38: Unique Strategies for Buying Real Estate with Travis Daggett

This is the bigger pockets podcast show 38.

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All right, everybody, this is Josh Dworkin, your host of the Biggerpockets podcast, here with my co host, Brandon Turner. Hey, Brandon.

Hey, Josh. What is going on in Josh World?

Josh World. Well, I'd like to represent the lollipopkins, the lollipop kids.

You sing in Josh World.

That's good.

Is that good?

You've been around your kids too much.

Yeah, apparently so. Yeah, now things are good, man. Things are good. You know, show continues to do well. Our last podcast was insane, man. Show 37 with Aaron Mazzarello got just a ton of amazing feedback. It was awesome.

Yeah, I think that was our biggest show to date.

I think it was. I think it was.

If anyone's listening and you haven't listened to it, you're missing out.

You are, you are. But yeah, man, things are good. Life is good, work is good, you know, killing it. How about you?

About the same. I'm working on a deal right now and we'll talk about it in the podcast today. But yeah, I'm excited.

Fantastic. Well, lots of luck with that. Listen, we're now at 425 reviews in iTunes. That includes 412 five star reviews and we want to thank everybody so much for doing that. If you're a regular listener and there's now like 13,000 plus of you and you haven't yet left us a review, please take a minute and run over to itunes and leave us an honest review and honest ratings there.

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You can walk to itunes.

Yes, you can. So yes, there you go. But yeah, so that's that. Also listen, our quote contest. Last week's winner was David Moore. Twitter handle is necalled David and he shared the quote from last week's show. If you can't find a buyer, it's probably not a deal. So Dave won a free 6 month pro membership on biggerpockets, which means he can now fully use the marketplace, get a snazzy new form signature. He can see who's checking out his content, see who's visiting his profile, and a whole lot more. And you can find out more about Pro account over@biggerpockets.com pro so big congrats to Dave for that trial. Yeah, yeah, yeah. All right, so we're going to do this same contest again this week for your chances to win a six month free trial of the Pro membership. Be sure to listen for awesome quotes today and simply share your favorites on Twitter, Facebook or G. And be sure to include the hashtag BiggerPockets when you leave the quote and we'll find you. And one of you guys will win another free six month trial to BiggerPockets Pro. All right, with that, why don't we get onto the show? On today's show, we're going to sit down with Travis Daggett. Travis is a real estate investor from Eugene, Oregon. Travis has been investing full time for a couple years now. Although he focuses primarily on wholesaling, he's going to actually teach us a ton of stuff about buying property. No matter what kind of investing you're in. It's definitely a higher level podcast today with an overload of really good information, so you're definitely going to want to grab a pen and paper and get ready to sit down and take some notes.

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And with that, why don't we jump into the interview?

All right.

All right, Travis, welcome to the show, man. Let's just ditch this here and get going. What's going on, man? How are you?

Thanks. Appreciate it. Thanks, guys.

Yeah, no problem. We're glad to have you here.

We are. Indeed we are. So who are you, man? What do you do?

Yeah, Travis Daggett, real estate investor. Do wholesaling fix and flipping. Little bit of several different things, but those are the main things.

No, excellent. Nice, nice. How long you been doing that for full time?

December of 2011, so almost two years.

Oh, nice. And prior to that, what were you doing with yourself?

Something totally different.

Not in real estate at all.

The interview is clearly going the wrong direction.

And now for something completely different. Yeah, I was doing sales training for an insurance company.

Okay.

Not really related at all.

Nice. And how'd you decide to get into the game and how did it all go down?

Well, one of the best things happened to me. And That's February of 2011.

The company, I mean, it was a big company, a bunch of people. They laid off about a quarter of the staff, me included. And it was really, it was good because it forced me to do something different instead of staying in the same job that I didn't like for 40 years. Yeah, I was traveling. I mean, I'm married, three kids, young kids. I was gone two weeks at a time. It was not good.

Gotcha. Gotcha so. So you got laid off, you had to figure out what to do and decided real estate was the way to go.

Yeah, I mean, I had a little bit of experience. I had a condo that I rented out. You know, we lived in, moved, rented it out, had a duplex. We lived in one side, rehabbed it, moved in the other side, rehabbed that, rented out, you know, the other side a little bit. But that was pretty much it before that.

Gotcha.

It was that technically, like your first deals in real estate was just kind of accidental, just like that.

Yeah. And I guess, I mean, talk about tips. One of the first tips is your average real estate agent. And I mean, nice guy, great guy, meant well, but didn't really have the investor mindset. So he said, hey, you know, when you move, just rent this place out and the rent will cover the mortgage payment. And that was the end of the conversation. So. Oh, great. Sounds good. And no, that wasn't good.

So you kind of went forward with following that advice, so to speak, and didn't know any better of it. And ultimately, well, living there, obviously you saved on. You took a chunk out of. Out of some of the cash flow by renting the other side eventually, but as a deal, it was not a good one is what you're telling us.

Well, I was talking about the condo. Yeah. Next.

Oh, you're talking about the condo.

Yep.

Oh, goodness.

Ignore Josh. He's drinking.

As we said.

By the way, really quickly, as you mentioned that, and I do want to plug this amazing guide that we put together, which is the. I think it's called Something to the Effect of the Ultimate Agent's Guide to Working with Real Estate Investors. We'll put a link to it in the show notes@biggerpockets.com show38. I believe.

It'S all about if you're a real estate agent or if you're an investor and have agents that you work with, how these agents can better understand investments. So if you know any agents, make sure to send this thing to them because we don't want any more of that happening. That's not good.

And I'll just piggyback on that article. Great article. We can talk maybe more. That's more up to date on the story, but I use that with agents and it's great. Especially how to really calculate cash flow. I mean, that's what we're talking about right there. Right.

And that's just it. A lot of agents just don't know. So I had an agent one time, kind of unrelated, but he told me that I was the cause of, like, that I was contributing to the cause of the bad economy back when the economy was bad, that I should, because I wanted to offer low on some property. And he told me I need to raise my offer because I'm hurting the economy. Like, me personally, I'm gonna help the economy by paying tens of thousands of dollars more.

Wow. Yeah.

I don't actually work with him anymore.

But you didn't know that you were buying for Blackstone?

