Okay. I hear some of you, you’re saying you can’t hear anything at all and some of you, you’re saying the sound is great. I’m going to think, I’m going to go with the big thumbs up. We have got everybody on here. Without further ado, let’s get started. We’ve got a lot of things to cover tonight. Got a new little toy I’m playing with on the webinar tonight so I apologize if there is any technical difficulties, but we’re going to get this proverbial bad boy started, all right?
We’re going to dive right into this thing. For those of you who don’t know me, you’ve never been to one of my training events or seminars or webinars, although I don’t do too many webinars to be honest except for my private coaching students. I’m going to come at you guys with some realness about this business. There’s no smoke and mirrors with the business that we run. There’s no smoke and mirrors with the coaching that I do. I’m going to give it to you, boom, just like that with some real and raw truth in what we do to operate our business.
Here’s the thing. Here is the first teaching lesson of tonight’s webinar about how to flip a house. There’s no secrets. There’s no secrets. The things that we’re doing in our business today, that I’m doing in my business today are the same things, almost the same things, it’s the same things with some new technologies that we’ve added to the mix. It’s the same things we were doing 10 years ago.
That’s the thing. When you’re operating your business, when you’re operating your investment company on proven fundamentals that work, you can run the same business for decades. I’m finishing my first decade running my business and I’m pretty sure what I’m doing today is going to be what I’ll be doing 10 years from now and 10 years after that and maybe teaching my kids to do. Now, so there’s some diversity within the fundamentals. I’m going to be going over the seven fundamentals tonight.
Some of you are familiar with my book. I wasn’t prepared. I’m not prepared at all. I’m not going to lie. I didn’t have my book. The book is based on seven fundamentals, seven fundamentals of a highly successful flip. We all know that the goal is to have a successful flip. I forgot to hit record. We all know that the goal is to have a successful flip. What are the seven fundamentals of a highly successful flip that we’re going to be covering today with a real life case study? This is one of the most recent deals that we just finished up. I’m going to be going over that case study. I forgot to hit record.
We all know that the goal is to have a successful flip. What are the seven fundamentals of a highly successful flip that we’re going to be covering today with a real life case study? This is one of the most recent deals that we just finished up. I’m going to be going over that case study. All right, boom. We are rolling.
All right. What are the seven fundamentals that we’re going to cover on tonight’s webinar? All right. The first fundamental is, number one, that’s way too big Brant if we’re going to get through all seven on the same thing. All right, number one. What is it? Raise your hand? Who knows what number one is? Mindset. Yeah, we’re going to talk a little bit about mindset tonight. Don’t worry. Don’t worry, not a lot, but it’s absolutely critical.
After mindset, what are we going to do? We’re going to get into some real estate. You’re not going to be flipping too many houses if you don’t have what? Deal flow. You got to have deal flow. You need the deals flowing to you. You can never have enough deal flow. There is a lot of things in this world that you can have too much of, including cookies and ice cream and things that we often want too much of. There’s a lot of things we can have too much of. One that we can never have too much of is deal flow. We’re going to go over how some of the ways that we generate deal flow in our business.
If you get deals flowing to you, you need to be able to what? Quickly analyze deals. I feel like I’m writing with a crayon from when I was a kid. When my parents used to take me to the Sizzler and you got the crayons and the paper. This thing is huge. There’s a Sizzler flashback here. All right. You got to learn how to analyze deals.
Whenever you begin analyzing deals, there’s really two phases of that. There are comps, there are CMAs and then there’s the repairs. I’ve broken that out to a whole nother section because when it comes to flipping properties, when it comes to renovating, rehabbing, that’s a whole nother fundamental in itself. We’re going to talk about estimating repairs. This thing is really hard to draw with. Estimating repairs and it doesn’t do dots. That’s okay. That’s okay. Estimating repairs.
After that, what do you need to actually do the deal? Financing, right? You need financing or cash. We’re going to talk about some of the options. Whether to use your own cash if you got it. Some of you who are like me when I first got started and you don’t have two nickels to rub together, you still need cash. You just need to learn how to use OPM, other people’s money and other people’s cash. We’re going to talk about ways that you can create a true win-win scenarios with your investments to create some not only great investments for yourself but for your lenders as well.
I’ve been working with private lenders going on close to nine years now. The relationships I have with my private lenders are, they’re friendships. The thing with private lenders are you treat them right, they come back. I’ve never had a private lender only do one deal with me, never. Repeat lenders. It sounds like repeat offenders. No, we’re talking about repeat lenders. That’s what we want here. Those are the relationships you have to cultivate in your business so that you can literally flip as many houses as you want at any given time. We closed on like four houses in the same week about a week ago.
All right. Then after you actually get the financing, you close on the deal, what do you have to do next? You’re going to dive into the rehabbing phase. Raise the virtual hands. How many people are scared of the rehab part? Dealing with contractors, just managing this big chaos of adult babysitting and just a bunch of unprofessional, untrustworthy, not very well-groomed men. I get it. We’re going to talk about that. We’re going to talk about ways to coordinate the chaos and create this beautiful home that you can put a sign on the yard and sell that bad boy.
Then the last fundamental that we’re going to talk about is we’re just going to call it Income Generation. How do you generate income out of this asset? Those are the seven fundamentals that we’re going to cover. Cool? If everybody is good, if everybody is good with this webinar of covering those seven fundamentals tonight and giving you a case study along the way, showing you with a real life real deal that we closed just a couple of weeks ago. None of this stuff like pulling up HUD statements from the 1980s like some of these gurus do. We try to go as live as possible. That’s how we’re rolling on this one.
Now, I was this close, and hell, maybe we’ll do it next week or the week, no, not next week because I’m traveling. I’m game for this. I almost, I was this close into doing a real life deal that we’re doing right now. It’s going to go on the market any day now, power freaking got cut off. Chris went over there yesterday to take pictures. We couldn’t get pictures, not good pictures anyway. I didn’t want to be presenting a case study where I didn’t have at least some decent photography. We opted not to go with that one, but that is a crasher deal like $100,000 rehab.
Show of hands. If you all let me know if you’re interested in that, getting into some really big nitty-gritty kind of stuff, like 100,000, $200,000 rehab construction kind of stuff. Let me know. I’m good with that. Most contractors suck according to Keith M. Agree to disagree. I’ve come to love contractors. I’ve also been dealing with the contractors. A lot of them do suck though. I’m not going to lie. They just suck, no lies.
All right. What is the first thing that we’re going to talk about? We’re going to talk a little bit about mindset. I’m going to try not to drift too much on this webinar or go chase some squirrels so you guys keep me accountable. We’re going to stay on point. I’m going to give you guys as much value as I can in our hour together.
What am I talking about when I’m talking about mindset? We’re getting into much more, something much bigger than just flipping a house whenever we talk about creating a successful business. A successful, sustainable real estate investing business. I’m assuming that’s ultimately what most of you want tonight, want in general is to create a sustainable business. Something that you can rinse, wash and repeat and do it over and over and over again and make money and be successful. Even hopefully even better yet actually enjoy what it is that you do. I get it. If you go into this business though with just like, “Ah, let me see what happens, let me kick the tires, let’s go test this thing out” Mm-hmm (affirmative), not going to happen. Just don’t do that. Go get a Subway sandwich up or something like that. It’s not that kind of business.
I would say most businesses, quite frankly being an entrepreneur requires some mindset. It requires some determination and really just getting prepared for what you’re about to undertake. I do a lot of CrossFit. I do a lot of, I’ve done Ironman, MMA fighting, all this kind of stuff. I’ll tell you that, whenever you go into a big sporting event, like I went to a CrossFit workout today, the mindset that you create going into that workout and that experience is going to determine your actual experience, success within that event. Same thing with business and same thing with investing. When it comes to creating success here and in today’s day and age, you definitely got to have the mindset game going on.
How do you sharpen that? How do you create a winner’s mindset? A couple of things I do simply, very simply read, read. Every single day, continue to grow and expand and sharpen this thing up here. Just begin reading books about mindset. Just creating this internal environment that is dedicated to succeed, dedicated to overcome the obstacles that are certainly going to come because they’re going to come. There’s just no way around it. That’s cool. That’s cool. Just be prepared for it. All right? We’re going to talk about how to prevent some of the obstacles and how to overcome them. There’s going to be some. Just make sure that you’re ready for them because I can tell you with the real estate world that markets go up, markets go down. Markets go up, markets go down, markets go up and on and on and on and on.
