June 11, 2021

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

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



* This article was originally published here

June 10, 2021

Flip Houses & Profit With No Money Down

Cash Chronicles - Logo - Background
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 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
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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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

June 8, 2021

The 4 Key Basics To Know as a First Time House Flipper

If you are on the lookout for your first house to flip, your new best friends are research and expert tips from experienced flippers. With the right knowledge in mind, house flipping can become a lucrative real estate career for anyone with enough determination to succeed. In this article, we’ve put together the four most important things first-time house flippers should know and look out for as they seek and renovate their first investment property.

Where To Find The Best Properties

For starters, let’s talk about where to find your first flip. The idea is to locate homes that are situated in growing neighborhoods, but which need some work to be considered desirable to the local residents. Unfortunately, new real estate investors often don’t know where to look to get the best deals on the market. This is a rookie mistake that can quickly cut into your profit margin. In worst cases, it can be the difference between a profitable flip and money lost. 

Foreclosures/Bank Owned Homes/REOs 

This category of housing is extremely profitable for real estate investors, particularly those looking for a house to flip. Because there is such a high cost for banks to repossess a home, they usually want to sell them as quickly as possible. Bank-owned homes make for a motivated seller who is willing to give away properties at a fraction of their value. The best part is that often foreclosures come at a major discount that has nothing to do with damage to the property. 

Distressed Homes

Distressed homes are a tricky category for new flippers, though, for more experienced home flippers, they can be a gold mine. Distressed properties are typically the product of neglect, which can be merely surface level, or run much deeper. If you’re going after a distressed home for your first house flip, make sure you hire a trusted, licensed home inspector. While cosmetic fixes are easy enough to budget for, structural/foundation damage is a can of worms best left shut.

Where To Find Them

Aside from your personal network, an excellent source of foreclosures, REOs, and distressed properties is Connected Investors’ PiN 5 software, which locates these difficult-to-spot gems across the entire US housing market. Investors need only enter their desired location, and PiN will source the best properties on the market instantly. You can try PiN for free by clicking here.

Want to Find Your First or Next House to Flip?

How To Accurately Calculate Profits

This is one aspect of finding a house to flip you want to get 100% right. Since house flipping is a numbers game, real estate investors must learn to accurately calculate their estimated profits.

How To Make Accurate Estimates

Before you can estimate profits, you need to estimate your expenses. To do so, must have a home inspection and acquire estimates on the repairs that are recommended. Calling multiple contractors to get estimates on labor and materials (and the market value of each completed repair) is the best way to ensure accuracy. This way you know the average cost for completing each portion of the renovation, and how much value it should add to the property.

Calculating ARV

ARV, or after repair value, is one of the most critical components of your house flip. Without knowing how much a property will be worth once it’s repaired, how can you determine your profit margin? Before making an offer on a property, you absolutely need to calculate this metric.

First, determine the value of the property as-is. This can be done with the help of an appraiser. Next, add up the value of the repairs you will be making, based on contractor estimates. Add these two numbers together to get your after-repair value. You should also check this number against real estate comps for reference.

Where To Get Funding

Most first-time flippers will turn to their bank for a traditional loan. If you can get one, this is a fine place to start. However, if you’re turned down, don’t be discouraged. Most real estate professionals looking for a house to flip to don’t rely on traditional mortgages to fund deals. There are two little-known secrets most real estate investors use to secure funds: private money and hard money.

Private Money Lenders

Private money lenders are individuals with cash reserves who want to make passive income on their savings. These people are not certified lenders, but with a basic contract drawn up, both lender and borrower can be legally protected. Private lenders can be found within your network and without having to look as hard as you think. If you know someone with extra cash, pose lending to you as a potential investment opportunity for them.

Hard Money Lenders

Hard money lenders are similar to private money lenders in that they are not banks, and they are typically easier to get property investment loans from. However, hard money lenders are certified. They may be individuals or organizations, and you can secure a mortgage from them as you would from private lenders. To get connected with hard money lenders, a real estate investor need only conduct a Google search, though it’s advisable to carefully vet any hard money lender you intend on using. 

That’s why we created CiX, a platform where real estate investors can secure loans for investment properties from hard money lenders in minutes. No need for a credit check: just answer a few questions about your loan requirements, and you’ll have hard money lenders competing for your business, giving you the best chance of getting optimal loan terms.

What To Focus On During Renovations

One of the biggest mistakes rookie house flippers will make is not knowing where to spend their budget on renovations. Of course, all repairs your home inspector recommends are a priority. But when it comes to cosmetics, many flippers go overboard, believing that the more they spend, the more money they will get back out of the deal. This is simply not true, and it can lead to quickly sucking your profit margin dry. 

