A common question we receive at our support desk is "Why aren't I finding any deals?" or "I analyzed 1000 properties and only found 1 deal, what gives?"
In this article I'm going to address these questions so that you can fine-tune BirdDogBot to bring back the right amount of deals based on how YOU want BirdDogBot to work for you. Although this is primarily focused on running searches, the same can be applied for adding and/or importing your own deals.
Before we begin, I would highly recommend you review the "Optimizing Search Projects" article as many problems can be solved by simply having an optimized search project.
Now that your search projects are optimized, it's time to tweak your "Analysis" settings.
First, it's important to understand the principle behind the process of fine-tuning these settings, otherwise it could be a frustrating experience.
The Fine-Tuning Process
The same properties and the same number of properties are going to be analyzed. The only difference is which ones are returned back as deals. The more strict the criteria, the fewer properties will pass the test and thus fewer deals will appear; however they will be HIGHER QUALITY deals. Conversely, the easier the criteria, the more properties will pass the test and thus more deals will appear; however they will be LOWER QUALITY deals.
In essence, if we have 100 properties to analyze with very "simple" criteria, then possibly 90 may pass the test and be considered a "deal". On the other hand, if our criteria was much more strict, only 5 might come back BUT these are going to be the top 5 properties from that same original list of 100. In this example. notice it's the same properties and the same number of properties. So, which list would you rather have?
The properties do not change! We are merely returning a smaller sub-set of the initial batch of properties that we're analyzing.
Now that we understand that, let's get tweaking!
You can fine-tune your BirdDogBot analysis settings using this simple 2-step system which I'll outline below. In a nutshell, what we're going to do is:
- Adjust your settings for very "simple" criteria so that we get maximum deals.
- Tighten your settings to reduce the number of deals so that we get the best deals (optional).
Here's how to do these steps...
Step 1: Adjust Your Settings For Maximum Deals
BirdDogBot comes pre-loaded with default analysis settings. While these settings may work perfectly fine in a lot of markets, it's impossible to have one set of rules work everywhere. We all know that's just not how real estate works because every market is different. Some markets are more distressed than others. Some markets are over-valued and some are under-valued. You get the idea...
Furthermore, not only is every market different, but every investor works with different criteria also. This is why BirdDogBot was designed to allow you to set your analysis for the way YOU work so that you get the best possible results.
The first thing we need to do is adjust our search project(s) so that our settings are the most forgiving. This will result in BirdDogBot bringing back as many "deals" as possible. To do this:
- Login to your BirdDogBot account.
- Go to Settings > Search & Analysis Settings > Analysis (tab).
- Set "Analysis Type" to "Basic Analysis".
- Set "Desired Profit" to something low like $5,000 or $10,000.
- Set "Apply to Existing Searches" to "Yes". NOTE: This will update all your existing search projects with these settings.
- Click "Save Analysis Settings".
- Go to Deals > Search Projects.
- Run your search projects again by checking the search projects you wish to run. Then from the "Actions" menu, select "Run".
After running your search projects, you'll probably find a whole bunch of deals in your "My Deals" list. If that's the case, then move on to the next step.
If, after running your search projects, you still don't find any deals, then please refer to the "Why Isn't BirdDogBot Finding Any Deals For Me?" article. If that doesn't help, then the reason you're not finding any deals is because there are currently no deals to be found in that market on the sites that we support. This doesn't mean there are no deals in your market. Again, I want to emphasize the key words here: "currently" and "on the sites that we support".
The nature of real estate is such that there may be a deal today that's gone tomorrow. Conversely, there might not be any deals today, but tomorrow (or next week/month/whatever), something may come up.
Futhermore, some of the sites we support may have more properties listed in some markets than they do in others. In some markets, perhaps they just never get listings.
So, assuming we found a bunch of deals, let's move onto the next step.
Step 2: Tighten Your Settings (Optional)
This step is only required if you want to reduce the number of deals that BirdDogBot finds so that only the BETTER deals come back. Some people prefer to work with larger lists and others (like myself) are too lazy and just want the "cream of the crop" as quickly as possible.
Personally, I'd rather have BirdDogBot analyze a hundred properties and return one super-solid deal, than have it return 50 deals that I have to go through and figure out what's really a good deal versus why something met my criteria. The idea here is to MINIMIZE the amount of work we need to manually do, not just reduce it!
There is no "big lists are better" or "smaller lists are better". Bigger lists require more work, smaller lists have too few choices. The idea is to find the right balance that works for you and your market, and then get BirdDogBot to do the work for you.
NOTE: By continuing with your fine-tuning, remember that the same properties will come back; however the list will be a smaller sub-set of the original. The numbers on these deals will be far superior as we are using a "tighter" filtering criteria.
Let's continue tweaking...
Now that you've found a bunch of deals, you may want to consider looking at the "quality" of those deals. In other words: are you happy with how the numbers look on these deals? Consider:
- Would adding expenses (which you WILL incur with 100% absolute certainty) be deal-breakers?
