Nathan Payne argues the 70% rule for real estate investing is too rigid and causes deals to slip away. In Utah, some buyers deliberately lose money on properties to keep construction crews employed rather than risk losing them to competitors. His alternative: skip the formula and tap a trusted network of buyers and contractors to decide whether deals make sense.
So like for us to like come up with a 70% rule and just say like, hey, like this is where people need to be. It's like, that's not every buyer. Some buyers I know in Utah, bro, they just have to keep their crews busy. So instead of buying like where it would make sense, the guy takes losses sometimes because he has to keep his crews busy or he'll lose them and they'll go work for someone else. So yeah, yeah. Imagine all the deals that we've— you've lost and everyone's losing because they are going off of a specific number. When they can just do it the painless way and find that guy who knows that has that squad and to be like, hey man, I got one, it's kind of tight, this is the situation, where would you be? And he's grateful because he's like, yeah man, I appreciate you, this is where I'd be. If it doesn't make sense on this one, hit me on the next one. That's business. Yeah, you're exactly right.
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