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The Terry Hale Show Episode 7

5 Things You Need to Know Before Looking at the Deal Any Further

TRANSCRIPTION

Hey, this is Terry Hale commercial real estate trainer,
want to get with you here
and teach you something that is so very important.
I know that a lot of you have been looking around
for commercial projects,
taking your time; time is money.
If you’re out there and you’re looking for projects,
and you haven’t found anything yet,
it’s maybe because you’re looking at
the deal and dissecting it prematurely.
There are five things that you need to know
five things before you want to ever take your time.
And look at the deal any further.
Alright, so let’s go through the five things.
Number one is the asking price,
not what they listed at; what their bottom line is;
what they’re truly willing to take; what’s the realistic price point.
All right, that’s number one.
Number two is going to be the as-is value, what it’s worth today,
apples to apples to other comparable sales,
to current market rents to replacement value if it’s vacant,
meaning what it will take to rebuild it. What it’s truly worth as is today.
All right, we use the net operating income formula
To be able to determine what the true value is,
it’s all about the current net, not the gross, right.
The third thing is the after repaired value; after developing value,
meaning after you fill it, whatever you plan to do to it,
what it’s going to be worth in the future is important to make sure
that there’s enough meat on the bone.
So you can create that monthly passive income for that huge
windfall of capital to change your life.
All right, the fourth thing is going to be repairs.
Is it a huge repair job? Is it going to be new roofs?
Is it going to be, you know,
repainting a whole parking lot for multifamily?
What is the repair cost?
Is that how you’re realizing your upside is just for repairs?
Because if you’re going to be paying
an extra half a million dollars in repairs,
and you buy a property for, say, a half a million bucks,
you’re not really buying it for half a million.
You’re really putting a million dollars in the game there to realize
whatever the future value is,
so make sure that you understand your repairs.
Last thing is the current loan amount. How much do they owe?
You see, it’s important that
Understand what they owe on the property
because if you’re asking for using my techniques, seller financing,
and you want to get a five-year deal,
but their senior debt existing debt balloons in, say two years,
well, you’re doing the wrong negotiation,
you’re negotiating prematurely.
And obviously, they’re going to say no
and you don’t even know why.
So make sure you get the information first,
the five things that you need to know
before you want to determine anything else.
Alright, I hope you enjoyed this little segment here.
If you dig it, check out below.
Go ahead and look for the link. Look at the comments section.
Click it and I look forward to engaging with you again. Take care

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