All Forum Posts by: Wane Tango

@John Horner  Sorry I did not explain myself well enough let me expand. 

I was relating the .75-1% to deals. 

I would like to think that I would be converting 10% or better from prospects to leads then 1 in 10 (or better) turns to a deal and that lead me to speculate .75-1% success rate. 

Success rate to me is converting prospect to singed contract. 

I am trying set marketing goals that make sense to my budget. I don't want to spend 90% of my budget on marketing when a speculated return on investment is nearing break even. 

Generally I like to be very conservative with my numbers and wanted to make sure that I was in the ball park with these figures as a rookie wholeseller. 

Admittedly I only have a 500 dollar budget to get me rolling. I already have 1000 biz cards and my prospect list from listsource is roughly $300. That just leaves me with $200 to do mailers (which I plan on hand writing because I have more time than money). Then mailing them out in batches of 500 per week to help spread cost over time, and to make sure I don't get swamped with more calls than I can handle. My plan is that each prospect will get a min of 6 touches over 6 months before I scrub them from list (or they call back,sell, ect). 

With this in mind I am trying to forcast my cost per prospect vs forcast of deals to help set my benchmarks and know how large my budget needs to be to make an educated guess on return on investment per dollar spent.  

Hope that makes sense. 

I am big on tracking numbers and I know these numbers will change on scale and as I gain personal experiences, I'm just trying to get an idea of what the cost of success is from a Marketing stand point. 

Ok so I am a new wholeseller and I have been studying and talking to other real estate professionals for the last 6 months and I am ready to purchase my first list. I do not know any local wholesellers yet. I am still trying to find one or two in middle TN that I can occasionally get some advice from (so I know the things I am being told will work in my state). Until then here is my question for anyone who can answer. 

My prospect list from listsource is around 1800 for a small area around where I live. Now I don't want to start counting chickens before they hatch but would it be reasonable to expect (considering that I am new) that I could predict a .75-1% success rate? 

Does this seam like a reasonable number or should I be more conservative in my guess work?

I am trying to prepare a 6 month projection and budget. I have an extremely tight budget and sold some items to get a starting point for marketing. I am just trying to figure out what my performance benchmarks will be. 

Thanks everyone!

15k on a fix and flip with an ARV of 140K seems like a pretty narrow margin. You could easily lose that amount when you open up a wall or if you find a roof, electric, plumbing, sewage, or foundation issue after purchase.

It sounds like you are getting these numbers from your agent (which is perfectly fine) but make sure that you verify those numbers and make sure you are not looking at in a best case situation. 

If the home is unoccupied and on the MLS you can put an offer in pending inspection. If this really is a good deal it will not stay on the MLS more than a week, and usually just a few days. Get a inspector in there and have 3 bids from 3 different contractors even if you plan on doing some or all of the work yourself. These people will show you what your actual cost will be plus show you what you may have missed. The inspector will cost around 500 bucks but he will be worth his weight in gold if he finds something expensive that needs work.

Im still new but if Im off base, please someone correct me. 

So I am ready to start making deals. I have talked with several professionals on here and I have mustered the confidence to start talking to prospects and potential buyers. I have a good idea on how the process will flow, I can see all of the moving parts to structure most of the deals that I am tracking, but I have one seriously important tool missing from my tool belt. The actual contract I would get a potential seller to sign when I do strike a deal. 

I talked to all of the local lawyers offices in town and non of them deal in real estate so I kind have been left out in the cold since then. Does any of my fellow Tennessee wholesellers have some insight on where or how I can get a usable contract?

A friend from a local real estate agency let me borrow one of the contracts that their company uses but in no way could I use this contract. It just lets me get an idea of the verbiage.  

Should I seek out a real estate lawyer in TN to write one from scratch or is it reasonable to think that another whole seller would let me use their contracts. I dont want to reinvent the wheel here but I also dont want to step on anyone's toes and make a faux pas among my peers here.  

Any input would be greatly appreciated!

