How To Start Real Estate Investing With These 3 Keys

Hey everybody, this is Toby with Global Integrity Finance. As we talked about yesterday and as we pushed out there today, we are going live with the Texas Investors Club. We've got Sam, Ashton, Eric, and Tang here today. We're going to talk to them about, you know, the key elements and the ingredients needed to be a real estate investor, how to ensure success, profitability, The dos, the don'ts, the ins and the outs, all the stuff that you guys have gone through. We kind of, in our world, look at you guys as real estate experts. You've kind of gone through the pitfalls of being an investor. You've done one or two deals. You've, you know, I know that Ashton has talked about several times where she's been out with her team, you know, we call it driving for dollars, hitting the mailboxes, finding the tall grass, the weeds in the gardens and all that, and trying to find those vacant houses. But You know, more importantly, our client. As a hard money lender, we see a lot of people wanting to get into real estate investing. You know, 3 or 4 years ago, HGTV made us extremely popular. Everybody wanted to jump into that bandwagon. I mean, they saw Chip and Joanne make millions doing it. We've seen the family out of, I think it's out of Vegas, the husband and wife that ended up getting divorced, but anyway, they're still doing their show. You know, they've all been successful at it because you only see in 30 minutes what takes most people 45, 60, 90 days to do, so it looks easy. But we get a lot of those people come in to Global Integrity Finance to say, "I want to be a real estate investor," and we say, you know, there's a lot to it. There's, you know, as I have preached, there's 3 things that you must have to be a successful real estate investor. One is you have to have a viable project, and we're going to talk about that. How do you find those good projects. There's tons of deals out there. You can go through wholesalers, you can go through realtors, you can go through MLS, Zillow. There's a ton of properties listed on the market, right? But not all of them make money. You know, not all of them have equity or have the ability to make a profit. So we want to talk about how to find those good deals. Number 2, we talk about having the knowledge, having the experience, or the coaching, or the mentor, the, you know, the partner that's been there, done that, that can help guide through all the pitfalls. You know, you go in and you take down a property and you pull up the flooring and next thing you know, it's all eat up with termites. And you didn't know that because when you were walking through the house, you didn't feel or didn't know to feel that soft floor and all that. So there's so many things that a new investor doesn't know that we want to help coach, mentor from afar. But we want to talk about how you guys do it day in, day out. And how people can lean on your expertise and guidance and direction to become full-time investors like you guys have done. So I've got Sam here with me, Ashton, Eric, and Thane, and we're just going to go back and forth and talk about it. And I don't care who starts, who stops, who interrupts. This is live. And of course, on the Facebook side, there won't be any bleeping out, but when we get to the other part of it, we'll be able to bleep out. Chris does that a lot for me. That's why our videos, when I post them, they look It's so good because he's bleeped out all the nonsense.

But I think about cuss words, that might be my problem.

You know, we try to keep it family friendly, but, uh, it's not always there. It's not always there.

We're passionate.

Yeah, that's what I've always said. Passion trumps all, right?

That's right.

When you're passionate about something, the emotions come out, the feelings come out. Sometimes the words jump out with you. So, so let's talk, Sam. How did you get into real estate investing? What's your little background? And then, you know, how's it evolving and where are you going with it all?

Yeah, uh, well, actually I'm an accountant. I've been doing real estate development, construction accounting for over 8 years now, and that's kind of where I got to begin, got started in real estate. And then it was about 3.5, 4 years ago, me and Ashton looked at each other like, hey, we want something different, you know. Yes, I was making, you know, good money as an accountant, but I didn't want to work until I was 67, 70 years old, hopefully making a grand or 2 grand a month in cash flow from Social Security and retirement and a small IRA Yeah, so we, I looked there like, hey, we can do something different. I've always been interested in investing in real estate, and we went to a real estate seminar and listened to what they had to offer, and we looked at each other, said, let's do it, and we signed up for the coaching program.

And you guys signed up for a coaching program?

Yes, initially.

Smart. You didn't just go dive into buying the first deal that somebody brought to you, right?

Yeah, well, we figured we got to know what we're doing, so really had that concept. Didn't want to go out there and, and, uh, and not know how to get a deal and find a deal. I knew how to do the analysis, I just was kind of clueless on how to find a deal and what's the process from after I do the analysis and finding a deal as to how do I actually take this thing down. Where do I find the money? Where do I find the contractors? You know, so those are all things and questions that you need answered. That's why we signed up for the coaching program is because a lot of people, yeah, you can see it, you know, like you said on HGTV, hey, they actually found this deal somehow and then how did they find everything else that's involved in the real estate investing. The deal is the most important thing, but there are so many nuances and other little things you got to know that can stop you from getting the deal done.

It can derail you.

Yes, yes, tons, tons of stuff. And I think that, you know, signing up for the program, not only do we get trained on how to find the deal, how to analyze a deal, you know, we got plugged into a network. And that's why we like the local real estate associations is we get You're plugged into the network, you get plugged into people that are doing it, knowing what they're doing and they're actually in the game doing it. You don't want to go to talk to somebody that's just, you know, off the Rich Dad program that actually doesn't do a deal.

Right.

The national program will, they'll call you on the phone and you'll never see them again. So we went to a local one where we could talk to the people, we could actually shake their hand. If I had somebody that I needed, if I needed somebody to come to a property and help me analyze it, I'd call and I'd actually have somebody show up. I don't know how many times I reached out to people. Tang was one of them.

A true coach, a true mentor, not somebody that was from afar or on YouTube or on a blog that you would listen to, but somebody could actually talk specifics about on a deal.

Right. Yes. That are actually in the game doing it and in your area because each area is completely different.

Correct.

So that's, that's the hard part as well is if you get one of those national, if we're talking about signing up for a coaching program, you get one of those national ones, they don't know your local laws. They don't know the local area. They don't have a plug into the local access to the people you need to get the deal.

Contractors, material.

Yes, absolutely.

Market analysis as to what the properties, you know, if this market, if this subdivision is increasing in valuation or decreasing, you know, days on market, all that stuff.