Doing a little research into the kinds of materials found in real estate comps can help you determine how much you need to spend to get buyers interested. While every neighborhood is different in terms of what buyers will expect, there are a few areas that always need attention.

Curb Appeal

This is the first impression you will make for your buyer. Simple maintenance such as cleaning up the yard and planting a small garden will go a long way. In addition, if the fence or siding demands a fresh coat of paint or stain, these improvements will help form a positive impression for buyers before they ever walk through the door.

Updating The Basics

Likewise, a fresh coat of paint in each room will update a home instantly. Avoid bright colors, and stick to neutrals, earth tones, and light hues. Having the house cleaned professionally, or at least thoroughly, will also dramatically help with the presentation to buyers.

Kitchen and Bathrooms

Kitchens and bathrooms are typically focal points to buyers, and if any major renovations are done, they should be to these areas. Laminate floors, new fixtures, re-caulking, updated appliances, and a fresh coat of paint are generally sufficient. Unless, of course, your research calls you to make bigger upgrades, as can sometimes be the case in upscale neighborhoods.

The Takeaway:

  • Use PiN to locate houses to flip.
  • Accurately determine your profits.
  • Get a property investment loan at CiX.
  • Carefully research and budget when making renovations.
  • Check out our other resources for investors searching for houses to flip. The more you know, the smoother and more profitable your first flip will be!

Need more info on flipping for the first time? Read this: How To Flip a House: 5 Things You Need To Get Started

The post The 4 Key Basics To Know as a First Time House Flipper appeared first on Connected Investors Blog.



* This article was originally published here

June 7, 2021

Is the Housing Boom Just Getting Started?

Are we in a bubble? Here are the factors in play that might impact the future, and the potential outcomes—and the probability they'll occur.

* This article was originally published here

June 6, 2021

Exactly How To Turn Real Estate Investing Into Your Personal Success Story with Richard Roop

In a recent episode of the Exactly How podcast, Shaun Young caught up with real estate investor and marketing mogul Richard Roop. Roop has been influential in the field since the late 1980s. In conversation with the Connected Investors’ Exactly How podcast host Shaun Young, Roop delves further into his history. He describes his experience as a real estate investor and as a marketer and offers his expertise with listeners. As Shaun Young notes in the introduction of the episode, Roop has “founded a free and clear investing model [for real estate investment].” This model “includes buying better than no money down with 0% owner financing.”

Roop explains his top five success strategies, all of which one can apply both broadly to the real estate investing field and to specific avenues of investing as well. In this article, we will discuss these success strategies. We will also consider the importance of marketing in real estate investing and analyze the significance of personal mindset and planning. All in all, we will discuss exactly how to turn real estate investing into your personal success story with help from Richard Roop.

Who is Real Estate Owned REO Expert Richard Roop?

According to the REIClub.com profile on the investor, Richard Roop is “a full-time investor.” He has been called The Marketing Consultant for Real Estate Entrepreneurs.” Roop currently serves as “the President of Bottom Line Results, Inc., a real estate acquisition company located in Woodland Park, Colorado.” He has held the position since 1996, following which he has found success in marketing and real estate investing alike. The profile notes that “as a successful marketing consultant since 1984, Richard specializes in providing innovative business and marketing advice to real estate entrepreneurs.” Roop is also the published author of How to Sell Your Home in 9 Days, which was released in 1995. In 2005, Richard Roop released a series of audio CDs designed to instruct investors in marketing their businesses. The series was entitled “Marketing Mastery for Real Estate Entrepreneurs.” As the REIClub.com profile notes, “Richard Roop’s articles have appeared in various entrepreneurial, real estate and marketing newsletters across the nation.”

Roop Describes His Start in Real Estate Investing

Shaun Young delves deeper into Roop’s marketing and investment history throughout the Exactly How podcast episode. Roop notes that he has been “buying and selling properties since 1996 as a real estate entrepreneur, but actually bought some properties [after he] got out of the air force back in the eighties.” It was during this period that Roop actually used his “VA loan to buy a couple properties, no money down.” These properties morphed into an excellent investment, doubling “in value over two years.” After this experience in real estate investing, Roop “got the real estate bug.” He then pursued marketing as a way to expand upon his early success. Roop credits his marketing education as one of the major factors which “helped [him] build a multimillion dollar business later on.” In 1995, Roop moved to Colorado as a marketing consultant, turning back towards real estate investing only a year later. With his marketing background, Roop “was able to create some killer marketing tools.” He “started quickly buying houses every month,” turning around “over 500 houses until [he] retired five years ago.” Roop defines himself as “a creative.” He expresses that “as a real estate entrepreneur or a real estate investor, it’s one of the best businesses on the planet.”

