how to analyze a wholesale deal: Payneless Flipping Secrets

What is going on, Nathan Payne? How you doing, brother?

Whoa, my man, dude, I'm always doing fantastic. Come on now, dude.

I'm— I'm— we're about to talk about one of my favorite things to talk about, and it's how to analyze a wholesale deal. Okay, so there's a lot of deals that come across my desk, a lot of deals that you've seen. You actually were looking at a couple today And the biggest question is, is it a deal? Is it something that's worth looking at? Now, I know everybody that has been in wholesaling for a while or real estate investing, that's the golden question, right? So that's what we're going to be answering today. If you don't know who I am, my name is Nathan Payne. I've been in the business for 7 years now, um, done hundreds of deals. And one of the most important things is knowing what a deal is because you don't want to lose money, especially— well, wholesaling, you can't really lose money because you never own the property. But if flip, fix and flip, you can lose money, which I've lost money and I've made money. But anyway, that's what we're going to be going over today. That's who I am, Nathan Payne. Who are you?

Yeah, guys, my name is Nathan Payne. Done a bunch of deals, a bunch of different states, known for locking up over 100 contracts in a single year. Some of you guys might have seen a 30-day challenge I did a while ago to where I picked totally brand new market, no contacts, no resources, nothing. And my goal was to do a deal in 30 days, and I did a $20,000 deal. Uh, without spending any money on marketing. And I only worked on it 2 to 3 hours a day, Monday through Friday. So that was pretty cool.

And this is—

and one thing I will say about how to analyze property, guys, do not skip this video. You're going to want to watch because I promise you, every other video, you know, the, the PDF, the, the resource, the PDF, whatever it is you downloaded from somewhere else, I promise you it's wrong. I'll explain to you why it's wrong. Right? And this will change your life.

Yeah, yeah. And I know we talk about this a lot, but guys, this is really important because if you don't know how to analyze a wholesale deal, you could be put like passing up on a lot of good opportunities. Okay, so, um, there's a lot of services out there that kind of give you— they do an algorithm, right? They kind of tell you what, uh, what they believe the property is worth. Now, we love Batch Leads. We like using Batch Leads. And if you go to Batch Leads and you click on if you type in— let's just say type in any address, right? I can type in my address. Let's see, 8293. Okay, so if you type in an address, you can click on the property once it searches it, and it will give you an idea of where you need to be. Now, I like using these tools as an idea, right? Like, yeah, I never use these things as being like, okay, this is the gospel, this is exactly what my house is worth. Same with Zillow. I mean, you name it, Redfin, doesn't matter. You use them as like a base, right? But if any of you guys are just saying this is what my house was, I'm sure nobody's doing that. But anyway, that's what you can do. You can click on it. And guys, you know what's really interesting? I'm actually selling my house. And yeah, it's already super accurate. It says what I've listed the house for. And, you know, the estimate, estimated value, that's right here. It's— this is why you don't want to go off of just specific estimated values. I'm not saying the Batch is bad, but they're just going off of the data in the area. I listed my house for $649,000. It sold under contract. Due diligence is over. But Zillow, all the properties and the services in the area are saying it's around $553,000. That's $100,000 off. And that, again, that's not their problem. It's just the data. That's what the data is saying. But when I— when you live in a neighborhood that's like, you know, a lot different than the surrounding areas and it pulls all that information, right, and gives like a— I don't know if it's like an average or whatever, but it can be off. So you definitely don't want to just base everything off that. Nathan, do you have anything you want to say?

Yeah, I'm just going to add that, you know, again, it's, it's not, it's not, it's It's not the algorithm's fault, guys. All right, cut it some slack. It's with real estate, guys. Real estate is hyperlocal. And the beautiful thing about it is that's where there's an opportunity for, you know, you, me, and us investors is because there's a lot of things to where, you know, a computer, AI, the algorithm, whatever, there's a lot of things that it can't take into account. And that's why you can't always trust, you know, 100%, or you need to verify or double-check or whatever the case may be. As far as the values and when analyzing a property. Because there are some, you know, perfect example, there was a house, um, that we flipped years ago to where something as small as we had trouble selling it because when people pulled into the driveway, the fence was close, was too close to the driveway. And so when you opened up your door, the door would touch the fence. Seems so minor, right? Might seem, or, you know, maybe not depending who's listening. Guys, that, that was a major issue as to why we couldn't sell the house for the price that, you know, when we looked up and down as to why. And there's no algorithm that can necessarily see that, right? Right. It's square footage, beds, baths, and, you know, maybe price, average price per square foot, but there's still going to be factors that it can't take into account. You know, out, or they're not, they're not good enough yet to tell you, hey, this house is like an awkward layout, right? Got this one issue, or hey, the, um, it's got this neighbor over here, or that, or whatever the case may be. And that's why nobody's going to be able to analyze a property as good as you.

