Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
Hello BP Nation. I have a qucik question for ALL of you and even newbies with just one or two deals can answer.
How do you count your deals?
I have run into a few investors who claim to have done X amount of deals, but when asking a few questions, I determined that they count them, different than I do. That stated, I wanted to know which way the consensus falls on.
Example: If you own 10 rentals, then that is an easy number to count. You have done 10 deals.
But what about flippers. If you buy a property, then fix it and sell it, have you done one deal or two? You closed on the buy side, then you closed on the sell side. That is two transactions, but the same property. In such an example, how do you all count it?
For rehabs, IMHO, it would be incorrect to consider a fix and flip as two deals. Objective of a fix and flip is to purchase a property, fix it, and then resell it to an end buyer.
If I purchase a rehab property and I count it as a deal, then it's incorrect because I haven't finished what I intended to do with that property, which is to sell it.
If I buy 10 rehab properties, fix them all but never sell them, I can say I have done 10 deals, but I have ZERO money to show for those deals. For rehabs, until the property is sold, the deal is in progress.
It's late and I am a little tired, so I hope it makes sense.
For rehabs, IMHO, it would be incorrect to consider a fix and flip as two deals. Objective of a fix and flip is to purchase a property, fix it, and then resell it to an end buyer.
If I purchase a rehab property and I count it as a deal, then it's incorrect because I haven't finished what I intended to do with that property, which is to sell it.
If I buy 10 rehab properties, fix them all but never sell them, I can say I have done 10 deals, but I have ZERO money to show for those deals. For rehabs, until the property is sold, the deal is in progress.
It's late and I am a little tired, so I hope it makes sense.
On this topic, I know an investors in Chicagoland/NW Indiana area who basically counts any deal that he's had even a small involvement in as his own deal.
As an example, he's also a mentor, so he includes any deal that he helps his students close on, even though he isn't financially involved in that deal.
I think from my point of view you count the deal you make money off. So if I buy a flip and I rehab and resell its one deal. If I buy a rental and its rented its one deal but if I buy a flip and its still sitting on MLS, I have not completed anything. I've only spent money but made nothing back. I guess an agent could count the buying side as one and the selling side as another because they made money on both ends, I only make money on one end so until I make money I haven't done a deal yet.
On this topic, I know an investors in Chicagoland/NW Indiana area who basically counts any deal that he's had even a small involvement in as his own deal.
As an example, he's also a mentor, so he includes any deal that he helps his students close on, even though he isn't financially involved in that deal.
Would you include that as your deal?
Funny you mention that. I know of similar situations where a person gave a lead and counted it as a RE deal of his own.
To answer your question, no, I would not count it and anyone who counted it for themselves, I would dismiss it in my mind.
How about this situation:
I did land development in years past and in one deal, I bought some acerage, subdivided it into 13 lots, then sold the lots. In this example, I sold all 13 lots to one buyer, but could have sold 13 to 13 different buyers.
So, should I count that as 1 deal, 13 (13 lots sold and made money on them all), 14 (13 lots plus original purchase) or 2 (purchase + 13 lot sale)?
I would count it as 1 deal. You only had one transaction regardless of how many lots you sold. If you bought one lot for $1000 and divided into 13 and sold each lot for $500 then you would have 13 separate deals with 13 diffrent buyers none related to each other. Maybe I'm sleepy and need to rest and think about it again.
If a builder buys a plot of land and splits it up and builds 13 houses and sells to 13 diffrent retail buyers- would he not have made 13 separate deals. If he sold to one investor he would have only done one deal.
Edit- Heading to bed almost 1am my time but I think people who want to count every single transaction have a need to boast or make themselves appear greater than they really are or more experienced or a host of other things I cannot think of right now. With an earlier post about the mentor counting the transaction of the students -It basically helps him look like a better teacher to have a higher number of deals done. It makes me look like a better business person to have a higher number in my bank account.
Ophelia,
For being a rookie and a new board member, I must say you have a hell of a good head on your shoulders. You should have been jumping into these conversations long ago, you have great input!
I hope it was my post about newcombers engaging that helped prompt you to do so, but either way, I am glad you have.
