property guys sell your house

when you're interested in an investment property,you're going to need to inspect that property and to understand whether or not it's a goodproperty to invest in. hey, i'm ryan from onproperty.com.au, helpingyou find positive cash flow property. today, i've got with my buyer's agent of choice,ben everingham from pumped on property. and today, we're talking about how to inspecta property. ben inspects a lot of properties as a buyer's agent. ryan: how many do you think you do a year,do you think? ben: i think we'd be doing at least 100-150a month now. so, what's that? over 1,200 properties a year? a lot of property inspections.

ryan: yeah. we're not expecting you guys toinspect that many, but ben has a lot of expertise on how to inspect properties. so we thoughtit'd be a good topic to go through because it's one that a lot of people get really nervousabout and they don't really know exactly what to do. we've got a checklist that we're going tothrough. the different things that you really want to cover when you're inspecting a property.and so, we'll just get straight into it. first, let's talk about the interactions withthe real estate agent. because i think that's where people just get nervous in the beginning.what sort of things should we be asking the real estate agent? how should we be interactingwith them when we're inspecting a property?

ben: brilliant. a lot of people, obviously,myself included, are a little bit cagey around real estate agents. a lot of people don'twant to be coming across as too positive with the property. they don't want to be comingacross as too [inaudible 1:25] with the property and they really don't want to be spendingmuch time with most real estates in general. but often, real estate agents are one of thebest ways to actually pull high quality information out of a property. in terms of my general process when i actuallyget to the property, i always spend 5 minutes with the agent before i walk in. that timeis firstly about building the rapport and then asking a series of questions which helpyou identify the demand for the property,

where it sits and if you can get any sortof price concession, which is what it's all about. ryan: most people, when they go to inspecta property, the agent is at the door and they kind of wish they could just slip throughwithout giving their phone number away to the agent. because i think they're worriedthey're going to be called and sold like a used car salesman would sell them. but you'resaying do the actual opposite, stop at the door, talk to the agent, build rapport andask about price concessions. what sort of things do you do to build rapport?what sort of questions do you ask to get an idea of the demand? and what can you do soearly in the game to understand if there's

a potential for a price concession? ben: the easiest way to build rapport - thisis something i picked up when i used to work back in the corporate world and it's calledthe ford model. it's just really simple for building a relationship. ford stands for talkabout their family, talk about their occupation, talk about their relationship and then talkabout something deeper. so, in a 5-minute conversation with an agent, i'll just reallyquickly spend 30 seconds on each of things. just building a little bit of an in-depthrelationship. ryan: isn't it weird to ask a real estateagent about their family when you're just looking at a house?

ben: it's really funny, man, what people willactually open up to you. i get, obviously, keep in touch with the same agents. so, i'mseeing the same agents week in, week out where, i suppose, for someone that randomly walksup at a property house inspection. ryan: how's your mom? ben: how's your mom going? is she alright?the agent will be scratching his head. but in reality, it's about building a bit of rapportwith those guys so that people sell things and give price concessions to people thatthey like and trust. it's not a one-way sales process. it's you selling yourself as a potentialcandidate and a serious candidate as well. ryan: yup. okay.

ben: there's more deeper questions. ryan: yup. ben: it's really about understanding how manyweeks has the property been on the marketplace. if you know that the average time on marketis 45 days in [inaudible 3:51] in queensland, but this property has been sitting on themarket for 80 days. there's either something wrong with the property, there's somethingwrong with the agent or -- ryan: okay. we cut out a bit there, but youwere saying asking the agent how long the property has been on the market for and ifit's been on the market for longer than it's likely to sell in the area, you were sayingthat there's either a problem with - what

were you saying? problem with the agent, problemwith the property or problem with something else? ben: problem with the price, potentially.it might be listed too high and that's why nobody's bought it. ryan: yup. okay. so we're asking them abouthow long it's been on the market. what else do we want to ask the agent about? ben: a really important question is to identifyif there's been any other written offers. every single agent that you walk into, anyinvestment property, when you ask, "what's the demand like? what's the market been like?"he's going to say huge amount of people coming

through the open homes. huge amount of peopleinspecting the property. huge amount of offers. that one question cuts through all of thebs that the agent is going to talk about. in reality, in most states in australia, ifthere's not an offer in writing, the demand or the "number of people through the door"actually doesn't mean anything. so, that will tell you almost immediatelyhow motivated the agent is. if the property has been on the market for let's say 30-60days and they haven't gotten a written offer, they are more likely inclined to take anyoffer to the owner and for the owner to be more willing to accept that low-ball offeras well. ryan: okay. so, we want to ask them specificallyif they've had any written offers on the property,