- Is the investment-to-value ratio on these deals far too high?
- Is your Maximum Purchase Price on these deals far too low and you know those offers would never be accepted because of how far below the asking price they are?
If you're happy with the numbers for these deals, then you're all set.
Chances are, however, you're not quite happy yet. So we need to tinker a bit more to get it right.
Next, let's work with the considerations above in that order so that we do this in a way that your're getting the BEST deals back. Remember, this isn't a filtering exercise for the sake of reducing the number of properties, but rather trying to get to the cream of the crop!
In order to get more granular and picky with our deals, we need to use an "Advanced Analysis". To switch to "Advanced Analysis", do the following:
- Go to Settings > Search & Analysis Settings > Analysis (tab).
- Set "Analysis Type" to "Advanced Analysis".
Now let's tweak each of the settings based on the problem we want to address.
First, INCREASE Your Profit!
Because we're about to get more picky about the deals we find we MUST increase our profit to counter-act the expenses and other factors we're going to consider. If you don't increase your profit at this stage, then you could easily go from finding 500 deals, to finding 0 deals!
Your profit should probably be set to AT LEAST $20,000 - $40,000 to factor in expenses and the other factors. To adjust your profit, do the following:
- If you've been following, you should still be on the "Search & Analysis Settings" page and looking at the Analysis tab.
- Set "Desired Profit" to $30,000 (for example):
- Click "Save Analysis Settings".
Now let's deal with the 3 problems outlined earlier...
Problem 1: Expenses Are Unrealistically Set To $0
Any time you purchase a property, you will ALWAYS have expenses that will be incurred. At a minimum, you're going to have to pay the title company and the property taxes while you own the property. Of course, nobody would ONLY ever have those expenses but the point is that at some point, you should factor in some expenses as well.
So how do you know what values you should set for your expenses? Answer: "practice and experience".
If you're lucky enough to have completed a few deals in your time (the more the better), then you should know from experience a good ballpark number to use for each of the expenses expressed as a percentage of the ARV. If you don't know, then look back at your previous deals and see. This is not only good for figuring out what values to use inside BirdDogBot, but I'm sure it will be an invaluable lesson for you as a business owner!
If you've never done a deal or you haven't completed enough of them to be confident, then I would recommend you do some research on your market on things like typical closing costs, property taxes, insurance etc. You can also stick to the "Basic Analysis" or simply use the settings I personally use which I'll include below; however, please be aware that they may not be accurate for your market!
The good news about expenses is they aren't written in stone. Ironically, that's also the bad news :).
The idea behind BirdDogBot using expense estimates is to have a number to start analyzing with as it goes through the properties with its "rapid fire" approach. After finding you a deal, you may see that your ballpark expense estimate was unreasonably high or low. From there you can adjust the actual expenses to more accurate projections, but there's no need to do that in the search and analyze phase. Just a rough estimate is more than good enough for now.
Here's how to add in some expenses along with the values I personally use when I'm looking for deals with BirdDogBot:
- If you've been following, you should still be on the "Search & Analysis Settings" page and looking at the "Analysis" tab.
- Also, you should have "Analysis Type" set to "Advanced Analysis".
- Under the expenses section, these are following values I personally use:
- Set "Rehab" to 15% (This really varies based on your market. You may want to start lower around 5-10%)
- Set "Closing Costs" to 0.5%
- Set "Holding Costs" to 7%
- Set "Unexpected Costs" to 4%
- Set "Misc. Costs" to 1%
- Set "Acquisition Fee" to %0
- Set "Apply to Existing Searches" to "Yes". NOTE: This will update all your existing search projects with these settings.
- Click "Save Analysis Settings".
- Go to Deals > Search Projects.
- Run your search projects again by checking the search projects you wish to run. Then from the "Actions" menu, select "Run".
- If too few deals are found, repeat the steps above, while slowly decreasing your expenses each time.
As far as expenses go, the LOWER your expenses, the MORE deals BirdDogBot will return. Conversely, the HIGHER your expenses, the LESS deals BirdDogBot will return.
Remember, your expense estimates are just ballpark numbers for now. They're just there to give us an idea as to how realistic the deal is with some realistic numbers. For example, after discovering the deal, you may find that the property is in better shape than normal and won't require 15% of ARV in rehab costs. Alternatively, maybe the property is a war zone and 15% is not enough. Either way you can update the numbers for this deal later on its proforma page.
Problem 2: Investment-To-Value Ratios On These Deals Is Too High
Ideally you probably want to be targeting a 65% ITV (investment-to-value) ratio. The lower the ITV, the better the deal is since you're paying less to acquire an asset of higher value. Obviously there are fewer of these deals out there, meaning you will get less deals coming back. On the bright side, these are the "cream of the crop" deals that we're after.
