How to quickly determine if you should work a real estate deal- Investor Thrive Live

I'mma start a little timer because the timer thing's cool. Let's do this. All right. All right, everybody. Welcome. We are live right here. This is Investor Thrive Live weekly call. I have my partners that I work with, got David Lamorte and Joe. How are you guys doing today?

Doing great.

Doing great.

Happy Wednesday.

Happy Wednesday, everybody. Guys, it's important that you start the day off with energy and excitement. I got my Diet Coke ready to rock and roll. All right, let's go. So everybody, we are going to talk about something that affects me, an investor who's been investing for quite a while. It affects the brand new guy, affects everybody, someone that's even been in it for 20 years. I was on a podcast with someone that was talking to me about the amount of deals that they have to look at and how do they determine whether it's worth their time. So that's what we're going to talk about today is when you get a seller, whether it's off market, on market, a lead that you see on Facebook, a friend brings you a deal and they say, hey, I have something, are you interested? And you have to determine quickly, am I going to say no? Am I going to look at it? How do I determine if this is worth my time? Do you have all those things? And David, I know we talked about this a little bit ago. You even bring this— break this down. Should I even go to the house? You know, when the seller wants to go to the house, should I go see it? Right. Sure. Today we're going to be talking about should we work something? We can talk about different scenarios, but we'll start with when someone just sends you a lead, because that happens to me a lot. People will send me a lead on Facebook. Or a friend will say, hey, my— I know somebody that wants to sell in this area, or I've heard that their house is listed. You should check it out. Okay, so let's start with there because I feel like that's the top. Because if you're talking to someone and you know they're motivated, then that's like a deeper level. So let's start with someone sends you a lead. Okay. So for me, like as, as, as we're looking to work with flippers, right, we're wholesalers, we're looking to either take the property down and wholesale it for a fee Or if it's such a good deal, you should flip it yourself. You really should. You should wholesale it. You should, you should just take down carpet paint if it's such a great deal. There's no reason to wholesale something if it's an easy flip and you can just put on the MLS yourself, right? But, um, the reason why I'm saying that is like, first you got to take a look at the property and you got to determine if there's flippers or investor activity in that area. Okay, so I'm going to show you guys a deal that I got sent the other day. And I'll tell you quickly if I determined if I should go look for a buyer for it, because if you're new to this, everybody, what we do is we look at what other wholesalers, other agents have under contract, and then we find a buyer quickly, and then we make our assignment fee there. We sometimes go off-market, but right now on-market, it's easy, especially if it's already under contract. It's quick to go get a deal. So I'm going to show you guys my screen. And again, with batch leads, I'm not able to show you guys everything because the YouTube will flag it. So I got my the back here, but let me show you this deal really quick, guys. And I can look it up here on Batch and I'll actually show you. So I get sent this deal, it's on an email I got, and I have buyers in this area, in the area, in the Orlando area. So I look at it quickly. All right, it looks like a decent home. Um, and you know, if I was a flipper, it looks like a flip that I'd be interested in doing just by looking at the front because it's not like a weird layout. You can just see from the outside it would be pretty normal, like, neighborhood where there's probably a lot of good comparables, right? Because a flipper, they're going to look at something, be like, am I dealing with something that's crazy and it's like not like anything else in the neighborhood, or is this a cookie-cutter home that I can base a lot of my knowledge off of, right? So I'll stop sharing super quick with Batch Leads. I'll show you. You guys just have to go to property. I know it might be kind of hard to see, but right here on the left-hand side, you go to property, you type in the address, you press search, and that way you can get more information on the property itself. You can click on details. It can tell you who owns it. I can tell you bedrooms, baths, if there's any liens, any, any issues with the property, if it's listed or not. So this is information it can give you, and you can go to comparables, okay? And you can see quickly on this one that its estimated value on this property, it's about $448,000. Now you don't always just want to go off of the estimated value off of whether you're using Zillow, Realtor.com, batch leads. You want to do a little bit more research into it, but that's usually pretty accurate of the ARV, is the estimated value right here. And I can zoom in on that where it says estimated value. Okay, $448,000. All right, so, um, you just scroll down here And this has specific filters on it telling you, you know, within a mile, 2 miles, houses that are, you know, built within the same time period, these are what they've sold for, right? And it tells you sold, it tells you active. So quickly I can say, okay, Batch is saying it's around $448,000. I know it's in a hot area because if I zoom out, this is in the Winter Park, Florida, is like a suburb of the Orlando area. Heavily populated. So without me having to dive too deep into the data, I can say there's flipper activity there. The flippers are in every major metro. If you're