1: Building a Successful House Flipping Business and Losing Millions with Marty Boardman

You're listening to Bigger Pockets Radio, simplifying.

Real estate for investors large and small. If you're here looking to learn about.

Real estate investing without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited.

From biggerpockets.com your home for real estate investing online.

Hey, everyone, thanks for joining us on our first ever BiggerPockets radio podcast.

Josh.

My name is Josh Dworkin. I'm the founder and CEO of BiggerPockets.com with me today is my co host, Brandon Turner, a real estate investor. He's the head of our community and he is a fantastic co host. Of course, this being our first show, you're about to find out. So what's up, Brandon? Nice to have you here.

Hey, thanks, Josh. I am really excited for this podcast.

This is going to be great, man. This is going to be great. Well, listen, before we get started, let's talk a little bit about the podcast itself. I want to share with everybody. For those of you guys who are actually unfamiliar with Bigger Pockets, BiggerPockets is essentially the premier community for real estate investors online. Essentially, BiggerPockets is this incredibly amazing social network that's been designed to make you a better real estate investor. We've got over 100,000 members, a vibrant forum community. We've got hundreds of conversations happening every day. There's over 10,000 articles on Real estate and investing, and we've got weekly contributions from dozens of leaders in the industry because all that is known as the credible destination in the niche of real estate investing. With that said, let's get to the show itself. On today's show, we're excited to talk with Marty Boardman. Marty's an Arizona real estate agent, a house flipper, and he's doing some pretty incredible stuff in real estate. Marty's also a weekly, regular weekly contributor to the Biggerpockets blog, which is is biggerpockets.com renewsblog and Marty actually put on a two and a half hour flipping bootcamp for us at the 2012 BiggerPockets Real Estate Investing Summit, which we put on last March. Marty last week wrote a post which we'll be linking to in the show notes@biggerpockets.com show 1.

This post.

He talked about losing $8 million. Let me repeat that. $8 million. Millions of dollars. During.

I mean, there's no other way to say it. That's crazy. He lost 8 million bucks during the real estate crash. And we're gonna be talking to him about that amongst other things on the show.

Want to invest in real estate but don't have the time or know the best local markets? Rent to Retirement has got you covered. Here's the deal they've of investors just like you find turnkey homes across the best US markets. And best of all, they do all the heavy lifting for you. With over 255 star ratings on bigger pockets, Rent to Retirement experts help you build strategies to retire early through real estate. And right now, Rent to Retirement offers some amazing incentives on turnkey new construction properties. Just for example, you can get up to 30% off new build prices or you can get 0% down loan options or interest rates available as low as 3.99%. So don't miss out. These deals will not last. Text REI to 33777 or visit biggerpockets.com retirement to start investing in top cash flow markets today. I've had my home security system for quite some time now. And the best part? Half the time I forget it's even there. It's just quietly doing its job, keeping my place safe while I get on with life. If you're wondering what I use, it's Simplisafe and it has been solid from day one. What makes it different is how proactive it is. Most systems only react after someone breaks in. That's like opening an umbrella after the rain stops. SimpliSafe helps stop trouble before it starts. Its AI cameras can spot a potential threat outside and real live agents jump in talking through the camera, letting the person know they're on video, that the police are on the way, or even flipping on a siren or spotlight if needed. It's protection that actually prevents problems instead of cleaning up after them. That's why I've stuck with it all these years. It just works quietly and confidently like the world's most polite bodyguard. And right now is a great time to get started. 50% off any new system. For a limited time go to simplisafe.com host again, that's simplisafe.com host because there's no safe like SimpliSafe.

You know, a lot of us work hard to build savings and start investing. But let's be honest, trading can feel like a full time job. The charts, the timing, the constant second guessing. It's stressful, right? You're always wondering, am I making the right move? Now you can eliminate all of that with QuickFund AI. QuickFund AI takes the emotion out of trading with an automated system that does the work for you. No staring at screens all day, no overthinking every move. Just smart automated trading strategies that can run while you sleep. And here's what sets QuickFund AI apart. With their Quick Fund guarantee, qualified clients receive up to $300,000 trading capital, 12 months of waived service fees, and a money back guarantee on the software itself, giving you the power to trade smarter without tying up personal assets. So if you're ready to smarter, not harder, visit QuickFun AI to get started. That's Q U I C K F U N D A I quickfund AI where technology earns for you.

Without further ado, why don't we get this thing going? Marty, welcome to the show.

Thank you, Josh. Thank you, Brandon.

Yeah, no problem.

It's good to have you, man. We're very excited to kick off the podcast with you and hopefully we could learn a thing or two about flipping. We can learn. Learn how not to lose $8 million. That was legit, wasn't it?

Oh, yeah, it was. You know.

The music stopped and I didn't have a chair in 2007. I'm sure that we probably have some listeners and some followers of biggerpockets who can relate to that, but, yeah, I mean, I was sitting on about 65 properties in 2007, and the market here in Phoenix dropped in value by almost 60%.

I was anticipating some correction. I knew the market was hot. I knew that at the pace we were going that the regular increases in value of 6% to 10% a month weren't sustainable. I thought I was being conservative, buying around $0.70 on the dollar, but the market corrected itself by 60%. And, yeah, the music stopped and I didn't have a chair.

Wow.

Unbelievable. So greed is good except when you get over leveraged.

Exactly. And it's really hard, I think. Well, it was at the time to know.

How much was over leveraged. And it's funny, I tell people all the time, you know, I'm actually grateful for the global economic collapse and the real estate market going into the tank because it actually saved my marriage. I've been married 14 years, and thankfully, the whole rest of the world, the rest of the country fell apart as far as real estate is concerned as well. And eventually my wife went from believing that I was just a complete moron to.

