Analysis vs. Offer Strategy

[Michael Temple]

I want to collect some input from other investors on the best way to handle the strategy of analysis vs. offers. Here is what I mean. Every single day I get leads sent to my email from my Realtor, Zillow, and Trulia. I open each and do a quick scan primarily looking at price and area to narrow downing the list for some to take a second look at. As you might imagine I discard a bulk of these.

After sifting it down to a small handful I go in and look at them, look at photos, area of town, rental rates, etc. This is part education for me and part deal hunting. If I find some that look promising I start doing some quick analysis (1% rule, potential rehab costs, etc.) if I get particularly interested in something I might dump the details into BP calculators. The idea behind this entire exercise is based on @David Greene book on BRRRR trying to get good at deal analysis by doing A LOT of them. I try to do a full analysis of a deal every day.

I reach out to my Realtor and go physically looks at a super small number of these. Now here is where the question comes in...

Most of these I don't make offers on because after looking at them in person I see the rehab is going to be higher than I thought relative to ARV and current asking price. For example, I just went and looked at one on Friday priced at 50K. ARV is approximately 80K. Estimated Rehab after crunching the numbers is $30K. So to BRRRR this deal, I would need to get it for around 25K (80K x.75 = 60K - rehab (30K) = 30K - other costs (financing, closing costs, etc.) = 25K max price.

As you can see that is 50% discount from where it is currently listed, which is highly unlikely I would get it. So question, should I just offer on it anyways or wait until stuff like this comes down into striking distance of what I need or sells before?

As you can imagine waiting until it gets down to those levels has been a spectacular failure so far. Nothing EVER comes down to that level or even gets close before somebody buys it. I generally save them to my list and check every couple of days to see if there is a price change.

I am really struggling with this because all the Realtors I am talking to keep telling me making offers like that "isn't a realistic approach" and the unsaid part of that is "its a waste of our time to work with you if you keep doing this because nobody is taking you seriously". I actually had a Realtor tell me that once in a nice way, but the meaning was clear. At the same time I know if I don't make offers I am getting nothing, nada, zilch. Ala Wayne Gretzky "You miss 100% of the shots you don't take".

In addition, I listen to the BP podcast and other investors that keep saying things like they are making 20-30 offers PER MONTH! I have to wonder if their offers look like my example offer above and they are just putting it out there to see what happens. Knowing 99% of them will be rejected.

I would love to hear how others are doing this. Are you doing 20-30 Offers per month knowing almost all of them will fail and possibly irritating your Realtors to keep writing all of these up or are you being more selective and do a lot more analysis vs. offers?