• Home
  • |
  • 786 » Z-Code Question #1 — How Much Profit Can I Really Make On A Deal?

I worked with a few friends to develop a simple marketing course called the Z-Code. The Z-Code teaches students how to find leads on Zillow, and Zillow leads are free leads, right? Some students have already taken the course and are very enthusiastic about what they learned.

Z-Code questions… what are they? They’re questions that have been asked by students who’ve taken the course. You’ll hear some of the questions over the next few podcast episodes.

This episode deals with the 1 st question: How much profit can I expect to make on a real estate deal? It’s a multifaceted question. What can I make on a wholesale deal? Can I really make money just using Zillow? If Zillow is buying houses itself in my market, is that good or bad for me?

Answering this question is a little hard because it depends so much on how much effort the investor puts in. But let me try.

For wholesaling, my go-to answer is that every deal should bring in at least $10,000. Not everyone agrees with me. Most feel that $5,000 is more realistic, but don’t listen to them.

Your offer determines your profit. If you’re doing it right, you’re in control. Just don’t chase deals with lower profits, and you won’t make lower profits.

Spend your time and structure your offers to make $10,000. Stick to that plan and you’ll make more money with fewer deals.

On a wholesale lease option deal, you need to set a minimum profit target, let’s say $5,000 for an assignment. Again, you have to walk away from some deals.

With Zillow, you’ll have so many leads you can afford to pick your seller instead of the seller picking you. On a sandwich lease option, you need to decide how much equity and how much rent you need to get.

When talking to sellers, you set the terms and the terms determine the profit. If you allow the seller to set the terms, you’ve already lost.

This is not terribly different from my standard advice regarding tactics. What’s different is the ease of getting leads you can market to. You need to talk to 5 sellers a day and make at least 3 offers a day.

Set this up as a routine instead of wondering what to do every day. You can control how much marketing you do. You can control how many sellers you talk to every day. Be consistent and follow up.

To find out more about the course, go to zcodejoe.com.

Listen and learn:

What’s inside:

  • Hear about Joe’s new course that teaches students how to find leads on Zillow.
  • The episode deals with the first question that students ask when they take Z-Code Joe training.
  • The first question is primarily about what profits can be made using Zillow for leads.
  • The next few podcast episodes will deal with additional questions students have had.  

Mentioned in this episode:

Transcription:

Download episode transcript in PDF format here…

Joe: What is up everybody. Welcome to the Real Estate Investing Mastery podcast. I’m Joe McCall and actually, this is kind of a mixture of REI In Your Car and regular podcast.

Because I’m going to do something a little different here. Recently I recorded a bunch of really good videos with a good friend of mine, JP Moses and super cool guy. If you don’t know JP, he kind of runs the show—don’t tell him I said that—at a company called Awesome REI. Awesome REI is a really good company that creates a lot of really good products and I’m friends with the owner, Patrick Riddle, and JP Moses is a friend of mine for a long, long time and work together in this business.

So anyway, we created a product together called The Z Code and it’s about how to find leads on Zillow and it’s really, really good. We dive deeper than just Zillow, but it’s a really simple marketing course on how to get motivated seller leads for free on Zillow, mostly for free.

Joe: There are a few things in there that we taught that cost a little bit of money, but it was a really good course and the feedback’s been amazing. And I’m excited and proud of this course. It’s called The Z Code and if you’re interested in getting this course, go to this link, right: zcodejoe.com. Zcodejoe.com and we’ll teach in that course how to get a lot of deals.

So anyway, we just did a video where a couple of, well about six or seven videos where we answered a bunch of questions and one of the first questions that I answered from JP, and these were questions that a lot of our clients are giving us who are going through the course, so we just kind of wanted to help people. But the first was, how much can I really make on my first dealer?

 

Joe: Also asked another way, was like, how much can I really make doing lease options? Or how much can I really make doing wholesaling? Or how much can I really make with leads from Zillow? So, it’s kind of a multifaceted question, a lot of different answers and you know, kind of just depends on what you’re doing. But we dive deep into that and I think you’re going to get a lot out of this podcast and you might be watching it on video or listening to it on audio. So, I’d encourage you to check it out.

