Having analysis paralysis over comping deals, check out this video I just made with someone that just said, Hey, I’m having analysis, paralysis of recopying deals, and I don’t know what to do. Watch me address exactly what fear what is concerning him to have that analysis paralysis of what’s causing the fear what’s causing him to be so nervous. Watch me address it. And at the end of the call, I don’t think he’s that nervous anymore. But check it out. And you decide for yourself
All right, what’s going on? We’re live. And I’m here with Sam, What’s up, brother? Not much. How are you? I’m doing good. And I saw that you wanted some help with comping, bro, you’re in analysis paralysis, that happens a lot happens a lot. When people get started. They’re just like, What do I do is that tell me a little bit about like, how you’re feeling? Because you know, it’s been a while since I’ve started. I’ve been in it for about five years. So tell me what’s how you’re feeling? What’s going on?
I’m, I’m pretty nervous. I’m not gonna lie. I’ve been trying to do this for at least a month, almost now. Yeah. And I finally got to the stage where I’m somewhat comfortable enough to go out and try and make calls and do all that. But I’m stuck on analysis, analysis paralysis, essentially.
So let me ask you a quick question. Because I’m interested what what makes you most nervous about the process? Is it talking to the seller? Is it not knowing like talking to the agent? Is it not knowing what to offer? Like, what’s what’s making you nervous? It’s
a combination of talking to the seller and the agent, but it’s majority majority, not knowing how to comp it properly. So for example, if I was to, say, find a property for 230, and offered something like 160, I don’t want and then later on, find out that it was worth less, you know,
a combination of talking to the seller and the agent, but it’s majority majority, not knowing how to comp it properly. So for example, if I was to, say, find a property for 230, and offered something like 160, I don’t want and then later on, find out that it was worth less, you know,
I know, dude, I know exactly what you mean, bro, because it happens 99% of the time. I feel like, uh, wholesalers are locking up properties at the wrong price, you know, and they’re having that problem. They’re, they’re getting that they’re offering, they get it under contract. And then they’re like, oh, it’s not a deal. Right. So you’re saying you’re nervous. You just don’t want that to happen to you? Right? Yeah,
for sure. Because I’ve heard a lot of kind of horror stories just trying to get into this on that specifically.
Yeah, it’s frustrating. It can be very frustrating. So there’s a couple things man like, right now we can take a look at a couple of properties. And I can comp them. And I can tell you what the numbers like what numbers you need to be at for it to be like, for sure deal, right for someone to buy it. The difficult thing with that is if you’re in multiple markets, I think you said Maricopa County in Arizona, and then you said Indianapolis so a lot of people learn the 70% rule. They’re like, hey, 70% minus repairs minus your wholesale fee. And it’s a deal. Now, that may be true, because you’re getting such a big discount. But the the chances of finding up someone’s willing to sell at that low of a discount is Rockley is difficult. Yeah. So in Arizona right now, because I understand the kind of the market, it’s a lot of buyers are buying it 80%, right. They’re buying my 80% sometimes just 80% period, right without even your wholesale fee without Well, obviously your wholesale fee, but without even repair some buyers, some buyers are doing 80% Minus rehab. So the rule of all across the board of 70% 80% 90% It doesn’t work just because you can’t live and die by that it’s just not gonna work. Because in Indianapolis in specific towns in Indiana, like Brazil, Indiana, Terre Haute, Indiana outskirts cities other than Indianapolis, sometimes it’s 50% minus. So to live and die by that is if you’re going to get yourself we’re going to waste time and I’m not about wasting time neither you so the way that I combat this, the best way to combat this is to know what your buyers are buying in that area just to ask them right. So for example, if I’m your buyer, and you have a property and you’re like hey, I’m talking to a seller, they’re pretty motivated. They’re wanting this obviously they always want more where would this make sense for you, Mr. Buyer, then Mr. buyer looks at it says hey, they’re motivated, okay, you’re not wasting my time. It’s actually something that like if I make an offer and you can get it, this is going somewhere they look it up and they tell you I can do 250 then your job is to go to negotiate with the seller for less than 250 for your wholesale fee. That is the easiest way as a new beginner to get a deal without having to worry so much about did I copyright it you’re saying you’re nervous right? So if you had someone like me that would just tell you what they would pay you wouldn’t be nervous right 100% Yeah, so that’s that’s what I teach.
It’s like I got the hat on it’s paint you have you ever met me I’m probably you probably never met me before right? No, no worries. That’s that’s kind of what I teach. It is payneless. Wholesaling the last thing is pain so I say it’s payneless bros if you have those relationships you can literally just go ask someone like me now not not all buyers are just if you don’t know them are just gonna like run comps and tell you exactly their pay because they’re busy. So you have to develop those those relationships with those key those key people that you vibe with it can give you that information. Does that make sense? Yeah.
As well as not all real estate agents are all that keen on giving you information without kind of getting something in return, which is what I realized already.
