Brant: All right. Hey guys. I am here with Mr. Stacy Ginn? Did I say that right?
Stacy: Yes, you said that right.
Brant: Awesome. We’re standing in one of our flip projects that we’ve just completed for InvestHomePro, one of my personal flip deals. Today, I’m with Stacy. He’s going to talk to us about one of his flip deals that ended up rather nicely. Stacy contacted me after reading my book to share his success that he had. Some of you guys know I love getting your feedback and your stories and success and seeing that you guys are going out there with this information and taking action and creating positive results. What we’re going to do is I’m going to have Stacy introduce himself, tell you guys a little bit about his background and then we’ll get into his deal as well in just a minute.
Stacy: Sure. Thanks Brant. My name is Stacy Ginn. As you said, you did pronounce it right. I’ve just closed my first flip last month in December and did very well on that. My background is I originally started out in production home building back in the ‘90s, giving away a little age there. I’ve been out of the business for a while.
I’ve been in corporate and oil field and started contracting on my own doing contract consulting about six or seven years ago. That business was up and down. Last year I was looking at how can I subsidize that with what I’m doing? To feel it out. A good family friend of mine that had been in real estate for a year, he goes, “Well, you need to start looking at buying houses and flipping.” I was like, “You know, I don’t know what I’m doing because I used to do new homes.” He said, “No, you got to try it out.” He basically started mentoring me and a good family friend. One of the things he did, he told me, he said, “Look, there’s a ton of information out here and I’ve read a lot of it. You need to take a look at it.” One of the things that really helped me because he’d been doing some wholesaling and a little bit of prehab flipping himself was a book by this guy named Brant Phillips.
Brant: Imagine that.
Stacy: Yeah, imagine that. I was like, “Who’s Brant?” He said, “Get the book. Here’s the link. Go out there on Amazon.” I got the book and I started reading it. I was like, “Man, this is helpful stuff. It’s very concise.” It’s easy for an aggie like me to read. You got to keep things very simple for an aggie. It’s very simple.
Brant: I was telling you before we started. I was like, “You’re not very smart.”
Stacy: I’m a pretty smart guy.
Brant: I’m the guy like if I can do it, anyone can do it. The way my mind thinks like I need to simplify things down and break things down to their simplest component, most efficient process because when it’s real very complex, my mind gets overwhelmed and I shut down. That’s why I tried to layout the book in a simple easy 1, 2, 3 approach.
Stacy: I think you did. I think the nice thing about it is that stuff, whether it’s flipping houses or anything, what I’ve learned in life is that it’s really good to go back and hopefully not make the same mistake other people do. I think you did a good job of saying, “You know what,” You laid it out there and it was nice. Pretty bare and you said, “Hey, I’ve had some screw-ups. I’ve had some successes.” You put it out there and said, “Okay, here are the things that you need to look at.” It was both I think, it was for us. You got to go out there and execute. You got to work. You can’t sit on your butt waiting for someone to call you. Then it was very concrete, specific to, I think I was telling you earlier that there were the five phases and I made a photocopy of that.
Brant: Of the rehab?
Stacy: Yeah, of the rehab. I carried that in my car with me. I would look, “Okay, I’m in this phase, have I checked this off? Have I done?” That was very helpful.
Brant: Yeah, love it. I love it.
Stacy: It was great. It was a benefit. That’s why I wanted to contact you after I saw I got your emails. I said, “Hey, you know what, I just did this deal and you had a little input in there and helped me out.”
Brant: It motivates me more than you know getting that feedback.
Stacy: Oh very great. I’m glad to hear that.
Brant: Let’s get on some numbers on the deal. Let’s talk about the purchase price, number of repairs, the financing structure and then you say that, what you sold it for.
Stacy: Okay. My mentor had actually sourced the house for me. You need wholesalers, you need people out there that can find them. This house was actually an estate deal. It was on the west side of town. The house was built in 1970 and the owner passed away so it was going through that process. I would say that one of the key things I learned in that, before we get into numbers is that I think one of the deals I got into and developed a relationship with this person. Sometimes you want to do things, you want to do them fast. Sometimes you have to be patient and take time. When I say develop a relationship, when I walked the house to make the offer, yeah, I helped the lady carry boxes out to her car. It was a little tidbit to the side.
Brant: I tell people all the time that real estate is a people business. It’s so much a people business on how you can influence and just connect with people, not only the sellers, potential people that you’re buying a house from, your contractors, your other professional team, your attorneys, your accountants all that stuff, you need to, it’s the how to win friends and influence people. It’s so important. I’m reading that book actually now just because it’s so important. It’s totally a people business because I’ve literally, there’s a good friend who’s a wholesaler that we bought a house from one time. I saw this guy. He’s brilliant on how he talks to sellers. He literally got a seller to sell their house to him $20,000 less than another wholesaler just by the way that he interacted with them.
