Posted by Brent_IL on July 29, 2003 at 13:49:59:
What I don’t understand is the need to differentiate. Wouldn’t you want to acquire property at the lowest reasonable acquisition price regardless? How much does the exit strategy have to do with negotiations to lower your costs?
I understand the part that flips are usually purchased at very low prices. Posted formulas start at 70% of as-is value before repair and profit allocations. But that is meant to apply to rehab/refurbishment flips. If I can buy on terms for a present value of 75% of FMV and sell in escrow for 92% of FMV, isn’t that a flip?
Despite our experience and money, we put effort into locating and talking to owners of entry-level home who have some kind of time pressure that is compelling them to sell. Once we find them, why throw them away because they don?t fit into a certain category?
Wholesale flips, L/O?s, owner participation, collapsing mortgage notes, and subject-to are all tools. We?re the carpenters. The property owners want to sell; we want to buy. As real estate practitioners, we are supposed to be the experts. If they don?t sell us their house, it isn?t their fault. We didn?t give them what they needed. If they sell it to someone else, we didn?t do our job. Not all deals are salvageable, but as experts, our obligation is to find a way to get the deal done. It?s a lot easier to learn purchase techniques that have broad applications for lowering acquisition cost than it is to find the few people that will give you a L/O on their house, or the one guy who will sell you his burn-out for nine cents on the dollar.
Only an opinion.