I think what @Shiloh Lundahl is offering is an incredibly valuable opportunity to a select few.
Arizona is an extremely competitive market. When I call on the rare wholesale email that actually makes sense (1 in 30 or worse?), any decent deals are gobbled up within an hour. In my opinion, most new flippers here are quite likely to LOSE money on their first deal. You can forget a $30k paycheck for your first flip around here. Expected profit on most cosmetic-level flips is very tight unless you're sourcing directly from distressed sellers via direct marketing. Even if you are, your distressed seller already got mailings from 10 other wholesellers. There are too many flippers and too few houses for newbies to have a chance here.
Shiloh's deal is fair because:
1. The education is incredibly valuable.
2. Shiloh is sourcing the deal. This is everything when deals are hard to come by.
3. You're getting 10% return even if the deal doesn't make money - much lower financial risk that a standard flip.
4. Shiloh is paying 1/2 of down payment and rehab so he has skin in the game and you can get in with less money.
- I think the $75k for RE classes is a major distraction from the actual conversation and off putting a lot readers. I don't think Shiloh is claiming that the $75k classes gives him any credibility - doing deals and making money does.
- A lot of the negative response has to do with Shiloh not selling well enough the benefits to the student/partner. The message here needs to be better crafted. People read quickly and move on.
- Another reason new investors aren't interested is that they don't have a realistic concept of how difficult it is to learn successfully flip in this market and how compressed profit margins are. If they knew how hard it is to compete, they would gladly welcome a deal like this.
- An alternative structure might be to have the student/partner put up 100% of the downpayment + rehab instead of putting in half. Then student/partner gets 50% net profit. People may be more attracted to this structure. You pay out more, but you can scale out to as many deals as you can find.
Shiloh - I will be interested to hear your experiences with this. From these responses, I suspect that it will be difficult to find driven partners who have both the foresight and the cash to bite on this.
