the methodical process - diverse...
TRANSCRIPT
THE INVESTOR ADVISOR: BUYING©
MO RE TH E N YO U E X PE C T , E X A C TL Y WH A T YO U DE SE RV E .
Thank you for the opportunity to present this Investor Advisor.
Investing in real estate can be very rewarding on many different levels. It
can also be very confusing, time consuming, and even frustrating.
We’re here to make your investing experience as stress-free as possible.
We’ll take you through each step of the process, always working with your
best interest in mind. We can work as slowly as you need, or we can be very
aggressive on your behalf. We’re here for you and the expansion of your
portfolio.
Again, thank you for the opportunity to provide you our real estate
investment guidance. I personally look forward to working with you.
Sincerely,
THE METHODICAL PROCESS
OF INVESTING
David A. NessBroker, DBR, NAR, CAR
Thrive GroupERA Real Estate
P: 303.946.1840F: 303.957.2395
www.ThriveDenver.com
ERA & THRIVE GROUP
Thrive Real Estate Group (Thrive) and ERA began working together at the beginning of 2010.
With a classy office in the heart of Cherry Creek and highly efficient staff, ERA brings a wonderful reputation in the real estate industry. Thrive adds a strong presence in the neighborhoods of Denver along with proprietary systems that
serve clients beyond their expectations.
The new relationship enhances the already first class service of both companies, and expands the geographic reach to offer services to even more clients.
All this has been executed with stylish, personalized service that our clients have grown to.
Welcome to Thrive. Welcome to ERA. Welcome to your team.
OUR MISSION
Our mission is to create a successful long-term relationship with our clients by providing industry leading knowledge, information and service to you.
We believe that the services of a true real estate professional should not only be seen during the transaction, but also after the transaction has been completed. Through our aggressive Premier Sales Plan, and our Signature Client Care Program we will help you accomplish your real estate goals now and in the future.
WHY THRIVE?
BACKGROUND
Thrive Real Estate was born out of a development company. During those
days, the principals of Thrive were highly involved in neighborhood data
gathering, planning, design, construction, community relations, marketing,
advertising, sales, closings, and client relations. This experience is hard to
come by, very powerful and very unique.
As you buy your investment property, imagine having the expertise of people
who have researched neighborhood trends in order to fund multi-million
dollar developments.
All of the same systems, processes, technology, expertise and energy is now
available to you, for your home.
The choice is yours. The honor of working for you is ours.
BUSINESS MODEL
Thrive Real Estate has a powerful, simple model. We work in teams. Nobody
can be the best at everything. Your broker will be your point person, but similar
to the Verizon guy, he has a huge network of professionals behind him!
When you work with Thrive brokers, you have the backing of the team
accompanied by proven systems and oversight that achieve one goal:
maximum profit in minimum time.
The result is YOU thrive – like we said…more then you expect, exactly what you
deserve.
TECHNOLOGY
Quite simply, Thrive Real Estate has the capacity to
analyze more data, market knowledge, and trends
then the competition, thereby positioning us to
provide more accurate advice, guidance, and
information to our clients.
Our systems paired with the specific way we
leverage technology produce sophisticated results
that sophisticated clients are drawn to.
RESUME
“The moment I met Dave and the Thrive team I
knew something was different. They approach real
estate differently. They embrace the product, in
our case urban town homes, and the surrounding
neighborhood…they are always optimistic,
creative and energized…”
Charlie Woolley, CEO St. CharlesTown Co.
ABOUT DAVE
Objective
To provide superior guidance and negotiations to my clients leveraged by technology and
service.