Joe: And also, again, if you are interested in getting The Z Code, go to this link right now, zcodejoe.com. Zcodejoe.com. I did a little sales video there talking about what’s in the course. What is this thing that everybody’s talking about with Zillow? You know, like right now they’re getting into buying houses, they’re buying properties, making offers in certain markets. What does that mean to you and us as investors, is that good or bad? I argue that its kind of, well I’m not going to tell you, I’m not going to tell you what I said in the video because you just need to go there. Go to zcodejoe.com and get the course. All right guys, we’ll see you. Enjoy this podcast.

JP: So how much money can you make really with Joe McCall’s Z Code strategies in real estate investing? Let’s talk about that.

JP: Wanda Q says, using your Z Code strategies, how much profit can I really expect to make? I’m not Joe McCall. I only have a few months of learning about wholesaling houses under my belt. What kind of realistic expectations can I have if I work this system as you’ve laid it out here?

Joe: It’s a good question. It’s hard to answer though. Here’s an answer that’s going to, you probably don’t want to hear, but it just depends. Like if you’re going to be doing a wholesaling, okay, what I tell people is you should be shooting for $10,000 profit minimum on every deal, right? So I don’t try, and this is something that a lot of people, when they go to local real estate clubs and stuff and they start talking, they’re excited about wholesaling, you know, and then they go to the local club and they meet other wholesalers and they say, yeah, you’re gonna make an average like $3,000 per deal.

Joe: It’s really hard. It’s like impossible to make over $5,000 per deal in this market. And everybody thinks their market is unique and special and different than everybody else’s. But I’ve seen this over and over and over and over again, in my own market with my own business and with my students’ businesses. They hear this from people and the ones that don’t, for the ones that refuse to believe it and go out there and actually start expecting www.RealEstateInvestingMastery.com $10,000 profit deals, start seeing seven thousand, eight thousand, twelve thousand, fifteen thousand dollars profit deals….

JP: Yeah, it’s really so much about what you believe is possible. It really is, and I know that sounds woo woo, that sounds, I don’t know what you’re Tony Robbins or Bernay Brown or something like that, which I respect those people. I’m not downplaying them, but I know that sounds like you just got to believe in the bigger numbers and they happen kind of law of attraction kind of thing. Is that what you’re saying?

Joe: No, no. It’s much simpler than that. It’s like you start expecting $10,000 profits, you start making offers where you get $10,000 profits. Yeah. I mean like if a seller is going to take, let’s say the house is worth a $100k you’re going to go in and offer $60k. Okay. And if you offer $60k you’re going to make a $5k profit. If you offer $55k you’re going to get a $10k profit, right? If the seller is motivated, the chances are pretty high if they’re going to take your $60,000 offer, their probably also going to take your $55,000 offer. Alright?

Joe: So, you need to come in expecting, you need to have like a minimum price that you’re willing to go and your minimum should be $10,000 and you come into the deal with that, you’re going to get it. Most of the time it’s not some mental magic, it’s not like positive thinking and putting it on the vision board or something. It’s just like practicality, practical. And so, you’ll start turning down deals that you’re only going to make $3k on where you would have chased those deals before. Then you spend more time focusing on the better deals.

Joe: You’d spend more time chasing the better deals that have higher profit margins and so you do fewer deals and make bigger profits… you’re happier that way.

Joe: So, here’s my point. Again, circling back, you know, on an average wholesale deal you should be expecting to get ten grand. That’s what you should be shooting for. Okay? If you get five, that’s great, but you know what? When you’re shooting for $10k you might get $15k sometimes… You might get seven or eight. But it’s a whole lot better if you’re shooting for five and getting some threes here and there.

Joe: Okay. So always shoot higher then the more experienced you get, the higher you should be pushing that limit up.

