Epic Real Estate Investing - EPREI 041 : Level 1 Property Evaluation - The Time Saver

Episode Date: September 17, 2012

Running the numbers and analyzing property can be a time consuming endeavor, not to mention that it can often be all for nothing. Matt shares his two levels of property evaluation that can save you tons of time and frustration. Before diving in today's subject, however, Matt addresses a trend in the email he receives from aspiring real estate investors. Many are stuck in their business by having trouble getting started, and many are also having an issue in analyzing their own deals. Matt covers it all in a "content rich" episode. Get your free real estate investing course at FreeRealEstateInvestingCourse.com New in the iTunes store: REI Wealth Magazine To get 3 free months of REI Wealth Magazine, click on the link:  http://itunes.apple.com/us/app/rei-wealth-mag/id552053319?ls=1&mt=8   Install the "REI Wealth Mag" app.     Tap "Subscribe"  Tap "Current Subscribers"   Enter the 3 month free bonus code: reinvestor Join us on the next Memphis Income Property Tour. Go to EpicRealEstateTour.com to register. It's free! All you have to do is get there and pay for your own shelter and food. Spend a day and a half touring one of the hottest real estate markets in the country with Matt Theriault. To your success! Learn more about your ad choices. Visit megaphone.fm/adchoices

Without further delay. Your guru. Sorry. Your guide to a better life through real estate investing. Matt Terrio. Hello and greetings from the epic real estate investing podcast. This is episode number 41. And this is the podcast that will show you how to build wealth through creative real estate investing.

So you'll have the option to realistically retire in the next 10 years or less. You do it right? I'd say five, four years. And you can enjoy the good life while you're still young enough to do so. My name is Matt Terrio, author, full-time real estate investor, and family man. If this is your first time listening to the show, awesome. Welcome. So glad that you're here.

Now you want to do two things. First, go back and listen to episode one for the ground rules of the show. And two, download the free real estate investing course, how to do deals, no money required. I made this just for you. And you can get it at free real estate investing course. No fancy spellings, no spaces, no hyphens, just free real estate investing course.com. It's a step-by-step course of where I unveil the mystery around doing deals with no money or credit. You see, to this point in my investing career, I've implemented 12 different strategies of investing in real estate using none to very little of my own money.

And I've yet to use one point of my credit score. I haven't dealt with a bank yet. I'm actually very proud of that. And, you know, inside this free course, I give you. the first two strategies, which I believe are the easiest two, and they are definitely the two that can generate the quickest success for you, the quickest results. And you can get those at free real estate investing course.com. Free real estate investing course.

Okay. So, I think I've got a great show for you today. But before we go there, I just got back from another very successful Memphis property tour. So a big shout out and thanks for joining us to Fernando and Asheria, Jim and Kim. Barry and Alan, awesome to meet you all. Randall and Nicole and Sandra and Johnny and Kalin. It was great to meet you all there, hang out with you all,

and appears we once again have 100% participation in our attendees purchasing at least one cash flow property per guest. So, you know, some of them are buying multiple properties, but at least one per. Awesome. And it's really cool to see people take that first step or an additional step that they haven't been able to take for a while toward their financial independence. So thank you all for just allowing me to be a part of your journey.

And it was so awesome to spend time with you. And I'm sure we'll see each other again soon. All right. Now, I do have, let's see, I have one more property tour scheduled for this year. If you missed out on this last one, that's November 8th and 9th. It's totally free. You just have to get there and feed and shelter yourself. But the tour is free.

And if you have an interest in joining us, go to Epic Real Estate. Tour.com. Epic real estate tour.com. Also, something new in the iTunes store. There's a new magazine, REI Wealth. It's brand new. The first issue just hit the virtual new stands in iTunes for your iPad, and the first issue features yours truly on the cover. And don't let the picture of me scare you away, though. Okay. There's lots of good information for real estate investors contributed from many experts in the industry. It's not my magazine. They just, they were, they thought I was worthy of gracing their very

first cover, so I'm very honored by that. Just log on to iTunes, download the REI wealth application and, uh, oh, app. The wealth app, R.E.I. Wealth app. Tap subscribe, then tap current subscribers, and enter the code. You want to write this code down.

R.E. Investor. All lowercase, all one word. R.E. Investor. And what that's going to to do is you'll receive the first three months for free. RE investor and the first three months are free. That's REI Wealth Magazine. That's their app.

And if you choose to continue after those three months, I believe it's just $2.99 per month. So go check that out. My man, Nolan, is putting it down over there at REI Wealth magazine. He's put a lot of work into it. I can tell he's passionate about it. And I think you're really going to enjoy it. All righty?

