Opening:
No one knows everything, and no one knows what they don’t know. Fortunately, success in real estate doesn’t require you to KNOW that much. Today on Flipping America we will talk about what you MUST KNOW to be successful in this business.
Look around online for training and education in real estate investing. You’ll see a combination of complexity, jargon, and pseudo-intellect mixed with a healthy dose of hype. Let’s cut through that. I’ve boiled this entire business down to 5 things you MUST know. There is a lot more to learn, but you have to nail down these items first. Without any one of them, your business will suffer.
How to contact us
Text WIT (upper or lower case) to 205-858-3547, enter your email and you will be subscribed to the Weekly WIT (Whatever It Takes). It has the week’s real estate and Flipping America news, an investing tip, a joke, and a blessing. It’s usually about a 7 minute read, with some optional links.
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Starr Has Questions:
- Arlene, Milwaukee, WI. “How do you find your contractors?
- Brandon, Atlanta, GA “My new contractor wants money up front for materials. I know you say ‘no money up front’ but we have this trust thing going on. He doesn’t know me and I don’t know him. What do I do?”
- Brittani, Decatur Ga, what happens when two people are on a deed and one is trying to refinance the property without the other’s permission…can this happen? If so, what can I do to prevent it?
- William, Macon, GA “I keep hearing about the foreclosure auctions at the courthouse steps. I think I might want to do that, but why not just buy foreclosures my agent is showing me from the listings? Are the deals any better at the auctions? How do you go about buying at the courthouse?”
- Adnon, Long Beach CA, “Do you always hire a GC? What it the repairs are minor?”
- Brenda, Elizabethtown, KY “Do you ever just do the work yourself? My husband and I kinda like doing the work and he’s good at everything.”
- Ellen, Milwaukee, WI. “My husband and I just sold our home to downsize and we are trying to figure out what to do with the money — over $200,000. He’s semi-retired, bored, and handy. We’ve thought about flipping some houses. What advice would you give us?”
- Kandra, Las Vegas, NV “I recently attended a seminar here put on by [a TV personality]. I felt like it was just a sales pitch for a $20,000 course. But I was here for a course and really didn’t learn anything. I’m concerned that if I paid the $20,000 I might not learn anything there either. And I don’t have $20,000 anyway. So I didn’t do it. But I’m back to square one. I really want to learn this business! I don’t have any money and my credit has a few dings. Is there any hope for me?”
- D’Wayne, Louisville, KY “How do you decide whether you are going to fix and property and flip it, fix it and keep it, or just wholesale it? I figure there must be a way to figure out the best thing to do with a property. I have a deal under contract for 72,000. It needs updating and paint and carpet. I think I’ll get $150,000 for it if I flip it. Or I could rent it out for $900 per month. But another investor just offered me $10,000 for my contract. What would you do?
- James, Lancaster, PA “I’ve been researching various REITs and crowdfunding platforms. REITs seem like less involvement from me, which I prefer, but the returns I’m seeing are at best around 6%. With crowdfunding I can get closer to 10% on my money but I have to be a bit more involved. While I’m thinking about it, do you have other options you would recommend?”
- Ellen, Villages of Ocala, FL, “We are trying to maximize the returns on our self-directed IRA. We started a little late in the game and don’t really have enough money in there to buy and flip a house. Any suggestions?”
- Karenza, Long Beach, CA “I want to dive into buying rental properties here in southern california. My question is, am I too late?”
- Britney, Penn Hills, PA “My husband and I are finishing up our first flip — so exciting! We are having a discussion about interior paint colors. Our property is in an area that has a lot of investor activity with trendy styles and colors. I want a bold color scheme, but my husband wants builder’s beige. Can you settle the debate?”
Five Things You Must Know:
- What a “good deal” looks like
- Numbers
- ARV
- Repairs
- Intangibles
- How to make exceptions with creative structures
- Numbers
- How to Find Properties
- Free
- Low-Cost
- “Worth it”
- How to Fund a Deal
- Self
- OPM
- Creative Structures
- How to Repair a Property
- Estimating Repairs
- Hiring Contractors
- Managing Projects
- Multiple Ways to Move a Property
- Retail
- Wholesale
- Wholetail
- Installment Land Agreement
- Lease Purchase
- Seller Financing
Quote of the Day
May the raindrops fall lightly on your brow.
