When it comes to wrap deals, your success hinges on the numbers.
Here’s a breakdown of why buying well is the foundation of a good deal: 👇👇
1️⃣ Create Room to Negotiate
• Always purchase the property low enough to leave room for adjustments.
• Example: If a buyer (Bob) can only bring $40K to the table, but you paid Alex $60K, you’re out $20K.
• Why It’s OK (Sometimes): Even with a shortfall, if the cash flow is strong enough, the deal might still work.
2️⃣ Plan for Flexibility
• Life happens, and buyers’ situations can change.
• If Bob can pay $4K/month but only $500 in extra payments, your margin will determine if you can make it work.
• Pro Tip: Don’t overpay. Keep your acquisition price below 10% of the purchase price when possible to maintain flexibility.
3️⃣ Know Your Limits
• If you buy too high and can’t adjust for buyer constraints, you may face losses.
• Golden Rule: Leave enough margin to handle compromises without compromising the deal.
4️⃣ Execution is Everything
• The most important factor is ensuring you’ve structured the deal to be workable under various scenarios.
💬 What’s your best tip for ensuring profitability in creative financing deals? Share your insights in the comments! 👇
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