7 Steps To A Deal

Are you a new real estate investor that is trying to make sense about what actually happens from the time that you ‘find’ a potential deal to the time that you actually close on a deal?

Well, if you’re like most, this is a huge ‘GREY’ area that is critically important to decipher in order to create a successful investing business.

Watch this training replay where Brant shows you 7 Steps that he uses in his business to navigate from the time a potential deal comes in, up to the point of closing and funding.



All right. We have officially began, 10 minutes into the show. I apologize for today’s webinar issues. Got new video camera, new iPad here. I’ve got a new camera, new microphone, new screens, made a lot of changes at the office. The maiden voyage has been a complete and utter failure (smile). All right. This ship is sinking as I speak. That’s okay. That’s okay, because it ties in very, very nicely with today’s presentation. This is actually the first time that I’ve been able to test out this new iPad presentation tool because I couldn’t get the stupid thing working.

What we’re calling today’s show, we’re calling it Bad Flip Gone Good, Bad Flip Gone Good. I say this a lot as a coach and a mentor. One of the greatest ways that we learn in business and in real estate is when things go bad. When things don’t go the way that we want them to go or expect them to go, when things go bad is often times the times that we learn the absolute most. Okay? This is really bugging me so I’m going to move a little bit here. It’s the times when we learn the absolute most. I’m not really liking that. I’m not digging that.

Whenever we think that, when we have a projection on some numbers on a deal and things go exactly the way that we think that they should go, that’s really cool. Don’t get me wrong. It is really cool. I love that when it happens. Then in terms of flipping residential real estate I would say that now, now that we’ve got our systems in place and I’ve learned the bumps and bruises, one of which I’m going to share with you today, that it happens most often than not. Not that our numbers are exactly 100% on but we’re pretty darn close when we’re projecting numbers on flip deals, on rental deals. What homes are going to lease for, how long they’re going to take to lease for, what our rehab numbers are going to be. We are really, really good at this point in time.

We weren’t always that good, but we’re not 100%. We’re not 100%. Sometimes we miss. Sometimes we miss. Sometimes still, we’ve got, if you want to use the 80/20 rule, we’ve got 10% to 20% of deals like we’re off quite a bit. Some of those times are really painful like we’re off in a bad way. Sometimes we’re off in a good way. Sometimes we underestimate things or we under project things. We’ve been able to really time the market well where we’ve done much better than we expected to do. That’s really good too.

Today, we’re not going to talk about one of those situations. Today, what we’re going to talk about is bad flip gone good, bad flip gone good and how you can learn. You learn the most when things go bad. I mentioned the 10% to 20% when things don’t fall the way that you project them to fall and they fall on the negative side. That’s actually the times for you to learn the most and to learn the most about yourself. Who you are, what your character is, how you are going to respond when your back is against the wall.

One thing that I had to learn about myself was that I didn’t like my back being against the wall. I didn’t like it, still don’t like it, not fun. The big takeaway that I’ve found is that when my back is against the wall, I’ve found I’m going to come out fighting. I’m going to come out fighting. A thing for you to consider when your back is against the wall and your business, just consider the quicker you are to respond and fight and get out of that situation, the quicker that you’re going to be back on to the place and creating the results that you desire versus just back against the wall, “Things suck. Woe is me. I can’t do anything.” Playing the victim role blah, blah, blah, blah versus taking action, cleaning up the messes, extracting the lesson that you learn from that situation, that deal and trying to find a way for it to not happen again. How can I learn from this? How can I learn from this?

I know a lot of you who have heard my webinar or read my book maybe about the first flip deal that I did, everything went wrong. Everything was bad. I did everything incorrectly. I threw this pity party for a long period of time where it’s kind of like, “Woe is me. I suck at real estate. I should just go back to getting a job. Armando Montelongo from How to Flip a House is a liar.” All this, going through all these kind of stories. Really I was disappointed. I was disappointed that things went wrong. I was disappointed that I lost money.

