How many deals are you going to do?

Question

Keep yourself on track to meet your goals this year.  Decide what your goal profit for the year is going to be then work backwards to figure out how many offers to make on a daily or weekly basis.  Consistency is the only way to make it in real estate.  Make offers, offers, offers.  Every week.

Bryan Casteel · Answer

I generally make an offer on any property that I take the time to see.  For my business a good deal is on that I can purchase at a price that will net me a profit at least equal to the amount of work needed to put the property back into shape.  I don't do any job that I don't think I can make at least $20K on unless it is just so darn easy that it will flip super fast.

For Example:
House needs $25K worth of work so I need at least $25K to $30K profit
House needs $12K worth of work so I need at least $20K to $25K profit
House needs $45K worth of work so I need OVER $50K in profit

The reason I do it this way is because bigger jobs inherantly have more risk and therefore I need more reward.  It is amazing how a $40K fixup job can turn into a $60K fixup job before you know it.  I need to build in the cushion to handle unexpected expenses.

Another way to figure a good deal is how good are the terms on a deal.  I will take a lower profit if the seller will finance me on the purchase.  My risk is lower because I am not out the cash on the purchase as well as the fixup costs.

N/A N/A · Answer

Thanks Bryan. It looks like this kind of insight is only possible after you get your feet wet.

Rich Reid · Answer

I really enjoyed reading this one guys.  I agree with Sam when it comes down to it... jumping in head first can be a disasterous way of going about any investing career.  Actually, Christy seems to have a certain advantage since she worked in the industry for a while.

I guess what it really comes down to is when the timing is right for you you've got to be ready and willing to bite the bullet and make the offer, but hopefully you've done your research and are taking a "calculated" risk.

Crunch the numbers and account for contingencies.

_________________________________________
"When you can't find a way, make a way!"

N/A N/A · Answer

Christy, the reason I am learning about the real estate market right now is because I am actively investing in the stock market and am also considering the options market. I write a free investment newsletter that provides unbiased research about stocks and my website also covers some of the basics of stock investing.

When I first started, had I known what I know now about investing in stocks, I would have been richer by tens of thousands of dollars. I realized that there are two ways to learn. The long, hard and slow way of learning from experience (which is an excellent way to learn) or the smarter and hopefully faster way from other people who are willing to share their experience (either through books, on a forum or in person).

SamGreen made a very wise comment about mistakes shortening the length of your investing career. So instead of sitting around, I am trying to learn about a different field of investing (real estate) long before I plan to take the plunge.

N/A N/A · Answer

I understand the wanting to learn Edge, but make sure you're not sitting around waiting to know enough.  When will that be?  Is there a course you will take that once you've done it you can go and make that deal?  I am very new to this but have more than 15 offers out right now on REO's and over 150 preforeclosures in the mail.  I've been on 5 different FSBO's and made offers on 2 of them.  Both rejected.  I don't know everything, in fact very little, but I will learn as I go.  I've learned the basics and I know my first few deals will be to sell the contracts to other investors to get my cash flow going, but you just have to do it.  Take the leap.  If I fail miserably (which is a thought I never entertain for even a moment), I'll let you know.  But don't let the "what if's" stop you.

N/A N/A · Answer

I hear you Sammy.  When I say I don't know anything, I've been a mortgage underwriter for many years and have spent thousands on studying the various processes.  The only thing left for me to do is jump.  What I was trying to say is I don't let fear of failure stop me.  There's a difference between being courageous and being stupid.  It may be a fine line but I feel comfortable at this point.  I think as long as we all move within our own comfort levels, we'll set the standards and levels of our success that varies for different people.  I am very cautious to the point where I know I could offer more but don't.  I make sure I am pretty much guaranteed a healthy profit when I make the offer which means I may not see a deal for a very long time, but when I do, if I've played it right then woohoo!!!  It will be an excellent payday.  Also, I want to make sure, since I will be selling the contracts, I'm guaranteed to find an investor who wants it.  If it's marginal, they won't.  I'll take more risk when I'm using my own money.  I look forward to talking with you further on the board   :type:

N/A N/A · Answer

I know. I did not take it the wrong way. I was explaining in great detail 
why I was not going to take the plunge right away.  :D

N/A N/A · Answer

Please don't take me the wrong way.  I wasn't trying to be critical.  I was going for more of a pump you up kind of thing.  :wink:

Sam Green · Answer

Hey Christy, I think you're on point with jumping right in, however, imagine you had a bit more info.  I'm sure you would be much more successful with your offers/deals with more knowledge.  What do you think?  I am a bit cautious, as you can tell.  I fear that going gung ho with little background might lead you to have some big mistakes, which could drastically shorten the length of your investing career. I guess I'm just trying to tell you to be careful.

Bryan Casteel · Answer

My partner and I developed this way of thinking after doing a couple deals that just weren't worth it.  After you spend $50K and many, many months on a rehab, a $15K profit just isn't enough.  It is very common that I look at deals these days and just say "There are easier ways to make money".  I would never have done that at first because it is just awesome to find a deal in the first place.  Once you get a few done it starts to make more sense.