Wholesaling Module 4 (Locating Properties) Part 2

by | Mar 27, 2019

We go through and can narrow down, again, by using our tools. From the school district, we teach the towns the school district serves. Plug the town into Zip-Codes.com, then plug the zip code into MelissaData.com, and click on the map view of individual carrier routes. Create a map view search to match this route on MLS. Then add in specific criteria like bedrooms, bathrooms, garages, yard size, and things like that. Now you’ve got a meaningful search.

Before you ever go actually make offers on properties, there’s one more thing you need to see. I like to use planning commission website data. In this case, this is a regional planning commission but every county in every municipality in the US and Canada has what is called a planning commission. They almost always have planning commission websites. The counties always do.

Municipalities sometimes don’t. You really need to go to the county level. On the drop down menu, we’re going to see all the municipalities in that county. In this case, we’re looking for Harmony.

You can see all of the demographic and sociographic data that has to do with Harmony Township. Scroll down. You get everything from sex, age, race, religion, salary level, to education level. It is all out there. It is all public information.

By the way, I want you to ask yourself how much money you have spent so far doing this four-step research process.

1) School report,
2) Zip-Codes.com,
3) MelissaData.com, and
4) planning commission website?

The answer is zero. You haven’t spent any money to do this. It’s all public information and it’s all free. This is amazing.

I want to show you the sheer volume of data that’s available for basically every census tract. By the way, we do give you the USCensus.gov data in your training material. If you want to try to use it, that’s great. I know for me, it was far easier just to use planning commission website data because everything is formatted for us. On USCensus.gov, you’ve literally got to create your own reports. It takes more time.

From the info on the planning commission site, you can see in Harmony Township, owner-occupant properties make up 73% of the population and renter-occupied properties make up the other 27%. That’s actually a well-balanced area. Generally we like to see two-thirds owner occupied and one-third rental. This is slightly below that on the rental side, slightly above on the owner-occupant side. What this tells me is it validates that this is a good area to flip homes because it’s greater than two-thirds owner-occupant. If you’re looking for rentals for your investors, then the rental-occupant ratio should be somewhere between 33% – 67%. This area is slightly below that, but it is a good area for flipping because there are more owner-occupants. Always look at the ratio of ownership versus rentership in an area.

If it’s greater than two-thirds owner-occupant, it’s a great area to flip homes; if the percentage of renters is somewhere between one-third and two-thirds, then it’s a good area for buying rentals. There is one more thing I want to show you. If we know that the most likely candidate for purchasing a property is a middle class family with 2.3 children looking to buy a median priced home, we have to ask ourselves whether that family wants to move to a neighborhood where there are other children. The chances are yes, they want to move to a neighborhood where there are others for their children to play with. From your demographic data, you can see in five-year increments how many people live there. At a quick glance, you can see the largest segment of the population for this neighborhood happens to be between 50 and 54 years old. That was 2010, so now those people are in the 60 range. What do we know about 60-year-old in North America right now? That’s right; they’re looking to retire soon. 76 million of them in fact. That’s a lot of people.

This may be an example where everything looked great so far, but now you think to yourself, “I should probably look for another area.” Here’s why. Does that family with 2.3 children want to move to a neighborhood where the largest segment of the population is getting ready to retire? While some of them may want to move there, the real answer is no. The majority of that middle class family with 2.3 children is going to want to move to a neighborhood where lots of other people have children. Does that make sense?

You may have just saved the person buying your wholesale deal from unnecessarily tying up precious capital for an unnecessarily lengthy time. I’m not saying you can’t sell homes there. You certainly can, but you would have a different strategy for this area. If an investor is flipping, I want to make sure they have the highest probability of flipping properties as often as they can. If I look back at the initial school report, I know by the data that I can probably flip five or six properties a year. I can see 65 sold to 28 active, that’s more than two to one. 39 to 15, that’s more than two to one. 35 to 13 – again, two to one.

What that means is I can probably sell properties here in 30 to 60 days including rehab. I would rather flip five homes here a year and make $50,000 a pop than flip anything in other areas, especially at the million dollar range. Now you’re using a four-step process. School report, Zip-Codes.com, MelissaData.com, MLS map view search. If you’re not an agent, you need to align yourself with the right kind of agent—an investor agent—who has been professionally trained by us to work with investors.

The final step is to validate everything with the planning commission website. That’s how you locate inventory correctly. No more guessing, casting a wide net and presenting the first thing that pops up. That’s speculating. This is investing. Now you’ve got everything you need to get started finding properties that you can then get under contract and wholesale to your clients. Please take the time to review, digest, and implement what you’ve learned. Very soon, you will be engaged in on-the-job training. You’re going to be earning while you’re learning. In the next module we’ll talk about analyzing flips in detail, so that once you find properties, you can analyze the specific ones before putting them under contract and attempt to sell that contract to your buyer. When you do your analysis correctly, you’ll be able to substantiate what you’re projecting for those properties, and you’ll make yourself out to be a big hero for people buying these contracts from you.

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