Posted on: March 21, 2019

If you’ve seen how wholesaling has dramatically changed the lives of so many, it is likely that you can’t wait to start your own wholesaling adventure as well. However, while some aspects of wholesaling are easy, there is one component many people find challenging—figuring out if they actually have a deal in their hands.

Fortunately, rockstar rhino and TTP guru Brent Daniels is here to help you out. Listen in as Brent dished out helpful tips, wisdom, and insights you’ll never find anywhere else. He even threw in a few awesome resources as well as some analytics for good measure!

If you can’t wait to snag that first ever deal, you shouldn’t miss today’s episode. With all the amazing tips you’ll learn, finding that first ever deal might be sooner (and easier) than you think!

Key Takeaways

  • What valuable resources you can use especially when you’re still starting out
  • Why understanding what your cash buyer database is buying and how much they’re buying for is key
  • Who determines the price
  • Why having a robust and active cash buyer database is very important
  • What ARV is
  • Why it’s important to understand the premium cash buyers need to make
  • Effective ways to build your cash buyer database
  • The best rule of thumb when it comes to making deals

RESOURCES:

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Episode Transcription

Brent Daniels: Brent Daniels here. The number one question I get the absolute most is, is this a deal Brent? Is this a deal or no deal on a certain property that they’re talking about? Right? You start doing your marketing and people understand me as the talk to people guy, the cold calling expert. I teach people around the country how to pick up the phone and make calls. So they get a lot of leads. And a lot of the biggest question is the thing that gets your heart pumping the most, that gets you excited, and the synapses in your brain start firing off is, could this possibly be my first wholesale deal? Could this possibly be the first deal that I got from just cold calling? Could I change my life with this deal right here? Could I wholesale this and make 10, 20, 50,000 dollars, and completely all of a sudden, life has changed?
I go from that place of, I believe I can do this, to the place where it’s a fact. And once you’re in that place where it’s a fact, oh my gosh, that’s when the exciting moments start happening, and that’s when you start being a true entrepreneur.
So, let’s take a look and let’s dissect this question a little bit. Okay. What most people do off the bat is they talk to a homeowner, whether they get called off of a bandit sign or a mail piece, or on the internet, or whatever. If they do a paper click or a SEO, however they have that contact. Or they’re proactive, they start picking up the phone, they start talking to people. Or they go to the doors and the door knock. In any way, they have an address, they have a condition of the property, they kind of have a motivation from the seller, and they’re wondering, can I possibly…could this be a deal?
So, a couple of things that most people do, is most people go to Zillow. Right? Zillow or Trulia, Redfin, or Eppraisal.com. Right? You can kind of get a general sense on this and it’s a good resource to use, especially when you’re starting out. Now, if you’re a real estate agent, if you understand values, if you are an appraisal, there’s going to be a lot easier for you. But the fundamental thing that you have to get through right now, what you need to understand the absolute most is, you have to understand what your cash buyer database is buying and how much they’re buying it for. Okay? It doesn’t matter. Remember, on every single transaction that takes place anywhere on the planet. I don’t care if it’s this marker, or if it’s a Lamborghini, or if it’s a light, or if it’s a camera, or if it’s a house. The buyer determines the price. Let it sink in.
It’s not the appraisal. It’s not the seller. It’s not the market. It is the buyer that determines the price. So with that, what are your buyers willing to pay for these deals? That is absolutely fundamental, number one. When it comes to wholesaling, you have to have a robust and active cash buyer database, 100%. And you need to talk to them, and find out what they’re spending in certain areas on certain properties. But listen, that’s all foof Brent, that’s all air. That’s all that means nothing to me. Give me something tangible. Okay. I’ll tell you what. Now I don’t…this is not the best way to understand if it’s a deal or not a deal. So you can critique it, but it’s not the best way. Okay. This is just, I’ll show you how we do it here, and I’ll show you how a lot of my students around the country do this.
Okay, so around the country, it is pretty standard to say something called ARV. The Adjusted Retail Value. Right? Or After Repair Value, whatever it is, ARV. Right? This is what it’s going to sell for once it’s really, really, really nice. What is it going to sell for? Let’s say that that is $100,000. Okay? Now, what most people do, is most people are taught to go 0.7% of this, 0.7 times 100,000 is kind of the industry standard on where you…that’s the spread that you want in there minus the repair value. So let’s say it needs 25,000 in repairs and you might assist from the 70,000. Right? And you’re now at 45,000, is what people are telling you should be able to sell that to an investor for. I don’t necessarily agree with that, but it depends on your market.