There was more to do with it than just me understanding what was going on. And it was funny.

Every time a Lehman Brothers would go bankrupt or Bear Stearns would go out of business or Countrywide would get absorbed by bank of America. I would put the newspaper down on the kitchen table in the morning and go, see, honey. See, I wasn't the only one who didn't see this coming.

Nice, nice. Well, why don't we. Let's come back to this story because it's really fascinating, and I think in the article.

You talked about the lessons learned and things to avoid. But before we get there, why don't we talk about your background? How did you get started as a real estate investor? What's your background?

Sure.

Well, I got into real estate investing full time in 2002. Prior to that, I was a TV news cameraman. I was the guy that you'd see schlepping around the camera gear, you know, hundreds of pounds of camera gear. And here in Phoenix, you know, we would. In the summertime, we would be covering brush fires and we'd be chasing bad guys. Chasing, I'd like to say we were always chasing ambulances and raindrops. You know, whenever it rained here it was. It was a huge breaking news story. And then, of course, you know, chasing, you know, fire trucks and ambulances and. Yeah, I just got to a point where I decided that I wanted to have more financial freedom. I wanted something a little more stable. I wanted to do something that didn't require working nights and weekends and holidays. So here I go, choosing real estate, right? Which is, you know, you have to do that. But you know what? At least I'm doing it. I was doing it on my own terms. And, you know, I mean, the problem was being a cameraman. You know, most corporate corporations, I was trying to find a job. And most corporations, you know, companies look at my experience, and they didn't see that I had any marketable skills in other industries. So I really didn't have much. Many options. It was, you know, either real estate or, you know, I don't know, there really wasn't much else for me to do. I actually, right around this time, read Robert Kiyosaki's book Rich Dad, Poor dad. And I was like, okay, real estate's the way for me to go.

I started the same way. I read the Rich Dad, Poor dad book. And I remember thinking at the time that it put into words kind of what had been, you know, filling up my head for, you know, quite some time. That that was. That was kind of the tipping point for me was reading that and then finding bigger pockets and moving forward from there. So that's cool that we kind of have that same background.

I actually think Kiyosaki is somewhat Required reading for. For new real estate investors in the past probably decade or so.

Yeah.

Yeah, I think so, too.

Yeah. Yeah, I agree. You know, and guys, it's probably been more than 10 years since I read Rich Dad, Poor dad, but I still have that cash flow quadrant burned into my. Into my head. Right? The E, you know, B. And I employee, self employed, business owner and investor. And, you know, I teach classes for realtors on how to work with investors. And I also teach a class on fixing and flipping homes. And I usually start the class out by writing that plus sign, you know, that quadrant up on the board and writing an E at the top and S at the bottom left, A B at the top right, and I at the bottom right, and saying, hey, you know, this is how I got out. This is, you know, was crystal clear in my mind, you know, when I read this book 12 years ago, and I think about it almost every day.

That's great. That's great. Well, so you decided to take the leap. You're going to become this real estate investor and change your life and find financial freedom. And what was the next step? Obviously, you had to do some learning, some research. You didn't just jump in and start flipping houses, did you?

No, I do it all newbie, or a lot of newbie real estate investors do. I spent a lot of money and I flew far away to take a boot camp on how to buy foreclosures and do lease options. It was actually right there in your backyard, Josh. It was in Denver. It was the Colorado association of Realtors, or rather Colorado Real Estate Investment Club. And it was a weekend deal where they brought in all these different gurus, and they were selling. Well, at the time, they were selling cassettes.

They weren't even doing cassettes.

What are those?

Yeah, Brandon's like 12 years old, so we don't really, you know, we'll have to school him a little bit.

Yeah, so that's, you know, on lease options and foreclosures. You know, I got back here to Phoenix. This was 2001, came back to Phoenix. And, you know, I actually convinced my wife after. After listening to these cassette sets that I knew enough about investing to quit my job and go into real estate full time, you know, and. And luckily for me, she, you know, she had a really good job and was able to support me for a while. And, you know, I guess you could say my sugar mama, when people say, hey, I get into investing, I want to quit my job, I'm like, well, you got a sugar mama, you're going to need one of those to get started because you need some source of income while you're figuring this thing out. But I was fortunate in that way. Things didn't really work out. After about a year, I wasn't making any money. I think I made about 10, 12 grand my first year. And my wife started using this really bad word job.

She started saying, you know, you need to go and get a job again because this real estate thing isn't seem to be working out. So I did what all newbie kind of real estate investors do next. I spent more money and I flew further away. I flew, spent $2,700. I flew to Atlanta and I went to a four day workshop called how to Get Lenders Fighting to Give youe Money. And it was pretty really ridiculous. What they, the advice they gave us is you know, just basically walk into a community bank and ask for a line of credit, you know, to do real est deals because, you know, you need the money to build an inventory of homes. And so that was a waste. And then, you know, right around the same time, you know, 2002 or so, going into 2003, after I got back from that boot camp, I called a local real estate attorney here in town who had written an article I read and I asked him, you know, I told him this story about I'd been to Denver and Atlanta. And he said, you know, Marty, it's really the best piece of real estate investment advice to this day I've ever gotten. He said, marty, quit wasting your time and your money flying all over the country paying these gurus to teach you how to invest in real estate. Find somebody there here in Phoenix who's investing and.