Yeah, I mean, like just in Dallas, you could be on one street and they're selling for $250 a square foot and the street over they're selling for $100 a square foot. And if you don't live here, you don't got local expertise, it's tough. You're in for a big hurt.

You have Greenville. On the west side is one price, on the east side is another, but you're less than half a block away. Yeah, and that is a great analogy. You have the same thing in Plano. I mean, we have it in all of the metro area. And you're right, if it's somebody that's in New York, it's very hard for them to understand the Dallas market and to be able to say, oh yeah, I can look on Zillow, but if you really peel it down to this subdivision, this neighborhood, we know what's going on and what's evolving, what's developing. Or why people are moving out of that area, right? Good. Exactly. So once you guys got in with Tang and, and the coaching and the mentoring and all that, um, tell me about how you then— because I've always said from day one, 85% of a new investor's time is going to be spent on finding a deal. Yes, the right deal. I guarantee you the 5 of us could go get on a computer right now, whether it be MLS, whether it be Zillow, whether it be through a wholesaling network and we could pull down 1,000 properties in a heartbeat. And 999.5 of those won't be worth crap. You know? I mean, do you agree, disagree?

Agree, yeah.

So how did you learn how to find the right deals through the processes with the mentoring and the coaching and all that?

Well, you know, they teach you, they train you, okay, the actual mathematical formula. If you're getting started, usually what investors or new investors are told is get 70% of ARV, which is the after repair value, minus the cost of repairs. So that's your— that's beating your head to go out there and find deals, and that's basically finding it at 70% of what the house is worth all fixed up, and then also subtracting out the repairs. And that's what we were told in the beginning. Now, there are other ways to take deals down, fancier ways to take things down, more exotic ways, but that's That's the beginning strategy for most people.

Beginner 101.

Yeah, because the main reason I teach that one is hard money lenders and private money lenders will only usually lend out to 70-75% of ARV minus the cost of repairs. Plus, if you get it at that and you make a mistake, you can recover.

You have some equity space there.

Right. Now, if you've been in it for a while, you can take down those 80% deals and still make a decent amount of money. But in the beginning, it's not a very good beginning strategy to stray away from that. Initial 70% of ARV minus the cost of repairs, just to kind of protect yourself, get your feet wet, learn. Also, you end up putting in a lot of money because you can go find somebody to fully fund the deal or almost fully fund the deal.

But here's my question. You were an accountant. Correct. How did you know how to swing a hammer?

I didn't.

So how did you know what the cost repairs were going to be? I mean, you're good with a pencil, but swinging a hammer is a whole different deal.

Well, I mean, we, we, uh, when we had taken our training classes and then we'd also anytime when we first started, we Every time we had our first appointment, we're out there marketing, door knocking. Anytime we got an appointment, we would call on other experienced investors. Okay. Tang met out with us several times. Eric met out with us several times. A couple other investors would go out there and meet us. They kind of knew how to, you know, do a—

Evaluation?

Yeah, back of the notebook evaluation on how much the repairs would be. And then usually after we get it signed is when you get some contractor bids.

Right.

You'd have 3 or 4 contractors.

So you have a rough number there. Right. As long as it still fit in that box, Now we can peel it down from the broad strokes into the finer strokes. Correct. Right? Yeah. Okay.

And then once you keep doing that for a while, you eventually can walk into a house and be able to know what to look around and be like, ah, $35,000. You might be, you know, $5,000 off, but you're going to be close. That's basically what we can do now. But it just takes time.

One of the things as coaching and mentoring that I want you all to do for a hard money lender is to teach your clients, no matter what that number is, add in 10% contingency. Yeah. Yeah.

Absolutely.

If you don't need it, we will fund it back to you on your final draw. So if you come in there and you need $45,000 and that's your— you've got all your bids and those numbers are pretty finite, add in another $5,000. If you don't need it on your final draw, I'm giving it all to you anyway. But 9 out of 10 times, something's went wrong, I've got to redo, and now I'm short funds.

Oh yeah.

And, and my gosh, I've done that several times myself just we didn't anticipate, unexpected repairs, plumbing, electrical, maybe a small foundation issue, or, you know, something that the city, you know, has come in there and red tagged you on, or something that you really didn't anticipate. But yeah, put in a 10, 15, 20% contingency. And if we could preach that across the, um, across the, the board there, I know that most people are running on that fine number because We have so many investors out there today and limited inventory. We're all scraping for that one deal that is viable. So we're squeezing every penny we can to get the deal. But if you put in there a 10, 15, 20% contingency, I'll work with you to make those numbers work because then I know we've got extra money to resolve any pitfalls that may come about.

Yeah, absolutely. You always want to have that extra money for repairs that you didn't see. Even at the end when you think you're done, you've always got your seller for flipping it, buyer's concessions. I can't tell you how many times, like, that's the worst. They can expect it to come through and just destroy your house.

You just finished it and inspector come in there, blue tape everywhere.

So they just— these are things you don't know until you've done a few deals. And that's why I always preach in the beginning, get coaching and training and then partner on at least your first 5 deals, if not 10 or 15. I partnered, we partnered on our first, I don't know, 20, 25 deals. I think we partnered with Tang and Eric on, I don't know, we're at like 9 or 10 now, at least the minimum.

Yeah. So I'm telling you, more heads are better, whether, whether it's 2 brand new people and they have one coach, but they can all bounce stuff off of each other. They can. There's always a different perspective, a different view. Somebody catches things that somebody doesn't. We try to tell our investors, even if you're brand new and you have a coach that may be that, you know, like Tang, that's busy, but at least have somebody else with you at all times to talk things through. It's amazing that when you're walking through a house and you're talking about, you know, do we remove this wall to open up the floor plan or do we add in a bigger walk-through closet, a walk-in closet and all that, somebody else can give you their position and perspective on that. And it starts making more sense as to how it appeals to them. And you can feel that a lot better than just by yourself.

Yeah. You also want somebody else there because it's easy when you're walking through to make the numbers work. Especially when you haven't—

You can talk yourself into it.