Right there before my face as I was throwing the Brant Phillips pity party, right there before my face were so many valuable lessons that I was failing to see. A few months later after that period of time I was like, “You know what Brant, like the fact of the matter is,” Because I was going through this battle of like, “Maybe I shouldn’t flip houses. Maybe I should just rent properties and be a landlord and stay on the path I was on.” Because I was doing pretty good at that. That was my comfort zone. The very first flip deal that I did when I ventured out, I lost money on that thing. I was going through these thoughts like, “Flipping sucks. It’s not for me. Maybe I suck. Maybe these television shows I’m watching are liars.” That’s debatable, that one. Really these were just a bunch of stories I was creating because the fact was that in my heart, I wanted to flip real estate. I wanted to learn how to truly flip a house.

When I was just honest with myself, that’s when I was able to look at the lessons before me. I was able to say, “Hey, let me pick up the pieces of what went wrong and learn from them.” I’m not going to go too far into it, but if you’ve read my book about the Seven Fundamentals, that’s what I did wrong. That’s what I did wrong, each fundamental, I didn’t have the right mindset going in. We could talk about deal flow. I guess that was okay. I didn’t properly analyze the deal. I didn’t properly estimate repairs. Could have financed the deal much better with private money. Totally butchered the rehab in the way that I managed it. The way my vision was changing daily and weekly, it was confusing contractors. I was wasting time and wasting money. Over improved a few things and blew my budget out of the water and my timeline. I didn’t market and price the house properly. I got greedy in a bad market. I didn’t string my first offer, tied up two or three months and it busted out, blah, blah, blah, blah.

Anyways, there were a lot of valuable lessons that I learned from that deal. Thank God. Thank God. That’s just something for you to also think about in your own life and your own business is, what have you failed at that’s actually golden nugget and a golden opportunity for you to learn and for you to grow? Because I guarantee you’ve got things like that in your life and your business.

What I want to talk about today though was a new situation for me that I haven’t run across, I had not run across at that time. Since this time I’ve ran across this situation maybe about three or four times, actually I’d say about three times I’ve ran across this situation. I’m calling this webinar Bad Flip Gone Good. This is what happens whenever a flip doesn’t flip. That could be another name for this podcast is, When a Flip doesn’t Flip, What do you do when a flip doesn’t flip?

This was the situation I had. Whoops. This was the situation that I had many years ago. I’m going to show you how I course corrected. I bought a property. This was back I want to say in 2010. The reason this whole webinar is on my mind is because I just went through this experience again with this similar deal but the numbers aren’t as dramatic. I don’t think you can really fully see the lesson as the example that I’m going to show. I’m going to show you one that’s a little bit older.

The bottom line was that I bought a house, I bought a property that I intended to flip. I had no desire to keep this property as a rental property, as a long-term hold. I bought it with expensive money. It was 12%-14% money that I bought it in. It was a short-term loan. It was a six-month loan. It was a very expensive house comparatively speaking to the homes I was buying at the time. In terms of the ARV, it was going to be close to a $200,000 home. It was $189,000 ARV.

In the Houston market in 2010, this was almost double. It may not sound a lot for some of you saying, “That’s not a lot for a property, a rental property.” In 2000, you got to understand that when I first came to the business for the first few years, most of the properties I was buying I was buying at $50,000, sometimes at less, quite a bit less than that. My ARV after I was spending 10, 20 or $30,000 in repairs was in the 100 to maybe $125,000 price range.

A $200,000 rental wasn’t in my game plan. Quite frankly, it’s still not to this day. We do mostly rentals that are ARVing around 100 to 150. That’s really my sweet spot. I have some above that but it’s not 80/20 rule or 80% of deals that I do and that I love and have done. Really what it boils down to is they have the highest ROI for those less expensive houses, less make-ready cost, less taxes, less turnover etcetera, etcetera. Anyways, different subject different story.

The bottom line was that I was buying this house … It totally worked. All right. I was buying the house, I don’t know, my pen’s not working. Actually that would make complete and total sense the way that today has gone. This is incredibly big here so let me adjust the size. The ARV on this home at that point in time was about $189,000. It was about $189,000 went into that. My purchase price on this home was 105. It was $105,000 and my repairs were around $30,000. My purchase price plus repairs plus I paid points closing cost etcetera, etcetera, we’re going to say 5,000. I think it was a little bit more than that. My all in was about 140k. It was about 140,000. I was intending to sell the property at about 189 maybe 185, I don’t remember exactly what I was going to price it, my initial listing price was at.