I don't think I have any other announcements. That's pretty much it. So let's get on with today's episode. Now, I've been sharing with you about the abundance of emails that I've been receiving, and I'm all caught up. And if you did not get a response for me, it's because I just didn't see it. Everything that was in my inbox, I have responded to. So thank you for all of your emails.

And, you know, the number of emails hitting my inbox each day just seems to grow. Every week, it's getting bigger and bigger and bigger and. And I've been noticing a trend within these emails. they're either about Matt, my biggest challenge is I just can't seem to get started. That's one. And the second one is,

can you check this deal out for me? What do you think? That's the second one. So that's the trend. Those are like two of the most common ones that I'm getting right now. So I'm going to address both of those subjects on today's show

and I'm going to begin with I just can't seem to get started. Can you help me out with that, man? I can't seem to get started. And this is a very common issue. and in my free course, I show you exactly how to get started. I show you the easiest and fastest way to get your real estate investing started, especially for those that are limited with their finances and their credit score.

But this, right, what we're talking about is not about the how to get started. I've put together 10 videos for you for free to show you exactly how. This is more about now that you know how, why do you still not get started? I mean, you know how. So why do you still not do anything? Well, it's very simple. And it all boils down to your belief. There are only really two reasons why people don't get started.

Or they have a tough time ever making a commitment once they do get started. They might try it for a little while but never actually make that commitment, that decision to take it on. And I'm going to simply assume that it's you that has this issue. Okay? I'm just going to, I'm going to speak to you like it's you. I'm, it's going to spare me a lot of time with referring to he or she. So there's only two reasons why you are having trouble getting started. Either you don't believe real estate works or you don't believe that you will work.

That's it. That's the only two reasons people don't get started is they don't believe that real estate works or they don't believe that they will work. So either you don't believe real estate works or you don't believe real estate works or you don't don't believe that you will work. That's it. Those are the only two reasons. And both have to do with your beliefs. So let's discuss this first belief. You don't believe real estate works. Well, this is actually a very easy one to overcome. And I've touched on it so many times in this show. I'm such an advocate of real estate. That's why I've done this show. Real

estate has produced more millionaires and billionaires than any other industry or investment vehicle. More than any other. I mean, what more proof do you need to bolster that belief, right? I mean, real estate works. You know, a good friend of mine used to be a financial planner. And after he retired from that, he told me that of the hundreds of people he met with in their home at the kitchen table, that's what financial planners do, I guess, they meet with families inside their home at the kitchen table. He noticed something common amongst the people who even had a chance at any sort of financial freedom in their retirement.

the only people that had a chance, even had a chance, they all had one thing in common. They all had real estate in their portfolios. You see, real estate works, and it works in every market. I mean, if there are people there, I mean, if there's people living there, real estate works. Now, certainly not all markets are created equal, but there are no bad markets. There are no good markets. There are simply up markets and down markets.

And depending on what market you are in is going to determine what strategy that you use to succeed. And that's where the education comes in. That's where the how-to comes in. But right now, we're talking about belief. Belief in whether real estate works or not. Real estate works. Believe it. Real estate works.

And that's really the easy belief to get a grip around. That's the easy part. You don't have to look too far for evidence that it does work. work, real estate works, as long as you do. Got that? Real estate does work as long as you do. And that brings us to the second reason why people never get started. They don't believe that they will work. Now, each and every one of us, we're all different. We are at different places in our lives. We have different experiences. We come from different cultures and different backgrounds, different resources that we have available to us.

We have different privileges that we've all grown up with. You know your situation better than I do. So your belief in yourself, it has to come from you. It has to come from within. There's just not a whole lot that I can do to increase your confidence for you. But let's look at something, because this might help. I know it certainly helps me,

because it's an awesome analogy that I always refer to for myself. and I always refer to this with my my coaching students and I reference a lot inside the academy. You see, I've noticed over the years that there are significant correlations between getting in shape and real estate investing or any sales career, really. And, you know, if you didn't know, real estate is a sales career. Hate to break it to some of you. Real estate investing is sales.

