Offer to Acquisition Ratio

[John Espinosa]

My team and I are currently putting in bids at the rate of 3 to 4 homes a week. And are currently at a stand still on acquisitions since early September. The inventory in my area is just becoming slim pickings. We're a much smaller team at the moment, and all work fulltime jobs, but we're planning on having a big year in 2013.

After acquiring hard money funding, and a few private money leads, were starting to ramp up our offers and are looking to do our first couple of overlapping deals (more than 1 flip at a time). After speaking with several other investors in my area, I've learned that many of these mom and pop flippers are putting in upwards of 30 offers per acquisition.

Now I know its a local business, but I found this number high, is anyone else keeping track of their offer to acquisition ratio?

[J Scott]

It's going to depend on a lot of things:

- How picky are you?
- How competitive are your offers?
- How good are your terms (cash vs financing, contingencies, etc)?
- Where are you located?
- What is your market like?
- What is the % of distressed inventory in your market?
- How much investor competition is there?

When I first started in this business, I was getting about 20-25% of my offers accepted. In retrospect, I was being very picky, was going after stuff no-one else wanted and was working in a market that had a glut of distressed inventory and few investors.

Here we are 4 years later and I'm investing in the same location, but now I'm probably closer to 5% of my total offers getting to the closing table. The market has changed, I've changed, the competition has changed, etc.

There's no benchmark that would make any sense for you to use -- you just need to make sure that your offers are as good as they can be for you to make the margins you want to make and then accept whatever percentage of successes that yields (or make more offers to compensate for low percentages).