Want to Start Real Estate Investing?

How To Turn Real Estate Investing Into Your Personal Success Story: Outlining Richard Roop’s Top Five Success Strategies for Investing in Real Estate?

In describing his success strategies for investing in real estate, Richard Roop identifies establishing a positive mindset as one of the first steps. Roop expresses to Shaun during this episode of the Exactly How podcast that “80% of success — [even] over 80% of your success — is the mental mindset, the inner game.” Roop references research he was involved in regarding “neurolinguistic programming, personal growth and development.” This research has examined the detrimental effects of fear and negative emotions. Roop notes that “the number one thing [he] can do to help people am to get rid of those negative…emotions of fear…worry, anger, sadness, guilt, that type of thing.” He explains that “once you can, over is fear as you know, [and] fear is one of the biggest things that holds people back.”

#1 Flesh Out Your Vision of the Business

Richard Roop outlines the first step for a successful real estate investing business as mentally “creating your business.” He suggests “creating exactly how you want your business” to function. In doing this, investors should strive to treat their business as a business even if it is personal and creative. They should establish a prospective timeline, outlining how they “want their business to look in one year or six months or five years.” Roop believes that “you attract what you focus on, whatever you focus on.” As such, new investors should “spend time getting that clarity in your mind of exactly what you want to be doing on a daily basis in your business, six months from now, how much money is coming in, what you are doing on a daily basis.” The first step in realizing this vision is creating the first goal for your business. 

#2 Make a Plan to Realize this Vision

Setting goals and “figuring out how you’re going to create that vision” is key to proceeding along your path to success. Without set goals, it is incredibly difficult to achieve success in a reliable and timely manner. Marilyn Price-Mitchell Ph.D. explains the importance of creating an actionable plan in her article “Goal-Setting Is Linked to Higher Achievement” for Psychology Today. Dr. Price-Mitchell writes in her article for Psychology Today that “written goals provide a road map by which [people] can measure their efforts and see how they contribute to the success of work teams and ultimately, to their companies.” Goal-setters are a special breed, Dr. Price-Mitchell notes, quoting Rick McDaniel of the Huffington Post. McDaniel says that “‘goal setters see future possibilities and the big picture.’” 

More than most, they “‘are comfortable with risk, prefer innovation, and are energized by change.’” Price-Mitchell continues on, referencing research which ties written goals to higher realized success. She writes that “setting goals is linked with self-confidence, motivation, and autonomy.” In fact, she writes, “a 2015 study by psychologist Gail Matthews showed when people wrote down their goals, they were 33 percent more successful in achieving them than those who formulated outcomes in their heads.”

#3 Fit this Plan into Your Schedule

Roop describes the next part of step one as “taking the things in your plan and getting them into your schedule.” One of the most effective ways to realize new goals is to fit them into your existing schedule. This prevents against assigning yourself too much work that cannot realistically be achieved in conjunction with other obligations and responsibilities. If establishing a successful real estate investing business is your first priority, you might consider taking the advice of Ron Friedman, Ph.D. in his article “Get More Done By Scheduling to Your Strengths” for Psychology Today. To get the most out of your working day, Dr. Friedman recommends guarding “the hours when you are at your most productive” and saving these for important goals and activities. He recommends that “once you’ve identified high-potential hours, [you] consider treating them differently—for example, by blocking them off on your calendar” and allocating them to your most important work.

#4 Establish Effective Marketing Campaigns

As a prior marketer, Richard Roop knows the essential role that marketing plays in real estate investing very well. Roop describes marketing as “the number one thing in any business” — particularly in real estate investing — because it helps you find leads, “buyers, sellers, other investors and private lenders.” He describes marketing as “salesmanship multiplied,” noting that the two activities investors should focus most heavily on every day as “marketing and sales.” The investing guru defines marketing as “finding deals” and sales as “converting them into cash.” As Roop explains it, there are a few key elements in every successful marketing plan. These include defining your “market and your marketing message,” creating “a sales presentation,” establishing a plan to “get that message to the right people,” and following up on these points of contact.

Check out this previous episode of Exactly How to learn how to find motivated sellers using Google and Facebook.

#5 Be Flexible as a Real Estate Investor

Whether it is marketing or purchasing a specific type of property, Roop encourages investors to be flexible. In marketing, Roop notes, you can always start over as “marketing is [just] a test.” He notes that “once you try a campaign, if it’s not what you expect, then you adjust it or try something else.” Similarly, if you try to sell or acquire a certain type of property in a certain area repeatedly with poor results, you might be best served by pivoting and trying a different area or different type of property.

Summary

As you see, being a successful REI is about having the right mindset and tools to run your business. In other words, having a good plan! 