Long story short, the house didn’t sell. This was at a time if you remember there was an $8,000 tax credit that was being given to first time home buyers. We were flipping houses like hot cakes before that came to a halt. When it came to a halt, it ended at, I want to say May 31st of 2010 and it ended right before the summer time because everyone was thinking, “Well, the summer time is the buying season of the year, so even if we drop the tax credit,” This is the government kind of stuff. It’s like, “Even if we you know, let go of the tax credit, people are still going to buy houses because that’s when people buy.” I can tell you that in the Houston market, specifically the houses that I had for sale, people weren’t buying them. The market came to a screeching halt because it had been doing pretty well in this starter price point for first time home buyers.

Now, I made some mistakes with this property. This is where I would say my ego got a little bit to me where I was in a neighborhood with, I was competing against new home builders, there was a new construction going on. I violated some of the prerequisites and laws if you will, fundamentals that I’ve set of neighborhoods that I don’t like to go into and I went into it. This is one of the reasons why I learned this lesson because I really didn’t know this lesson. I had been told this. There’s a difference between being told something and experiencing it. I experienced it on this deal. I realized I really didn’t like competing with new home builders meaning like subdivision builders in their own subdivision, not a good thing.

That being said, the market halted. I was competing against new home builders, and not only was I not getting offers, I wasn’t getting showings. Crickets were chirping. After multiple, multiple price reductions I think I ended up dropping to about 165, 165. You’re looking at I owed 140ish on this property, $140,000, I had a full listing agent agreement. I wasn’t listing myself and I have a flat fee. I had 6% in realtor’s fees, 6% on that is probably about 10 grand. It was probably about 10 grand. Plus that time I had been paying what? Financing.

If I had 12% interest on $140,000 loan, that’s 1,400 a month. If you round off 1,500, I was $8,000 or so. I was at $8,000 into a holding cost at that point in time plus miscellaneous stuff. I don’t know, a couple of thousand of insurance, utilities, etcetera, etcetera, etcetera. You look at this and so you’re looking at 20 grand here. There, that’s what? Profit of maybe $5,000. Maybe $5,000 if the house sold right then. Meaning each month that I was holding on to that property, it was costing me what? Another 1,400 in financing plus insurance, utilities, all that kind of stuff. Another four, 500 bucks. Each month it was costing me. If this house didn’t sell at this 165, then within two or three months I was going to be at break even. Then it was just going downhill from there because the market wasn’t going to suddenly course correct and it was going to increase in value. That just wasn’t happening.

This is why I had to face the facts. I had to face the facts and I’m like, “Houston, we’ve got a problem because this house is not flipping.” I’m not going to lie, I freaked out. I was freaking out. I’m like, “This sucks.” It’s like all these negative thoughts go through your mind like, “Oh my God. I’m going to die. I’m going to go bankrupt. I’m going to lose all my properties,” Because I had like 30 something rental properties at that time. Like, “Oh my God. I suck at real estate so bad.” You have all these negative thoughts.

Another thought came in and it was not good. I was like, “Oh crap, my loan’s coming due with my lender and I don’t know what to do.” This was a private lender. We do all of our deals with private lenders. We’re doing most of our deals with private lenders then. I’d always performed. I had always, I’m the biggest advocate on when you get a private lender, some investors come into this business and they’re like, “I need to get 10 private lenders and raise all this money.” I’m like, “Slow down Chachi.” My students I’m like, “Let’s slow down here. Less is more. Less is more, slow is fast. Slow is fast.”

When it comes to raising money and working with private lenders like I said, the rule of one applies here. You have heard me say that before. “The rule of one.” Just focus on one. Focus on finding one lender and you take care of them come hell or high water, good deal or bad deal, good flip or bad flip whatever the situation may be, you take care of that lender. I knew in my mind I’m like, “Man,” I was going through all these worst case scenarios. I’m like, “What if this house doesn’t sell for a year? All right. That’s going to cost me like 24 grand. Okay. Let’s figure out ways that I could pay that.” Back then that was not going to be an easy thing for me to do.

