Micro-Flipping For Beginners: $20,000 Profit On FSBO

EP#3

Micro-Flipping For Beginners - $20,000 Profit FSBO

Are you considering a probate property as your first or next real estate investment?

On this episode of The Real Estate Cash Chronicles we’re going to see how following the right steps to find and flip a FSBO property can present you with not just one but multiple ways to profit depending on how much time you want to invest in the deal.

Meet Doug

A former school teacher from North Carolina, Doug walks us through how he completed his life-changing “Duplin Deal”. In almost no time, he was able to get in and get out of this single family flip and cash in over $20,000!

Watch to learn how he closed this For Sale By Owner (FSBO) property that showed up as inherited/probate deal type.

Want to use his experience to build yours? Listen anywhere you hear podcasts or watch on YouTube!

And don’t forget to claim your free Connected Investors’ account.

Transcript

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Patrick (00:00):

This episode of Cash Chronicles, we’re going to meet Doug Maners who made $20,000 on one wholesale deal that took him less than a day’s worth of time.

Voiceover (00:14):

Welcome to this week’s episode of The Real Estate Cash Chronicles, where we speak with real investors from around the country to break down individual deals. They’ve completed showing you the actual timeline of events that it took to make a profit making money in real estate. Isn’t a mystery, it’s a step-by-step process, but once you complete one, you’ll never think about cash the same way let’s get started.

Patrick (00:37):

Yeah, yeah. Yeah. So, Doug man thanks for joining us today. And I’m super excited about talking to you about, you know, the deal that was, you know, pivotal to your continued success. So just simply stated, man, how did you find it?

Doug (00:51):

This particular deal, I guess for simplistic purposes, we’ll call it the Duplin deal because it was located in Duplin County. So maybe that’ll help a little bit, but the Duplin deal was actually it was actually a for sale by owner. It was but it turned out to be a probate deal. They had inherited the house when their grandparents I think it was a grandmother had passed on. And so it was actually a probate deal. That was the for sale by owner.

Patrick (01:15):

Very nice. Very nice. So after you put two and two together and you found out that it was a probate, it was a for sale by owner. So just kind of reading in between the lines here. Did, did you just call the number on the, for sale by owner sign or what’d you do next?

Doug (01:33):

Yeah, it, it was actually what an office sign actually had. It was actually found through, you know, back, and this has been a few years back before we had access to all this data. You know, you had to do an old school. And so it was a situation where, you know, we were you know, identifying some for sale by owners or reaching out and contacting them that were advertised and their properties for sale. And so it was a situation where, you know, reached out to the motivated seller contacted them and found out a little bit about the property, obviously. And then through a series of questions, you know, it’s important to ask the right questions to a seller, obviously. I was able to determine that the house was inherited and that also determined that there was no mortgage on the house, which is important piece to know.

Doug (02:20):

And so that’s always helpful. They kind of know that you know, what they owe when you want to formulate an offer. And so, yeah, it was a, it was you know, as soon as a series of questions, the, a seller you know, disclose a number of different things to me. And the interesting thing about this property Patrick, was that it actually was a, to a total of 2.4, three acres. So the house set on some acres and then, you know, on, on a larger parcel. And anyway, so that that’s good. You’ll see, in a minute when we, I, you know, that, how that came into play, it made it turn into a really good deal.

Patrick (02:53):

Okay. Sweet, sweet, sweet. So I like what I hear so far, so you’re able to make contact with them and let’s, let’s dig into that a little bit. So you made contact and you said you, you, you asked the right questions. Can you share a few of those right questions?

Doug (03:10):

Well, yeah, I mean, absolutely. I, you know, it’s very helpful. You know, when you’re talking to a motivated seller, it’s important to have obviously, you know, criteria in front of you, you, it’s good to have maybe a form or format that you can literally walk a seller through to ask the questions that you need to, you know, important information that you need to know. For instance, you know, a good question may be, you know, Hey, do you owe anything on the property? Sometimes they’ll disclose that sometimes they won’t in this case they disclosed, no, we don’t own anything else, an inherited property. Well, then I knew it was a, you know, a probate situation where the person had inherited the property. Now, obviously the next question you want to ask about that is, do you own it outright? And now, you know, has it been through, you know, clear that, you know, the probate process you know, you own the property, is it, has it been deeded to you and so forth which it had, yes, they, they own the property outright so they can move forward.

Doug (04:02):

So, you know, obviously once you find out the situation with the seller, there may be follow up questions. You need to ask to make sure that they’re in control of that property now, because as you know, Patrick, sometimes you can get into some legal things where the judge may be making some decisions. I mean, you know what I’m talking about? I, it could be a, there’s all the things that can happen. So you want to, you know, just ask them point blank. Most people will be straight up with you and let you know whether or not that they have, you know, ownership and or control of that property, which they did. And so then I proceed to ask him more detailed, specific to the property. So you want to know, you know, you know, tell me a little bit about the house, how many bedrooms, baths, square footage what kind of condition is the house in?

Doug (04:41):

When was the last updates done? I’m going kind of fast, but you get the idea. I hadn’t done it. I’ve only done it once a month. Now I’ve done it a few times. Right. But then, you know, a really important question that I think a lot of investors forget ask is how much the land is with the property. Now, this was important in this case. Because then he said, Oh, it’s a, it’s on 2.4, three acres. Well I tell you, I’ve been able to successfully negotiate a number of real estate deals in wholesale deals just happened to be a wholesale deal that because it had additional land immediately in your mind, you’re thinking subdivide. In fact, a couple of big is wholesale deals. This one included where I made a substantial wholesale fee was properties that could be subdivided in both cases. The seller did not know that. And so there’s a tip for you, absolutely. For you guys as there’s a nugget. So always do your research. Can the property be subdivided? Does it meet the zoning criteria? And now all of a sudden there’s a whole new Avenue of value that’s added to that property.

Patrick (05:42):

All right. So I love everything I hear so far. And thanks for being so open and sharing so fluid with us, Doug, and look just quick interjection to all of our Connected Investors, family, and listeners, they look and make sure you go and find the notes for this podcast. Obviously, it’s going to be packed with probate information. I can get a little sticky, it can get a little tricky, but being a member of the connected investors community is going to make it a lot easier. Hey, look, that’s what we’re here for your success. Our success it’s mutual. It’s mutual together. Okay. So you, you you’ve given us some good questions. You’ve, you’ve, you’ve kind of unwrapped the candy bar. So, so tell me about the deal. Tell me what you got on paper, what that looked like. Maybe the number, the timeframe. So let’s, let’s continue to go with that a little bit, Doug. Yeah,

Doug (06:33):

Absolutely. Absolutely. Yeah. So, you know, after some additional questions and things that, you know, obviously talking with the seller, finding out about the property, that condition, the location, you know, all these different factors. One other quick question, I’ll just throw out there. Patrick, before I get into the numbers, is, do you have any other interest in the property or do you have any other offers on the property? You know, that’s the key question to ask in this case, they said, no, they had no other offers. Well, what that does is immediately opens up for you to be able to say, Hey, now, Hey, I’m the only player. So now that’s going to affect how I negotiate. Now, if they say, well, yeah, I’ve had three other offers. Well, my follow-up question will be, Hey, would you mind telling me what they offered you?

Commercial (07:11):

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Doug (08:13):

Sometimes the seller would tell you, Oh, well, one of them offered me 61 on for me, 80. And sometimes they’ll just blurt it out. You just want to get as much information as they can. Now, sometimes sellers won’t do that. They’ll say, well, you know, I’d rather not say well, it’s okay. Not a problem. I just was curious, you know? And so needless to say, in this case, they didn’t have any other offers, no other answers at that point. Now one advantage of that is I, you know, obviously I jumped on this. I had, you know contacted them as soon as I had seen this particular you know, listing that they had put out or advertisement, I guess I should say. And so you know, I was the first, you know, first, first player in the game, so that, that always helps.

