Drew Levin and Danny Perkins are the face of Snap Flip.
They are billed as the stars of an HGTV program on buying and selling real estate. I often binge on HGTV and DIY. I thought I knew the shows and the stars.
I won’t go into my favorite shows. I am still holding out hope that this year’s home giveaway, St Simons Island Georgia will be coming my way.
But I don’t know these guys. I’ve never seen their show(s).
After seeing the TV ads and doing a Google search for Snap Flip, here is what I learned.
The Cliff-Notes Version
Snap Flip is a concept that has ordinary people buying homes at wholesale prices and doing quick flips. There is no attempt to increase value. The concept has Drew and Danny fronting all the money. The program requires no money or credit from those they train to find and make the deals.
Buy it and sell it…fast.
Back To Snap Flip
The process begins with live events, Almost a seminar, where people pre register to attend the free session to learn about the program.
We signed up to attend.
They are meticulous in getting you there. Friendly emails and text messages. We weren’t sure what to expect. I am alway concerned with things like this. I expect it will be a sham or a get rich quick scheme.
You know the drill. The only one making money is the guy doing the seminar.
I am no stranger to time share presentations, or the old school multi-level marketing presentation. I was skeptical. We showed up. The invite included the promise of a dinner.
We arrived to a full parking. A hotel was the venue for this presentation. We found a spot in the back and went in. Registration was required.
We, my wife and I both had to fill out what I considered an obtrusive form. It asked a lot of financial questions. I skipped some answers, but filled out my name, address and phone number. They already had all that, and my email.
I was surprised at the crowd. Only an estimate, but there were as many as five hundred people there. While not late, we waited as they set up extra chairs in the back.
Everybody got a handout. It was a nice multi page brochure that included pages to take notes. I did.
I am a skeptic. The cost of putting this thing on had to be huge. TV ads, website, expensive brochures, large hotel meeting room, and of course, the promised meal.
Normally I would expect a sales pitch to sell an expensive training course. Sign up tonight sort of pitch, and you’ll save 30%. As I read the handout, I could see no mention of a multi DVD training program.
Because of the website and the TV ads, I had a glimpse into what these guys really do. I was sure, as in any pitch, there was a lot they weren’t saying. Probably a deal breaker in there someplace.
Here Is What I Learned
I began taking notes from the start. I wanted to know what they did but had no real interest. I wanted to know what the ‘gotcha’ thing would be.
There was none.
Snap Flip is a huge home buying business. From what I learned, these guys have a system to buy homes at wholesale and quick (Snap) flip them to investors.
The premise is this. There are, perhaps, millions of homeowners who must sell. The reason is not important. They must sell. There is no intent on cheating anyone. The concept is to help people in a desperate place, to sell a house before it was too late.
The program promises to teach the student how to find and negotiate with the must sell homeowners to make a deal.
All cash deals with quick closings. A matter of days rather than weeks or months.
The Snap Flip Concept
When people buy the training they sell at the program, they also become part of the buying group created by Drew and Danny. It is an organization. A club if you will, that brings all the resources of the Snap Flip concept to the table for the benefit of its members.
In this presentation, I learned that the process of buying homes requires no money from the student/member. (beyond the cost of training)
I should point out that the training and it’s price where mentioned early. It was informative. Nobody was selling. If you want in on what they do, you need to do the training and it cost just under $1,200.
The students, in a three day training course and then home study after that, are schooled in how to find properties, what’s a good deal and how to put it together. Once they have one, they run it by the ‘home office’ (my words) for approval.
If the deal is something the company will go for, they agree to put up all the cash to make it happen.
The student/member, armed with a signed promise of funds, gets it done with the properties owner, and the real estate transaction closes.
After a quick closing, the student/member is in charge of finding a buyer to make a quick, 21 day flip. That’s where ‘Snap Flip’ comes from.
The program training promises to teach the student where to find the buyer. These deals invariably become flips to investors who will renovate and sell, or convert the property into a rental.
They Do A Good Job Of Explaining
The presenter did a good job. He’s done this before. Probably hundreds of times. As I watched, listened and made notes, I was waiting to find out how they make their money. I expected a sizable split of the net proceeds of the flip.
That’s not what they do.
I still don’t know all of the ‘profit centers’ they certainly have, but I did find out what it costs the student/member who is doing the work.
Here is how it works – keep in mind they train the student to know how to do all this
Once a property is found, a deal is negotiated. The company (Drew and Danny) puts up all the cash. All the properties are purchased with cash. No loans, mortgages, contracts for deeds. Everything is ‘all cash’.
It doesn’t make any difference if it’s one hundred thousand dollars, or five hundred thousand dollars, the company fronts all the money. The student/member has only time and effort in the deal.
Once the sale is closed, the student/member must find a buyer and sell the property fast. They like to have it all done in 21 days.
The key to this is making the new sales price attractive. The buyers are nearly all investors who will renovate or rent the property. They are looking for below market pricing. Often, well below market pricing.
We were told the buyers for the flips are not interested in finding properties on their own. They have no interest in hammering out deals with distressed owners.