Work History
Modo Real Estate, LLC | 2005-2008 | Managing Partner - Sales & Marketing
1045 Clarkson Street, Denver – 19 units - Project Management
1366 S. Logan Street, Denver – 16 units - Marketing
188 S. Logan Street, Denver – 21 units - Project Management
500 E. 11th Street, Denver – 17 units - Sales & Marketing
1245 Columbine Street, Denver – 31 units – Sales & Marketing
636 Washington Street, Denver – 17 units – Sales & Marketing
271 Grant Street, Denver – 10 units – Sales & Marketing
1285 Albion Street, Denver – 24 units – Sales & Marketing
701 28th Street, Denver – 15 units – Sales & Marketing
ABOUT DAVE (CONT)
Rental Properties Held
1045 Clarkson Street, Denver – Condo – Cash Flow
5422 S. Nevada Street, Littleton – Duplex – Cash Flow
468 Elati Street, Denver – Single Family Residence – Cash Flow
345-347 Delaware Street, Denver – Duplex – Positive Cash Flow & Flipped
1420 Uinta Street, Denver – Duplex – Positive Cash Flow
2360 E. Iliff Street, Denver – Condo – Break Even
Properties Syndicated
1245 Corona Street, Denver – 17 unit Apartment Building - Cash Flow
636 Washington Street, Denver – 2 condo units – Cash Flow
1265 Colorado Blvd, Denver – Condo – Held & Flipped
1060 Bannock Street, Denver – Office Building – Cash Flow
865 Santa Fe Drive, Denver – Office Building – Held & Flipped
1355 Layfayette Street, Denver - Cash Flow
1001 E. 30th Street, Denver – Cash Flow
Thrive Real Estate Group, LLC | 2007 – Present | Managing Partner
2007 total transactions: 50
2007 sales: 9.4 million
2008 total transactions: 35
2008 sales: 7.6 million
2009 total transactions: 23
2009 sales: 7.1 million
ABOUT DAVE (CONT)
Accreditation
Realtor©, DBR, NAR, CAR, DIBS
Licenses and Certificates
Wealth Intelligence Academy - Short Sale Accreditation
Wealth Intelligence Academy - Creative Financing Solutions
Wealth Intelligence Academy - Foreclosures
Wealth Intelligence Academy - Lease Options
Managing Brokers License
HUD Certified
Education
Armbrust Real Estate Institute – Colorado Real Estate Commission Licensing
References
Robin Deruyter
Julie Dunn
Todd McWhirter
Annie Whitney
Mindy Sawyer
Kevin Calame
LENDING
“Funding can make
or break a
deal…many people
do not understand
lending…especially in
today’s market.”
-Matt Bliss, Spire
Financial
THE VERY FIRST STEP
Many investors make the mistake of putting the cart before the horse:
searching for properties before determining their lending strategy.
Will you use a mortgage broker or a mortgage banker?
Will you use hard money?
Will you use a local bank or a national bank?
Will you use IRA funds?
Will you do a 1031 Exchange
Do you want to close at the beginning of the month or at the end?
How much do you qualify for?
How much are you pre-approved for?
Are you working with someone you know and trust or who comes
highly recommended?
These and many other financially oriented questions are critical, and
should be answered prior to searching for property to avoid losing time
and money.
TYPICAL LENDING PROCESS
Pre-approval - Getting pre-approved for a loan allows investors to know exactly how much property they can
afford. Pre-approved investors have greater negotiating power as well. Pre-approval should be completed
BEFORE looking at properties.
Loan Search - Investors should seek the advice of an experienced mortgage professional who will help
determine which financing options best suit their needs today and in the future.
Loan Application - It's crucial that investors supply a mortgage professional with as much information as
possible, as accurately as possible. All outstanding debts as well as assets and income should be included.
Documentation - Investors must submit paperwork supporting the application as well. Information commonly
sought includes pay stubs, two years' tax returns, and account statements verifying the source of the down
payment, funds to close and reserves. If you have a company, be prepared with a Profit & Loss Statement
and Balance Sheet.
The Hunt - The investor begins shopping for an investment property with their Thrive Realtor. When the right
one is found, the terms of the sale will be negotiated, including the price and potential terms of the loan
being sought.
Appraisal – Lenders, whether traditional or alternative, require an appraisal on all home sales. By knowing the
true value of the home, the investor is protected from overpaying.
Title Search - This is the time when any liens against the property are discovered. A lien may have been
placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared before
a transaction can be completed.
TYPICAL LENDING PROCESS(CONT)
Processor's Review - The mortgage professional packages all pertinent information and sends it to the lending
underwriter, including any explanations that may be needed, such as reasons for derogatory credit.
Underwriter's Review - Based on the information put together by both the loan executive and the processor, the
underwriter makes the final decision regarding whether or not a loan is approved.
Mortgage Insurance - Many lenders require private mortgage insurance – this varies depending on the property
and loan type.
Approval, denial or counter offer - In order to approve a loan, the lender may ask the investor to put more money
down to improve the debt-to-income ratio. The investor may also need a bigger down payment if the property
appraises for less than the purchase price.
Insurance - Lenders require fire and hazard insurance on the replacement value of the structure. Flood insurance
will also be required if the property is located in a flood zone.
