Example of Screening a home

I've been getting a lot of leads lately that don't meet my criteria and thought I'd give an example of some of the analysis that I utilize. I know examples are sometimes the best way to learn and be critiqued so I thought I'd share.

Example:

I got a typical lead call of a woman and a husband. Day 1 the husband calls and I do the analysis. I look up all the information and research his wife's name because records show he purchased the home with her. Day 2 the wife calls and gives the same pitch a different way (possibly assuming a different outcome?). I call her bluff and say, "You're Joe's wife at XXX street right? He called yesterday." From here onward I've contacted her for the property details.

After running my script and building a ton of rapport I determine they need to sell due to a typical double payment situation. Their home was over an hour from me, so I made the decision to do some number analysis over the phone to see if the home is worth the drive. I further discover:

Target Price: 60k Willing to take: 55k.

Home Details

2 bed 1 bath 1000-ish sq feet built over 50 years ago. Bonus Garage on property. Home is in one of the best high school district's in the area.

Last sold less than a year ago for 55k.

Comp comes in at 52k

70% rule: 35k

Area Details

Rent in the area goes for around $580

50% rule: Mortgage must be < $290 in order to hold as rental.

2% rule: Target price for home should be $29k

I'd consider this deal a buy and hold to rent due to the school district. Since my buyer won't meet the 29k-35k price range that I am aiming for I imagined maybe I could control the terms.

Further discussion and rapport building discovered the following:

Payment details:

Owner financed lien

$450 per month mortgage

$100 per month insurance

$1200 taxes

From the above I knew that a subject to wouldn't be a good deal since the payment doesn't come close to meeting the 50% rule and there's nothing I could do to the property to get the rent in the $1000 range.

I told the buyer that I needed to analyze some numbers and my next call would let her know my final steps forward for the property. Unless I can find some other way to purchase the home, it appears I'll have to pass on the property.

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