You've got to sell property to buyers. That's obvious. But where the real skill comes in is you've got to sell your creative ideas and offers to sellers. is made. So you're always selling, always selling in real estate. But here's what I want to point out. If you wanted to lose weight and gain some lean muscle mass, most of us know exactly what we would need to do to make that happen, right? You eat less and exercise more. Simple. You know that if you cut your caloric intake by 500 calories a day, over time, you would lose weight, right? The same is

if you stepped on the treadmill for 30 minutes a day. You know over time you would lose weight. weight. You know that without a doubt. It's physics. You'd have to lose weight. You can't exercise and cut calories and not lose weight. Now, you also know that if you did some arm curls three times a week, you would gain some muscle mass and development in your bicep, right? Without a doubt. Over time, that would happen. Now, certainly, genetics, your starting point, if you've worked out before in your past, the intensity of your workouts, the frequency, that would all play a role in how much weight you'd lose or how much your bicep would develop. But over time, you would see results. You have to. You can't work out every day and not see results. The same is very

true with your real estate investing. You see, if you posted one ad on the internet every day, Just one ad on the internet every day, just one. That would be 365 ads in a year. You would generate leads. You can't have 365 ads circulating on the internet and not generate leads. You've got to be a pretty bad advertisement writer. Okay? I mean, you have to get leads.

No way around it. Your phone would ring. Your inbox would receive messages. It's impossible for that not to work. just like if you eliminated 500 calories a day from your diet. It's impossible for that not to have a significant impact on your weight loss after a year. Now, if you wrote just one offer per day, that's all you got to write one offer per day, just one, that would be 365 offers written in a year.

You would do a deal. You would do a deal. You absolutely would. Just like getting on the treadmill once a day would impact your weight loss, so would writing just one offer a day for your real estate. investing. Now, you know, if you decided to start your workout routine today, you know this. If you decided to start your workout routine today and you took off for the gym and you did some arm curls, you know when you got home and looked in the mirror, your bicep will look exactly like it did when you left for the gym this morning. There'd be no change after your very first workout, right?

So let me ask you, would you give up on going to the gym because you got home and looked in the mirror and had no results? Or would you go back? in a couple of days and do it again. You go back, right? Because you know that your bicep is not going to develop after just one routine of arm curls. You absolutely know that if you keep going, you're going to eventually have nicely developed biceps.

Your real estate investing activities are just like that. You're not going to get your results after just one day of internet ads, one day of yellow letters, one day of bandit signs, one visit to a networking event, one day's worth of phone calls to people in pre-foreclosure,

you're not going to get your results after just one day. I mean, just like the trip to the gym, you've got to keep going, don't you? Yes, you've got to view your real estate investing just like that. And the good news is, the more you conduct your real estate investing, quote-unquote, arm curls, the bigger and the stronger the muscle gets. the better and more advanced your skills get,

the easier it gets to lift that weight. And conversely, should you take a break, the muscle gets weaker and it loses shape, doesn't it? That's exactly how it works. You know, if you're going to the gym and you're in a rhythm and you've been going for a couple months, you're starting to notice some results, and this happened to me recently, is I got sick.

so I didn't go to the gym. I got sick and all of a sudden I started feeding my cold and I started sleeping in a little longer. It felt very comfortable to sleep in and it felt very good to have some real wholesome comfort food. I got out of my rhythm. I got out of the out of my routine. And when I went back, even though it just been a week, actually it's almost two weeks, even though it just been two weeks and I've been doing this for months, it took me a while to warm up and get going again.

My muscles had gotten weak. I felt a little heavier. I felt a little sluggish. The muscle gets weaker and loses shape when you stop. And that's exactly how it works in your real estate investing. Believe that. I mean, know that if you perform the right activities, perform them consistently and perform them over time,

you will get your desired results. You will get them fast. Some of you will get them fast. Some of you will get them slow. Some of you will get them regularly. Some of you will get them intermittently. And that's the same with regard to getting in shape, isn't it? Your results will be primarily determined by the intensity, frequency, and duration of the right activities, the right exercises.

Believe that if you do the work, you will get the results. Don't be so concerned with when. Don't put a time limit on it. You know, you want to be in shape your entire life. you want to be making your real estate riches your entire life. So this is not just, let's give it a shot for a couple months and get ready for the summer and then start eating again. Now, not unless that's the type of life you want, you want to be healthy for life. You want to have an abundance of financial independence for life.

So don't be so concerned with when. This isn't just, I'm going to give this six months and see what happens. Don't put a time limit on it. Have faith that if you do the work, it will work. it will work for you. And if that isn't enough for you, I mean, what's the alternative? What will happen in your life

if you don't do the activities, if you don't do the work? What will happen if you don't pursue real estate? What's the alternative? See, I always point that out because the alternative always terrified me, scares me to death. That was always enough to keep me on track.

I can go out and bust my butt for myself every day, or I can go bust my butt for a boss. Which end result do I want? If it's given that I got to bust my butt, right? I would rather bust my butt for myself. I'd rather work on my dream instead of somebody else's. So the alternative, terrifying. Absolutely terrifying.