Stacy: The way he interacted with them?
Stacy: I tell you one of the things, I think you talk about it in your book as well but one of the things that my mentor told me was that is that we look at sellers as being a seller. In this market, even in this market we’re in now, he said, “You need to look at them as being clients. You need to look at them as being customers.” Taking that first step, rather than going that hey, you’re a customer and they’re a seller. They’re really a customer because you’re competing with a bunch of other people out there. I think you proved that point when he got a deal for better just because of the way he handled him.
Brant: That’s right.
Stacy: I went to the house. The house had not been remodeled in quite a while. I went through and I remember you said, “Do not break this rule.” What rule? Do you remember what rule that was?
Brant: Mm-hmm (affirmative).
Stacy: Do not break this rule.
Brant: Yeah the calculator.
Stacy: The calculator.
Brant: Yeah [inaudible 00:07:12].
Stacy: Do not break. I’m a numbers guy so I took that to heart. I went in and I walked through and I did my estimate. By the way, it’s like the fifth house I think I had looked at and considered putting a bid in, which was probably a good turn around. I had done my work with my agent and got it down and said, “Okay.” The lady was asking 125 for the house. I was like, “You know what, I can probably give you about 105 for it.” I said, “But I’ll meet you in the middle and I’ll do 113.”
At first, the response is like, “Oh gosh, you’re 20,000 off or you’re 15,000 off.” I said, “You know, you got to go through that process with them, they don’t understand. When you take out the commissions, when you take out the curating, when you take out all the stuff, because this house was not ready to sell conventional.” In fact, I was competing with a family member trying to buy it conventional. We came to a deal and we closed. I had gone through there. I said, “All right. Here’s the market right now, here’s my estimated repairs. I subtracted that out. What’s 70% of that number?” I was at about 115 range. I did pretty good for it.
Brant: Real quick, the number he’s talking about you can find at www.freeflipanalyzer.com. Essentially what it is, is when you plug in all your numbers, purchase price, estimated repairs, your financing and closing costs, all that kind of stuff, it’s going to give you a number. In most markets, these shifts and this change and it depends on where you’re at in the country and for that matter the world. Generally that number for flip deals is you want to be around 70 to sometimes 75% of your after repair value, your purchase price and your repairs.
The rule with that is as a flipper, as an entrepreneur is like when you plug in all the numbers, assuming that you have good numbers, good data that’s being input into the spreadsheet, the spreadsheet is going to, it’s going to tell the story. The story is, is this a good deal or a bad deal? There’s really no middle ground. If it’s like a maybe, you put it in the bad category and you just walk away.
When the numbers make sense, if you’re really committed to this, you’re an entrepreneur, you do the deal. It’s the numbers. It’s the market condition, what type of financing, all that kind of stuff. You look at it, if the numbers make sense, you got to pull the trigger. Because I talk to a lot of guys and they have that fear thing. I’m like, “Your numbers make sense here, what’s really going on?” A lot of people walk away from deals even when they’re not … That’s why I try to just let the numbers do the talking rather than my mind because we’ll talk ourselves out of doing deals because we’re like, “Oh” We play the what if game, “What if this happens? What if that happens?” Rather than, “What do the numbers say?” Let that make a decision.
Stacy: That’s the fear. You can’t let fear drive you. I bought the house. One of the things I did look at and you look at the numbers, you got to look at realistic stuff. One of the things that was a big deal out there and you’ll see it all over the city in Houston. I ran into this in homebuilding and new homes is the slab. There was a lot of foundation. I walked the house and I could see it. Look down and the lines weren’t straight. I made sure that the warranty on the previous slab work was transferrable and that was the condition of the contract. Once we got that cleared and I knew that my numbers were right because you think about it, if that number had been wrong, that was a $10,000 mistake. Then I felt comfortable. There was a fear but you eradicate the fear by using facts.
Stacy: Yeah knowledge and using facts. I bought the house, we started the work. In the end, it was a very extensive rehab which was great. It was a lot of fun. I ended up with about $80,000 in the rehab.
Brant: The first price was 110?
Brant: $80,000 for repairs.
Stacy: So you have 190.
Brant: 190 hard costs?
Stacy: Right. There was some miscellaneous costs for about another 10,000.
Brant: What was your financing structure?
Stacy: My financing is I had two private investors and then I had a construction loan.