May the soft winds freshen your spirit.
May the sunshine brighten your heart
May the burdens of the day rest lightly upon you.
And may God enfold you in the mantle of His love.
Expected Air Date: Wed 8/10/2022
Transcript
[0:00] No one knows everything that no one knows what they don’t know.
[0:12] Music.
[0:26] Wherever you are, whatever your situation, there is an opportunity for you. And now,
Here’s that flipping America guy Roger Blankenship.
Today’s real estate business.
[0:57] Baloney sandwiches with a call it mixed with a healthy dose of hype.
[1:03] I sometimes marvel when I read the real estate news and how complicated people tend to make things.
It’s coming out August 23. Love it. My publisher.
Believe there’s gonna be a best seller.
[1:36] Buy it cheaper than you sell it.
That’s it. I love it.
Simple rules now the rest of the book would be an expose,
Exposition. Yeah. Exposition of those two rules. How do you get there? How do you make sure that that’s what happened? That’s that’s the kind of stuff that we talk about all the time on the show. We’re actually gonna get into a little bit of that today.
In order to get to those two things you have to know some things you don’t have to know,
Industry magazines and I read a lot of this stuff but listen I’m gonna tell all of you out there and there’s about a one 1 million a half of you listening right now and and I’m thankful for everyone of you I love everyone of you and appreciate you and thank you so much Star does too,
She’s sending you hugs over the airways right now. Kisses. Oh, okay.
[2:47] I’m not gonna tell you what to think I’m just going to tell you that it’s it’s a lot of pseudo intellectual baloney sandwiches.
The language of big real estate deals and I’ve read the books on commercial real estate investing and I know what waterfall events are and I know
I know how you build a funding tier and I understand all those things and if you’re in that world and you need to know those things but most of you listening to me today,
You don’t need to know this. You need to know a few simple things. In fact, I’ve boiled it down to five things you must know,
A couple subcategories and I’m gonna get an image just a minute. But first of all, how to contact a star, how does the listeners follow you?
And that is on Instagram and Facebook.
[3:47] Okay real estate is life Atlanta and if you wanna follow the show at flipping America on Twitter and Instagram and flipping America media on Facebook,
And if you want to call in with your comments or questions 877 55 Roger that’s (877) 557-6437,
Press extension one and leave your message or your question we love hearing from you so don’t hesitate to call,
And if you have a question, it will get answered. You could leave it on the hotline 877 55 Roger or you can email us questions at flipping America. Net. Or you could send them to Star. Real estate is live Atlanta.
[4:26] People like the same questions to you I don’t know maybe it’s that smile.
Ask how more friendly you’re a nice person.
[4:37] Thank you,
Playing. A big shout out to our sponsors today. The find your fit course. You’re gonna hear more about that in just a minute.
And so I’m gonna get right into the topic because we’ve been telling you if you’ve got questions you send them in we’ll answer them and boy do we have a pile of questions we’re gonna get to as many of them as we can today but I thought if we start with a question we’ll never get to the topic
And so here’s the topic.
[5:06] The five things you must know in order to be a successful real estate investor. Now, I’m gonna try to keep this separated from Asset classes, independent asset classes, you must know this whether you’re doing apartments or office buildings, or,
Light industry, or mobile home parks, or houses. These are the things you have to know. Number one.
What does a good deal look like,
Yeah.
You’ve gotta know the numbers in order to know that the deal is looking pretty good. And that would be your after repair value or your future value if you’re using commercial property.
Whatever it is you need to know that value.
[6:00] An evaluation the value of it now and the valuation that you’re going for then you need to know what it’s gonna take to repair it to get to that future value,
So it’s there’s some knowledge about estimating repairs and that sort of thing and and of course we got resources for all of these things but I’m not gonna sit here and turn this into a gigantic sales pitch. I’m just telling you what you need to know,
And if you go to Flipping America. Net, you can find all the stuff that you need to know. Then, there’s something else I call the intangibles.
I took the intangibles years ago and developed the flipping America property grade and I’m kinda famous for that I invented it and it basically when you put in
You answer five basic questions about the property and combine that with your net profit and what your returned your expected return on investment is.
The algorithm gives that property a letter grade.
[6:54] So it can grade out as an A minus or B plus,
Or a D for don’t do it.
How big of a job logistically is the rehab not just the numbers but is it like a monster 8 month thing or is it you know.