JP: That’s a great point, that it’s not, it’s not this magical law of attraction thing, it’s that your actions that you’re taking and the decisions that you’re making are now filtered through a different number. And I can, you know, I can kind of hear the conversation in people’s head going, I’m going to lose deals. I know like I’ve done this deal before and I know if I’d offer $55k instead of $60k I wouldn’t have got the deal. And yes, that’s true. You will lose some deals as you start aiming for those higher margins. But the benefit you will gain on the other side of it is exponentially more valuable than what you will lose in deals.

Joe: Well, let me give you another example. If the seller would have taken 68, they probably would’ve taken $63k. You understand? Okay. Maybe like the 60 to 55 is a bad example because that’s like a jump in $10,000-digit numbers. It goes from a $60,000 to a $50,000 number, right? But like let’s go $68k to $63k. The seller probably would’ve taken your $63k offer if you’ve got a good enough rapport with them. If they know that you can close quickly and they trust you, right? They just want to get rid of that property. And now sometimes you will lose deals, but I’m telling you this, you’ll make more money in the long run. I promise you you’ll make more money in the long run if you start shooting for $10,000 deals instead of $5,000 deals.

Joe: So, when… and that’s wholesaling, traditional wholesaling. When it comes to lease options, you need to have like a minimum profit target on your deals and so like, and you need to have that written down. You need to know, like on a wholesaling lease option deal, I don’t want to make less than five grand. That’s my minimum. Okay, on an assignment. Otherwise I’m just not going to chase it. I’m not going to do it.

Joe: And so, what happens though then when you have that coming into a negotiation with the seller, I’m willing to walk away. I’ve got so many leads in my pipeline because I’m doing this marketing that I’m, my job now becomes to disqualify leads. It’s a psychological thing too, because when you’re coming in and you don’t have enough leads, all of a sudden, the sellers are disqualifying you. You need to turn the tables around. You disqualify the sellers, right? There’s a big difference when you’re talking to sellers. They can smell desperation and motivation from a mile away.

Joe: If you’re just, you know, you remove yourself from the outcome… "That’s fine. If you don’t want to do a deal, I’ve got 20 other people to talk to today. It’s not a big deal." And you pull away, you pull away your offer…. Once they start bringing the objections and asking too many questions, it’s amazing the psychologically it reverses and they start chasing then. So, you gotta have a minimum profit margin on each end of the sandwich lease option. I want to make at least $30,000 on the back end. I want at least 15% equity in the property. I want at least 25% of the rent for cashflow or maybe minimum $300 a month. You need to kind of write those numbers out.

Joe: And I get this question all the time where, you know, I’ve got a seller that wants to do lease option, but they want to make, they want me to put $7,000 down or they want me to put $5,000 down. And I say, well, what does it matter what they want? You’ve already lost it. Once you have, they’re dictating the terms to you. You need to be dictating the terms to them. They’re not the one making the offer and you are, but you make the offer to them.

Joe: So, you gotta stay in control of these deals. And be willing to walk away. If the deal is dead, once they tell you that, you’ve already lost control. You just need to send them an offer and follow up in a couple of months. Right? Like, you just make the offers and you should, you start the conversations with like, I’m going on a bunch of tangents, but I think this is all kind of related to what this guy is asking. Right? But like, "Mr. Seller, do you mind if I ask you a few questions about your house to see if it would be something I would be interested in?

Joe: That’s the approach you gotta take. So, when you have this attitude of coming into the deal, like, I’m gonna make $5k minimum on this deal. I have a friend who makes his minimum, he won’t touch at least option deal if he doesn’t make less than $10,000.

JP: More than $10,000. You said if he doesn’t…

Joe: He won’t approach it if he doesn’t make less (more) than $10,000. So, He’s wants to make more than 10,000.

Joe: Yes.

Joe: I was using a double negative. Yes. So anyway. Uh, and how quickly can you do that? It all depends on you. It depends on how much marketing you’re doing, how many leads you got coming in and how good you are talking to sellers.

