questions!!