Moneyball: The Real Estate Edition with Steve Prewitt (Mindset)

Welcome back Dealhunters! With COVID-19 impacting sports leagues all over the world in 2020, we figured what better way to present the latest in foreclosures and real estate news than by relating it to America's Pasttime, baseball. 2011's "Moneyball" starring Brad Pitt follows Billy Beane and the Oakland Athletics as they work to turn the fortunes of the franchise and assemble a winning team on a limited budget with a new approach to free agency. Instead of relying on traditional metrics like home runs, batting averages, and salary, Beane proposes one straightforward stat to select new players for the team: on-base percentage. His premise is that when all is said and done, the teams that win the most get on base most consistently. Instead of chasing big-money free agents with glitzy stats, Beane scours the market for undervalued talent that manages to get on base more often than not. Based on a true story, this film highlighted the Athletics' rise from mediocrity to contention with the Moneyball strategy, but it also illustrates a key concept in real estate investing.

Most coaches and flippers would tell you to stay away from low-margin deals (in the $10,000 - $15,000 range) with small spreads on the ARV ($40,000 - $50,000) because of the potential of unforeseen issues to eat up your profit. However, today's episode is about teaching flippers and investors to take a Moneyball approach to real estate. Donny and returning #ForeclosureDealsCoachPodcast guest Steve Prewitt surmise that if you can consistently find "undervalued" deals with smaller margins and spreads that you can rehab at low costs, you can stack those deals and earn similar profits to those investors who only work with large margins and huge ARV spreads. By flipping these smaller deals, you set yourself up for continued success by creating consistent income, avoiding the lulls in business you might encounter when you can't find big-money deals, and stacking the profits from your smaller flips to be able to comfortably manage larger deals with a cushion of capital and the leverage you've created in your market from consistently doing deals and "getting on base." Listen as Donny and Steve break down the Moneyball concept in real estate, and be on the lookout for your next deal!

Mentioned in today's episode:
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