Find a way to serve them. Find a way to make it worth their while to teach you the business. Bring them deals, mop their floors, bring them coffee, whatever you got to do. That's what I did. I actually ended up going to just a local class for on foreclosures. It was actually a class for realtors. I met a guy in the class who was working with the local investor who was buying homes at the courthouse steps. And those guys kind of took me under the wing and showed me the way. And I worked for them for about a year and a half. It was like an apprenticeship. It was a real estate investment apprenticeship and lasted about a year and a half. I did about, I don't know, 20, 25 deals with those guys and we split the profit three ways. I was basically their bird dog.

And then from there I had enough of A track record, I could start raising some of my own capital. It started out with family members, friends, and then grew. And the next thing you know, I had two and a half million dollars in investment capital and 65 houses.

And then it went bye bye.

Yeah, yeah.

Went from a net worth of 8 million to negative 2 million. You know, so, you know, I never really, you know, through the process, lost hope. You know, I've always felt like, you know, what, hey, if I was able to build a business like that in three years, you know, I can rebuild it. So, you know, we had, you know, some, some pretty frustrating times. I mean, we. At one point, you know, towards the end of 2008, going into 2009, we were burning the furniture to stay warm. I mean, sell on Craigslist. You know, I had a Rolex watch I hawked at a jewelry store. You know, I sold my Mercedes, you know, started driving a 94 Honda Accord. You know, it was a humbling experience, but, you know, I'm grateful for it because, you know, I, during the process, I read a lot of books, you know, books about, you know, like, Abraham Lincoln and Thomas Edison and, you know, Walt Disney. And every one of them has had a monumental failure. Failure in their life. And it's kind of helped them kind of regroup. And I guess it's just a rite of passage for any entrepreneur to fail miserably at least once or twice in their life. So, you know, I'm fine.

Well, at least, look, I mean, you lost 2 million. Donald Trump lost how many billion? So, you know, you're not a big shot yet, man.

I'd like to go back to something you said earlier, Marty. I think you mentioned when the best piece of advice you ever got from that, from that friend of yours who said, you know, find an investor that you can, you get close with and that will teach you. And what you said was, you find a way to add value to them. And I think that's, you know, a lot of people come to the bigger pockets, the forum, and they talk about, I need a mentor. I need somebody to, you know, teach me the ropes. And I think that a lot of people missed that as what kind of value can you bring to the mentor? Like what, what can you do to make it worthwhile? I mean, this isn't a charity case that somebody just wants to pick somebody up. So I think that's huge and something that, you know, newbies definitely need to keep in mind.

Yeah. You know, what I tell people, Brandon? And, you know, when I'm teaching classes I just got a class today for realtors and I also like to teach one about fixing and flipping. And I'll work with anyone, but they got to do one of two things for me. They got to bring me money or they got to bring me deals. That's how they value to my business. And you know, most people have one of two things. They either have time or they have, they have, they have money. Those who have time, you know what, bring me deals. If you've got money. Well, then, you know, we'll go find deals and work together. But, you know, I'll sit down, I'm happy to sit down with, you know, anyone here in my market and show them exactly how they can bring me deals. Yeah, I'll explain it to them. I'll give them six steps, which includes go get your real estate license. Because I believe in this market here in Phoenix, you got to have a real estate license to do deals because you need access to the multiple listing service to find those short sales, to find those REO properties, to comp properties, to get access to properties. So that's part of the process. But I'll tell you, most people are completely unwilling. They're too lazy. They're just not motivated enough to do exactly what I tell them to do. And it just never works out. It rarely ever works out. I think they'd rather pay somebody $5,000, a guru to tell them how to do it. So.

I decided and it's just something that kind of came to me here in the last few days. And really it's something I've been doing. I didn't really know I was doing the last three years and writing on my own blog on flipping phoenixhouses.com for bigger pockets. I just wrote a book. I'm sure we could talk about that in a minute, but about flipping houses. I'm really on a mission. I've decided to show people and to tell people as loudly as I possibly can how hard it is to do this business, how hard it is to fix and flip real estate, how hard it is to buy and hold real estate, how hard it is to invest in real estate. It is hard work. It's rewarding. I'd much rather do this than dig ditches or slap camera gear, but it's not easy. And I just get so frustrated. Just here in the last week, I've attended a real estate investment club in Milwaukee because a partner and I, Jay Scott, who's a member of Biggerpockets, him and I have joint ventured on some flip deals in The Milwaukee area. I went to a workshop, or rather a local real estate investment meeting there last week and they brought in a guru who talked about how easy it is to raise private money. I watched a video today online of a guru saying how easy his system is to master and how quickly motivated sellers will be calling you once you use his system. And it just makes me sick because it's not easy. I wish these guys would stop saying that, but the truth is, if they didn't, I guess nobody would buy their programs.

Yeah, pretty much.

First of all, good plug Flipping Phoenix houses, that would be your website. And we would love to talk about the book fixing and flipping real estate that came out this year.

Really quick. Want to touch upon what you had talked about, the difficulty.

In becoming a successful real estate investor. As you said, the gurus do make it sound really easy.

I think, frankly, people want things handed to them. I think that's why you have found that so many people have just not come through for you because they think it's going to be easy. They think whether they're hoping to believe what these guys are saying or they're just not realistic about the approach to getting started as a real estate business person. Because I really do truly believe, and I think we all do, the three of us, that you need to run your real estate life as a business.

But these guys have these false hopes. And I'm glad to hear that you're taking this mission to.

Make people understand how tough it is.

With bigger pockets. We really try hard to make sure people are realistic about getting started and being successful. It's just for everybody listening, I just want to really emphasize how important it is to understand that real estate is not a joke. You don't just go and say, hey, I'm going to go buy a couple houses. You need to plan, you need to map out your path, and you need to be detail oriented in your approach to moving forward. I'm assuming.