And that was always enough to keep me on track. And, you know, any day I didn't feel like picking up the phone and calling for sale by owners or putting up roadside signs, I thought about what will happen over time if I don't make those calls, if I don't put up these signs. I mean, whether you do the activities or not, you are going to get a result whether you like it or not. If you do the activities, the exercises, you will get one result.

If you don't do them, you'll get a different result. But the result is coming. So, you get to choose. Got it? So choose. Now, the second trend within these emails that I've been receiving is, and it works actually very perfectly into what I was going to discuss today anyway, I get a lot of emails stating something to the effect that,

check this deal out. What do you think, Matt? I got this call, here's the house, and what do you think? Should I do it or not? I actually hate these types of emails. Okay, I hate these types of emails. You know, on 99% of the people that send me these emails, 99% of these types of emails that I receive, the people who send them have done very little work.

They just, they gave me address and a little bit of story about the property and they want to know, they want my opinion. I mean, there's this big story around the property that makes it sound somewhat appealing, but no numbers or analysis has been performed. But don't stop sending them to me because I don't like them. don't stop sending them to me because I hate them. Stop sending them to me because you're violating one of the three don'ts of property analysis that we discussed in the last episode.

One of the big don'ts. Don't take someone else's word for it. Perform your own evaluation. Generate your own opinion of value. Your opinion of value. Run the numbers. This is your money. Not mine.

It's your future. Is it not worth it to you to do the math to see if it works? Or has the potential of working? You're the one that's got everything to lose. This is your deal. Only after you've actually run the numbers, do you really listen to the story? Okay?

I mean, it doesn't matter if someone wants to sell their property to you. What matters is, do you want to buy it? Big difference. Hey, I got this guy, he called, and he says he wants to sell me his property, and he really needs to sell it. Well, all right. Doesn't mean you have to buy it. Do you want to buy it?

That's what you should be more concerned with. So you've got to learn how to evaluate your own deals. I mean, that's the investing part of real estate investing. The analysis, knowing your exit strategy, and knowing what numbers you need to execute that exit strategy, the numbers that you need to see to be able to successfully execute that exit strategy. And I covered this pretty thoroughly in my free course. It's pretty thorough in there.

in greater detail, even greater detail, inside of the Epic Pro Academy, because it's that important. Now, if you don't have the free course, go get it. Just go get it, get it at free real estate investing course.com. And if you're one of the 5,000 people that have accessed that course, refer to video number six. Refer to videos number six and actually number seven also. So go to videos number six and number seven. I cover this in detail. Now, I know, you know, formulating a property's value can be very time-consuming.

And frequently, it can be all for nothing. That's why I think people send me their stuff because, you know, they don't want to go through the time. They'll look at it on just a brief level. But it is time-consuming to crunch the numbers. And sometimes when you go crunch those numbers, like, wow, that was a lot of time, and this isn't even a deal. And you kind of might be frustrated or annoyed or that was a waste of time.

All those things come to you. that's just part of the game. Hey, you signed up for this. You knew the job was dangerous when you took it. That's just a part of real estate investing. And, you know, to save you some time, though, okay, I know that. And I'm going to save you some time. This is how I do it.

You can qualify a property first by ever going into the time-consuming process of running those numbers. You don't have to waste all that time. You can eliminate a property right away or qualify a property right away, whether it's worthy of additional time. And here's how I'd qualify a deal first. And I call it my level one evaluation. Okay, this is level one evaluation.

And level one evaluation consists of just really, just a few questions. So the first question is, is this property what you're looking for? Is it what you're looking for? You know, there's people that send me deals to look at and one day they send me a condo. The next deal, they send me a luxury home on the cliffs. And the next day they send me a commercial. building and they want me to look at all three of them. I'm like, where is your focus? Is this what you're looking for? You've got to narrow in that focus. You've got to say, I am looking for three

bedroom, two bath homes, and the median price range in five mile radius of my house. And I'm looking for distressed sellers. Like, whatever your criteria is, I just threw that out there as an example, but you've got to define what your criteria is. So first question is, this person that called me, is this property even what I'm looking for? Does it fit your criteria? If it's a It does not stop. Okay? It's over. It's not your deal.

Even if there's money to be made there, this is not your deal. Especially if you're just getting started. You need to be more focused than that. Because you'll be chasing your tail all over town with all these crazy potential deals and you'll never get anything done. I promise you that. How can I promise you that? How do I know that?

