Jason here…
Here's another question in our Asset Manager Millions LIVE Q & A series…
"Can you talk about the strategy you mentioned where we can wholesale BULK deals PLUS as part of that deal, we can end up keeping a property or two FREE & CLEAR?"
Because my WHOLESALE + KEEP strategy is one of the most POWERFUL strategies there is for adding properties to your (rental) portfolio from BULK deals without needing funding, racking up debt, or paying interest…
...it requires a little more detailed explanation, so bare with me for a minute, ok? (And no it's NOT doing JV's, partnering or anything similar)
When we find the right portfolio of properties (from an Asset Manager), we use an advanced strategy called "Wholesaling + Keep Properties".
It's a powerful strategy that can ONLY be done when doing BULK deals.
You've gotta have the right kind of properties where you can make the numbers work (that's where I'd roll up my sleeves and help you).
Here's a 30,000 ft view of how the "Wholesaling + Keep Properties" strategy could work.
(NOTE: Please understand this example is to show you what's possible -- this is a fictitious example, please don't reply correcting my numbers:-)
So "hypothetically"…
We connect with an Asset Manager who happens to have a BULK package of 50 properties.
After talking with the Asset Manager, doing some due diligence & running some numbers, here's what our strategy looks like…
Asset Manager (Seller) Wants $750,000 For 50 Property Package
• Fair Market Value (FMV) Of Package Is $1,000,000
• After Repair Value (ARV) Of Package Is $1,100,000
(We decide we'd like to KEEP 3 properties from this package and we'll sell it as a 47 property package).
Now...
The Fair Market Value (FMV) Of Package With 47 Properties Is $950,000
• Seller Agrees To Accept Discounted Price Of $630,000 For ALL 50 Properties
• That's A Discount Of 37% Off FMV And A 43% Off ARV
We Agree To Terms With Cash (End) Buyer For $665,000 (47 Properties)
• The Buyer's ARV For the 47 Properties Is At 65%
We Do Our Due Diligence
• We Close On All 50 Properties (A-B) For $630,000
• We Close On 47 Properties (B-C) For $665,000
After Paying $25,000 In Closing Costs = $10,000 In Net Profit
• We get 3 Free & Clear Assets Valued At $35,000 (Each) = Net Value Of $105,000
• Once Properties Are Rented We Can Collect $650 Per Month x 3 = $1,950 x 12 Months = $23,400 (Minus 10% For Property Manager) = $21,060 Per Year
So in this hypothetical BULK deal, I made $10,000.But the focus of the "Wholesaling + Keep Properties" strategy is NOT to make a profit, but rather to stick a rental property or 3 in our portfolios, right?
It's a self-milking cow strategy.
Which just simply means sales from the cows' own milk, pay for the cow.
It's a smart OPM (other people's money) strategy savvy investors can use to build your own rental portfolio for free.
This is OPM on steroids!
And as AMAZING as the "Wholesaling + Keep Properties" strategy is, it's NOT going to happen with every list you get from an Asset Manager.
But when it does work, what if you can pick up a 1-2 properties a year this way?
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