The investor buyers prefer to work with (buy from) the “Snap Flip’ teams. It is just simpler and easier for them.
Who Makes What
What we learned in the seminar, is that the Snap Flip team, Drew and Danny, and those in their business, make money on the cash. They charge a flat percentage plus a transaction fee.
The numbers work well for everybody. I expected the student/member would end up with about 50% of whatever the net was. It’s a lot better than that,
The Snap Flip fee for doing these deals it a flat 1.65% of the cash invested in the deal, plus a transaction fee of $395.
I did some math. The Snap Flips are designed to happen fast. I mentioned 21 days. That is not ironclad, but there is a purpose.
If the rate is 1.65%, that is not an APR. It is a number. Let’s say the deal takes thirty days from the buy to the flip. That means that Drew, Danny and their people will see a return of 1.65% on their cash in 30 days.
If I have the numbers right, that is an annual return of nearly 20%. The assumption is, the original cash invested is, immediately after closing, reinvested into another Snap Flip deal. They are earning about 1.65% per month.
The strategy for Drew and Danny, is to never have the money dormant. It is always invested in a deal. It is always working.
I doubt it works that perfectly, but you get the idea. Even at 15% APR they are beating both the bank rates and the stock market for return. And every dime is backed by the property.
What about the student/member? I don’t know if they have a term for this person. I save the term investor for the guy who buys the snap flip.
Some numbers to think about. Let’s use the cash amount as $100,000. That’s what they pay for the property. The property then sells to an investor at a price $115,000.
That’s a $15,000 gross gain. After closing costs let’s say the net gain is $10,000.
In this example, the student/member would pay back the $100,000 from proceeds received at closing, plus 1.65%. That amount is $1,650. That money plus the transaction fee of $395 is repaid to the Snap Flip people.
The amount remaining is the ‘profit’. In this example the amount would be $7,955. This is only an example that shows how the numbers work. All in all, it looks like a sweet deal.
This has all the appearances of good business. Not once during the presentation did I sense the slightest hint of a scam, sham or tricky deal.
I think the program will protect a student/member from making a bad deal. Drew, Danny and team, know what they’re doing, have done thousands of these over the years, and don’t make many mistakes.
Putting their money into it, it is not likely they’ll let the student/member make a bad deal.
For the would be student, the cost is just under $1,200. That is for the training and membership into their investment group. If you do not buy the training, you’ll never do a Snap Flip.
The missing part of the program, if you want to call it that, is the understanding of just how much work this involves.
There are hundreds of people in any given area who want a bite of the distressed home market. As I wrote earlier, I watch HGTV and DIY. I see the Flip or Flop, Flipping Vegas, Property Brothers and the rest.
So do millions of others. Many of them would like a piece of the pie. Some have the money, some have the credit and some have neither. All however, think about flipping houses.
That means there is competition for the good deals.
The Snap Flip all cash scenario is a good one and may give it an advantage, but they are not the only ones with cash.
Finding the properties takes work. Pouring over foreclosure notices is work. And there are dozens of others reading the same notices. It will take a lot of searching before you actually find a deal that works.
I have no doubt that this Snap Flip program is a great concept. I know there are many making a nice income for the effort. I also know that most people will not do the work, or make the enormous effort required to be successful. But that is the case with any worthwhile endeavor.
Making money in real estate is as old as the earth. As long as there has been land, people have been buying and selling.
The program I saw is not something I will do. Not that it’s a poor business, but rather, it is more work than I want to do. It is frustrating and tedious work. It require time, patience and perseverance. I have other ventures I would rather pursue.
From what I saw, this is a great opportunity for the right person. I watched as several dozen people pulled out a credit card to sign up for the training class. I wish them all much success.
Snap Flipping can be a wonderful thing. If you are one of those who can spend a lot of time, putting in a lot of effort, you will probably be rewarded with financial gains. Perhaps an income you will not find any place else.
I am certain that the over riding motivation to be a member, is you can do it with out money, credit, or risk. If you are ready to work really hard, follow the training, and pay attention, you will make money.
This is not a “to good to be true scenario”. It is a hard work. But it also a, “we’ll help you thing” that can produce fruit.
The win win philosophy is at work. Remember, you are making good money for hard work. Those helping you are earning a fair return on their investment. Everybody is winning.
HealthyLivingAfter60.com is here for seniors. We want to inform other seniors on important issues. This is a good income opportunity. Is it right for seniors? It can be, but don’t fool yourself. It will be work. Not physical work. I will involve lots of research, prospecting and negotiating. All require a lot of your time.
I do think it may be something we can tell our kids about. Those struggling in a post recession era can do this. They can be broke. they can have horrible credit. They only need an open mind, willingness to follow the training and a solid work ethic.
If you have questions or comments, we can talk. Drop a note in the comments section below. —Robert
Update: There has been several comments made regarding the training programs being pitched and sold in the SnapFlip program. To address what happens, we have published an updated article You can read it here: SnapFlip Real Estate, Read This First