So Nathan, now that you've answered really well that it's good to have these tools to give you an idea, and you can look at data, but it requires skill set to dive in and see, to really analyze a wholesale deal, whether you're a flipper and you're going buy it yourself, or if you're a wholesaler trying to make the right offer to the seller. How do you do it then? How are you going to be able to analyze a wholesale deal in order to wholesale it to a flipper?

Yeah, so there's a couple things that I'm gonna do. In the simplest answer that I can give is, when you're looking to analyze a property, it's not a, oh, here's the hard set numbers and it's a fact that it's for this price. You're building an argument, right? Think of it like you're going to court and you're building a case and you're trying to find as much evidence as you can to support your case that it will sell for this price if you do X, Y, and Z to it, right? And on the flip side, just like any good attorney, you're also going to want to know, hey, when I talk to my buyers, what are— what's the evidence? What are the things they're going to bring up to argue against my case? And I want to be prepared for both of that. Right. So that's kind of how you want to go into it. This is analyzing property is not a firm science, but, but there is one thing that is more important than all of that. All of that's really great, but there's only one person that can tell me what this property's worth. Who is it? It's the person that's buying it. That's right. So, guys, the buyer is the most important person when knowing, hey, what's the value of this property? What's the ARV? What's the rehab? There is nobody that can give you a better answer than the buyer themself because they're the one buying it, right? It's true. The value of a property, what it could sell for, it doesn't really matter what I think. All that matters is what they think because they're the one buying it. Yes, there's, you know, there's some information. Yes, there is some evidence. But guys, a lot really comes down to the buyer because what a property's worth, that the ARV, what it could sell for, how to analyze it, what someone's able to pay, that can change drastically depending on who the buyer is and what they're planning to do with the property. And guys, I know you've heard stories of, you know, that of, you know, where you'll have a deal and one buyer will look at it and they'll have an offer price down here and they'll end up selling the deal to somebody all the way up here. Or I mean, I remember when I used to go to way back in the day and rehab meetups I remember chatting with guys and there's a bunch of us that weren't really doing many deals or any deals at all, and we'd be like, ah man, can you believe this sucker just paid this price for that property? Or, oh, someone just paid this price for that property. Because like, we're all upset, you know, they didn't get the deal or we didn't get the deal, whatever. And so we're like, ah man, how, how could they have done that? Well, the reality was is we don't know their business, right? We don't know the ins and outs. We don't know what they're planning to do with the property, or, or all of that. And so rather than scoffing, well, guys, take a step back and say, hey, there's something to learn here. Maybe they have more than one way to profit on this property. Maybe they were going to do something else. Maybe they know something I don't know, or maybe they see something that I don't see. But again, the only person that I can get the answer from is the buyer.

I love it. So how can you get that information from the buyer, especially if you don't have the house under contract, or if you like what is the process? Let's, let's help people find that out. Let them know a little bit of how we do things and, uh, you know, how to operate the best way, the most ethical way in my opinion.

Yeah, love it. Um, so let's say I've got, uh, I'm talking to a seller at the, uh, the world, world-renowned 123 Main Street, right? So I'm talking to Mr. and Mrs. Seller of 123 Main Street and they're like, hey, I want $200,000 for my house. I'm like, okay, right? And with wholesaling, guys, what's 99% of wholesaling? You look, you try to crunch some numbers and you end up with, ah, it might be a deal if the ARV is here and the rehab is only this much. But it, but it might not be a deal if the ARV is really only here and the rehab is really this much, right?

Unless you get the property at such a discount right? But that like 50% of Batch Leads, you know, estimate or Zillow estimate. But that doesn't happen very often.

Even that's not always accurate. I'm speaking from experience.

But yeah, it depends what market you're in.

So I talk with Mr. and Ms. Seller, right? They want $200,000. Okay, well, I don't know. It might be a deal, might not. I'm not too sure. So what do I do next? Well, great. I'm going to look at— I personally, I start with local buyers. Right, buyers that are local to that area, that neighborhood.