Doug (08:50):

And so needless to say we negotiated a little bit and tell me what he wanted for the property, knowing that they didn’t know anything on the property. I knew there was probably some room there for negotiation. And we actually settled on an amount of $57,000 for the property, which in that location, I knew the ARV just knowing that area. I knew the ARV of that property was beautifully remodeled and, and maintain would be somewhere in the $120,000 range, especially with that much land, even without that much land I knew it would be. And so, you know, I kind of, you know, at 57,000, I knew there was an opportunity there to generate some profits. So that’s, that’s kind of the amount we set it on was 57,000. I didn’t offer them any earnest money that, you know, usually if you don’t bring up earnest money, many times a motivated settle like that, that’s a, that’s a probate property, you know, they’re not gonna, they’re not going to say anything. Sometimes they will, but in this case I didn’t offer nearest money. I just say, I’m willing to go ahead and put together the contract. We’ll get that signed and we’ll get moving forward to settling, you know, sailing for you. Now, the other question you asked was about timing, is that right?

Patrick (09:54):

Oh, well, you know, what if I did, that was going to be where I was heading. So I’m glad to hear about the economic details and yeah. Timing. I mean, how long did it take for, for you to go from communication to having that contract signed? So yeah, a little bit of, about that a little bit.

Doug (10:12):

Sure. No, absolutely. One thing you got to consider is being the first game, the first one in the game. So to speak the first one to make an offer is you don’t want to drag your feet on that. You want to go ahead. You know, fortunately I already kind of knew the numbers for that area. So I was able to formulate an offer based on what I was told, but I also went out and looked at the property, I’ll walk the property. So you know, I, you know, we negotiated right up front on the phone on a price on it, but I said, Hey, let me do this. I want to go back and get a good look at the property now as a wholesaler. Is it critical to look at that property? Yes and no. Okay. Now, if you’re remote, if you’re wholesaling remotely and you can’t get there, guess why you don’t have a choice, but you’re going to have to put it under contract based on the factors that, you know, and that’s okay.

Doug (10:56):

Nothing wrong with that. But because I was close enough to this property that could drive out and look at it, I decided to go out and take a look at it. And I said, okay. Yeah. And so we, when we talked about the 57,000, I I’ll tell you what, let me go take a look at it. I’m going to ride out there today. I’ll look at it. And you know, if it’s exactly the condition that you told me, I’ll go ahead and put an offer together. We’ll meet up and get that sign. So I wanted to go in and attack this thing and get it done right now. But I wanted to lay eyes on just to make sure that seller was telling me the truth about the condition. So in this case does exactly what I did. I drove out that day.

Doug (11:27):

I looked at the property they, they were very honest about the condition. And so I also wanted to look at the surrounding properties. What’s around the area. You always want to look at the neighborhood in this case, it was a rural property. So not, but you know, is it in North Carolina? Is it next to a home farm Duplin County? That’s the first thing in your mind, you, if you’ve got a hog farm in the backyard, that’s gonna affect the value of that property. Fortunately, this one was rule, but it was a very nice rule. It was well well-kept farms, well kept land out there. And I wanted to look at the, you know, being 2.4, three acres immediately. My antenna went up to say, Hey, what can be done with this? Can it be subdivided? So my next thought, obviously, you know, you want to go in, you want to take a look at the zoning for that particular parcel.

Doug (12:16):

All this can be found typically on the County websites nowadays, or if you’ve got a really good data provider, they can get you that information as well that you, you may be subscribed to which is very valuable by the way. But that being said in this case, I saw that, you know, the surrounding land looked like it could be supportive of a potentially another build. And that was the reason I looked at that because now you’ve got, instead of one investment property, you’ve got two investment properties, one with the house, with the lot on the house. And one with the land you know, adjacent that could potentially support a second house. And so that was kind of my thinking there, and obviously adds great value when you can formulate a deal like that. So anyway, I put the property under contract that day, I met with them that evening.

Doug (13:02):

We got the property under contract, and then I made sure I set aside, you know, usually I try to go at least four weeks of due diligence, as much as they’ll let me and in about eight weeks to closing sometimes with the opportunity to do it shorter, you know, I obviously, if I wanted to, in this case, I was going to wholesale this deal. I want to be able to have time to identify a particular, you know, an investor buyer for it. So that gives me at least four weeks of due diligence time. But in this case they really didn’t even require a due diligence fee. They didn’t do any of that. I didn’t have to worry about it. So I just, I put myself some time out there that I could do that. And then an additional four weeks to close it, but we actually ended up closing it sooner than eight weeks. But yeah, just to give me an idea of timetable,

Patrick (13:47):

Look, Doug, you are on fire and supplying me and our listeners with tons of awesome information. Let me just interject a quick few things. One would be something Doug said that, that I want to expand on just a little bit is when you have the opportunity, you won’t always, but when you have the opportunity to go look and walk the property, like Doug mentioned, it’s going to give you a new level of legitimacy. And then, and then when the buyer, I mean, I’m sorry, when the seller is asking, you know, why or when or who, or how are you going to walk the property align that I’ve heard it successful before to continue to legitimize is, you know, I just want to make sure that I walk that property so that I can make you the best offer possible. So, so I’ve found that to be a very valuable phrase in my experience. And then the other thing is, so tell me about this subdividing. I mean, well, I tell you what, before you jump in there looking for some cash

Commercial (14:52):

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Patrick (15:06):

But that’s where we’re going. Is Doug had mentioned something about data provider hello, Connected Investors, Hey, make sure you’re using what, what we offer and all the options and simple orientations that are gonna make your life easier. So now that all that being said, thanks again, Doug. Generally about how the details of the subdividing, I mean, so you’ve got the whole thing under contract, the dwelling and the 2.4, three acres, but your going to intend to subdivide it and then sell it, or you’re looking for that end investor who you’re going to just apply them with the information of, Hey, look, you could subdivide this, this, tell me more about that,

Doug (15:59):

You know, and you do bring something up here, Patrick, that, yeah, you could go either way as a wholesaler, you could potentially go to the effort to subdivide a property yourself you know, in, in a range that but in this case, no, I was looking at this specific because I did have buyers that were interested in doing spec homes, spec builds. And so I already had that kind of in my back pocket that I knew that if the land could support it then I had a buyers that would be interested in not only buying the house and remodeling and selling it but also going ahead and you know, building on the additional parcel. So as a wholesaler, the more legwork you can do upfront is your time allows that sometimes you don’t have time to do all this and that’s okay.

Doug (16:44):

You can put it out there to your buyer, let them do the legwork. But I think you stand a greater chance of making bigger money and credibility. Like you mentioned, Patrick, when you can go to them, when you’ve already looked at the property, you’ve already, you know, maybe done some due diligence yourself to determine that, yes, there’s a large enough parcel here. We can add a second property based on the zoning. In this case, it was our, a zoning rural agriculture, which you know, in those situations you have a lot of latitudes. So it was very helpful. I already kind of knew that we’d be okay, the second thing, because there was no water and sewer in this area. I knew it had to make sure that there was a per a situation where you had a soil evaluation. Now as a wholesaler, I’ve actually paid for so evaluations before you know, myself to make sure it part before I presented it to an investor.

