The 10 minute offer for commercial properties

[Brett Merrill]

Hey BP community,

I was hoping to get a little input on other investors experience with the 10-minute offer as found in one of my favorite books Financial Freedom with Real Estate Investing The Blueprint to Quitting Your Job With Real-Estate-Even without Experience or Cash by @Michael Blank. 

A quick back-story - I am a Physical Therapist by trade and also an investor in the Western Massachusetts area. My investments so far have been buy and hold acquisition of two 4-family properties one of which is mixed-use. It took about 1.5 years to acquire both which is a little slower than I anticipated. However, they are both excellent properties and I am very pleased with the financials and operations of both. 

I am now looking to successfully scale my real estate business. I have revamped my team and have switched my focus and goals on acquiring a 10-30 unit value add property in the Western-Central Massachusetts area in the next six months (breaking it down using the 90 Days of Intention Journal by  @Brandon Turner). Now that I am ready to begin making offers I am curious to hear others experiences with the 10-minute offer. I agree with this strategy and have compared the offer price using the 10-minute offer with that of a more complex analyzation and usually get close to the same number. 

I will be moving forward with this strategy and would love to hear peoples questions, concerns or advice on this type of strategy and scaling. Thank you in advance and look forward to hearing form you. 

[Greg Dickerson]

Originally posted by @Brett Merrill:

@Greg Dickerson thank you very much for your response. Yes, what I have been getting out of it is using that strategy to then formulate a letter of intent which will be used as the basis of our offer moving forward. In order to gain more experience and confidence I would like to analyze at least three properties a night. Looking in the 10 to 30 unit range what would be your advice on how in depth to get with these analyses? I believe the theory behind the 10 minute offer is using a conservative quick conservative gross income (10% vacancy) and expenses (55% of gross income) along with cap rate to arrive at a fair market offer. This usually is much further below the asking price when based off of the marketing package figures. Have you had experience submitting Letters of intent based off of a quick analysis such as this?

I do not use rule of thumb or assumptions to formulate an offer or LOI. I only use actuals. If that info is not available I still do not use rules of thumb numbers I use actual numbers from my other properties.

I only use actual reported income and expenses from the OM to determine if Im going to take a deeper look. If the deal looks close I then reach out to the broker or seller to get all the financials and info so I can verify the numbers and generate my own assumptions to then submit an offer or LOI.

The problem with rules of thumb is that will be different for the different size, type, age, condition and location of the properties.