That’s cool, but if you’re not prepared like so many investors fall out here. When the markets go down, they hit a little turbulence, they check out. “No, can’t do that. This isn’t for me, etcetera, etcetera.” Guys, they tap out, “Boom, boom, I’m done.” Because they just didn’t have the mindset game. They didn’t have the mindset game prepared. They weren’t prepared when they went into this business and they check out at the bottom or when things get a little bit tough.
When things get tough, when you hit a valley, you hit a bottom, there’s just one way to go and that’s up. That’s cool, because this is where we make so much more money is going through some of the times that the market and what you see on the outside of the economy is like, “Oh, this is so bad.” We’re like, “No, it’s not bad.” All of our competition is checking out. We’re gobbling up houses and either we’re holding them or we’re just flipping them to investors. We’ll talk a little bit about income generation, different ways to make money. So many ways to make money in this business but you can’t do it if you don’t have the game up here ready.
When we talk about mindset, there’s four pieces that I want you to think about tonight. There’s four pillars if you will that are going to help create your success. Just mindset determination is the first thing. What’s the second thing that’s going to help you create success? This is really my four X factors of success. There’s mindset. Number two, there’s skillsets. There’s skillset or skillsets. What are the skillsets that you need to be successful?
We’re talking about flipping houses tonight. Obviously you need the skillsets that are necessary to go out and do the work that is required to create this house flip, this business. It doesn’t mean that you have to have all the skillsets internally in terms of like you don’t need to know how to hang drywall, or float and tape or tape and float. You don’t need to, I can’t even say it much less can I actually go out and tape and float. I don’t do that. You have to have the skillsets that are necessary or know how to call upon and leverage the skillsets of others in order to build teams. Professional teams as well, accountants, bookkeepers, people who are going to bring you deals. Then just the skillsets that it takes to have a successful business.
I’d be lying to you if I were like you see on some of these websites or other webinars quite frankly and, “Hey, we’ve got this magic pill. This little push button formula where you can overnight have 10 deals under contract when you wake up with breakfast in bed the next morning.” This high in the sky kind of stuff. Don’t have any of that tonight for you. I’m sorry. I wish I did. I wish I had the little easy button that you can hit it and just go do deals and got it.
What I will tell you is that the good news is this, is we live in the information age. The skillsets, the information surrounding skillsets is right there. It’s right there for all of us. We can Google it right now and learn pretty much everything that we want to know about real estate, real estate investing, about all the seven fundamentals. You can go research all those topics and you can get the skillsets. Now, it’s up to you to do the work, to actually do the work to improve and expand upon your skillsets and leverage the skillsets of others and build your team but that’s on you. We’re talking about mindset. We’re talking about skillsets.
There’s two other pieces that I would have you consider that are extremely critical to creating success. The third piece is environment. This is the environment that you surround yourself with. This is the people that you surround yourself with, environment. This is the place, your workplace, the environment. There are some environments that are more conducive to success. This is physical environments, places where we think bigger. I love going down to the beach. I love going to the river. We just got a new office. I got the most expensive one because it’s got big glass wall. Half the building is a glass wall because I’m like that’s good, better environment just to expand.
The other piece of this environment piece is the people in your environment. The people in your environment. There’s saying that goes like, “Iron sharpens iron.” The people that you surround yourself with, the environment that you put yourself in is literally one of the biggest factors in determining your success. This is why I’m a part of Mastermind groups. This is why I go to business meetings all the time. I try to learn and put myself in environments with people who are more successful than me, people who are smarter than me. No jokes, no jokes on that one. Okay good.
All right. I like to put myself in environments with people who have more money than me, who’ve been more successful because I’ll learn from them. I like to put myself in those environments where I can expand upwards. Consider the environments that you’re putting yourself in. The thing about when you’re a kid or if you have kids, choose your friends wisely. Our friends will a lot of times determine who we become. When you watch your kids, like should they be hanging out with those kids? It’s because of that environment.
Then the last piece of my mindset on success X factors is accountability, accountability. The thing is this, I’m going to teach you guys some really cool stuff tonight. You’re going to learn a lot if you’re taking notes and paying attention. Who’s going to hold you accountable to actually do the work that it is that you know that you need to do in your business?
We see this a lot in the health and fitness world, like trainers. You compare the results of the person who’s like, “Yeah, I’ve been thinking about losing some weight this year. I’m probably going to go to the gym next month. I’m maybe going to eat a little bit less,” Versus the person who’s like, “I hired this fitness trainer. Monday through Friday at 5 AM in the morning. Like I’m counting my calories. I got the MyFitnessPal app. I check in. I have to check in every night.” That’s accountability. Who’s going to get the greater results? This is my first lesson. This is about the first fundamental, mindset. In mindset, we’re breaking that down into really four X factors if you will about success.
Before we move on to the second fundamental, the question is what can you do to sharpen your mindset, improve and grow and expand your skillsets? Improve your environment, putting yourself in an environment that’s more conducive to your success? What ways can you create accountability? Create accountability in your business or in your life? Cool?
Let’s move on to the next fundamental. I want to make sure I haven’t seen any questions or comments here in a little bit. I want to make sure that you guys can hear me okay. Cool, cool, cool, cool, cool, make sure you can hear me okay. I’m assuming you can, cool. Cool, cool, cool. I’d hit a comment and it was like, “I can’t hear you.” I’m like, “Whoa.” It was an old one, my bad. I’m running this by myself so it’s a little bit difficult.
Let’s get ready for fundamental number two. Fundamental number two is all about what? All about what? All about deal flow. We are talking about deal flow. This is number two. This is number two. There is a lot of ways to generate deal flow and leads in this business. What are some of the most typical ways that you guys and girls think of when you think about deal flow. How do you create leads to get your phone to ring, to get emails? Things like that.
The first thing, that’s a letter. There’s mail. There’s postcards and direct marketing. Sending out marketing. This can be in the form of radio. I’m going to draw a radio. Yes I am. That is a radio my friends. Billboards, things like that. All of these equal what? We call this paid marketing. When it comes to generating deal flow, that is first option. This is how a lot of people start in this business by generating and creating marketing campaigns, marketing campaigns to basically send out marketing. You invest time. You invest money. You create marketing campaigns to send out your message, your information out into the marketplace hoping that it returns with the result that you desire. Getting that phone to ring, getting emails and things like that. You’re sending a message out into the marketplace.
I would also add PPC, pay-per-click, pay-per-click advertising. I’m going to switch screens here in just a second. I’ll show you one of our websites that we use to generate leads with a little bit of pay-per-click. There’s some things where I can’t really get into too many of them tonight but with some little secret ninja tricks that we do to generate leads and things like that online without costing much if any money at all. It goes a little bit more in alignment with, falls more into the second type of marketing that we’re going to talk about in just a second. All right, cool.
This is a website. Hopefully you all can see it. If not, let me know. It’s called Houston Capital Home buyers. This is basically just that, I do not like that picture on there by the way. It’s somewhat cheesy. It converts. Listen to your conversion rates more than your personal preference. Just a standard motivator type seller site.
This falls in alignment with the second form of marketing, kind of sort of, which is what I just like to call, I call it hustle marketing. I’m not talking about pay-per-click. You’re probably getting a little confused right here. With your credibility site, with your direct marketing website, there’s two ways you can bring leads to this site. One is you just pay money. We call this like you turn on the lead valves. To open up the faucets of leads. You pay money into the traffic machine which is Google, and you pay money. Maybe Yahoo, maybe Bing, some of that kind of stuff. That’s the first option is to basically just pay money to get people to come to your sites. We don’t always do that.
The other option that you can do. Let’s switch screens again. The other option that you can do when it comes to deal flow is what I like to call hustle, hustle marketing. Beating the streets, creating networks and networking with the people who have the deals. In my opinion, this has been my main strategy since I started in real estate. Big difference is paid marketing is you send money and a message out to return the results you desire. With hustle marketing, you go out to attract what it is that you want. You physically go out and do this.