So another thing that’s going to make you help you not feel as nervous when you do this is when you call an agent when you call a seller kind of get out of your mind that you have to give them an offer on the first call. Don’t Don’t worry for about a month, half the time when I call someone well as sometimes I do make offers, because I’m quick with analyzing because I have the experience, but you don’t necessarily need to like feel the pressure to make him an offer there. You can gather information, see if it’s right situation and say, Hey, let me go run my numbers, let me call you back. And then that’s when you could reach out. If, again, if you find the right opportunity, it’s not worth analyzing every deal if like they’re not motivated, because that’s what we’re looking for. We’re looking for people that need you know, convenience, ease speed, they need move quick, they have distressed their properties need work, that’s who we’re trying to serve, not the client that just wants to sell the person that just wants to sell and can wait five years or one year doesn’t have to sell. It’s not something we can really help that like we’re not agents, you know, yeah, so hopefully those two things I just told you, knowing the buyers in your market and not feeling like you have to make an offer know exactly what you have to offer on that first call. Hopefully it does make you feel less stressed right now rather than nervous. Alright, so let’s take a look at some of those deals. And I’ll show you because it is important to know how to comp so but again, don’t live and die by the 7% rule. I’m about to show you how I do it. All right, so give me the address of one of the houses that you want help comping. Okay,
so the first one is 6510 lupine terrace, Indianapolis, Indiana. Okay,
so this is on the MLS Correct? Well said it was listed right here MLS NUMBER but I guess not. I like using Zillow and batch leads, but I’m not gonna show batch leads because then it will like block my my life. This isn’t like when I use batch leads. So is this. Tell me a little bit about this property? This looks like a condo or something?
Yeah, it’s definitely a condo, it’s a two bedroom, one bathroom, around 850 square feet. And that’s as far as I know about it so far. So
here we go. Like if you are to use realtor.com, it does a pretty decent job of kind of telling you if you scroll to the bottom like comparables like for us, we can’t really compare single family. These are condos. So you want to compare condos to condos. So this one looks like it’s in the same might be in the same area. 3307. Let’s take a look. So this let’s see if this has pictures. This is currently listed. Yeah, I think this man, they really need to paint on the outside. What do you think, man? That’s great. Yeah,
sure. The house or the property looks like it needs a lot of updates on the outside at least is the house that you have. Is it on? How did you get that lead? I pulled it up on Prop wire and that leads okay, and have you called
it yet? Not yet. Okay, so not not here, Rocha. They don’t want to make you feel bad. But if you haven’t talked to the lead, yet, it’s a complete waste of time to comp a property. Because Because I could be looking at this house, get the numbers all right, and never be able to get ahold of the seller might not be paying his phone bill, you might just blown up his phone. Who knows. But, and I see this a lot. A lot of people like want to make sure they know what everything’s worth before they call and they just complete waste of time again, because you never know, you might not be able to get a hold of them. Now let’s just take a look. We’re already looking at this one. So you can see from it that it’s been flipped inside. Someone flipped this house. Right. So that got it for 94 999. And let’s see, it’s been on the market for 14 days. So that doesn’t really tell us if it’s been on the market like first 100 days and no one’s buying it and they’re overpriced. So one thing you could do is you could call the real estate agent that has listed the property Todd and be like, Hey, Todd, I’m thinking about flipping house, a condo right next years, but I’m just curious is 9499 Is it moving quick? Are you getting a lot of offers or you’re gonna have to bring the price down? That’s like a quick way to find out you know, the heat in that area. Right. So I am curious what they bought this for. I don’t really use real realtor.com Very much. I use batch and Zillow, but I think you might be able to find the details here. Let’s see a property history. Okay, cool. Yeah, check this out. Listing removed. Okay. They took out the information price. 94. Okay. Yeah. So they had a listing, they listed it, they took it off, and they rented it out, and then they’re listing it again. Alright, let’s, let’s run the numbers on this thing really quick. So you gotta have a calculator. I know, Brent urine TTP. So Brent probably has a calculator. I’m not exactly sure where you would get it. But this is the one that I use. So let’s run the numbers on this. So let’s say you’re talking to this seller, you call him and it’s a really the house is distressed, right? It’s all it’s all math. It’s all math problem, right? So here’s, here’s how I analyze it. I would go into this and I’d say okay, if flip comp in this area, a condo is $95,000. That makes sense. That’s the ARV. And that’s not 100% Sure, like we’re not sure I usually look at for sale for sale instead of what’s for sale versus what sold just because markets are pre changing pretty quick right now. So if I check like six months or a year ago and what sold it might not be very accurate because you know the market right now. So I just say what’s for sale. And that also helps you if you’re in a non disclosure state where they don’t even tell you what, what something sold for. So let’s just assume it’s 95. And I’m talking to the seller, the seller is like, hey, everything is destroyed, right? Like