Overview of the Selection Process
Shopping for Investments is different—you don’t see the properties
Today (August 19, 2019), you can pick among just fourteen multi-unit properties available on the market in Bakersfield. But, how do you pick the right property for your investment portfolio?
You may already know that shopping for investment properties is different from shopping for personal residences. Instead of touring every home and then picking one to buy, you pick one to buy and then you tour the home—the market operates in reverse.
New investors become scared when they must put an offer on a property without seeing the inside, but this is normal, and you will become familiar with the process.
Select the top three properties using data
In the videos below, I show you how to pick properties without seeing them in person. You will use numbers from the listing data to pick properties with the best returns. And Google maps will help you get an idea of what the neighborhood looks like.
Make your offer unique
When you find a property, you must make an offer before you see the inside. This process protects the privacy of tenants and reduces the number of unnecessary interruptions that each tenant must suffer.
If you use a traditional method of offering, you can only make an offer on one property at a time. However, I recommend a method that allows you to view up to three properties on the same day.
To make this system work, you must modify your offer. The key changes in this strategy will help keep your money in the bank until after you have seen the properties. Because the money remains in your bank account, you reduce risk, reduce fear, and increase the number of properties that you can qualify.
Here is what I recommend in your offer:
- Set a specific date for the acceptance deadline (use a Wednesday).
- Set a specific date for the visual property inspection (use a Saturday).
- Add a term that states that you will deposit your “earnest money deposit” within 3 days of completing your visual inspection.
By using these terms, you can make multiple offers on investment properties without having to deposit your cash into escrow. You can visit all three properties on the same day, and you can cancel the two contracts that you like least. (Unless you want to close and can close on all three properties.)
Download the spreadsheet
In the videos below, we use an excel spreadsheet to compare properties. Download your copy of the spreadsheet here. Download
The Short How-to Guide of selecting three properties
In the video that follows, we spend just 30 minutes to review properties and select our favorite three. This video skips the process of developing the excel spreadsheet, and it is probably the best place to start for new investors.
The Long Version: How to select properties and make your own spreadsheet
If you want to see how the spreadsheet works, or if you want to create your own, watch this much longer video. It is 1 hour and 30 minutes long. We cover:
- Using Excel Formulas.
- Reading MLS data sheets.
- Identify possible mistakes in MLS data.
- And, why we use proforma data to make choices.