Hey there — today I’m talking about the real numbers.
If you’re on Instagram and Facebook and YouTube, and you see these guys flashing lots of big checks from deals… most of the time it’s BS.
You need to take it with a grain of salt and an ounce of skepticism.
Here’s why…
On a land deal, I got a check for $12,500. But my net profit on that deal was actually only $5,400. The $12,500 was gross profit. My split with my partner was a 55/45. So my 55% is $5,400.
Which is nice, right? But it shows why that $12,500 check doesn’t tell the whole story.
See, I put a few thousand into the deal to pay off some taxes, to pay off a couple of liens and to pay the seller a little bit of money.
So while I have a check for $12,500… the real numbers are behind the scenes. Pull back the curtain. Guess what, there’s expenses and operating overhead in these deals.
Realtors do it all the time. They say, “We do $450 million a year in real estate!” What they mean is: They’re selling $450 million worth of real estate… their commissions are squat compared to that.
They may have to split the commissions with the buyer’s broker, and then the actual agent has to split their commissions with their firm. So they may be walking away with 25% of 6% of $450 million. And those firms have LOTS of expenses and lots of agents. They put a lot of money into marketing and resources.
The average top-producing agent I’ve met takes home $100,000 a year. For 60+ hours a week. :-/
And for investors, they’re spending anywhere from $2,000–$4,000 in marketing per deal. They may have acquisition managers, VAs, an office… all of which is overhead. Most investors are netting 35%.
They’re trying to brag about the big deals, the big revenue… but that’s gross revenue NOT the net profit. Huge difference.
I’ve also heard of this sneakiness. Investors say they’ve done 200 deals. Well, they really only did 100 deals a year. They’re counting the buy and the sale as separate transactions.
People actually twist the numbers like that.
Just stop!
How much did you profit AFTER expenses, commissions to partners, marketing, VAs, interest paid, etc.? That’s the true net number.
It really annoys me when people aren’t transparent and honest. They’ll also rent a mansion for a day to shoot a video in it, implying it’s their house from all their deal profits. Or lease, not buy, a fancy car to show off. BS.
Just bring the truth.
If you want to brag about how big of a deal you got, show us the real numbers after expenses, after your overhead, after your profit splits, after taxes.
The real numbers.
We’ll all be better for it.