So where do you plan on finding your next off-market deal?

Attend one of this week’s LIVE Pre-MLS events and search your city FREE.

Additional Resources

Subscribe to our YouTube Channel & Podcast 

Want to start investing in real estate? Watch This

Need funding for your first or next REI project? Visit PrivateLenders.com to meet verified private money lenders today!

Transcript

Click Here to Read Transcript

Speaker 1 (00:00):

On this episode of the, Exactly How podcasts and YouTube show we had covered the top five aria business success strategies. See, in a second,

Speaker 2 (00:09):

You’re listening to the, Exactly How podcast, where you’ll hear the underground, closely guarded wealth building secrets of successful people around the globe, discover exactly how to improve your mental, physical, and financial health. Feel better, make more money live, give, and prosper in today’s exciting, fast paced world filled with opportunity for those who know exactly how

Speaker 1 (00:37):

Welcome to the Exactly How podcasts and YouTube show brought to you by connecting investors. Now, during this episode, you’ll discover exactly how to navigate through selling virtual REO properties. Now, for those of you who are new, my name is Shaun Young, today’s host and proud member of the Connected Investors community. Now, before I introduce you to our incredible guest speaker today, I want to make a request. Then, if at any point in the show you like what you’re hearing, please give us a thumbs up or subscribe to the show so that you don’t miss an episode and make sure to take a look in the description of this episode, as we’ve packed it with thousands of dollars in free resources. Now, today we have the privilege to learn from someone who was founded a free and clear investing model, which includes buying better than no money down with 0% owner financing.

Speaker 1 (01:27):

Now, prior to their career in real estate, they were marketing consultant, but all that changed when he got a Chang letter in the mail in 1984, which started their path to searching income opportunities and personal success science, I would describe our guests as creative. I like to give a warm welcome to Richard Roop. Richard, thanks for being a guest on today’s show. Hey, I’m excited to be here, Shaun. It’s good to be with you. That is awesome. Well, Richard, before we get going, can you tell our audience just a little bit about where you’re from, what market you’re in and just a little bit about yourself? Well, I’ve been, um, buying and selling properties since 1996 as a real estate entrepreneur, but I actually bought some properties in why after I got out of the air force back in the eighties where the Japanese were buying up real estate prices were going up and I used my VA loan to buy a couple properties, no money down.

Speaker 1 (02:29):

And then they, they actually doubled in value over two years and I got two years. Wow. I know. So I, uh, I that’s, that’s, that’s how I got the real estate bug, but I was, uh, I studied with all the marketing bureaus. I was the marketing director for a company in Hawaii, uh, nlp.com build that company. And then I, I left that and became a, a marketing consultant after I learned, you know, from all my marketing gurus and, and that, that helped us build a multimillion dollar business later on. I moved to Colorado in 95 and that marketing consultant. And then in 1996, I got some training. I started, uh, buying, buying, uh, you know, as a real estate entrepreneur. And with my marketing background, I was able to create some killer marketing tools and I started quickly buying houses every month. And I bought over 500 houses until I actually, I actually retired Shaun about five years ago and took, took, took a break.

Speaker 1 (03:39):

Uh, but earlier this year I I’m back in the game. And, um, I’m excited the bug bit you again, huh? Well, it’s, it’s, it’s, uh, I think everybody should have a business and as a creative or, you know, as a real estate entrepreneur or a real estate investor, it’s one of the best businesses on the planet. Indeed. I would, I would definitely agree with that. I would definitely agree with you now. Now, Richard, before we dive into the top five REI business success strategies, you would say you contribute a lot of your success to overcome and fear and worry. No. Can you tell our listeners why that is? I think success in anything that you do, uh, is all about the, the inner game. So I actually train and coach other real estate investors. I’ve been doing that for 20 years and I can give them all the best tools and strategies and techniques, but it all comes down.

Speaker 1 (04:37):

It’s like 80% of success over 80% of your success is the mental mindset, the inner game. And so we’ve found we’ve been very, you know, that was the company in Y was, was on neuro-linguistic programming, personal growth and development. So I have a good background in that. And that’s the number one thing I can do to help people is, is get rid of those negative, you know, emotions of fear, uh, worry, anger, sadness, guilt, that type of thing. Once you can, over now fear as you know, Shaun fear is one of the biggest things that hold people back. So if anything’s just call it fear, and then there’s just simple things that work to overcome fear and worry. That’s just negative goal setting, you know, with the law of attraction and you kind of drawn to what you focus in on. People are worrying. They’re focusing on what they don’t want myself.