Doug (17:26):

But in this case that it was, I was in a wind situation, the property itself, even if it didn’t per, if we couldn’t put a second house on it, it was still a desirable property. There’s still a profit to be made on it. And so I didn’t have to worry too much with regard to you know, having to make sure everything was right. So the buyer ended up doing the evaluation tasks and that before they close on it and sure enough, it, it supported it, they had a survey done and it was, it was beautiful the way it set up. So but yeah, that, that’s kind of the idea. There is if you, if you, if you don’t know who your buyers are, if you don’t know that you have a buyer that’s interested in it, presenting that buyer with that opportunity as a wholesaler could open up a new world for you, your deal deal is you go to that buyer and you’re like, Hey, you’re not, you’re not presenting them with a three bedroom, one bath home on 2.4, three acres. You’re presenting them with a three bedroom, one bath home on a half an acre with additional acre you know, that could be developed that that’s a whole different Avenue, you know? Cause they, somebody, you know, if you could make that property do a number of different things in RA, you could put mobile homes on it, you get, you know, there’s a lot of things you can do to it. Well, anyway, but yeah, hopefully that helps

Patrick (18:40):

It did it, did it. Did I appreciate it? So, okay. So how long did it take from you getting the property under contract with the seller to having, you know, your wholesale assignment assigned just quickly? How long?

Doug (18:58):

Yeah, so basically what I did is it just, you know, I’ll make this brief, but I, what I did is I actually met the buyer out there because I wanted the buyer to have my vision for what this property could be and show him my research. Just a little tip there. You can’t always meet the buyer out there. I get that. You may have to share that over the phone or whatever, or cinema, you know, email or send her a text message or whatever, letting her know, Hey, this is what, you know, this is what I foresee. What could you could do with this property? In this case, I met him out of there because I learned to give him my vision of what could be done. But anyway, that being said, so it was very quickly within that. You know, a few days I had the buyer out there, we walked the property, we walked, you know, we went in, we took a look at it. You know, and I, I arranged all that as the wholesale. You don’t always have to do that, but that’s a good idea if you can arrange it because I would rather be the one with that buyer, then have the seller meeting the buyer and they get to talk and you get the idea.

Patrick (19:53):

Yeah, I totally agree. Okay. So what was the answer to the question? How else would you need a question?

Doug (19:58):

It was, what I did is I took my assignment fee, the entire assignment fee at closing. And the reason I did that, because I knew this buyer already. I knew him well, now here’s what you want to consider. If you don’t know that buyer well then you may want to either get some of the assignment fee or all the assignment fee at the time of assignment, which we, you know, I signed it over to them in a matter of days. Okay. So you might want to get the whole fee up front, but in this case I got a substantial assignment fee. So I structured it a little bit differently. I waited and got that fee at closing. I didn’t require them to put down a deposit because I was literally working with this investor hand-in-hand. I helped them coordinate the survey. I helped them coordinate a so evaluation. I went out and found him because he was busy. This guy was a busy business person. This was when I was full-time hustle. And so I took my extra steps because I was going to make a big, you know, assignment fee on this. So I was willing to go the extra mile for this particular seller, but there’s been times I’ve gotten the whole assignment fee up front at the time of assignment. So you can structure it several different ways.

Patrick (21:01):

Nice. Okay. So meat and potatoes question here, man. So we know that you had an under offered a purchase for 57,000. How much did you assign it for?

Doug (21:15):

Okay. I signed it for 77,000, so it was a $20,000 silent fee.

Patrick (21:20):

Sweet. So you made 20 grand, so here’s the next, so 20 grand, how much time from, you know, starting with the, for sale by owner, working into that offer to purchase meeting the buyer out there, meaning the perk test people out there all the way to closing. How much time did you really have rolled up into this particular deal?

Doug (21:47):

Well, there you go. That was, it was about a six week process to get all that done because we did want to get some evaluation. We wanted to get that stuff done prior to closing, although it wouldn’t have really mattered. But my personal time involved in that couple trips out to the property, some phone calls, things like that. I mean, I may have had three or four hours. It wasn’t a lot.

Patrick (22:08):

Fantastic. So if I hear you correctly, you cleared 20 K let’s round it off and call it four hours. So you were making five grand an hour.

Doug (22:20):

Yeah. That’s, that’s basically true. Absolutely. Yep.

Patrick (22:23):

You know, I, I, I don’t, you know, Doug and real estate investing is great because you can make that chunks of cash rather quickly. Tell me about some of your long-term goals that you have reached by being a real estate investor.

Doug (22:38):

Yeah. Well, and you know, and I, I personally asking that question and one thing I’ll share, I’ll throw in a, another nugget out there for as a wholesaler, as a wholesaler. The nice thing about that is, you know, and I, and again, I was at exclusive hall, so that’s really all I’d be at, except for this back, you know, this has been a few years back, but as a wholesaler, you get first look at a property. So you get to cherry pit, the ones that you might want to do a fix and flip with. So, you know, this particular property, I didn’t want to do a fix and flip, it needed too much work. You know, it wasn’t, but let’s say you go out and you get one, that’s a cosmetic fixer. You may not want to wholesale that one. You may decide, hold on.

Doug (23:17):

I may want to go, you know, get some funding because you know, and be able to take that, get some funding for maybe a private hard money lender. And because it’s an easy fixer and do a fix and flip on that particular property instead of wholesaling it. So that’s kind of the beauty of getting out and looking at that property, then you can make that decision in this case. I didn’t want to do that. But because I did do some of those fix and flips, I kind of transitioned ultimately into doing more fix and flips. And so that barely became my bread butter. Ultimately, as my business grew out, I was able to secure a, you know, a project manager that kind of runs those for me now. So I don’t have to be there for the day-to-day operations. I just write the checks and, and help with the vision of the property.

Doug (24:00):

But but that being said, even now I still have deals that are wholesale, that I’ll flip a quick flip you know, that allow me the ability, because I may not want to fix it flip every deal. It may not. It may, maybe I get offered a deal in a County that I don’t really do a lot of business in, or maybe it’s, you know, it, my I’m too, you know, my guys, my crews too tied up on some existing projects and I don’t want to add another project right now. You know, why not monetize on those deals? That’s why you don’t have buddies that are a buy and hold investors. And I’m like, guys, why are you skipping on that deal? Just because it’s not good to put a tenant in there. Why don’t you just launch your wholesale? It’s I’m going to, I’m sure there may be a buyer if the numbers work for.

Doug (24:41):

So, you know, that’s really what it’s all about is you know, taking advantage of that. So I moved more in the fix and flip arena and still do some wholesale deals as well from time to time, because there’s always people looking for deals. No doubt about that in terms of having that. And, you know, in, in the, you know, it’s all about the numbers and, and I’ll mention, you mentioned the $20,000 and I’ll wrap up with that. You know, yeah. Why did I make 20 on that deal? Because what that investor was able to do is he was able to not only remodel the house and sell it and make a profit. So he was making somewhere around a 15 or $20,000 profit just on that one house, not to mention, then he owned the land out. Right. Cause he subdivided that out.

Doug (25:21):

Once he bought it, he owns the additional parcel, which was about 1.7 or so acres over an acre, because I think it was 2.2 0.4. Yeah. 2.4. So actually, yeah, so you get the idea and then he went on to make almost $80,000 on, on that deal. By the time he built, put a spec house on it sold it, he did very, very well. So if he, you know, he’s making, you know, 80 to 90, I want to make a large amount as a wholesale. So I made 20. Sometimes you can’t make 20 on every deal. You may only make five or 10, you know? Sure, sure, sure. So, if you were not a real estate investor, what would you be doing, man? Oh man. Well, you know, my background’s in ed the case and I taught school for a lot of years and I’d probably still be a broke school teacher. It’s an honorable profession, but I’ll tell you why, you know, when you got kids to put through college and, and you know, those kinds of things, it’s tough to survive on a teacher’s salary. So I started doing real estate part-time as a side hustle and ultimately it turned into full-time and I was making more money part-time than I was making. Full-Time

Voiceover (26:24):

Want to be like a guest on our show and make some cash in real estate. Join the center of the real estate investing universe and start connecting with free education off market deals, cash buyers, and even funding partners. Connected Investors.com has been changing the game for people around the country since 2005. So just visit Connected Investors.com forward slash cash. So you can start doing more with real estate, no matter where you are in your journey to financial freedom. Seriously, guys, if you were brand new to this and looking to close your first deal, there is not a better headstart out there to help you find properties and learn what you need to make cash. If you’re already an experienced flipper or landlord, then Connected Investors gives you access to dozens of unique inventory sources and automation that cannot be found on any other platform in the industry, Connected Investors.com forward slash cash. Go there, claim your free account, get your gift pack. And then, well, don’t look back, jump in and put that whole ecosystem to work for you because all guests of this show come directly from the Connected Investors community and would love to interview you after your first or next life-changing real estate deal.