I'd like to actually talk about that a little bit with you a little more. And then I actually also want to get into four flipping boxes, which is something that you taught over at the Biggerpocket Summit. Why don't we talk a little bit about the business approach to real estate planning plotting. Do you have any insight in that?

Yeah, I think what I advise anyone who approaches me and says, hey, I want to get into real estate investing. What I do is I instruct them or advise them to think about what their financial goals are. You know, three years, five years, you know, five years, you Know, one, three and five years down the road. So, you know, I always say, you know, you want to work backwards and to figure out what it is you're going to do. Like I consider fixing and flipping. You know, this is my day job, right? This is my business. I fix and flip homes to generate enough revenue to buy income, you know, cash flow producing real estate. That's why I fix and flip. So, you know, how much money do I need to generate from my fix and flip business to cover my nut, right? Just to pay the bills, to, you know, pay my house payment and, you know, put groceries on the table and keep the lights turned on. And then how much above and beyond that do I need to earn to put towards my investment properties? So you know, what I encourage people to do when they're starting out is just say, okay, how much money do I need to make? You know.

If it's, let's just say it's $10,000 a month. That's your goal. Well, that means if you can net $10,000 on one flip property, sounds like to me you need to flip 12 houses in the next 12 months. Right? And how much money is that? How much money do you need to buy and sell and rehab 12 homes? Well, I don't know. I don't know what your market's like. I don't know what your niche is going to be, what type of home you want to buy, what price point, how much it's going to cost you to rehab. Need to sit down and figure that out. Figure out how much is going to take to buy these and rehab them and how much is it going to take to hold on to them and how long is it going to take them to sell. And so you just work backwards from there. So then you really, your goal kind of shifts from being from flipping enough homes to earn ten grand a month to how do I raise the money that I need? If you don't already have the money to flip 12 homes a year, one a month. So you really kind of have a couple of different goals kind of working together there. So that's what my business partner Manny and I did when we first started. We sat down and we decided how much money we wanted to earn, how much we wanted to use and put towards our revenue generating properties. And then we just said, okay, here's our goal. So our goal became to raise 2 million bucks. If we had $2 million in investment capital, then we can fix and flip five to eight homes a month. And at the end of five years, that would Allow us to not only pay our bills, but buy between 18 and 20 rental properties that would cash flow between 17 and $22,000 a month. I just tell people, sit down, figure out how much you need, and then work backwards from there.

That's great. I think, Brandon, you and I have talked a bit about that and I believe that's the approach you tend to take as well, the work backwards approach.

Yeah, it is, definitely. I mean, I look at cash flow like that. I say, well, how much money do you want to, you know, eventually have in passive income? And if, you know, if that's, you want to earn $5,000 a month, well, how many houses does that take? You know, if it's a hundred dollars per unit, you know, that's what, 50 houses or 50 units. So that could be one 50 unit apartment complex or 50 single family homes. I mean, I look at it the exact same way, going backwards. And one thing, Marty, you said earlier that I thought was just really, really good. You talked about how you need, you don't have to. I guess flipping houses is not a investment as much as it is a day job for you. You said, like, that's how you pay your bills. And that's one thing I always tell, I guess new, new real estate investors, they say, well, how can I get involved in real estate investing? And I always tell them, well, find a job that you love. You know, like flipping is the one that gets all the show on TV and all the popularity. Flipping's, you know, popular, cool thing to do and it's a lot of fun. I mean, I've done a lot of flipping too, but flipping is not for everyone. And so I think that's what I always tell everyone is find a job that you absolutely love and that you get excited to do when you wake up in the morning. And if that's flipping or if that's wholesaling, then great, jump in with both feet. But if that's working at McDonald's or if it's being a math teacher, then go work at McDonald's and be a math teacher. But invest on the side. That's, that's one thing that I found that people don't have to necessarily flip houses or be a wholesaler to be involved in real estate.

No, you don't, Brandon. I mean, I, you know, I fix and flip homes just because I like fixing and flipping houses. It's my job and I love it and I couldn't imagine doing anything else, but it generates enough revenue to again, pay the bills and I enjoy doing it. I have a brother in law and he lives in Austin, Texas and he buys a couple investment properties every year but he has a wonderful job at IBM as a senior level engineer and he likes that. He uses the income that his job generates to buy investment properties. I use the income that my Fix and flip business it's interesting, there's been some debate on BiggerPockets in some of the forums about whether or not fixing and flipping is actually investing or not. I don't get involved in all that. It's all semantics. I think the definition, the Webster's definition of investing is investing a principal amount of money and getting a certain rate of return and expectation back. I guess technically it is, but. But if you stop fixing and flipping homes, if I stop tomorrow, the income stops coming in. At least with investment properties, whether you work or not, you get that mailbox money every month. It's definitely not for everyone and I encourage people who are going to fix and flip for a business they need to systematize. Just like I read the book the E Myth and it just talks about franchising and putting as many systems in place as possible so you can control costs and create a brand for yourself and a product that people can expect. Or other realtors who are looking to show your flip properties know every time they look the same, they smell the same, they feel the same. Creating that brand, that's really important. As a fix and flip investor, do.