Lipstick on a pig.
And then you put in the mileage from your office because that’s something to consider as well do you got travel time to and from the project,
Went spend some time this morning at a project we’ve got going right here in Atlanta. It took me 10 minutes to get there and 10 minutes to get back to the studio. Love it. Yeah.
Tuesday I’m going to a project we’re doing in Dothan Alabama it’ll take me 4 hours to get there in 4 hours back now.
[7:52] I’m making a lot more money in dosing than i am on the one in Atlanta.
The third thing when it comes to a good deal is how to.
[8:16] And I’ve demonstrated that plenty of times in the various shows and sources over it but with creative deal structures you can turn an ordinary deal into a killer deal,
I
190.
But she didn’t live there anymore. She had turned into a rental and did renters in her view had trashed it to what that bad. But in her view they had trashed it. And,
So we were talking about it and I said look if you’re okay with raining it how about running it to me she was running it for 800 a month I’ve researched it to market rent was 1500 a month,
She was happy to get 800 a month,
At 800. I said, what if I gave you 800 a month and you’d never had to come and repair anything ever again.
You never had to come here again and 2 years from now I will buy it from you and I will give you full price I’ll give you 180 1000 for it.
[9:24] She said, really? Oh, that would be awesome. I said, great. So, she wants 170. It’s worth 180. I ain’t no deal.
I brought some people in from out of town,
And they gave me 15 1000 down I gave her nothing down.
I made,
$50 thousand on the back end and about $20 thousand on on the cash flow and the creative deal structure turned not a deal into a killer deal,
So, you have to know that. Then, number two, you have to know how to find properties.
[10:17] I mean, this is a property business and you,
There’s there are all kinds of methods and strategies and programs but I categorize them all this way and I’ve got a little book about this shameless plug time. It’s a little book on Amazon. You can get it for 399 and
It’s called.
How I get 10 1000 deals in my inbox every week,
It’s been off a little bit over the pandemic years but it’s coming back. 10 1000 deals a week in my inbox.
Who helped me look at and even we still can’t get through it all. So, we’ve developed, you know, ways of weeding through it but you’ve gotta find a way to get to these properties. Now,
I I love them into three different ways. Free, low cost, and worth it.
Free are things like networking and talking to people and passing out business cards sort of free. Well, you can get business cards for free at this print. Com. Low cost include things like driving for dollars, driving around, maybe getting an app
Learning who owns property cinema postcard and.
[11:38] Then the worth it includes things like mailing campaigns and owning websites and that sort of thing they’re all different kinds of ways to find properties and which one works the best well what works best is when you do several of them at once,
You’ve gotta be out there. You gotta put yourself out there. It’s like any business. You’ve got to market market market. And right now your marketing for deals.
How to get it paid for.
And that’s always an option.
As a person who has done over 2000 single family residences I will tell you I probably haven’t used my own money to buy but about 50 houses.
[12:29] Most of the time i use other people’s money.
I use other people’s money to create the cash.
[12:53] And what you yeah and that comes down to the next one OPM other people’s money.
Well might be,
Second best sometimes creative deal structures that’s next but other people’s money it could be a lender it could be a private lender it could be an institutional lender it could be up a partner an equity partner,
Or it could be the seller themselves. Now, they’re not gonna contribute any money to your deal.
They may turn that equity into a loan to you,
They don’t really have any plans to do it for the next couple of years. So, how about and you do, you can even say, hey, I don’t really know what you’re planning to do as money. It’s none of my business but.
If you’d be interested in making 12% return on it for the next 2 years maybe we should talk. Our 10% whatever number you wanna put in there.
And people’s like 10% return. Hmm, how do I do that? Well, I’ll give you I’ll give you the full price for your house and but you,
Long.
[14:14] Yeah. Yeah. That’s just one example of a creative structure but it’s also using other people’s money.
And the third thing is to create instruction. I’ve said enough about creative structures. So, if you know how to fund a deal, you’re gonna get a lot of things done.
We’re gonna take a quick break and we’ll be right back in just a moment and I’ll give you the other two things that you have to know.
[14:38] Although my show is called Flipping America i don’t believe flipping houses is for everyone.
But I do believe that everyone including you should consider real estate as a part of a balanced investment portfolio.