Signing - During this step, final loan and escrow documents are signed.
Funding - At this point, the lender sends a wire or check for the amount of the loan to the title company.
Confirmation of Recording - The lender authorizes the disbursements of loan proceeds.
Close of Escrow - Documents transferring title will now be recorded with the County Recorder.
LENDING SOURCES
There are 5 primary sources of capital for your investments:
1. Traditional Lending – loan from a mortgage banker or
mortgage broker.
2. Line of Credit – if you have a good relationship with your bank
(particularly small banks or credit unions), they may be willing
to extend a line of credit to you for your project.
3. Hard Money – loan from a private individual or private
company.
4. IRA – you can use your IRA funds to invest in real estate (we
can show you how).
5. Investors – through your network (and perhaps ours) you can
allow others to invest in your property; they leverage your
expertise, you leverage their funds for a win-win scenario.
BUYER’S AGENCY
“We’re here to
guide you
through every
step of the
process, as
fast or as slow
as you would
like…”
- Dave Ness
WHAT IS A BUYER’S AGENT?
A buyer’s agent is one who is ethically and legally bound to put the buyer’s interests ahead of all else in a real estate transaction. Once under buyer’s agency agreement, the agent is contractually and ethically responsible to you, and not working for the seller. It is important to do
this before you go rushing off looking for homes or you may end up with no representation.
Buyer's Agency allows the agent with whom you are working to be your representative and to put your interests above all others. At Thrive, the Buyer Agency Agreement provided by the Colorado Real Estate Commission is required for all brokers.
A seller’s agent is ethically and legally bound to represent the seller. He or she is not allowed to tell you what to offer for the property, cannot point out defects of a home unless they are material defects, and might only provide you with comps if you ask for them, and those comps will probably be in the favor of the seller, not in your favor.
An excellent buyer’s agent will not only be your eyes and ears in the market, but will also advise
you on what to look FOR and what to look OUT for.
At Thrive, we’ve been advising buyers for years through all types of transactions: single family homes, duplexes, condos, townhomes, lofts, land, horse property, commercial property, and more. The best part is, the seller pays for all these services – it is one of the few times in life where you get all the benefit but do not have to pay for the services received!
*In very seldom cases, the buyer may be required to pay for services rendered. Ask your agent for details.
WHY USE A BUYER’S AGENT?
•Market comparables (CMA & DMA)
•Market trends (micro and macro)
•Neighborhood history and projectionsAdvise
•Online syndication
•Broker community
•MLS accessLocate
•Price
•Terms
•TimelineNegotiate
•Contract management
•Timeline management
•Due diligence managementManage
WITH OR WITHOUT
AN AGENT?
On your own
You use slowly syndicated system like
Trulia search
You guess what price is the right price to offer
You negotiate against an experienced seller’s
agent
You manage all dates, deadlines, timelines, and contractual requirements
***You save no money (common misperception)
With a Thrive agent
You use our real time home search tools to find
the best deals fast
We execute advanced market analytics to
determine price
We use years of experience to negotiate
on your behalf
We manage the entire process with an online
real time calendar
We make sure you do not overpay, or lose your
earnest money
***Note: there is no
money to be saved
by a buyer who is
not represented. In
this case, the listing
agent keeps the full
commission and the
buyer gets no
representation. You
lose big, the listing
agent wins big.
Beware of this
situation!
ACQUISITION
“Dave's integrity and market
knowledge is obvious and his calm nature made the process a smooth deal through closing. We look forward to working with Dave and the Thrive team in the future.”
