What is the most difficult part of analyzing a property?

Question

Hi BP,I've recently signed up for a few Whole sellers emailing list. I'm excited by all of the potential properties but I'm having a difficult time figuring out which ones are the winners for me. I'm curious to know what is the most difficult part of analyzing a property you experience?For example,1. Location2. ROI on Flip or Hold3. Amount of work needed to Flip or RentEtc

Corby Goade · Answer

What I've done to determine buy and hold VS flip is look at the cash flow over a five year period. If I will make more in cash flow over five years than I would by flipping the place in less than six months, I keep it. If not, I sell it.

Joe Villeneuve · Answer

Understanding that the number$ don't lie, and not to argue with them (rationalize a bad deal as a good one).Sometimes the best deal you make, is the one you don't.

Schuyler Hayes · Answer

It would be location for me. It seems fairly easy to determine the rent income you can squeeze out of a place—but knowing what sort of changes in the area may affect its value 5-10 years down the road is more of an art. I'm delighted to have some friends and connections involved with city planning in a couple areas, and any time I get wind of plans for the future I'm compelled to start thinking of REI in that area. New road being built? New zoning policies? Plans for a new residential development, public park or commercial area? All things that are worth taking into account, and being early to know about them might mean the opportunity to pick some low-hanging fruit in buying a property that may otherwise not seem too appealing!

Omar Khan · Answer

@David Coronado We're not in SFRs (i.e. no wholesaling). Deals are sourced from brokers, property managers, lender and other relationships.

Omar Khan · Answer

@David Coronado Figuring out the market/sub-market. A lot of sins can be washed away if you picked the right market/sub-market. Other factors are important as well but the one I mentioned above has worked the best for us.

Henri Meli · Answer

@David Coronado . The most fun part in analyzing deals ... are all of them ... :) :) :). I really think you want to take many factors into consideration when analyzing. How you weight each of the factors depends on your personal goals. What exactly are you trying to achieve. And that question can only be answered by you. For me, there are a couple of things that have frustrated me over the years: 1. Extract the BS from the seller. Most of the time, many sellers only tell you 1/2 the story and you have to figure out the rest. 2. It is projecting incomes properly. if I buy a property that is 60% occupied, am I going to be able to fill the remaining 40%? If the place is only 60% occupied, then there is a reason for it...

Lana Efremova · Answer

Hi David, Totally agree with Grant. Figuring out what your investment properties sell for and rent for in a particular area is the most important piece. I work only with agents that specialize in Investment properties. They know what they are doing. Also Real Estate agents that specialize in investment properties, make great partners on flips and rentals.

Grant Rothenburger · Answer

Varies by person. @David Coronado Some people know construction so rehab budget is easy for them and knowing ARV is hard. Some people have extensive market knowledge so ARV is easy but rehab budget is hard. So on and so on. Depends on the individuals skill set/ knowledge.For me it was figuring out the local markets. What a 2/1 rents for in city A is completely different than what it rents for in city B. In some parts of my market, that even changes by street, and then by block! IMO this is the hardest part to figure out, but I had an understanding of construction and construction costs beforehand. Once you do know what a property rents for in x market or what is sells for, everything becomes so easy. You can get a property sent to you and know just by the size and address what it would rent for, what the ARV is, if that area is better for flipping or renting, what kind of finishes are required, etc.. Now you just need to walk it and get a rehab budget, run the numbers and make a decision.That was my process, everyone is different.

David Coronado · Answer

@Henri Meli What kind of BS stories have you heard in the past from sellers?

David Coronado · Answer

@Schuyler Hayes and @Omar Khan I agree, I think that's the hardest part of selecting from all of these wholesale deals from these email list is figuring out which ones are in a good location. How do you source your deals?