Yeah, yeah, yeah. I think he wanted me to. Yeah. Single handedly turn the economy around. But, you know, anyway, so, yeah, I definitely. I do want to talk more about that working with real estate agents, because that's actually. Travis, how you and I got connected was. We were talking in the private message system about that. So we'll hit that up because I know. Yeah. Like you said, that comes later in the story. So duplex, you. You bought the condo followed by the duplex. Did the duplex work out better than the condo then in cash flow wise?

So a lot of lessons learned there. We lived in one side, inherited the tenants, and, you know, big mistake. Right. We just made a ton of mistakes there. But so the tenants there was just kind of pay whenever you can for the previous owner.

Nice.

And so we just started headbutting with them right away. And.

If someone wants to live in one side and rent out the other, great. That's good for them. For us. Boy, you know, we couldn't use a property manager because we were living on one side. They wouldn't manage just the other side. So you really have no escape. Right. I mean, you're living right next to them, so any problems, they're. They're at your door.

Yeah.

And that was a long, drawn out process getting them out. And I mean, police were involved.

Nice. Hey, man, I've been there. I've been there. So that's. I think most. Most of us have. I think. But, you know, so. So you mentioned living next to your tenants. A lot of our interviews have been with folks who've. Who've done that.

Yep.

And in many cases, you know, they say it's fantastic. It's a great way to train. You want to do it because that's how you learn how to be a landlord. I'm a little skeptical of it. I. I think in theory it's great. Um, it's a good way to kind of train. If you have the right people in there. If you have the wrong people, as you've experienced, it can be an absolute nightmare.

Yep. Yep. You got it. Yeah. Made mistake. I mean we over. That's one of the things too that in my mind kind of blurs things is when you're living there, you're rehabbing it to a different level as a rental.

Yep.

So when we ended up doing the numbers, we had over rehabbed the whole place, both sides. And the cumulative effect was, you know, we had way too much in.

Yeah.

Yeah. And then this was 0708, so our arm shot up. We had an adjustable rate mortgage.

Yep.

And so thankfully, I mean it was, it was really a blessing. We got out of it, you know, broke even, got to move on down the road. But yeah, a lot of lessons with that one.

And that's what's cool about that though is that you did something, you know, you move forward, you did it. It didn't work out necessarily the way that, you know that the TV shows make it look out. But yeah, I mean, you didn't lose money and you got a ton of lessons that have probably helped you out since then. Alright, so after that, then you got rid of that property, you sold it, you, you know, broke even like you said. I guess what came next, that was when you saw the job, Correct?

Okay. Yeah. Right. So I was working at that company and then February 2011 laid me off. And I mean, I was so excited. I remember calling my wife from the hotel lobby saying, this is great, they fired me. Laid off, whatever you want to call it, I mean, I didn't do anything wrong. It was just cut back. And so I was going to school for accounting at the same time online. And I remember, you know, I kept going through those classes and studying, but I just, I just didn't really feel like I wanted to keep going and go work in downtown Portland as an accountant.

Yeah.

And so I started going to seminars, every real estate seminar I could find.

And reading books and just kept doing that, taking people out to lunch that had any kind of real estate investing experience and asking them. I mean, I stopped the guy that was driving to the apartment complex by our duplex and he had a nice car, didn't belong in the apartment complex and turned out he owned the place and took him out to lunch and just ask questions that like if I.

Could jump in there. I mean, that is so. That is so cool what you just said there. Because most people don't, I mean, most people think about, I'm gonna take somebody out to lunch. We hear that all the time. Right. And you think of like taking out like, I don't know, the the big, huge investors that are maybe, like, training or teaching or the coaches or the gurus, whatever. But just. Yeah. Finding the guy down the street who's the landlord. I know. That's how I did it. I became friends with my best friend's landlord, and he became my, like, biggest mentor, like, for the last seven years now. And. Yeah. So, yeah, quick tip there for people. Yeah. Just find out who the neighbor's landlord is and get to know them.

And Brandon. Brandon really wants you to take him to lunch. So, you know.

Yeah. Come out to Monte Sano, Podunk, Washington.

And we'll get two hours from the nearest Apple Store.

Two hours from the Apple Store?

Really? In the middle of nowhere? Yeah.

Yeah.

Anyway.

Yeah.

So anyway, moving on. I just had to throw that in there, so. All right, let's keep going with your story here. So you started going to these seminars, taking people out to lunch, learning everything you could, books, what next? How did you kind of get into your first actual, like, deal then?

Yeah. So, I mean, I know we're not big on. On gurus and the hype and everything, but for me, it just kind of shortened the learning curve for me. You know, I got some coaching, got some mentoring.

I got a HUD house in Mobile, Alabama, and got an offer accepted.

Why there?

I just started shotgunning offers in some different states. And, you know, again, I'm not sure this is what I do if I was starting today, but it's what I knew how to do. And so is this house, Crest Haven Road. It was listed for 35,000 bucks, and I got an offer accepted for 7,000.

That's a little reduction there, huh?

Yeah. Yeah.

Had another real blessing. The agent that was. That put the offer in for me was just superstar. One in a million agents. Family had a property management business. They managed several hundred properties of their own and some for some other people. And he'd been buying and selling at the courthouse for years, so he knew investing. So he said, hey, I can find a buyer for you for this deal today. And just a wholesale cash buyer. So that first property, I got it for seven. Sent in a $500 deposit to HUD, and we did a back to back or simultaneous closing, and they just sent me the difference, sold it for 17,000.

Whoa.

And they just sent me the difference. So all I had out of pocket was 500 bucks.

Nice. And how long did that take for him to find you, the buyer and you guys to do the close?

Well, he had a buyer within a few days, But HUD takes 30 to 45 days to close, regardless. Okay.

And I wonder if that's going to change now that the government is closed for business.

They already closed today, wasn't it?

Yeah, I think today they're officially. So I heard they're laying off a bunch of their. And I mean, this is going to be old news to people, probably when they listen to this podcast, but I heard they laid off a bunch of their staff and everything's going to get slow. Which is another reason I wanted to talk to you today, Travis, because I'm working through a HUD deal right now, too. So I know you have some HUD experience and we'll get into that, but.