-Bruce & Angela Blakeslee
REAL TIME
PROPERTY SEARCH™
As an investor, you have full access to our exclusive Real Time Property Search
System. With this system, you can search by:Map Area
Neighborhood
City
Price
Bedrooms
Bathrooms
Square Footage
Walk Score
In addition, you can:Save properties
Save searches
Make notes on properties
Share properties with others with ActiveLynk
Recall your most recent viewed properties
See only properties with notes
Get real time email updates with properties that match your criteria
Property Type
Lot Size
Year Built
Features
Schools / School District
Short Sale
Foreclosure
WEB INTERFACE
You will
be
given
an
account
login to
begin
building
your
profile…
THE MOST SOPHISTICATED HOME
SEARCH TOOLS ON THE WEB
FEATURE WE OFFER WHY YOU WILL LOVE IT
View ALL condos, homes, townhomes, and lofts No need to search multiple sites
Real time MLS data feed See properties as soon as they come on the market
Make & store notes Notate properties so you can remember what you liked
Save properties Never have to search for a property twice again
Save searches Save time by running a search over and over
Save favorites Keep a running log of your “best picks” for quick access
Auto email updates Let our system do the searching for you
Integrated map search Narrow down to a specific neighborhood
School info integrated School info at the click of a button
Search foreclosures, bank owned, REO, & short sales Either avoid, or focus on these types of properties
Real time data statistics Average & mean data on any given area in 1 click
Mouse-over info on properties See quick, thumbnail images & info on all properties
Direct link Easily share info with spouse, friend, or business partner
Notated properties after viewed Save time & skip properties you’ve already viewed
10 STEPS TO
EVALUATING PROPERTIES
Focus on the FactsIts not supposed to be, but buying investment property can be an emotional process. You often find yourself trying to determine if this is “the best use” of your money. It's OK if your initial impression is an emotional one. But because the purchase can have a significant impact on your bank account, you need to make sure you gather all of the facts you need to make an educated decision.
Look for good bones.
Don't get hooked on the appearance. Then you need to learn to look past the furniture, wall colors, window treatments, and other decorating, and just look at the home layout and flow. New cherry cabinets and granite counters matter little if they are in the galley kitchen. At the same time a family room with black walls featuring a mural of the moon on one side also matters little if it is big enough (and yes, I have seen that). Aesthetics are relatively inexpensive to fix - major construction is another matter.
When looking at room layout, avoid corner doors. Rooms with doorways in the middle of walls flow better than rooms that open in a corner.
Make sure the most expensive stuff works. The two most expensive rooms in a home to renovate are kitchens and bathrooms. Also, focus on the “systems” – roofing, HVAC, plumbing, electrical, sewer to name the major ones.
Take an inventory of features, what you like and what needs fixing. Good news: With more houses on the market than in the past several years, you'll likely be able to look at more houses before making a decision to put in a bid. Bad news: That means it can get quite confusing to remember the details of each
home you look at. Good news: our online search tool will manage all that information for you! Use it to stay organized by doing things like making notes on properties of particular interest.
EVALUATING PROPERTIES(CONT)
Is there room for expansion?
One of the best and quickest ways to add value is to add something that was not there before. Adding a
garage, bathroom, or extra bedroom, for example, can have a significant impact on value and / or rentability.
Does the basement leak?
If you've been lucky enough to live in a house with a dry basement (or perhaps without a basement) it's hard to
imagine the havoc a wet basement can bring to your life. If you've ever lived in a house with a leaky basement
or hate the thought of a foot of water surrounding your furnace, you'll likely be sure to check that either the
basement doesn't leak or it has a system that automatically removes water.
What's the condition of the home's exterior?
Does it need painting, or is it sided? Does it have painted brick that's peeling? Is the aluminum siding chalking?
Improving the exterior can be costly. Check the exterior walls carefully before putting in a bid. Look for straight
grout lines and “hard” brick type when buying brick structures.
Neighborhood:
Do not buy a home in a dumpy neighborhood with the intent to flip it and make a huge profit…it probably won’t
happen. However, if you hold the property and flip it in the future, you stand a decent chance at turning a nice
profit. Pay close attention to your strategy in relation to the area.
Check the zoning, nobody likes surprises.
Too often investors are horrified to learn that the neighborhood they just invested in is undergoing huge zoning
changes that can prevent you from carrying out your plans (like “popping the top”). Before you put a bid on a house go the town hall, city hall, or county register of records and determine if zoning is going to be a challenge.
INVESTMENT PROPERTY
POSSIBILITIES
“Finding the right investment property is a lot like finding
the right stock – there is no perfect stock, but there are
hundreds to choose from that will work wonderfully to
fulfill your needs…” –Dave Ness
MARKET ANALYTICS
DETERMINING VALUE
DETERMINING VALUE
(INTERNAL)
Amenities
Beds & Baths
Condition
Size & Style
Location
Inte
rna
lFa
cto
rs
DETERMINING VALUE
(EXTERNAL)
Rates
Volume
Absorption Rates
Economy
Comps
Exte
rna
lFa
cto
rs
WHAT DOES DETERMINE WHAT YOU
SHOULD PAY FOR A PROPERTY?
Today’s market conditions.