What does that look like? We do some hustle marketing towards our websites in terms of blogs and some things that one of my IT guys does, one of the ninja tricks that he does to create some, what we call organic traffic. We’re not paying money. We’re not paying money per se to just buy those leads through the traffic store but we’re doing some work. When I began my business, what does this look like? I just began going to every networking event in my local community that I could find. If there was a real estate boot camp networking event, mixer, whatever, I was going there and shaking hands and talking to as many people as I could find.
What did I find? I found two things. I found realtors who knew about investment in real estate. That is the key. That is the key. We don’t want some of these just wet behind the ears realtors who don’t know anything about investment in real estate or even realtors who know a ton about real estate but they don’t operate in our world and our space. I began to meet with realtors who knew about real estate and I began to meet wholesalers. Wholesalers are what? Wholesalers are, essentially they’re like agents but they’re the guys that send a lot of money on the direct marketing campaigns, yellow letters, postcards, websites, things like that. They do all of the follow-ups. They talk to the motivated sellers. They run CMAs to find out what the deals are worth. Most of them. They do a lot of that legwork.
I’ll tell you, there’s a lot of work involved to actually get a deal. For those of you who are just coming into this business and you’re thinking like, “Should I be setting up a marketing campaign and do it all that type of work to get a deal?” The honest answer is like, “I’m not sure.” I’m not sure. Some people come into this business, they feel very inclined to do all that work. That’s great. I say that you should do it. There’s a lot of people like myself, I love marketing. I do. When I started in the business, I was working a full-time job, very incredibly busy job with a wife, family, kids and I’m just like, I had a decision to make. That was like starting a whole nother business. It is. It’s like an entirely different business model than actually just going out and flipping houses. It’s crucial.
What I just began to do was use the 80/20 rule. The 80/20 rule. I was like, “Who are the 20% of agents and wholesalers that are finding 80% of the deals? I’m a big believer in the 80/20 rule. I found it certainly to be true in the world of investment in real estate. When it comes to deal flow, if you want the fastest path, the cash. If you want me to tell you what some of the secrets to my success, because we could spend a lot of time talking about deal flow and setting up direct marketing campaigns and all these types of things, find out, take notes on this. Here’s what you go to do. Find out who the players are in your market and get like that with them. Cultivate a relationship with them.
One of the first wholesalers that I found about like 10 deals from the guy the very first year, cultivated the relationship to where I was the first guy he would call before anybody else. There’s some other things that you have to do on that, cultivating that relationship. You got to make sure that you can close when the deals come to you. You got to make sure that the deals, that you can close them when they come to you. When the deals start coming to you, you got to be able to what? You have to be able to analyze the deals.
We’re going to talk about the third fundamental. We’re going to talk about analyzing deals. How do you do that? How do you analyze deals? All right. I know that on tonight’s webinar there’s people from all different walks of life and experience. Experience in investment in real estate and business experience. I can tell you, when I first got into real estate the thought of analyzing a deal was like, “Whoa.” I had no clue. I had no clue how to do that.
How do we analyze a deal? Once again, I’d like to tell you like there’s this push little button little thing that you can do to analyze deals but it all really comes down to comps. Comps, you may hear this as a CMA. Comparable homes that have sold in that neighborhood that you’re looking for. When you’re looking at purchasing a deal, you need comps. What are your comps for that home for homes that have sold in that area? That’s it. That’s all it comes down to, are comps.
What I’m going to do now is I’m going to show you some comps from our case study home tonight. Let me pull them up. Where did they go? Where did they go? Where did they go? All right. What do comps look like? What are comps for? For some of my newbies out there, so let me pull them up. I’ll switch the screen real quick. All right, cool. Hopefully, you all can see my screen. What do comps look like? Nothing really special.
These are some comps here. I think I’ll pull them up. These are comps. These are homes in the area that we are looking to deal in or that we did a deal in that have actually sold. If you see the status, it’s sold. Whenever it comes to looking for comps, what do you need to look for? Look for houses that are sold. Do we look at actives? Homes that are in the market that are active? Yes we do. Yes we do. We look at them but they’re not a comp. we use that to just gauge the market and say like, “Hey.” Like, “What’s going on in the market right now?” We look at that as much in as like what is the competition like right now? Who are we competing with? There’s a lot of homes for sale. What are they priced at? Are people pushing the price in that neighborhood? What’s going on with the comps?
The big thing with the comps because I’m not really a numbers guy. The thing with numbers, as an entrepreneur and as a business person, what you have to be able to do is figure out what the numbers are telling you with your comps. When we started digging into the comps of this property, let me try and have the … I think I have the most recent ones. We started looking at the comps and this property it was coming out, if you look at the average, was coming out at 130,000.
130,000 wasn’t going to be a deal for us quite frankly, but we started looking at them and we started looking at the pictures. These are some pictures of them. We were finding that there weren’t a lot of rehabs. You can see that this is an old outdated type of property. We’re like, “Ha, the house isn’t event rehabbed and it’s getting 130,000 or 125,000.” We start looking at it and we’re like, “I think there’s an opportunity.” They’ve got this old butcher block countertops, this vanilla wafer stove here. Yeah, these aren’t really even comps. We started feeling really good about our property. We were looking to go 150, 160 on our home. We based that off of comps. I got to have another drink. I was getting a little tired. That’s my first thing for you guys, is that you have to use solid comps.
There are some websites out there. A website like Zillow for example. People ask me all the time. They’re like, “Should I use Zillow or can I use Zillow?” I’m like, “Not really.” There are some markets where Zillow is much more accurate than other markets. To be quite honest, you need to have access to the MLS to run this business. There beginning to be some paid type of websites for those of you who don’t have MLS access. I’m not going to give out website names or anything like that tonight. You can do your own research and do your own due diligence. There beginning to be some online websites that have access to comps and to the MLS.
I’m not saying that some of these sites aren’t good. I’m just saying make sure that when you’re analyzing a deal, that you’re analyzing a deal with comps similar properties that have sold in that area that you’re looking to sell in. Whenever we’re talking about an area, you have to be careful. You need to pull it from that subdivision. Sometimes there’s a big difference when you go across just a dividing streak. You go into a different subdivision, houses sometimes can vary from a hundred, two or $300,000. Obviously those aren’t going to be comps if another thing in your neighborhood is selling for that.
Some other things to consider, some other things to consider when you’re looking at comps. I’m not going to write this down. I’d encourage you to. You want to find homes that are within 10, possibly 20% but probably 10% is more ideal of the same square footage. Meaning if you have a home that’s 2,000 square feet, you want to find comps that are 1,800 to 2,200 square feet ideally. Sometimes you have to expand your search a little bit to get some good comps.
You want to find homes that are in the same school district, that have similar amenities. Just basically, you want to find like and similar properties that are comparable because sometimes there’s like these odd balls out of the group, these just MacDaddy home that’s 3,000 square feet, bigger than everything else in the neighborhood. Just toss it out. A good rule of thumb is toss out the highest and the lowest. You want to look for similar properties.
Whenever you have the comps, okay like, “I think my deal is worth this.” Cool. When you get that number and you feel good about that number, and this is where networking, you go back to the previous fundamental. You go into a networking. That’s why it becomes so critical because if you don’t have comps, you don’t know how to pull comps, then you need to build a team where you have people on your team that can pull comps and say, “Hey, this is worth this or it’s worth that.” Like, “I’m not sure.” You need to build up a team that will really help you determine what your comps are worth.
Whenever you figure out what your comps are worth, how do you analyze the deal? Is it even a deal? For those of you who have never been to this site with this scruffy guy on it, you can go here. This is the next step to start looking at it. Like, “Hey, is this a deal or not?” It’s just basic spreadsheets. So many times some of the things that we use to run our business, they’re just like basic type stuff. We just use them over and over again because they work.
Do we have some more death tricked out spreadsheets? Yes we do. This little baby right here gets the job done. We’ll call it 123 flip strip. Let’s say that you’re looking at buying this home. You’re like, “Okay. It’s $150,000 is my ARV. That’s what my agent’s telling me.” “Cool. What are you getting it for?” They’re like, “I think we can get it for 85,000 is what they’re saying.” “Okay, cool. What are the repairs?” You need to figure out that piece. I get it. We haven’t talked about that yet.