going to work in a little town, which I'm going to show you in a little bit, that's where you got to be a little hesitant if you're going to work something because it's like, well, there might not be that much investor activity. Not always. You can still do deals in small areas, but it does help you if you work in larger areas, if you're wholesaling, right, for dispelling deals. So let's go back to this deal. Again, I haven't decided to work yet. I just have seen the information that Batch has given me, and I'm like, okay, um, this is looking pretty decent so far. And, uh, let's go back here. So what other information can I have? So built in 1977. Most flippers right now in the Florida area, I know that if something's above 1970, they're interested. Now, if it's below 1970, they're like, I don't know, there's usually— I got to change the pipes, maybe electrical. So usually if you can get a home above 1970, that's something— that's a good thing that flippers will be like, okay, I'm interested in that. The cash price on here is $310,000, right? So that's a good deal. If it really is worth $440,000 and you got a $310,000, you already know that's a pretty good spread. You don't know what the condition is yet, but you can say, okay, that's a decent spread. I can already tell I think this is a good deal to work because it's, you know, it's in a good area, price point's good, cookie cutter. But let's take a look at some of the pictures. Okay, so looking at the house, bathrooms outdated. I think this is one of the rooms, the flooring got taken out. Not terrible, maybe put in some new doors, bathrooms outdated. You have to redo the bathrooms if you want like new, complete new bathrooms. But this is not a rehab that scares most flippers, right? They're not like, oh my gosh, I got to get like a giant truck and just take out this trash and maybe I'm going to find some crazy stuff. No, they're like, this is a complete updating, right? So for me, it's like, okay, this, this is something I definitely want to work. I take it a step further and I put it into my calculator and let's see right here. And I say, what would the numbers look like if I were to wholesale something like this? That's true. I don't think ARV is quite $445,000. I think it's more like $420,000. But so let's just put it at $420,000 and it's at $310,000. And this rehab, the house, just quickly to do the numbers, that the house— where did it go? Do we— I want to find out what the square footage is, so let me see. 2,300 square feet, okay. So then I would put 2,300 square feet right here into the side where you put the square footage. I think a flip like this would take maybe 4 to 5 months. You take it, you take it down and maybe take like 2 or 3 months to flip it and then 2 months, 1 to 2 months to rehab it, sorry, to sell it on the MLS. That your flipper that you're working with, I'd say 90% of flippers know an agent that can list it at cost or they are agents so they don't have to pay the full 6%. So I put it 3%. And let's see this, I think this is like a basic, like basic to medium rehab. And the way that basic and medium rehabs work, basic is carpet, paint, Medium is bathrooms, carpet, paint, and kitchen. Okay, that's medium. And then everything is everything, even down to the studs. So when we're looking at this one, I don't think this one— I think this is like in between a basic and a medium. I don't think it's like that, um, it would be that difficult. So I would say maybe a little bit less than $24, but let's put it in here anyway. $24 per square foot, so it would go medium. And let's see, so if you want to make a wholesale fee of $15,000 and you get the property for $310,000 and it's worth $420,000, you would have to sell it to them for $325,000 and the flipper would make $3,975. So someone that looks at that would be like, not worth it. I'm not going to make enough money. Now, that's why it all depends on what your buyers think. So if the buyer thinks it's worth $470,000, $450,000, like Batch was saying, then it gets closer. Um, you know, that's why you need to talk to your buyers because a lot of the time, like this deal, according to the numbers I'm running right now, it's iffy, right? But still, um, I think someone would be interested just because of the fact it's like a nice, nice property, like compared to other, um, you know, other ones that you're probably looking at in Florida. So According to this, I would work this deal just because of the area location. Obviously, the numbers don't always work, but I also don't always just take what the wholesaler is saying they want. I'll usually say, okay, they're probably a little flexible, or my buyer, you know, has different thoughts than I do. And maybe the rehab's a little higher than, you know, it should be. Maybe it's a $40K rehab at that. So let's see. Other. Okay, so now you're talking. Once it gets into the 10% plus, that's when a flipper is like, yes, I'll do it. So sometimes you got to change the numbers. You don't want to fluff the numbers and get too crazy with it. I'm more of a guy that's like, hey, let me be conservative, especially if I'm going to flip it. And then if I'm conservative, I'm not flipping this thing. But I did want to take you guys, Joe and everybody watching, David, through this process. Because for me, if it's a property that I think is cookie cutter, I work it. Because cookie cutter means lots of comparables, lots of, um, lots of other ones to base it off of that flippers can use. And when you get something that's kind of like so random where people are like, I can't find any comps for it, that's a red flag. Because flippers are like, I don't feel comfortable flipping something that has no comps and just kind of hoping it works out. Right? Some flippers will do it, but I, I don't— I wouldn't do it. Any questions, Joe, David, anybody from, uh, the live?