Speaker 1 (05:34):

And, you know, with my clients, I, I felt I have them focus on exactly what they want in their real estate business. And if they have any fear come up, just focusing on the outcome, what’s the ideal outcome you want to get, you know, in the future, once you get past that and the fear disappears something. Now, I think what you just said is huge. And it’s, uh, it’s highly crucial to our, our, our listeners out there. You know, a lot of folks always hear, you know, have a positive mindset, have a positive mindset, but you really just took it like a step further by, by, by identify the way that you did. And I really appreciate that. And guys who are listening, you know, don’t let that just pass you by. That was a very important golden nugget there. Guys, your mindset really determines and dictates where you’re headed, what you focus on.

Speaker 1 (06:20):

It will only grow. So it’s focus your energy and time on things that you want to occur, not what you don’t want to occur. It’s just how it works, guys. If you’re always trying to avoid getting stung by a bee, it’s probably going to get stung by a bee one of these times. Yup, absolutely. So guys, you know, what makes the financial freedom podcast and YouTube show unique is that each and every show comes with a detailed action plan. Now what we do is we pull the steps out of each show, create a blueprint on how to implement exactly what we’re covering. Plus you get to see our free training right now. All you have to do is text the word exactly to (910) 600-0630, to see for yourself. And you can find properties in any town for pennies on the dollar with this software that I use each and every day, guys. So remember, all you have to do is visit Connected Investors.com forward slash free to get the key takeaways, the resources, and access to a copy of multiple offer deals, structuring software with training videos. Now, Richard, what does this copy include?

Speaker 1 (07:34):

Uh, the copy of my software. Yes it’s okay. Well, we talked about the free and clear investing model. We actually call it the ultimate strategy for buying and selling houses. Cause you can buy anything anywhere, any price range, um, you can make any property cashflow and in order to do that, you really need to crunch the numbers and negotiate some seller financing. So if you’re buying a property where the seller is getting some money, you know, uh, they have the equity. If you play with their equity and, and, and push it out into the future, you can calculate how much you’ll make by getting likely said, 0% financing. You can add that to the normal price you might offer if you were paying all cash. So I have deal structuring software that takes all your numbers and it creates multiple offers, whether you’re giving them, you know, whether it’s an all cash offer or some cash or no cash and everything in between whether they wait for their money for five years or 10 years or 15 years.

Speaker 1 (08:43):

So it’s really makes, uh, negotiating with sellers extremely easy because you’re just basing it on what the property can afford. And if they want, if they want more cash or they want a higher price, or they want more cash flow on the deal, um, that the, the, the free and clear offer generator software calculates all those numbers for you, spits out multiple offers and helps you get a lot more deals, uh, accepted if you’re negotiating seller financing. So that’s what I’ve, I’ve created a number of deal structuring software programs. That’s the main one that I’ve created in my free and clear cash machine, and it’s a $500 program and they can, I’m going to, I’m willing to go ahead and give it for free so people can kind of check it out and maybe spark their interest in going after these free and clear houses.

Speaker 1 (09:37):

Wow. That is awesome. I’ll definitely take advantage of that for sure. So guys, did you hear that? I mean, Richard is breaking down for you now. Maybe let me, let me not take for granted that our, our listeners actually even know what, what owner financing or seller financing is D in a brief, you know, kind of scenario. Can you explain to us what, what owner financing is and kind of what that looks like from just a basic deal scenario? Yeah, well, yeah, when you buy a house, they have, if they have a mortgage, you’re going to pay off the mortgage typically, um, and then give them cash for their equity. Whatever’s leftover between what they owe, what you’re buying it for. Okay. So one of the things you can do is you can ask them well, instead of giving you $40,000 for your equity, I’ll pay off your loan instead of getting $40,000 for your equity.

Speaker 1 (10:30):

Why don’t you take back a note, a mortgage, okay. And we’ll give you reliable monthly payments. And instead of giving you 40,000, now I’ll give you 60,000 over the next period of time, okay. Allows you to up up price. So seller financing is when they’re not getting all their money and they’re taking their money either down the road in a lump sum balloon or with the monthly payments. So that they’re being the bank. Awesome. So basically guys, they’re being the bank. They’re being the bank now, but they’re not a bank. So we, we, we tell them, you know, basically payment it’s principle, only payments they ever say, where’s my interest. I says, well, uh, if you want to loan me some money, I can give you some interest right. At money. Right. But, uh, you know, this is how I can get you your price.

