This blog is all about building rental property wealth in nearly no time. That means finding and buying properties 'in nearly no time'. And it means managing the properties 'in nearly no time'. Your time is the most precious thing you have. Once it's gone, it's gone forever.
How do you find and buy a property 'in nearly no time'? You may have spent hours on Redfin, Zillow, or Trulia scrolling and clicking endlessly. You wonder whether the photo shown is just flattering. You wonder why it's been on the market for 103 days. Yes, it's like Tinder. Yes, you have to learn how to swipe left...a lot. And quickly.
Buying a rental property means managing an efficient 'purchase funnel'. It's a disciplined process to find the right property for you as quickly as possible.
My 'purchase funnel' looks like this. For every one property I buy I know how many offers, visits, sets of numbers, and listings are needed. And yes, I sketch like an eight year old.
Say you've decided to invest in one area of your city.
- Have your broker & property manager only send listings that meet your tight criteria. Both of you need to be crisp on the criteria. If you're getting more than about 20 listings a week, it's probably too many. Aim for no more than 5-10 per week.
- 'Running the numbers' should take you no more than three minutes per property. Three minutes. What does 'run the numbers' mean? Within three minutes - 180 seconds - you should have a five year forecast ROI, CAP rate, cashflow. It won't be perfect. You're using numbers on the listing your broker sent through. But you'll know enough. Enough to swipe left aggressively. (You can use a free rental calculator from the internet, but if you want to be really quick build one in Excel or Google Sheets that works for you).
- Try and visit no more than one-in-ten properties on which you run the numbers. If you're visiting more your financial criteria may be too loose. Sellers aren't just giving properties away. Don't waste your energy. An in-person visit will take you a minimum of 30 minutes, maybe an hour or more with transit time.
- Make an 'offer to purchase' quickly. If you know your numbers and discuss an appropriate price with your broker/property manager this step should take 30 minutes at most.
- From having an 'intent to purchase' signed to owning a property is at least eight hours of your time. It'll be stretched over 40 to 60 days probably. Purchase and sales agreements, collecting paperwork for mortgage underwriting, registering deeds, transferring money - it all takes time.
Speed at the top of the funnel is essential. Run the numbers quickly so you don't waste your time. Visit in person quickly so you can make an early offer if you choose to. Speed at the very bottom of the funnel matters much less. You want the transaction to go smoothly.
Focus your efficiency at the top of the funnel, not the bottom. Why? Here's an example:
Say it takes you 12 minutes to run the numbers on a potential property, and you buy one place for every hundred you evaluate. And let's say you visited 25 places, an hour each, before buying. That's 20 hours of running numbers plus 25 hours of in-person visits. 45 hours total. A full working week.
Now say you get that to 3 minutes running the numbers per potential property, you buy one place for every 25 you evaluate. And let's say you only visited 10 places, an hour each before buying. That's a little over an hour of running numbers plus 10 hours of in-person visits. 11 hours total. Just one busy day.
Track your time and number of properties at each steps of the funnel. You'll be able to pinpoint where your time is being spent - and wasted.
Congratulations. You've learned the value of 'swiping left'. You know how to find and buy properties in nearly no time. Now learn how to manage your properties in nearly no time.