That made perfect sense to me. Yeah, that was a great— that was a great breakdown. And I agree, sometimes you can, you know, be flexible with the numbers, but, um, I, I like to be conservative as well too, because you want to think as an investor as well.

Joe, do you have any questions?

No questions. Just, I mean, I, I'm hearing things that rehab costs have gone up. So I think using 18%, 24%, and 40% may be ultra conservative because especially Florida, you've got supply chain from COVID and you've got supply chain problems. Sorry about that, guys.

No worries, man. Sounds like you got a lot of dogs.

Yeah, yeah, yeah, my guard dogs, my, my two German Dachshunds.

I love it, I love it.

Let me, let me mute myself here.

But Joe, I'll respond to you. I understand what you're saying, Joe, you like that rehab costs have gone up. So I agree with you. So looking at this deal, I'm like, oh man, that's not as good. But because I know that Florida, where we're in Orlando, it's pretty hot Guess what? This house, this property, we reached out to the wholesaler that has it. It's already under contract. It's already sold at this price. So for us, it's like, well, shoot, this— I ran the numbers and it kind of made sense according to the comps I looked at and the numbers, but it's already sold within a couple of days of them putting it out. So there are different buyers that look at different, different properties differently, right? There's some that have like materials and they have like they own the crews and they have to keep their crews busy. Because if they don't, then they're going to lose their crew members. So they'll sometimes take really small margins, right? There's some people that do pad splits that will take a property and they'll split the rooms. So if we always look at something as like, okay, this has to be a flip and it has to meet this, it's, you know, that's obviously works for the type of flipper that wants to make a specific return. But in these hot areas like this, what we're showing you where it's like, you know, a good area, there's other opportunities and not other opportunities, but there's other strategies that other people are using. So that's why it's important to know what your buyers are buying and what buyers want. Because again, if you just looked at it through one lens of like a flip, then you'd be like, oh no, this one doesn't really make sense. But again, it, you know, knowing your area is so important because this one's already sold, right? So anyway, if you work in a really hot area, everybody, know what your buyers want. And if you run it through the lens of a flip and you're like, whoo, I don't know, I always say, hey, if you're cool with a couple of your buyers, you might as well reach out to 2 or 3 of them and just get their vibe on it, get their opinion, be like, hey, you know, I see this good one, a good property. It meets your criteria. Where would you be on this one? And then if they're like, man, I really like this, and then you can go back and forth and say, hey, look, they're asking for $310,000. Obviously I have to get paid. What would you pay? And then you can have that, that conversation with them. But that's, uh, that's how I would determine quickly. And I know, you know, I went a little longer because I wanted to go a little further, but that's how I determine if I would work a deal. I don't let price really determine if I'm going to work a deal all the time, because if it's a wholesale deal that someone has, that usually means they have a fee inside, which it can be anything from $1,000 to like $70,000, right? They can— they have room to move. I got this deal the other day from a wholesaler here in Utah, and he said, hey, help me find a buyer for this at $440,000. And I was like, well, what do you have it under contract for? He's like, I got it for $370,000. So he had, what is that, a $70,000 fee baked in that he had. So if I were just to just not be like, oh bro, $440,000, no way, you know, he ended up accepting an offer at $385,000. So he wanted $440,000, but he accepted $385,000 and made $15,000. And it happens time and time again. So if you see a good property, hot location where you got buyers, don't always get, uh, you know, whatever the word is, dismayed or like not interested in working something just because the numbers don't work immediately, especially if it's a deal on the MLS or another wholesaler's got it. David, you have something you want to say, or Joe, you have anything you want to say to that?