A couple of things; if a wholesaler is bringing you a deal, they may be telling you a number, giving you a number. Saying, “Hey, it needs $25,000 in repairs.” “Okay. Okay.” Take that with a grain of salt. Take it with a grain of salt. What we have found is that wholesalers’ numbers even some of the good ones unfortunately, no knock against them but their numbers, generally, their after repair value numbers are inflated. Their rehab numbers a little deflated. A little deflate gate going on here.
How much? I don’t know. It varies in the wholesale. I’m getting hot. Let me turn on the fan. It depends on the wholesaler but a good number in terms of repairs that you could use, you could factor and say 5% to 10%. I would probably say 10%. Okay, 25 grand. We’re going to say this thing is like 27,500 or something like that. At that point in time, we’re not going to go much further right now because we’re going to talk about repairs. We’re going to talk about, for those of you, I’m moving a little too fast for some of you, I apologize. This is big. I’m actually running behind time. We’re going to pick up the pace.
You’re looking at the flip analyzer and you’re like, “Okay. I’m pretty sure based off my comps and my agent told me and whatever website you used that it’s worth 150.” You’re like, “Cool, all right.” They’re telling me it’s worth 85,000 and I believe the repairs are going to be 27,500 based off what my wholesaler told me.
How do you verify that? How do you verify that? I’m glad you asked. That is a great question. Let me share that with you. Let’s talk about the next free resource I’m going to give you guys tonight if you don’t have this one. The Free Rehab Estimator. You can go to freerehabestimator.com. For those of you who haven’t been to the freerehabestimator.com, in a while, we’ve been doing some updates. We’re not done yet. It’s getting really, really close. We’re not done yet. For those of you who haven’t been in a while, you will be pleasantly surprised that we have added a ton, we’ve added a ton of things to this thing. It’s a little bit overwhelming to some folks and I’ve been told. That’s okay.
What I did is just this week, it has not been posted yet but I’ve made a training video that’s going to be inside of this page so that whenever you log on to or go to the Free Rehab Estimator, there’s going to be a training video. It’s a little over an hour long. I’m going to warn you on that. It’s about an hour long, just about this rehab estimator. Go to the rehab estimator.
I know people who print this out and they take it to the job site and they fill it out. They go back home, plug in the numbers later. You can pull this up with your laptop or with your iPad. We are developing an app that should be out very, very soon. I’m holding up the process. I got to go in and create some accounts for iTunes and Google and all this kind of stuff on that. This will be on an app really, really soon. Go through here. The rehab estimator walks you through every phase of the rehab starting with foundation, concrete, roofing, exterior and everything that you would possibly need on the interior as well.
What I would tell you is just take your time with it. Whenever you don’t know exact square footages or the exact square feet or the number count of certain things, that’s okay. That’s okay if you follow this rule. In the rule of quickly estimating repairs, because right now the Free Rehab Estimator is only intended to help you quickly estimate repairs. In the world of quickly estimating repairs, it is better to be comprehensive than it is to be accurate. It is better to be comprehensive than it is to be accurate. I’ll say that one more time. In the world of quickly estimating repairs, it is better to be comprehensive than it is to be accurate.
Right now what the Free Rehab Estimator is for, what it’s intended for, it is basically just to give you a quick way to analyze the repairs that are needed for your home. Now, it might take a little bit of time in the beginning but when you get comfortable to this rehab estimator, you’ll see it will go really, really quick. My students use a downloadable spreadsheet. That’s what we give them. They custom made themselves things that they learn and things like that. That’s the first thing.
The first phase, essentially, the first phase of analyzing your repairs or estimating your repairs quick estimating. Number two is where you’re going to need to spend some more time and make sure that you’ve got some accurate repairs and accurate bids going on. Whenever it comes to actually figuring out like, “All right. All right, Brant. I got your rehab estimator and I think this thing needs $27,000 in repairs but I’m not really sure. I was comprehensive. I did what you said and I got comprehensive with it but I’m still not sure. I need some solid concrete kind of numbers.” Cool, I get that too.
Let me pull up. Give me just a second here. How do you actually find out what numbers are good or not good? The only way to do that is to do this. This is where a little bit more work involved. Once again, there’s no big tricks here or anything like that. It’s just like you need to start getting some bids, boom. You need to actually get a scope of work. Talk to some contractors and begin meeting with contractors, either general contractors, with electricians, plumbers, with painters. If you’re going to manage the project yourself, you’ll be meeting with multiple subs and getting their bids. Or if you are going to hire a general contractor, you’re going to want to get an estimate at this point in time.
This is actually the case study deal tonight. When we begin analyzing our deal, we went through this process. We had generated deal flow. I apologize. I forgot to talk about how this deal came to us. I’m going to take a step back real quick and the property on Walnut Valley, how did it come to us? The property on Walnut Valley is going to fall into the hustle category where one of my students had recently bought a deal across the street and he was working on a rental property deal. There was a house in need of repair across the street from the one that he was working on.
He did what any good investor would do. He walked across the street and knocked on the door and had a conversation with the lady who was there and started telling her about what he does and his business. He buys and fixes up homes. Oops, sorry about that. He buys and fixes up homes. I’m going to show you all a video of the property as well. Just let her know that, “Hey, I’m buying homes in this neighborhood. If you’d be interested in selling, then you know, let’s have a conversation. Let’s have a conversation and possibly work out some type of agreement where I can buy your home.” That’s the property that you see there.
Like I said, my student Brian just began having this conversation with them. Ultimately we got the deal under contract. It needed a lot of work. It was pretty dirty. There were some fairly graphic pictures in here. That’s how we got the deal. Some of our deals and here’s the thing, like whenever you start doing marketing and you start doing networking, and when you begin putting your message out into the world, into the universe, into your marketplace, you get deals from all over the place. We’ve had multiple deals in just the last few months just from word of mouth. Just from people saying, “Hey man, you buy houses, right? I heard about you or Joe Schmo gave me your name and number.”
We bought a house off Facebook the other day. There’s a girl that I had worked out like at CrossFit I knew from years ago, when I say know her, barely, hardly knew her. She knew my wife but she was but she was selling some stuff on Facebook years later because she knew nothing about what I did years ago. She’s like, “I saw some of your videos. You do real estate stuff. My mom’s trying to sell her house, etcetera, etcetera.” A story along with that. We ended up buying that house. Bought a house from an elderly lady not too long ago. Then another guy just from networking was like, “Hey man, here’s a lead for you.” We bought that one. We’re actually finishing that one up here any day now.
This is the case study deal that we’re going to talk about. The rehab budget that I showed you a minute ago was put together after we just determined like, “Hey, this is a legitimate deal, needs quite a bit of work.” We made that decision to go ahead and purchase it. That’s the process up to this point. We’ve talked about, of course I’ve got mindset. We’ve talked about deal flow. Talked about analyzing deals and estimating repairs.
Once again, I wish there was a little push button I could give you guys to analyze repairs. Now, I’ve done my best with the rehab estimator and that’s great. It is great in getting you to a certain point. Matter of fact, the other day, I was with another one of my students. He’s got a deal. He was analyzing a deal. He’s like, “Man, I’m thinking about putting a contract on this deal. Will you help me take a look at it?” I’m like, “Yeah, I will. I have 30 minutes.”
We met over at the property. We walked it. We took about 15 minutes to walk the property and take it all in, soak it all in. Hopped in my truck. Got the rehab estimator out. Within 10 minutes, we had his bid. Came in at $70,000. He’s like, “Well, let’s add 5,000 of just whatever money on to them.” The total budget came out at 75. Gave him his analysis. He’s like, “I can roll with that at 75. I wish it was 65 or 70 but it’s still a deal for me at 75.” I’m like, “Cool. You go do the work. Get this baby under contract and we’ll talk next week about really fine tuning this, your repairs.” He got the deal under contract. We went and met the next week, our bid came out finally at $68,000. It was basically 70,000 really quick, fine-tuned at 68,000.
