How To Determine a BAD Real Estate Deal

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How do you determine if a lead is a BAD real estate deal? Is it a bad comp? Can you underwrite it? Did the wholesaler send you little to no info? In this video, I break down how to determine if a deal is bad or good using a real world example.
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❎ I am not a CPA, attorney, insurance, contractor, lender, or financial advisor. The content in these videos shall not be construed as tax, legal, insurance, construction, engineering, health & safety, electrical, financial advice, or other and may be outdated or inaccurate; it is your responsibility to verify all information yourself. This is a RU-vid video for entertainment purposes ONLY ❎

Опубликовано:

20 июл 2022

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Комментарии : 101

@ereckharrison Год назад

Hilarious seeing Pace in this mood. As a father, i have those days too when you’re extra spicy lol 😂.

@chitwnyawdman Год назад

Extra cranky lol but I understand

@shakaguru1896 Год назад

Hahaha!!!!😂

@robertruschak7083 Год назад

$500,000 : you got to be kidding for a duplex in that area . Did you even hit the 1% rule for rent rolls

@TheGood200 3 месяца назад

😂😂😂 lmao facts I get it, - Dad with a two year old

@DiqaunColeman Год назад

I'm not sure how many newbie real eatate investors will realize how invaluable this 1 piece of content/video is. To be honest, I personally would of paid someone who knows how to underwrite deals like this $5k for 2 hours to teach me everything Pace laid out in this video. Thank you so much Pace. This is my 3rd time coming back to this video as a reference.

@jerryshield7945 Год назад

He tore that wholesaler a new one 😂 I didn't know depreciation and appreciation were separate nor how to calculate them. Pace once again you're amazing man.

@andyscorner101 Год назад

You had me LOL when you were shouting at this wholesaler for not doing his job, and you were 100% correct. I was a RE Broker for 20 years and saw many people with RE licenses doing exactly that, namely, NOTHING. They would give me paperwork with hardly any completed information pertinent to the deal and expect me to give them numbers so they could go back to the seller and complete the transaction. I'm alluding to P&S and Creative Financing deals that went south, along with my hair ( from pulling it out), and plenty of Antacids for the stomach pains they gave me. I'm still laughing. Good job on this one. It's not easy being me, is it? 😂

@totallyhuman182 Год назад

We just ignoring paces collar 🤣🤣🤣

@johnny.b. Год назад

Pretty sure it’s popped purely for this video 💪🏻 lol

@brendanlyons3688 Год назад

Great clip Pace! This is actually really well explained. And you did it quickly! Thanks for the nonstop nuggets ✌

@tailtappinfishing2919 10 месяцев назад

Love his sense of humor😂

@caseyl9253 Год назад

Love to see Spicy Pace! Thanks for the video!

@NicolasReyes3 Год назад

This is gold man you’re best. Thank you for this. I just can’t stop watching so much valuable info right here I got headaches of watching countless hours of your videos

@romi929 Год назад

Wow !!! For a newbie This is gold !!! Thank you Pace!!😍

@sethanderson9617 Год назад

Ooooh! Pace is feeling spunky today! Love it!✌

@lorenzofevola2223 Год назад

You care a lot about your viewers ! Thank you for breaking down a duplex. I am considering getting another after a very successful 2021 deal or going bigger . Not sure what to do , this helps evaluate .

@nandingpanelo Год назад

Thanks Pace and community

@nickthegreek2233 Год назад

We ended up keeping it, got it at 0% interest and came up 100k on the purchase price

@DiqaunColeman Год назад

Most people probably overlooked the name of the person who sent Pace this deal but I caught the name & wanted to see if Nick would jump in the chat & you did. Shout out to you my friend!

@GaryRabatin 8 месяцев назад

Why did you waste Pace’s time sending this to him? It made you look silly. No wonder you ended up keeping it because those terms would have never brought forth a Buyer. This was clearly not a Hole In One Offer, more like a hole in none offer.

@lauraculotta708 Год назад

Great information!!

@paparuda1968 Год назад

Good video Pace! Thank you for this one!

@PaceMorby Год назад

You're welcome!!

@RioEstateAgent Год назад

Awesome Video Pace! I'm new to your channel and I'm wondering if you have a video where you explain the 7 reasons why you invest. I'm familiar with most of them but curious to get your take on why you use those 7! Thanks!

@michaelmartinez6660 Год назад

I love this fkn guy! Only person I can listen to and not get tired of lol and he’s a G for keeping it real!

@hennmack3968 Год назад

Great content 🤣🤣🔥🔥

@DocK1ll3r Год назад

No Way!! Nobody is going to believe this, but the person that was trying to sell this home came to me asking me about managing it for him as an Airbnb (this is what I do full time). Very unique layout, and interesting property. So funny to see Pace looking at it and hearing his thoughts after I walked through it about a year ago. So cool

@marksimon8393 8 месяцев назад

I couldn’t stop laughing at this video 😂 Pace is pulling out all the stops to solve this equation with limited to no information in the picture is hilarious.

