Untitled Document

PROPERTY SCORING SYSTEM

0 POINTS

No pride of ownership. Junk and debris in streets. High crime. No appealing shopping close by. Declining neighborhoods. Abandoned buildings and boarded up properties. Close to major streets, industrial areas, or commercial zones. Far from employment centers or commuter accessibility

2 POINTS

May be clean older neighborhoods. Close to shopping, church, schools, etc. but not very appealing. Working class tenants neat, established. May be poor location on the upswing with pioneer fixer-uppers. Nicer inner city neighborhoods.

3 POINTS

Easy accessibility to all necessary amenities and transportation. Middle class suburban neighborhoods. Not on busy streets. Cul-de-sacs ideal. Properties near by very similar in price. Good foliage and landscaping, except in brand new subdivisions. Only high-class inner-city locations.

1 POINT

Consider only if price is excellent. Needs major cosmetic and structural improvements. At least 10% of purchase price will need to be spent immediately to make unit rentable. Improvements do not significantly improve the rent roll because of quality of tenants and location. Improvements not to increase not to increase value more than 10% above purchase price. Usually associated with poor locations. Possible to find this property in excellent locations where prices are so high that improvements do not increase value buy just make units acceptable to renters. Viewed as making a larger down payment (for improvements) and receiving an averaged priced property.

2 POINTS

This is the true fixer-upper! Cosmetic improvements would be nice but not immediately necessary. Costs mot to exceed 5% of the purchase price. Cosmetic improvements immediately affect the value upwards and make the property more desirable, saleable, and attractive. Not much structural work if any is needed. Only paint, landscaping, drapes, and other inexpensive improvements. This type of property should not be bought if the buyer does not have the time or mental capacity to undertake supervision of improvements. This property can prove to be the most profitable in the short run. The worst house in the best neighborhood.

3 POINTS

Newer property or older property with recent renovations. No problems, clean inside and out... good landscaping. New components to replace major items. May have been a recent fixer-upper project which is being sold by a don't wanter at an excellent price. No work necessary before renter moves in. Solid property with a hassle factor of zero. Quick closing, quick rent-up, quick cash flow.

1 POINT

10%or more above the reasonable market price. Consider only if financing is excellent.

2 POINTS

Within + or - 5% of the market price.

3 POINTS

At least 10% or more below market price.

1 POINT

More than 15% down. Seller needs lots of cash and wants all of his equity. Or property will have heavy negative cash flows for more than two years. Or there will be a large balloon payment due in less than three years from date of purchase. Consider only if price is excellent.

2 POINT

Financing required from an institution with up to 15% down of buyer's money. Credit check, institutional, secured loans for part of the down payment (high interest, high monthly payments). Seller carries small amounts. Cash required from buyer. Balloons due in less than 5 years.

3 POINTS

Less than 5% of buyer cash involved. Seller carries most of the financing at lower than market rates with no balloons in less than 7 years. No negative cash flows projected beyond the first year. Contract sales, no credit checks.

1 POINT

Won't budge on price or terms. "Take it or leave it." Doesn't need to sell. Not anxious at all. In the drivers seat.

2 POINTS

Might consider a small discount in price. Needs cash for new house or property. Needs cash for bills, etc. May carry small second or contract but leery of unusual deals.

3 POINTS

Needs cash for pressing items. i.e. behind in payments, etc. Or, doesn't need cash at all. Has tax management, transfer, time problems, or divorce, retiree, or investor looking for a solution without major need for cash. Flexible in price or terms.

	POOR	AVERAGE	EXCELLENT
LOCATION	0 POINTS No pride of ownership. Junk and debris in streets. High crime. No appealing shopping close by. Declining neighborhoods. Abandoned buildings and boarded up properties. Close to major streets, industrial areas, or commercial zones. Far from employment centers or commuter accessibility	2 POINTS May be clean older neighborhoods. Close to shopping, church, schools, etc. but not very appealing. Working class tenants neat, established. May be poor location on the upswing with pioneer fixer-uppers. Nicer inner city neighborhoods.	3 POINTS Easy accessibility to all necessary amenities and transportation. Middle class suburban neighborhoods. Not on busy streets. Cul-de-sacs ideal. Properties near by very similar in price. Good foliage and landscaping, except in brand new subdivisions. Only high-class inner-city locations.
PROPERTY CONDITION	1 POINT Consider only if price is excellent. Needs major cosmetic and structural improvements. At least 10% of purchase price will need to be spent immediately to make unit rentable. Improvements do not significantly improve the rent roll because of quality of tenants and location. Improvements not to increase not to increase value more than 10% above purchase price. Usually associated with poor locations. Possible to find this property in excellent locations where prices are so high that improvements do not increase value buy just make units acceptable to renters. Viewed as making a larger down payment (for improvements) and receiving an averaged priced property.	2 POINTS This is the true fixer-upper! Cosmetic improvements would be nice but not immediately necessary. Costs mot to exceed 5% of the purchase price. Cosmetic improvements immediately affect the value upwards and make the property more desirable, saleable, and attractive. Not much structural work if any is needed. Only paint, landscaping, drapes, and other inexpensive improvements. This type of property should not be bought if the buyer does not have the time or mental capacity to undertake supervision of improvements. This property can prove to be the most profitable in the short run. The worst house in the best neighborhood.	3 POINTS Newer property or older property with recent renovations. No problems, clean inside and out... good landscaping. New components to replace major items. May have been a recent fixer-upper project which is being sold by a don't wanter at an excellent price. No work necessary before renter moves in. Solid property with a hassle factor of zero. Quick closing, quick rent-up, quick cash flow.
PRICE	1 POINT 10%or more above the reasonable market price. Consider only if financing is excellent.	2 POINTS Within + or - 5% of the market price.	3 POINTS At least 10% or more below market price.
FINANCING	1 POINT More than 15% down. Seller needs lots of cash and wants all of his equity. Or property will have heavy negative cash flows for more than two years. Or there will be a large balloon payment due in less than three years from date of purchase. Consider only if price is excellent.	2 POINT Financing required from an institution with up to 15% down of buyer's money. Credit check, institutional, secured loans for part of the down payment (high interest, high monthly payments). Seller carries small amounts. Cash required from buyer. Balloons due in less than 5 years.	3 POINTS Less than 5% of buyer cash involved. Seller carries most of the financing at lower than market rates with no balloons in less than 7 years. No negative cash flows projected beyond the first year. Contract sales, no credit checks.
SELLER'S MOTIVATION AND FLEXIBILITY	1 POINT Won't budge on price or terms. "Take it or leave it." Doesn't need to sell. Not anxious at all. In the drivers seat.	2 POINTS Might consider a small discount in price. Needs cash for new house or property. Needs cash for bills, etc. May carry small second or contract but leery of unusual deals.	3 POINTS Needs cash for pressing items. i.e. behind in payments, etc. Or, doesn't need cash at all. Has tax management, transfer, time problems, or divorce, retiree, or investor looking for a solution without major need for cash. Flexible in price or terms.