I’m just like, “Okay, let me just deal with this.” I’m like, “Let me think outside the box here,” Because really losing money on the deal, it wasn’t an option for me. While it looked like it was when I’m looking at the numbers that you see now, it’s just a mindset thing. That’s why I started how to flip a house book off of the mindset fundamental because it’s all about your mindset. It is all about your mindset. My mindset was that, “No, mm-hmm (negative). I’m not going to lose money on this deal. How can that be possible?” I don’t even know the answer to that question.

The first thing I knew that I had to do was I had to have a conversation with my lender and let him know what was going on. Just be honest, real and raw like, “Here’s what’s going on. This house isn’t selling. I don’t know what to do about this loan coming due because I can’t pay it off. I don’t have this amount of cash.” I didn’t have the amount of cash at that time. Like, “I can’t pay this loan off and the house isn’t selling.” I called my agent and I said, “Look, here’s the deal. I need to turn this into a profitable deal. At this point in time, leave it for sale because if I can sell it and dump it, I would.” I’m like, “I will even entertain offers in the 150s if I just have to lose 10 or 15 grand right now and cut the price, I will do that because I want to be done with this deal.”

I’m like, “Why don’t we go ahead and put it up for lease? Let’s just put it up for lease.” I put it up for lease for 1,650. This was in the summer of 2010. It leased really quickly. That was a good thing. Didn’t quite cover all my costs at that point in time because I’m paying, or it didn’t even come near to covering my costs at that point in time because I’m paying 1,400 a month just to my lender plus insurance, plus taxes. The taxes in this area, for those of you in Houston know the Sienna Plantation area, that’s where this house was, incredibly expensive.

I was losing money a little bit every month but I was okay with that because this was a short-term thing. I called my lender. I said, “Hey look, here’s the deal. The flip flopped. It’s not flipping. I want to see if we can extend this loan for a period of time, six months to a year, whatever you feel comfortable with, I need to extend it. The banks as you know aren’t lending right now but I’m going to work in effort to get this thing refinanced as soon as possible.” He said, “Sure, not a problem. Not a problem at all.”

The funny thing is, I’m going to go on a quick tangent, that whenever the market was getting really dark and really ugly, interestingly enough, that’s where I raised a lot of money and cultivated a lot of relationships with lenders that I have to this day.” Going into that market, we were borrowing a lot of money at 12% and 14%, some 10% money. During that time when things really got ugly, I was going to my lenders and saying, “Hey look, here’s the thing. Love and appreciate all that you have done for me and my business and trusting me, investing with me. But here’s the thing, this market that we’re in, there’s a lot of opportunity for us but that opportunity is of course not only more profitable for us but I have to really safe guard my risks.

The fact of the matter was I’m going to continue buying real estate but if I’m borrowing at 12% or 14% if there’s an even worsening of the market then I’m putting myself in a bad place as a business owner because I want to always be able to perform all of my obligations. Of course, I’ll go to my grave to make sure I do that. I have to find funding sources that are considerably less than 10%, 12% and 14%. I understand if you have other investors you want to work with or just simply put the answer is no but what I’m saying is I want to keep working with you. I want you to invest with me but I have to borrow at lower rates. I’m talking 7%, 8%, 9% rates.”

The interesting thing was my lender said, not like, “No, Oh my God.” A couple of them said, “No, that’s okay.” That was okay too. Most of them were like, “I thought you would have called sooner. That’s not a problem. I feel my money is safe with you. I’m okay with that. I want to keep investing with you.” Sometimes we just have to ask. A lot of times this real estate game, it’s just a people business. It’s relationships. It’s just having these conversations. First off, the lender was more than willing to extend the loan out for another year. I was negative cash flow which I did not like. Did not like it at all, but only for a period of time, only for a period of time.

I ended up refinancing. I did a refi. I don’t have these exact numbers but I did a refi with my bank and the appraisal came back believe it or not incredibly low. At this point in time, all appraisals were coming back low. I borrowed somewhere about $110,000 with the bank. That was a first lien. Then I borrowed another $20,000 from a second lender. Then I had $10,000. This was not as a third lien. This was from my original lender. He was actually the second and the second was the third but whatever. You get the point.