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Meet The Host

Patrick Giarelli lives in beautiful Wilmington, North Carolina with his wife and dogs. Patrick is an open-minded, high-achieving individual who has had success not only in the real estate industry but also in wholesale jewelry. In addition to hosting The Real Estate Cash Chronicles podcast, Patrick currently helps scale-out one of the southeast's largest home-buying teams.

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The post Micro-Flipping For Beginners: $20,000 Profit On FSBO appeared first on Connected Investors Blog.

* This article was originally published here

476: Using Partners to Scale & Killing it With Airbnbs w/ Tony J Robinson

Normally we have two hosts and one guest, but today we have three hosts, and one of them happens to be a guest as well. We welcome Tony J Robinson, host of the BiggerPockets Real Estate Rookie Podcast, to the show! Tony has grown a respectable following due to his impressive short-term rental portfolio, his ability to scale quickly, and his made-for-radio voice.

Tony grew up with real estate around him. His dad had a wholesaling company, and when it closed down his father relayed to Tony that his biggest mistake was failing to keep any of the wholesale deals as rentals. With this advice in mind, Tony saw an opportunity to fix up some rental properties in Louisiana. This gave him an intro to real estate funding, and after a few successful deals, he decided to dive in head first.

Now, Tony has short-term rentals in Tennessee and Joshua Tree. He’s started multiple partnerships and speaks on the benefits of having reliable, trustworthy partners, plus how to avoid toxic partnerships that will stop you from scaling. He also lets us in on his free and simple method of finding out whether or not a market will work for short-term rentals.

In This Episode We Cover:

• The importance of having cash-flowing passive income
• Why you should never treat a rental like your primary residence
• Buying in markets that are heavily reliant on tourism 
• How to make a strong, stable, and reliable partnership 
• The risk vs. rewards of short-term rentals
• Long-distance real estate investing as a rookie investor
• And SO much more!

Links from the Show

• BiggerPockets Forums
• BiggerPockets Real Estate Rookie Podcast
• BiggerPockets Money Podcast
• BiggerPockets Youtube Channel
• BiggerPockets Money Youtube Channel (Please subscribe!)
• Real Estate Rookie Youtube Channel (Please subscribe!)
• BiggerPockets Podcast 364: Snowballing 6-Figure Short-Term Rental Profits Into Passive Investments with Avery Carl
• Airbnb
• VRBO
• Zillow
• PriceLabs
• Brandon's Instagram
• David's Instagram

Check the full show notes here: http://biggerpockets.com/show476

* This article was originally published here

Flip Houses & Profit With No Money Down

EP#5

Flip Houses & Profit With No Money Down

Flipping houses with no money isn’t just possible, people do it every day. People like our most recent guest, Jason Velie, who made $26,000 by using the power of social media, hard money, and creative financing to flip his first property.

Meet Jason

Jason has worked in finance for most of his career, and jumped into real estate when a vacant house in his neighborhood piqued his interest.

When the house remained empty for nearly a year, Jason reached out to his local Facebook group to get more details. That’s when a motivated seller from another property reached out to him.

Check out this episode of The Real Estate Cash Chronicles to learn how this tentative “newbie” got his first property under contract but perhaps more importantly, how he financed the flip using none of his own money.

Listen anywhere you hear podcasts or watch on YouTube, and don’t forget to claim your free Connected Investors’ account!

Transcript

Click Here to Read TranscriptMinimize Transcript

Patrick (00:00):

Today on Cash Chronicles, we’re going to find out how Jason made 26k, and using zero of his own money.

Voiceover (00:10):

Welcome to this week’s episode of The Real Estate Cash Chronicles, where we speak with real investors around the country to break down individual deals. They’ve completed showing you the actual timeline of events that it took to make a profit making money in real estate. Isn’t a mystery. It’s a step-by-step process, but once you complete one, you’ll never think about cash the same way let’s get started.

Patrick (00:33):

Welcome to this week’s episode of The Real Estate Cash Chronicles. On today’s episode, we talked to Jason Velie about how he closed the $26,000 deal using zero of his own money. For those of you who are new, my name is Patrick Giarelli, proud member of Connected Investors and the host of Cash Chronicles. Before we go any further, I’d like to pivot here and make sure I reach out to you, listeners and Watchers. I look, go check us out, get subscribed to the podcast. Let it come to you automatically. If you like, what you see, give us a thumbs up. If you really like what you see, share it with your friends and your neighbors and your coworkers. We want to be here for you. But at the same time, we want to make sure that we get out there for as many people as we can. So like us, give us a thumbs up. I don’t know, email us, text us, post this on Instagram. I mean, make things happen, do big things and make sure because if you go and check us out, then you’re going to find all your free stuff and the free details and the little niche information, those golden nuggets that might push you and your real estate investment right over the edge. So let’s jump into this $26,000 flip. Okay, Jason, thanks for being on the show today. How are you?

Jason (01:58):

Hey man. Doing great. Thanks for having me.

Patrick (02:01):

Yeah, man. We’re we’re we’re we’re glad you came along for the ride. So Jason let’s, let’s dive into this flip. You made, you know, first things first, what was the process in finding the property?

Jason (02:16):

Sure. Yeah. So this was actually the very first flip that I ever did. Um, the, the way we found it was my wife and I, it was actually in the neighborhood that we used to live in. My wife and I were walking the kids around the neighborhood every day. And we saw this house. It was, um, look clearly vacant and we passed it and passed it for over a year. Eventually after I got more interested in real estate, I took a picture of the house and I posted it on our neighborhood Facebook group. And I said, Hey, does anybody know the owner of this house? I’d like to see if they’re interested in selling. Uh, cause I had tried to look up the owner online and it was so outdated. I didn’t have luck getting the contact info. Well, I actually didn’t get the answer to that question, but because I made that post because I did that work, trying to find the deal, somebody else that was in the neighborhood, Facebook group messaged me privately and said, Hey, whereabouts to move out of our house. That’s on the other road over, would you be interested in looking at our property? And I asked her if she had an idea of how much she was asking for it and she gave me a number and I said, yeah, I’d definitely be interested in looking at it. And then that’s when we schedule a time for me to go look at it.

Patrick (03:36):

That’s fantastic, man. So putting, putting that Facebook group for this property, you didn’t get that property, but you gain the attention of the other person. That’s right. I love it. That’s cool. I love it. When a story like that comes together. Um, okay. So you started a conversation with her and um, did you get her, you know, offer to purchase or what, what, what was the next step

Voiceover (04:10):

Looking for some cash for your next flipper rental, just visit private lenders.com, get matched with hundreds of verified lenders from around the country. We’re looking to help you with your next real estate deal.