@scottw.6609 Год назад

Thanks for the knowledge Pace!

@PaceMorby Год назад

Any time, Scott!

@alj8629 Год назад

@@PaceMorby uradumby25 - Around 15:57 - can you explain to me how (or what number/percentage did you multiply by) to get the 7 years upfront depreciation of $127,272

@paulgomez3318 Год назад

This was hilarious and refreshing to watch lol. 😂

@andresruizbriseno302 Год назад

Pace, great video. Is the 12% COC rate something you use for all your investments or does it depend on location for you?

@brookeshelton9923 11 месяцев назад

Super helpful!!! ❤

@PaceMorby 10 месяцев назад

Glad it was helpful!

@MichaelF7 Год назад

Pace got the collar popped up, Beast Mode!

@donaldjohnson8522 Год назад

Nice break down Pace Morby I would say it be wiser to put 20 than 15 percent

@Lootalot Год назад

This earned my subscription

@PaceMorby Год назад

Thanks Chris!

@Lootalot Год назад

No, no, thank YOU! Truly.

@shibby189 Год назад

Good grief, I would love to have a drink with Pace some day. Love this guy!

@perlaargyle9343 Год назад

Except he doesn't drink 🤣🤣

@donaldmorckel1684 Год назад

LOVE The " PACE VIBE " music at the end of this video lesson ....... who is that ?

@Goatsportscontent Год назад

This was my deal 😂 we ended up getting this at 0% interest and giving the seller 100k premium on the purchase price instead.

@gusdominguez9024 Год назад

Is this real?

@Goatsportscontent Год назад

@@gusdominguez9024 yes. Nick is my business partner

@Crowowl11 Год назад

Tell us more on your story

@Goatsportscontent Год назад

@@Crowowl11 what would you like to know

@Crowowl11 Год назад

The whole deal! Perhaps a video reply to Pace and show your numbers

@uradumby25 Год назад

Pace, thanks for doing this. Currently in Utah (luckily our drywallers do a significantly better textured ceiling). But I am seeing alot of deals like this. $510k+ duplex's, with 1200-1500 rents per side. No central air. not very nice. Only way they seem like they would cashflow would be if you could get the seller to do financing at a crazy low interest rate. Meanwhile Ohio is sell for 100-200k with 800-900 rents, or more. In a market like this, if you didnt have to put money in the deal would you accept low cash flow or would it not be worth the effort?

@Hawksforever99 11 месяцев назад

I should've waited till after watching to comment lol...looking at that place from satellite and the Street view, my personal opinion is that as a renter, i wouldn't pay 3 HUNDRED per month for that place, much less the break even for the $3,046 + other fees...and then you'd have to give the seller your entire year's cash flow almost (assuming you could get what you'd NEED to for rent). Donny walk away from deals like this. RUN!!

@nicktran939 Год назад

Wholesaler is nuts! trying to pawn that off to Paceman.

@b3198 Год назад

It’s a bad deal. Why overstate how bad? A 1/1 unit and 2/1 unit will rent for more cumulatively than a 3/2 unit.

@Naturalbound Год назад

Fuck ya Pace! You tell them! Lol. Love it!

@Godschosen503 Год назад

Is there any thing else that can go wrong with a subject to deal other than a due on sale clause?

@ParadoxxedMedia 2 месяца назад

I would have text the dude "Yikes!" - 1 word text from me means the deal is over, don't call me back. In all seriousness, where is the value in this deal? What on earth would justify your assignment fee when there is negative value for the buyer??? I feel the seller wrote the terms and the dude signed off on it, thinking he did his job.

@Silversidepro Год назад

Depreciation is actually worse than you lined out because you did not remove the land value. I know you know that and did it this way for simplicity of the illustration.

@ryleyr9305 Год назад

Wouldn't the rent be higher because they're 2 seperate units? Didn't think rentometer incorporated that

@ryleyr9305 Год назад

If the rent is really that low, that's embarrassing for the wholesaler

@perlaargyle9343 Год назад

I think he couldn't get the numbers perfect on the rent estimate website cuz the wholesaler didn't give him any info in terms of how many beds/bath

@cyndigreenwood3272 Год назад

@@perlaargyle9343, It shows what the front house is on Zillow. It was a 2bd 1 ba.

@philkyles6506 Год назад

I was thinking that if the seller would give you a 60yrs loan on the house would that be a deal

@tiktokdj606 Год назад

And more than that I can buy a cashflowing property that gives me the same depreciation. If it isn't positive cashflowing why bother for the rest?