So what do you think? I guess. How did that actually happen? I mean, you put an offer into hud, and this again, with my experience of working right now, HUD is being very strict on what I have. For example, how did you get proof of funds? Like, HUD wants to see proof of funds, I assume. Or they asked me anyway, like, how did you show them proof of funds? Did you just give them a bank account or.

Yeah, so I was starting with my own money, which is, again, another reason I was offering in. In Mobile, you know, because they got cheap houses.

Yeah.

So I figure even if I have to close on the place at seven grand. Okay. So, yeah, just copy my bank statement. Okay. That was it. Okay. Yeah.

I just think it's weird. I mean, like, it's cool, but weird just to think about, like, a place you've never been. I don't know if you've been there, but, like, you don't live there. You just shotgun an offer at this random place. Like you said, you don't know if you recommend that, but I don't know if I see any major downsides other than wasting, you know, an agent's time. If you're not prepared to close, if you didn't have that money, I could see that being an issue, but. No, that's cool.

I worry about that. I mean, I think, you know, I don't know where you heard to do that.

I think just blindly making offers on property and, you know, podunk anywhere because it's cheap is probably something that I'd strongly advise against. You know, not having infrastructure, not potentially not having buyers. I mean, if your agent didn't come through for you, you. I mean, you might have been left holding the bag on this thing, and who knows what would have happened? Right. I mean, you're. You. You probably would have been stuck.

That's right. The only thing I would say that Mitigated the risk for me. Was the, you know, 7,000 the cost of the, of the price.

Yep.

But I agree with everything that you said. Right now it would be no big deal for me because I've done it a dozen times. But yeah, the first one I probably would have been just throwing my hands up saying, what am I going to do now?

Since we're talking about hud, why don't you fill folks in here? What is hud?

Why are people searching for HUD deals? Why are there opportunities with these HUD homes?

Well, HUD Housing and Urban Development is just a loan, an FHA loan that they took back. So, you know, if you go to the courthouse, most of the bids end in a credit bid. The lend, meaning the lender just takes them back and then they're hud, they're a HUD house. And just like most things the federal government does, they don't do it. Well, in other words, like, I mean, marketing everything that's going to be a.

Treatable topic for this show. Most things the government does. Was that the word they don't do well anyway?

Yeah, yeah. So which works to our advantage because they don't do a good job marketing it. They generally hire the lowest performing agent in the area who just expects to get paid for doing nothing. So the property, the nice thing about them, I mean, there's a lot of things about them that lend themselves to being good for investors. They do kind of an inspection. It's only as good as the guy that looks at them, of course, or the lady. But they give you more than just what you have usually, which is nothing. So they'll check out, you know, the roof, the maybe electrical, plumbing, stuff like that. Depending on whether utilities are on. They make up a little report for you, they take pictures, they tell you how much they think everything is going to cost to fix. I mean, again, really, really basic, not final number type of stuff, but they give you more than you'd get normally. And each place you can bid on it daily. So it opens and ends at midnight.

And where would you bid on a HUD home? Where does that happen?

Hudhomestore.com hudhomestore.com does an agent have to.

Do that or can just an investor without a license do it?

Yeah, agent.

Okay. And do you have your license? I meant to ask you that earlier. Okay.

Nope.

So your agent goes on bids for the house and if you win it, great, you get to, you know, close on the property. Now I know there's something. Can you explain A little bit about, like, they don't always open it up for investors right away, right?

Oh, that's right. Yeah. It's like Fannie, you know, home path, first look or something they call it. But yeah, it's 30 days usually.

Yeah, they make it. They give it to homeowners first.

Yes.

Got it. So anybody can go on. I just pulled it up while we're sitting here and pulled up Colorado, and there's a list of all these exclusive, extended. There's five pages of properties available in the state of Colorado. And essentially I would just find one that I like and call an agent and say, hey, this looks like a deal. Let's put some offers in. Now, what do you typically offer at? Are you getting significant discounts below what you would pay for, say, an REO or other types of properties, or is it pretty much similar?

It's a good question. One of the books, probably the best book I've ever read, real estate investing, is Flip, one of the Keller Williams, Rick Valani.

Is that who it is?

Yeah, and millionaire real estate investor. And they talk about, you know, the funnel. So I was doing the strategy of making a ton of offers and then seeing what comes back as opposed to doing a lot of due diligence up front and then, you know, making fewer offers. So.

A lot of offers means low offers, right? Yeah. So that's. That's what I've done with the hud. Just make low offers, see what comes back, and then conduct the due diligence that comes back. I mean, a counter. What you get a counter on?

Do you know, are there any requirements for HUD homes? Like, the reason I asked this a guy that the HUD home I'm working on right now, which I'm sure we'll talk about, but they said that if I don't fulfill, like, if I don't buy, even though I have a. I think I even put a financing contingency in there. They said it doesn't matter. I lose my earnest money. Have you seen that before? Is that normal or is that just with me? They said they won't. Like, they're gonna keep my earnest money no matter what because I'm an investor.

Have you heard that? They just don't like you.

It's the beard.

They clearly know what they're feeling. Yeah, that's funny.

Yeah, that's it. Investors. You're not getting it back. Just forget about it.

Yeah, that's what I said.

Forget about it.

So it is definitely. You can't just. On a normal wholesale deal, you just put on all these clauses like, oh, I'm gonna, you know, weasel clauses. They say. So with a HUD home, you kind of have to know you're gonna get it right.

You're not going to sign it. Yeah. You're going to close on it. You're not going to close on it. And a close on it could be simultaneous, which is basically an assignment, right?

Yep.

Yeah.

So real quick, for those who don't know, why don't you just kind of explain the real basic. What is the difference, I guess, between an assignment and a simultaneous close or a double closer?

Yeah, sure.

I mean, in full disclosure, I've never done an assignment, but I know, of course I understand it. That's where you just get a property under contract and you would just put, you know, my case, Travis Daggett and or assigns, and I tie it up for 7,000, I go out and find a buyer for 17, and then I just assign the contract to them.

And probably I wouldn't give the seller 500 bucks. You know, I'd probably give them less.

And when do you get paid when you do that?

Well, you get paid when you assign the contract to them. So you get paid from the buyer that. From the end buyer. They're just paying you a fee and.