When I went to him and I said, “Hey, the bank is going to loan me $110,000. I’ve got another lender that’s going to loan me 20,000, so I’m going to pay you off $130,000.” This was within six months or so after that time, after I had extended. I said, “The only thing is if you can hold back about $10,000.” This may have been 15 and 15 I’m not sure but it was somewhere around that range. I said, “I’m going to refinance, probably get you the bulk of your money back but I’m going to have a little bit outstanding.” He was like, “Sure, not a problem.”

Here’s what happened. This renter that was paying 1,650 a month, guess what they did? Guess what they did? They rented the home from 2010 all the way to 2016. They paid their rent every single month. Please note that I did not say they paid the rent on time. They paid an incredible amount in late fees. When I say an incredible amount, they were late every month. This is back when I was pretty much managing all my properties, all of my systems. These renters were still calling me and texting me and stuff like that at that time.

What I found most amusing, not only that they paid the rent every month but late, there was a new story, every single story with every single month associated with the late payment but they were a good family. I don’t meant to poke fun but I am poking fun. I should apologize for that. They paid the rent every month. They stayed in the house and they took really good care of the house, like really, really good care of the house.

Things had shifted in my business. Oops. Things had shifted in my business. Things were going on. As real estate investors, we need to look at our portfolio if not multiple times per year, at least on an annual basis and look and say, “Hey, what assets are performing? What assets are not performing? What properties are at their peak, at the top of the market? Ones that are drifting down here?”

The name of this game is what? Buy low sell high. In that market that I purchased this property at, I had really essentially bought it really, really low and I was trying to sell it really, really low too. That’s how we’re still able to typically flip houses even in bad markets or low markets. We just have to buy them cheaper and sell them cheaper, sell them for less and expect that our whole time or days in the market is going to take long. This is why it’s so incredible to be able to raise good money and establish lines of credit or maybe even structure loans with banks so you can get really solid, cheap financing. That that alone creates opportunity for you in markets that other investors just don’t have because they’re borrowing money at 12%, 14% and two to three to five points.

I digress. Bottom line was I had bought low and the question was now, “Could I sell high?” Earlier this year I was doing a review of all my properties. Just so you know, what I’ve been doing the last two or three years, really the last two years, it started about three years ago where I was just getting rid of some of the trash, I wasn’t selling high. I was just getting rid of some junk that I had bought a long time ago quite honestly, when it comes to properties.

The last two or three years, I have felt that we were in this range. We were near the top. This is the top of the market. I felt that we were at this point. The other cool thing was, that had happened over the last I guess eight years was this, principal pay down. With my second liens that I mentioned on the previous screen, the second and third lien were amortized at a different rate than the first lien. With the bank was a 20-year amortization, 5.5% interest rate that kind of thing. With my second and third lien, those were on, one of them was on a five-year AMO with my lender for the 10 or $15,000 that I paid off much, much quicker. I just flipped another house, made some money. I wanted to pay him off and get him out of that deal. I paid him off really quickly.

My other lender was essentially almost paid off, not quite but more than halfway paid off. At this point in time, principal pay down meant that I owed about 110 total loan on that property which was what? Which was about what I had paid for when I originally bought the property. I’m not talking about the repairs but it was back to what I paid for it now.

At the beginning of the year, I was reviewing my portfolio and happened to talk to my agent, my main agent. She was telling me about, she said, “Hey, do you have any properties in Sienna? Because I’ve listed a couple over there and they’ve just flown off the market.” I’m like, “That’s interesting. At what price point? Because Sienna ranges from 200,000 to about a million and something.” She was like, “235, 245.”

I’m like, “Hmm.” I’m like, “I have one. I’ve had a tenant there for eight years but it’s one that I really would consider selling because I’m still thinking about way back in the day. If this market shifts and corrects again, is that something I want to holding on my books right now? I would have been completely fine with that because now I owe $110,000. It’s still rented. It’s been a great property, great property, but let me see. Can you run a CMA for me?”