You want to invest in cash flowing rentals but don't have the time to manage the properties? Is your local market too competitive or expensive to invest in? Rent to Retirement offers new construction turnkey investment properties that you can buy with as little as 5% down and rates as low as 3.99%. Their team handles everything from financing, management, insurance and more so you can live where you want and invest in the markets that offer the best returns. Rent to Retirement has the best reputation in the industry with more five star reviews than any other company on the BiggerPockets website. To learn more, visit biggerpockets.com retirement or just text REI 233777 to start investing in the best markets today. I've had my home security system for quite some time now and the best part? Half the time I forget it's even there. It's just quietly doing its job, keeping my place safe while I get on with life. If you're wondering what I use, it's SimpliSafe and it has been solid from day one. What makes it different is how proactive it is. Most systems only react after someone breaks in. That's like opening an umbrella after the rain stops. Simplisafe helps stop trouble before it starts. Its AI cameras can spot a potential threat outside. And real live agents jump in, talking through the camera, letting the person know they're on video, that the police are on the way, or even flipping on a siren or spotlight if needed. It's protection that actually prevents problems instead of cleaning up after them. That's why I've stuck with it all these years. It just works quietly and confidently like the world's most polite bodyguard. And right now is a great time to get started. 50% off any new system. For a limited time, go to simplisafe.com host again, that's simplisafe.com host because there's no safe like SimpliSafe.

You know, a lot of us work hard to build savings and start investing. But let's be honest, trading can feel like a full time job. The charts, the timing, the constant second guessing, it's stressful, right? You're always wondering, am I making the right move? Now you can eliminate all of that with QuickFund AI. QuickFund AI takes the emotion out of trading with an automated system that does the work for you. No staring at screens all day, no overthinking every move. Just smart automated trading strategies that can run while you sleep. And here's what sets QuickFund AI apart. With their Quick Fund guarantee, qualified clients receive up to $300,000 trading capital, 12 months of waived service fees, and a money back guarantee on the software itself, giving you the power to trade smarter without tying up personal assets. So if you're ready to trade smarter, not harder, visit QuickFund AI to get started. That's Q U I C K F U N D AI quickfund AI. Where technology earns for you.

Well, that's great information. Let's talk a little bit more about partners. You know, I know that you went at it alone for a while and then and you brought on Manny, your partner, who's a great guy and of course the Milwaukee flip with Jay. Can you talk about just getting into these partnerships, why you decided to partner with these guys? Is there something that they bring to the picture that you couldn't do on your own? And let's kind of go that way.

Sure, yeah. Going into business with somebody, partnering with someone, it's a lot like a marriage. And ideally, you find a partner who's got strengths you don't have. And ideally you have strengths they don't and they complement each other. When I started working with Manny.

It was really out of necessity.

I had the technical ability to operate the business and find the properties and get them fixed up, but I didn't have the working capital, and Manny had those connections. So it was a really good partnership because he was able to find and meet new investors and help us raise capital to fix and flip houses. And I could focus on the technical side, which is just acquiring the properties and making sure they got fixed up properly and got sold. Likewise with Jay, we met at the Biggerpocket Summit last March and decided to start doing some flips in the Milwaukee area. Big reason why we did that. There's just a nice.

Discrepancy or difference between what retail homes are selling for and what distressed properties are selling for. We actually had Steve Cook, who's a contributor to BiggerPockets, look that up for us, and he found there was about a 51% difference between distressed properties in the Milwaukee area and in regular sales, homes that aren't in foreclosure. And it was a really good fit with Jay because.

He'S very detail oriented. He really gets into the technical side of flipping homes. He really understands the mechanics of it. And frankly, I'm not really into that. I'm more into the art of the deal and putting the deal together, and I'm more into analyzing the numbers in the market. So, again, it's a really good fit. And so, you know, we work really well together. It's interesting. Manny and I and Jay were all the same age. We're all 40 years old. We all have young kids, you know, so we're all in similar stages in life. And so it just. It makes a lot of sense. But I think, you know, for people who are out there thinking about bringing on partners or partnering up, you know, you really have to think it through and make sure that, you know, you have the same temperament, that the expectations are laid out, you know, before you get started on your first project. And I would say take it slow. Just like when you're dating, right? I mean, you don't. You don't meet somebody new and then move in with them, you know, a week later. You know, you take it slow. And I think that's what you need to do with partners. You know, just do one deal, then do another, and just get to know each other, you know, and you don't have to do a formal, you know, LLC and operating agreement. Maybe just do a joint venture and just see how it goes.

Well, good, good.

Advice. Let's. Let's talk about this Four Flipping Boxes. I mentioned it to Brandon. He was unfamilia with it. And I think it's going to be somewhat difficult to translate over the airwaves without pictures, but hopefully you can do a little bit of justice and maybe fill us in on what is Four Flipping Boxes. Just to everybody listening. Four Flipping Boxes is.

A class that Marty taught over at the summit. He also, I believe, teaches it locally. So fill us in a little bit.

Sure. Though I mentioned, you know, when the market went in the tank, you know, we were really struggling, my wife and I. And, you know, I was fortunate enough.