Keep it up!
I count it as 1 just as you did.
As for those who count it as more or the mentor example, I agree 100% with you. It is nomthing more than a need to boast or make oneself appear to be more experienced than they actually are.
I agree that one paycheck or one hold would constitute one deal.
I would also say that a holder of more than 1 year who cash flowed, then sold for a profit would count as 2.
I count deals like so:
- Every time I close on a loan/sell a property
- Every construction draw I take out on a rehab
- Every time I receive a rent check
- Each time someone I have ever talked to closes on a deal
This makes me look more experienced and polished as an investor.
:)
On a serious note I count a fix and flip as one deal and do not understand the logic of calling it two deals.
I count deals like so:
- Every time I close on a loan/sell a property
- Every construction draw I take out on a rehab
- Every time I receive a rent check
- Each time someone I have ever talked to closes on a deal
This makes me look more experienced and polished as an investor.
:)
On a serious note I count a fix and flip as one deal and do not understand the logic of calling it two deals.
Wow, James is now on his 32 deal! :lol:
In all seriousness, I agree James, I don't understand either other than they want to make them,selves look better! I too count 1 rehab as one deal. I guess it could be considered two RE transactions (purchase/sale) but not 2 deals.
i agree as well.. a flip is one deal...now what do yall think about this scenario? i bought a 4 unit property, rehabbed, and rented out for 6 months...then i sold on a contract for deed, collecting 14,000 as a downpayment...then, after a few months, i sold the note to a note buyer...how many deals would yall say that is??
I tend to look at it on a property basis. When buying the property you have a particular exit strategy in place regardless of what that strategy is. Going into a deal and getting out of it are just part of a deal.
If it wasn't counted on a property basis, then would someone count refinancing a property as a new deal? What if you do a sale with a leaseback. It seems to me that there could be many creative ways to add to the number of deals if you don't look at it on a per property basis.
@Bryan, I would count that as one deal.
Like Chrales stated, exit strategy is irrelevant, one deal is one property, regardless of if you bought and sold or just bought, bought and rented or rented, then sold on owner carried note.
Looks like the consensus is one property = One Deal.
Now if the words "RE transactions" were used, then yes, buy = 1 transaction, sell = 2nd transaction.
For agents, listing sold is one deal. Represent buyer on a property = one deal
Will
This sounds like a Rich Reese question.
BTW
Where did he go?
Don
Thats funny Don! :lol:
Rich has been sick, but better now. Spoke with him today via phone. He takes yet another trip next week.
Anybody want to buy a 4-plex needing $20k in rehab with rents of $550 per door in Mesa, AZ? (currently vacant)
I know this is off topic, but still in my own thread. Please PM or email me. Rehab and flip or buy, rehab, place tenants and hold for cash flow. $110k all in with $2100 in gross rents equals cash flow by any standard. :D
As a bonus, I will even count it as 4 deals for you!!!!
Hey Will,
Thanks for the compliment. And yes ofcourse it was your post that inspired my action to join and talk to everyone- Now if you would kindly post me a link to your post I'll go ahead and read it..LOL.. In all seriousness I think for most lurkers myself included when you come to this forum with your two or three tiny rental properties(Speaking of myself here) and you are just doing your first rehab even though you've been in the whole mortgage/loan game for a while you feel intimidated by all the big guys here doing 30 or 40 flips and owning hundreds to thousands of rentals. You think what in the world do I have of value to contribute. What could I possible say that these guys don't already know. It is my dream to one day say I've done as many deals as you have done. (I promise I would count each deal multiple times..LOL)
Thats just it, everybody at one time or another was just starting out so never be intimidated by those with many deals under their belt and never think that a rookie investor does not have anything to offer a pro here on this board. It just is not always true.
If 25% down gets me seller financing then I'm game...
I don't think you read this entire thread Loc, it is about people double counting deals to make themselves look better, as in, property purchased then re-sold, and counted as two rather than the appropriate one count.
Interesting question. I've never thought to sit and think about it. But here's how I would count my deals.
If it's a house that I am fixing to rent, then that's already a transaction. If it's a house that I'm flipping, it's a deal (on my end) when I sell it.