Today’s competition – buyer’s other choices.
Today’s interest rates.
Today’s economic conditions.
Condition.
Location.
Volume & Absorption Rates.
Amenities.
Style.
Square Footage.
Number of bedrooms and bathrooms (scaled).
Comparables*
WHAT DOES NOT DETERMINE WHAT
YOU SHOULD PAY FOR A PROPERTY?
What the seller paid for it.
How much money the seller will make on it.
What the mortgage balance is.
What the neighbor’s house is listed for.
How much it is insured for.
What the county assessor says it’s worth.
INVESTMENT TYPES
HUD Homes
M.U.D.
Short Sales
Foreclosures
Cash Flow
Commercial
PROPERTY TYPES
What Is a HUD Home?
The Federal Housing Administration (FHA), which is a part of the Department of Housing and Urban Development
(HUD), provides federal mortgage insurance which ensures that mortgage lenders will be reimbursed in the event homebuyers default on the mortgage. When a lender is forced to foreclose on an FHA-insured single family home, townhome, or condominium because the owner can no longer make payments, it can file a claim with FHA for the balance due on the mortgage and convey title of the property to HUD. A HUD Home, therefore, is a one-to-four unit residence acquired as a result of a foreclosure on an FHA-insured mortgage.
Who can buy a HUD Home?Almost anyone. If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD
Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.
How are HUD Homes sold?All properties available for purchase by the public are offered for sale at internet listing sites maintained by management companies under contract to HUD. Any real estate broker registered with HUD may submit an offer and contract to purchase on your behalf. HUD pays the real estate broker's commission, if included in the contract.
Are there any special programs?Properties in designated areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments.
Should I get a home inspection?We encourage you to get an inspection after your offer is accepted. All HUD Homes are sold AS-IS, without warranty. HUD will not make repairs nor pay to correct any problems.
What about financing?Although HUD does not offer financing directly, some of our homes qualify for FHA-insured loans. Shop around for a lender to find the best loan terms.
HUD (CONT)
How Are HUD Homes Sold?
When a HUD Home becomes available for sale, usually it is listed on the Multiple Listing Service and on HUD's home page on the Internet. Any real estate broker who is properly registered with HUD may submit contracts for purchase. Brokers are used because of their expertise in the local residential real estate market and because HUD does not have sufficient staff either to show properties to prospective buyers or to assist in those other aspects of homebuying normally handled by brokers. Most HUD Homes are initially offered on a priority basis to owner occupant purchasers (people who are buying the home as their primary residence). Following the priority period, unsold properties are then available to all buyers, including investors.
HUD Homes are offered for sale at fair market value, based on a recent appraisal. Generally, HUD Homes are sold in what is known as an "Offer Period," during which a potential buyer's offer must be made. At the end of the Offer Period, all offers are opened and the bid providing the highest acceptable net return to HUD may then be accepted. Following the initial "Offer Period" homes remaining unsold are offered on an "extended" basis which means offers may be submitted any business day. If a bid on one of these homes is acceptable, the broker will usually be notified within 48 hours of HUD's acceptance of the offer. HUD does not provide direct financing to buyers of HUD Homes. Buyers must obtain financing through either their own cash reserves or a mortgage lender.
What Are Some of the General Sales Conditions?
HUD Homes are sold in their as-is condition without warranty. Because of HUD's as-is policy, HUD Homes can often be a great opportunity for the fixer-upper. Not every HUD Home needs fixing up, but when one does, it can be a real bargain. For example, HUD's asking price on the home will reflect the fact that the buyer will have to invest money to make improvements. Also, keep in mind that on most sales the buyer can request HUD to pay all or a portion of certain financing and closing costs.
HUD does not warrant the condition of its properties and will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential homebuyer to get a professional inspection prior to submitting an offer to purchase.
PROPERTY TYPES (CONT)
M.U.D.Multi Unit Dwellings can be anything from a duplex to a 500 unit apartment building. With M.U.D.’s there are specific guidelines on lending that can be challenging. It is important to get the upfront approval of a mortgage broker you trust or who comes highly recommended.
Short SalesShort sales are properties that are being marketed for less then what is owed to the bank. There are two types of short sales. The first type is a Lender Approved short sale. This is when the lender has approved
a certain price for the home to be sold. This type of short sale is usually faster to close and is typically easier to deal with. The timeline is usually about 3-5 months to close. The second type of short sale is the (you guessed it) Non-Lender Approved short sale. This is when the lender has not approved nor determine what price they will accept. This type of short sale is usually a much longer and more complicated process. The timeline is usually about 10-14 months to close.