Speaker 1 (11:21):

If, if we add interest, that’s going to lower the price and you’re going to have to maybe pay taxes on the interest. So this is how we were worked it out for you. So it’s, yeah, they’re being the bank, but they’re, they don’t have big overhead where they, they need it. And that is crucial. That is a crucial point. Richard definitely thank you for pointing that out to our listeners. That is a very important part there. So guys, as a, nearly a million people know the Connected Investors, it is a social network of real estate investors, and it’s a marketplace of investment properties. In description of this video, I’ve included a link to this episodes form discussion. So all you guys have to do is head right on over and take a look. So Richard, let’s go ahead and dive into the strategies for successful REI business. What would be step one?

Speaker 1 (12:11):

All right. The first step for a successful real estate investing business, be create your vision, create exactly how you want your business. Number one, treat it like a business. Okay. Get, get really clear set a goal. Okay. How do you want your business to look in five years? You know, your real estate operation. And then I want it to look in one year or six months. All right. And get it. Like you said, you fo you, you attract what you focus in on, whatever you focus in on. You gotta get more of that. So focus in on what you want, not what you don’t want and spend some time getting that clarity in your mind of exactly what you want to be doing on a daily basis in your business, six months from now, how much money is coming in, what are you doing on a daily basis? How much help do you have? How much profits, who are you targeting? What type of deals are you doing? You know, where are you doing it? Are you doing out of your home? Do you have an office? Are you doing it virtually? Are you doing it? Are you a big fish in a small pond, locally, the ideal situation. And, uh, and then, um, that then there’s, there’s five steps, Shaun, to get whatever you want. And the first step is to set a goal, okay? Like that, right?

Speaker 2 (13:39):

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.

Speaker 1 (13:55):

The next step is to make a plan. So forget about how you’re going to get that goal. Make, you know, take the blinders off, take off the limitations. If anybody’s done it, you can do it. And you set that goal as long as it’s important to you and you can commit to it and you want it. You have a reason why then, then figure out how you’re going to do it. Then go ahead and make your plan, figure out exactly how you’re going to create that vision. And then step number three is plan your work, take this things in your plan and get it into your schedule. So you’re actually doing those, those critical, a result area activities. And then what I say, Shaun is don’t think during the week, just operate off your game plan, just get off your schedule. All the important things are in there.

Speaker 1 (14:48):

If you get those things done, you’re on your right. And then the last thing would be, you’re going to get some feedback. You’re not going to be on target the whole time. So if you ever get off target, uh, you know, go, go ahead and adjust as needed. So you want to, you know, be on top of your numbers and be on top of your progress. So if you know that you’re on track. Okay. That is awesome. That is great. Great feedback. Now, now those are all great tips. I really like how you broke down those five steps even be successful in any area of life. That that is awesome. Richard. That is awesome. So now that brings us into, into step two for, for us here. Um, what would you say step two would be a marketing. I think the number one thing in any business is marketing just like, and this is a real estate investing business.

Speaker 1 (15:35):

So of course you need leads. You need tires, you need sellers, you need other investors, private lenders. So those are marketing campaigns. So I think you should be operating your business off of marketing plan. And to me, marketing is salesmanship multiplied. So the two activities you should be focusing on every day is marketing and sales. So marketing, did you find the deals right? And then sales to convert them into cash. Okay. So there are seven elements of any marketing plan. So the first element is the market. Who are you going to target? You know, sellers, homeowners, property owners, or what type of situations, and then where geographically you’re going to target. So that’s your market. So you could go nationwide and be a virtual wholesaler, right? Or, or you can go be a big fish. I think people should be a big fish in a small pond.

Speaker 1 (16:32):

Get really familiar with the area that you keep targeting over and over. So that’s your market? Who are you going to hit? Where are they located? Okay. And you, and a lot of different investing models, the free and clear investing models were targeting free and clear houses, right? Uh, but you might be targeting junker houses or you might be targeting houses with no equity or, or a distress, that type of thing. Okay. Have your market. Then you want to have a very benefit Laden results driven message to get to that market. Very cost-effective okay. And it should be a market to message match. So what’s what can you do for your particular market? And that should be in your marketing message. And I have some great marketing messages that I’ve used just almost unchanged for, for decades. Okay. Because it’s all those, all those normal things that we offer as investors.

Speaker 1 (17:27):

Plus when we’re going after the free and clear, we can say, and we can pay top dollar probably more than any other buyer. Uh, that’s kind of a marketing benefit that, okay, it’s a sales presentation and print is as, is your message. Right? And the third, the third element of marketing campaign is how are you going to get that message to the right people? And that you want to use multiple types media? I like postcard. Okay. For very targeted list. I like letters. You can call, you can run ads. You can post signs. You can have an ant farm. There’s all kinds of as a ways to get your message out. Okay. I like direct mail. And, uh, it’s just my preference because I know how to make it work. I have a good message. I know how to target the right people. I know how to design it.