You'Re not doing that title or anything. You're just like, hey, at a coffee shop, here's the assignment. Put your name in, gimme a check, cashier's check.

And again, I mean, honestly, I haven't done it. I would probably, if I was the buyer, I'd probably want to do it at the title company.

I've heard people doing it both ways. Yeah, both ways. And yeah, just. I think a lot of that is the relationship. If you have a good relationship with your buyer, they'll probably find giving you the check, but they're gonna want to make sure it closes. Things go wrong.

Absolutely, absolutely.

So, but then on the other hand, a double close or a simultaneous close is.

What would. What would that be?

So if you use the same title company or closing attorney, then really, if they've done it before, then it's no big deal. So they're just saying, hey, look, I can see that Travis is buying it at 7, and I can see that we have a buyer here. They already. I have everything from them and they're buying it at 17. So clearly Travis doesn't need to send in $7,000. He can, you know, we can send him the difference between the 17 and the 7. So that's, that's an ideal simultaneous closing where they're just sending you the difference. They're closing on one, then closing on another. Yeah.

Now that's the ideal. What, what about the non ideal?

Well, there's one where the buyer didn't. They want to use their own closing attorney. So it really would have been a simultaneous closing, but they said, hey, we want to use our own. So I mean, it took a day or something.

Now, do you have to pony up the cash? And how do you do that if you don't have it on hand?

Yes, you do have to pony up the cash. Boy, I haven't, haven't had to do that, but I, you know, I guess you'd use a transactional funder.

Yeah.

You could find somebody.

Yep.

And pay him 2,500 bucks. Yep. To do that.

Yep. So there, yeah, there are transactional funders. That's kind of the job. That's their role. You know, you need that super, super, super short term cash and it comes at a very high price.

Yeah, yeah, yeah. Right on.

Oh, very cool. So now, so you're wholesaling these HUD homes, obviously, which is very cool. Do you have any, I guess, tips for dealing with HUD as an investor? You know, what would you say, you know, are there headaches that come with putting offers on these HUD homes? Anything that people need to look out for or, you know, jump in a little bit here?

Yeah, yeah. I mean, well, there's all kinds of stuff. I mean, there's, there's books on it and there's gurus that have done training on it.

I'm asking you, though, somebody, you know, not, I'm not asking the guys who aren't doing it, asking the guy who's actually doing it.

Right. Yeah, yeah. I mean, there was one the other day that I guess thing to watch out for is we've seen the inspections go down in quality, the BPOs. So you'll look at an amount of repairs needed and maybe it says a few thousand bucks and you're thinking, oh, all right. It's just paint and carpet. This place had a hole in the ceiling in the kitchen. I mean, it just looked, I mean, it looked like aliens when they go in there to rescue the people. And it's just, you know, I mean, it was stuff hanging out all over. So somebody went in there and said, yeah, just, you know, it needs this and that. And they didn't even mention the hole in the ceiling. Nice.

Nice.

Yeah.

So that is a concern if you're, if you're wholesaling A house now, like virtually, like from distance, like you were doing. How do you deal with that?

Well, so, I mean, first of all, you're making the law for see what you get a counter on. Then when you get a counter, just like you do any time because your first offer shouldn't get accepted or it's too high, Right?

Yep.

So you get a counter and then you start checking the house out. So then you run comps. Then maybe if you got a contractor or two or three that you know there, maybe get them to check it out, say, ballpark what they think, you know, get an agent to give you comps. Then you say, okay, now how much can I pay for it? And then you can go back with a counter or new offer.

But of course, you can't do that if you're making an offer at, let me throw a dart at the wall. Oh, yeah, there's a property and it's cheap. So in that case.

Even though you potentially are putting a low ball offer in, I mean, that risk level is really high.

Yeah, yeah, I just used it. I kind of built my team as I went. So when I got that offer accepted, then I built everything around that. And as a result, most of the deals I've done have been in mobile.

Okay. So you basically decided, hey, I got this first deal, I'm going to stick around.

Yeah. And that agent just turned out to be a great partner.

Right on. That's great. That's great.

So Brandon had said you had mentioned to him something, your quote, HUD strategy.

Can you talk about that? What's your HUD strategy?

The HUD strategy is just making those low offers, a lot of them, and you can make them every day if you want because it begins and ends, the bidding period begins and ends at midnight. So you can make an offer and the next day you can make a little bit higher offer and a little bit higher until you see what they counter at and they'll tell you, hey, this is the minimum we'll take. Well, it's not really the minimum that they'll take because we've seen them say the minimum we'll take is X, and then the next day they take an offer of ours lower.

Interesting. So are you saying, let's say I see a property listed, I'm going to pull it out in Detroit. We like. I wouldn't bid there. Well, many people wouldn't, but Detroit, say it's 10,000 bucks, there's a property in Detroit and you think it's worth, say, $2,500 and you put an offer at 2,500 bucks today and they say no, they'll come back and they'll say our minimum is say $9,500. And the next day you go in at 2,550.

You can keep beating them on the head. Now your agent is continuing to put in offers for you at these low ball prices.

Yeah, but when we get a counter, there's no need to keep making offers because we know what the minimum they'll take is.

But you just said that that minimum is not, not legit. Right? I mean, you're, you're still under. Under. So, okay, so you came at, at 25, they say. Well, they say 95. What, what's your response at that point?

Well, we know that we're not even close because we know they'll take about another 15, 12, 9% off somewhere in there. Okay, so we know, hey, we're not even close. We won't, we won't bid on that until they drop the price.

Got it, got it. So you'll watch for them to drop on that property and hopefully you get it within range of that 2,500 that you think it's worth.

You got it, Got it.

Yeah, Got it, got it, got it. Cool.

I wouldn't bid in Detroit.

There's nothing wrong with Detroit. And they have a cool RoboCop statue that they're putting up. So for all the Detroit listeners. Well, actually you guys are all gone because I bagged on you so much, but yeah, yeah, Detroit.

Yeah, I heard about the RoboCop statue. That's a big attraction. It's kind of cool.