Brant: A blended interest rate from?
Stacy: No. My financing …
Brant: No, I mean what was the blended interest rate that you paid?
Stacy: On the?
Brant: All three. Is it averaged out to 9% or?
Stacy: Yeah. No, I actually had a profit share on the private equity, on the money, I paid a point and it was 12%.
Brant: What amount was that loan for?
Brant: It was 100? Essentially almost your purchase price?
Stacy: I had 100,000 in loan, I had 90,000 in private money and then the rest made up the difference. I came in and …
Brant: I’m sorry. Real quick, it’s a good point here is that sometimes people ask about using a private lender or they’ll think that they can’t use a private lender because private lender doesn’t have all the funds. A lot of them, we don’t pull money together, just put it all together and do the deal. What we do is we provide one lender, we have a rule of one lender one lien. If you had a lender that had $100,000 you can use that to purchase a home. Then you got a second lender say you owe $50,000 you need to do 50,000 repairs, you could take out a lien or a loan with the second lender for that 50,000. There’s ways that you can do it. Sometimes we’ll do a bank loan for the purchase price and use either our own cash or our lender’s money for the repairs. That’s how you can do deals with no money out of pocket.
Stacy: That can be done. I think that’s the thing.
Brant: Yeah. We do it all the time.
Stacy: I think what you put out there is creative. People think creative is some kind of just conceptual type thing. Creative is real. Creative is looking at, for me personally, I looked at what resources did I have to do this deal? I looked at the alternatives and compared them. Then I said, “Okay, this was the best combination to put together.” That’s what I did. You can do it because at the end of the day, whether it’s an equity investor or you have some other kind of partner or a lender or hard money, do you know what they do? They do the same thing you talked about.
Brant: The exact same thing.
Stacy: They go through that. They go through that same analysis and if it makes sense, they’ll give you the money.
Brant: Another thing that I know a lot of investors struggle with is, a lot of investors, I hear this all the time. “I only have $10,000 to invest or I only have 20,000.” Whatever amount this potential fledgling like new investor, like “I have this amount of money to invest.” Sometimes guys that have a lot of money. They’ll say like, “I have 100,000. I have 500,000. I’ve got this capital that I want to invest.” My mindset, when I teach people, I’m like, “Go into every deal with a mindset that real estate should put money into your pocket not take it out.” Even when you’re purchasing because there’s always a way to structure a deal with no money out-of-pocket. If you’re the high net worth guy and you’ve got hundreds of thousands or millions of dollars sitting around, you may make an educated decision. “Yes, I want to invest this capital to get this certain amount in return.” For you guys out there who have no money or say five, $10,000 to invest, it really doesn’t matter.
Brant: Because that’s what attracted me to real estate because I bought my first house on a credit card. I didn’t have any money to invest. I knew there was a way because I read it in some books. I could get real creative with this.
Stacy: Someone before Brant Phillips had seven steps of fundamentalism.
Brant: Yeah. That’s the thing I want you all to get is that there’s ways to do no money down real estate deals all the time. You just have to get a little bit creative. It’s not this real in-depth creative thing. It’s just like, “How can I structure this deal with no money out-of-pocket?” Generally, that answer is through private lenders which brings me to a whole nother discussion.
I won’t get too deep into that today but I’ve got out of that mindset for a while. I was beginning to invest some of my own money as I started to accumulate wealth. I started to invest it. What I realized was two things. That everyone, I don’t care if you’re Donald Trump, everyone has a limited amount of capital. At some point in time that capital is going to run out. Whether it’s 5,000 or 5 billion, at some point in time, that capital is going to run out.
If you can develop networks and lenders, it’s an unlimited amount of capital essentially. Not only are you going to reach an endpoint investing if you’re using your own capital but you’re really doing a disservice to your lenders because that’s the light bulb that came on for me with my private lenders was getting out of this mindset. It’s like, “Urgh, I’ve got to ask someone to borrow money. I don’t want to ask people to borrow money.” Then it turned like, “I’m not asking anyone to borrow money, I’m providing an investment opportunity that’s going to help them increase their wealth, increase their retirement fund, provide a really good, solid investment and a home in a neighborhood that they can drive to and touch their home and look at it versus shipping it off to Wall Street where they don’t really know what’s going on. That was the game changer for me. It’s like, “I’m going to” It’s a big long discussion.
Stacy: You’re doing them a favor.
Brant: We’re doing them a favor and they love you for it.
Stacy: They do. They love you for it and OPM.
Brant: Other people’s money.
