How to secure your next property deal 20% below market value in the next 7 days t
THE LEGAL STUFF DISCLAIMER This publication is intended to provide general information only. It does not purport to be a legal, accounting or financial advice. It is not intended to be a substitute for specific advice about a particular problem or process which should be referred to a specialist professional. No responsibility is accepted by Matt Jones or MLJ Property Group for the accuracy or omission of any statement, opinion, or information in this publication and readers should rely on their own enquiries in making any decisions touching their own or their client's interests. Matt Jones and MLJ Property Group expressly disclaims all and any liability to any person in respect to anything done in reliance upon the whole or part of this publication. COPYRIGHT WARNING Matt Jones Ownership. At the date of preparation of this Publication, the copyright in this Publication is owned by Matt Jones. Reproducing this Publication. Other than for the purposes and subject to the conditions prescribed under the Copyright Ad 1968 (Cth) no part of this document may in any form or by any means (including, without limitation, electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without the prior written consent of Matt Jones. No licence to use. No express or implied licence to reproduce the whole or any part of this Publication is granted to any person or other entity and no such licence can be granted without the prior written consent of Matt Jones Enquires should be addressed to Matt Jones. 2 w w w. p r o p e r t y r e s o u r c e s h o p. c o m
HOW TO SECURE YOUR NEXT PROPERTY DEAL 20% BELOW MARKET VALUE IN THE NEXT 7 DAYS DAY 1: BECOME AN AREA EXPERT PART 1 Buy a map of your local area make sure it clearly shows you each suburb within the area. If it s a metro area this should be easy enough, if you are in a regional area, get a map that shows 10 or 20 towns on the map you want to get a good spread you ll see why shortly. If you can t afford the cost of a map, photocopy a few pages out of your local street directory or phone book. While you are out and about buy some coloured pins. They should be a few dollars from Officeworks or a newsagency. You want a box that has at least 6 different colours with at least 10 of each colour Get hold of a corkboard or pin board, you re going to need this to stick your map on as well as the pins. If you don t have a pin board, just go to your local grocery store or Bunnings outlet and ask for a cardboard box and flatten the box so that you can utilise it as a pin board. If the surface area isn t big enough for your map, stick a couple of them together. Grab your map and stick it on the pin board and you are done for the day! DAY 2: BECOME AN AREA EXPERT PART 2 Ok, you have your map, pin board and pins now you need to get some data to put on it. The goal here is to have all the median house prices of your chose area on one page and colour coded so you can see at a glance what is happening around you. Median house values are not always a great indication however we are only after a helicopter view at this point. There are a heap of resources to gather this sort of information. Probably the easiest is to buy a copy of the latest Australia Property Investor magazine. These guys always have this information towards the back of the publication and it is Australia wide. If you can t afford the $10 for the magazine you can go online and Google median house prices in Australia. There are a number of sites that give this information for free and it s just a matter of typing in the suburb and it spits out the most recent median price allocated to that suburb. Ok, now you have your source you need to collate the information. Dependant on the density of the area, this will determine how much area you should cover for example, if I use Brisbane as an example, I would choose a 20km radius. The bigger the area you cover the more adept your information will be so I will leave that up to you. As a general rule, I like to cover about 20 suburbs if I know the area already if I don t then double it. To record everything draw up 2 columns on an A4 piece of paper; down the left hand side write your suburbs and on the right hand side write the corresponding median price. All that s left to do is create a legend that shows your colour coding pins corresponding to a medium price value. For example: white = under $300k; blue = under $350k; green = under $400k and so on. 3 w w w. p r o p e r t y r e s o u r c e s h o p. c o m