ForeclosuresForeclosures, also known as “bank owned” are properties that the seller could not pay the mortgage anymore and the bank took the property back. These properties are usually vacate, winterized, and in
most cases need a significant amount of work. Since the bank has already foreclosed, these properties can usually close within 30-45 days from offer.
Cash FlowCash flow properties, also known as income properties, are usually properties that are on the market which are currently rented. These properties can present fantastic investment opportunities, however, they usually need quite a bit of investigation. The “Pro Forma” that is provided by the seller is often times not accurate, or shall we say “inflated”. Another significant determinant is the type of financing
or “debt structure” the owner has versus what the new buyer will have. “Debt service” , as it is sometimes referred to, can make a break an investment.
EXIT STRATEGIES
EXIT STRATEGY TYPES
There are 3 primary exit strategies to choose from; most other strategies are a
derivation of these 3 fundamental approaches:
1. Fix and flip – we help you buy below the market, you “fix” and upgrade the property, we put the property back on the market and you sell for a profit.
2. Buy and hold – this approach allows you to have recurring cash flow (what we call “wake up money”). In this approach, your “exit” is delayed by years
sometimes, but your monthly cash flow increases in the meantime. This can
also be mixed with #1 in that you may want to still fix the property up, but
probably not to the same degree. Within this approach there are many
variations, like lease option, to choose from.
3. Wholesale – we help you buy a property below market, you immediately flip it to another investor for a quicker, and usually smaller, profit.
Part of the value we bring to our clients is advising on what strategy might work
best BEFORE you make your purchase.
KEY MARKET FACTORS
Location
Location is the single greatest factor affecting value. It is always one of the first characteristics people consider
when looking for a home…whether they are buying or renting. Consequently, neighborhood desirability and resale-
ability are fundamental aspects to be considered when you purchase.
Competition
Smart buyers and tenants will always get a feel for the local market place and interpret value by weighing your
property against prospects in the area. These similar properties can give you a glimpse at how your property will
stand out and help us set a realistic price or lease rate that will give your property a competitive edge and shorten
the time on the market.
Timing
The real estate market may reflect a seller’s or buyer’s market. The number of buyers or tenants in the local market
may vary depending on the season, lending, and the economy. Market condition cannot be manipulated, but an
individual tailored marketing plan can be developed to combat unfavorable conditions accordingly.
Condition
An aesthetically appealing property permits the buyer or tenant to appreciate the unique features rather than
forcing them to think about how they will adjust their lifestyle.
Pricing
If the property is not appropriately priced, a sale or lease may be delayed or even prevented. Reviewing the
comparative market analysis of your property and similar properties in the area will assist us in determining the best
price or lease rate. By knowing the possible price range, we can help advise you on what to do to your property and what NOT to do in order to maximize your return.
CONTRACT MANAGEMENT
& COSTS
THE OFFER
Offer
24 hours
Counter24 hours
Counter or
accept
Main considerations in an offer:
1. Offer price
2. Seller concessions
3. Earnest money
4. Financing type and contingencies
5. Inclusions & exlusions
6. Timelines:
a) Acceptance Deadline
b) Inspection Objection Deadline
c) Appraisal Deadline
d) Loan Conditions Deadline
e) Title Commitment Deadline
f) CIC Docs Objection Deadline (if
applicable)
g) Closing Date
INSPECTIONS
We highly recommend our clients get Inspections done on the property they choose to purchase. When you consider the impact your purchase can have on your bank account (plus or minus!), paying for an inspection makes a lot of sense.
We have several recommendations we can make for property inspection companies – we do
not (and cannot by law) get anything from them for referring our clients to them (like a referral fee). The one thing we do get is the assurance that our clients will be taken care of professionally. However, you’re always able to choose whatever company you like.
The inspection is one of the main milestones in the contract management process. The inspection report that is produced can be somewhat intimidating. The inspection companies job is to uncover any and all adverse issues with the property, at present and potential.
Therefore, particularly with older homes, that list can be quite lengthy.
We encourage our clients to be cautious with inspections, but to also be realistic. Many issues that show up on inspection reports are normal depending on the age of the home. Others are much more serious, like a faulty foundation, and can be cause to re-enter negotiations with the seller, or even terminate the offer.