I would just double down on how you said important it is to understand your buyers and their buy criteria, because you really don't know, uh, sometimes what they could purchase to that. They might have materials, they may be able to— they may just want to keep their crews busy, they may be, for all you know, wholesaling to a hedge fund. And, uh, so things like that are always happening. So sometimes you don't want to judge too harshly at the beginning.

Yes, I got beat out the other day by $100,000. Okay, so I got a property. The numbers made sense at $310,000. I called the seller and he's like, I got someone at $410,000. I was like, that's not a real offer. They're going to bounce. And he's like, well, I'll call you when it closes. And he texted me the day it closed. He's like, it funded, it got paid. And I was like, oh my gosh, like who? 'Who bought that?' So I asked the guy for the buyer's number, called them. The buyer ended up— was a wholesaler that ended up closing on it, was going to fix up the property and get the tenant out, clean it up, and then he was going to sell it to a hedge fund once it was cleaned. Because the hedge fund had offered like $440,000, not knowing the current condition that it was in was terrible, right? So the guy was just going to take it down, clean it, and get it out. Now, I think that's kind of a gamble. It's very risky, but he was willing to do it. So that's, you know, sometimes you get paid. You get that, that, um, that seller got $100K more than most everybody else was willing to pay because that one dude was willing to get crazy, right? So, you know, sometimes they win like that. So that is how everybody— in a nutshell, I know that was— that wasn't that quick, but that's how I determine quickly if it's— if it's hot area, if it's got a lot of investor activity, if it's above 1970, and it's you know, 3.2, especially if it meets those, like, well, that's hedge funds are wanting that. Everybody wants that. Go definitely try and find some buyers. Now, this is where it gets kind of confusing. Now, if you're working in Salt Lake City, Utah, or Orlando in a specific market and someone brings you a deal, that's easier to say yes to because that's your— it's your market. But if people are bringing deals from Kentucky, Oregon, places that you've never done deals, I've done deals all over the country, so I know how to find buyers. But sometimes people get deals that are outside their markets and they're like, they think about it, right? They're like, maybe. It happens all the time. I just got this text message from my buddy to look at this deal. So let me show you guys. He said, hey, man, he's a window cleaner. And he said, hey, I just cleaned the windows of this property in Pendleton, Oregon, and the lady, the grandma that passed away, her granddaughter inherited the property. She— I just cleaned the windows. She lives in Michigan. It's really, you know, I think they want to sell quick. You should give them a call. So I was like, I'll take a quick look, right? This is a very quick look. I look at the house, okay, so it's outdated, and that's pretty much all I know about Pendleton, Oregon at the moment. I got an outdated house and the windows are clean, but at least I know that there's motivation involved. Uh, cause the, the, uh, the granddaughter lives in Michigan and she doesn't, um, probably want to deal with it. So is Pendleton a hot area? Is that something that, uh, you know, there's going to be a lot of investor activity. If you guys just look, Pendleton, Oregon is, uh, is a pretty dang small town. Um, so the next thing I'm going to do just very quickly, I'm going to see if there's investor activity. In, in the area. Okay, so I'm going to take this house. Uh, where was the address? Does this happen to you guys, by the way? Like, Joe, like, you get some kind of random and you're like, maybe I should look?

Yeah, happened to me today, actually. I was just looking at one right before our call, and I used the calculator to, to help look at it. My numbers are way different, but I'm still going to call the agent because you You don't know.