not, "have you had any offers on the property?"because then they can just say, "yeah. we've had heaps of offers, but they've all beenrandom people just saying it and not actually committing to it. ben: exactly. ryan: is that how you find out whether ornot you're likely to get a price concession? or are there other questions you ask as well? ben: there's definitely some other thingsin relation to price concession. one of those things might be that the property is an averagecondition. obviously, not many people can walk into a completely un-renovated, uglyproperty and see what it could potentially

be. so, a lot of those people that comes throughthose cheap properties get turned off because it looks too much like hard work. so, they'rethe perfect properties to get that price concession on. there's a heap of different ways to get priceconcessions as well; like using building and pest inspections to negotiate. there's $10,000worth of things that needs to be fixed up, give us a $10,000 reduction. the other oneis to ask the agent how many sales they made in the last 12 months and you know if theagent is just living above the poverty line because they're not selling a huge amountproperty, they're going to be more motivated to make a sale as well.

ryan: and the agents actually tell you that?how many sales they've made in the last 12 months? ben: yeah. the good agents will tell you thatbecause they're proud of their accomplishments and how many sales they're making. some ofthe not-so-good agents will keep that pretty quiet, but that's public knowledge. you cansearch the agent's name in rate my agent and find out how many sales. ryan: okay. so there's some good questionsthat we can ask the agents. guys, ben is giving us a free checklist that we're giving outto all of you guys. you can check that out, go to onproperty.com.au/334 and there'll bea link to the free checklist over there. if

you want to know all the different questionsyou can ask, it'll be on that checklist. let's say we talk to the agent, we make itthrough the door and we're now looking at the property. what sort of things should webe looking for when we're inspecting the property? actually, maybe we should look at the streetfirst. when we're out on the street, before we even talk to the agent, are there thingswe should be looking for straight away? ben: definitely. there's a lot of things thatare important to me. for example, the distance to things like high schools, primary schools,train stations, bus stops, shopping centers, major shopping centers, cities, beaches - allof those sort of "key infrastructure" things that are meaningful to people and meaningfulto renters. the other things that i like to

look for is if the house on the main road?is it near train lines? is it under power lines? because some of those things, likemain roads, power lines, train lines can actually - from a valuation perspective - reduce thevaluation and future value of the property by upwards of $50,000 to $100,000 and i'veseen that happen. if they're within a certain distance of those things, immediately wipethat amount off the price. other things that we look for, is it directlynext to a park? because some people like to live opposite a park. other people don't likeit because it makes them feel open and exposed. i really look at the street and go, "are housesin the street well maintained?" how many of the houses in street are renovated versusun-renovated? are the people in the street

owners or are they renters? easiest way totell, how well do they look after their garden? all of those sorts of things begin to piecetogether the bigger picture of, "is this a desirable area?" a simple way to ask thosequestions is would i live in this street if this was my property? you're not always buyingwhere you want to live, but if you can mentally see yourself or someone that would live inthat area renting that from you, then that can be a great place to start as well. ryan: okay. so, kind of assess the area tounderstand its desirability and avoid those black spots, i guess, you would say, thatunder power lines or right on the train line or things that could diminish the value ofthe property.

i think the biggest thing that people wantto know is when they're inside a property, often, you're really caught up in the emotion.it's very exciting. there's a lot of other people in there, too. you don't really knowwhat to look for. are there specific things we should be looking for once we're insidethe property to understand if this is a good property to buy or if it's just going to bea money pit. ben: definitely. and that's a really goodquestion because i was definitely one of those people. i used to get wrapped up in the experienceof buying a property. so i'd walk into a property that i was inspecting for myself and be soexcited, but after i'd inspected 15 properties in a day, i couldn't remember one propertyfrom the other. and the notes at the end of

the day looked like a blur. this checklistthat ryan's got with the 83 different things could be really helpful if you downloadedit. walk through that checklist. that gives you a systematic way of looking at things. definitely, how many bedrooms, bathrooms?does the floor plan work? is another really good question. is it livable? is it open plan?could you open up that floor plan? is there walls that you take out that are non-structuralthat would give the illusion of a bigger space? and then, you start going into all of thebits and pieces. so, what's the age and conditions of the kitchen and bathrooms? what's the tiles,the carpets, the floor painting look like? is there asbestos? is there air conditioners?how big are the bedrooms? you really want

the bedrooms to be at least 3 meters by 3meters as a rule of thumb. anything smaller than that feels funny when you look into thosebedrooms and feels small. ryan: this sounds like a lot of stuff forpeople to do. are they trying to do this on the first inspection or is this over maybea first inspection and then a solo inspection that they might do themselves? ben: i like to do this in the first inspection.so that when i'm comparing 3 properties against each other, i can compare apples with apples.but you could use this checklist. if this is overwhelming and a lot of stuff do to,you could go have a look at the inside and outside the property then you could go backand have a look at the street and do the market