Yes.

Yes.

You haven't had a deal and you're like, yes, I— oh, you know, we could probably get that done for 3. And my wife's like, no, babe, it takes 5 grand.

It does. 5 grand. It's always been 5 grand. Yeah. No kidding. It's gonna be 5 grand no matter what. It sounds like, "No, I guarantee I can get it done for $3,000." Yeah, but you said that on the last one and it was $5,200.

Absolutely. Absolutely. So, you know, you want that extra—

you want that sense of logic to always be playing because here's the thing that I see, and I'm sure you guys see that with a new investor, they're emotionally invested in this deal.

Oh yeah.

It's not business yet. They haven't been beaten down enough for it to be logic and business. It's all about the emotion. It's all about the hype. It's all about now I get a better future, a better career, a better opportunity. I'm now in the game. And but so the emotion overwhelms them where logic gets pushed aside. And we can always talk ourselves into having a cheat day, having, you know, cutting the corners on this and all that. When I say cheat day, I meant food-wise.

I really got that one.

Just making sure Facebook ain't like, what do you mean cheat day? I'm talking about, you know, you're on your diet plan. It's New Year. Everybody's got their New Year resolutions and, you know, like, well, you know, I'm going to have a burger today. We can talk ourselves out of sticking to our guns real easy. But when you have a partner, then you're held accountable and you're held to that. Hey, this is what we mapped out. This is our plan. Let's stick to it and not— I guarantee when that happens, your success potential percentages go through the roof.

Absolutely. Without a doubt.

Tang, tell me about your mentoring and coaching with Sam and Ashton and all that that involves.

So we started the Texas Investors Club as a monthly meetup just to educate and show the community, hey, there's how to do deals, how to get deals, marketing down. I mean, that's down to the— that's the main thing, right? You got to market. They got to know you. They got to know that you buy houses.

So, uh, people have to know who you are and what you're doing, right?

Exactly. So we're We're basically a marketing company. That's all it is, but we just market properties. And so once we get the deals, that's when we have the product. Now the next steps are having knowledge, right? Having done quite a few flips now, I know the emotional attachment on deals. Like the first one, we're like, "Hey, let's put all these nice marble, granite—" Let's overbuild it, right?

The castle right here in Garland, baby.

The HGTV makes it look nice, so let's make it look nice too, right? That's right. But your ARV is like $150,000.

Why are you doing all this crazy stuff? I got $300,000 in the rehab.

Yeah, yeah. So quickly we found out, you know, with mentorships and coaches like, hey, no, you got to check the comps, check out the pictures. Did that guy do what you're about to do? It's like, no, but this is pretty, right? Yeah. No, you do what the neighborhood says, right? What the comp says. So that's like one of the biggest gems.

That's a great point.

You're quick to like, oh, granite everything, granite everything. Okay, that's the hot stuff, but the neighbor has still Formica and they're selling at the right price, so why overbudget or go over on the—

Why overbuild it?

Yeah, overbuild it. So those are the little things that I didn't— I wouldn't have known if I didn't have coaching, but I would have known at the end of the day, forking out that bill, right?

Trying to go sell it.

Yeah, I had to sell it for more because I overspent. No, it doesn't work that way.

600 days on the market, you're wondering why it won't move. But in this market, we might win appreciation. Now you're trying to talk yourself into it. But that's what our investors do. Yes. I've had that happen, and we've told clients that budget does not work for that neighborhood. What do they do? And here's the thing that I hate. There are lenders out there that will loan money to anybody on any deal, whether it makes a profit or not. We tell them no, they go somewhere else, and 90 days, 6 months later, I get the call, "Hey, we did that deal, we spent that money, we can't sell the property, and now my note's due. Can you refinance us?" No! I wouldn't do the deal, why am I going to buy it from that lender? So, but that's what happens is they think, they talk themselves into, you know, we can make this thing happen, we're going to make this big beautiful house and everybody's going to come running and buy it. It doesn't fit the neighborhood. It doesn't fit the demographics of what's moving in that area. And it won't move. It won't. Go ahead. Anything else on that, Eric? Want to add anything to all that?

No, I mean, I'm in the same boat as these guys, obviously, with the training and the mentorship. We actually all met at the same, same local REIA where we got the same training. So it's huge for me. That was the network and getting started.

So when you're talking about the network, so we're talking about the meetups that you go to, the mixers and all that. We're talking about actually sitting around the table and sharing opportunities with others, maybe bouncing off, hey, I've got a deal over here in Mesquite or Garland or Dallas, wherever. This is what I'm looking at, but I don't know, I do know. And you can get in that interaction And you may find somebody who wants to partner up with you on that deal. Exactly right. Absolutely. And that's why those meetups are so important and so valuable.

Yeah. And you get also other exit strategies that you would never think of. That's one of the things I love about going to the meetups is you're talking to other people and they're like, well, did you ever think about this? You know, and, or how about this? And so you just, I didn't think about that. And you start plugging the numbers in that way and thinking about a different way to take a deal down. Like I just found another strategy that, hey, I can implement this in a certain situation and make another 5 or 10% on my profit margin and/or get a much better cash flow.

So, and you're right, that's the big thing, because not every deal has to be a fix and flip. No. Yeah, it can be a buy and hold, it can be an owner finance, it could be so many other that you— yeah, the margin— excuse me, the margins might not be there for a fix and flip, but it doesn't mean that it won't be a good rental property and that it's in an area that would be you know, a good family that's going to rent that and have longevity of that or turn it into an owner finance. So you're right, there's so many other things that if you don't know, you, you, you sell yourself short on every project that comes across your desk.

Yeah, you might let deals go that you never thought of, right? Um, we— that's one of the reasons we decided to partner with Tang on the Texas Investors Club, because he's a little bit more experienced than we were for about a few years. And when we first started doing deals we'd take, we'd come to Tang and be like, I don't know what to do with this deal. Because it didn't fit the 70%. It didn't fit the small barn deal. So, you know, he'd just show us other ways and he kind of mentored us along the way as well on how to take a deal down differently and how you can make more money. And now I'm like, I just want to do only owner finance.