What I do whenever I do a free rehab estimator, I try not to undercut things. If I’m not sure, I’ll overestimate a little bit. I get it. I’ve been doing this for a while. It’s something that’s more natural to me. It’s something that I’ve seen my students pick up really, really quickly. You can too if you just make a little concerted effort to get familiar with the rehab estimator or others. There’s others out in the market place like I talked about. We live in an information age. There are so many calculators and things like that out there. That’s how you estimate repairs.
CliffsNotes version that I gave you tonight is Free Rehab Estimator, quick estimating. You move to the second phase which is accurate estimating. That’s done how? Just getting bids from other contractors. Okay? Cool.
Let’s talk about our deal now, back to this deal. We’re going to talk about ways to finance deals. We’re really going to focus only on one. We’re going to talk about a couple of the others but we’re really going to focus on what I know most of you all are interested in, which is private money. What are the other options and why are they either good or bad or just indifferent?
All right. Financing. The financing fundamental. Here’s the thing. Money is an idea. The government’s printing money like all the damn time. Money is an idea. Whenever you come into this business, I don’t care, those of you who have millions of dollars or those of you who owe millions of dollars, you have nothing. Don’t care. I’ve been broke as a joke starting with nothing. I ain’t got time for the sob stories about, “I ain’t got nothing.” Guess what? I didn’t either when I got started. It’s possible. You can do it if you commit to just go do the work.
What are the options? Even for those of you with money, here’s the other thing, for those of you with money, I want to challenge you and actually I want you to consider looking at ways to do your deals without investing your own capital in your deals. I’m not saying that to say don’t invest your money in real estate. That real estate is not a good place to invest your money because whenever we invest a lot of our own cash, when we’re in a great cash position, my money goes into real estate. What I’m only doing is challenge you as an entrepreneur to look at ways that you can do deals more creatively because markets go up and down. We know that. Look at ways to get into deals creatively with 100% financing. Better yet 105% or 110%, we can get cash back at closing. It makes you a better investor, a better entrepreneur whenever you have that tool in your tool belt.
What are the options for financing deals in today’s market? One, we can talk about banks. Do we use banks to finance deals? Absolutely. We’re doing some new construction development. We’re using bank loans. 5% interest, very favorable terms, construction loans, they’re great. We use construction loans for new development homes. We’ve used it on flip projects but flip banks will typically not be a good candidate for financing your flip deals because most of our flip deals have to close really, really quickly and banks don’t afford you that opportunity. Banks need 30, 45 days. A lot of your flip deals, they need to close like yesterday. You’ve got like two of three days sometimes to get the money together and get to closing. That unfortunately eliminates banks as being a good financing source.
I will say, I’m going to add a little asterisks that a bank, it’s really annoying me that I can’t get the [inaudible 00:58:01]. Lines of credit work beautiful. If you have access to some favorable bank lines, flip away. We’ve had some bank lines for years and we keep those pretty much tied up with some property. Bank lines of credit are great. Otherwise, that’s about it.
Hard money is a great option. Hard money is a great option. Whenever I first began investing in real estate, that was how I was financing all my deals. I started out buying rental properties. I’d buy them in hard money, refinance them, rinse, wash, and repeat. I did that over and over and over again.
Hard money is typically what? Like 12% to 15% interest and two to four points. A point is a percentage. Some people are like, “Well, that’s a lot of money man. Like 12% to 15% that’s a lot.” To me, I’m like, “It’s not great but like the 12% to 15% doesn’t even bother me as much as the points. The points was like oh my God you’re gouging me. It’s the cost of doing business. It’s the cost of doing business. I’ve seen a lot of investors walk away from deals based off that alone. Like, “I’m not going to pay 12% for this property.” To me, it’s naïve. It’s like look at your numbers. When you plug your numbers into that deal, do the numbers make sense? Do they make sense? If they make sense, do the deal.
I remember a couple of years ago, it’s probably less than that, we had a ton of real estate going on. We tapped out our private lenders. We had tapped out our bank lines of credit. Got a deal came to us and it looked like a solid, like solid $50,000 deal. It was a solid deal. I’m not going to lie. We only had access to 12% in two monies. One of my private lenders but it was basically all our money lender. This 12% in two points. I have been using this lender a long time because we have lenders that we’re operating [inaudible 01:00:17] 7% to 10% is what we generally pay. The numbers were just solid. I’m like we’re going to pay, we’re going to gladly pay your 12% in two points to get this deal under contract.
Long story short, we got the deal, rehabbed really, really quickly, timed it right in terms of the market in this particular area. It was just going through the roof. We sold that deal well over 50,000 more than we even intended to sell it for. We netted $100,000 on that deal using a loan that was 12% and two points. If your numbers don’t work then absolutely you don’t deal with 12% to 15% and two points or three points or four points or whatever. You don’t do the deal. If the numbers work, you just do the deal.
Here’s why I like hard money. I like hard money for newbie investors who are just getting started. Hard money lenders are great to look over your shoulder, to guide you along because if they don’t want to lend on your deal, most likely it’s a bad deal. Not always but a lot of times if they don’t feel confident of loaning money on your deal and they’re in the business of loaning money to piece of crap houses and they don’t want to loan money to you on your piece of crap house, maybe you should go find another piece of crap house. That was the way that I learned the value of having a good hard money lender on my team.
I’ve been working with a hard money lender for a while. This is years ago. The first time I was on deal like number five or six and he told me no, I got a little ego. I’m like, “Who’s this guy telling me? I’ve got you know like five deals now and he’s telling me that he doesn’t want to finance my deal.” I’m like, “Check yourself Brant. This dude’s loaned on hundreds of deals. That’s all he does and he’s saying like, “Brant, walk away from this one.” He was right. I’ve been doing a lot of basic rehabs. This thing was like a job was over, not that it was over my head. It was over my budget. It wasn’t a good deal. I appreciated him for saying no to me. I learned a valuable lesson. I love hard money lenders in general for a couple of those reasons.
That being said, that being said, hard money lenders to me also are, they’re like training wheels. There’s a saying a buddy of mine in this business says that, “You can tell the experience and success of the investor by what they pay for their money.” Although I love hard money, it’s like training wheels. At some point in time, you want to take the training wheels off of the bike and ride the bike. I have like four kids. There comes a point in time like I’m working on my daughter riding [inaudible 01:03:22] bike at four. One of our sons, he’s now my youngest, he’s six. I’m like, “Dude, we got to get rid of these training wheels.” He doesn’t want to take them off. We’re just taking them off. Taking off the training wheels. He’s going to appreciate me for it. That’s what every [inaudible 01:03:42], all that kind of stuff a little bit.
Private money. Private money is taking the training wheels off. Private money is how we finance 80% of our deals if not even more, is with private money. What is private money? The simplest way I can explain private money is this. Private money is relationship-based lending. It’s relationship-based lending. It’s essentially taking a handshake agreement, something that you and your private lender agree to on principal and terms, making sure that both sides are happy. Then putting that agreement in writing with your attorney in the forms of the real estate legal documentation, the notes, deeds of trust. Making sure that you’ve got a secure title policy, all those types of things. It’s relationship-based lending.
Where do we find lenders? I know that’s where a lot of you are thinking. Similar to your deal flow fundamental, very, very, very similar, we don’t spend a lot of money for paid marketing. We spend some but there are some guidelines that you need to be weary of with the SEC, this is Security and Exchange Commission. Our private lending efforts are mainly falling in alignment with that principle of just networking, communicating your message, what you do in your business and really how you can help and serve them. We’ve got some educational information out there on the internet that we provide. There’s a lot of strategic networking events that we attend, local events that we host ourselves and do things like that.
You don’t need to start your own event or anything like that. In the beginning all I did was begin to speak to everybody that I knew, friends, family members, business associates at networking events about what I was doing. I wasn’t trying to pitch anything. I wasn’t trying to sell someone on investing with me or anything like that. I feel as if like a lot of people don’t like trying to be sold on something.
What I did do was communicate a message. I communicated a message that I was investing in real estate and that had some opportunities for other people to passively invest in my deals. I’m just beginning to paint this picture, the whole Wall Street versus Main Street in conversations and things like that. I was excited about what I was doing. Began having these conversations and people started calling me. I started setting up meetings. I got a lender and then I got another lender and I got another lender and then word of mouth. It was like a snowball effect. It began to just seem real.