I met or I was introduced to a real estate investor here in Phoenix. Actually, he was introduced to me by my church pastor. And, you know, this guy is a very successful real estate investor here in Phoenix. Flips a lot of homes. And he introduced me to him. This is when I was really struggling, trying to get, you know, trying to stay afloat back in the spring of 2009. And I actually went to work for this with this guy. He's kind of like a project manager overseeing some of his flip deals. You know, I was doing everything for him. I was hanging ceiling fans, I was hanging blinds. I was. I was installing door hardware. I was cleaning toilets. You know, these are all flip properties that he bought. And I was helping him out. And, you know, when I. When I. When I first met him, he sat down with me and he said, this is how our business works. And he got out a piece of note paper. If you can just visualize, you know, a page of lined note paper. And he wrote. He drew four boxes on the piece of paper, and he wrote in each box, in the first box he wrote acquisition. And the second box he wrote rehab. And the third box he wrote sales. And in the fourth box he wrote raising capital. And he said, a fix and flip business consists of these four boxes. Acquisition, rehab, sales, and raising capital. He's like, and you got to have somebody in each one of these boxes and almost, you know, to keep things running, you know, at all times. And he's like, my focus is the raising capital box. I raise capital. He's like my partner. He focuses on acquisition. He makes sure we've got deals in the pipeline. We're always. We've always got a new deal coming. He's like, and then he'd hired two people. He hired someone to handle sales, and he hired somebody else to handle the rehab and overseeing the rehabs. So I just thought, you know, he just called it his four boxes concept, but I'm the one who added flipping to it. So I thought, wow, I've never really thought about a house flipping business like this. And it just really cleared things up for me. It made me, it helped me think about each phase of our business. And it is a business, you know, I mean, fixing and flipping homes is a business, you know, and it just really helped me to focus on each aspect of the business as we acquired properties and rehabbed them and the importance of keeping that cycle or that pipeline full and keeping things going. And so when I teach people and I teach the class, it's really, it's really simple. And as a matter of fact, on my blog, I have four categories. Acquisition, rehab, sales and raising capital. It's one of those four things, you know, subjects that I'm going to be talking about all the time. And it's easy to kind of break down the business that way when you, when you, when you think of it like that.

I'd actually love to know more about the raising capital part. I mean, out of the other, out of those four boxes, you know, I feel like in my flipping, I've been alright in the three, but it's the raising capital that I always seem to struggle with. Like, what are your, I guess, thoughts and suggestions on that, Marty?

So look at, you know, when, when, when you've got guys, you know, like Bernie Madoff, right, and all these other shysters out there ripping people off. I mean, you know, you know, makes raising capital, you know, that much more difficult, right? With all the news stories I tell people all the time, you have to have a track record to raise capital. You can't just, you know, wake up one day and decide you're going to start fixing and flipping homes or buying a bunch of rentals or, you know, it doesn't matter what type of business it is. You know, I've got a buddy of mine I just talked to today. He's got a landscaping business he owns back in the Midwest and things are starting to go pretty well, but they haven't been in business very long and he's trying to raise money. I told him I go, look, you know, without a track record, it's going to be tough. I mean, I look at Brandon, I look at two experiences I had. You know, when I first got started in real estate investing, you know, I was working for a guy and his partner who are buying homes down at the courthouse steps and I worked for those guys and I was basically a bird dog for a year and a half. This is what happened, Brandon. My friends, my family, my former co workers who all thought I was crazy when I quit my job, you know, after a year and a half, here I was. I was making money. Things are starting to happen for me. I was working with some investors. They saw that, right? They saw I was doing deals, and they wanted to get, you know, they wanted to be a part of it. They wanted to invest with me. You know, they wanted to. So we did promissory notes, and they do, you know, deeds of trust on properties. And, you know, I'd secure them and give them, you know, a rate of return, you know, 10, 12%, you know, but I had a track record. They saw, you know, after a year went by, I quit my job, and here I was doing real estate. They're like, wow, he's not living out of a cardboard box. Yeah, must be doing something right. You know. And then, you know, you know, Fast forward to 2009, spring of 2009, and, you know, this investor, Keith, I was telling you about, it taught me the four flipping boxes concept. Yeah, I started working for him and helping him out, you know, with his jobs. And, you know, I actually was a realtor, you know, so he actually started having me list some of his homes. And right around that time, my business partner Manny called me up, and he was, you know, out on the road doing another business. And I told him, yeah, man, I'm helping this guy that I met through my church, and he's an investor, and, you know, I'm helping him out, you know, getting these things fixed up, and I'm listing them for him. And he's like, well, why couldn't you do that? And I'm like, well, I could if I had some money. And he's like, well, I've got, you know, some investors who've got money. I mean, you've got the track record to fix and flip these homes. You know, you know what you're doing. Let's partner up. So that's really the trick. I mean, I think people kind of put the cart before the horse. I mean, you've got to establish a track record. Well, how do you do that? Well, you work with people who know what they're doing, you know, and. And that's really. I mean, I look at Warren Buffett. I read his book a few years ago. It's called the Warren Buffett and the Business of Life. His story is fascinating. I mean, a lot of people think Warren Buffett just had this wisdom and this knowledge to invest in the stock market. The day he was born, he actually had a mentor. It was a guy by the name of Benjamin Graham. He wrote a book in 1949 called the Intelligent Investor. Warren Buffett was 20 years old when he read that book, and he knew a little bit about investing in the stock market, but not a lot. He read this book. He actually went to New York City, enrolled at Columbia University, and took Ben Graham's classes and actually went to work for him. And if you buy the book the Intelligent Investor, now, Warren Buffett has written a foreword to it, and he acknowledges that Ben Graham was his mentor, his coach, his friend. I mean, you just, you know, even Warren Buffett didn't roll out of bed and know how to invest in the stock market. I mean, you got to have someone that's going to kind of show you the way. And once you start to learn, people around you are going to take notice. I mean, another great way, Brandon, to raise capital is just go find a good deal, you know, you find a good deal, the money will come. I'm telling you, there'll be people that are going to want to work with you, you know.

No, that's true. There was a house I found about a year ago, and the lady had it listed. The day she listed it, she listed at 30,000. I offered her 15 on the spot, and she took it right then and there. And immediately I had three people that wanted to buy it. So I ended up wholesaling it for about 8,000, and it was the best wholesale deal I'd ever done. And so that's a perfect example of that. You know, I found the deal, and, you know, the money just showed up. I didn't have to try for that one.