INSURANCE
Title Insurance: the title commitment is provided by the title company that the seller selects and in most cases pays for to disclose to all parties connected with the real estate transaction all liens, title defects and objections that affect the subject property. This is also know as a “commitment to insure” or binder. It lists all of the requirements that must be met before the title company can insure the property in a title policy. Marketable title is a title free from reasonable defects which can be sold or mortgaged. Marketable title may have certain encumbrances or burdens attached to the title and the buyer has to
be comfortable with and have the knowledge of and accept. The title commitment typically has three parts:
Schedule a-basic facts of the transaction, date, buyer, seller, lender, sales price, loan amount, estate being insured, how title will be taken, how the title is currently vested, legal description and address, estimated title insurance charges.Schedule b- lists the requirements that must be met before a title policy can be issued; releases of
deeds of trusts, releases of tax liens, judgments, correction deed(s), warranty deed(s) or deed(s) of trust.Schedule b2- lists the necessary exceptions to title-these are the items that are not being insured over by the title company. There are 8 standard exceptions, taxes and further burdens not being insured by the title company that will affect the subject property after the closing- such as covenants, conditions and restrictions, easements, and or mineral reservations.
Homeowners Insurance- the ever changing homeowners insurance industry has made the process of obtaining insurance for a property the burden of the buyer. It is advised that investors contact their insurance carrier to confirm that the property is insurable by their company.
COSTS OF BUYING A
PROPERTY
As an investor, there are several costs you should be aware of that you may be required
to pay out of pocket…
Inspection – this fee varies depending on age of home, square footage and location.
Usually the Inspection fee is somewhere between $250-$450. There are additional
inspections that vary in cost which can also be performed (this list is not
comprehensive):
1. Radon Test 5. Roof Certification
2. Mold Test 6. Termite Inspection
3. Sewer Scope 7. Furnace Certification
4. Carbon Monoxide Test 8. Hot Water Heater Certification
Appraisal – this fee is usually about $350 and is required by the lender. Sometimes it can
be rolled into the loan, but usually the lender will require it to be paid out of pocket.
Survey or Improvement Land Certificate (ILC) – this fee is usually associated with farm,
ranch, or horse property where the property lines are not readily definable.
Sometimes the bank will require a Survey or ILC to be performed. Surveys can be
$1500, and ILCs are usually around $450. Usually these costs can be rolled into the
loan.
COMMISSIONS
Buyers
Agent
2.8%
Listing Agent
3.2%
Total Commission
6% (usually paid for by
seller)
Disclaimer: there is no “standard” commission; figures used in this report are used for example purposes only .
There is a one time
$299 transaction fee
charged to you at
closing for
transaction
management.
Note: there is no
money to be saved
by a buyer who is
not represented.
In this case, the
listing agent keeps
the full commission
and the buyer gets
no representation.
Beware of this
situation!
COMMISSION BREAKDOWN
THE CLOSING
MY ROLE IN YOUR
CLOSING
Prepare closing instructions 60 MinutesReview Contract, review legal issues 60 MinutesInput pending date in Multiple Listing Service 15 MinutesProcess Earnest Deposit Check 30 MinutesMake copies of contract for all parties 35 MinutesLaunch & customer closing plan 60 MinutesProcess & deliver complete file to Lender 45 MinutesProcess & deliver complete file to Title Company 15 Minutes
Phone calls (15 calls each day @ 10 Minutes each for 30 days) 4500 MinutesSet up whole house inspections 60 MinutesMeet Inspectors and buyers for whole house inspection 180 MinutesDrive time 30 MinutesMeet appraisers for property appraisal 90 MinutesDrive time 30 MinutesPrepare market comparables for appraiser 60 MinutesReview comparable data for appraisers 30 Minutes
Prepare and mail closing instruction letters 20 MinutesReview Inspection Reports 60 MinutesPrepare Inspection Notices 30 MinutesRenegotiate contract due to Inspection Report 120 MinutesGet three repair bids per repair request 90 MinutesMeet contractors to receive repair bids 75 MinutesReview repair bids with seller 60 MinutesMeet repairmen to complete repairs 180 Minutes
Take new address photo for just moved cards 60 MinutesPrepare just moved cards for printer 45 MinutesReview title documents for title defects 30 Minutes
Weekly follow-up with lenders to track buyers loan 60 Minutes