To fix this issue, we'll set our Desired ITV to 65%. If too few deals are returned, we'll slowly start increasing the Desired ITV in small increments (say 5% or 10% at a time) until we find that "sweet spot". Keep in mind you don't want to jump in increments that are too large as that will make finding the right balance too difficult.
Here are the steps you need to take to do this:
- Go to Settings > Search & Analysis Settings > Analysis (tab).
- You should already have "Analysis Type" set to "Advanced Analysis".
- Set your "Desired ITV" to 65%.
- Set "Apply to Existing Searches" to "Yes". NOTE: This will update all your existing search projects with these settings.
- Click "Save Analysis Settings".
- Go to Deals > Search Projects.
- Run your search projects again by checking the search projects you wish to run. Then from the "Actions" menu, select "Run".
- If too few deals are found, repeat the steps above, while slowly increasing your Desired ITV each time in small increments to 75%, then 85%, then 95%.
The thing to keep in mind here is this: the LOWER the Desired ITV, the FEWER but BETTER deals BirdDogBot will return. Conversely, the HIGHER the Desired ITV, the MORE but LOWER QUALITY deals BirdDogBot will return. If you manage to get your ITV down to 65%, then I would recommend you stop there and tweak the other settings if you want to continue reducing the number of deals that BirdDogBot returns.
If you find that you need to keep your Desired ITV at 95% or higher (assuming your MaxAskingDiscount is still at 90% (or higher) and your expenses are still set to 0%) in order for BirdDogBot to return any properties, then this likely means that you're in a very "tight" market and the properties that are currently listed on the sites we support are getting pretty close to over-valued, or they're already over-valued. This is why BirdDogBot keeps rejecting them.
Problem 3: MaxPurchasePrice Is Too Low
If you're finding that the MaxPurchasePrice is too far below the asking price of the property, then you need to LOWER the "Max Asking Discount" setting. This is very much a "personal preference" type of option. If you don't mind making low-ball offers, then you can keep this value quite high, otherwise keep it lower.
Unlike the Desired ITV, there is no "ideal" Max Asking Discount value as this is really a matter of preference. Theoretically, the lower your Max Asking Discount, the better "quality" the deal will be since you won't have to negotiate as much to get the asking price down low enough such that you can meet your profit goal. Plus, the closer you can be to the seller's asking price, the more likely you are to close on the deal.
In case you're wondering, my personal preference is 40% and that's where I'd recommend you start also.
Here are the steps you can take to dial-in a "Max Asking Discount" setting that works for you:
- Go to Settings > Search & Analysis Settings > Analysis (tab).
- You should already have "Analysis Type" set to "Advanced Analysis".
- Set "Max Asking Discount" to 40%.
- Set "Apply to Existing Searches" to "Yes". NOTE: This will update all your existing search projects with these settings.
- Click "Save Analysis Settings".
- Run your search projects again by checking the search projects you wish to run. Then from the "Actions" menu, select "Run".
- If too few deals are found, repeat the steps above, while slowly increasing your Max Asking Discount each time in small increments to 50%, then 60%, and so on...
- If too many deals are coming back with the Max Purchase Price still too low in your opinion, repeat the steps above, while slowly decreasing your Max Asking Discount each time in small increments to 30%, then 20%, and so on...
The thing to keep in mind here is this: the LOWER the Max Asking Discount, the FEWER deals BirdDogBot will return. Conversely, the HIGHER the Max Asking Discount, the MORE deals BirdDogBot will return.
Final Thoughts
In closing, we need to keep in mind that "less deals" is not necessarily a bad thing.
For one, the "tighter" your list of deals (especially after you followed the steps in this article), odds are, the better the deals will be and the more money you can make on each property. Of course, more quality deals is always better, but when you're optimizing this method of finding deals, you should be focusing on quality rather than quantity. This not only saves you time, but it makes you more productive and, more than likely, more profitable! And who plays the real estate game without the intent of making money?
Secondly, even if you run a search and you analyze 1000 properties and don't find anything, that's still NOT a bad thing! Remember, BirdDogBot did all that work for you and saved you from spending days or weeks doing it yourself, only to get the same result! Given that new properties are listed every day, you can run that exact same search the next day/week/month and analyze them all over again without the agony of manually doing it yourself. Just click the "Run" button and the magic happens. Or, better yet, simply let BirdDogBot run your searches and analyze those properties on auto-pilot so you don't have to do anything.
Finally, if you don't find anything, you also know that you've covered this area. Until you find a deal with BirdDogBot, you can now focus your efforts on looking for deals elsewhere, just like you did before you subscribed to BirdDogBot.
To end on a positive note...
In the 5 years since BirdDogBot was created and at the time this article was written, we've analyzed over 5 MILLION properties and found over 300,000 deals that have met investors criteria! So, given those numbers grow every day, I'm quite confident you'll find something with just a bit of tweaking.
Good deals are tough to find, but fortunately you have BirdDogBot doing the hard work for you.
Happy deal searching!
If you have any questions or require further assistance, please contact support@birddogbot.com.
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