Never know. You just want to— don't take too long on it, right? But let's take a look at this one. 3, it's a 3/3. So let's kind of see if there's any, uh, any other properties that kind of meet the criteria of, uh, of this in the area. Let's see, a 3/3. Let's look at this one. So this is not— okay, complete— not a comp, right? Completely different. I'm really just looking to see if there's like any— if there's anything that looks like it's been like completely flipped. Like if I can look at the pictures, be like, okay, there's obviously a flipper around here. That looks kind of flipped. Yeah, yeah, I would say it's in pretty good shape. Looks like some of it's been flipped. That's $650,000. Let's take a look at this one. Okay, no, not flipped. Let's see. Alright, nope. Because if— because really like if you can see if there's houses that are being flipped, quite a few of them, What you can do, this is like a new build or newer home. You can just call the agent that's listing the property and you can say, hey, you know, is your guy looking for more properties to flip? I have one that I think he might be interested in. Now, this one is on market, so you'd definitely like want to negotiate and get it lower. But guys, like for me, in the time that I have, like it's not really worth my time to like call agents or look deeper into this. Pendleton is super small. I don't think it's like a place that I'd probably spend too much of my time or any time looking for a deal. Plus it's on market. Now if it was off market, if it was like, you know, hey, I know this girl, she's thinking about listing it and she hasn't yet. Before she does, she wants to get cash offers. Obviously I would, you know, give a call and see what I can do. But Yeah, on this one, it's probably a no-go. Plus $449,000, and you can get this house for $650,000, which is, you know, 1,000 square feet more. I think they're, I think they're a little high for their asking price. Just quickly looking, it's been sitting a while too.

I didn't realize at first.

Oh, this one?

Yeah, the subject house, right? 43 days.

Uh, yeah, I mean, if you guys want to have some fun, I can call it and we can We can— I can talk to the agent and we can see what happens. But yeah, we don't have to if you guys don't want to. But yeah, that's quickly for me determining like, okay, not worth my time outside of my market. Doesn't seem like there's a lot of investor activity in the area and I would probably have to deep dive pretty far to find a cash buyer that would want this. And I'd have to negotiate it probably like $50,000, at least $50,000 or $100,000 less than what it's listed for on the MLS. For a cash buyer in that area to be like, hey, it's worth working with you versus me just waiting till, uh, you know, or me just calling directly, right? Like, you, you want to be able to provide value, especially if you've got a deal on the MLS. You can't just call an investor and say, hey investor, are you interested in this house? I haven't called, I haven't negotiated, I haven't done anything. Then they're like, well, hey bro, you haven't done anything pretty much other than see a property, uh, and you haven't provided any value. There's no reason for me to to, you know, work with you. But if you called an investor and said, hey, I have a property on the street, I've negotiated it and I got a really good deal, I think it may, you know, make sense for you if you're looking for more flips. And they're like, okay, well, what you got? Then that's the value you would provide, right? So that's, uh, that's pretty much it, guys. And, and when it comes to appointments with David, on going on appointments, it like, is it worth going to see a house, right? That's what we talked about. For me, Asking price doesn't really matter because if the house— if the seller's motivated, if they have a quick timeline, like they want to close within a short amount of time and the condition of the house needs work, those things are more important to me than what they want for the house. Because what they want for the house is— it doesn't matter if they're not going to get that— an offer for it. Like my aunt had her house for sale for like $850,000. That's— she believed deep down that's what it was worth. And, you know, she listed it for that and she didn't get $850,000. She ended up getting less, like $790,000 or something like that. But for her, she was totally fine with that after she realized after a lot of time that that's what the offers were coming in at. So don't let price always like stop you in your tracks. I know a lot of people it does where they're like, oh, you know, they're asking for so much. It doesn't matter. I did a deal on the MLS a couple of months ago where they had listed it at $450,000 and we ended up closing the deal at $320,000. Okay, so $130,000 less because we found out that the property lines weren't correct. We had to redo the property lines. The house had a lot more issues. So sellers can have like, you know, big thoughts about what they want. But as long as there's motivation, timeline's quick. And the condition needs work, work that lead, right? Whether it's an agent, wholesaler, or off-market. 100%. Let's see, Joe, David, any questions? I think we got one question, one guy from the YouTube saying, what's up, guys? Yeah. Um, yeah. So any, anything from the lot, from the audience or you guys?