Jason (04:25):

Sure. So I went and saw the property first. You know, I saw there was a, there were a handful of, uh, things that needed to be done, but very minor, mostly cosmetic stuff. And she was asking 65,000 for the property. And I came in and offered 60,000 under the condition that I would pay all closing costs. And she came back and said, after talking to her husband, she came back and said, well, as long as, as long as you cover all the closing costs and you, you walk us through this process because we’ve never sold a house without a realtor before, you know, as long as you’ll do that, then, then we’ll come down to the 60 that you want. And then, uh, at that time I didn’t even have an offer to purchase format sitting around anywhere. I had no idea how to do that, where to get that or anything. So I went home and found one online and, or I think I had a realtor send me one and I just use the standard, like NC realtors, 14 page form or whatever it is. And so I took that giant contract over there to the seller and tried to explain all that to them. And they signed it right there with me. Uh, I set the, the terms out to be like 60 days, just, just to give me some extra slack, because at that point I still had no idea how I was going to fund it.

Patrick (05:47):

Sure. Okay. Okay. That’s smart, man. I just want to remind our listeners real quick that you can find properties just like the, that Jason and I are talking about, uh, today and hundreds of other off-market opportunities using the link in the description for this episode, the link also provides you with information to sign up for a free membership program, which gives you access to hundreds of online tools. So, so far let’s recap, the first couple of steps Jason’s walking around the neighborhood with his wife and children sees a property, connects youth and technological platforms Facebook about, Hey, I want this property. Doesn’t get that property finds another property from the reach out. He does walks it and talks to it a little bit. They say 65. He makes a counter offer at 60. He goes back home researches that a little bit finds the yes, like he said, 14 page North Carolina realtor offered a purchase contract. It goes back over to the seller, walks them through, filling it out, gives himself 60 days of slack, a little lag time to make sure he can position himself and get this thing done. Um, so then w what was the next? What, what happened next?

Jason (07:17):

So, yeah, then it was game on, then it was how in the heck am I going to fund this thing? Because I don’t have the money to pay for it. So I, I had learned, you know, through other podcasts and books, a little bit about hard money and private money. I knew I probably wasn’t going to get any private lenders that would lend to me without any experience. Um, so I started looking around for hard money lenders and I researched several, I looked up a bunch of them. Um, and I found a few that were willing to help or work with me in some fashion. But what I found is that this property I got under contract was a double-wide on a permanent foundation. And most hard money lenders will not touch a double-wide. Even if it’s on a permanent foundation deeded with the land as real estate, even in that situation, most of them won’t touch it.

Jason (08:11):

I was fortunate enough to find a hard money lender based out of Charlotte that was willing to lend to a first time flipper that was willing to lend on a manufactured home on a permanent foundation. And they actually ended up lending me 100% of my $60,000 purchase price. Plus 100% of my $10,000 rehab budget. So it was expensive. You know, they charged me three and a half points and 12% interest. Um, but you know, it, it it’s what I needed at the time. But so at closing between my closing costs, plus my three and a half points that I had to pay them, I had to come to the table with $8 and I didn’t have $8,000 sitting around in a bank account. So I leveraged a credit card for the $8,000, which is how I ended up having no money into the deal. And I’ll elaborate on that a little bit, because when I tell that story, people always ask me, well, how do you leverage your credit card?

Jason (09:14):

How’d you get money out of it? It’s not my idea. I didn’t come up with it. I wish I could claim it, but I learned somewhere. I don’t even remember where that if say you and your wife have a Venmo account or a cash app account, you can send, say a thousand dollars to your wife in Venmo. We’ll charge you 3% to do that. You can send it from your credit card. So it will cost you $1,030, and it will put a thousand dollars in your wife’s Venmo account. Well, then she just turns around and sends you back that thousand dollars back to your Venmo account. And then you have a thousand dollars in your account, and then you just cash it out into your bank account. And then you’ve got a thousand dollars cash sitting right there. So I did that eight times until I had $8,000 in my bank account.

Jason (10:01):

Uh, and then, so I ended up in total pain, $11,000 in total financing costs, you know, from the points I paid up front plus the like five months or so that we held it. It took a while to get it sold because of COVID, uh, people that, some of the buyers that we had under contract losing their jobs and falling through. Um, but I mean, it was, it was a super easy flip from the day I got it, uh, closed on the purchase to the day I relisted. It was only 18 days and that was having my contractor do all of the work. I mean, we just did some flooring, some paint, some new light fixtures, plumbing, fixtures.

Patrick (10:43):

That’s, that’s amazing, but slow down. Cause I want to, I want to dig a little bit. I mean, I’m very, very grateful that you’re super going step by step and you had a lot going on there. I just want to make sure that, that we slow down, open them up just a little bit, just a little bit, and this way it’ll benefit the listeners even more. But thank you. So one of the things I heard in there that I got to mention real quick was how, I mean, yeah, you might not have invented it, but how thoughtful and creative it was to do that Venmo trick, um, because basically what you were saying, what I heard and what I think our listeners will hear is that if there’s a will, there’s a way, and if you want it bad enough, you’ll find the way. Yep.

Patrick (11:34):

That’s fantastic. That’s fantastic. Hey, look, let me, let me just mention this real quick. As Jason had mentioned, you know, he used a different private lender out of the Charlotte area. Um, you know, for many of our listeners at this point in your real estate journey, you know, you can go to PrivateLenders.com and you’ll be able to find that funding that you need out there. And then, and hopefully streamline the process that, that Jason was mentioning was, you know, a little challenging, but he persevered. All right. So, so, okay. So, so, so, so we got the house, um, let’s, let’s get to this part, you explained the creative, uh, orientation with the Venmo, um, the closing you covered the closing costs and now you’ve closed. So let’s, let’s, let’s jump in right there. So it did need some rehabilitation.

Jason (12:36):

Sure. It needed, yeah, it needed flooring, a little bit of paint, some light fixtures, a couple of plumbing fixtures. We added a dishwasher. We pressure wash the front and back deck got rid of some junk that was in the backyard. Um, I didn’t, I didn’t have to do anything. My, my total rehab budget for having my contractor do all of it. Labor and materials was only 10,000.

Patrick (13:05):

Nice. And how long did it take

Jason (13:08):

From the day I closed on the purchase to the day we relisted, it was only 18 days. So the contractor was finished and only like 14 days. Cause then we had to get the realtor and to get the pictures and all that

Voiceover (13:20):

The Connected Investors app connects you with investors notifies you of available properties, helps locate cash buyers and secure private funding to close deals, set up in seconds to become a member of the Connected Investor social network. Now you can scroll through your main feed to find cash buyers seen investment properties, not available to the general public and network with investors by adding your own comments to a thread, to keep the conversation going. The control center is your connection to add properties, to sell, start new discussions, connect with local investors and even find private funding. The notifications tab will keep you alerted to new investment properties and offers. You’ll also find new friend requests to connect directly with the community to build your network from the property marketplace. You’ll be able to find favor and make offers on investment properties, download connected investors today to find, figure, fund and flip investment properties on the go. Sounds like you had a good contractor. Yeah.

Patrick (14:26):

Nice, nice. Nice. Okay. So you got all of that accomplished with around $10,000 for the rehabilitation. So here’s a question. How did you figure out from your purchase price at 60 14 days later after the rehabilitation, or maybe before, during, how did you figure out what it was, what its listing price was gonna be?

Jason (14:56):

Sure. Um, so this one was a lot easier for me to calculate that, you know, ARV after repair value, if you will, because it was in the same neighborhood that I lived in. So obviously I’m going to know those house values very well, but I mean, usually you just pull up the most recent, similar comps that have sold recently. Um, and based off of those sales, you pick your price. But in addition to that, the hard money lender, when I first put the application in for funding, they did send out an appraiser before they were willing to lend me the money. And the appraiser was doing the appraisal subject to the repairs being completed. And his appraisal came back at 121. We ended up listing it at, uh, 125.

