The Science of Flipping - Bulk Package Deals - Are They Worth It?

Episode Date: November 8, 2022

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Yo, yo, welcome back to the Science of Flipping podcast. I am your host, Justin Colby, and today's episode is going to be about bulk packages. I'm seeing them everywhere as a buyer, and I'm sure you are coming across them. Let's talk about them and why they could be a great deal, but maybe not so great after all. All right, as always, our number one and main sponsor, MinutePages.com, are your websites you need as a real estate investor. If you are a real estate investor or an aspiring real estate investor for just $97, you can get the most professional, best-looking real estate investor websites there is. Automatic

SEOing to help you gravitate to the top of Google. It is a no-brainer so you can build credibility, influence, and authority when talking to realtors, homeowners, contractors, title companies, hard money lenders. Go to MinutePages.com and get your website right now. All right. So let's jump into this idea about bulk purchases. I myself am looking to buy as many rentals as possible. And so either my students are presenting them to me or realtors are presenting to me, or I'm just coming across them

through my ordinary marketing. Now, while the concept seems great as I can go out and buy 20 homes at one time, and in fact, I've been structuring some creative finance negotiations on two of these packages. Neither two have yet finalized. But the reality here is this, at least what I am finding. A lot of these bulk packages are coming because the owners of said properties realized they missed the top of the market. Now they're ready to liquidate. They're

not actually ready. They're not actually motivated. What they're doing is they have FOMO. Yes, fear of missing out. So now they're scrambling because they know they're about to go through a cycle where interest rates are higher. It's not as easy to find a buyer and they're trying their best to sell at top dollar now if you heard what I just said they're trying their best to sell at top dollar that doesn't make any sense for us real estate investors because you can just go on to the MLS and buy any property for top dollar so when bulk packages come around you would think of the brand like Costco. You buy in bulk because you receive a discount. That's the concept here. But

homeowners and their investors, let's call it what they are, these investors that own 15, 20, 50 doors that they're trying to sell at one time in liquidate, they're not realizing the concept. If you've heard me on other videos and other episodes, and by the way, let me pause now. If you are not watching this on my YouTube page, you need to go over there, youtube.com forward slash Justin Colby and subscribe. And by the way, if you're listening to this on iTunes or Spotify, make sure you're giving me a five-star review. Now, again, these investors are selling for top dollar. The challenge we have seen is even in the single family home, one homeowner and these investors trying to sell at bulk is they have not yet caught on to the market shift. Now, could these investors sell one by one on the MLS market?

Maybe. Now, that's always at least the handful of bulk packages I'm trying to acquire and or have come across my desk. That's at least my experience is these investors, they're not ready to take a discount. In fact, I had one just a little while ago, just before this last interest rate hike. And quite honestly, it was a great deal. I was even trying to get it done with seller financing because the existing loan was at 5% interest on all 12 of these properties. The challenge being is the homeowner wanted top dollar, would not take a discount.

And if anything, wanted money, if he was going to do seller financing, which in theory is fine, I have no problem buying a rental in a creative way and paying top dollar for it. But when it doesn't make any money and you can see for the next several years, because the rent is actually underperforming at my buy price, not at his buy price. At my buy price, I potentially, and that deal was going to come out a couple hundred dollars every single month, very close to about a thousand dollars a month. So then I just started doing some very simple math and even on creative financing because of my buy price, I couldn't make the math work. So what that investor, I actually just followed up with that investor because that's the secret

of success is the follow-up nurture game. That investor actually just informed me they've been liquidating one by one at their top dollar on the MLS as the tenants leases go up. Well, awesome. That is great. I told him I'm happy for you. That is fine. I'm not upset at all.

Just also understand if you're going to try to liquidate in bulk, I need some love. I'm happy to buy them all. The transaction will be smooth. It'll be fast or a buyer usually would, but we need a little bit of love. Again, think Costco when thinking like this. So if you are out there coming across investors that have bulk packages, bulk packages are being sent to you. You have to do your due diligence if you're going to be buying it. You, if you're going to present them to me, you need to give me more than just here's a package of 20 deals for $3 million, whatever. I need more than that if you're going to try to present them to me. And quite honestly, I'm only buying those type of deals or going through my students to buy those deals. So if you're not a student, no harm, no foul, but I

probably won't be your bulk package guy. If you're interested in being one of my students, just let me know somewhere on social media. The Justin Colby is my Instagram handle. You can comment in the comments below and YouTube. I can't do a whole lot on iTunes, but that's okay. You can find me anywhere. The Justin Colby is a great place. So with all that said, guys, we are in this time of the market. Homeowners and investors alike are still trying to get top dollar. They're not always the most reasonable when it comes to pricing their homes. And I can understand it and I respect it. But at some point they will have to be because interest rates, I believe,

will even rise again. So hopefully you found this valuable. Hopefully it gives you a little insight of what I'm experiencing in my buy and hold model, what's going on in the market, what's going on with investors. And let me know how else I can help. Again, my Instagram handles the Justin Colby. Go over there. Let me know. Happy to chat with you. Talk to you soon. Peace. you