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Prove It
Prove it. Yep, it means what it says. Before you close on any deal be 100% sure that the info you used to base your buy decision on is accurate. I am willing to bet that the seller, broker, or wholesaler embellished on some of the info you believe to be true.
Before you do any deal, prove the numbers by common sense due diligence.
This does not mean trusting the Realtor or wholesaler that is presenting you the deal. I am not saying they are lying however they tend to make things appear a bit more profitable than reality will prove.
A wholesaler using the term ARV is the human version of Zillow and therefore is never accurate.
The value of a property is what a buyer is willing to pay for it, period.
When a seller tells you what a property will bring in for rent prove it before you believe it. A great way of doing this is to look on craigslist for similar properties located in the same area and call them. The MLS will often be a good resource of rental data for properties that have already been rented. Tools such as Rentometer will give you a range of rents to consider but keep in mind that much of their data is mined from ads on for-rent properties, thus not a true reflection of what a property actually rented for.
When a wholesaler tells you what a property will sell for once fixed up prove it with an appraisal. The appraiser should be able to give you a good idea of what the value will be once repaired to good working order.
When a Broker tells you a property is a “great deal” have them prove it with credible data. You may find that most real estate brokers have little to no experience in any form of real estate investing. Ask the broker if they own any rentals themselves, most don’t, therefore, be careful who you listen to when you hear the words “great deal”
In this episode, I provide a real-world example of a “deal” that wiped out an investor simply because they did not take the time to verify what they were being told. Tune in to hear about that mess and at the same time learn what not to do.