The thing that happened for me too was it was a lot of hustle in the beginning. I can’t even lie about that. There’s a lot of work and effort I put into it. Then the light bulb came on. During, part of the time when the economy and everything was going down, I was beginning to raise private money and talk to private lenders. I still noticed I was having this fear and anxiety if you will with speaking to some of my lenders. A light bulb went off one time because I heard about so many people were losing money in the stock market. They were just getting crushed and losing their jobs, all this type of stuff. I’m like sitting over here like crushing it in real estate.
I was like, “Wait a second. I’m not asking them to borrow money. That’s not it. I’m offering them an incredibly, incredibly great investment opportunity. I truly have an opportunity myself to help and serve these people with their investments. Years later, I think we’ve raised about $15 million or so just buying single family homes. That’s it. Single family homes, 15 million or so just from private lenders. That’s not bank money, hard money lending all that kind of stuff what we’ve used just from private lenders.
I’ll tell you a couple of things. One, we’ve never had a private lender who has not loaned to us only once. All of our lenders have loaned to us multiple, multiple, multiple, multiple times. We’ve never had a lender just lend to us one time, do one deal and like, “No, I don’t want to do that anymore,” has never happened. Is that like that for everybody? No, it’s not, but it’s been like that for us. That’s been my experience.
I’ll tell you a couple of things before we move on. When you begin to talk to private lenders, I’m going to strongly encourage you. One, is like do your homework. Do your homework, read about the Security and Exchange Commissions. Read about conversations you could have and you can’t have. I hired SEC to try to make sure I was putting these things together properly.
The second thing is we talked about mindset. When I began raising private money. I had a very serious conversation with my wife and I said, we’re in bed. Like, “Here’s the thing, like people are investing in me and my business. This is their retirement money. This is IRA money. This is their cash, their hard-earned cash.” I just want you to know this is a conversation I had with my wife. “If anything ever goes sideways, if anything ever goes wrong,” because we’re beginning to create wealth and assets, I’m like, “I will sell everything. I’ll sell our house. My investors come first.”
I’ve never had that conversation with an investor. I had with my wife but I feel as if your lenders, my lenders, they can sense where your heart is and where your focus is. I’ve seen people come into this business, a deal goes sideways. They get the heck out of the dodge and they leave their lender sitting there with this messed up past. It’s not even that the lenders a lot of times don’t make more money whenever they take a property back if they set things up properly. However, that’s not the way that we do business, because have we done deals where we’ve lost money on? Absolutely we have. My lenders have never missed a payment. I’ve never been late on a payment.
A little tip too. When I have a private lender, I set my payments up in auto bill pay to pay them early. They take note of that. They take note of that. They like working with investors that not only pay them but pay them early. That was how it began for me in the beginning. This is what I call the rule of one. If you can get one lender, just focus on getting one and you go above and beyond and you take care of them, they’re going to do business with you again. When people have an investment that’s going well and they’re making money, guess what they like to do? They like to talk. They like to brag to others about it. That was my rule. That’s my lesson about private money. It leads me to what I’m going to show you here.
The really cool thing about private money is this. You start thinking about doing deals. When I first got started in real estate, you all had my story. It wasn’t that I was being foolish with my money. It was just that my wife and I had come to a point where we had finished paying off all of our student loans. We’re living in this apartment and we’re paying off our credit cards and things like that. We didn’t have any money. It was nothing that was bad. It was just like that’s the point that we were at in our lives. We were in our late 20s and starting a family and paying off student loans, put myself through college. My wife paid for a majority of her college and student loan. That’s where we’re at. We didn’t have any money.
The idea and the thought of doing a lot of real estate just didn’t seem possible to me. Then another light bulb went off whenever I really began to understand some of the creative aspects of real estate. I was like, “Oh, you mean that I can actually get money when I buy a house?” I want to make sure you understand that. There are ways that you can get money when you buy a house. My question to you is if you are getting money when you’re buying a house and you may not even be making any payments on the property until the property sells, how much real estate can you do? How much real estate can you do? Should I even pose that to the question forum? How many deals can you do if you don’t have to bring any money to closing? If you’re getting cash at closing. Anybody want to chime in on that one?
It’s limitless. You can never stop buying houses if you continue to raise money. This was our HUD statement on the case study deal. This was purchased what? October 1st 2015, so just late last year. This was from an IRA. You can see that. This was my company Invest Home Pro blah, blah, blah. This shows you here we were the buyer at this point in time. I’ll show you the sales slide in a little bit. We received $32,424 at closing. This was purchase price of 70,500. We even got an extra $1,000 from the seller contribution to clean out the property. Anyways, that was what we got. We got $32,000 at closing. I just wanted to show you about how you can get cash back at closing.
Here we are. We had our $32,000 in rehab money. Let’s see here. I’m not sure what our rehab budget was. Let me pull up that estimate again. Okay cool. We pull up our rehab estimate. It is how much? Let me pull it up. It came in at $33,000 I believe. It’s not pulling up. Well, you suck, webinar thing. Anyways, I can’t show my screen right here because it’s not allowing me to show that. It came in at $33,000 was our budget for this property. We ended up going a little bit over but that was okay. That was okay.
I’ll show you one other thing before we dive into the rehab side of things. Here we go. This was our first analyzer in Google Docs, what not. This is what we run rehab estimator in Google Docs. We anticipated the property would be worth about $150,000. Purchase price was $78,500, repairs say 35,000. This put us at a $75% loan to value rate. I’m sorry, 75% was our purchase cost. Purchase and repairs in comparison to our after repaired value.
There have been times where we’ve bought houses in particular markets where you don’t buy above 70% ARV. This particular market, we’ve gone up to 75% ARV depending on the deal. A lot of times people are like, “What’s the number like? Should you buy above 70% or 75%?” We’ve bought a couple that were even higher than that. Don’t advise that. It depends on the money that you’re bringing to the table. Do you have cash? Do you have 5% of bank line etcetera, etcetera? It depends. It depends.
What is it ultimately dependent upon? How much money you’re going to make down here, those actually shouldn’t be highlighted. Where we’re typically making our money is in this four to six month range. When you’re analyzing a deal and you’re like, “Okay, so four to six months, am I happy making $20,000, $18,000 whatever it is?” This being the reward, is the reward worth the risk that you’re taking with the deal? For us it was, so we did the deal. That was cool.
We had our money. Then it came to, how are you going to manage this rehab? This is a make it or break it point. This is a make it or break it point for investors. If you can create all this deal flow. If you learn how to really and quickly analyze deals which is not very difficult, most people can get that, you learn how to estimate repairs, cool. You can pick that up pretty quickly. You begin to raise private money. You get financing for your deals. You are able to close on deals. That’s great. If you get to this rehab part and you can’t successfully manage this rehab or find the general contractor so you can successfully manage it the right way, you’re in for some trouble. It’s not going to be very fun.
What is it that you need to be looking for whenever you are looking at different contractors to use? This is not a plug or a pitch for Invest Home Pro but I’m going to use us as the example for teaching purposes. Whenever you begin to look for contractors, oh that’s some cheesy music. Whenever you begin to look for contractors that you are considering hiring, first thing is that consider that the interview process starts whenever they provide an estimate.
When you begin talking to contractors and your general contractors, make sure whenever you are talking to them and you’re interviewing them about your deal that you’re trying to look a little bit deeper than just that conversation like, “Is this person going to be able to successfully bring me through this project from start to finish professionally, on time, on budget as much as possible? No, we don’t always bring projects in on time and on budget but we always do it again just to make sure we are honoring our word and our commitment and that we’re pushing that ball forward on that rehab as much as possible.
How are you going to do that? One, get some references. When you’re looking for contractors one of the best pieces of advice that I could give you is that when you begin looking for contractors, look to get references from other people in this business. Some of the greatest places that you can probably find references are from some of your wholesalers because they have experience with contractors. They’ve been able to see the work with hard money lenders. They’re in this world where they’re dealing with contractors, the good, the bad and the ugly.
