Weekly insights

  • Over the last month, you may have heard crowdfunding mentioned in the news, and certainly not in the best light. Two popular investment platforms, CrowdStreet and PeerStreet made headlines for separate reasons, illustrating why fund investors need to strongly understand how their funds are being invested. So what’s the takeaway here? Analyzing upside reward and downside risk by underwriting both the deal itself and the operator is critical in protecting your investments.
  • The most common problem I saw last week was missed opportunities. When there is a project that fits your buy box, be prepared to make an offer quickly, and answer the seller at a moment’s notice before the seller moves on to another offer.
  • One thought from a conversation last week: What does it take to go from doing 1 or 2 flips a year to 5, 6, or 7? Is it time? Cash/liquidity? Leaving a 9-to-5? Reliable and available crews? We settled on time and crews. Doing 1 or 2 deals while having a 9-to-5 can be life-changing. Personal clients in my portfolio have demonstrated success while still working their 9-to-5 when the right systems, prospecting strategy, discipline, and team are in place.

Property Breakdown

Single family detached home in Prince George County

PURCHASE:  $290,000

RENO:  $100,000

ARV:  $480,000

DEAL DETAILS:  This client makes it their daily KPI to send out 5 offers a day to raise their chances of getting into the right deal at their desired purchase price. They have secured this property by being quick on the offer trigger for an on-market property and using an agent who knows how to push the envelope to get a decision. They will fully renovate this bungalow to have both above and below-livable grade sqft. This experienced client often has material already in storage which allows them to speed through projects with their crews. The 5 bed, 2 bath property will become a 5 bed, 3.5 bath within the next 6 months. With a focus on volume, this client’s strategy aims to hit multiple ‘singles’ to keep crews in place, rather than meticulously looking for ‘home runs’ on every deal. 

Closing thoughts

Everyone wants to be flashy and make hundreds of thousands of dollars per deal. How many of those deals are truly in our market? What is the ROI on the cash required for those deals? The risk involved in those types of transactions is generally very high, not to mention the time commitment required to get those types of deals to the finish line – often requiring 2+ years to see the project through. If success means to you, “I need to make $100K whenever I flip a house”, I might challenge you to consider what the ROI profit looks like instead. If someone came to you and said you’d make 50-60% ROI on your cash within 6 months, would you take it? Most people would jump at that opportunity, especially in this market. This is what we’re seeing some of the most successful investors doing. They’re finding projects that can make 50% ROI on the cash that’s been put into the deal with opportunities that will take them under 6 months. Doing this multiple times a year gets them to their desired total dollar profit, lowers their risk per deal (as they are generally simpler rehab projects), and keeps their crews busy and working with them and not another investor. If you were to be looking at the ROI of your cash instead of what the dollar amount profit is on a per-deal basis, would you be getting into more deals? Is your version of a buy box limiting your ability to purchase more deals?

I put these newsletters together to share the useful insights that I and my team uncover from all the deals we underwrite and the data we pour through daily. I figured, why not share it?

I would also love to have more conversations about the unique perspectives and insights that you may have. So check my schedule below, and let’s chat about our industry, our market, or whatever else comes to mind.

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Conor Reilly

Sales Manager, WCP