The only reason I still fix and flip is to get that big paycheck now to help, you know, cover some stuff that we're getting. But you're right, to build that big rental portfolio, owner financing apartment, you know, rentals, all that gives you that long-term cash flow, equity build, all that. Your new 401k, RA plan that you could never got from corporate America.

Yeah, it's funny, I already make now more now on cash flow from owner finance deals than I would in 30, 40 years working for corporate America, putting 10% of my paycheck away. It's nuts. Right. It is that quickly.

And that's what we want our viewers to understand, is that there is money to be made. There's a future to be made. There is an opportunity there. But we and you guys have seen so many people take their life savings, dump it into a project, dive in headfirst, lose it all. And now they're at corporate America saying real estate doesn't work. Real estate didn't work. That deal didn't work. I've seen it. So you guys have seen it.

We're getting more calls from other investors that need to sell. Yeah. Yeah. They don't start by saying they're investors. Like, oh, I have a house at 322. I thought, oh, sounds great. I need to sell now. Oh, great. Yeah. I got a hard money.

Oh yeah. Yeah. Okay. It's due in 3 weeks. Yeah. We're getting more of those calls. I get those calls every day. Hey, we got— I got— in fact, this is, this is, uh, God's honest truth. Right before here, I got a call from another hard money lender, won't name them, and said, hey man, I got this sweet deal out in Bel Air, California. It's a $5 million deal. We've got it on our books. Guy's got about $1 million in construction rehab, but man, we just need to get it off our books. Are you interested in buying it? My first line is no. Yeah, no, you're trying to sell. Yeah, why are you dumping a $5 million deal on me that you don't want? Yeah, but we need to open up our line of credit. Nah, I'm sorry. Yeah, no, sorry. But we hear— I see it all the time. Yeah, I hear. And so we have kind of an unwritten rule in the hard money world is that you do not refinance a hard money loan into a hard money loan. I kind of, uh, take that case by case because there are certain circumstances that we'll look at. Why did that deal not perform in that timeline? Could be because they had a bad contractor and the first deal went for 60, 90 days, 6 months, then they had to fire him and the new guy had to come in, redo, undo and all that. So there's that delay time, health issues, weather. We look at them all. But as a general rule, when we get that call from somebody says, hey, my loan's maturing with so-and-so, and I just need to refinance to finish the project. My first thought is, number one, why are you still 12 months into it, not finished the project? Number two, why won't they extend you? Yeah, you know, if I've got a loan that we're working with a client and situation happens that they need an extension and they're paying us and everything's performing and the rehab's going good and inspection, I have no problem extending them. I want that residual income on that debt. But if it's one of those guys that's not paying The rehab is taking too long. There's a $30,000 rehab and it's taking them 18 months to do the work. You got a problem. Oh yeah, I'm trying to get that one off my books immediately. So I'm calling you, hey, you guys, I got a deal for you. You guys want to ride this deal? It's a great deal. Yeah, it's a great deal. Great area, great neighborhood, man. You know, I'll give you, you know, the brother-in-law deal on that one. So I didn't even market for this deal, right? Um, Ashton, tell us about your day-in, day-out activity. You are the queen of Driving for Dollars.

Queen of door knocking. I've been deemed the door knocking queen amongst the DFW community. Yeah. So investing community. So my day, I door knock the pre-foreclosure list. Okay. For about 20— Is that the Rowdy list?

Yeah, we pull the Rowdy list. The Rowdy list?

Okay. All right. So 25 days out of the month, I'm door knocking. For about 7 hours a day, 6 to 7 hours a day.

In the wintertime, usually around like 5 or 6, just because it's dark sooner.

Yes. Not the weather, just dark.

Had nothing to do with it. Sleet and ice, snow. It gets dark, you gotta get home. Well, some of those houses are scary if they don't have these street lights. Yeah, just don't go to some neighborhoods. It's a long windy driveway down there, all trees are grown up.

Yeah, so I stop about 6:30, 7:00 when it gets super dark. Good job, proud of you.

So tell us what that entails. So you're driving, this is on a list, you're knocking on doors, and you're trying to help that person have an exit strategy without losing not only their house but everything that, you know, I mean, if they get foreclosed on, they're wiped out. Yes, they're 3 to 5 years from being able to own another home. Right. In today's world, if they're looking 3 or 5 years. Yeah. On the best case scenario, they can recoup that credit, they can get their assets on 3 to 5 years. If everything goes according to plan, they might be able to go FHA. They're not going to go Fannie Freddie for at least 5 to 7 years. But you're trying to help shorten that loss. Yes. Yes, that's correct. Yes. So how does that conversation go most of the time?

So what I do— Slam? Yes. Yes. 9 out of 10 times, yes. A lot of people are in denial, so I see that a lot.

Until you meet them at the courthouse steps and say, "See, I told you!" Right.

So, you know, what I do is I offer to go over all their options. Okay. So 9 out of 10 times sellers don't want to sell, but I go over all their options with them. And there's a multitude. Yes. Right. Yes. Oh yeah, there's a lot of options. Now, generally selling is the best option. They just don't know it yet. So that's why I go over all their options and I knock all the other options out of the way. And then they kind of realize they're ready to sell. And by me taking my time to go over all their options, they go with me.

They decide to sell to me. So on that side of it, you're looking at, I mean, the options, and we'll just go through them real quick, can be: Indeeds and LOU, I can sign this over, you can bail me out. Of the REIT, stop the foreclosure. Um, you can then either lease it back to me or do it— you probably wouldn't do a normal finance on that, but you might do a leaseback.

We'll do a short-time leaseback to give them time to move.

So you want them out of the house?

Yeah, because they can't pay their bills already. Already, most likely they're not gonna pay their bills going forward. Each— but again, that's— each situation might be different. They, you know, they might be waiting, um, to get, you know, some sort of help from friends and family who are cashing their 401k, or they might be expecting some sort of big cash income. So win the lottery. Yeah. So yeah, those you're like, okay, that's not gonna work.