@Mike Parks When you get a copy of the appraisal then you will get a clearer picture of why it was priced that way. Also you can contest an appraisal if you feel like it is off by more than 10K. Then again their may be something more going on in that property than you are aware of. Make sure to follow up with this as soon and as detailed as you. Especially make sure that you get a trusted inspector in there before you go into closing and walk the property with him. If there is any concerns make sure to get 3 bids from contractors for repairs. The truth will come out somewhere along the lines, you just don't want it to be a surprise after you take control of the property. BTW if this is a buy and hold property for you, and it appraised that low. It would be worth while to have it tax appraised again. That could make a couple hundred dollar difference at the end of the year if they follow suit with the appraiser. 

Good luck with this and make sure to keep me posted about this, I am curious to know what is going on at this property. 

Wow there is a lot of great info in this thread!

@Seth Mosley I have zero information of any value on this subject, but I am in middle Tn and always looking for other REI to connect with. Admittedly I am still very new to this but I hustle. Anyways let me know if you would like to meet up to chat about TN properties and investing in general. Always good to make a new friend.

@Mike Parks Now this is not a subject that I am strong in (or really anything) but I would be happy to pay forward what I have picked up from others. 

From the outside looking in ARV and comps for buy and hold will be the exact same as doing it for a wholesale or flip as long as it is a 4 plex or less. Banks will lend on 4plexs or less as if they are a single family home so just look for comps with similar SF and bed/baths that should get you in the ball park. So everything that @Bryan L. mentioned above should apply to you ask well. Anything over a 4plex is looked at strictly on annual income. If you want to see if a rental makes sense you need to look and see if it cash flows more than anything. The rental calc on here is really good at making you look at most (if not all) the things you need to know about a single property to see if it is a deal you would be comfortable with or not. One thing that Brandon Turner keeps mentioning in the podcasts is that you should plan up front for outside property management even if that is not part of your plan. It gives you a pad later if you decide to step out of the day to day management or if you scale to the point to where you can no longer manage yourself. Im not an expert and I have no real world experience in this I am just repeating what others that are way smarter than I am have told me. If I have said something that is wrong, please anyone that knows better correct me. 

@Bryan L. Now that make perfect sense. 

@Mike Parks Please feel free to add or bring in other variable to this. The more attention this thread gets the more valuable knowledge that its going to bring. 

@Bryan L. Coming in and dropping some knowledge. Yes I would love to have lunch/dinner with you again. I am a lot further along in my education than when we last talked and I am very close to having the tools in my belt that I need to start landing deals. Side note, I have been warned do be mindful but leery of county tax appraisals due to them being outdated or just low in general. What I was told is that most of the time tax appraisals unless recently audited (or updated) generally stay behind the curve due to people making improvements/additions but not reporting to keep the annual tax lower and that the general county tax increases are behind inflation making this harder to trust as a true market value. Now this is not information that I know personally to be true, especially in our market. Could you weigh in on this and maybe give some perspective. 

I will shoot you an email to set up a day and time that we could meet, I have a lot of questions about our market that I am positive that you already know well and could save me several weeks of research. Thanks again Bryan!

@Mark Brogan I was part of the webinar and I did hear him talk about using those websites to find comps. I have known about them, the down fall is those websites are weak and no up to date in my market. Redfin does not service my area at all, and zillow still shows the previous owner and a stack of other bad info on the home that I currently live in. (I have been hear for over 2 years). I am aware that the best place to get comps is from a real estate agent, my problem with using that is, I plan on initially just doing wholesale and in the end I would not use them as an agent. I would feel terrible for wasting someones time like that. Mostly I am concerned with understanding ARV vs actual value. Thanks for your response.

@Robert Leonard I do use a phone mounted holder on my dash as well. I am a property inspector so I spend a tremendous amount of time driving and looking at properties all ready. I will try that app and see if it helps me to start to get a better picture of value vs location. I am a very analytical person and I am compelled to research all the information that I can get my hands on when I don't understand something. Comps, as is value, and ARV and their relations has been alluding me since I have started researching REI. I know that these are three numbers that I will need to make a confident and competent offer. I am doing this to better myself and my family. I have very little in the way of capital and honestly I could not afford to get into any situation that would leave me in a less than break even deal for the first two or three deals. We are very much in a paycheck to paycheck living situation and this seems like the best way to do so. I am willing to take a risk (obliviously) I am just looking to mitigate that risk as much as possible. Thanks for taking the time to give me some new insight on this. Your reply was helpful.