And hopefully you have these relationships already, right?

Or you have the relationships already. And basically I'm going to have the conversation with the buyer and say, hey, Mr., Ms. Buyer, cash buyer, I saw you did a flip over here on 456 Main Street, right? I've got one right around the corner that I'm currently negotiating. Would you be interested in another flip in this neighborhood? And they say yes, right? Because they're an investor and they want to make more money and they've already done deals in this neighborhood. So nobody's going to be more familiar with it than them. So the chances of them being your best buyer, really high. So from there, I'm just going to say real quick. Yeah.

Cool thing with Batch and a lot of these softwares out there is you can find out who those buyers are who bought a transaction cash within the last, you know, 90 days, a year. So that's, that's what we're talking about anyway. Sorry, go ahead.

Yeah. And so Mr. and Mrs. Seller said they want $200,000 cash for their home. So I'm going to tell Mr. Buyer, yeah, I've got this property over at 123 Main Street that I'm currently negotiating. The seller, they really want to get around— and this is going to depend on the situation, right? But I might say 'Yeah, they really want to get $220,000 for it. You know, is that something that you'd be able to make work?' Now guys, a lot of the times, especially if you're brand new, the buyer might come back and be like, 'Oh my gosh, $220,000, that's a ridiculous price, blah blah blah blah blah.' You know, right? I'm gonna say, 'Hey, totally get it, totally understand. No, I agree with you. What price would you be able to pay?' And they're like, dude, I need this thing all the way down at like $130,000, right? And you're like, okay, got it. Is there any ammo that you can give me that I can bring to the sellers to help get it down to that price that you need? And so now I'm going to get the buyer to tell me, hey, what's the specific, like, expert rehab, you know, whatever, right? Because I don't know if you guys are like me, I don't know much with swinging a hammer. I don't ask me questions on rehab, right? Your guy for that.

And by the way, guys, if you are wholesaling, you're not rehabbers, okay? You don't need to know all these things. A lot of people want to get all this information. Don't leave that to the experts. Just ask the people that you're going to work with.

Exactly. And so now I get the buyer to tell me, hey, what specifically is, is wrong? Why specifically do I need it at this price? And now I have something to go back to the sellers with. And the thing is, guys, is whatever price that buyer gives you, 9 times out of 10, there's a lot of room that he can come up, right? If he tells me $130,000, he can probably actually pay $150,000, maybe even $160,000, $170,000. You'll— you'd be surprised. But the thing is, is now you know, right? So I'm not wondering what if. I'm not, you know, getting a, a, um, a seller under contract with something that I don't know if I can sell or not. And guys, when you have this conversation, the biggest kind of, wait, but Nate, won't the buyer steal the deal from you? Guys, I don't know. I don't know when kind of like the whole thing got started with that buyers are just like thieves that try to like steal every deal from you. I've done a lot of deals. I've yet to have a buyer steal a deal from me, like behind my back, right? Uh, not saying it can't happen, but if you— now here's the other thing. I also, I don't do email blasts, all right? That's like a big asterisk. The way I work with buyers is I'm getting on the phone and having a personal conversation with them, all right? Quality over quantity. I don't need a list of 10,000 buyers. I just need to talk to the 2 or 3 perfect ones. And you guys can do the same thing. And so now, rather than guessing, rather than taking the seller's livelihood and their home and everything, rather than risking all of that and putting them in a situation that they don't fully understand, nor are they really signing up for it, all right, because most, most wholesalers aren't explaining to the sellers that they're wholesaling it, which I don't agree with. But now when you do make commitments to the sellers One, there's a way you can be transparent and tell them, hey, it's another buyer buying it. But two, when you're making these commitments, you already know upfront that you can 100% fulfill on it. Imagine how much more confidence you would have in wholesaling knowing that every offer you make you can 100% stand behind, you can 100% fulfill on. Imagine how much easier this business gets when you don't have to guess anymore. That's the power of what we're talking about today.

Yeah, so for everybody that's watching this, if you're like, man, I don't know how to do that, that's okay, that's completely fine. We do make a lot of videos on how to do it, or you can go to painlessflipping.com and we'll literally show you how to do it. We'll teach you how to do it so you don't have to figure it out all yourself, right? But basically, that's my suggestion for analyzing a deal. A lot of people are going to give you 70% of ARV minus rehab minus, um, you you know, your wholesale fee.