Talk to hard money lenders, talk to wholesalers, maybe some agents, talk to other investors to find out like, “Hey, who are you using on these deals to rehab your properties?” Make sure that you’re interviewing and checking references, asking to see some of their work. Do they even have videos? Do you even have videos bro? What type of work are they putting out? Can you see it? Maybe you go and say, “Hey, do you have any after projects that you’re working on right now?” We have like 20 projects we’re working on right now. It’s like, “Hey, do you have projects that you’re working on right now? Do you have references? Do you have testimonials? What’s going on?” Verify your people.
The second thing with contractors is communication. Communication, it’s critical. We live in the day and age of phones, smart phones. The scenario where you have a contractor and they don’t call you for four or five days like insanity, unacceptable in my opinion. Make sure you’re having these conversations upfront. Like, “Hey man, what can I expect if I work with you? What can I expect my property to look like?”
Then when you’re going through these conversations and getting ready to start rehab, there’s three things, three things that I want you to pay attention to. They’re all critically important. The first one is budget. We all know that if the budget is not there with your contractor, you need to keep shopping around unless there’s just something wrong with your budget. The first thing that we’re worried about or that we’re concerned about and this is of paramount importance is budget.
The second thing we’re concerned about with a contractor is quality and the third thing is time. Budget, quality and time. They’re in that order of importance. We want to make sure that we come in on budget. We want to make sure that it’s acceptable quality. It doesn’t mean that we have to have the best quality in the world. It just means that we have to have good quality and then time. What’s the time frame on this? Those are the three things that you want to make sure that you have from your contractor.
Then the other thing you want to make sure that your contractor is managing the job properly. I’ll give you a little look at how we manage properties. We have online software that shows all the projects that we’re managing. These are over here. We have flips and we have rentals and we have other jobs. We actually manage all of our jobs with an online portal that our customers have access to and they can see it. We communicate with our subcontractors and things like that. That’s how we manage our jobs.
That being said, the rehab part, don’t mess that up because then you won’t get to see the final payday which is the most important thing. I’m going to talk a little bit now. I’m going to come back to our deal. This was the Walnut Valley deal that we purchased for 150,000. We’re going to get into some numbers. Then also more importantly, we’re going to get into some and talking a little bit about income generation and what you can do to make sure that you’re safeguarding yourself with your investments.
Whenever it comes to income generation. This is the seventh fundamental. You need to make sure that you have multiple streams of income, multiple streams of income. With real estate, real estate can be incredible forgiving over time. Incredibly forgiving over time. On the flip deal, not so much. We have a short window, time frame and we need to get things done. What I found, generally markets don’t change that quick. Things are not going to shift that quickly but it’s good to have some other tools in your tool belt. Whenever I go into a flip deal and this is conversations that sometimes come up with lenders. That’s why it’s good just to be educated about it. Just be educated about it. I’m going to switch over here quick.
What if something goes wrong or what if other opportunities simply present themselves to you? That’s a possibility too. It’s not that anything went wrong. It’s just that you are more experienced savvy investor and it’s like, “Hey, I just want to know what my other options are.” When it comes to generating income, I like to have multiple extra strategies. There’s always the option like, “Hey, if it doesn’t sell, I could rent the property.” I know some of you are like, “Hey, this is a flipping event, why would I even consider that?” Here’s why. I want to share this with you because this is a legitimate concern with a lot of investors. What happens whenever your flip doesn’t flip? What if your flip flops so to speak? What if that happens? Could that happen? Yeah, it could.
Here’s what happened to me was many years ago, this is many years ago. I had one of the, it was not the first flip that I had that didn’t sell. It was actually the second flip that I had that did not sell. I was freaking out. I was like, “I’m used to my houses put them on the market and sell them really quickly.” I went through a phase where my houses were selling really quick. I was just on a roll. My house didn’t sell. I had this house and I owed about, I think I owed about $140,000 on it at that time. This was gosh, six, seven years ago I assume now. I owed about 140 on it. I couldn’t give this thing away. It was in a nice area, it was a nice home. We were competing against new home builders which is a big no, no when flipping houses but we’re not going to get into it tonight. I owed about 140,000.
My house had been on the market for a few months. I was not selling. It wasn’t selling. What am I to do? What am I to do? Didn’t like making that monthly payment every month because I was making payments to my lender. I was like, “This is not what I wanted to do.” I had another option. I had a plan B. I’m like, “I’m just going to rent this thing out. I don’t know for how long. I didn’t want it to be a rental house, I just didn’t. With successful investing, sometimes just means having staying power. Being able to fight another day and move on to the next deal.
I ended up renting the property out and still own that property today. I’ve had the same tenant for the last six or seven years. However, just a few weeks ago, my sister-in-law was over at my house. She’s in real estate as well. She’s like, “Hey, do you have any properties in this subdivision anymore?” Because she knew I had one of them. I’m like, “I’ve still got that same one.” She was like, “That’s like one of the hottest areas to be in right now.” She’s like, “I have a client who’s looking for a house over there. Anything that comes on the market, that’s gone.” My eyebrow is going, “Huh, huh, interesting.” I’m like, “What do you think this house would be like worth over there?” She’s like, “Probably 225, maybe 250.”
I’ll tell you these days, I owe about that on my house, 250k, oops, yeah. That’s 115 by the way. It’s looking pretty darn good now and somebody will be putting that house on the market because that might be the high for a long, long time. They always go higher but that might be five years or 10 years. I’m like 250 on whatever 150 on, 115 on now with the same tenant that’s hardly done any repairs for the last six, seven years, looking pretty good to me so I’m probably going to sell that property. That’s an option for you.
Owner finance is another option. Just owner finance it is another option whenever markets go bad, things like that. This is my favorite way to make money in real estate. It’s my favorite way to make money in real estate. We don’t have time to get into it tonight. That’s your work to do my friends, to look into owner finance.
Then of course, it’s just to flip it. Sell it and flip it. Sell it to, what we just call a standard flip. Just sell it to a home owner at the end of the day. Sell it retail to a family that’s going to come in and move into it. Or sometimes we sell to landlords. We sell to investors. We sell to hedge funds. We sell to other people. There’s multiple ways in this diversity even inside of the flip model. You guys are probably wanting to see what we did on this deal. I get it. That’s a fair question. Let me pull it up. Are you guys enjoying tonight? I don’t do many of these. I train. I’ve been training my butt off with my students. I don’t do a lot of public webinars. If you guys are getting some value from this tonight, let me know. I appreciate that.
All right. Let me pull this up real quick. Anybody want to see another HUD statement. All right, cool, cool, cool, cool. All right. Here we go, let me pull this bad boy up. Drum roll, what did we make on the deal? What did we make on this deal? Da, da, da, a HUD statement is coming right up my friends. Coming right up my friends. Switching back, yes sir.
All right. This is the HUD statement. It’s not freaking coming up. That’s funny. It’s actually not funny at all. It’s actually not funny at all. It’s not showing PDFs. I’ll be damned. Hold on just a second. I’ll tell you what we’re going to do, we’re going to go a little, I’m going to boot this thing for you guys. Long story short, we ended up going a little over on rehab. We ended up going a little bit over on our rehab. I’ll tell you what I will do if anybody is cool with this. What I’m going to do, I’ll post this inside the group and let you guys pull it up. I’m going to do that right now. If everybody looks in handouts. I’m going to post my HUD statement in the handouts section. Okay? Give me just a second. I’m going to post it. Don’t know too many webinar dudes who do that but that’s what I’m going to do.
Okay, that is uploading as we speak. Long story short, we ended up making about $15,000 on this deal. Purchase price like I said was 78,500. We spent about $35,000 in repairs. Now, the thing with this house was we actually priced it at $159,000 when we got it. Multiple offers and we got it. However, the appraisal did not come back. It appraised at $150,000 because a lot of those other comps that we showed you guys, they weren’t really comps because they weren’t done the way, at the level of our rehab that you guys saw on the videos. We had to renegotiate a little bit. We got our buyer to come up to $152,000. We walked with about a 15, 16,000 profit at the end of the day after holding costs and those types of things. That’s where we’re at.
