Handy Joe with a full time job and a family of five just said he made 30k profit on his first deal using no money that took less than a month.
Then there is Nellie Homemaker that now “controls” over 80 properties in 1 short year.
It probably sounds too good to be true right?
Well, it must be true. You saw it on your Facebook feed last night and if it was on Facebook it has to be true. What they didn’t tell you is that 30k profit was probably chopped up between 30 people.
But a profit is a profit right?
And what does “controlling” a property mean anyway? Do these people own them? Are they a partner in the portfolio? Maybe they’re an administrator in the portfolio and control means paying the bills? You either own them or you don’t, right? You’re either pregnant or your not.
People often get sold and seduced by the success stories of others with no questions asked.
If a wholesaler pitched you a fix and flip property with the upside of profiting 60k when it was done, would you take his or her word on it?
You would do your due diligence and do some digging to make sure those numbers line up.
If you’re thinking about hiring a coach or mentor promising these type of results, or you’re considering partnering with someone that brags about all the huge profits they’re making on their fix and flips, do your homework first.
How can you find out the truth?
Ask to see their HUDs and P&L’s for their most recent deals. Those are the true results.
I just recently had a good friend of mine finish an inner city Phoenix fix and flip in which he profited 50K on the deal. Not too shabby right? That’s a lot of money on one property. Well, he partnered up on it and had to split the money five ways. His take was 10k, still not too shabby. However, it took him 5 months from start to finish to realize that profit.
What if his goal was to make 100k a year from flipping? An outsider looking in will say WHOA! He makes 100K a year doing two flips a year! The digging will uncover it’s more like 10 a year in that scenario. Assuming they are all profitable (which I can tell you from experience that mostly none of them go as planned).
Now I am not saying making 10k per flip is bad business, it’s just something to account for when setting goals. If you want to make 100k a year flipping homes then make sure you back into your goal.
- How many deals a year would that take?
- How much capital will you require to make that happen?
- What’s the most you can do at the same time?
- Do you have the resources to do multiple deals at the same time?
There’s definitely more that goes into cashing that big check.