She runs a CMA and says that it is worth $240,000. $240,000. I’m like, “Hmm, is that the top of the market?” The fact of the matter is we don’t know. We never know when the top of the market is. We never know when the bottom of the market is until we’re looking behind us in rear view mirror. We’re like, “Oh, that was definitely the bottom.” Or we’re like, “Oh, that was definitely the top.” None of us have a crystal ball. I get asked that question all the time. People ask me, “What do you think the market is going to do next year? What do you think it’s going to do, blah, blah, blah?” I always tell them. I say, “First off, I’m not that smart. Second off, nobody really knows. Nobody really knows.”

There’s been a lot of predictions about what’s going to happen in 2017 with the new president and all these types of things. The fact of the matter is if you just go on projections and outlooks and forecast, that’s great. We should do that. We look and I somewhat have an idea of what I think the market is going to do.

When you look at all these government programs that come in and all the bailouts that happen, can anybody really predict what’s going to happen in the market? I’m not trying to be smart ass or anything but a lot of times when people ask me that, I tell them like, “Yeah, I do know what’s going to happen in the market. I know exactly what’s going to happen in the market. The market is going to go up, the market is going to go down. Then it’s going to go sideways for a little bit and then it’s either going to down again or up again and it’s going to keep doing the same thing forever and ever and ever.” That’s what I love about the market because I know if the market is up or the market is down or sideways or crossways, there is always an opportunity there. It’s just up to us to find that opportunity.

Now for me, those of you who know my investing game plan, my business model is buying properties that are in the starting price point to median home pricing for the Houston area which is somewhere between 100 and $200,000 is typically what the ARV is on the prices that we buy and hold. Really, it’s about 100 to 150,000. That’s where most of them are. We have some that are 200s or in the 200s and we have some that are less, worth less than $100,000. Those are typically, that’s the market that we play in for sure with rental properties.

When it comes to flipping, we’ll go a little higher, we’ll go up to 300. There are some exceptions where we go to real high-end stuff but I’m not crazy about it. That’s not where I’ve had my biggest successes. Honestly, that’s not where I’m creating the most sustainable business because of one, there are markets shifts and things like that. There’s a huge potential to make a lot of money in the high-end markets and I’ve done that. There’s a huge potential to lose a tremendous amount of money with some of the high-end deals. I’ve done that too.

I like being in this comfort zone, 80/20 rule. These homes that are 100 to $200,000, $250,000 is where over 80% of the homes are in a market. Guess what? That’s where 80% of the buyers are in a market. Guess what? That’s where 80% of the renters are in a market. Guess what? I’m insulated. Whenever the market goes down, I’m going to lose buyers and I’m going to lose renters. That’s okay because I’m gaining them from the upper market as well. Vice versa when the market goes up, I may be losing buyers who are moving on up and renting on up but I’m gaining buyers and renters coming up from that lower market as well.

I had to question and ask myself, “Is $240,000 at the top of the market?” I’m like, “Damn it if I know, I really don’t know.” I will tell you that my principal loan on this house was $110,000. My agent was telling me that I could sell it for $240,000. I can tell you that this my friends is a very nice spread, hashtag spread my friend. “You need a spread to bring home the bread.” There’s my quote of the day. “You need a spread to bring home the bread.” I’m like, “Done, listed.” I contacted my tenants, gave them 60 days. Said, “Hey, we’re not going to extend this lease.” It was on a month-to-month, it was on a month-to-month.

A little management tip, we don’t always auto renew our leases for a year or two years if it’s a property we’re considering selling. We’ll just go month-to-month. This thing had been month-to-month for a really long time. We gave them 60 days to move out. That was the beginning of the year. We spent about $10,000 in terms of, I don’t know if it was quite that much. We had to replace the roof. The roof was really old. We replaced the carpet. We painted the entire home. We did some other things like that. It was about 10 grand.

Long story short, we did not get 240 for the house. Things I had against this property was the master bedroom was upstairs. It’s a big deal in Texas. It’s not ideal in a lease. We ended up selling it for 232. Agents, commissions, blah, blah, blah. I walked out of there around 85k. 85k was my profit. This was money wired to me in my bank account from the beginning, from the beginning of, “Oh crap, I’m going to lose money on this deal. Everything is going bad. Brant sucks at real estate, blah, blah, blah, blah, blah.”