Patrick (15:47):

Okay. Okay. That’s pretty cool. So I want to get, even though the appraiser, you pretty much just nailed out in the head. I mean, that’s what they do. And he was able to, you know, see, uh, once the repairs were done, what the true potential was, but you mentioned something there. And I just want to get a little, a little bit more granular, um, comps. So I think sometimes investors like you like me, um, in many industries and especially real estate, uh, this happens, we say, comps, I know what that means. You know what that means? Explain to the person who this is day one in their real estate path. What does a comp mean? How do you find said comp and it is comp an abbreviation for something?

Jason (16:44):

Sure, absolutely. Um, so comp can be short for comparable or a comparable sale and essentially what makes a good comp is a very similar property as the property in question, um, that’s in very close vicinity that has the same amenities, um, things of that nature. Now, the way I usually comp properties, uh, I don’t know if this is the best or most accurate, but the way I do it is I just pull up, uh, my realtor.com app. And I look in the area, I use the map feature and I look in that neighbor, I start right where the house is that I’m trying to comp and I select my filters to only show what has recently been sold. And I’ll narrow it down. If I need to, to say, you know, only show me three bedroom, two bath properties that have recently sold, you know, that are between such and such square footage. And then I’ll slowly zoom out on my map and I’ll try to find comps that are as close to my property as possible. Um, and if I have to expand that map search a little bit farther to find decent comps, then I will, but that’s generally how I do it.

Patrick (18:01):

Awesome. Thank you, Jason. Uh, you know, for our new listeners out there, or again, you’re, you’re new into your real estate journey. His definition was absolutely perfect. Uh, that is how I explain it to people myself and he hit on all the right cylinders. Appreciate that. Only thing I might add also is that, you know, it can Connected Investors tools will also streamline some of that stuff for you. So if it’s his realtor.com usage or if it’s connected investors tools, it’s, it’s going to be a similar orientation, but you definitely want to take into consideration vicinity, uh, you know, square footage, age of home, how many bedrooms, how many bathrooms, like he said, as close as possible. And one of the, one of the things I think this is really, really viable, you know, as you mentioned, Jason, this was a double-wide trailer on a brick foundation. So I don’t know if you’ve ever gotten to a challenge like this, Jason, but I have where I didn’t dig quite deep enough. And before I didn’t realize it, I was using a site built home as a comparable for a double-wide trailer. And I would say those are not comparable. What would you say?

Jason (19:28):

I would agree. I mean, and even, even appraisers agree, if you look at an appraisal, if an appraiser has no choice has no recent comps to go off of, of the same property type, you know, say for example, they’re trying to comp a stick-built property, you know, a property that’s not a manufactured home or mobile home, but they can’t find enough comps. Sometimes they have to use some type of modular comp or something like that. And even on that, you’ll see on the appraisal report because of that difference in construction type, they will make a value adjustment on there. So even, even appraiser appraisers will agree that they’re, they’re generally not ideal. You know, you don’t want to use different types of, uh, properties for comps if you can avoid it.

Patrick (20:16):

Yep, yep, yep. Yep. Well put man, well put, I appreciate that. Uh, so, okay, so now you’ve rehabbed it and approximately 14 days when you get your money for the rehab was funded by that group, you found in Charlotte that you’re paying the points too. And so on and so forth, um, took about 14 days. Realtor comes over and let’s pick it up with realtor coming over, um, and what, what that process to get that sign in the front yard.

Jason (20:52):

So that was pretty straightforward. Uh, I called a friend, that’s an agent and I just said, Hey, do you want to list this property for me? And of course he said, yes. And so he called and said scheduled for somebody to come out and take professional pictures of it, as soon as he got those pictures back. Um, well obviously he made, he had me sign a contract with him first, a listing agreement. Um, and then he had the pictures taken and, uh, he used those pictures to list it on the MLS. Uh, and then we just started showing and we had it under contract two different times that fell through because people lost their jobs. And that’s why I held it for a total of about five months, um, from the purchase to the sale. But it had those other situations not happened. It would have been a much shorter transaction.

Patrick (21:45):

Sure, sure. That makes sense. That’s kind of tricky and hard to predict, but what’s important is the determination, the grit, uh, you know, you didn’t just cry and go, whoa is me, sounds like to an extent you didn’t find just one buyer, not just two buyers, but when it was all said and done, you sold your first investment property three times. I mean, there’s something to be said about that. The first one you did it, you did a good enough where, I mean, Tom, Dick and Harry wanted it, uh, but only one of them could pull off the closing procedures. Okay. So I think we’re pretty much to an extent we’re where we’re heading towards closing. So you covered all the costs from your initial seller. We already did that though, because you closed rehab. So now you’re now you’re selling. Um, was there any type of deal structure or negotiating that took place between you as the seller and as that final buyer,

Jason (22:57):

There was a, so like I said, we initially listed it at 125. We came down not too long after that to 120 and the, the final, the third offer that we, that, that we got that third person under contract, they had made an offer a full price offer, but with really large concessions, they wanted like 7,000 towards closing. So since I knew the property was worth it, I made the counter offer of how about you increase your offer to 5,000 over asking to 125 and we’ll give you your 7,000 concessions because that only truly takes 2000 out of my pocket and the appraisal on their end, luckily came back high enough to justify that 125.

Patrick (23:44):

Absolutely. Absolutely. And what I heard again, there is, you know, some creative thought processes. Um, you know, one thing I’ve learned in this industry is that there isn’t, there’s not one size fits all, you know, you’ve, you’ve, yes, there’s a step by step system, but sometimes those steps can still be a little, a little different than the last steps you took. Would you agree? Absolutely. Okay. So, alright, founded on a walk, posted it on Facebook. Got it. Under contract closed with that person brought in your contractor about 14 days of work, about $11,000. Nope. About $10,000 in rehab, then you listed it, sold it three times negotiated that third one in that creative format of restructuring, some of the buy price for some of the closing costs. Um, you closed now at that point, you know how, so at that point you got a check for approximately $125,000. Right? Right. So tell me about how it got spread out. And of course we all understand that when it was all said and done, Jason’s panned received a romaine, a remaining $26,000, but, but let’s, let’s break it down. And if you, you know, the best you can and tell me where it went.

Jason (25:41):

Sure. So, um, the bulk of it went to the hard money lender to pay them back their $70,000 that they lend me in total because throughout the process of me owning the property, I made interest only payments to them. So I never paid any of the principal portion. So I still owed them the full 70,000 at closing. So that was paid directly to them. Um, the remainder came back to me and I had to pay back, you know, my credit card that I, you know, taken out and all that stuff. Um, and there were a couple other, you know, more closing costs and there was one other thing where we had to get, um, somebody to do crawlspace work because it was an FHA loan. So he was paid out a couple of grand at closing. Um, but at the end of the day after I got my check at closing and I paid back my credit card, I netted before taxes a little bit over $26,000.

Patrick (26:39):

That’s fantastic. So trying to make sure I listened to you, um, in a, basically a span of five months, you made $26,000, which is basically quick math, $5,000 a month. And this was your side hustle. I mean, you’ve got a full-time career, right?

Jason (27:07):

Yeah. And do you have a full-time job in finance?

Patrick (27:11):

So $5,000 a month bonus. I mean that most of us, I mean, that was good for you, right? Absolutely. I

Jason (27:25):

Think the biggest thing was just the, the return on the amount of time that I had to put in it was, was the biggest reward. Because if I had a flip that I had to do a a hundred thousand dollars rehab on, but I was only going to net $26,000 that might not be worth it. But in this case I had very limited time in it. I had the contractor do all the work, so I didn’t have to do that much at all.

