How to Get Offers Accepted?

Question

Hi Team

I am from sunny South Africa and I am new to the buy-to-flip investment strategy. I don't think I battle with fear of taking action when I see great deals, what I have found is out of the 95 properties I have looked in the past 8 months I have made 20 offers made I still have nothing to show for all this.

I keep thinking that there is something I am missing.

I start with my end price in mind and work backwards taking off holding and refurb costs to get to my initial offers. This normally works out to the same figure I get if I use the following algorithm (ARV*.7-Refurb Costs).

Has anyone else battled with this kind of thing before?

Russell Brazil · Answer

Market values of properties are not based on what you need to buy it at to make a profit. You cant force a formula onto a property. Find the properties that fit the formula.

Scott Isbister · Answer

Keep up the persistence. One suggestion is try to find private deals. The benefit is you can talk to the seller rather than an agent doing it on your behalf. The benefit is you can figure out what is important to the seller. The seller might have other things more important to them then simply price. The art of a deal is working out something that is good to both sides. Its hard to do that when you are not personally speaking with the seller.

Good luck!

Todd Rasmussen · Answer

@James Hutley

You may be competing with people who are willing to pay 110% of ARV to buy a primary residence. Just keep grinding. Adding to above advice, start to look at your rehab estimates and build margin by squeezing on your costs as well.

Ronny Tiburcio · Answer

@James Hutley Just keep going. Keep flooding the funnel with more and more offers and sooner or later, one of your offers will get accepted. As long as you stay true to your process and numbers, you'll be fine.

If you are making offers in the same area, you might want to look at what kind of market you're in and what kind of offers are you losing to. In a hot market, a lot of people and companies are paying cash so for example if you would offer something with financing and you're in a all cash town, that can be a big reason why your offers are getting declined.

Sheila Greene · Answer

It takes discipline to get that right property. You are taking the right steps from what you have described . This is not an overnight process right now and yes it seems like it should be easier but that first deal must be right. Think of the story you will be able to tell if you stay the course !

Forcing a deal can be tempting but it’s about the numbers . It’s uncomfortable and that may tempt you into a do so deal so don’t give in. If you move forward in the wrong direction just to escape limbo you will have a big set of new problems.Pushing a bad or OK deal is not the goal, getting a good deal is the focus. Stay strong and see each offer as a step in the right prosperous direction you want to go.

James Hutley · Answer

Hi Team, we just signed off on a 16 unit development.

The persistence paid off and we found a property that all three of our strategies apply to:

Buy-To-Let

Buy-To-Flip

Buy and build a development.

Thank you for all your advice.

James Hutley · Answer

100% agreed, the fast-selling price is based on comparable properties on the market it the moment.

Thanks for your feed back, I am grateful for all the advice I can get.

It sounds like, it still a case of we just need to keep putting one foot in front of the other and find more properties. :)

James Hutley · Answer

This is an example of how I run my numbers:

Asking   Price

R735 000.00

Average Price

R              750 000

CAPITAL   COSTS

R              119 780

Capital costs include 6 months of holding cost like bond payments, rates & taxes, water and electricity, refurb costs (R20000), bond fees and Attorney and or Transfer fees. The result of which is that my starting price would be

Your   maximum Offer

R              496 720

My max offer would be :

Your   FINAL maximum Offer

R           514 124

My max offer is R75000 under what the outstanding bond is. Does this look right to you?

James Hutley · Answer

I have run numbers on 2 properties this weekend and found that my offers on these properties would be below what the sellers currently owe on their bonds, do I make my offers anyway?

James Hutley · Answer

Hi Team, does anyone have an example of numbers that are run when working out what you should offer on the property?

How to Get Offers Accepted?

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