And that's exactly what I was doing when I got started. I mean, I was wholesaling. You know, I started out as a bird dog, and, you know, I would just assign the contract. You know, I would write a contract, the homeowner that would say, you know, my LLC is the buyer, and then I have an and or assignees clause on the contract, then I would assign it to this investor I was working for, and he'd give me three, four, five thousand bucks. Well, eventually, when I'd done enough of these and, you know, I had family members and friends see that I had the success I was having, they started investing the money with me. And so I was able to do that on my. Start taking these deals down on my own. And I remember, it's funny, I read stuff all the time on biggerpockets and elsewhere about wholesaling. Everybody wants to wholesale and trying to figure out the secrets and the key to it. There's really no secret to it, and there's no, you know, you don't really have to work very hard to get a buyer's list together. All you need to do is find a good deal. I remember I was. I had just kind of gone out on my own. I finally got some of my own capital together, and I found a deal. It was In Mesa, about 20 minutes from where I live here in Guilty. And I bought. I got homeowner to agree to sell it to me for 85,000. And I knew it was worth between 140 and 150 all day and needed about 20,000 in rehab. So I bought it for 85, and I listed it. I actually put an ad in the newspaper, the Arizona Republic. This is, you know, going back to 2000 newspaper.

What's that?

I put an ad and I put the cross streets of the house and the details. And I got. I supposed to get a dozen phone calls on that house. And I think the first three or four guys who called me said, hey, this is a great deal. And I sold it to the first guy who called me. I wholesaled it for about ten grand. And he told me, said, before you call anyone else, you call me. I'll buy every one of these you got. And there was about two or three other guys who also called me on that house and those guys. And it was from one newspaper ad that cost me about 200 bucks. And those guys bought just about every home I bought over the next two to three years. I mean, they just, you know, there was no need to go out and put this. This buyers list together, you know, and do all this crazy stuff. I mean, it's because I had deals. It was easy to find the money, and it was, you know, it was easy to find the buyers. You know, just. I tell people all the time, just find good deals and the money will find you.

That's great advice. Great advice, man. I can't tell you. Well, I can't tell you because, you know, but we read this all day. The new wholesaler questions. The guru of the moment is telling them to get out there and build these buyers lists. Well, great. You've got a buyer's list of what for what? Find the deal. You find the deal. The buyers will come. You mentioned something else. You actually went and spent money. You spent $200 on an advertisement.

I think that alone puts you in the 20 of the 8020 rule. When it comes to the folks who are learning, starting out wholesaling. People think that wholesaling is free. Now with the Internet, it's a little easier, but still, you were willing to pony up a couple bucks to promote this thing.

You need a little bit of money to do this business. You can't just jump in with nothing.

No, you got to invest in yourself.

I think. Is it Stephen Covey and the seven Habits of Highly Effective People? He talks about sharpening the saw. I mean, this is a profession. This is a business. I take it very seriously, and I believe that I have to invest in myself and in my education and, you know, I read books all the time about. About business, about entrepreneurship, self improvement. You know, I mean, you've got to invest in yourself and in your business, and sometimes you know it's going to work and sometimes it isn't. I mean, I think I wrote a post for BiggerPockets a few months ago. I think I called it the direct mail fail. And, you know, I did a bunch of direct mail, spent a bunch of money, and I didn't get a single lead out of it. I mean, I got a lot of calls, but none of them really turned out to be anything. And I got some great feedback and advice from some BiggerPockets readers who have had a lot of success with direct mail. But I came to the conclusion that it's just not for me.

Frankly, I don't like being on the phone for hours and hours talking to people who really aren't motivated to sell me their home.

To me, it's like finding a needle in a haystack. It's just not my thing. I'd rather. Or I'd rather scour the mls. I'd rather, you know, buy at the courthouse. So this business is about finding a niche. I mean, there's a lot of different ways to make money investing in real estate. There's a lot of different ways to acquire real estate. But you got to be willing to spend some time and some money, you know, kind of figuring out what that is and figuring out what works and what doesn't. You know, it's funny, Josh, you're talking about buyers lists and, you know, all the education there is out there and how to build a buyer's list. It's.

I.

They're not really buyers lists, they're suckers. Lists is what they are because they're not trying to find a legitimate buyer. You're trying to find some sucker who's going to probably overpay you for a home or Overpay for a home that you've got acquired, that's not really a deal.

Yeah, for sure, for sure. Listen, we're kind of running out a little bit. Don't want to cut you off here too much, but we've got a couple of things that we've got to talk about, including your book. Tell me about the book. What got you writing this thing and give us a synopsis. Again, it's called Fixing and Flipping Real Estate and we'll have links to that along with pretty much everything else that we've talked about on our show notes@biggerpockets.com showone but let us know what's going on with this book here, Marty.

Sure. So back in April of last year, 2012, not long after the Biggerpocket summit, I had a book publisher.

Send me an email and approach me and Josh, you probably remember you and I, you gave me a lot of advice on this and negotiating the contract with the publisher. But they approached me. They'd been reading my blog, Flipping Phoenix Houses and had seen some of the posts on Biggerpockets and liked the way my style of writing and just asked me if I'd ever thought about publishing a book and I said sure. And I actually wanted to call the book four Flipping Boxes, but they decided that that wouldn't really translate, that the readers would have a hard time figuring out what that meant. So they changed the title to It's Really Wordy Fixing and Flipping Real Estate Strategies for the Post Boom Era. And I'm really proud of the book because number one, it's really my story. From.