Well, I'm wondering, can you kind of walk me through the process? I mean, real basic, like if I wanted to wholesale at a long distance like you're doing, if I wanted to pick a random, you know, a market, I do my study and I realize where there's, you know, low priced houses and people are paying more for them, I guess. How does your typical day look? I mean, what do you do as a long distance wholesaler? I mean, you would just start making offers. Are you getting on the phone with people? Are you flying out there? How does that. What can you tell me about your day?

Well, my typical day is changing a lot because I'm, I'm just finishing up the four hour work week.

Nice.

And I mean, talk about a. Just a game changer as far as the way you think about your business. Yeah.

But yeah, I mean, back when I started, I was just making a ton of offers every day on HUD properties, finding the listing agent, making them directly to the listing agent.

So they're going to know about the property. If anybody's going to know, they're going to know. They may tell you, hey, you know, I showed this to this person. They said they'd pay this. Or, you know, they're going to have an idea maybe of what you could sell it for, at least to a retail buyer, if not investor buyer. And out of those dozens and dozens of agents, you will find, eventually you'll find that superstar that has his finger on the pulse of the investor market and could bring you a cash wholesale buyer, too.

Yeah, that's true.

I mean, that's a really good idea. I mean, like, you find that good agent, they can work both sides of that for you. Now, do they get it? Do they get a commission then off of the. Because you're doing a double close, so you're reselling it. Are they getting a commission on both those sales or how do you work that?

Yeah, that's a good question. And a good agent will ask to be paid well, right, for that. Yeah. So. And this guy is a good agent. So he said, hey, look, I want a minimum on the front and I want this on the back. But, hey, you know, that was fine. He said, I want to make sure I get 1000 on the front and 2000 on the back. Okay, yeah, that's fine.

And that's all up to. All up to negotiation. I mean, it's between you and the person. You want to make them happy. You want to keep them working hard for you and you working hard for them. I mean, again, like, it's like last week with Aaron Mazzarello, he said, you know, real estate is a relationship game. I mean, that this whole thing is relationships. Right. So, yeah, that's key. So what about other than hud? How HUD Homes are you only doing hot homes, or have that just been what we've been focusing on in this conversation?

Yeah. So then 2012, I mean, it was. It got to be more regular and predictable. You know, there was a HUD deal in there where I netted about 80% of my previous year's salary with my job.

So in a single deal.

Yeah, so that was disclaimer. I mean, I wasn't making a lot.

Yeah. I was gonna say, what's your salary? Because you were like a rich programmer. You know, I don't engineer. You know, that's. That's pretty sexy.

Made 200 grand in that wholesale place.

He was an accountant.

Yeah, right. But that's good. You know, keep your expenses low, especially when you're starting. Yeah, it really, really helps that my wife's not going out and, you know, buying Gucci stuff. So.

Yeah, so that was, that was the one that, that gave me the belief. I thought, wow, this, you know, I could, I could do this. It wasn't beginner's luck. I could do this and I could live off of this.

So we are getting them accepted about once every three weeks. It's pretty predictable.

Do you have a ratio on how many you were offering? Like, like, were you offering getting 1 out of 100 or 1 out of 20?

Yeah, probably 1 out of a hundred.

Okay.

Yeah. So then we started buying them at the courthouse before HUD got him. So we, we'd see deals coming up. And again, this is in Mobile with a superstar agent who already had the team in place to do everything that you need to do for a courthouse deal.

Okay, let's actually talk about that. Courthouse deals. Cause we haven't really focused much on the podcast with that. So what is that? I mean, let's go real, real basic. How do you buy it? A courthouse.

Okay, so a courthouse is this place where you probably spent a lot of time as a kid. Brandon, thank you.

Thank you, Josh. I don't think you're being interviewed, though. Thank you.

Have they expunged those records?

No, not yet. We're working that.

All right, so courthouse deals. Yeah, tell us about them.

Yeah, yeah, courthouse, yeah. So.

The borrower, right, they're in default. So they haven't paid for three or more payments. Right. So they're in default. Or Liz Pendens. And so then the lender says, hey, we're going to foreclose on you in 30 days. And they put a notice out in the local paper. And then depending on whether it's judicial or non judicial foreclosure, the state, of.

Course, is going to be judicial or non judicial.

Right? Yeah. Just means the process and how long it takes. Judicial takes way longer. And then that sale is going to happen at the courthouse, they say on the courthouse steps, but it's going to be wherever. You know, they have this regular place and the. I mean, there could be hundreds of them depending on the area. But the opening bid would usually just be announced right before the sale. So maybe the day before the sale. So that's the game changer, right? What's the opening bid? Because that's going to eliminate most of them. In other words, opening bid will not be. I mean, there's not enough equity Right.

So where do you find out about the opening bid?

Whoever the trustee is for the sale. So they hire an attorney to conduct a sale. Or we've seen auction.com, they've been hiring auction.com to conduct a sale. Whoever it is, they. They will release the opening bid or not. It's up to them.

Gotcha.

Sometimes they won't even tell anybody.

Gotcha.

Do you call them up? I mean, like, do you call the trustee up and say, hey, what's the opening bid? Or do they put it online?

Yeah, they release it list. You can, you can pay for services that'll go out and gather all that stuff and, you know, send it to you. Okay, so opening bid. And then you go there and you bid just like what, it sounds like an auction, only it's just some guys out there with flip flops and tank tops.

Just, you know when someone just reading a bunch of. Bunch of stuff and then they'll just say the property price and, you know, again, most of them get canceled or postponed or just go back to the lender because it wasn't a deal. But the ones that are a deal, you know, you can get some great, great deals on great buys.

No, go ahead, Brandon.

Well, I was gonna say the downside is you can't go and look at the properties ahead of time. Correct. I mean, like, you can't get inside the properties ahead of time, usually. Right.

Right.

Now, if they're vacant, I mean, you know, realistically, if they're vacant, you know, a door's open or a windows broken or whatever, then you go and you get in. But if they're occupied, if they're occupied now, your maximum offer goes down. True. Yep. Yeah. Because you don't know what the inside of that place looks like.

And I will say, you know, we definitely don't encourage people to walk into the open door of a vacant property or trespass on properties that are not theirs. And we strongly, strongly warn against doing that because you can actually get yourself in trouble.

You'll end up on the other side of that courthouse.

Yes, exactly.

