More Deals, or More Profit Per deal?

General Real Estate Investing
1

I just got started in a program that’s around 95% automated, and have a question.

I advertise “We’ll pay 100% of your asking price”, or “I’ll pay 90% of your asking price”. People are easily driven to a website,

www.fullpricehomeoffer.com

or www.sell90.com ,

and the system automatically explains itself to them, then makes them offers by e-mail , follows up by e-mail every 3 days until they reply, and then sends them the contracts… all on auto-pilot.

I may not even talk to them until they’ve agreed to my terms, lol. SO… here’s my question… Because I use that “line” (100% of asking price) in my ads, I can literally make dozens of offers a week to almost ANY type of seller… they don’t have to be desperate anymore.

Because of this, I can step up my marketing machine and get lots and lots of leads, but with smaller profit margins… $4000 - $6000 - $10,000, etc etc.

Originally, I felt I’d advertise the 100% offer and get lots of deals, but now I’m wondering if I should do less deals, but make more $ on each?

What would you guys do? Since it’s so “hands off”, should I take everything I can get, or should I not work as hard and take only the 90% deals and the “better” 100% ones?

One big difference, is the 90% deals are all “cashed out” within 60 days or less, so I’m walking away from those with a check. The 100% deals are more of a “buy and hold” type of transaction, so although I pay more, I may make more $ in the long run.

The whole theory behind the program is it makes it easier for me to find “regular” sellers, since I can advertise to buy at full price. I’ll have more leads, but since it’s automated, I will still work less hours.

What would you do? Do you have to have a “minimum” amount of profit in a deal before you’ll take it on, even if you know you’ll still make $ and have partners to walk you through each deal a step at a time?

Z

2

Y’know if some one told me their website would automatically offer 90% of my asking price beforehand, I would simply add 10% to my price before I contacted you.

I hope I am missing something.

:slight_smile:

3

The offer has a subject to appraisal clause built in.

Did you come up with this, or are you just using a referral redirect url, Nick?

4

Howdy ZNick:

The MLS has plenty of houses for sale. Why not offer 100% on all of them. The whole idea is to pick and chose what deals to work to make more profit on less deals. I would rather make $100K on one deal instead of $1K on 100 deals.

5

ZNICK,

Don’t listen to the others - they are probably jealous. I LOVE your plan and will implement it immediately. What do you think about doing 1,000 deals at $1 each???

Mike (volume is the key)

6

More profit per deal. Simple, effective, and I’d wager what every professional REI on here is going to say.

You say that you can make a fullprice offer and still make $4-10K doing it. I’d be curious as to how you think that’s going to happen?

As Ted said, I’d rather make $100K on 1 deal than do a 100 deals that make $1K each. Simple time value of money. And the whole “it’s automated, so I’ll work less” doesn’t fly. At some point, you have to be involved, even a little. And a little on 100 deals is a lot.

More important, I’d rather have one property with $100K in equity, than 100 properties and $100K in equity. One small shift in the market, and those 100 properties are gone.

Raj

7

It’s silly to even calculate profit into the equation. the more houses you buy, the more successful you are. price, value, income, profit, are all meaningless.

8

cecsix,

I really, really hope that was a tongue-in-cheek response and not serious.

Profit doesn’t matter, huh?

the more houses you buy, the more successful you are…

So that would mean that if you buy 100 houses at 10% ABOVE market, then you’re more successful than another who has bought only 10 properties, but at 50% of value.

Hmmm.

If price, value, income, profit are all meaningless, then why bother?

Again, hmmm…

Raj

9

Neo,

That’s hilarious! I’m thinking I need more listings. I haven’t tried this approach, so I shouldn’t knock it, but it seems like a recipe for disaster. I’ve know investors with 15-20% equity positions that have lost their you know what.

-H

10

Wow, nice discussion!

The MLS has plenty of houses for sale. Why not offer 100% on all of them.

That’s my point exactly! Without doing any work I can make offers on hundreds of properties weekly. The ones that give me MY terms I will work with.

