I just finished sending out my first wave of direct mail postcards and my plan is to start out wholesaling properties to gain more experience to be able to venture into different areas of real estate. Since I have started receiving calls more and more questions come up as I go (which is of course a good thing to ask and learn what I do not know).
A couple questions I have now after talking to some of the leads pertain to actually making an offer on the property.
First: When trying to estimate the costs is it anywhere near possible to estimate without actually going into the property? I have a few leads who have tenants in the property and they do not want me going in to look over things and get a scope of the condition of the house. They do not want the tenants to know that they are selling the house.
Second: When constructing an offer what is the general process for that? Do you make them a verbal offer and then if they accept do you send them (email/mail/Esign) the purchase agreement? Or should you send the purchase agreement as your offer without disclosing verbally? Is there a way to put together an offer package with the reasons why you are making the offer in that amount?
Again thank you in advance for the help. BP and all of its members are such great resources to have when starting out!
1. yes and no, I like to use square footage x 40. so 1000 sf house = 40,000 rehab. That is very general and in no way represents what will actually cost but it's a rule of thumb to go by. You should ask questions like "How old is the roof?" If they say it's 15 years old, probably needs a new one. In my area roofs are about 2.5 a square foot so I know that cost. You need to talk to contractors in your area and ask questions regarding to how much something would costs. You should also read J scott's book on estimating rehab costs it's a great book to understand everything associated with rehabbing.
2. Yes. First ask them what they want for it. If they want some ridiculous number, then you can write them off without wasting your time. If they give you a number close to what you need to get it for, then go look at it. While you are in front of them face to face, find out what the motivation is and use that to get the price down. That way you can tell them, the roof needs fixed, kitchen needs to be gutted, etc. Those are your reasons.
and don't send an offer without verbally coming to that price. I've found that the more information is kept from the seller or buyer, the worse a situation can get. I like to tell sellers everything I plan on doing so they feel comfortable in the situation, it's building rapport
Thank you for all the great info. That helps calrify a lot of what I was wondering. I literally just received my copy's of both of J Scotts books in the mail yesterday. I am excited to start reading and learning.
@Blake Reynolds, I would also recommend you get J Scott's book located in resources under FilePlace.
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