Patrick (27:50):

Yes. That is the secret sauce, right. There is. I didn’t have to do much of the work. I mean, that’s, that’s the streamline orientation, what real estate can do for so many of us is kind of automate it kind of make sure you plug in the right pieces, but I didn’t have to do much of the work to make $26,000. Um, so what would you do differently, if anything, and what was the most important thing you learned from your first flip? Um,

Jason (28:34):

There’s probably not much I would do differently. I would, there’s a, there’s a, a couple other rehab items that I would have added to the budget just to help it sell a little bit faster with a little bit easier buyer. Um, there’s a couple of things that looking back now, I realize, Hey, those were pretty outdated. You should have just replaced those. They didn’t cost that much. Um, so I probably would have done a little bit more on the rehab side, um, as far as what I’ve learned from it, honestly, just learning that it, this is a real thing. It actually works that you can, you can make money appear out of thin air in real estate. It’s this was, this was really the proof of concept for me. And what, what really, what really gave me the bug, I guess you could say do

Patrick (29:23):

Proof of concept so strong, so real. I totally appreciate you sharing that with all of us. Um, yeah. I mean, your story in a nutshell, in the last few things you just mentioned, that’s the reality that is it, that, that, wow, this is a real thing. It can be done. Why do I think and believe it can be done because I just did it. I just made 26,000 hours. Uh, it’s fantastic. Um, you know, so real estate is often a stepping stone for many people, meaning you can make a lot of profit in real estate, so you can fund other long-term goals. Was there a moment? And I’m just going to say from that first one to where you are now, I mean, I know that the first one got you started and there’s been more things since, um, but it was, was there a moment or, or even a purchase or an experience or an adventure that really made you say I’ve made it?

Jason (30:34):

Um, I think I’m almost there. I think what cause what I’m looking for now is, is, um, I’m planning to sell some of my, uh, single-family properties and 10 31 exchange those funds into some multifamily deals, which is really where I want to be long-term anyway, I never intended to flip any properties. I just wanted to hold stuff, but you know, you can’t refinance on a manufactured home as an investment property. So I couldn’t have kept that first flip, even if I had wanted to, and most single family home properties right now don’t make sense to refinance out of, from a cashflow standpoint. Most of them, the numbers don’t work out that well, or, you know, the, on the other side of it, even if you bought a manufactured home with cash, it’s probably not going to appreciate very well long-term. So for me, I’m looking to sell some stuff and exchange that, that money into some long-term multifamily stuff. But I think, um, I think I’m right there. I’m, I’m, I’m really close to really getting into where I really want to be with it.

Patrick (31:41):

Cool, cool. Glad to hear that for you and yours. Um, so here’s a crazy question. I mean, you know, uh, what do you think your life would be like if you never started investing in real estate, you were still working at Lowe’s Home Improvement.

Jason (32:03):

Oh man, that was my college job. Uh, honestly the short answer is it would be boring. It’d be boring and it would be a whole lot more work. I mean, right now I’ve got an amazing finance career. I make great money. It’s very flexible. I’ve got good benefits from my family. My wife is only working one day a week right now, you know, so I, it’s very nice, very flexible, but I’m bored. You know, I, I, my, my day job doesn’t excite me, you know, I still do it. I I’m grateful for it. I like it it’s, but it’s not, it doesn’t have the, the, the thrill of the hunt, you know, that, that the real estate investing has behind it.

Patrick (32:49):

Thrill of the hunt. Heck yeah. I mean, that’s, that’s kind of a fervor and a passion that I think many, um, you know, experienced real estate investors, or just getting into the real estate investing industry. There is a lot of the thrill of the hunt or how long you tinker, uh, at Connected Investors or at PrivateLenders.com. And you’re just scrolling through things and you’re touching things and you’re clicking on things and you’re looking at things. And then this thing makes you look at that thing. And that thing makes you look at this thing. And before you know, it, you are you, I mean, you’re, you’re down so many different wormholes, but they have a reason for their worm holes. And you hear that this place is going to need a new toilet. Well, how much does the toilet cost and you Google it and there you go, a hundred bucks. All right, cool. I’m good with that. We can factor that in. Um, that’s fantastic, man. Uh, so Jason, what habit would you credit your real estate investment success to?

Jason (33:59):

I don’t know if the right answer is habit or, or passion, but I just, I just absolutely love this stuff. I eat, breathe, breathe, and sleep it, you know, but I would say one of, one of the things that has given me the most success is spending a lot of time with wholesalers and aspiring wholesalers. You know, most investors are especially experienced investors do not want to waste time with newer wholesalers or aspiring wholesalers because to their credit, it usually is a waste of time. You usually end up spending a lot of time on the phone, answering a lot of questions, teaching them a lot of stuff for most of them to never even find a deal. Um, so you, you can waste a lot of time, but I have intentionally every time I’m in any kind of Facebook group or on Connected Investors or anywhere else, I see somebody that’s an aspiring wholesaler in my area.

Jason (34:58):

I always reach out to them. I always answer all their questions, help them as much as I can because that one out of 10 finds an amazing deal. And the perfect example of that is the big Leland flip that you and I have spoken about offline, that a wholesaler is bringing me, I should close on. Hopefully sometime this month, this is that for that wholesaler’s very first deal. He’s going to make an assignment fee of 29 grand on it. And I’m going to profit somewhere between 60 and 80 on it. I mean, it’s a huge deal, but it’s his very first deal. But the reason I got first dibs was because I started with him at the answering all of his questions and spending a lot of time with them. So I’ve had a lot of success with that

Patrick (35:44):

As fundamentally. Fantastic. And I, to try to have as many of those types of conversations with new people or really any people, and as you just alluded to, um, and something you and I have spoke about, you know, outside of this call before, um, relationships, right? I mean, it’s, it’s, it’s treating people like how you want to be treated. It’s helping people along the way. Um, any other relationship rule of thumbs that you might offer?

Jason (36:22):

Uh, have you ever read the book? The Go-Giver?

Patrick (36:25):

Cool.

Jason (36:28):

Yeah, the book, the Go-Giver is just a phenomenal, phenomenal book. That is a very well laid out fictional story, but the, the concepts that it, it puts out, it’s just basically just always be giving, always be adding value wherever you can. And it all comes back to you. I mean, you, you, if you help somebody, you help another investor find a deal. Even if you don’t get paid on it, it’s going to come back. They’re going to want to help you. Yeah. You’ll have some people that take advantage of you. It happens, but all in all it comes back. And, uh, a good short example I can give you that actually is just two weeks ago, I had a wholesaler locally bring me a deal that didn’t quite work for me, but I was like, you know what? I think I know the perfect buyer for you.

Jason (37:16):

I’ve got a friend, that’s an investor in this area. Let me contact him. I gave him the information. I connected those two guys. I told both of them. I didn’t need any money from it. I didn’t need the JV with the wholesaler. I was just connecting them. Um, so they ended up getting under contract together and they’re supposed to close soon. And both parties have told me that they’re going to pay me something on that for connecting them. And so I might make even more money just from trying to be nice and providing value than if I had tried to be greedy and take the money up front.

Patrick (37:49):

Awesome. Jason, thank you. Thank you. And it looked for our listeners. There’s a book, uh, and it doesn’t happen too often, but it happens. I haven’t read it. So now it gives me one for the rest of you as well. Go-Giver. G.I.V.E.R. Go-Giver. So that’s awesome. Thank you. Thank you so much. Hey, so we’re getting close. We’re getting close to ending things up here. Um, and, and I don’t really have a spot for this, but I, so be it. I mean, I guess I’m a host for a reason or something. You told me a real quick story one time and I just think it, it has, it has power. Um, so I want you to tell the real quick, similar version of the story, but the, um, where you bumped into, um, CEO and President of Connected Investors, Ross Hamilton. So, but, but you had a chance encounter with him years ago. Tell us about that real quick.