Stacy: The thing is, is that you’re giving them, just like my investor. I gave him whatever blender came on that but 12% interest on that. What did the stock market do yesterday?
Brant: I don’t look at the stock market.
Stacy: The stock market dropped 350 points. Fortunately, I’m not into stock market so it didn’t affect me. The point is, is that those people and I think if you look historically, they say the stock market’s made like 5% to 7% of what? Of paper sitting out there. It is a long discussion but like you said, you just took, we’re standing in a hard asset right now. This person’s money in this, if everything goes to hell in a handbasket, he’s got something to grip on to that’s worth something. He knows that he’s not going to have to go chase you down to get that value out there because it’s in here, because at some point it’s going to come back. That’s what we did.
I think you’re right. There’s a lot of creative opportunities and everything to do there. Don’t let it start. I think the key is though the money is out there. It’s first couple of fundamentals of making your networks, sourcing the deals and finding the deals because there’s money out there looking for good deals all the time.
Brant: Yeah. It’s the biggest, the money is generally the biggest mental obstacle that people put up in their minds.
Stacy: It’s not an obstacle in my mind.
Brant: Literally, it’s like stepping over this grout and aligning the tile.
Stacy: It’s there.
Brant: All right. We’re going to, let’s wrap up. You bought purchase price is 110,000, rehab cost for about 80,000.
Stacy: 80,000 and another 5,000 other costs. Then when you get to closing cost, now what I did is I did have a realtor commission in there. I sold the house at top of the market, sold it for 30,000 more than any other house that sold in there and $3 per square foot. I think I told you earlier, the key that I did and my mentor told me this is from the beginning. It didn’t make sense to me at first because I’m like, “Why would I put a sign upfront for a house that I’m not going to be selling for three months? I don’t even know what I want for it.” I put a sign out there that said, “You know what, this house is going to be available soon.” In today’s market, in Houston especially everybody is so desperate for houses, I sold my deal without listing it on the MLS and my partners and I made $57,500. I appreciate it.
Brant: We do fist bumps. We go with the boom.
Stacy: That’s right. We have to watch the ring.
Brant: Yeah, I have to watch the ring.
Stacy: Yeah. I appreciate the knowledge and information. I’ve been going back to what my mentor told me. “There’s a lot of information out there, you need to go out there and you need to put a team together. You need to meet people like Brant. You need to meet other people that are in the business that are successful. Meet the guys who have done it.” There’s a lot of people out there that will coach you. I’m in a house right now that Brant actually did. This is one of your houses?
Brant: Mm-hmm (affirmative).
Stacy: You’re still doing it?
Stacy: You’re didn’t just speak on it. I’m glad you’re doing it.
Brant: Yeah. With my coaching and with my life, there’s something that I hold very true. That is in order to lead it you must live it because I found that in the, as I’ve spent a lot of money on coaching and mentoring, I’ve found that not all the mentors who are out there are actually living it. I try to apply that in all areas of my life. In order to lead it you have to live it. Yes, this deal was, that we’re standing in, structured similar to that. I have a private lender. We just talked about it, I have a private lender who loaned, I want to say $260,000 to purchase this home, 260-265 that we’re standing in. I had a second private lender who loaned approximately 80,000 for repairs so that’s 340,000 all from private capital, zero money out of the pocket. I actually put, I went into my pocket a little bit the money that we have in our account for just in case surplus things go wrong.
About $340,000 of private capital on this investment deal that we’re about 98% done. Let’s just wait just a few days. We’re going to lease this property for, I want to say 439 maybe 449 and just … Yeah, not only do I preach it, I live it. Once again man, boom. Awesome job. I appreciate you reading the book first and then really I’m inspired by you going out and taking action. I’m sure everyone watching this is as well. I appreciate you meeting up with me to share that.
Stacy: Sure Brant. Thanks for that. That’s right, I’m sorry [inaudible 00:22:24] I’ll do it again. I appreciate that Brant answers his emails. I can answer that too.
Brant: I do.
Stacy: He does.
Brant: We just set a record for four fist bumps now.
Stacy: Four fist bumps.
Brant: More than anything, you got the record man.
Stacy: All right.
Brant: All right.
Stacy: Thank you sir.
Brant: All right. Thanks guys.
Stacy READ my book, ‘7 Fundamentals of a Highly Successful Flip’ and proceeded to GO OUT AND TAKE ACTION!
Long story short, he ended up flipping a house and netting over $60,000!
Nice Job Stacy!
Very proud of you my friend for ‘Testing’ these 7 FUNDAMENTALS and creating a nice payday for yourself, and your partners.
LOADS of valuable content in this video, so be sure to watch the entire video….