Once you have pinned all your suburbs, step back and take a look at the big picture. Ask yourself the following questions: Which areas are surrounded by expensive suburbs as designated by the pins? Which areas could be seen as emerging suburbs? What s your budget and what areas does it fit into? Are there properties for sale that are already 20% under the median price as designated by the pins? The answers to these questions will help refine the area you need to start looking in to secure your next property investment that is 20% under market value DAY 3: GET A JOURNAL When securing a property you are going to come across a lot of deals, speak to a number of agents and make a lot of notes so a special book to record it all is important. Every flyer you receive at an open for inspection should be pasted into your journal with a couple of quick points about the sale price, reason for selling and time on the market. Building up a resource like this will be invaluable down the track when you look back over the deals you have investigated. Many times I have looked back through my journal and found a property that has been on the market for months and have been able to secure it at a bargain price because of my knowledge of the history of the property. Whenever you crunch the numbers on a deal, put it in your journal. It not only records the data but builds confidence in your own ability to work through the deal. After a while, the properties you look at, whether it is online, in the paper or on site can become a bit of a blur so it s important to have each one logged so that comparisons can be made and facts scrutinised before taking any action. DAY 4: NETWORKING WITH AGENTS Real Estate Agents are a crucial part of your team. The more agents you talk to the more people you have out in the field looking for your next deal. Now when I say talk to I mean, giving them a clear idea about what you are after. For example: I m looking for a 2 or 3 bedroom lowset house that I can add value and put back on the market for a profit. I have $350k to spend and looking for a quick settlement with a 3 month turnaround. It s important to treat agents with respect, they cop a bad reputation in the industry but there are good ones out there so don t judge a book by its cover. So call 5 agents today to get the ball rolling. Set aside some quality time to do this, you want to strike up a good relationship with this person and be ready to go and look at a potential deal with them. 4 w w w. p r o p e r t y r e s o u r c e s h o p. c o m
DAY 5: GET CLEAR ON THE NUMBERS Numbers are everything in property investing so you want to have a good handle on them. Now there is no reason to get complicated with the process when you are initially looking at potential property deals. You would have seen my slide show in the video that had a quick breakdown of my numbers on both deals. You can expect to look at a lot of deals before you actually buy one so you need a simple method like that to sort the good from the bad. Complex spreadsheets and calculators can come later, get the basics over the line first. Get another A4 piece of paper and draw a line down the middle. On one side write CASH OUT and on the other side write CASH IN. Then list the 5 main costs in the cash out column: Purchase price, purchase costs, add value costs, hold costs and sell costs. Then on the other side write what you can potentially sell the property for after you have added value if there is profit you can start taking your feasibility to the next level and drill down further. Obviously if you are holding the property long term your costs are going to be different however doing this exercise gets you on a level playing field and gives you confidence in the fact you can exit the deal earlier if required. DAY 6: TAKE ACTION. There is no point doing all this work and not getting out there and putting the rubber to the road. In fact, I know that 90% of the people reading this document will do nothing with it. If you want results - you have to take action. How bad do you want to succeed? Will you allow the opinions of others stop you? Will you be part of that 10% that actually takes that step forward in your journey to a better life financially? I always try to do a little more than is expected of me. This habit will pay big dividends if you apply it to your research of property deals. It might mean a few sacrifices along the way but hey, if building a strong foundation for your own financial freedom means missing a few episodes of Masterchef, isn t that worth it? DAY 7: GET IT UNDER CONTRACT Ok, you ve done your homework, it s time to really start putting your money where your mouth is. Most people at this point start making excuses as to why they can t do this last step: I don t have the wage to support another mortgage, I don t have a deposit saved up, I don t have time to meet with a real estate agent. Well, in my experience getting a property under contract doesn t always mean you are going to buy it. If the deal is good enough the money will come. For now it s about tying it up and getting it off the market so you can buy some time to do some more due diligence. Whenever I submit a contract I always have a solicitor to write in a get out clause. Often the wording states that if my due diligence does not provide a satisfactory result within 7 days then I have no obligation to buy the property. Of course, it s critical to have a solicitor word the clause for you so that there is no ambiguity on the contract. Good luck finding your next property deal! Action requires you to only take ONE step at a time and if you follow through with at least one of these tips, it is a step in the right direction. Remember results will ONLY be achieved through ACTION! 5 w w w. p r o p e r t y r e s o u r c e s h o p. c o m