JP: Let me ask Juanita’s question in a different way because I know, I don’t know if she’s, um, I don’t know what level, uh, Juanita is in terms of her experience with you, Joe. Uh, she could be just a podcast listener or she could be someone who has gone through some of the training that you put out. Maybe she’s been through the entire Z Code training that’s put out, or maybe she’s a coaching student, right? That’s a whole different level of not just commitment, but accountability to you and your ecosystem.

JP: And I would imagine that your answer to that question would be very different for, you know, somebody who is investing themselves in a coaching relationship versus somebody who just listens to your podcast. So, let’s, let’s pretend that she is really all in and she is just a student of you, all in, 100%, highest level. Like whatever that is. I don’t even know, but what would your answer be to Juanita in that situation in terms of how much profit can she really make?

Joe: Well maybe my first question would be, my answer would be a question like, well how much do you want to make and I’d work from like backwards. How much do you want to make a month? Let’s say it’s 10 grand a month. Let’s be realistic. Don’t tell me you want to make $100,000 a month coming out of your, coming right into the business… But let’s say 10 grand a month, that’d be great. You quit your job. Okay good. That’s two deals a month, let’s say, right, just being conservative, let’s say. Then that means you’ve got to get three properties under contract, three properties under contract, so then you need 30 leads per contract, so 30 times three is 90… You need 90 leads. Let’s just bump that up to a hundred. You need 100 leads per month. And if I open my calculator, I take a hundred leads and let’s say there’s 23 working days in a month on average, a hundred divided by 23 I need 4.3 I need five leads a day.

Joe: That’s why my big mantra is talk to five sellers a day. So, you need five leads a day. So, my answer is, work from the revenue backwards to all right, how many leads do you need per day? Then how much marketing should you be doing every day to get those five leads? And let’s put it on a scorecard and let’s track your numbers. You need to figure out your KPIs. So maybe it’s send 500 postcards a week.

Joe: You know, we’re doing this marketing challenge right now and we, one of the things we’re telling people is go out and send some simple letters, to guess what? Rentals on Zillow, right? And it’s working crazy. One guy just re posted a message in the group that he’s got, he’s getting a 20% response rate, 20% on his letters, and he got one deal out of it. H got a contract, he hasn’t flipped yet, but he got a contract.

Joe: So, um, I don’t know, man. I think, I think it works. But here’s my point too, is like, all right, so you gotta figure out what do you need to do every day to get five leads a day? So, I would say to my coaching student, Juanita, you need five leads a day. What are we going to do? So, every day, let’s pick two or three things that you or your virtual assistant are going to do every day. So, you can talk to five sellers a day and then we’ll figure out as time goes along, if this is enough, are you getting enough leads by doing this marketing? Do we need to do more of this? Less of that, change this up?

Joe: So, you know, let’s do 500 letters or postcards a week or letters a week. That’s a good place to start, right? Um, let’s do then maybe 30 text messages a day to Zillow for sale by owners. And if you have a hard time getting 30 a day, well let’s pick three or four different markets and just cycle through them 30 a day. Um, and then what else could you do? Maybe, um, you could send, you know, postcards to owner occupants with equity and you could send, uh, letters, one off letters, 20 a day, to rentals on Zillow, right?

Joe: So now you got three things that you could be doing. You put that in your scorecard and you track every day, every week, how much is going out, the outbound marketing. And then you start tracking the inbound leads that are coming in. So, if your goal then is to make 10 grand a month, it might take a couple, three months to do that. Just kind of depends on how good you are on the phone. You gotta be good on the phone and how you talk to the sellers.

Joe: So then let’s get a scorecard. Let’s track how much marketing is going out. How many sellers are you talking to every day? How many offers are you making every day and eventually after the first month, how much follow up are you doing every day? And I can virtually guarantee deals unless you’re, you know, a complete idiot. I can almost guarantee deals if you do this marketing consistently every day, over three, six, nine months, right? Like every day you’re doing enough marketing, you’re getting five leads a day coming in, you’re talking to five sellers every day. You’re making at least three offers a day to each of those five sellers, and then you’re following up with them. It’s like you can’t do deals. You can’t not do deals.