We’ve documented at least 86 career pads in real estate and real estate investment most of these have variations within different,
Asset classes and strategies I honestly believe there are more than a 1000 ways to make a one 1 million dollars in real estate one of them is probably right for you.
[15:10] Do you figure this out? I’ve watched hundreds of people over the years and seen people both flourish and.
I’ve also seen some of the people who failed at one thing do really well at a different thing and I’ve started noticing patterns among people who do well so,
Couple of years ago, I started building profiles of successful people in different areas wholesalers flippers, builders, rental investors, and lenders.
What we have learned is that successful people in,
Area tend to have certain characteristics and life situations those who lack those qualities struggle and usually don’t do well.
Or what if there was a way every person could figure this out before they begin?
This thinking led me to the find your fit course available at Flipping America. Net forward slash.
All one word. In just five easy lessons, you’ll take stock of your life and perhaps pursue the best fit for your real estate career.
You can take the course at flipping America. Net forward slash find your.
[16:18] And that is a great place to start I had a great time creating that course and I don’t know if you remember Star but that’s the course where I have people take a personality test,
I love that though.
[16:31] And do some dreaming and thinking about what you really want out of life,
Cafe in Milan.
[16:56] And reading paper.
I don’t think you’re gonna flip houses in the US if you’re living in Milan.
[17:13] And and actually that conversation is one of the things that that,
But anyway, back on the subject. Let’s review. We’re talking about the five things that you must know to be an effective and discussful real estate investor. Number one, you have to know what a good deal looks like.
Number two, you have to know how to find properties. Number three, you have to know how to fund a deal. Number four, you need to know how to repair a property.
And there isn’t anything there isn’t any real shortcut to this if you’re going to repair properties you’re gonna have to learn some stuff. Yeah. You’re gonna have to learn the parts and pieces of a house. You’re gonna have to learn what things cost.
And you and and so the first subcategory here is you gotta know how to estimate repairs.
And the best way to do that is to use your search engine and Home Depot or Lowe’s catalog. Some big box catalog where your figuring out what things cost and you’re just gonna have to do some researchers. No shortcut to this.
If you wanna know, you gotta know. Now, there are a couple of really cool apps out there and I’ll be saying more about that because I’m in conversations with the owners of one of them.
[18:32] Then you gotta know how to hire contractors and.
I don’t know. There’s a little bit of an art to it. But there’s some sides to it too. I’ve got a whole section of that in my contractor possible course and it’s a big part of what we do in the flip starter course also.
Really.
It’s gonna be painful. It’s not gonna be fun.
So there is a process to hiring average process to firing them. There’s a process to protecting yourself along the way.
[19:18] When you get books on project management it can get real complex and and difficult and overwhelming in a hurry it doesn’t have to be that
But it is helpful to understand a gant chart what that is and it is helpful to know what project dependencies are
And I’m telling you this is a lucrative business if you will apply yourself to learning what you need to learn to make it so,
If you just have flashes in your mind of the lifestyle and the car you’re gonna drive and all that stuff.
[19:53] This isn’t gonna work.
It’s like,
Blood in the water with a bunch of sharks. Oh god.
Contractors are very surprised and in a little bit of disbelief to think that a woman knows about the parts and pieces of a building or can swing a hammer or drive a nail or even operate a screw gun.
Ann.
You know they’re they’re partly right about some of that but if you if you’re a female you really need to apply yourself to understanding not what color to paint things,
That’s fine.
Your realtor can tell you that you need to know that process in which some of the work it’s done you need to know the difference between the thicknesses of drywall and the,
What are value means with insulation and the difference between an eve and a pain and a corporal and I don’t know I’m just making stuff up. You need to know all the parts and pieces of the house.
[21:11] And what the things are called,
Because if you say thing I’m a jig or do hickey,
I probably could spend the rest of our time today talking about how essential it is that you get good.
Hiring contractors but again, we’ve done entire shows on it. So, we’re not going to.
Then, number five.
[21:49] Number one,
Hey, you know, after a commercial, they have to go back over anything was already done. And I’m thinking, are you born in the south? Why do you repeat yourself so often?
Number one, what a good deal looks like. Number two, how to find properties. Number three, how to fund a deal. Number four,
How to repair a property number five multiple ways to move the property and I’m not talking about pick it up put in a different location I’m talking about moving it out of your pipeline.