That's—

that you're gonna miss out on a lot of deals that way. Why do they give that formula out? Because if you get a deal at that, that low of a price, it's— you— it's always a deal, right? That of course it's a deal. You're getting it like for $200,000 off usually. Um, but listen, this is a better way to do it. You can make way more money and, uh, it's just easier. It makes the process easier. You don't have to make landing pages for everything. You don't have to go email blast.

Um, so anyway, I had a perfect— yeah, I, I'll just wrap it with, um, an example from today. There was somebody I was chatting with, um, earlier today to where she had, um, she had a lead. She's like, I, I have no clue what to do with this, but I know the seller's motivated. It's like an outdated house, but it sits on 40 acres, and like strawberry farmers lease like half of it, and it's just like a super weird problem. She's like, I, I don't know if it's a deal or not. The guy inherited it. He sounds motivated, right? Well, number one, who are we gonna sell it to, right? That's the number one question. Who are we gonna sell it to? And what, what the heck is this thing worth, right? So step number one is, well, I gotta find people that would be interested in this type of property. And then step number two, I'm gonna get them to tell me what price they need it at, right? And as wholesalers, all right, this is where marketing and negotiating come into play. Negotiating, that's why, you know, the way I negotiate, my number one goal is, is not to give a certain price, but I want to find out what is the person's rock bottom number. And, you know, if that's able to work, great. If not, you know, we do what we can to make it work, but we always want to see how low can, can we get it for. But then from there, also, that's coupled with I'm going to find the buyer for this property and I'm just going to have them tell me what it's worth, you know, or what it's worth to them. I'm going to have them tell me what to offer. I'm going to have them tell me why I can only offer this price and why it's not worth that number and why it's really only worth this because I don't know anything about strawberry farms or this or that or the other thing.

When you say that, I'm just like, are we in the right area? Are we in the right market? That's what I would say, guys, is like, just make sure if you're not succeeding, that you're in the right market. Now, if you don't know how to— if you're in the right market, we do have a Facebook group that helps you in the guide section. It teaches you exactly how to know what, what market to go to. It's just to make sure you're even in the right place. But anyway, that's so important.

Yeah. And fortunately for this one, I don't think market was the issue. It was just, you know, very different. Like, it's not a standard single-family house. It's like kind of a unique property. And so, but what I do know how to do, right, which is what I kind of, uh, the direction I pointed her in was I said, hey, here's how to find the experts, here's the conversation you're going to have with those experts, and here's how you're going to get them to tell you the exact answers that, that you need to know, right? And so you don't need to spend days or weeks trying to comp and this and that and figure out values. Guys, you can have a 5-minute conversation and have somebody much smarter than me, you know, tell you exactly what the answer is.

Yeah, and they're gonna pay.

They're gonna be a lot more effective too.

Yeah, exactly. So anyway, guys, that's how to analyze a wholesale deal broken down quickly. And, uh, you know, go out there, have conversations with buyers that are actually going to be buying your properties. And if you guys are watching this live, we appreciate you. Just comment where you're watching from so we can network. And if you're not watching this live, you know, leave, leave us a comment. Let us know how you think, you know, what we said, if you like it, you know, share this. This actually helps us get in front of more people. But if you are interested in working with us or learning how to get into this and you feel overwhelmed with the wholesaling process, go to painlessflipping.com. That's our goal, is to make this a less painful experience. If you want to get into real estate, you're going to have to go through some pain. You got to learn, you got to grow, but we take the pain, as much pain as we can out of the, the process.

So I think we take all the pain out of the process. Yeah, just to reiterate that, guys, we do the hardest parts for you. Uh, it's not like just the coaching thing, it's more of a done-for-you service, and then, you know, we'll coach you on the stuff that you need help with. But it allows you— imagine, um, take that, that strawberry farm deal, right? Imagine I told you exactly what to do, and then also I made those calls for you and negotiated it for you and then found the buyer for you, negotiated with the buyer for you, and handled all the paperwork for you.

And you still—

wholesaling sounds a lot easier then, doesn't it? So guys, that's what we do in a nutshell.

And you still get paid too. Yeah, right?

Yeah.

Cool, cool. So, all right guys, well, uh, thanks for tuning in and we will catch you on the next one. But we do— hold on, we got two people. We got We got some people coming in saying we got, uh, Rhode Island here, over here. Well, Rhode Island, let's go, Deli! All right, everybody, later.

Later, guys.