research and ask the agent the questions aswell. it doesn't have to be all or nothing at once. ryan: yeah. just be careful with that micbecause you keep hitting it by accident. ben: so sorry. ryan: really, it's all pretty basic stuffthat we're talking about. we're looking at number of bedrooms and number of bathrooms,which is easy to remember. we're also looking at the size of the bedrooms, making sure they'reat least 3 by 3, is that what you said? ben: yeah. absolutely. ryan: so 3 meters by 3 meters. we don't wantto be too small or too pokey. i guess 3 meters

by 3 meters gives you the opportunity to puta double bed in there as well, is that right? ben: definitely. ryan: we also want to look at the conditionof the kitchen and the bathrooms to see how they are, how good the condition is because,obviously, the kitchen is probably the most important part of the house followed closelybe the bathroom. we then want to look at the condition of laundry, if there's a laundry. what about the walls, the roof, timber, tiles,those sorts of things? are we looking at that and making notes of that? because i'm nota builder, i wouldn't know what dry rot even looks like, let alone how to find it. shouldi be looking for that stuff or should i just

wait for the building and pest inspection? ben: in reality, it's good to get an ideaof that stuff, but as you said, none of us are builders and most investors aren't. so,always get that building and pest inspection done and compare that to your own inspection.and then it just gives you that broader picture of the property. if there are any major issuesthat come up in the building and pest that you didn't pick up, you can always ask fora price concession. you can pull out of the property if they're too much. or you couldask the owner to fix them before settlement, which a lot of owners will actually do foryou. ryan: so, really, when you guys go insidea property, you're looking at those major

things. also, as ben was saying before, youwant to look at the floor plan and to understand, is this something that is livable and arethere opportunities in this floor plan? for example, if the kitchen is separated fromthe living room, is that a load-bearing wall? can i knock that down and actually open itup and it's only going to cost me $2,000 to do that. is that the sort of things peopleshould be looking for when they're analysing the floor plan? ben: absolutely. i'm always looking, how cani add the most value to this property through manufacturing -- sorry that's my ring tone.sorry guys. so, basically, i'm always looking where can i add the most value to this property?so, let's say for example you've got this

beautiful big kitchen-living-dining area ina house and it's a 3-bedroom, 1-bathroom home. if you can tweak that floor plan so that youcan fit a 4th bedroom and a second bathroom in, in most suburbs, in brisbane or sydney,that alone can add between $30,000 to $50,000 on top of the renovation cost to actuallymake that happen. so, you're always looking for a way to manufacture some growth intothe property as well. so, after you've gone, "okay. does this lookokay? the renovation's not going to be too heavy. what else can i change to add directvalue to the property?" so that instead of saving the next $30,000 for deposit, you canmake that happen through a quick renovation and pull that out so you're not having towork and save this hard all the time.

ryan: yeah. a lot of people go into a propertyand they're just looking at, "is this property okay or does it have a lot of problems thatneed to be fixed?" but what we should be doing is taking it one step above that and saying,"yes, we want to see if there's any problems in this property, but also we want to lookfor opportunities to improve this property which could potentially get us some instantequity or really quick equity in the property." and also, it could potentially get us somebetter cash flow and better rental income from the property because we can make it moredesirable for people. if there's an extra bedroom or an extra bathroom. there was a house that i used to live in andthe only way to get outside - i have this

massive backyard - but the only way to getoutside was through a pokey door in a laundry. there was the opportunity to open up. thekitchen had a lot of space in it. you could put a small deck out there and it would havejust changed the house and made it rent for $30 to $50 more per week, for sure. as ben was saying, look for those problems,but also you need to look for the opportunities when you're inspecting a property. that'swhy, i guess, this checklist is so great because you can go through it, you know all the problemsare ticked off and gives your mind some freedom to think about those opportunities. i guess that kind of covers the inside ofthe house and people can check out the checklist

if they want more details. what about theoutside of the house? are there things that we should be going around the outside lookingat are we going down the side lane checking out i don't know, the roof? are we climbinginto the roof? what are we doing? ben: you are getting a little bit [inaudible16:10]. hopefully, not climbing into any roofs, especially if the dodgy insulation schemefrom a couple of years back where i would never advise a normal person to jump intoa roof these days. ryan: leave that for the building inspector. ben: leave that for the professionals. ryan: what about - you've got on your listchecking the stumps of a property to make

sure the stumps are good which would requireyou to go under the house. so are we going to be going under the house? should we bringour overalls? ben: i'm wearing a suit most of the time wheni'm inspecting these properties. so i get down on my hands and knees and maybe you'renot crawling underneath the house through the spider webs, but you can definitely geta good idea from just ducking your head underneath the property, especially if it's on piers.obviously, there's properties which is slab on ground and then there's properties thatare stood up, in a lot of areas in australia as well, on concrete or steel piers. all you'redoing when you chuck your head underneath is basically looking if the piers are straightand they're not cracked and just to make sure

