Epic Real Estate
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If you enjoy this video, PLEASE SUBSCRIBE In this video I'm going to walk you through the art of real estate negotiation! Mastering this process will open the door to a whole new world of opportunities. Now, here's what you need to know when it comes to negotiating a real estate deal. As an Epic real estate investor, your goal is to get a signed contract with the seller as quickly as possible in order to beat your competition. After all, the longer the process takes, the more competitors you'll have sniffing around. By instilling urgency into your process and moving quickly with your offer, you get control of the deal, locking out your competition. And don't let the 'quickly' part of this process concern you. A lot of investors make the mistake of taking their time before making an offer. They like to do their inspections, analyze the neighbourhood and the condition of the property, and they take time crunching the numbers. Don't fall into this trap! Your greatest asset when negotiating real estate deals should be your speed. All you need to do is make an offer somewhere in the ballpark price range, then present it to the seller, contingent on your inspection. That way, by adding contingency clauses to the purchase agreement, you retain the legal right to inspect the property prior to closing. Should you discover anything during the inspection that negatively impacts the value of the property you'll be able to renegotiate the price or walk away from the deal without penalty. Now, let's talk about your quick and dirty math. How do you calculate your ballpark offer? The formula I use is: (ARV x 70%) - repairs - profit = your maximum allowable offer You can adjust this percentage depending on the value of the property. As far as calculating repair costs, I base my calculations on: Light repairs - $10 per square foot Medium repairs - $15 per square foot Heavy repairs - $20+ per square foot As for your profit calculations, well that's for you to decide As a general rule I bump it up a little bit just to leave some room for later negotiations (either with the seller or a buyer later on). I also cover my bases by making sure, if I'm left with the property, the monthly gross rent is going to be greater than 1% of the acquisition and repair cost.