Domination to crash to crisis to chaos to come back, it's my story. So I was able to weave this story over the last 10 years into the book. And a lot of hard lessons I learned and mistakes that hopefully that the readers of this book can see and learn from. But it is the fourth Flipping Boxes concept and that's how the book is kind of laid out, including the story of how I met Keith, who taught me how to fix and flip homes and taught me that the concepts. But the book, again, I think it's a pretty easy read and it's not an A to Z how to do this. It's more like a blueprint. Everyone's different. Everyone has a different way of doing things. But I think it lays out how to start a fix and flip business. Whether you want to flip one home a year or 20amonth. That lays out how you would go about doing that and how you set up a business Brandon, for you it does include a lot about raising capital and finding money and building that track record and attracting investors into your business. A lot about acquisition, really two thirds of the book I talk about acquisition because you make your money when you buy, not when you sell.

Focus is on acquiring properties. But what I think is really cool about it is the publisher had me do some research prior to writing it and as far as we could tell, there hasn't been a single book written about fixing and flipping homes since the crash.

I think a book written in 2007 on flipping on Barnes and Noble and Amazon. I'm not sure who the author is, but really there's been nothing written in the last four or five years about fixing and flipping homes post crash. So, you know, my hope is is that people will see it on Amazon, on Barnes and Noble or hopefully someday it might end up on the bookstore shelves there and say, hey, wow, a book about flipping homes after the crash. You know, I want to buy it. So I have a lot of tips and information and.

A lot of things that I share with the reader on how to kind of navigate the market in the post boom era when we're dealing with a lot of REOs and short sales and auction propert and dealing with homeowners who have little or no equity. And so I think that of everything I've written about in the book, that's what the reader will find most valuable.

That's great, man. Well, listen, again we'll make sure everybody has a link to the book via the show notes and.

Can certainly get out there and pick up a copy. I have not yet read read the book but I'm anticipating doing so soon and will urge everybody to do so because Marty is the real deal and this book is certain to be great. Before we head out, we've got one last thing we're going to do. We're going to do a really quick speed round here. So I'm going to ask you a couple of quick questions and let's hear what you've got to say. First, should investors get a real estate license?

Absolutely. I believe.

Investors should have a real estate license mostly because you got to have access to the multiple listing service. I mean, how are you going to comp properties? How are you going to look for deals, short sales and REOs and how are you going to get access to them? I mean it's unrealistic to ask a real estate agent, especially a good one, to do all that stuff for you. They've got better things to do with their Time than show you how to do that and meet with you. So do it. Even if you don't plan on listing or writing offers, do it. It's worth it. It. And forget about what people tell you about fiduciary, responsibility and disclosure. You know what? You run your business the way you're supposed to, you won't have anything to worry about.

There, There you go. There you go.

All right.

Favorite real estate book other than your own.

Favorite real estate book other than my own. You know, Rich Dad, Poor dad is probably the closest thing to a real estate investment book I've read. I'll be honest with you. I mean, I see these real estate books on the shelves and, and I look through them and they turn me off a little bit.

It's hard for me to believe that the authors, some of these books, are practicing what they preach or are really at it. So I would say Rich Dad, Poor dad is my favorite. And I also. More on the personal development side, I think Think and Grow Rich by Napoleon Hill is a fantastic book. I mean, so those, those are actually just above me here on my bookshelf. I keep those out and I flip through them all the time.

Nice, nice. Favorite business book, non real estate.

I would say the E. Myth is my favorite non real estate related book because it talks a lot about McDonald's, about franchising, about systematizing your business.

I think any business owner can get something out of that book and find it valuable.

Fantastic. Fantastic. Best advice for a new real estate investor.

You know, the best real estate advice I talked about earlier, you know, that I ever got was, you know, stop wasting your time and money and with these gurus and find a real estate investor in your own backyard and hook up with them, serve them somehow. Create a win win.

Great advice, great advice and advice. And lastly, what is your favorite vacation location?

There's a spot, it's about three and a half hours south of here. It's called Rocky Point, Mexico. And I can get door to door down there in about three and a half hours. It's right on the Gulf of California, the Sonoran Sea, they call it. And condos are really cheap to rent down there. To me, it's like being in Hawaii. It's just absolutely beautiful. And I love the Mexican culture. Manny, my partner and I and our families go down there. We vacation down there quite a bit here the last couple of years. And I just love it. It's like paradise.

Fantastic. All right, guys. Well, listen, Marty, thank you so much. You can find marty@flippingphenixhomes.com or on the BiggerPockets real estate news blog@biggerpockets.com renewsblog Also, everything like I said that we discussed will have links to books and things like that and Marty's site at our show notes@biggerpockets.com show one and thanks so much for being the first guest on this inaugural podcast from BiggerPockets.

Thank you. I'm honored.

Thanks Brandon for being a great co host. I think this is going to be a great success and we're looking forward to the next couple episodes. So join us for show number two. The next episode sounds like a Star wars thing or something, but.

We'Ll see you then. Hey guys, that was our interview with Fix and Flipper. Marty Boardman before we sign off, I'd love to get your help. Please please head over to itunes and leave us an honest review of this podcast. Remember, the more five star ratings we receive, the better the chances others are going to find this podcast and learn how to become better real estate investors. So please help us out and leave a rating. Also, be sure to check out our show notes@www.biggerpockets.com.

This is Josh Dworkin signing off. Thanks again and we'll talk to you.

Next time you're listening to BiggerPockets radio.

Simplifying real Estate for Investors Large and.

Small if you're here looking to learn about real estate investing without all the.

Hype, you're in the right place. Be sure to join the millions of others who have benefited from biggerpockets.com your.

Home for Real estate Estate investing online.

Thank you all for listening to the Bigger Pockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calico, content and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit WWW dot.

The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose, and remember, past performance is not indicative of future results. Biggerpockets LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.