But anyway, all right, so you've got these properties, they're vacant or not vacant, and.

You may not be able to see the inside.

That's right.

And so that makes doing due diligence a little bit more difficult. So obviously you have to bid down, assuming that there are problems.

Yep, yep. But haven't you guys found that the outside of a house, the yard, etcetera, can give you a good indication of the inside?

Absolutely. Yeah.

Yeah. So there's some of the due diligence. Yeah. And. Yeah. And the rest of it, you're just going to have to build into what you're comfortable paying and what you think it's worth and what you think the repairs are going to be.

So. So let's talk about, like, I'm standing there, say it is on a courthouse steps, whatever, wherever the hell it is. Right. So we're there. I'm there with 25 other people. And.

Are these things getting into just crazy bidding wars? I mean, what can people really expect? Somebody who hasn't gone. And by the way, a tip that I've got is if you've never been to one, you need to go and just go and watch. I mean, don't bring your wallet. Just show up and the experience is one you don't want to miss. But maybe you could tell us a little bit about what that's like. Yeah.

I went to one in a number of them in Mobile, and, you know, I've been to here, where I live in Eugene. But that's a great tip, what Josh said. Great place to find buyers, a place to find private lenders.

And just go and watch and you'll see other people that are just going to kind of watch. And I don't know about a lot of markets, but in mobile, there's only two buyers when it comes down to it. You get a few random people, but it's only two guys. The guy I've worked with and the other guy. And that's it.

And that's all you really need. You don't need a million buyers like we've talked about. You don't need a thousand buyers on your list.

You're talking end buyers.

Right.

You're not talking about there's two people buying at the courthouse steps. You're talking about there's two people buying the properties from the guys who get the properties from the courthouse steps. That's. If that's confusing to anyone. It was confusing to me, too. But you're talking the. The end buyers for the whole.

I'm talking about the bidders.

Oh, I'm way off.

There's only two guys.

Oh, yeah. Everybody giving me eyeballs here. And I was totally on the ball, Brandon. Okay, so wait, well, you're. You're the one. You're one of the. The guys, obviously.

Right.

And so there's literally two investors in Mobile who are buying property.

Yeah. So half a million after the show.

Half a million population, you know, and really, you have two buyers now? Part of that is Legal stuff. I mean, there's some guys that got in big trouble because they were. They were bid rigging. In other words, they were going beforehand and saying, hey, look, you bid on this one, I'll bid on that one. And those guys, I mean, they're. They ended up in prison.

Nice.

So that cleared out. Cleared out a bunch of the competition.

Wow, that's. That's crazy. So, all right, so the two of you guys are literally punching each other in the face at every auction, and there's like five people just gawking at it. Is that kind of what it's all about, or are other people not bidding? What. What's the deal?

Yeah, not so much the punking punch in the face, more the technique. I told you earlier. But, yeah, it's just. Yeah, they're bidding and I mean, everybody's got their own set of buyers, so they may have more landlord. Landlord buyers for the low end, section 8 stuff. And, you know, maybe the other guy has more buyers for the. Maybe some of the higher end stuff. And sometimes they're crossing over and competing.

Okay, well, really quick, that's actually an interesting thing. You go to the courthouse, say you watch for a couple of weeks, and you see who's bidding on what. Then you obviously now know, hey, this guy's always going to bid on the Maltese. This guy's always going to bid on this. And you find the niche where there's not a lot of competition and start working it.

Yeah, you got it. Yeah.

That's awesome. I don't know what. Nobody's ever. I've never even heard that before. The suggestion of, you know, meeting your buyers and your. I mean, I read a lot of real estate books, and I've never heard people really advocate that. Go to the courthouse, bring your business cards, and just network. And I love that idea.

Like, it's a good idea, but if you read BiggerPockets, you would know about it.

I've heard of this site Bigger Pockets before.

Yeah, the 9,000 word article. Sometimes it's hard to get through.

Thank you, Travis.

For.

Not for me.

Yeah, no, but it is a. It's a very good. It's a very good piece of advice. Yeah, yeah, yeah, that's. That's awesome.

I only went to one ever in my county, and there was like, two guys were there and one was like a lawyer down from Seattle. He drove three hours to say. I don't know what the word he said, but he had. He had to say something out loud at the courthouse steps and. And then turned off and walked. He drove.

Yeah.

Two hours down or whatever it was, and then said two or three words and drove back. And he said he does that every week, like, for. To random places. I don't know what it. Like, he has to, like, file something. I don't know what it was, but anyway. And then the other guy was there, was watching. So nobody bid on anything at my courthouse. Nothing. It was just sitting there. And I thought, man, I really should be taking advantage of this. But I don't. I don't know it. Hence the reason I'm putting these questions to you like this down. Because I want to know I'm missing out on something. There's an opening in my area. So anyway. All right, so you put an offer. You're bidding with this guy, and you tell the auctioneer that you're gonna pay 40,000. Nobody else tops you. And what happens next?

So we. So we win the bid. Now you got to fund it day of. That's a big. I mean, it's. I guess I'd say hurdle. But it's good because it eliminates competition. You have to fund it that day. Cashier's check.

That'S it. So if you use. And that eliminates most private money, hard money, they're going to want to see clear title. They're going to want to be on a note and mortgage. So what we did is we put together a prospectus for private lenders along with a video. It said, hey, look, this is what we're doing. And we're basically in need of line of credit. So it's really not going to be secured by a specific property until a few days after we pay for the property and get title? Are you okay with that? Some are and some aren't. Do we just take the ones that are and we have to have that cash the day of to be able to pay for the property. Then we can put them on a note and mortgage when we get the title for it.

Gotcha. Gotcha. You mentioned something. You talked about clear title. When you go and buy a REO foreclosure from the bank, those come with a clear title. So you know, you're getting property. You don't have to worry about secondary liens or anything like that. However, at the courthouse, that's not the case.

Let's talk about that. And how do you learn about what's going on on these properties? Because I remember when I first started investing, I heard all these horror stories. You'd have these investors who were like, oh, my God, that's A screaming deal. I'm going to go, I'm going to go, I'm going to get it. And they get it and they get it at a great price. A really, really good price. Except it's not a really, really good price because it doesn't take into consideration all the liens on the property that they now have to take care of. For anyone listening, pay close attention to this because.