I did that. I know. All right? So if it doesn't fit your criteria, stop. The evaluation is done. If it does, if this property does fit your criteria, then you move on to the next. question. So the second question is, is this property going to move you towards your goal of

cash or cash flow? See, we're always looking. Are we going to flip this property for cash? Are we going to hold on to it for cash flow? And whatever your goal is at that moment, is it moving you towards the cash? Is it moving you towards the cash flow? If it's not, stop. Evaluation is over. Okay? If it's not moving you towards your goal, even if it's the property that fits your criteria, if it's not moving you towards your goal right now, stop. Now, if it will move you towards your goal, and it does fit your criteria,

then you move on to the next question. Number three, who is in control of the property? Who is in control of it? Are you dealing with the property owner? Are you dealing with a realtor? Are you dealing with a wholesaler that has it under contract? Are you dealing with a bank employee? Or are you just dealing with a guy that happens to know a guy?

you know if you're not dealing with or won't be able to deal directly with the decision maker stop game over level one evaluation is done you know i find more times than not well i guess if not always the middleman is going to either waste your time and or cut into your profits if you are dealing directly with the decision maker then you can move on to the next question All right. So it has to fit your property criteria and it has to move you towards your goal. And you have to be discussing the deal with the decision maker. Then you can move on.

So the next question. Does the seller, this is a biggie too. Does the seller want to sell or do they need to sell? Big deal. Right? Does the seller want to sell? A lot of people want to sell. a lot of people interested in selling

or do they need to sell that's who you want to deal with that's where the deals are remember the deal mantra the foundation of a real deal is the seller's motivation to sell whether they want to or need to is a direct indicator

of their motivation the foundation of a real deal is the seller's motivation to sell if they merely want to sell or they're interested in selling, it can be a very frustrating experience for you, a time-consuming experience, if not a painful lesson in futility. Now, if you're not sure at this point whether they want or need to sell, because sometimes you can't determine that right up front, if you can't determine that right up front,

you're not sure where their motivation is, you can conduct a brief seller interview a little later in the process to reveal their actual motivation. and I've included that seller interview sheet, the actual one that I use, and it's just below video number six in the free course. So make sure you get a copy of that. Very simple. I've taken all of the guesswork out of this for you. By the time you're all done that, you'll know.

All right. Now, if you have been able to determine that the seller needs to sell, there's a pretty good chance you've got a real deal here. Now it would be okay to invest a little more time and move into level two analysis. Okay, level one is done. Property fits your criteria. It's moving you towards your goal.

You're dealing with the decision maker, and there is selling motivation there. You likely got a deal. Okay? Now it'd be okay to invest a little more time and move into level two analysis. The point I want you to get out of level one analysis is that you can easily eliminate the deal

through a series of quick questions without ever having to pull comps, without ever having to analyze the market. and without ever having to leave the comfort of your office or your home. And what all that results in is, is saved precious time, your time. All right? So don't make the mistake so many investors make doing all of the physical and time-consuming work up front without knowing the basic information that will determine the possibility of a real deal or not.

Make sure these questions are answered first before running the numbers. Okay? Question number one, is this property what you're looking for? Does it fit your criteria? If it doesn't fit your criteria, stop. If it does, move on to the next question. Second question. Is this property going to move you towards your goal of cash or cash flow?

If it won't, stop. If it will, move on to the next question. Three, who is in control of the property? Are you dealing with a property owner, a realtor, a wholesaler, a bank employee, or is it just some knucklehead that says they got to deal with their buddy? You got to get the decision maker. They got to be the owner. They got to have it under contract.

If you're not dealing with or won't be able to deal directly with the decision makeer stop. But if you are dealing with the decision maker, go on to the next question. Final question. Does the seller want to sell or do they need to sell? Do they want to sell or do they need to sell? You got to get the person that needs to sell. Because at the center of every real deal is the seller's motivation to sell.

Got it? All right, so answer those questions first when evaluating your deals. You'll save yourself a bunch of time and frustration if you do. And write those questions down and keep a copy of them in the car and keep you a copy by your office phone until level one analysis, level one evaluation, same thing, but do it, have a copy of those questions by the phone until they become second nature for you. Now, if your deal passed level one evaluation, you can now move on to level two evaluation, where you'll actually run the numbers to formulate your own educated initial opinion of value.

And that's what we're going to go ahead and cover on the next episode. So until next time, as a very wise person once said, Nothing in this world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful people with talent. Genius will not. Unrewarded genius is almost a proverb. Education will not.

The world is full of educated failures. Persistence and determination alone are omnipotent. To your success, I'm Matt Terrio, living the dream. Thank you for spending this time with Matt Terrio and the epic real estate investing podcast. When you have a moment, stop by iTunes to leave your comments and let us know what you think of the show. And if you haven't done so already, get started investing today by visiting free real estate investing course.com. To access Matt's free course, how to do deals, no money required. Until next time, to your success.

success. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.