Jason (38:51):

Yeah, sure. So it was actually my senior year of my finance degree at UNCW. Uh, professor Ed Graham taught a real estate investing class and loved the class, by the way. That was the first time that I learned that you could truly mitigate almost all of your risks in real estate investing if you just buy. Right. So huge, thank you to Dr. Graham for that. But, um, because, because Ross Hamilton was a former student of Dr. Graham, um, Dr. Graham had Ross come into the class one day and speak to us as the class and Ross came and he, he told us a little bit about investing, but what he was really excited about was this Connected Investors thing. And I remember he was all excited that he had just gotten his, his three letter URL, the CIX because, uh, that was the first I had heard that apparently that’s a big deal and it’s hard to get a three letter URL or they could be very expensive if you do find one. Um, so the whole, you know, connecting with private lenders platform and stuff, because what he was telling us about, um, but it was in its infant stages at that point. And you know, now I look back at it and I’m like, holy crap. He actually did it for you, man. You actually did it,

Patrick (40:15):

You know, is it a big world? Is it a small world? I think sometimes it just depends on who you ask. Um, I feel like more often than not, it’s a super small world when your eyes are wide open, when you’re looking for connections, when you are living the right lifestyle and in being a giver. Um, and I, I just appreciate that, that quick share even a little off topic, but I think it’s still a fundamental part of this podcast today. So, um, so man, really, basically, Jason, I just want to say, thanks. Thanks for being on the show today. Um, lastly, we have what we call rapid fire. Okay. I’m going to ask you a series of questions and you answer them as fast as you can just say the first thing that comes to your mind, are you ready? Let’s do it. Coco cool scale of one to 10. How strict were your parents get up early or stay up late? Stay up late. How many hours of sleep do you get? If you came across an extra hundred grand, what would you do with it?

Jason (41:33):

Leverage it as down payments or down payments for private lenders on four or five.

Patrick (41:40):

Yes. Favorite or last book read?

Jason (41:46):

Uh, last book I read was the, uh, Advanced Tax Strategies for the Savvy Real Estate Investor. It’s a book that would put most people to sleep, but I’m a nerd for the numbers and the taxes side of it.

Patrick (42:01):

Hey, I appreciate and love it for you. Title itself got me exhausted, but if you could be any superhero, who would you be? Oh man. Maybe Nightcrawler. Okay, let’s go. Here we go. And that would be valuable. Something everyone should do less of worry, something. Everybody should do more of be generous. Bitcoin bang or bust. I don’t know. Reasonable. Well, people live in Mars in your lifetime. I’m going to say no. Yeah, yeah, yeah. For what it’s worth. I’m going to say no to, Hey. Uh, so Jason, you did it, man. Thank you. Okay. Uh, I want to say real quick to the rest of the Connected Investors, family, and community. Thanks for watching this episode. Remember again, one more time. If you need money, go to PrivateLenders.com. If you need properties, go to ConnectedInvestors.com. If you need to put it all together, we can help you put it all together. Okay? If you like anything you heard today, give us a shout out, give us a Google totally off that makes the edit, but at the same time, thumbs up and share it and tell your neighbors and tell your friends. Um, one thing that I’m going to just quickly say is, uh, and Jason said it. So I’m stealing it from him. If it’s real estate investing, or if it’s this podcast, I love this stuff. Hey, you guys stay safe, stay happy, stay healthy, stay kind. And we’ll see you next time. Thanks again.

Speaker 4 (44:03):

Want to be like a guest on our show and make some cash in real estate. Join the center of the real estate investing universe and start connecting with free education off market deals, cash buyers, and even funding partners. Connected investors.com has been changing the game for people around the country since 2005. So just visit connected investors.com forward slash cash. So you can start doing more with real estate, no, where you are in your journey to financial freedom. Seriously, guys, if you are brand new to this and looking to close your first deal, there is not a better headstart out there to help you find properties and learn what you need to make cash. If you’re already an experienced flipper or landlord, then connected investors gives you access to dozens of unique inventory sources and automation that can not be found on any other platform in the industry, connected investors.com forward slash cash. Go there, claim your free account, get your gift pack. And then, well, don’t look back, jump in and put that whole ecosystem to work for you because all guests of this show come directly from the connected investors community and would love to interview you after your first or next life-changing real estate deal.

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Meet The Host

Patrick Giarelli lives in beautiful Wilmington, North Carolina with his wife and dogs. Patrick is an open-minded, high-achieving individual who has had success not only in the real estate industry but also in wholesale jewelry. In addition to hosting The Real Estate Cash Chronicles podcast, Patrick currently helps scale-out one of the southeast's largest home-buying teams.

Connected Investors

Real estate investing professionals from around the world turn to Connected Investors for innovative resources and timely local information about the business. Known for its cutting-edge technology, social network and in-depth educational opportunities Connected Investors is the industry’s leading source of real estate investing information.

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The post Flip Houses & Profit With No Money Down appeared first on Connected Investors Blog.

* This article was originally published here

What Las Vegas Home Sellers Need to Know About Capital Gains Taxes

Did you know that you must pay taxes on the profit from the sale of your home or investment property? Considering the highly high toll taxes can take from profits, this is one surprise it is better to avoid when you have made such a considerable investment of time and money. When the value of an investment in capital assets, such as real estate, experiences growth and subsequently sold, there is a tax on the capital gain at that time. When the acquisition sells, the capital gains are said to be realized by the investor. 

The IRS approaches taxes on these gains in differing ways, depending on whether the investor held the assets, either short or long term. Investors can deduct your cost basis or original purchase price to determine the capital gains. You can subtract the cost basis and any costs of improvements from the profit from the capital gains. 

Planning your investments, from acquisition to resale, should be completed before you ever close on your first real estate investment. A significant part of this overall business plan should include avoiding capital gains taxes when it is time to exit a property. We will explore more about what Las Vegas home sellers need to know about capital gains taxes.

Limits

These taxes are capped at a specific limit to restrict the growth of government revenue. Las Vegas home sellers need to understand how these rate limits on capital gains taxes will affect their investment. A capital gain rate of 15% will apply should your taxable income be at least $80,000 but less than $441,450 for single filers, $496,600 for married filing jointly or qualifying widow(er), $469,050 if you plan to file as head of household, and $248,3000 if you are married filing separately. A rate of 20% will apply to any gain over the top threshold of the 15% rate, with some exceptions. Individuals with significant income may be subject to a Net Investment Income Tax (NIIT). If your capital gains are in the red because of capital losses, the amount of excess loss you can claim is limited as well.

Married vs. Single

In many cases, there is an exclusion available every two years for Las Vegas home sellers on capital gains taxes of up to $500,000 over cost basis for married couples filing jointly for single investors. The exclusion is $250,000 over cost basis. One of the qualifying requirements for this exclusion is that the real estate will have been lived in for a total of two of the last five years as your primary residence, though they need not be consecutive.

You may be required to make estimated payments on your capital gains. It is wise to consult with a tax advisor to ensure you are making the right moves for your investments. Deferrals of capital gains are allowed under a 1031 exchange of like properties. There are strategies that you can put into place to offset these taxes with capital losses.  Ensuring you have covered all of your bases means it is essential to have built a strong team of professionals to help guide you because you want to keep as much of your money as possible. 

RjRebel Buys Houses understands just what Las Vegas home sellers need to know about capital gains taxes and what you can do to avoid them – sell to RjRebel Buys Houses or buy a “like-kind” investment from our inventory of great investment properties! At RjRebel Buys Houses, we make it easy to keep your hard-earned investment profits at work, earning wealth and long-term passive income for you! Call RjRebel Buys Houses at (702) 572-6293 or send us a message today!

* This article was originally published here