I would never, ever, take on a deal where I only stand to make $1000, but I can easily make $10k-$15k while paying someone 100% of their “asking” price.

I posted this to help me determine where my profit “cutoff” should be. I just started using this system, and it’s working. It would be excellent for a new investor, since the whole thing is taught to them step-by step.

I’ve done 14 deals so far this year, but I want to double that next year, and this system may help me do just that. They were 14 “typical” REI deals, where I stand to make $25-$45k each when they cashout, but I need to supplement that and add to it. I’m not satisfied with 14 deals!

My answer to the 1st question/post after the original… of course I will run comps before I accept anything. If they “mark it up” 10%, my comps will show that, and I will offer them 90% of the REAL value. Remember, with the 90% deals I’m selling those to CASH buyers. $150k house makes me $12k-$15k on these.

As far as “how can you make profit on a 100% offer”, that’s VERY easy. I do it all the time! (NO, I WOULD NEVER DO A DEAL WHERE I’D MAKE $1000, LOL!)

We “start” at 100% of asking price, but we can negotiate it down if the house needs work or anything. The way we do it, is we offer the seller full price and get OUR terms. Then, we mark the property up $5k- $15k-$25k when we sell to our tenant/buyer in a lease-option deal. We make a nice up-front option deposit, cashflow, and the rest at the end, when they cash us out.

So, you make your $ from your buyer. Keep in mind too, that “asking price” isn’t always the same as “retail” price. Some people are asking less than what it’s worth from the start, for a quicker sale.

If we give them “asking price” they have to be willing to owner finance the property 100%. (like a sub-to) They have to keep their existing loan in place and let you either make payments on their equity or wait for any equity until you sell the property. The instant offer they get from the site explains this to them in full and screens them out. (I still have not talked to them yet)

The best way to explain it to you, is that we’ll give them full price if they will give us whatever TERMS WE WANT. If they won’t, we don’t give full price. We start by offering them full price, and that’s the letter they automatically get from the site… but with us getting OUR terms.

BUT…

If they can’t/won’t give us terms, we then tell them "ok, we’ll give you cash, BUT you have to come down to 90%. In that case, we “flip” the house to a cash buyer that we have worked with to get financing through our company. We work to finance people who can’t get financing elsewhere, and those people happily pay full price. SO… if the seller won’t go for 100% and OUR terms, we give them their terms, but OUR price. 90%. If it’s a $150k house we make $22.5k and cash out the seller. Even if we help the buyer and pay the closing costs we make $15k-18k.

Yes I know… most of the time they ask for more than it’s really worth, but I have to educate those people and negotiate.

The same system can be used to do the “big money” deals as well. Instead of someone using it to make 100% offers, it’s customized for your “regular” deals. I will soon be paying someone to run my 100% offer program, because I have a lot of “regular” deals… sub-to, short sales, foreclosures, etc to do myself.

Someone sent me an e-mail wanting to see more of how the system/software works. Go to the site:

http://www.fullpricehomeoffer.com , and click on the link way at the bottom of the page that says “Strategic Equity Something”. That will show you the program.

Dang I’m tired of typing.

Z

11

it’s people with attitudes like this who will never make it in life.

buy high, sell low!

12

Dang! cecsix,

I knew I wasn’t doing something right!

Here, I’ve been buying low and selling high all this time. :slight_smile:

Oh well, I guess I’m just not the success that I thunk I was, huh? ;D

Happy trails,

Raj

13

Don’t feel bad Raj, those are common mistakes. I’m thinking about holding a seminar soon based around my top 5 strategies:

  1. Buy High, Sell low
  2. What’s so positive about positive cash flow
  3. Screening renters is a waste of time
  4. More houses = More success
  5. Profit is for chumps

If you’re interested, I’ll let you know when and where. ;D

14

I think that is an excellent seminar! People will be willing to spend 1000’s on it, I’m sure!

Seriously ZNICK,

If it’s working for you, then great. That’s the beauty of REI. Niche marketing makes a success. Personally, I see a number of potential flaws in the plan (as it’s stated), but I’m a pretty cautious guy.

