How to Make Competitive Offers Without Paying Too Much

With home prices soaring and competition through the roof, it's important as an investor to know how to be competitive without compromising your returns. In this episode, we discuss different strategies to consider to make sure you're not left high and dry from an emotionally driven deal. --- Transcript Emil: Hey everyone, welcome back for another episode of the remote real estate investor. My name is Emil Shour and my co host today are,   Tom: Tom Schneider   Michael: and Michael album. And today's episode, we're gonna be tackling something that's a little relevant to the time. So as everyone knows, very hot real estate market, not a lot of supply a lot of demand. So we're gonna tackle the question, how do you make competitive offer in today's environment without overpaying? So let's hop into this episode.   Alright, guys, this is a very timely topic. As I mentioned earlier, very hot market out there not a lot of supply. A lot of demand a lot of owner occupant demand, right people very interested in home. So if you're an investor looking to buy a single family home, probably pretty tough out there right now. So Michael, I wanted to kick this one off to you first, just because I'm sure in in Roofstock Academy you get this question a lot from new investors, seasoned investors. So I'm curious what your you're telling people what the message your your relay is?   Michael: Yeah, absolutely. Is I First off, I just have to say I love the wording you use. It sounds very coach, like at a sports event? So my answer is like, you got to have high and low and you go out there. It's tough out there. But you got it. Yeah, score barkos. So I think it's really apt. It's really apt question and definitely really timely. So what I always tell people is, look, the numbers need to drive the decision making above anything else. So if you can afford to pay 5000 over ask 10,000 over ask or ask or 10,000 under ask. I mean, that's just the numbers. That's the math.   So you need to do your analysis really thoroughly and be very confident in your numbers both on the income and the expense side, which is then going to dictate Okay, what kind of returns should you be anticipating based on these different purchase prices. And so we've actually got a really great tool in the academy, the property analysis tool, and you can do a goal seek in Excel, which will basically tell you, Hey, this is the maximum offer price you can have, or that you can offer in order to hit your goals, whether that be cash flow, or cash on cash or cap rate. And so like Pinocchio says, always let your conscious be your guide.   Tom: But that's not a good mentor He’s got a, you know, a checkered history. So think of someone else Michael   Michael: Depending on his nose length is gonna determine how how good of a mentor he should be, always let your numbers be your guide. And the other thing too is if you're buying with a loan, there's going to be an appraisal done. And so the lender is also kind of going to be your backstop in that sense. And they're going to look to other properties and say, Well, this isn't worth that much. So we're not going to lend on this much. So you've got a little bit of leverage. But the thing to keep in mind is that a lot of people are overpaying for properties they're paying over ask they're paying above and beyond what the appraisal comes in at. So it is just very competitive. So I'd say first and foremost, let your numbers be your decision making beat up pointed out spear. Tom, what are your thoughts there?   Tom: I think that's great. You know, it's funny, we have the outline of this episode. And sometimes I'll I'll sort of quickly run the episode and how I expected to go out like our talking points, just kind of knowing each other and I think you stole mine in this episode.   Michael: You were going to use my reference to Pinocchio?   Tom: Well, no, I didn't know we're just talking about this is the magic bullet for like making competitive