But sometimes it's a job loss.

Yeah, they got a job and they're trying to have like a 3-month gap, or I've been interviewing and I've been, you know, given this, uh, offer letter. And so now it's just next 90 days I should be back home.

In those situations where they know it's, you know, guaranteed or not even 99% sure they're going to get that cash when fall, we'll actually— won't buy their house, we'll help them delay the foreclosure. So do a delay? Yeah, we'll help them delay it so that they can get back on their feet and go and get their life back together. 99 times out of 100, that's not the case. Right. They don't have— they're not expecting some sort of cash, but yes, if they are, we will help them, you know, delay it. If not, then we go over the other options, which would be bankruptcy. Again, you really only use that if you're going to If you're expecting some sort of cash to come in, this still only delays it for 60, 90 days.

But if they do a bankruptcy, you basically lose out on the property.

Well, it depends. Like, say they call us 2 days before the foreclosure, right? And they know they need to sell, they have no other option, and they just waited too long. Be like, hey, listen, we can't— there's no title's going to clear us in a day, there's no bank's going to— we can't get a payoff from a bank, right? You got— we got to stop it. So your 2 options are a temporary restraining order or bankruptcy. Temporary restraining orders can be anywhere from $1,500 to $2,500. Bankruptcy is free. You got to go file it. Here's the paperwork. I can't show you how to file, how to do it. You're not an attorney. Yeah, I'm not an attorney, so I can't, I can't walk you through it, right? But you can go up there and fill it out, and it will delay the foreclosure. So we let them know that those two options, and then once it's delayed, that gives us, okay, hey, you know, we can now, we can slow things down. Yeah, we can buy your property. We can we can help you out of the situation. So that's— you don't always want to— you really don't want to go there because you don't want them to have a bankruptcy on the record, but that's again better than a foreclosure. And at least you're most likely going to get something out of selling versus nothing when it does go to auction. So bankruptcy is an option. Doing the temporary restraining order, again, if you're expecting some cash, some cash from fall in the future, that's a good option. If you're not, then you're just wasting the money. You're spending $2,000 to $2,500 to delay and you're just going to be right back in the same situation in 2 or 3 months. Then we ask them, do you have a 401(k)? Do you have any kind of money you're expecting from friends and family that can reinstate the loan if they're behind on it? This is all dealing with foreclosure. And then what else do we talk to them about? We do— we buy the house cash, all is. If the house doesn't need a whole lot of repair and we think it can go on the market, hey, you know, we can list it for you. So that's what we're doing.

So are you doing, uh, when you're buying the house, are you doing like keys, uh, cash for keys?

We can do that as well. It depends on how much they owe, what they're behind, what the house is worth. Um, and you, we always prefer to do cash for keys because assuming somebody else's loan is a lot cheaper than getting a private money loan or a hard money loan.

But they've got a Fannie Freddie in the 4 or 5, whatever. Yeah. You're assuming that loan over.

Yeah. The downside to assuming a loan is if there is a big reinstatement and/or a big repair cost, you got to come with that money cash to hand, right? And, you know, we've been around long enough, we've got a big enough network that we can usually find lenders to do a second lien position. That's what we can do. Most new investors, they don't have that. They won't have that. So again, that'll come to, hey, that may not be the option for you as the investor at that point in time. Or you need to partner with somebody that is an option forward. Gotcha. So there's just, again, it's another way for you to take the deal down if you're a new investor. That's why partnering is such a huge deal in the beginning, is one, more ways to take deals down, two, easier access to money, probably better rehab contractor costing, and you just, you know, you're less likely to make a mistake because you have an expert helping you out.

When you're doing the cash for keys, and what do you give them, 30 days, 2 weeks, a week?

Again, we ask all case by case. We generally offer 2 weeks, but it's if they have something that's coming up in 30 days and, you know, the deal, if they're getting $10,000, $15,000 back from the sale, you know, hey, we'll let them stay in there for however long they want until the money is used up, you know. So I prefer to do 2 weeks, but situation always, always—

So not every time are you taking a property and rehabbing it and and increasing the value to sell it, you may just be moving it quicker at a shorter equity spread.

Yeah, um, wholesaling. Yes, we do that, we do that a whole lot.

You know, that's a forbidden word.

Yeah, is it? Yeah, I forgot it wasn't here.

Yeah, thanks to a few of the national wholesalers or the big wholesalers, they've kind of tainted that for everybody. Yeah, um, but then, and we do a lot of business with wholesalers because A lot of our investors that are fixing today started out as a wholesaler. They learned that I can go get a deal like what you guys are talking about at a lower price, bump it up $5,000, $10,000, $15,000, sell it, and I didn't really have much into the deal, and I grow my cash flow that way. Now I have money to put down closing costs and reserves to do a flip and build their abilities that way.

I highly recommend for brand new beginning investors to wholesale for at least your first 20 deals because you jump in there too soon trying to fix and flip, you are going to lose money.

You'll get buried. If you don't have a coach, a mentor, you'll get buried.

That's what happened to us. Yeah, yeah.

We— and that's what, uh, we've got some new hires that started today and one of the things we were talking to them about was, is the, uh, kind of the, um, um, progression of an investor. And if they're smart, they start as a wholesaler. They have nothing, normally very, very, very little into the deal. Yeah, right. A little bit of option money. If they can sell it, they can make a little bit of money. And they do that over and over and over. They build a network of buyers, they build a network of sellers, they build all this understanding, and then they can start going into— now they got some cash flow, they've got some reserves, they can go into flipping. And then usually from a flipper, they go into the buy and hold, building a portfolio of rental properties. Yeah, and that's how it usually progresses through, the proper way. We see people go right into buying apartment complexes. I'm like, really? Have you ever done a deal? No. Ever managed? No. How are you gonna collect rent?

