ONE SCOTTSDALE FLIP OR TWO IN GLENDALE? I RAN BOTH ALL THE WAY THROUGH.

The question I get more than any other is some version of this: I have got enough for one big one or two small ones. Which do I do?

I have never answered it well in a single sentence, so this week I am going to answer it all the way through.

FROM DEVON'S DESK

Two deals. Same operator, same capital, same twelve months. One in Scottsdale, one pair in the West Valley. I am going to show you the whole P&L on both, then I am going to break them on purpose and show you which one bends and which one snaps.

Before I start: neither of these is a deal I funded. I built them off real comps in each submarket so I could put every number on the page, including the ugly ones, without anybody's actual business in your inbox. What is real is the structure, the pricing, and the timelines. Those come straight off our desk.

DEAL A — ONE IN SCOTTSDALE

Purchase $850,000. Rehab $220,000. ARV $1,425,000.

Here is what we would put behind that: a $985,000 loan, first position. All $220,000 of the rehab and 90% of the purchase. You are in for $85,000 down on a $1.425 million project. Twelve-month term, no prepayment penalty, draws funded in about 24 hours so your crew never waits on us.

Carry at 12% is $9,850 a month. Call the rehab five months and the sale three, because a $1.4M house in a balanced market does not move in thirty days. Eight months, about $79,000 in carry.

After selling costs and closing you land at roughly $180,000 in profit over eight months. About $22,500 for every month your money was exposed.

That is a good deal. I would fund it today.

DEAL B — TWO IN THE WEST VALLEY

Purchase $285,000 each. Rehab $65,000 each. ARV $475,000 each.

Same structure on both: $321,500 a house. All $65,000 of the rehab, 90% of the purchase. $28,500 down on each one. Fifty-seven thousand dollars of your cash, and you control two entire projects.

Carry is $3,215 a month per house. Three months of rehab, three months to sell. Run them side by side and you are out in six.

After costs, about $72,000 profit on each. Roughly $144,000 for the pair in six months. About $24,000 a month exposed.

SO FAR SCOTTSDALE LOOKS BETTER

And in absolute dollars it is. $180,000 beats $144,000. One crew, one scope, one closing, one set of headaches instead of two. If you stopped here you would take the Scottsdale deal every time. Most people do. Bigger deal, bigger number, and it feels like graduating.

Now let me break them.

THE PART THAT ACTUALLY MATTERS

Assume your ARV comes back 8% light. Not a crash. Not a disaster. Eight percent, the ordinary amount by which a finish, a comp, or a bad month moves a number.

Scottsdale: $1,425,000 becomes $1,311,000. Your $180,000 becomes about $72,000.

West Valley: $475,000 becomes $437,000 on each. Your $144,000 becomes about $72,000.

The same miss lands both deals in exactly the same place.

Read that again, because it is the whole issue. Eight percent erased sixty percent of the big deal's profit and half of the small ones'. The margin you thought you were buying with the bigger deal was never really there. It was rented, and volatility is the landlord.

But the dollars are not even the real difference. Here is the real one.

With two deals, you get to be wrong once and still have a year. One comes in light, the other comes in fine. You sell the good one, recover your capital, and go be patient on the other. You have a bad deal. You do not have a bad year.

With one deal, you get to be right or you get to wait. You cannot sell half a house. There is no partial exit, no recovered capital, no second outcome to average against the first. Every dollar you have is in one address with one buyer pool, and in a balanced market where the average listing now sits close to three months, wait is the most expensive word in this business.

Size is not what you underwrite. You underwrite how often you can be wrong.

WHAT CHANGES THE ANSWER

I am not telling you to do the two. I fund both of these every month, and Scottsdale is the largest single slice of our book. What I am telling you is that the big one has to clear a higher bar, and the bar is not a bigger number. It is a bigger cushion.

If you are doing the big one, three things have to be true. Your margin has to survive an 8% miss and still be worth eight months of your life. Your timeline has to have real listing time in it, not the timeline you would like. And your lender has to be somebody whose terms do not move at day 40, because you have no second deal to lean on if they do. The rate is what you pay for money. Certainty is what you pay for sleep, and on a single-exit deal you are buying a lot more sleep than usual.

If you are doing the two, one thing has to be true. Stagger them. Two rehabs starting the same Monday with the same crew is not two deals. It is one deal wearing a disguise, and it fails all at once anyway. Start the second when the first one is drywall. The entire advantage you are buying is that the outcomes are independent. Do not spend it on convenience.

AND IF THE CASH IS THE PROBLEM

If the down payment is what is standing between you and the right project, tell me that before you walk away from it. If you have equity in another property, we can often structure around it and bring your cash to close down. If your money is tied up in a project about to sell, that is a conversation too.

We lend our own money, so there is no committee to ask. That flexibility is the whole reason to work with a lender you can actually get on the phone.

THE DEAL DESK

Recently paid off:

• Phoenix fix-and-flip — paid off in 133 days. Bought right, scoped tight, listed on schedule. That is the whole trick.

  
  

Currently on the market:

• Gilbert, 85296 — $600,000, rehab complete, on the market now.

• Glendale, 85308 — $400,000, rehab complete, on the market now.

85 loans and $34.1 million since inception. 29 loans and $16.1 million this fiscal year, already about 49% ahead of all of 2025 with a quarter still to go. Of the 41 operators we have funded, 16 have come back for another one.

$100K to $2.5M. Fix-and-flip, new construction, bridge, acquisition. Up to 90% of purchase and 100% of rehab. Twelve-month terms, no prepayment penalty. Commitments in 24 to 48 hours, close in 7 to 10 days standard and faster when a seller is pushing. Draws in about 24 hours. We lend our own money, so when we say yes, we close.

ONE THING TO STEAL

Take whatever deal is on your desk right now and do this. It takes four minutes.

Cut your ARV by 8%. Not 20%, nobody believes 20% and nobody runs it. Eight. Recalculate the profit. Then ask the only question that matters: if this comes in at that number, is my year still fine?

If the answer is yes, the size of the deal is irrelevant. Do the big one. If the answer is no, you do not have a margin problem. You have a concentration problem, and the fix is not a better spreadsheet. It is a smaller deal, a better basis, or a second deal to average against.

If you flip or build: run the 8% test before you run the offer, not after. If you are an agent: the investor who buys two mid-market houses closes twice with you and calls you twice next year. The one who buys the trophy calls you once and might not call again. If you are a vendor or sub: the operator running two staggered rehabs is twelve months of work, not four. Find those people. If you work in title or escrow: you already know which files close clean. It is almost never the ones that were a stretch.

One question I would actually like answered: what does your current deal look like at an 8% miss, and have you ever actually run it?

Reply to this email, submit at weare42solutions.com, or send it to devon@weare42solutions.com. Call or text 602-501-1174. We would rather look at ten of your deals than wait for the perfect one, and I am happy to run the 8% test on yours with you.

P.S. Size is not what you underwrite. You underwrite how often you can afford to be wrong. Separately: we pulled every private-lender mortgage recorded in Arizona this year and the ZIP-level breakdown is genuinely interesting. Reply "lending report" and I will send it over. No form, no catch. Know somebody staring at one big one versus two small ones right now? Forward this to them.

Newsletter Edition #37