@justinlau3960 Год назад

20% cap ex. Is that high?

@terrilvanhemert Год назад

🔥🔥

@Hawksforever99 11 месяцев назад

What could you even rent this place for? I didn't catch how many beds/baths he said if he even said it yet, but I'm thinking like if you could rent those place for much more than 2 grand a month, I think you're doing well, considering the shape it's in. So you'd have to give the seller your entire year's worth of cash flow. And then again at the end of year 2? Dude you need to have a talk with the seller about coming back from his dream world to reality. He's (or she is) out of touch!!

@uradumby25 Год назад

does pace always do 20% capex each month ? In my spreadsheet I have 5% a month for general repairs and maintenance and 5% for capex - big expenditures, so i guess 10% total, I wonder if my estimate is low.

@alj8629 Год назад

uradumby25 - Around 15:57 - can you explain to me how (or what number/percentage did he multiply by) Pace to get the 7 years upfront depreciation of $127,272

@kylekotecha153 Год назад

But how do you get the 7 year acceleration? I bought a few in cash. I need the tax breaks

@perlaargyle9343 Год назад

Your CPA can help you with that

@pmartbrown Год назад

Maybe there’s 50kg of gold buried in the back yard?? Not sure how else this passed the quick UW litmus test.

@alj8629 Год назад

Around 15:57 - can someone explain to me how (or what number/percentage did he multiply by) Pace to get the 7 years upfront depreciation of $127,272

@brennabustamante4686 Год назад

My question too.

@TheCinnamondemon Год назад

he multiplied 7 * 18,181, the annual tax deduction amount bc 7 years of the deductions are provided upfront.

@davidcolvin3 Год назад

not the dog shed :'''')

@phil1954 Год назад

Add management fees and the deal keeps getting worse.

@Goatsportscontent Год назад

Spoiler alert we renegotiated and pace wanted the deal The terms of this deal ended up being: 600k purchase 0% interest 50k up front 25k end of year 1 25k end of year 2 No monthly payments for the 1st 36 months and after that 1100 per month 12 year balloon.

@gusdominguez9024 Год назад

So what about this deal made you think, "yes, this is a good investment"? The rents are low and the property price is severely inflated. I don't mean to offend, just want to see what you see in it that I don't.

@Goatsportscontent Год назад

@@gusdominguez9024 cash flow bro. The terms we got are awesome. We don’t make monthly payments for 3 years and it will rent for 2500 a mo. The return over 12 years until you balloon out is huge. This is a longer term plat

@uradumby25 Год назад

@@Goatsportscontent 2500 each side?

@cyndigreenwood3272 Год назад

I still don't see it as a good deal. I estimated the rents to be about $2,800 as long term rentals. 2,800 x12 is 33,600. So at that rent rate you would only cash flow 7ish K the first 2 years. At the end of 12 years not even including the fact you are paying another 50K or the fact its 1100 for 9 years.. you will only get 403,300 (in rent) at the end of 12 years when the the balloon payment is due. The only way I see it working is if you Short Term Rental it or even Medium Term. OR sell it at some point. The cash flow would be nice during that time, but that Balloon scares me.

@aaronwhite7754 Год назад

@@Goatsportscontent So to escape the balloon profitably you gave the tenants a balloon or plan to sell the home correct?

@MoSellsATL Год назад

❤️❤️❤️

@OffroadTreks Год назад

Dude, I live in Boise. Someone bought this and is renting it, lol.

@OffroadTreks Год назад

PS: I'm from the east coast, I 100% agree with the dry wall comment. Drives me up the freaking walls. Also, these people paint all the soffit the same color as the house and not the trim color like everywhere else in the country.

@belaad Год назад

Pace bought it. He renegotiated the deal to 0%

@Crowowl11 Год назад

Belly laughing!!!

@perlaargyle9343 Год назад

This video is 🪙 gold ! So good for seeing if something is a good deal 🙂🙌🎉

@robertoinvests Год назад

❤

@KevSab7 Год назад

You seem in a bad mood Pace. This is not like you. Hope everything is okay 👌

@kimberlymihalik8820 Год назад

Drywall 😂😂😂😂

@JohnsonOc Год назад

Damn! It’s so funny to see Pace going bananas on this creative deal. 🥹😀

@tariqkisyed3557 Год назад

Learnt a lot. Very simple explanation. However, your calculations aren’t correct. It should be 95000 to begin with 🥸

@alj8629 Год назад

Tariq ki Syed - Around 15:57 - can you explain to me how (or what number/percentage did he multiply by) Pace to get the 7 years upfront depreciation of $127,272

@cyndigreenwood3272 Год назад

Its actually 70K. 50K down, 5k for closing costs and 15K to the wholesaler. The 25K was at the END of the first year.