I didn't have a specific question. I would just, you know, um, say that that's why it's so important to first be close with your buyers. And also, I think, be honest with yourself on this journey. It's not like being an employee. You're an entrepreneur on this journey. So you got to be honest about what resources you have and who you have that you could talk to and how quickly you could move that. And it's like, if you don't— like, yes, you could maybe go into that market and find that thing and spend a few days, and that could be a deal that could close, and you could make money on it. Um, but you could get lost in things like that. So I think it's about determining, okay, I have whatever you have that day. Like, and every day is different. Like, today I have a different amount of buyers than 2 weeks ago. So with what the projects that are coming to me right now, what can I feasibly do? What are my current resources that I can use where it makes sense to take time and do this, you know, because sometimes you can plug and play and it's worth that to dive in. And sometimes you can't because you don't have those current resources and it might take a day or two just to get those resources. And sometimes that's not the best move. So, right.

Time is what— time is the most precious thing we have as investors because we get to determine, you know, how we use it. Not only that, but like where we— what deals we work, right? So if I spend all day in Pendleton, Oregon, looking for a buyer for this deal, Is that the best use of my time when, you know, I have 5 or 6 other deals I can work in Orlando? Probably not. But check this out. Let me say this really quick, everybody. Leveraging your network is the next— is the best thing to do when you get deals all over, right? Like if you get opportunities. So, for example, David, if I have a deal in Long Island and I don't have buyers in Long Island, what I would do, I would just say, hey, David, 'You got buyers? What do you think about this deal? I'll give you the lead. Let's split the deal 50/50. You work it. I brought you the lead, you bring the buyer.' That way I'm able to leverage my ability to work my own deals, focus on my own market, and we can still do deals together. Same with you, Joe. Like, if you get a deal in Orlando or Texas, um, you know, or even in Long Island, you could send it to him, or I— you know, we can work together and you guys can leverage the networks that are there. And that's why, um, you don't have to pass up deals, but I wouldn't work on them like aggressively yourself unless like we're in Pendleton, Oregon, like I was showing you, and this house, someone's like, hey dude, the seller's willing to take $120,000, you know, and you're like, okay, I might as well just buy that myself and relist it or, you know, put some work into it. If it's a no-brainer, obviously, you know, you guys know that if it's like 50% of Zillow estimate, but That's not how it always works. But speaking of networking, check this out, guys. I'm 1.5 hours from Pendleton. Scotty Washington, Texas. Look at that. May I call the agent? Of course you can, Scotty. Go ahead. If you get the deal, Scotty, give me $20. How's that? Yeah, man, definitely call. So this is the situation, Scotty. This, my buddy just cleaned the windows here and they said again that the owner of the property lives in Michigan. So you already know it's absentee owner. That's as far as much as I know. And that's the information that I've been given. But yeah, so you can at least go into it knowing that, you know, it's outdated and there's some motivation there. Thank you. You got it. Okay. All right. Good luck, Scotty. That's awesome. See, guys, isn't that awesome? Like the power of of networking and all that. That's great. Perfect. And Scotty asked. Good for you, Scotty. Other people be like, I'm just gonna call, forget that. Well done. So just know, guys, as you do get opportunities sent to you, be, uh, yeah, keep me posted, Scott. Cool. Yeah, just know, as you get opportunities sent to you, leverage your network, stay focused in your area, because, uh, you know, opportunity costs are real. You know, if you start working something random which a lot of— I actually see a wholesaler that sends out like deals all over the country and I'm like, hey, you would do so much better if instead of trying to find deals for properties that are all over the United States and you're having to find buyers in every new market every day, just focus on one market or two. And then, you know, through time you're going to be able to have a better, you know, relationships in that area and move stuff, right? Yeah, exactly.

Cool, guys.

Well, that was it. And, uh, you know, we'll wrap it up. We're going to head out of here. And if you need anything, you can hit up David. He's in Long Island. Joe, I'm sure if you got— if people want to reach out to you because you work in the Orlando market, they can reach out to you. Um, you guys can reach out to me. I mean, we're here to do deals. We're here to help you guys succeed. So we'll see you on the next one. Peace out, everybody. Have a great day.

Yep.