All Forum Posts by: Dustin P.

I don't want to say it's not feasible in the current market but it's very very very unlikely to grab a deal at those %s, especially a 2-4 multifamily. If you find something that fits those numbers on paper it's likely a much higher rehab, a lower ARV or a combination of both. Although you may be able to find something a little better now that supply is so high if you can find a motivated seller willing to drop their price

This is assuming you're looking for a deal on the MLS or from a pocket listing or something and not spending marketing money on direct to seller advertising where there's no realtor to caution the seller against taking a lower offer

Quick update - sent one out this morning and sold within 2 hours, 300k price point but didn't have a ton of actives in the area. Under 400k definitely is the sweet spot right now!

 I've never really paid too much attention to list price I just offer where it makes sense if it needs work

I am over asking a lot less often though

Some sellers are willing to drop prices but a lot seem to be holding onto this idea that they're still at the top of the market

I have had 3 under contract at least 80-100k off in the past couple weeks though

 This is definitely happening. Sellers are holding on and hoping that this will just pass because they missed the peak. It's definitely happening big time to flippers

It's a fun time!

 Exactly this IMO

It's easier to find better deals because there will be more motivated sellers out there. They will get spooked and the ones that have to sell will be more willing to sell at a discount because in their minds they don't want their value to drop even more if they wait

But also yes there will be sharks in the water wanting a much steeper discount than normal

I would recommend going through your list and figuring out who is still buying, how they are adjusting their numbers, what they are seeing with their current flips in terms of offers, feedback etc. The ones that are spooked by the market, put them in a separate time out section and stop sending them deals for now, check back in every month or so

And get feedback from your buyers. If they aren't willing to buy the house at $350k, where's the price where it makes sense? $330k? $300k? $250k? Have them provide their comps, look at the actives with them and try to see what they are seeing, hear them out on rehab costs, find out if they are giving legit feedback or just BSing  you to get a cheaper deal. Hone in on those buyers that actually do want to buy and make the deals work and try to get the deals where they want them

Hey Patrick!

I know you and I talk about this a bit but here is what I am seeing

Before the last month we were selling deals at roughly 85% of ARV minus repairs. I try to put together a realistic ARV and the repair is I'm sure light by most people's standards (These are wholesaler deals). However I do not send an ARV or rehab number out with the houses, just pictures / comps and a price

I've tracked almost 100 houses that we sold that have been at least partially remodeled and resold on the MLS and I'm seeing an average of 9.5% above my estimated ARV. However I'm also sure that a lot of the ones that hit well above ARV also spent more on the rehab (I confirm when I can but people often don't want to give their true rehab numbers). I did some math on a lot of them and a lot of the deals, after selling, penciled out to between 76% and 83% of ARV minus repairs

A lot of this was obviously just the market being crazy. I anticipate this last wave of deals to be hitting a lot closer to the actual ARV I calculate using closed comps. I'm expecting this number levels out to 105% to 107% of estimated ARV by the year's end

As far as what price points, here's my data from May / June

May - 35 deals total, $14k average wholesale fee (High month for us, average month is more like 25)

Under $400k - 14 deals

$400k to $600k - 16 deals

$600k+ - 5 deals

June so far - 22 deals closed or set to close, $12.6k average wholesale fee

Under $400k - 13 deals

$400k to $600k - 8 deals

$600k+ - 1 deal

So at the lower price points we are seeing things still move very quick, typically sold within 8 hours, but the higher price point houses are moving slower and are also where our cancellations are higher. Our cancellation rate has hovered around 20% but I see this going to closer to 30-40% which is higher than I want to be

What I'm doing to combat this is

1) Better training for acquisition agents. When the market is red hot it's easier to be too light on rehab or push numbers too high because that's what you have to do to make your offer competitive. I've made over 1000 offers in the past 9 months or so and I track every one and a lot of investors beat out my offer by quite a bit. Obviously some of them have licenses so they're getting or waiving their commission, they may have seller credits that do not reflect in the tax records, but in general our offers have actually been light compared to a lot of others. However with the market shifting right now the numbers have to be a lot more on point so I have been canceling a lot more deals before we even send them out to buyers

2) More offers, better follow up, leaning more on agent relationships to find deals. Supply has almost doubled. That means I need to be sending double the amount of offers at least. I need to be better at catching deals that fall out from other wholesalers / investors, following up, and getting the deals cheaper. We are working on this

We are still selling deals. I just got one in Scottsdale $100k off list price and was able to mark it up $20k and sell it so the buyers are still out there. There's just far less speculation and buyers are falling into a few groups

A) Big buyers that have always and will always be buying, they are just adjusting down on numbers

B) Buyers that are afraid of the market and opting to wait and see what happens

C) Buyers that know we are in a market shift and are making hail mary YOLO offers to see what they can get (Which will work better now than when the market was red hot)

I'm actually glad we are shifting. The market was getting a little too crazy. I do 3-5 deals a year myself and it's always nice to be able to pick up deals at a steeper discount. I think once summer is over we will get a better idea of what the market is actually doing (Since at least for me the summer has always been my worst time for deals)

Reduce your offer by $100k

Sounds too good to be true. I'd take it and learn as much as you can and ride it as long as you can

It is a pretty small job for an actual contractor or carpenter especially with the labor shortage right now. Do you have a handyman you trust that you can pay hourly? It may be the better option