What I want to talk about now is and hopeful let me know in the comments if you guys got that but it’s in there. Cool. I talked about in the beginning about what creates success. We talked about mindset. We talked about skillsets. We talked about the environment and we talked about your accountability. What would that be like for you guys in your business? Right now, no BS, if you had access to the skillsets that you need, hundreds of video lessons in an environment like a group, a group of other likeminded people who are striving to create the same success. Then you had a forum and a place where you can have conversations and ask others to hold you accountable and you could do things like post things in the group like, “Hey, I’m having this issue. I’m having this problem etcetera, etcetera.”
For those of you who don’t know, I’ve put together a program that contains over 100, well over 100 video lessons about what we’ve talked about tonight. Going in-depth. Going in-depth to each of the seven fundamentals. What I’ve called this training is the F7 X Factor. F7 of course represents the fundamentals. If you have these seven fundamentals needed in real estate then you do have the X factor to create success.
The F7 X factor is what I’ve created after like a lot of blood, sweat and tears to help teach and train people like exactly how to do this business. I’m like, “I get questions and calls and emails all the time. I got to a point I’m like, “I’m just going to dump my brain and my experience and some experience of some people who are on my team, other investors as well into one place, where people such as yourself are just getting started out or maybe you’ve done some deals but you’re trying to go to the next level in an environment and a forum where you’re just, every day, day-by-day, a little bit, just a little bit more, a little bit more just added into sharpening your iron and increasing your skillsets.
The way that we’ve done it, these 100 video lessons is, one is like don’t get overwhelmed. If you remember the rule of one, I talked about earlier with finding your first lender. The way that we’ve structured this training is that whenever you sign up to this F7 X Factor, you’re going to get some lessons to begin with. You’re going to get a new lesson every single day. It’s going to open up a new lesson. Every day that you’re part of the program when you get a new lesson, five days a week you’re going to get a new lesson that’s going to help you just stay a little bit more inside.
The last thing I want to happen is like, “Hey, here’s 125 real estate lessons. Watch them all and get back with me next week.” Because if you just take 15 to maybe 30 minutes a day, most of the lessons are 15 to 30 minutes a day, and they go in-depth into everything that we talked about tonight and a lot of other subjects we haven’t discussed tonight because there’s a lot. There’s a lot when it comes to real estate investing. If you just took 15 to 30 minutes a day and watched a video and then took some action on that video, just think how much further ahead you would be in your real estate knowledge a few months from now. Just think about that.
If you took time basically like you and I talking every day through these videos and I’m teaching you everything I know and just learning this whole process. I appreciate each and every one of you coming on to the webinar tonight. It was my intention and my goal to give you tremendous, tremendous amounts of value. I also want you to consider of how much there is to know about this business. Also just have that honest conversation with yourself like, “Are you set up to go out and create success? Are you set up to go out and create success the quickest way possible?”
Whenever it comes to investing and coaching or training or things like that, there’s really two things you need to consider. It’s like, “One, is this going to help me speed up the process? Two, is it going to help me avoid some of the pitfalls? That’s what I’ve tried to do with the F7 X Factor, is helping you speed up the process to create results and also to avoid some of the pitfalls.
What is the F7 X Factor besides 100 real estate video lessons? It’s all those video lessons and an online forum. In addition to that, we’re going to give you some other things. We’re going to go in-depth, in-depth into what we talked about tonight. We’re going to begin with mindset. We’re going to help you increase your mindset. We’re going to help you begin to cultivate and create your own deal flow using OPT, other people’s time to bring the deals to you. We’ll get into websites, direct marketing, all that type stuff.
We’re going to talk about evaluating deals. Some of the forms, the calculators, the spreadsheets and things that we have, we’re going to get access to those. You can quickly begin to evaluate deals. We’re going to go into depth into rehab, estimating repairs, and you’ll have your very own downloadable version of the Free Rehab Estimator that you can modify and tweak for yourself.
We spend the most time in the financing X factor. We spend a lot of time on each X factor but I know like this is one of the areas where people are really, really looking to grow their business. The financing portion of the F7 X Factor is like we go in-depth. Most of that time is spent on private money because I know what most people are seeking and what not. Is this the most idea way to finance your deals?
We’ll also go into rehabbing. We’ll talk about budget, time, quality, go more in-depth on how to choose a contractor. We’ll go into some of the rehab design stuff. Colors that we use and things like that. Giving you a design pack that you can use for your rehabs.
Lastly, we talk about income generation. We give you some more training on the ways that you can learn to generate cash from your deals in any market, up, down, sideways, it doesn’t matter. There’s multiple ways to make money from deals. Just saying a deal went bad is not an excuse because you do have options. This is the F7 X Factor. These are some people who have joined, people who are in the group and their testimonials.
What I also want you to understand and what makes the F7 X Factor so much different than so many other programs out there, there’s tons of real estate programs out there. It’s like okay, I got this forum or I got this download or I’m in this, there’s this real estate eBook kind of thing. Great, that’s cool, or even video, that’s much better. Whenever I start, begin putting this together, I’m like, “I don’t want to have just another real estate program, online program.” I want my program to create results. I know the principles that I plan my business with mindsets, skillset environment and accountability and I wanted to bring that to this program.
What I’ve done is I’ve included a monthly group coaching webinar. Members of the F7 X Factor we’re going to do, we do a monthly group coaching webinar, taught by myself and some of my team but it’s usually me. I usually do that. This is my time to train you guys. Answer hot, I call them hot seat questions like questions that you have specifically for your business. We just talk shop. You’re going to get access to coaching every month on a monthly group webinar call. I’ve got some other stuff for you in just a second.
You’re also going to get access to my simple private money system, full training live event replay. I’ve got other live event replays. I’m going to give you all tons of forms. Then this is like one of the big things is you get access to a private Facebook group. We have a private Facebook group. This is some of that environment piece that we’re talking about is we have a private Facebook group. Anytime that you guys have a question, it’s right there. You post it in the group. This is our private member group. There’s always questions and things being asked inside this group. The F7 X Factor group is here so you guys can just post away. This guy is asking for referrals and lenders. Anyways, you got access to the private Facebook group to ask questions anytime. Sometimes it’s me answering the questions, sometimes it’s a member of my team, sometimes it’s other investors, sometimes it’s all of us within that group. You get access to that the very first day that you join.
In addition to all of those other components of the group, which is over 100 video lessons, all of the downloadable forms, monthly web training, access to the private Facebook group, we’re going to give you live event replays, the private money system, all of those things, all of those things.
I’m going to throw in two bonuses tonight. This is only for tonight. Two bonuses for tonight. For those of you who sign up tonight, I am going to give you a one-on-one strategy session with me. That’s one-on-one strategy session with me. I’m even going to do something I’ve never done before. I will offer for the first five people that sign up tonight an in person one-on-one webinar either at my office. We’ve just moved to a new office and I want to show it off. Either that or we’ll just get on webinar or webcam. That’s cool. A lot of times these are on the phone. We’ll go webcam. We’ll whiteboard whatever your business is. A one-on-one one hour coaching call.
The second thing I’m going to do is I’m going to give the first five people to join private lender access to one of my private lenders. There’s a lender who loans in multiple parts of the country. I’m going to give you his name and number. I’m only going to do this for the first five, only for the first five. Anyways, that’s what the F7 X Factor is all about is you’re going to get everything that we talked about for $97 a month. $97 a month. That’s it, $97 a month for all that stuff. I know it seems insane but I’m an insane kind of guy.
Anyways, that being said, that’s all I got for tonight. I appreciate each and every one of you coming on. I’m hoping you got tons of value from tonight’s call. Whether or not you’re coming to the F7 X Factor, go out, take action, create success, flip houses, follow the seven fundamentals that we went over tonight. They work. They’re proven. Rinse, wash and repeat. This is how we run our business using these seven fundamentals. This is what we teach our students. This is what they’re doing to create success. Just do it.
I would love for each and every one of you to join the F7 X Factor and be a part of our group. If not, take this information and go out and create success. All right. I appreciate you guys. I’m going to get in and go hang out with my wife and kiddos before they hit the sack. I’ve really enjoyed tonight. Message me and let me know, give me some feedback on the event tonight. I wish you guys all the best. You all take care.