that the beams are supporting or in the centerof these piers. little tips and tricks like that. definitely looking at structurally,does everything look okay? if there's a pier that's exploded and the piece of wood isn'teven sitting on in anymore, it may or may not be a huge issue. cost of replacing thosethings isn't significant, but it can really freak-you-out type thing if you're not usedto seeing it. so, in terms of the outside of the house,it's really how big is the block? what type of zoning is it? how old is the house? hasit been renovated? perfect opportunity would be either where the board or brick home thathasn't really been touched since it was built that you can either re-paint or render andre-paint type thing. those sorts of things

plus a little bit of landscaping, maybe anew carport, make a property feel so much better to a tenant and it'll obviously havea lift as well in terms of manufactured growth. ryan: yeah. so, again, the same sort of mentalitythat we took to the inside where we are looking for these problems, but we're also lookingfor the opportunities is the mentality we want to take to the outside. because we'regoing to be looking for things like looking at the gutters, looking at the piping, lookingat the piers. but really, we're going to need a building inspection to understand how muchare those going to cost to fix and that sort of thing. i guess what you're saying, we want to compareapples to apples. so, you want to find any

problems that are obvious. so when you'relooking at 3 or 4 or 5 different properties, if one has an obvious problem, maybe you candiscard that and not bother with it and focus on the other 2 or 3. but also, you want tobe going around looking for the opportunities. is the garden horrible but can be easily fixedto give the property a lift? can you give it paint or a render? what are to opportunitieson the outside to improve the street appeal of the property? ben: absolutely. ryan: sweet. i think that kind of covers everythingwhen it comes to inspecting a property. this is obviously a very big topic that we coveredquite quickly. we talked about building rapport

with the real estate agent and asking thema whole bunch of different questions to understand the demand for the property and if there'sany opportunity to get price concessions. we also wanted to do some research into thestreet and the area, see what it's close to. we want it to be close to good things; likeschools and shops. we don't want to be close to bad things like power lines. remember that aussie movie and they live underthe airplanes? ben: the castle. ryan: yes! the castle. they live under theairplane and then they go on holidays and they have a holiday house that's directlyunder power lines. that's the sort of stuff

that we want to avoid because most peopledon't really want that. so we're doing our research into the area. when we're going inside, we're looking fornumber of bedrooms, the floor plan, all that sort of stuff, but we're also looking foropportunities. and then the outside, again, we're looking for any structural problemsor things that may be issues, but we're also trying to elevate our minds and look for theopportunities to add some value to this property in either rental income or in growing equityfrom the property which we can then draw out to re-invest and grow our portfolio faster.did i miss anything? ben: no. i think you've absolutely nailedthat on the head. i suppose, i'll just would

love to finish up with an example. so, wemight be looking at a suburb, for example, wynnum west in brisbane right now which is13 k's away from the city. i could buy an un-renovated, really ugly duckling propertyin that suburb on a 600 sqm block right now for between $440,000 and $450,000. i couldbuy exactly the same product, completely renovated for $550,000 to $560,000. so. there's $100,000gap there right now and to take it from $440,000 to let's call it $540,000 may only cost you$50,000. $50,000 is $50,000, that's a lot of money, but for every dollar you're puttingin, you're getting a dollar back out. so, you've made $50,000 in equity on that sortof deal and you can do that relatively quickly, within the first 12 months of holding yourproperty. then there's another deposit to

help you move forward into [inaudible 21:23] ryan: yeah. so, definitely, the idea of beingan active investor and rather than just buying a property that you love emotionally, actuallyunderstanding the market, understanding the area, understanding your strategy and findinga property that you can actually add value to. because i think a lot of people do lookat property investing as just a "get rich quick" thing or "i'm just going to park mymoney and i'm going to retire." but really, if we see it as "well, how can we add valueto the property?" "how can we add value to people's lives that people are willing topay for?" if we treat it like a business and look for the opportunities there, then i thinkwe can inspect a property and really understand

whether or not it's going to be a good investmentfor our future. ben: fantastic. perfect. ryan: we're losing internet again. alright.thank you so much. guys, you can check out ben. go to pumpedonproperty.com. you can seehis blog over there or you can get in contact with him and book a free strategy session.if you let him know that you came from ryan at on property, i do get a referral fee. so,thank you for that. if you want to get access to that checklist that we talked about thatgoes through all of the things that you want to check off when you're inspecting a property,just go to onproperty.com.au/334 which is this episode number and there will be a downloadlink there.

thank you so much for your time, ben. untilnext time, everyone, stay positive.