Question:
Tony, what is the highest percentage of ARV that you will offer for an REO? Or, do you strictly look at your cash flow?
-Student
Answer:
I look at my cash flow. Each case is different. I’ve paid probably as high as 70%, but it depends on what I’m going to do with the house. If I know it’s a house that I don’t want to keep as a rental, but I’m not going to have to fix anything, I can just turn around and flip it and make $10,000 after all is said and done, why would I say no to that? People sometimes think “oh I don’t want to waste my time with that.” GET OUT OF HERE! Listen, if I can do $10,000 on a house and do $50,000 a month, I’ll take 3 of those a month. The rest of you guys can keep the rest of them. So, yeah, I’ve done as high as 70%. But again, everything is in line, if you look at the way I calculate numbers on my stuff, I’ll pay a little more if there’s less repair. I’ll pay less if there’s more repair. If there’s no carrying cost, if I have no hard money loan on it, I adjust the numbers so that it makes sense, because that’s what makes the difference between someone who will walk around complaining that he can’t find a deal or someone like myself or Mike Cantu or any of the successful people that you’ve had an opportunity to meet that understand that it’s not about finding a deal. Once in a while, we find deals and they land right in front of us and we trip over them like a rock. But most of the time you’re making deals, ok? It’s creating deals. You’re looking at something and asking yourself, “How can I tweak the numbers or something on the property?” It’s about being creative in the way that you see real estate. If I only had a dime for every time I heard someone who would walk a house with me and go, “my god why would you even touch that? Why would you buy that thing? Are you crazy?!” I was so happy to hear that because I knew this is why I’m making the money I’m making because most people cannot see that and they get stressed out.
-TA