All Forum Posts by: Chris Feltus

While we are talking about Cash Flow let's take a moment to set the record. Many people who claim their property cash flows $400 per month are using the phony cash flow calculation. I am not saying that is the case with Steve Ramsey, just wanted to provide everyone here with the correct information.

Tried and true landlords will tell you, net proceeds overtime from your rental properties income will average about 50% after deductions for the year to account for: vacancy rate, repairs, maintenance, property management if you use it etc.

This is a problem because when people offer properties and claim "the house cash flows $500 per month!" It can lead to problems later on down the road when you inevitably run into problems you did not correctly budget for. The correct cash flow formula accounts for these expenses.

correct cash flow formula = rent * 50% - P&I

phony cash flow = rent - piti

You can query the information from your local appraisal district for free, or you can purchase lists from List Source (core logic product), amongst others. List Source and other list generating services will approximate equity with relational databases. The keyword there is approximate the home owner could have refi'd and pulled all the money out yesterday for all you know. Personally, I like to use deed date as an approximation of equity I do deed dates 15 years or more back.

There are many lists to hit, it becomes a matter of preference really.

• Tax delinquencies
• Code Violations
• Absentee Owners
• Probate
• Inheritance List

The list goes on. The fact of the matter is this is a numbers game. Also for the record, I personally prefer post cards. I have been split testing for awhile now and have found in my marketing yellow letters generate more calls, but they are frequently of lower quality.

At the end of the day its about mailing your list consistently. No matter how targeted your list becomes there is no "sell my house right now!" list to mail. Red flags (such as code violations etc) generate motivation, combined with equity generally lend themselves to producing deals. When the going gets tough, keep mailing.

Hope that helps.

I think this is one of the best ideas in this thread. It could pin point everyone on a map show their profile picture, their name and specialty.

It's not quite that new. Overall I found it to be quite underwhelming in my market, it often is unable to find a good portion of the comps at all, and the comps it does report tend to have inaccurate sales numbers. I have verified extensively through the MLS.

@Renee Munro Not accurate at all. Zillow uses an algorithm to estimate what the comparable sales are. For a general overview of a given subdivision as a whole, it's a decent tool. For determining the ARV of a specific property its near worthless.

@Daren H. Yes I would definitely recommend you include a picture or two of the exterior of the property within the body of the letter. In addition, you can also print a small thumbnail sized image of the subject property itself in the top left corner of the envelope itself (see blog post linked below for more information).

For additional information please see this part 2 of the Driving for Dollars guide I wrote for Bigger Pockets.

BP blog post: Driving for Dollars Part 2

Copy of the Letter I use:

For a quick overview http://www.city-data.com and http://www.zip-codes.com/ come to mind. If you want to get hands on with the data to be exact you will need US Census Bureau information. However, to do this you will need to be able to manipulate databases in access or another program.

@Brandon Turner I must say it goes well with your latest blog post entitled "5 Lessons Crazy Cat GIFS Can Teach Us About Entrepreneurship".

Explain to him you are expected to perform on your side of the transaction. If he is able to drop the contract with no consequences what so ever its very easy to weasel out of a deal. Who knows you could be stuck with a contract and on the last day your buyer backs out, im sure the seller would not be happy. It is up to him to do his due diligence and make certain the numbers work from his perspective.

But also provide him with an out. If after depositing the contract with your Title company and the title is not clean/marketable, allow him to receive his deposit back but only then. Save for a natural disaster or house fire.

Disclaimer: This should not substitute for legal advice, please consult with your RE attorney. I am not an attorney nor have I played one on TV.

Now that I got that out of the way, let me try and walk you through it real quick. Hopefully this will help if you have any questions let me know.

1. Parties: Put buyer and seller obviously. If the seller has PoA the way to write this is Owner of the property signed by Person with PoA - Attorney in Fact. You will need to use this formatting for anything else that requires a signature as well. If the property is an estate, put in "Estate of Persons Name Here".

2. Property: Self explanatory get the Lot & block # from the corresponding appraisal district.

3. Sales Price: Assuming you are using cash or hard money, A. Cash portion of sale write in whatever you and the seller have agreed upon. B. 0.00, C. Sum Total. Here is an image to illustrate.

4. Financing: Draw a diagonal line through this section

5. Earnest Money: I leave this blank. If you want to put something here 1% of the sales price is pretty much standard. E.g. if the properties sales price is 75,000 put in 750 for earnest money. Earnest money is not required to have a valid contract in Texas. Recall earnest money is fully refundable during the option period.

6a Title Policy & Survey: We typically pick up the Title policy so I check seller shall furnish to buyer at BUYERS expense and then fill in my title companies information.

6b. n/a

6c. Survey: typically leave blank. That is up to you.

6d. blank

Page 3 is all promulgated information, skip that

7. Property Condition:

7b. You can do two things here, have the seller fill it out with you at the table, in which case you check 7b1 buyer has received the notice. If you want the seller to send it to you or title company later check 7b2 and put in the amount of days it needs to be delivered by, typically I put in 5 but the majority of the time we fill out sellers disclosure on the spot. 7b3 This is if the property is exempt from providing a sellers disclosure notice. Texas property code states estate properties and REOs are exempt from providing a sellers disclosure.

(skipping to 9 here, if I skip any numbers from this point forwards its because the paragraph doesn’t really have anything pertinent to add).

9. Closing, set the date you and the seller agree to. Notice the first sentence “The Closing of the sale will be ON OR BEFORE the ____ of __”

10. Possession: Typically check upon closing and funding. If the property is owner occupied for example then you will likely need to check the next box “according to a temporary residential lease” and you fill out that form as well.

11. Special Provisions: Disclosure here, put in writing if you are licensed professional of any sort e.g. Real Estate License, CPA, attorney etc. I also typically write in buyer to pay all normal closing costs.

12. Settlement and other expenses: line through, this is for traditional real estate

13. Proration’s: Make sure you let them know, unless you agree other wise, they will be deducted at closing the amount of taxes prorated until the current day from the first of the year.

16. Mediation: parties (checkbox) will seek to mediate before agreeing to hire attorneys on one another

Notice: This is mainly for title company to contact everyone. Put in your information for buyer and sellers information

22. Agreement of parties: here you will need to check any relevant addendums. For every real estate transaction I every do I have my own Addendum I always attach so I put it in other. If the property was built PRIOR to 1978 check the box for lead based paint addendum and bring that with you as well. Note all these forms like lead based paint and sellers disclosure can be found on the TREC website.

23. Termination Option: most powerful paragraph in the whole contract. This gives you the buyer unrestricted right to exercise an option and back out of the deal if you need to. I typically put $20 for a 7-10 day option.

24. Consult an attorney: I have never filled this out for myself or a seller.

Directly below consult an attorney is the executed date of the contract. Everyone signs

Page 9 Broker information block, cross through that unless you’re a realtor or using a realtor.

Page 9 Option fee receipt: make sure you get them to sign this as well and state how the amount for the option fee was given (cash check etc)

Page 9: contract and earnest money receipt. Title company fills this out later don’t worry about it.