Prepare closing instructions 60 MinutesWeekly follow-up with co-op agent to track file 60 MinutesSet-op time for closing & notify all parties 60 MinutesNegotiate contract issues & problems 120 MinutesOrder Closing statement for review 25 MinutesReview Closing statement for correct figures 60 MinutesPrepare Commission Statements 15 MinutesCompile all bills and receipts 60 Minutes
Renegotiate any closing walk-thru issues 60 MinutesInstall Sold Sign 30 MinutesNotify all parties of the closing figures 30 MinutesCorrect closing figures 30 MinutesPrepare closing packet for Buyers and/or Sellers 30 MinutesDeliver key at closing 30 MinutesPick up sold signs, remove lock box & keys 30 MinutesGo to closing 90 Minutes
Travel Time to closing 30 MinutesFollow-up calls 30 MinutesThank you letters 30 MinutesSold notice to MLS 15 MinutesMail survey letters 10 MinutesReferral letters to Past Customers 30 MinutesDonation to Make-A-Wish Foundation 30 MinutesClose out file 60 Minutes
Modify property web site 30 MinutesPrepare HUD 1 Tax Letter 30 MinutesTOTAL prep time in 30 day period 7,215 Minutes
MY ROLE IN YOUR
CLOSING
CLIENT EXPERIENCE
FEEDBACK…
“Dave was not only professional and experienced with all the ins and outs of real estate transactions, he also became my friend. He was there for me when I needed him to be. He was even there for those times that were above and beyond what would normally be expected from a Realtor. On our way back from looking at a house, I had a flat tire and Dave turned around and came back to help me. He changed the tire for me on I-25 in the dark, in the rain. Now that is what I call great service!
Thanks, Dave!!!”
Mindy Sawyer
“We were extremely impressed with Dave Ness and his entire Thrive Real Estate Group…negotiating with the other agents and advising us on the whole inspection process. We had a great experience working with Dave and will definitely recommend him!”
Robin & Julie Dunn
“Our experience with Thrive was awesome! Dave, was very patient with us, answered all of our questions and worked with our schedule and circumstances. He helped us understand the purchasing process as well as all of our options. Thrive had great communication with us and updated us with any changes. Their personal service was phenomenal! I will definitely call them for my next purchase.”
Jesse & Leslie Miranda
FEEDBACK…
“For all people looking for a professional in the Denver real estate market, look no further than Dave
Ness and his team at Thrive. Dave has excellent connections in the market…whether you are a young
professional looking to buy for the first time or a seasoned veteran looking for the perfect property,
Dave will manage the details from start to finish. Dave's ability to quickly narrow down the property
search and work tirelessly to negotiate a fantastic price will leave you with peace of mind and quite a
few extra dollars in your bank account. Dave brings honesty and accountability to the business with
everyone he works with. For all of this, I consider him to be the best agent in Denver…”
Matt Farnum
“Although I was not in the market for a "high end" property Dave treated me like a million dollar client.
He always made himself available to answer questions and was great at communicating where we
were in the process every step of the way. In addition to his own knowledge and experience he was
able to provide a vast list of competent referrals including a mortgage broker, general contractors and
online resources that made the whole experience much smoother and enjoyable. I would highly
recommend Dave and his team. I look forward to working with him again in the future.”
Dan Cohen
“Thank you for spending so much time with us to make sure we made the right decision! Also, thank you
for all your referrals of professionals that work with you, they have been fantastic, and we look forward
to contacting you for others in the future. Lastly, thank you so much for your expertise, we are very glad
we chose you and the Thrive team out of all the Realtors we interviewed!”
Eric & Robin DeRuyter
SAMPLE CONTRACTS
ADDITIONAL INFORMATION
CLIENT NEEDS SURVEY
1. Why do you want to invest in real estate?
2. How much experience do you have investing in real estate?
3. What are your short term and long term goals?
4. At what pace would you like to accumulate a portfolio?
5. Do you plan to invest alone or as an LLC?
6. Describe your “perfect picture” of the process of buying your proparty from
now all the way through until it closes (time frame, price, showings).
7. What are your fears about investing in real estate?
8. What type of properties would you like to buy? Why?
9. What are the top 3 things you would expect to get out of working with me?
MEET MY TEAM
Lender
Chris Magnotta
Cherry Creek MortgagePre-Inspections
Jay Hebbelman
Contract Management
Adam Cox
Title Company
Jason Richards