Have you ever head this saying…..”As a real estate investor and entrepreneur you make money when you buy and REALIZE the profits when you sell or rent it out?” Yes you’ve heard it? Or no you haven’t?
Whether you have heard it before or not, there’s no more true statement in all of real estate than this. If you by properties right then you can’t miss. The purchase price dictates whether you will get approved for funding and whether a private lender will fund your real estate investment purchase. The purchase price dictates whether Strategic Freedom Funding will fund your deals.
The purchase price is everything.
“How can a real estate investor make sure they purchase real estate investment properties at the right price?” “How can a $40k Flips member or a Freedom Funding member be assured that their deal will qualify for funding?” Many real estate investors and members of Strategic Real Estate Coach ask us this exact question in our customer service department and chat box.
One question I often get from my students is, “How do I know what to offer on a real estate investment property?” Or they ask “How do I qualify for funding?”
I have a simple solution for you. Use the Strategic Real Estate Coach Automated Offer Formula. When making offers on properties, it’s the same equation every time. I use my Automated Offer Formula to find the max purchase price I can pay on a property and then simply try to acquire it at a price below that price.
This formula is what I use EVERY SINGLE TIME on every, single property I bid on. The math always works out. It’s simple. If I can get the property using the formula below, I buy it and so should you. If the seller wants a higher price than this formula allows, then I would pass on it and move onto another property and so should you.
This video interview explains “Asset Based lending” and how my funding companies will fund your deals using the Automated Offer Formula.
When you use the automated offer formula you can partner with us using an equity partnership. This quick 60 second video explains what an equity partnership is using the Automated Offer Formula.
The Automated Offer Formula works like this:
- Take the Realistic Salable After Repaired Value of the subject property. (Real estate investors can get this value from a real estate agent who can run a Current Market Analysis or a “CMA”. A CMA is a report made up of 3 sold properties that have sold and transferred in the past 3 months, 3 pending comps that are currently under contract and awaiting transfer and 3 active properties that are on the market.)
- Multiply The Realistic Salable After Repaired Value of the subject property times 65%
- Subtract the repairs needed. (if you need a repair estimator check our hammerpoint.com)
- The final remaining number will give you your MAXIMUM offer price
Here’s a real life case study example, we recently bought and flipped 2227 7th St.:
We started with Step 1: The After Repaired Value.
We determined we could sell it for about $140,000.
We then moved onto Step 2: Multiplied times 65%.
Grab a calculator and do the math. $145,000 x’s 65%. That’s $94,250.
Then move to Step 3: Subtract the repairs (use www.hammerpoint.com, which is part of the Realeflow Software to determine repairs). We determined that 7th street needed $30,000 in rehab and repositioning. So finally, subtract $94,250 minus $30,000 and that leaves $64,250 as our max offer price. We bought the property for just $62,000. PERFECT! It meets the Automated Offer Formula.
It also leaves us $49,000 in gross profits to work with (the difference between $145,000 (sell price) and $92,000 (all in investment) which is a nice profit spread and ensures we will make a profit even if something goes wrong.
As most of you know, I’m in the Greater Cleveland area and we had a ROUGH winter. It was subzero degrees almost the whole month of February.
Once the weather cleared up, we were able to really hunker down and get some houses turned around very quickly and on the market.
Do you remember the case study I mentioned last week, 2227 7th St? It was the home we sold in just FOUR days for OVER the asking price. This is the perfect example of using the Automated Offer Formula.
Watch the video below for an overview of 2227 7th St. and the Automated Offer Formula broken down to see exactly how it worked for us.
Like I mentioned above, the market I’m consistently buying in is the Greater Cleveland area, but if you live in a hotter market like somewhere in California, Vegas or Seattle, I can show you how to adjust the formula to fit your needs. Simply multiply times 70% instead of 65%. In those hotter markets prices are also much higher so there’s a larger profit spread. So instead of 65% multiply times 70%
Follow this link to my 40K Flips blog and watch the Automated Offer Video Training I did.
Have you used my Automated Offer Formula? If not, start today. Go make an offer on a house using this formula. If so, how has it worked out for you? Leave your own case studies in the comments below.
We’ve seen many, many of our subscribers and members use the Automated Offer Formula and have great success with it and close very profitable real estate deals.
The case study from Mark Pepe showcases how he used the Automated Offer Formula, bought a house in the Seattle market and flipped it quickly. He’s just one of our thousands of successful members.
P.S. Not a Strategic Real Estate Coach Member, yet? Searching for more tips and strategies to super charge your real estate investing? Go below and subscribe to our newsletter and download our 2 free ebooks. “How to Find Your Real Estate Investments” and “How to Fund Your Real Estate Investments”