I don't know. They don't do it. There's a lot involved, especially apartments. There's a lot of— what people don't know is all the legalities involved with apartments and the property management and the taxes and Maintenance. It's maintenance. Maintenance. And it's—

and everything breaks at 2 in the morning. No different on a single-family house than it does a 50-unit apartment complex. It all breaks in the middle of the night. Yeah. So yeah, I— we— I'm telling you, we see it all. You guys see a lot of it. And this is why it's so important that the Global Integrity Finance really talks about what it takes to be successful. What we look at it is, if Tang, if you came to me as a brand new investor and I lent you the money to do a deal and you fail, well, number one, I've lost a customer, I lost a client, and number two, you've lost all your money and you're out of the business. But if I can coach, mentor, or partner you up with Sam and Ashton and Eric and you succeed, then number one, You come back to me and you grow. And guess what? You tell everybody else, hey, you know what? I went to Global, I went to Sam, I went to Eric, and they helped me become who I am today. These are the people you need to be partnering up with and talking to. They're the ones that's going to take you from being an architect or an accountant, an engineer, an accountant. What were you doing prior to sales? I was in sales, sales. But it was, you know, nothing that was going to give you the the luxuries and the latitude and the flexibility you have today. But changing your career into who you are and where you can go today with this is— I did it through these relationships and through these partners. That's what's so important to us. As you're knocking on these foreclosure lists, is there, is there a certain— when you're looking at that list and it's usually pretty long. Yeah, I remember seeing the Roddy list. 20 years ago, and it was, I mean, it was a big manual, you know, depending upon the county and the city and all that. I'm sure it's only growing today. Yeah. You know, there's certain things that you look in that. Is it neighborhoods? Is it just equity spreads? What is it that you guys look at when you're looking at that book?

We focus mostly on equity spread, and we kind of have our cap right now as we don't, we don't really chase houses that are over $500,000. You can't sell them as quick. Yeah, you can't sell them as quick. And then the market has just been so going, growing for so long, and now it's not growing anymore. It's just not going up by 10 or 15%. I just would— I don't know if the market's going to turn tomorrow. I would just hate for the market to turn in the next, you know, 6, 9 months to a year and have a million-dollar property on hand. So we keep it under— we ourselves keep under $500,000 for the max. Um, we go off the more on the list, it's based off the tax appraisal, right? The most conservative number. Yeah, so we, we use that and we always try to at least get 10% equity spread based on whatever the estimated loan principal is versus the, the tax appraisal. Because that'll say, hey, at the very least we should be able to at least list it, if not owner finance it, something. We'll try to— there's some equity in there, we can probably do something anything with it. At the very minimum, do a short sale, um, if that's the only, only last option there is. Uh, obviously you want to land the ones that are like 30 or 40% equity spread, right? You got a multitude of strategies, different ways.

Lots of leverage on the short sales. Uh, those, um, you've got to get somehow to get that off the auction block to do a short sale because those take a long time. Yeah, those are a pain in the rear, right?

Oh yeah, they, they take generally 6 to 9 months to get done.

Um, and which is amazing as a bank. If you come to me and say, hey, we want to take this note off your hands, I'm giving you my bottom line payoff today. Yeah, not 6 months later. Yeah, because all that's done is increase in debt, legal fees, administrative fees, and I'm not recouping any money. No, it amazes me with the banks.

Wells Fargo's the world's worst on those short sales and the turnaround time and the delays that They, they like the short sales because one, they know that if they go to foreclosure, they file, that the homeowner can delay for a long time. Oh yeah, they could be stuck, you know, not making anything. And at least with a short sale, hey, it's, it's gonna be good on the market. It's, it's most likely gonna get sold within the 6-9 months. So that has their, their light at the end of the tunnel for them. Right. I can see why it's beneficial to them. Plus, it costs a lot of money to keep getting— to keep hiring the lawyer to send out the documents to do the foreclosure process. So the cost is sometimes their loss projection.

Yeah. Short sale is less than what it might take to carry out.

And it's— and it kind of just gives goodwill through, you know, through community. You know, you're— you have less people saying, this bank took my house, you know.

So Kind of helps your ego a little bit. That mean old bank. I wasn't making my payments, but they still took my house. How dare they?

A lot of them have that attitude.

Oh, trust me. I hear it every day.

What do you mean I can't have my escrow money? You haven't made a payment in 60 days. Yeah, but that's my money. No, it's not. It's money we loaned you to do the rehab, but you still have to make your monthly payments there. That's just wrong. That's my money. It's my money that you borrowed. So we hear it all the time. What else? So how does a new investor get plugged into a network like you guys?

Come on out. Yeah.

Come on out.

Texas Investor Club. Free drinks. Yeah, free drinks, free appetizers. My guys went there the other day.

Yeah, I enjoy it. Yeah. You went down to Houston. Houston. And then I sent two other guys down there. Yeah. And they loved it.

They loved it. Yeah. We had a large turnout. We had 200 people come out to that one. Nice. And we've been growing pretty rapidly lately. Yes, the third Tuesday every month. Right now we're at Grapevine at the 2200 Basswood Street at Marriott, the Courtyard Suites. And it's going to be in one of the big conference rooms What can they expect when they come?

Because I'm new, I'm shy, um, I, you know, tell me 200 people there, how are you going to know I'm there? And, and how, how do I know how to get engaged, right, to get that coach, that mentor, that plugged into the network thing?

So we wanted to do something different this year, uh, something different from other, uh, meetups, right? So I wanted to do a series. So the first one that we did was marketing, right? That's the first thing you you gotta do to get in the business, you gotta market yourself, market your business. Just do whatever you can to market to get the phones ringing, get the leads coming in. So this next month we're doing sales and negotiation. So once the calls comes in, what are you gonna do? Like, you gonna get caught deer in the headlights or what are you gonna do, right?

I got a call, who I do? Let me call you back, I gotta call Tang real quick.

So that's marketing. You say that, but people will do that. In fact, we've done that, you know.

Tang, I got so-and-so on the other line, hold on. Put it together. What's the question? Hey, here's his question. Let's put the phones together.

So this next month we're doing sales negotiation. Okay. That will help. We're doing live cold calling. I mean, not live cold calling, but like role playing.

Role playing. Yeah, role playing there.

