Phase Five
Buying Real Estate -
How To Decide

Buying real estate is a major undertaking. We all know one can become wealthy in buying investment property. But that is only if you buy right.

How do you decide?

Well, by completing the first four Phases of this real estate investing guide, you are officially practicing Time Value Real Estate Investing. It has taken a little while for you to set upyour foundation, but from now on, you will have a tremendous advantage over your peers.

Very few real estate investors know how to analyze properties the way you can. Many will not see the gems, your system will make crystal clear. The professionals will be impressed. Consistently buying real estate at substantial discounts will give them a high level of confidence in your decision making.

You have narrowed your choices to 5 properties. Let us now make the final cut.

1st - Make an appointment to see the properties with a property inspector. If the properties are out of your State, arrange for a "light" inspection with the seller. Let them know you need someone to look at the properties before you can write a contract. Have them coordinate with your property inspector, to see the properties.

If the properties are within your driving distance, go along with the property inspector.

The property inspector must be clear that this is a "light" inspection and not his full blown inspection which will cost between $100 - $250. They will want to charge a minimal fee for this inspection, but it should be less than $50 for each property.

All you want is a general assessment of the property and a loose ballpark estimate of the cost of needed repairs. Let the inspector know, you will do a full inspection on the one you decide to buy.

2nd - Take the full retail value of each of the final 5 properties and multiply them by 0.6 (60%). This gives the maximum you will pay for any particular property.

Write down the estimated closing costs for each property. Do not forget the points.

Take the estimated rehab cost of each property, given by your property inspector and add 20% to each of them.

For each property, subtract the estimated closing costs and estimated rehab costs from the 60% of retail figure.

That is your decisive figure for each property. That is the maximum you will offer to pay for any particular property.

For Example: $100,000 Full Retail Value.
$60,000 = 60%
$7500 = Closing Costs and Points
$10,000 = Rehab Estimate
$2000 = 20% added to Rehab Estimate

$60,000 minus $7500 minus $10,000 minus $2000 = $40,500

$40,500 is your decisive figure in this example.

3rd - Compare the decisive figure for each property with the seller's asking prices on each.

The 3 properties which are closest to the seller's asking price have made your buying real estate decision.

If the sellers asking price is BELOW your decisive figure for any property, very quickly move on this. In regards to buying investment property, you have just hit the "mother lode."

This will happen from time to time. Because most of your peers do not have a way to analyze buying opportunities, they will continually miss "mother lode" gems. TVREI finds them quickly.


From Buying Real Estate back to Investing In Real Estate.