I have more doubts about the 90% deal than I do about the 100%. I’m curious as to how it’s possible for you to sell a property within 60 days IF that same property was not able to sell conventionally. But again, that’s my cautious side.

However, the biggest issue is;
IF this is such a good way to buy properties (and I can tell that you’re convinced that it is), then why would you have to ask what everyone else thinks?

Just my thoughts,

Raj

15

My question isn’t whether I like the program or not, but “how low can I go”, LOL! I think I’ll only take deals that will net over $10k.

The people who created and sell the software say “why not do 2 deals a week for $3000 each instead of one every 3 months for $25k”. I don’t totally agree that it is indeed “a deal” if I’m making $3k, because in ALL of my 14 completed deals this year, something has cost me at least $3k that I didn’t expect.

THAT’S what I’m asking people… how low is too low?

I have more doubts about the 90% deal than I do about the 100%. I'm curious as to how it's possible for you to sell a property within 60 days IF that same property was not able to sell conventionally. But again, that's my cautious sid

We take people who can’t get credit anywhere else and get them angel financing after working on their credit. They buy the properties that we have already pre-negotiated for them, so when we offer someone 90% cash, we already have a buyer lined up.

We also allow that 90% seller to continue to market their property until we have an approved buyer for them. Then, we buy at 90% and sell at 105% and walk away from the deal.

Z

16

my question is how much did this 95% automated program cost you total, or is costing you monthly if you pay for it that way?

17

I don’t remember exactly. I signed up for “both” programs, the “Business in a Box”, where it’s all customized 100% to your existing business, and the “Ground Partner program”, where they teach and you follow the 100% offer system exactly like my pages show.

Both systems have the same tools, you just customize the BIAB for your existing personal system.

I believe the BIAB, the custom one, is around $279 to setup, and then it’s $249 a month afterwards because you’ll be changing it as your business grows.

The “Ground Partner Program”, where you do exactly what’s layed out and they teach you the system is a little more to setup, but then it’s only $149 a month afterwards because you won’t be changing things.

They’ll give you a price break if you sign up for both…

Z

18

Z,

I’ve got to say that I’m still doubtful. More so than ever actually.

If you were wholesaling/assigning for $3K a deal, then great. If $3K is the profit in a retail transaction, then bad. $3K will get eat up in costs/taxes. You said it yourself, $3K isn’t even enough to allow for the unexpected.

On a retail deal, I’m getting a minimum of 20% of value as profit.

On your 90% thing, you keep saying “we.” Is “we” your company, is “we” this great new program? How exactly does “we” get people financed that “can’t get credit anywhere else?” How does “we” get 105% financing for people with questionable credit?

Raj

19

You can be doubtful… I’m not trying to convince you otherwise. I’m just wondering what’s the least people will take a deal for?

I certainly won’t take a deal with only $3k in it! What is your lowest amount “net” that you’ll accept?

“We” is me? My company… I use a service that works with people and gets them financing. Don’t you have someone that you refer your buyers to? You can make $ this way. :slight_smile:

Sometimes I give them a 5% “second”, or whatever I have to do to make the deal go. It’s what “we” (you and I) do, right?

One thing I never said was I can “get someone with bad credit a 105% loan”, lol. Sometimes I have to “make” deals, not “find” them.

Z

20

Nick:

I checked out your website and I’ve found a few mistakes: Numbers 3 and 4 are the same.

  1. You get all the income tax benefits including tax deductions for mortgage interest property taxes paid Just like any other homeowner.

  2. You get all the income tax benefits including tax deductions for mortgage interest property taxes paid Just like any other homeowner.

Another question: I live a building that’s for sale. The owner is asking about 700,000.00 :o for it. I think the price outrageous but it belongs to her. Its FSBO. I only pay $950.00 per month, the tenant on the 3rd floor pays $1,000.00. Not sure what the mortgage would be if financed but sounds like it would come in around 3K. Could this be done in my case? I’m making about 50K a year.

T.