How to be a SMART wholesaler: DEAL ANALYSIS IS KEY

You guys need to know your exit strategy before you get sellers under contract Okay, and if the end buyer is a homeowner well there’s no way for you to make money in that situation it’s not a fix and flip we already know that so if you’re gonna pay full retail for something you either a need to get under creative financing buy it yourself or be you need to know what its ability to cash flow is and then you need to talk to other people that own Airbnb in that area. So do is when your appointment Tuesday. Okay, tomorrow, you have homework who is in Chandler?

Yeah, I used to live in that area. So I know it’s a good area, but it’s just moved there either building the casino right behind it, how many bedrooms, you know, five by four with 1000 foot guest home. I just don’t want to mess up the appointment is my first time. I don’t have to obviously give an offer anything but I was gonna make sure I’m talking about the right stuff to move this. Okay, so do is let’s let’s just imagine you’re the buyer. Okay, what are you going to do with the property? And how are you going to make money on it? I would turn it.

Okay, so how much is your loan gonna be? Well, you don’t know that. So you got to do the homework. Every time you walk into an appointment, you need to pretend like you’re the buyer. Okay, I’m the buyer, I’m gonna figure out what my loans gonna be go to bankrate.com and say, if I bought this for $1.3 million, I’m pretending you’re the buyer. I’m not saying you are the buyer. I’m gonna get a loan for a million dollars. I gotta put 30% down 300 grand roughly. So my loan payment is going to be $7,000 a month. Well, damn, that means that I gotta go figure out how much is this going to bring in.

So then I go to air DNA or I go to Mooney if there’s money right there. He’ll help you underwrite it or you go to that link that Darren Talcott gave you and you figure out could it bring in money do so let’s say that the air DNA or somebody tells you that that thing could bring in $30,000 a month every single month on Airbnb. Do you think that’s a deal? No, that’s a deal. What did we just say? We said $7,000 Your payment to our loan is $7,000 a month but let’s say the air DNA says you can bring in $30,000 a month. Hell yeah, that’s a deal. Guys. Can I tell you something no smart buyer buys anything with cash. Listen to this.

No smart buyer buys anything with cash. So if you guys think your buyers are going to come in with $1.3 million in cash, that does not happen. They’re all leveraging they’re all getting loans. Everybody’s getting loans to buy properties. So you have to assume that your buyer is going to have a loan. So you have a loan your loan, let’s say hypothetically is $7,000 a month. All right, cool. I got a loan paying seven grand a month I go to err DNA or motifs calculator, and I find out that property can bring in $30,000 a month. Does that sound like a good deal for me to have a 23,000 monthly spread in my pocket every month?

Yes. Okay. So you take out management, you take out utilities, you take out capex, which is capital expenditures, which means, you know, monthly repairs and improvements, and I probably end up netting on that $23,000 spread. I probably ended up netting something like 16 to $18,000 a month in my pocket. Does that sound like a good deal? Yes, hell yeah. All day long. What if I go to bank rate and that house says for $1.3 million, my loan is $7,000 a month and then I go to air DNA and I find out that the most I can bring in on that property is $5,000 a month. Is that a deal? Absolutely not. It’s not a deal. So this is why we always always, always start with the exit strategy in mind before we go into negotiate with the seller.