Speaker 1 (18:12):

So, uh, that different types of media. So that’s, those are the three elements of a marketing campaign I learned from Dan Kennedy. Now I added four more. Shaun, the next is multiple hits in order to maximize your results. You want to hit the same people over and over and over. Okay. And you can mix up that those different types of media, you know, a postcard, a call, a text, a visit, you know, you want them to, I see your message multiple times, because most people until you’ve hit them five or more times, they may, you know, you get a real big bump in response. If you hit the same people over and over, okay. It’s just, I know why and all that, we don’t have to get into that, but we just know it works. Okay. It’s like John, if a seller says, no, I don’t want to take your offer.

Speaker 1 (18:58):

That’s no number one. We always say get five or more notes. Right. Be patient. And you close again. You make your offer. They say no. And you keep going back and after. Okay, I’ll go ahead and do it. Most people give up after the first or second try. All right. With marketing, same with marketing. And that’s going to be over time. So the next M these are the seven M’s. The next M is months. How often are you going to hit someone over, over a period of time? So if I’m just Shaun, if I’m just mailing to absentee owners that have free and clear house in my zip codes right now, if they have a house for sale, so I’m going to hit them every three or four months. Okay. But if I know, oh, they have a house for sale. It’s an expired listing or they’re in distress or something like that.

Speaker 1 (19:47):

Then I’m going to hit them more often. So it’s going to be a drip campaign or rapid campaign over a number of months. So you want to hit them five or more times, uh, over a period of time so that my free and clear houses, absentee owners, we hit them, you know, once a quarter. So for two years, that’s the campaign. Okay. And then, um, the next dam is money. How much are you going to spend to get a deal? And how are you going to spend on your marketing? And it’s, it’s really the cost per deal. It’s not the cost per lead. It’s the cost per deal. And then you got to take a look, what is your average profit per deal? Okay. So you can, yeah. You can measure your return on investment. So people talk about the cost of leads. It doesn’t matter.

Speaker 1 (20:36):

The cost of leads. It’s like if you spent a thousand dollars and you got 10,000 bucks dollars back, right, then you do it again. Right. Absolutely. You know, got some campaigns to get us 20 to one 30 to one 51, uh, because it’s very targeted and it’s very effective, but don’t worry about the cost per lead, but it depends on how many leads you need to convert into a deal and your average profit per deal, by the way, Shaun, the average profit on these free and clear deals, we usually get nine to 15 years of owner financing. And our target profit is between 75 and 125,000. Well, so, so Richard w where do you get that profit at for our listeners? Do you get that upfront in the middle or at the end? It’s a combination of the cash you get now because you collect money.

Speaker 1 (21:26):

When you buy that property, usually collecting 10, 20 or 30 grand. When we buy it, then we have either a breakeven cashflow or a positive cashflow. We have a breakeven cashflow. We’re given all the net, net, net positive cashflow to the seller on their note, getting rapid principal reduction, paying off their note because his principal only payments no interest, right? Don’t worry. We’re, we’re paying off what, what they’re waiting, the money that they’re waiting for. And then down the road when we sell or refinance the property, that’s our back end. So it’s, it’s usually you’re getting 20 grand when you buy it, you might get 40 grand in cash flow and then another 40 grand on the back end. It all depends on how you structure the deal in which deal, the offer, uh, the seller takes. But this is really good for people that flip properties they can make.

Speaker 1 (22:19):

You can, you can get all the cash. If you learn how to make some multiple creative offers to the people that won’t sell at a deep discount or the discount that you need to make it a deal, you can come back and say, well, how about if I do this? You can get the 10 or 20 grand that you would make on a flip. You can get the 10 or 20 plus the cash. Well, plus the cash later. That’s why the profits are so, so it’s cash now, cash flow and cash later. Um, so that on your market, on your, uh, your budget, like our experiences, when we’re sending my, like my best postcard to a good targeted list, we might hit a thousand homeowners, right. And get 30 calls, but, and then, and then do about 10 offers and then get one accepted. So those thousand postcards costs about 600 bucks.

Speaker 1 (23:16):

Okay. So, um, that, that’s, that’s, that’s a pretty, it’s a pretty good return on investment. Absolutely. Lately I’ve been saying, you know, go ahead and budget a thousand cards a month for three months, and plan on doing a deal every three months, right? With an average profit of like maybe a hundred grand, uh, or, you know, 75 to a hundred grand, and you can do a quarter million dollars in cash. Now, cash flow cash later, just doing four deals a year on a very sick once a year. Folks, you could focus in on this, but I think people should add this to what they’re already doing. Because if you already have leads, you can actually convert, turn some of your trash into cash by, you know, the people that you can’t convert. You can go ahead and make some, some other offers and get those accepted.