JP: Man, I think that’s so smart because it really taps into the, what has become for me, a big realization in my life that yes, when I set goals, I want to set a goal that feels maybe even a little bit bold and audacious, but if I define the success of that thing as the ultimate achievement of that thing and only focus on that big end result, it can often be kind of  deflating. I get into it, high energy and then I’m like, I, what do I do to make, to get from here to there? And it can, it can feel frustrating, but if you dial it down, you, you’ve got your goal set, but you dial it down to defining success based on what is a systematic way I can check boxes on a day to day basis and if I check these five boxes every day, then that is success for today. I can go to bed at night saying, I’m a Z Coder. I’m a lease optioner. Or I don’t know if that’s what lease option people call themselves…

JP: But I think defining success of a goal based on a daily system, a daily routine that you have control over, it gives you that control and it keeps you from being in a state of constant failure until you get there. Right? It’s a whole different perspective and really can put wind in your sails.

Joe: Well, it’s, it’s, it’s breaking it down into goals you can control. You can’t control that you’re going to make $10,000 a month. You can’t control that it takes 30 leads to get one contract or um, but you can control how much marketing you’re sending out every day and how many leads sellers you’re talking to every day.

Joe: Let’s say you do your marketing and you’ve only talked to three sellers and you need to talk to two more. Well, you still can control that. You can pick up the phone and start calling a few for sale by owners, calling some old leads, calling some other property managers in the area or wholesalers and say, Hey, do you got anything? I’m looking for deals. You control your own destiny. You control how much profit you’re making on a deal. You actually do control how much money you’re making in this business.

Joe: Don’t believe the bs that is too complicated, it’s too hard. There’s too much competition. That’s crap. It’s just not true. It isn’t. And I’ve heard, here’s a funny thing, I hear this all the time from students. My market’s too competitive. I can’t do it here. Somebody said, I can’t do it. Somebody says it’s illegal or whatever. Like I had one time, two students in the same city. They didn’t know each other. One student complained to me on within one day of each other like, one was like one day and one is the next day. One guy complained: “I got sellers. That’s easy. I can’t find any buyers. It’s impossible.” The other person said, “I’ve got buyers, tons of buyers. I can’t find any sellers. This doesn’t work.” I could not believe I was hearing these two different things from these people. I actually put ’em together and I said, you guys need to talk.

Joe: But like that is like it’s all in your head. Okay, you can do this business. You just need to be, you just need to do better more marketing and better marketing than anybody else and be consistent, follow up, follow up, follow up. So that’s my thing. I would be harping on that with my student, Juanita. I’d be saying, give me a scorecard. Every time we talk I want to look at your score card, I want to look at your numbers, and if she ever comes to me and complains that all this isn’t working, I’m having a hard time, I want to quit or whatever, or this doesn’t work, I say, show me your scorecard. How many offers have you made in the last week? Your speed to income in this business is directly proportional to the number of offers that you make, period. That’s, that’s the way it works.

JP: Yeah.

What are you thinking?

First off, we really love feedback, so please click here to give us a quick review in iTunes! Got any thoughts on this episode? We’d love to hear ’em too. Talk to us in the comments below.

Enjoy this podcast? Share the love!

Related Posts

Leave a Reply


Your email address will not be published. Required fields are marked

  1. Is the zcode a stand alone course that those with no experience in real estate can use or is it a supplement to your other courses for people already experienced with real estate? (Can a complete noob get started and male money with the zcode?)

    1. ZCodeJoe.com teaches you how to FIND leads. My Lease Options course teaches you what to do with the leads once you get them. 😉 Joe

  2. Hi, Joe, Thanks for making your course so affordable expecially in these times of Crisis.

    1. Anyway are the other monthly fees, other than marketing..Is the 97 a one time fee.?

    2. And you also mentioned about partenening with you, how does that work.

    Thank you

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}