This is the biggest danger to bidding on properties at auction other than not being able to see them. Are these liens? Talk about those.

Yeah. Again, just back to what Brandon said. Relationships. So a title company, and specifically the attorney there who can do a prelim, a preliminary title search or report for us. And frankly, most of the time if there's stuff that he just says, boy, I'm not sure about this, but anything like that, we just say, leave it alone, we're not going to do it. But most of them, he says, yeah, yeah, looks fine. Now, I've never had a problem. The agent I'm talking about, Alabama has never had a problem. He's been doing it for six years. But I'm sure somebody could if they didn't know what they were doing and have that good relationship. So that's how we deal with that. We haven't had a problem yet.

So what does that mean? So you find a property that they do the preliminary and maybe they find a couple liens on it. When you say there's no problem, does that mean there's no liens?

Yeah, most of them we do are no liens or it's a mechanics lien. Look, they put in H Vac and it's seven grand. We say, well, that sounds crazy. Seven grand for H Vac for this little place. So if we have time, right, we can go and say, hey, you know, will they take 1000? We see if there's, if there's some way to deal with that. If not by the sale, we let it go. And if the sale doesn't happen, it just goes back to the lender. We can still go after it.

Yeah, yeah. Okay. So ultimately it's up to you to you're doing some underground due diligence before you even get to the auction. You found out about these liens, you've reached out to whoever's put the lien on the property and you try and negotiate it. And once based upon that, then you proceed forward or you don't. Yep, got it, Got it.

Did you say, do you pay for those preliminary title reports or is that just relationship free, like relationship Based.

Yeah. Relationship. Yeah.

And I guess you never get. You never know that if you can get that unless you ask. So again, I'm gonna call up. Last week there was something I had to call the title company about, and I'll do it again this week, so.

Oh, yeah, yeah. Title companies really need. Are kind of the best friend of investors. I mean, you really want to be in with those guys because they'll. First of all, as an agent, they love you. They love agents. Agents can ask title for anything. They'll buy you lunch, they'll buy you dinner. As long as you keep sending them business, they're happy with that. But same for investors. If you're going to bring business to a single title company, they're going to be very happy to work with you. Just be honorable. Don't shop to 20 title companies. Find one that you're happy with and work with them and be solid and you'll get everything you need.

Yep, that's cool. The courthouse is. I mean, it can be a good source of entertainment, too.

So it's not just, oh, yes, sounds like there's a story. So let's. Let's hear it.

We go down there, and there's, this place. And it was one family member foreclosing on the other family member.

Oh.

And so they're standing off on two sides, and it's, you know, the mom and one of the brothers and the other brothers on the other side. And this tiny little lady's. She's crying. I mean, crying. The auction. Not crying, sobbing, but just reading it off.

And so I'm like, this guy's evil. He's laughing at the old lady crying. All right, we're talking about the crier. We're talking about the auction runner. Little lady.

Yeah. So she's reading it ends up not. Not, you know, it goes back to the lender. They're just. So we're there and. And, you know, my partner goes up, says, gives him the card, says, hey, you know, if I can help you out, just let me know. He says, I've got about. I think it went for 120 or something. He says, I got about $80,000 cash in a duffel bag in my trunk. And we're just like, what?

What? So it would say, well, sorry. I mean, the sales already happened to me then, so it's not how it works. We're at his office later that afternoon. He calls up and he says. He says, I found a friend to give me another $15,000. He said, so I took all that cash and I just laid it all over my bedroom. And me and my old lady were just gonna roll around in it because we'd never seen that much cash before.

Nice. Yeah, you never know what you'll find that's funny.

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All right, so courthouse the process. There's a couple things to look out for. You make your offer. You've got to have cash in some way, shape or form. Got to be able to close on it. And, you know, once you've acquired those properties, then you've got to look at your exit strategies.

Are you wholesaling or holding these or flipping?

Yeah. So we've wholesaled them, and again, that's the same strategy as any other way you acquired them. And now we're at the part where I started making mistakes. Right. And. And that's stuff we like to hear here.

Yeah, it's good.

My first mistake was I started rehabbing. And I mean, I really didn't like. If I just read that book Flip, I would have. I would either not done the deals or done them totally different, but you don't know what you don't know. So I started rehabbing some of these. And my partner didn't have a lot of experience rehabbing either. In other words, the guy who's an agent, who bid on him. And.

We'Re not talking about moral, ethical, dishonest. We're talking about expertise here or ability. So he said, okay, we're going to rehab this thing. And I said, go for it. I had no. I mean, I wasn't looking at repair estimates. I was not interviewing contractors. I wasn't looking at pictures. I was not.

I was not giving them draws and then inspecting their work to release the next draw. And all those things that a good rehabber does, I was not doing. So, I mean, we had two that we went. Just blew the rehab way. Just in the stratosphere cost and I mean, it was bad. So a lot of. A lot of tips there specifically related to rehabbing.

Yeah.

So you lot. It sounds like you lost money on these guys. Yeah, yeah, yeah.

Lost money on one, was able to finally sell it. Took nine months. Lost money on that. And then the other one, man, we couldn't. I. And we ended up selling it with seller financing just to get it gone. And we will end up taking the full loss.

When the note balloons in a couple of years.

Yeah. So despite acquiring these properties at a good price, you still kind of ate crow. And that was all on just not getting those numbers right. It was all on the estimating portion of the puzzle. And, well, it sounds like, I mean, the releasing of the draw probably didn't end up screwing you up on the bottom line, but the estimation was pretty much the fatal blow here.

Yeah, yeah. The conversation was pretty much, how much do you think it'll cost to fix it up? What's this? And the end of the conversation was, how much did you spend? Was double. I mean, that was how it went.

So how do you end up spending double? I mean, and I'm not, you know, I'm not trying to dig in and make you feel bad. I'm just, you know, because I think a lot of people can learn from this. And I'm sure you're not the only one who's going to listen to this. Who's. Yeah, clearly Brandon's made that mistake before.

I think I've tripled my budget.

Nice. Nice.

Anyway.

Yeah, yeah, yeah. So how, you know, how do you. How does that happen? And how do you avoid it happening?