All of those issues and problems I had because I just didn’t quit and give up, didn’t throw my hands up, I can’t tell you how many investors during the down market when times got tough, times got hard, “Oh my God, this is rough. Let me just quit. Let me run away.” Got so many calls from lenders whose investors bailed on them. They didn’t know what to do. I got calls. They wanted me to take over the deals as an investor or they were calling my construction company saying, “Hey, can you come step in and finish this rehab? Whatever we can do to lease this property or flip this property.” So many calls, I received so many calls from lenders because people were just flat out giving up, meaning investors were giving up.

I get it. I get it. There’s times that we go through as business owners and real estate investors that are tough and they’re difficult. I’m not going to sugarcoat that. It is that. Just think about this. I don’t know how many investors in the Houston market or nationwide that bailed on deals and properties because things got tight, things got tough and things got hard. I can tell you firsthand that I knew a lot of them. I saw them not show up to real estate networking clubs, meetings, Mastermind stuff like that because they bailed. They went back to get a job or do something else because when you can’t take the heat you get out of the kitchen and they got out.

Here’s what I want you to think about. This is for you to store away for future reference, to file away in your mind. Think about this, all of these investors that bailed in 2008/ ’09, ’10, ‘11, ’12 whatever, even in today’s market, think about the deals that they bailed from. If they had found a way to make it work, how much better off they would be today, because most of them aren’t even in the business. Most of them aren’t even invested anymore in real estate. One, they would have held on to those investments. Two, assuming they would have salvaged those relationships with their lenders, they could have even made them win-win. I still work with that lender from that day in this deal. I believe when deals go bad, how we handle them even if they’re bad, if it’s good or bad, how we handle that situation, we can come away with gaining so much more respect in the eyes of our lender.

Let’s just look at dollars. That’s when one of the greatest transfers of wealth has ever happened in that down market. Think of all the deals that these investors could have done additionally or just had on the ones that they had and then waited, waited for the market to come back to the top or near the top, they could have made out like bandits.

This is just one example of the properties I was able to buy then with private lenders and navigate through that rough market to reach the “Top” and I’m hoping I’m one of the tops. I want to go back down again because I was just getting started back in the other market. Now it’s like, “Oh, I can’t wait for another crash or correction because I’ll just be that much better able to take advantage of it, because going through it the first time, it was still really hard. I was still really scared. Every time I bought a house, I was like, “Oh my gosh.” I was listening to the news and reading the newspapers, back when we had newspapers. We had newspapers then. I used to read it actually and just thinking like, “Oh my God. Maybe they’re right. Maybe this is never going to end,” because it was all doom and gloom, blood on the streets.

Come to find out, it’s not really that bad. It’s not really that bad if you build a sustainable business. Doing deals that are sustainable in any market. That’s why I like that price point. That’s why I really like working with private lenders that when things get bad, let’s have the conversation. “Hey, what can we do to modify this or change this? I want to honor my agreement, but part of that agreement maybe we need to shift things a little bit, you get paid a little bit more in the back. I don’t know.”

The fact of the matter is, when a flip goes bad, you still have the ability to make it good. You still have the ability to make it good. It’s completely within your power. It’s completely within your power. Just consider that. Whether you consider it or not, it’s just true. Real estate is incredibly, incredibly forgiving over the long-term. It’s incredibly unforgiving for the short-term. That’s why you had to really be spot on your numbers on a flip deal. In the long-term, it’s really, really forgiving. This is a case in point. This is an example of that. This is what I wanted to share with you. This can be an incredible, incredible tool for your tool bale is just understanding some of the powers that you have.

We’re not going to get into owner financing today. However, this could have been set up perfectly for an owner finance deal. It’s just for you to consider. That for you to ultimately decide what to do, you control your destiny. You’re the captain of your ship, no one else is. It’s up to you to create that situation when your back is against the wall, when you have a bad flip, a bad situation, a bad circumstance, a bad partnership, whatever it is, find that opportunity to make it good, to find a way to make it profitable. Take action, make it happen. That’s all I got today. Love and appreciate all you guys for reaching out, taking action to create results in your life and your business. With that, I am going to sign off and say peace.

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