So, then you add your… So for something that would sell at a 100 you’d have to be at 35,000 to make 10,000 on an assignment fee. Hope that makes sense. If it doesn’t comment down below, I can break it down a little bit more. But if that makes sense, that makes sense. So that’s kind of the industry standard. Now here in Phoenix, Arizona, because we are competitive, we go at a little bit different. So I have is $100,000 property. I times my ARV, every time depending on value. If it’s under, let’s say 80,000, this adjusts and I’ll go through that too, but 100,000 ARV times 0.84. What does that mean?
So I believe I know my cash buyers. And this is why it’s important to understand your cash buyers. It goes back to the beginning of this video. My cash buyers want to make 10% on their money. Okay? If they put in, let’s say 80,000, they want 8,000 back as a return. Now you might say, Brent, that’s absolutely bananas. I know in my market, fix and flippers won’t do anything for less than 20,000 profit or 30,000 profit, maybe. And then maybe somebody like me or somebody else will come in there, doesn’t mind making 10 or 15,000 on a deal, and beat them like a drum and take every deal, which is usually how the market sorts out.
So I’d be really careful by making the assumption that there has to be 70% minus repairs minus what you want to make on it. I’m just telling you, that’s not real world. That’s some chat room nonsense. That’s some people that haven’t done deals, and it’s just theory. That’s like going to a REIA meeting and people are telling you that they won’t even look at a deal unless it’s 30%, unless they can get it and make 30% profit on it.
Okay. Well how many deals have they done? They’re still waiting around. They’ve been to the same REIA for six years, haven’t done a deal. This is real life. This is stuff that everybody that does a lot of business has experienced. So it’s really important you understand what percentage does my cash buyers need to make. And more importantly, if it’s just a number, what if it’s just 15,000 I just need to make 15,000 on the deal. I don’t care if it’s 400,000 or if it’s 100,000. I just need to make 15 K every time and just keep turning it over and turning it over. How about that? There’s no way to know unless you have a really healthy cash buyer database there you’re communicating with all the time.
So let me go back to this. Here in Phoenix is 0.84. So now it’s a much different number. I’m at 84,000 here minus the repairs. Right? And now I’m down to 59,000 is what I can offer. If I want to make 10, which I don’t I always try to make 20 on every deal, but if I wanted to make 10 now I’m at 49,000. Remember the last time, the person that was offering 35,000. I could go up 14,000 and still make 10,000, because I know my cash buyer database. So it’s absolutely fundamental to understand what is the strategy. Every buyer is different. Right? What if one buyer can fix up a house for 50,000 but the other one can fix it for 30? You need to know that. That’s why building your cash buyer database is so dynamic.
Let me give you a tip for building your cash buyer database. Number one, talk to your title and escrow companies or your closing attorney, and ask them, who was buying the most properties? Who do I need to talk to? Who can I send my best juiciest deals to? I want to make sure that it brings business to you, Mr. Title company, Ms. Attorney. I want to make sure that we do that. So who do I need to talk to and be connected with so that I can make sure that we bring you the business? And they start talking and then go start looking at all the places as you’re driving in neighborhoods that have those big dumpsters in the front of them. Go talk to the people there. Go see what’s going on. Go and start building it up. Start looking at everybody that’s doing fix and flips and have these brand new build properties. Go find the owners of those.
Throughout the country, this work guys. Get on the database of every wholesaler out there. Get on their email blast out. Keep track, or have a VA keep track of all those addresses. And then see who actually closes on those deals and adopt those buyers. How’s that sound? You can build your cash buyer database. I’m telling you need to communicate with them and don’t be intimidated by them. Just have a good conversation, provide value. Say, I want to bring in the best deals. What are you looking for? Some of them are going to be jackasses, some of them are going to be absolutely legit. So just learn to create a filter that determines which ones are the best and, which ones are just wasting your time. And I’m telling you will be able to know if it’s a deal or not a deal.
I gave you a little bit of the analytics there so that you can play around with it and see if that works for you. Or you can just go directly to your cash buyer database and determine. Because here’s the thing, I have seen student after student hallucinate in their mind and imagine that their buyers need to make a certain amount. And they pass on deals that more seasoned people grab, and sell for a lot more because they don’t understand the strategy. The exit strategy of every single buyer. Some of them will pay over market value in certain price ranges to do turnkey rentals. I mean there’s so many different options here. And the only way to know specifically for your market, is to get in and have conversations with your cash buyers, understand what they’re looking for, and how much they’re trying to make. Get into their mentality and never assume you know.
If you want the best rule of thumb on deal or no deal, locking up as low as you can. See what the lowest house is sold for within a mile and be under that. Life’s going to be good. So I hope this was helpful. I love you guys and I’ll talk to you soon.

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