Speaker 1 (24:08):

So you don’t even have to, some people, if they got leads, they don’t even have to, uh, get more leads and more people that if, you know, if you learn how to do this and you’re, you’re doing it, and you can actually get your buddies leads, he’s not doing it. And you can, you know, work his lays and you can do a JV on it. Right. Or, you know, some type of, because their strategy is totally different. So when he’s saying guys, when he’s saying like, he’s not working those, what do you mean? Does he probably work? Those leads based on his strategy, but potentially wholesaling it, uh, or maybe fixing and flipping. But like he said, Richard is explaining a different strategy guys. So most folks, they have leads sitting in their database and they look at those leads as trash. They’re like, yeah, this is his contract.

Speaker 1 (24:50):

And if they’re good, if they’re smart, they’ll follow up. But, uh, but they keep following up with trying to get, maybe, maybe their model requires a discount, right? So type of model, I want to take a discount, but they want to sell the house and you can offer all the benefits and more money if they wait for some of their money. So you go back and you make those offers. So yeah, it’s, everybody should be doing it. Powerful, powerful. All right. And then the last am of the seven M’s of a epic marketing campaign is mindset. And we kind of talked about that now in marketing, everything’s a test, right? And so there, there really is no failure. There’s only feedback. So once you try a campaign, if it’s not what you get, you expect, then you adjust it or try something else. So my all marketing is a test.

Speaker 1 (25:40):

So you can’t really fail at marketing. You, you, you do as much as you can upfront to, uh, try and make it work, you know, on the first go marketing campaign. Awesome. So if Richard, you have given us a lot of great, great information, um, how can folks out there get ahold of me? What D can, if folks want to learn how to potentially do, uh, you know, the type of structure, the type of, uh, uh, uh, seller or owner finance that you discussed. I mean, do you have something out there or is there something out there that they can get a hold of you? Yeah, absolutely. Um, um, my gift to the audience is that free and clear offer generator software will do is, um, if they request that, then I will get some, I’ll throw some training videos in there. So they understand this free and clear model.

Speaker 1 (26:34):

And I’m happy to do that for free. They can go to, uh, re podia.com. That’s R O O P uh, Richard group. Yeah, R O P like in poop, O D I a [inaudible] dot com forward slash exactly how, and I’ll go ahead and have that package put together and it’ll be free. They can just access it for free. That is awesome guys. Great, great value guys. Thank you, Richard. So, so much for offering that to our viewers and our audience out there. Um, I mean, this has, has been a great, great session, a great interview, and I appreciate you taking the time out. Um, you know, Richard, before we let you go today, we have a tradition on this show that we call the rapid fire session. And this is where I basically ask you a list of questions and you just give me the quickest answer that comes to mind. All right. All right. Let’s do it. All right. On a scale of one to 10 Richard, how strict were your parents? Uh, they were like a four. Not that strict. Okay. Get up early or stay up late. I get up early and stay up late. How many hours of sleep do you get each tonight? I get, um, I get about six or seven hours of sleep. Okay. Favorite or last book? Read the secret of creating your future by Dr. Tad James. Okay. If you could be any superhero, Richard, who would it be? [inaudible]

Speaker 1 (28:14):

captain America. Okay. Something everyone should do less of waste their time. Be flounder important, something that everyone should do. More of focus. Great, great goals, and, and focus on them and work on them. Just decide what you want and go for it. Bitcoin bang or bust. I bought Bitcoin west $78. Um, I think it it’s unknown. It’s it’s speculative is what it is. It’s it’s. I have play money in Bitcoin. Okay. Okay. Well, people live on Mars in your lifetime. They already live there. There you go. Well, guys, you all made it to the end of the show and most people never finish what they start. So you guys are all special. Now. Now, if you’ve got any value out of the show today, make sure that you share this video with a friend on your Facebook page, like the video, subscribe to our channel and send us topics that you want to learn more about. And guys, like I said, nearly a million people use the Connected Investors, social network, and marketplace to connect. Now in the description of episode, we’ve included a link to this episodes, forum discussion. All you have to do is tap that link. Ask me another pro’s questions and see what other investors are saying about this episode. So guys, until the next time you can catch me on the inside of Connected Investors. See inside

Speaker 2 (29:59):

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 Investors social network. Now you can scroll through your main feed to find cash buyers, see 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 property. Download Connected Investors today to find, figure, fund and flipping investment properties on the go.

 

About The CEO

About The CEO

Ross Hamilton is the CEO of Connectedinvestors.com an investment property marketplace and social network for real estate investors with close to a million members. Several years ago Ross launched a private funding portal (CiX.com) that disrupted the entire industry. His portal facilitates over 3 Billion in funding A MONTH.

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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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