Okay. We want anybody that's doing marketing right now that have leads, hey, call them up right now. Let's get them on the phones. Let's see what we can get. See how pleasant. Yeah, exactly. Good. And just show them a little tactics Little ways of getting the numbers out of them, right? Right. First one who says numbers loses, right? So you don't want to say your first number, right? Yeah. So little things like that. And Ashton, we're going to go on stage and go at it. Nice. So she's pretty good at—

so she's going to be the seller, the homeowner, and you're going to be the— we're going to roleplay with audience people.

They're going to be the experts, you know. Yeah. So I mean, Ashton just renegotiated $100,000 yesterday. 'Cause it was, in the 3.5 years I've done this, I've never done this before. She sent me a property, I analyzed the wrong house. Oh no! I called her, I called her, and I was like, oh no, she's like, "Baby, did you do the right house? 'Cause you sent me 403, it was 406." And I was like, "Hold on. Babe, you're gonna hate me." She's like, "What?" I'm like, "It's the wrong house." And an hour and a half later she called me, "I got him down $100 grand." And I'm like, "Oh my God." Holy cow!

And now, we've got a house under contract.

He was ready to cancel.

The contract. He's just like, let's go talk to him. I'll go talk to him. They were that desperate.

I mean, I guess they just got to get out from underneath.

They might have got a real good price on the first one and they were just sitting there. How long they could ride that?

You want to cut me that check right now or you just going to bring it tomorrow?

So you guys want to know how she got 100 grand off?

Yeah, come on out, come out.

And that's amazing. I mean, whether you're negotiating, it is It's still today, it's a seller's market. It's still, even though inventory is thin and even, you know, and investors are by the hundreds, it's still a seller's market. And so to be able to negotiate $10,000 down is great. To do $100,000 is astronomical. So kudos to you. So I'm telling you, this girl is amazing to be able to do that. Go ahead. So now I've come and I've listened to your role play. I've been there, I've gotten drunk. I'm ready now to really commit to this deal. Yeah.

So once we get the deal now, um, the following month, how to get the money, right? So learn how to talk to hard money lenders, talk to private lenders, just present the deal, learn how to present the deal.

Be able to have it presented to anybody. Anybody. Exactly. Man, I've got like, I don't know, 72 clients this week that I'll send to you so that you can tell them how to send that deal to us properly.

Exactly. So just basic pro forma of the deal, what it could make, the comps and everything, just to present. So of course that's the beginning, right? Once you build that relationship, it's, you know, it gets a little looser, a little more streamlined. Yeah. Once you have a good track record of, you know, flips and everything. Right. But so yeah, it's going to be a series every month, something different.

Nice.

All the way leading up to the rehab, the following ones, the rehab, like what to look for, what to and what to be careful about on the rehab. And then coming down to closing, how to sell it, listing it, certain ways you can list for a little less than what the market's wanting. Right.

So having to hire a realtor that's going to charge you full 6% commission, find somebody that's going to help you streamline that cost but yet market it to full. One of the things that we've seen over the past is firms out there that listed at a very discounted price or discounted cost. And, and what you told us, you get what you pay for. So, uh, make sure, you know, one of the things that we try to align ourselves with— and we've got some realtors who are going to come on the show— but find those realtors that are investor-driven, that they work with investors, that they work with flippers and wholesalers and all that, because they're not looking at charging that full 6% because they know the margins are thin, but they're still going to max maximize the exposure. They're going to still take the good photos, pictures, and all that, and they're going to do everything they can because the more properties they turn over, more money everybody makes. Exactly. And so that's one of the things that we push, and I'm sure you guys do the same, is, is find that right format to be able to sell your properties and maximize your profitability on that. Um, anything else anybody wants to add to the, to the commentary of this?

Yeah, I mean, just, I guess, a little bit more about the Rio. We wanted to kind put something together where, like Tang was mentioning, we've got the series, we've got everything kind of planned out how we want to run through it. Um, and so we're not, we're not catering to just brand new investors, but we all have some ideas. We've been in a little, a little while where maybe there's something maybe an experienced investor can pick up on as well. So we get a little bit of that mixture between new and experienced investors. That way you just don't have a bunch of new investors running around room trying to figure out, you know, have you done a deal, or have you done a deal, or, you know, do I need to talk to that person? So we're trying to mix that up a little bit.

And I have a foundation there to feed off of. Exactly.

Yeah, we really want to provide value as well as having a place for everybody to come and network and meet each other as well.

Yeah, one of the big reasons we all decided to get together is we have very complementary skill set. You know, I'm an accountant, um, Ashlyn's, you know, the door knocking queen, uh, Eric, he's like back office scaling guru, and you got Tang, marketing social media expert. And then our other partner, he couldn't make it today, uh, Josh. He, he's been doing construction development for, uh, final question, yeah, about the last, uh, 8 years, I almost, I think. And he's done ground up, um, he was started out in California. He came here because in California it's, it's, it's a beating to get it. Permitting permits like 6 months long and it's ridiculous.

That's if you know somebody.

He's out here, and you know, I, I would put him against any, any contractor in Texas. He knows his stuff. He is crazy knowledgeable. So we all have a really, a really complementary skill set, and that's why we decided to get together is like, hey, let's, let's bring this product to these people to help investors, um, succeed, be more successful, because we all have the same philosophy. You know, we, we help people become wealthy, we can't help ourselves but to rise with them and become better ourselves. So we, we have a, we have a big philosophy in that, um, and share the wealth because there's enough out there for everybody to have a good life.

Great. So that was gonna be my, my final segment was construction. It's got to be the biggest, uh, hurdle that could demolish a project. I've seen it, I'm sure you guys have seen it. I've built helped a lot of people out with my own crews where they've hired a contractor. The guy did really bad work. We've had to end up— and I had to walk the property with the contractor and the owner and say, look, either you step up or we have to get rid of you. And the homeowner say, you're out, dude. Um, because they— whether it is they don't know or they're too lazy to do it right, we see this day in and day out. There's too many houses trying to be lipstick instead of doing rehab. And, um, we fight that every day. We fight that because contractors are like the appraisers right now. There's a huge demand for them, so they don't have this mindset of customer service and integrity. You know, our appraisals used to take us 24 to 48, maybe 72 hours to get an appraisal done. Now, and we're a national— yeah, that's if We pay them extra. Yeah. And it, you know, because there's so much demand. Contractors the same way. So you guys have somebody that can review stuff and say, yes, this bid can be done at this price and this house will meet that standard for that neighborhood.

