Response on pricing, business phases and balance ⚖️

made a great comment about doing some of his own EMD lending for $300. It created a long response that I moved here because I realized I was sharing a lot about our philosophy and even how it impacts all of you as acquisition team members. Please share your comments below 👇

🎯 POST

Jeryt Henson

I have been doing $300 or 10% for the upfront, but with no minimum. Issue here is that I am my own person and $300 puts food in my mouth. I can see how a minimum fee is crucial if you have employees. I think there is pros and cons for each, but I do see more borrowers complain about upfront cost, so keeping it smaller will increase the volume in my opinion.

RESPONSE 👀

That makes perfect sense, and I'd consider it stage two when starting to fund deals yourself. We started at stage one, no upfront fee, and doing the reps to learn how to refine the processes, contracts, etc. 😁 Good times.

There are different strategies for each phase of a business, and we are blessed to have been able to move through a few of them over the past couple years.

First, it was no-upfront EMD. We did this to prove the model, get live repetitions, and generally learn from doing. This was also a time for super cheap rates on other funding types. The loss of money was considered tuition and seed capital in the business.

Next, we raised prices, so for EMD it was having a small upfront fee and targeting breaking even. If we really thought about opportunity costs for our money and our time, this was still a deeply negative phase. I'm confident our money in SPY and QQQ funds and me working a corporate job would have generated more money. That was the phase and the price paid. Different phase, different costs, different learnings and development.

As volume increased, more money was being used than we had in our winter coat pockets, so it meant borrowing from others, growing those relationships, and dealing with the legal implications of correctly using money from investors, funds, etc.

As volume increased further, systems and teams needed to evolve. This means more IT and staffing costs. All the founders time can't be underwriting and funding deals at this point because the growth strategy needs time, capital raising needs time, marketing needs time, system development needs time, hiring and training needs time, etc etc.

Currently, are fortunate to have a significant portion of our portfolio referred to us, and the sub-section of that from this group is growing (our goal)! That blessing also comes with new expenses -- referral fees. That money doesn't just show up magically. A new phase of business, new strategies with different revenue and expense impacts. The game changes and the fun continues.

👉 One note that I think is important is that we DO NOT charge more on deals that go though our acquisition members, such as via the VIP white label sites. The client gets the EXACT SAME rate as when they came to our main site without a referrer. This is important ❗because it means you can tell potential clients that you are a member of the acquisitions team, and NO broker or other additional fees are added to pay you.

This is one big reason people don't like white labels. The perceived additional cost ... that you do NOT have. I think the technical business language for this is "winner winner chicken dinner." 😂

However, because the overall business model has these expenses in it, there is an overall portion of the pricing that is paying for it. No money trees in my yard yet. When we are funding millions of clams a month, this fun game has a serious side to it as well. 😉

If we were dealing with the upfront EMD pricing in a vacuum, let me be frank, I would push for a $2500 minimum fee because our focus is more on morby/stack, echo and double close deals, and I would prefer that we only to the heavy EMD contract work for larger deals.

But ... we don't live in a vacuum; and that's a good thing (can you imagine the dust and spiders😷😱).

🥅 Our goal is to help as many people as possible find financial freedom through real estate funding.

... and because we think that it's easier for our acquisition team members to get their foot in the door on smaller deals, we strive to balance what is optimal for business profitability with what is optimal for hundreds of people to find more financial freedom through the business.

This is a constant balancing battle ... and we are always out-of-balance on one side or the other because we are human, and loving it. 🧡

3 comments

Response on pricing, business phases and balance ⚖️