[22:16] And that’s more than just selling it. Of course, that’s the first thing. Selling it on the retail market,
Is always a good thing to do if you’ve added value to it somewhere along the way,
Another thing that you can do is wholesale the property.
So
Choice of words and for those of you that are listening who are not really real estate investors you may be a little befuddled by the way real estate investors use the word wholesale
It has nothing to do with the traditional marketplace where you have a middleman who is a supplier who buys in vast quantity
And then divide that up and sells it in smaller quantities to the retailers that’s what we think of as wholesalers okay.
The the best way to think of wholesaling in real estate is arbitrage.
Like stock trading arbitraries you sell something like put your call options or whatever you sell something that you don’t actually own you have a contract that gives you the right to own it but you don’t own it yet.
And that’s what happened with in wholesaling in real estate.
[23:32] Somebody will put a property under contract and they will sell the rights to the contract and he’s through an assignment of contractor they’ll do a double closing that sort of thing but they’re not actually taking ownership of the property most of the time they’re just selling this.
Okay then there’s another thing called Whole Tale and that’s a little bit different and I’m saying whole,
Who and the word tale T A I L.
Not hotel like place where you stay but,
And you fix the main things but you don’t put a finish on it you don’t put that spit shine and decor in the wow factor in the kitchen and all that stuff,
You leave that for an enterprising home buyer to do and you don’t sell it for full retail price you sell it for discount but you still make money.
[24:27] That’s whole tailing.
Because it’s it can be lucrative.
Okay.
The contract states that they’re gonna pay you X dollars every month for a certain number of years and when they’ve done that you’re gonna.
Assign the contract to him. We’re gonna.
The thing about an installment land agreement is it doesn’t advertise. It’s not an amortized loan. It doesn’t create a state in land. Technically under the definition,
Meaning that the person is not accumulating any ownership value in the properties so if they if they’ve got a tenure contract for deed and they get 7 years into it and then something happens,
Maybe the family splits up or maybe they get have to move or something like that and they take off. Well, all that money that they’ve been paying toward that contract is reckoned as rent.
They’re gone and they have nothing.
[25:34] So that’s kind of a disadvantage to the buyer but the advantage side is you get a lot of benefits of homeownership. Yeah. And so there,
There are certain,
I have done it hundreds of times. I love contract for deeds.
Then there’s the least and least option you you turn into a rental property and you can also,
And this is a lot of fun when you buy a property with create a structure like a lease with an option and you sell it the same way like I describe earlier in the show.
[26:20] No matter how you acquire it, you can dispose of it with at least with an option. You can just turn it into a straight rental if you want to and keep it forever which is a another,
Conceively good thing to do but you can put a future purchase price on it too and you can have people give you,
Option payment and what they’re paying isn’t is a payment,
And then,
Another way to move a property is with seller financing just a straight out note indeed it’s a promissory note and then say,
A deed of trust it could be a mortgage but either way it is a deed to secure debt.
One of my favorite things to do right now and we call it the bore method buy owner financing repeat and we really make use of it to the flipping America buyers club.
[27:19] But I like to buy houses at a relatively low price and then,
A little bit less than the current market price and set up a payment that is well less than the current rent price so the people moving in there getting a great deal,
With the understanding that it’s as is where is and they’re gonna fix it up.
[27:43] Creates the opportunity. Any note buyer will tell you if you buy the property at a discount and sell it at retail and create a note based on that then you’re well above your the stated interest rate on the note.
[27:59] Are stated interest rate maybe nine% but our actual return may be 30.
[28:06] Alright,
And I’ve managed to take the entire show up with that so we’re gonna do questions next time around. That’s fine. You drop gyms on them though. That’s what we call it. Gems. You get some real good gems. Oh my god. Gemstones like,
I was thinking Jim who might,
I know a guy named Jim. I have dropped him anywhere.
Alright.
It reminded me of some things then I learned even more today. So we were over there taking notes or were you texting your husband,
Okay folks if you believe that I’ve got some real estate spanning the the East River in New York I wanna sell to you.
[29:08] Alright.
May the sunshine brighten your heart may the burdens of the day rest lightly upon you and may god unfold you in the mantal of his love.
[29:32] You’ve been listening to flipping America real estate investing for everyone. Listen three times a week on stations across the country or on the flipping America app free in the app store,
Be sure to like us on Facebook find and follow us on Twitter and Instagram and keep your eyes open.
[29:50] Music.