Yeah. Oh, absolutely. And you have to have somebody you can trust and rely on that because you could bring out 3, 3 different contractors to a property, they'll have 3 different, 3 different bids, and people people tend to try to go with the lowest one. Well, one, like you said, you normally get your pay for it, but even though there are 3 different bids, 3 different price points, there may be 3 different products that you're looking at. And especially an investor, you don't know the difference between— you don't know.

Just like you, I mean, you're an accountant, you didn't know how to swing a hammer.

No, no, I still don't. Luckily, I would stay away from that. Um, you know where they're at at Home Depot.

Yeah, yeah, so, but that's what I mean, if you if you've never been in construction and you don't know it, you don't know if this contractor's taking advantage of you, blowing smoke up your skirt or whatever. So when the product is finished, now I'm getting ready to sell it and I'm selling it to a buyer who's buying an FHA, which is the most rigorous inspection. And they come in there and they just blue tape it to pieces. Yeah. You know, your GFCIs aren't working. Your, you know, crown molding, whatever. It's all— I mean, now you got to go spend a bunch of money to fix this to be able to sell it. Now you're upside down, and if you don't know, it's too late at that point in time. Yeah, absolutely. Yeah, I will tell you a true story, uh, with a very experienced investor. We were doing this, uh, we financed this house out in Fort Worth, and we had this, uh, construction company that was pretty much touted by a lot of the Rias. They're no longer around but I walked through the house to do an inspection— this is God's honest truth— I walked into one of the bedrooms and I hear as I'm walking across this brand new carpeted floor I'm hearing this "crack crack" through the whole room! What the heck? I pull up back There was tile on the floor originally that had gotten busted up and they forgot to remove it, put carpet pad there. They put carpet right on top of all that.

I swear to God, at least it was carpet, because if you lay down, you know, laminate or lay down vinyl, they couldn't have hardwood.

But the carpet was easy enough just to stretch over it. Yeah, we— and here's what was sad, was we had the homeowner, the, the investor had finished the deal, had put the house on the market. We had our real estate firm was doing an open house, and she called me, said, hey, look, I've had probably a dozen people come through here and they're pointing out all these issues. We had like in the bathroom and in the kitchen, the ceramic tile, but your gaps were not the same. Might have a quarter inch, an eighth, a sixteenth. It was just, it was all over the place. And they were— so they're pointing that. And so she said, and there's something wrong with this back bedroom, the carpet and the flooring in the back bedroom. So I drove out there, saw all this, and literally brought the contractor supervisor and the owner in and said, explain this to me. And like, we can't. Yeah, but this was on an open house. Yeah. So now what happened? Now we gotta hope that that contractor honors does everything, corrects everything, which they did. Um, but they're lucky the investor had no clue.

Lucky that they did, because most of the times out of 10, they're gonna— 99 times out of 100, though, they're gone and you won't see them again to fix that.

I had a little bit of leverage because that's what I basically told this— the owner. I said, look, I'm, you know, Toby with Global Attorney Finance. We have a pretty big footprint in this area. If you don't make this right, I promise you You will never get another job in this town. And they fixed it within about a week. And then lo and behold, 6 months later, they're out of business. But now you see why. Yeah. But as a new investor who doesn't know how to swing a hammer, you wouldn't know. You wouldn't know that there's spacers that goes in tile before you grout it when you put it up there so that it's uniform and all that. There's little things that as an accountant, you don't know. You know how to line those numbers up and add 1 1 2. But that's it. That's as far as it goes. And we have so many people that have no clue about construction, and they're entrusting in somebody who says, I'm a contractor, I've built 200 houses, or I've rehabbed 200 houses, or whatever, so I can do your job. And they've taken those 3 bids and said, you know what, this guy talked a good talk, his price is within my budget, let's rock and roll. Yeah, until shit hits the fan. You can bleep that out if you want. But that's what happens. And so having a group like this, having a mentor, having somebody, and on the construction side, is so invaluable for investors to say, look, walk this property with me. Here's my bid. Walk this property. Will this thing make sense? Once we can all ensure success and profitability, our industry will grow, people's lives will change, and there'll be an impact in what we do and how we do it. Yeah, absolutely. Alright, thank you so much everybody for being here today. Facebook, thank you for tolerating this 50 minutes of chitchat. I hope there was good content there. Again, there'll be some more posts come out of this. We're going to break this up and put it out on our website, globalintegrityfinance.com. You've got my Facebook site. Well, how do people see your stuff? What's your website? How do they get a hold of you guys?

Right now we just have our Facebook page set up. It's Texas Investors Club. Okay. Since we were, we were called the DFW Mid-Cities REIA when it was just me and Ash, and since we partnered with Tang and Eric, we've now changed the name. So we're in the middle of putting all that together, but you can still go to the DFW Mid-Cities REIA website. Okay. It'll have all the information there as well until we get everything transferred over. But we are on Facebook right now, and you can go there, ask questions, holler at any of us on Facebook. As well, reach out to you about your information, and you'll get it.

We'll like that page so that it goes back and forth, and then we'll send you— once this stuff— once Chris gets done, uh, putting this— making it all nice and pretty and all that through the editing, um, then we'll send you a clip of that. Then you guys can do what you want to do with it. Well, we'll also post this on LinkedIn. That's another platform that we push quite a bit. And like I said, it's on our website. We have, I don't know, 30-some Videos there, Chris? Pretty much. All right, thank you so much. Hey, give us a holler, globalintegrityfinance.com, or you can call the office, 214-548-5190. Have a great day, talk to you soon.