Hi Guys, I have a system in place developed to find deals on the MLS using data analytics. It has a proven track record of finding 20-35% profit margins.
I am having a hard time finding cash buyers for these deals. Any advice on how I can convince my local investors here in the hot Portland, Or market that on market deals DO exist short of giving away the keys to the castle??
Why not just put them under contract and wholesale these deals?
Hi Antoine, thanks for the reply.
I'm also licensed agent in Portland and most of the principal managing brokers here don't really understand investing especially not wholesaling. I'd much rather just other these up for the buyers commission paid by the sellers agent instead of charging a wholesale or finder fee to keep my Broker happy and my nose clean in the eyes of the RE Board here in Oregon.
I think what I am discovering is the cash buyers I have may not be the real deal and I should focus on building that up.
@Matthew Smith have you specifically asked your cash buyers why these properties don't interest them?
Post up an example of what you have offered and was passed up and we may be able to give some insight. My thoughts are the deals may not look as good to them as you think, or they aren't truly the cash buyers you thought.
@Brian Pulaski here is one of them that already sold way over asking price at $393K with conventional financing which to me would tell me that an appraisal was done and came in at $393K+ or the buyer made up the difference with cash for the bank to move forward on it.
Max Rehab 30K - 45K
1 Block West - $370K
2 Blocks North - $412K
3 Blocks East - $480K
@Matthew Smith How I read it: $320,000 plus $45,000 is $365,000. ARV is $413,000. Closing costs are going to be over $25,000 (that is just the realtor commission). Now you are at $390,000 with an ARV of $413,000... I would never put $390,000 of my cash out there to make $23,000, most likely less.
I assume I am missing something in my math? Is the ARV of $413k low? Can you get the buyer a much better deal, like buying the house for $250-275k? I would pass the deal above up each time.
@Brian Pulaski The ARV is conservative. Fully renovated this house could go for as high as $450K-$460K and the rehab figures were worst case. This home was near turn key just outdated.
Also I was only looking at the purchase side for closing costs since in Oregon all the commissions are paid by the seller. I wasn't taking into account the costs once you go to sell at the higher value. -Duh!
Thanks for your insights!
@Matthew Smith It's a numbers game. As a realtor, I don't think you understand investing yourself (sorry to be blunt). The whole point is to make return, it's not about HOW MUCH you make, it's about the RETURN you make. So lets 20k on a 390k investment is ..... 5.1% which is absolute garbage. I can do a lot of other things with WAY WAY WAY WAY less money and make 3-4 times that. So this deal that you are saying, and if your other deals are the same way, I would pass on every single last one of them.
There are also short term capital gains taxes to consider if those cash buyers are using as a flip. I would think that the best buyer would be owner occupied remodel or BRRRR. I would love to pick up a Portland house at that list price with those comps, but as you said, it was bid up to $393k. There are plenty of posts about Oregon realtors that wholesale. I would think your data analytics coupled with your license would be a great benefit as a wholesaler.
You mentioned you have an analytical "system" to find these deals. Would it be something you are are willing to share?
I think you are making it too hard. If this was me...if I have to convince my pocket buyers then there is no "deal" IMO. I offer scenarios as I find them and then they tell me what to move on. To me, there is no "deal" here based on what my buyers want and you are offering.
If the seller won't lower the price and seller wanted my help still, then I would offer it as LR+BAC or a smaller SAC+BAC, and just make it a retail offering. If your brokerage won't allow you to do that, or they are too greedy, go find a new brokerage.
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