Tim Bell property analysis 11

Now, the last thing that we want to talk about here as we talk about assessment or analyzing properties is how do I know which strategy I want to use on a property? Okay. A lot of people ask me that question. How do I know if I should fix and flip it or buy and hold it as a rental property or wholesale it? How do I know? I don't know. Here's an easy way to tell. Every property is either a fix and flip or a buy and hold. Every property you're going to see is a fix and flip or buy and hold. How do you know the difference? Well, on a fix and flip, it's going to be in a nicer neighborhood that is primarily owner occupied properties. Okay? People, people live there. It's their, their personal residence. Okay, let's say that you have a house that's run down and beat up and needs work. In a nicer neighborhood, that's a perfect candidate for a fix and flip. Because that nicer neighborhood is predominantly owner occupants. There's people that own the houses that live there and live in them. And so if you bring that property up to the standard of the neighborhood, then it's going to be very saleable and you're going to find another mom and pop owner occupied homeowner that wants to live there. That's a fix and flip. Now on the other hand, let's say the property is in a rental neighborhood. It's mixed. It's some renters and some owner occupants, or it's predominantly renters, something along those lines. Most likely the highest and best use of that property is a buy and hold property. Here's the thing you need to remember. Renters love to live in owner occupied neighborhoods. But owner occupied neighborhoods and owner occupants hate to have renters in their neighborhood. They don't want renters in the neighborhood because from their perspective, the renters don't take as good a care of their house as the owner occupants do. So most neighborhoods are either going to be an owner occupied neighborhood or they're going to be a rental neighborhood. Some neighborhoods are mixed. Some have some owner occupants and some renters. It really depends on which way that neighborhood is going. Some neighborhoods in America are gentrifying to be more owner occupants than renters. Others are going the other way where the owner occupants are moving out and the properties are being purchased by landlords who are going to rent the property out. Again, you need to make some determinations on that neighborhood. Your real estate agent can help you with that. You can look on various other different resources to figure that out. Okay. But you got to decide, is this property a buy and hold property or is it a fix and flip property? Okay. Once you've decided which it is, it's kind of like your cell phone. Okay. Cell phones have two cameras. Modern cell phone has a camera on the front to take pictures of other stuff and it has a camera on the back to take selfies. Right. Okay. Now I think of it this way. When I'm trying to decide what I should do with the property, I think of it this way. I look at the property first. What's right for this property? There's only two choices with the property. Well, the third choice is it's not a deal at all and it won't even work. And you know, you walk away. But two choices on properties where the numbers will work. It's either a fix and flip or a buy and hold. If, if it's in an owner occupied neighborhood and it's a nice house in the owner occupied neighborhood, or rather it's a rundown house in the nicer neighborhood, then you may want to do the fix and flip on it. That's the right idea for that property. On the other hand, if it's in a rental neighborhood or a mixed neighborhood that's going towards renters, you may want to do it as a buy and hold property. So those are the only two choices you're going to find out in the marketplace that will actually work for you is fix and flip or buy and hold. So you've checked out and you've determined what is right for the house. The next step is to turn the camera around on you, so to speak. In other words, do I have the resources necessary to do what's right for the house? So let's think about it. Let's say the property is a fix and flip property. And what resources do you need for a fix and flip property? Well, you all, obviously you're going to have to have the money that you need to buy the property and money to fix it up. Either need to have that yourself or have access to it, be able to borrow it or whatever. So you got to have that. What else do you need? If you're going to do a fix and flip, you got to have contractors, you got to have people to come out and work on the property. Right. And then the third thing that you need to have that you may not have considered when it comes to a fix and flip is you've got to have time. You got to have the time to go out and manage those contractors. You've got to be able to tolerate owning that property over somewhere between a month or two months, up to three, four, five, six, eight months, something like that. And then the fourth thing you need to have to do a fix and flip is patience. Okay? With a wholesale deal, you can get paid in hours on a wholesale deal. With a fix and flip deal, it's going to take months, weeks and months and multiple months to get paid. You've got to have the patience to manage that rehab and to get that property sold. So again, for a fix and flip, you got to have money, you got to have contractors, you got to have time, you got to have patience. If you don't have all four of those resources, you can't do a fix and flip. At that point, you've looked at the property, you've determined, for example, that a fix and flip is the right thing for the property. And then you look at you and say, do I have the resources to do the fix and flip? If I have the resources, do the fix and flip. Don't even hesitate. Go out and do it. Make the higher amount of money. If on the other hand, you don't have the resources, then wholesale it out to someone who has those resources and then allow them to make the larger amount of money. You make the smaller amount of money and everybody's happy. That's how you decide whether or not you should wholesale that property. If you have the resources to do what's necessary that is right for the property, fix and flip or buy and hold, do it. Don't even hesitate. But if you don't have those resources, wholesale it to someone who does have those resources, allowing them to make the larger amount of money. That is our analysis process. Remember, doing this analysis process is absolutely critical to your real estate investment business. If you're not looking at properties, analyzing properties and making offers, you don't really have a real estate investment business. All you have is a time consuming, expensive and frustrating hobby. Again, real estate makes a wonderful business, but it makes a terrible hobby. So make it into a business for you.