One of the hardest parts of flipping real estate is finding the deal. Once you lock in the offer and close on the property, the rest of the movements are just formalities.
Everything is in the buy. Let me repeat that. “Everything is in the buy!” So the key is in the hunt and locking in that special property. This might be hard to understand, but it typically will take inspecting and offering on 20-40 properties before we land that gold nugget. It’s basically one of those parts of the business that you just have to understand. You can’t get emotional about a property. You make the offer and then move on to the next.
Personally, I look at 3-5 projects every week. So by the end of the month, I’ve looked at 15-20 projects. I normally do a financial pro-forma after each showing to see what price I’ll have to offer on to make my targeted rate of return of at least 20% annually. Once that number is established, I make my offer regardless of what the property is listed at for sale.
Many times I’ll get negative comments from real estate agents representing the properties such as, “we’ve rejected lower offers than that” or “the seller has told me she’ll not accept anything lower that x and you’re lower than that”, etc. It goes on and on. I politely let them know that I understand but I’d appreciate it if you just submit it regardless and lets see if we can make a deal.
Many times I’m unsuccessful (39 of 40 times) but when you find that right property, the payoff can be tremendous. With the commission, project management fee, construction management and disposition fee, one house flip can net a six figure income for the servicer.
In ending, the most important part to making offers is not to get emotional and over pay on a property just to get the job. There’s another deal tomorrow. There always is. Focus on making the offer and then moving to the next property. By the time you’ve made 20-40 offers, there will be one or two that stick out that potentially could be purchased at the right price to make you a great profit. Just keep at it.
Brian Kuzdas is the CEO and Founder of FlippingProperty.com, RE Management and RealEstateAuctions.com. For more information on Brian, you can review his LinkedIn profile at https://www.linkedin.com/in/briankuzdas/. You can reach Brian direct at 650-575-7025 or [email protected]