you got to tear out. It’s a teardown. Okay, so for me, I’m like, okay, tear down. What’s the square footage in this property? It’s 969 66. So I put the square footage in here. 966 And I’d say okay, this house needs everything right? Here’s the rehab costs for me everything $40 Time $40 square foot times 966. It’s gonna be about $38,000 rehab for everything. And a lot of people, they might increase these numbers, but I think it’s fine. How much are you trying to make on your wholesale fee? If I can make eight? That’d be great. Okay, that ain’t great. Okay, so you want to make 8k. So then just to teach you, most flippers, do not just take a pile of cash and say, Hey, I’m on Vestas in one property, what they do is they say, I’m gonna get a hard money loan, and I got to borrow, let’s just say 25,000. That’s the purchase price of the property, I got to put down 3750. And I have to pay interest on the rest of the money I borrowed, and it shows you what the monthly payments are. Does that make sense? They’re borrowing money, so they don’t have to come up with a whole mouth, they just put down a little bit and then they get loan the rest, right? So you got 12% interest is what they do. And two points is how much they pay just to borrow the money. So if you want to borrow 23,000, is 2% of 23,000, then it shows you that your points, that’s how much you pay 15% down that’s the number here and then hold time
So this house, it’s a condos, 966, it’s probably wouldn’t take someone very long to rehab it. So just from my experience, I’d say two months to rehab it, and then two months to list it in case it’s slow. Commission and sale. Do you know what commission sale is? Like? Okay, so you know how real estate Yeah, real estate, do you know what that is? So there’s 3% For someone to list the house. And then there’s 3% for a buyer’s agent to come in. So it’s usually 6% is what a buyer would have to pay. If he was not an agent, he paid 3% to a realtor listed and 3% for a realtor to bring a buyer. Okay, most flippers know somebody that’s an agent, or they are an agent, so they don’t pay that listing fee of 3%. So there is 3% closing costs, usually one person 1.52, but I do one because the buyers that I use, they’re good with the title companies they know exactly like how to, you know, get a little bit of a discount you, you follow me on everything. Okay? So if you were I just threw in the number 25 Just because from experience, I’m like, Okay, it’s probably gonna have to be around that low. If you want to make 8000 in the rehab is everything, it’s about $38,000 rehab, you would have to in order to get your investor in the green, that’s where all investors want to be, they want to be above 15% 20% or higher. In order to get your investment in the green, you’d have to get this from the owner, you’d have to get it from the seller for $25,000. Okay, and then you would wholesale it to your buyer for 33,000. It’s all it’s doing is taking the price that you got it for under contract for adding eight and it’s giving you the what you wholesale for. Okay. Okay. So if you’re talking again to the seller, and they’re like, look, the house, blah, blah, blah, this is my problem, and I need to sell quick and you’re like, Well, you know, we usually buy properties in this area for around 20 to 25,000. You know, I’m not that’s not my final offer. But what that makes sense. If we were able to offer you something in that range, no way your offer sucks. And you’re like, Okay, well tell me, you know, what would make sense? I said, That’s not my final offer. They’d say, You got to give me at least 33,000. Right. So you’re like, Okay, well, let me see if this works. Now you’re at 10%. Now, most buyers in Salt Lake City, Utah, Phoenix, other like major metros are okay with the 10%. Like that’s like it, you’re getting low, you’re getting to like an iffy deal right now. Like if it’s below 10%, because that’s how much they want to make on the return on their net profit, right? This is calculating, they buy it. Yeah, that’s how much money they make. On their own, I’m having a brain fart, but that’s how much percent they make net profit. So this is getting a little iffy. So you might, if you can’t get any better than 33, you might have to adjust your wholesale fee, right? And then it gives them a little bit better of a deal. Not that you you’d have to or you could just say look, you know, if I did that, if I came up with a 33 It’s actually kind of getting tight for me, could you do 30 And that’s where the negotiation right is coming into play. But that’s why knowing your buyers, and how I suggest in the beginning is really important because you might have someone that is cool to buy it. 8% right, they’re willing to pay a little bit more. But you’re kind of in a scenario right now where you’re like, I don’t know, right? I don’t know what someone’s gonna buy it. So that’s why I suggest to do the paynless way and network you know, go to RIAs find people through title companies, you can use batch leads to find buyers, you can reach out to agents and network isn’t this isn’t like something that takes years it takes days to you know, really reach out and it’s a continuous thing where you’re always trying to find improve your relationships, a lot of people what they’ll do is they’ll find some buyers and they’ll never do it again. Like they’ll just keep just look for deals non stop. So you want to keep on cultivating good relationships with your buyers. So that is how this works, man, because what you are you’re pretty much getting a deal for a flipper. So what makes something a deal? Well, you got to talk to the buyer, but it’s usually if they can make a 10 to between 10 and 20% net profit on their investment. Okay, does that help? Yeah, very much. And by the way, if you liked this video, smash that like button so more people can see it, and we’ll get you more content like this, where we show you exactly how to do it step by step.