The name of the house. I won't say the name of the house, but it was also a woman's name. And my partner and I said there's no risk of us ever naming our daughters after that.

We didn't want to hear that name again.

But how it happens is.

Probably in the first place. You know, I doubt we even got repair estimates or bids or quotes from more than one contractor. I think we probably said, hey, look, John said he can do it for 25 grand. And he went in there and he spent 25 grand. And he was halfway done. He said, I need another 25 grand. So we gave him another 25 grand.

Yeah.

And then he said, okay, I'm done.

Well, how do you not let that happen? So how do you get to. Oh, snap. I just spent 25 grand and he's only halfway done. How did somebody prevent that? What do they do?

Yeah, so we would have got three, at least different contractors, and said, okay. So John still says 25, but here's Bob that says 50, and now here's Joe that maybe he says 45. So now we say, Whoa, 25 doesn't look. Doesn't look right anymore. Maybe we, you know, we're going to look at them line by line and say, okay, what are they each saying here? And then we're going to go back to our arv, our after repair value or eventual selling price, and say, okay, what do we need to do to get this. This price? And I think. And again, I don't know everything that we did, which is part of the problem, because I wasn't managing or somebody wasn't managing it, but I think we did a lot of things that didn't translate to selling it for more, obviously.

Gotcha. And I think that's, that's great advice, you know, on the, on the, on the bids, you know, that low bid, you know, is, especially in this case, it's, it's an outlier.

Right.

So if it were three bids, it was four, 40, 45, and 50. Okay. The low bid is a little lower, but less of an outlier than 25 versus the 40 and 45. So that's a big fat red flag for anybody. Yeah, we're all inclined to be cheapos as investors, but.

You don't want to go for that guy who's super underbidding everybody because there's something not right, probably.

Yeah. Yeah.

And, you know, I know this isn't, you know, interview Brandon, but if I could share a quick story of a lesson I just learned on the exact same thing that you just went through. So I remodeled this little house. I mean, tiny house, 350 square feet. It's a studio house. And got this contractor brand new. Never used him before, and he did really, really good work. But it took him three months to finish this little 300 square foot house. Three months. And the, the thing I learned is I thought, oh, a little project, whatever. It was only originally, I think a 10 grand budget somewhere around there. And what I didn't do is I didn't have periodic draws that were defined ahead of time. Had I said, when you get the flooring done, you get this amount. When you get this done, you get this amount. Because that would have encouraged him to go faster and to stay on budget. And then if he wasn't on budget after the first draw, if he was double, then, then I know he's going to be double the whole project. And we ended up about 50% over budget, which on 10 grand we spent 15. So it wasn't the end of the world. But, you know, that's five grand that I no longer have on that property because of it. So.

Yeah, yeah. Well, so on that. Right on, on the, on the draws between the both of you or, you know, Travis, because we care about him deeply. Yeah.

What?

You know, I'm going to go and do my first flip. I find a house. I get it. I got it. I'm good. Now it's time to start. I got the interviews. I found the guy that I want to do the job. The contractor. How do you arrange payment? What are you doing? Are you giving X amount up front? And then what do the periodic draws look like? What's your standard deal that you've been doing?

Well, the other piece of the puzzle is whoever is going to be selling the property or whoever is the expert. I mean, it could be. You could be an agent. They should be part of that conversation, too. So you're all looking at. Because a contractor may or may not have the expertise as to the rehab level for the neighborhood. So they may say granite countertops. The agent says, granite countertops are not going to get you a penny more.

Yeah.

So they're all part of that discussion. So you go through there and then you all agree, look, this is what we're gonna do. This is how much it's gonna cost. This is how long it's gonna take. And we're gonna give you 50% now and 50% when you're done, or by thirds or however, depending, you know, it's a bigger amount divided up more. And the way you're gonna get the next draw is whoever's gonna be selling it, we'll just say the agent, they're gonna take pictures and they're gonna say, yeah, this is what we talked about. Right. And all three of you are going to say, yep, this is what we talked about. And they say, okay, here's. Here's the draw all the way to completion. Yeah, this is what we talked about. This is ready to sell in this market for this price right now.

Yep.

Instead of, you know, the contractors doing his thing and whoever's going to sell, it's doing their thing and the investors doing their thing, you know that nobody. Nobody really knows what the other is doing.

Yeah. And like you said, I mean, it's the relationship thing, and that's where you find a good agent to work with. I love that idea of. I work really close with my agent on the same thing. I don't. I've never had him take the pictures. And I kind of like that idea. It's kind of putting the. Putting the requirement on him kind of makes me not the bad guy. But I don't know. I like that. But if I were to do mine over again, I'd probably do. I probably. I paid for materials. I just put it on a Home Depot card and get the 12 months, no interest or whatever it was. So I bought all the materials at one big chunk up front. I probably would have offered the guy a thousand dollars up front, you know, just so he could pay his guys or whatever, and then probably divided the rest over four payments, one each week, and he should have been done at the end of the month. Like, that's probably should. I should have structured it, but yeah, next time.

Well, there you go. There's two different to. Two different ways to divvy up, right?

Yeah.

All right, well, listen.

Let'S talk about a little bit more about your process, and then we're going to start speeding through it because we're starting to run out of time here. How many hours a week do you think you put in.

On your business right now? And I know you're reading the Workweek book, but.

What were you putting in? What are you putting in?

Yeah, well, I discovered again, from reading the book.

I discovered that I was spending a ton of time on stuff that either didn't make me any money or somebody else could do, but I felt like, man, I need to be busy, because when I had a job, I always had to be busy or else I got in trouble. So I got to always be busy.

And I've discovered, wow, I'm really. It really doesn't take too long to do the things that only I can do.

Yeah. Yeah. So what were those? I mean, what were those things? Some of the things that you. You cut out. Sure.

Email and phone calls. I mean, those probably the two biggest ones.

So you don't talk to anybody and you don't even email. Travis is a loner.

All you have to do is knock on his door like. Like we do at Brandon's house.

Yeah.

All day long.

Yeah. Right.

All right. So I mean, what portion of email and phone calls, what are we specifically talking about?

Well, most of it was, again, just thinking, I should get an email on this. I should get an email every time somebody comments on my bigger pockets comment or whatever. And it was just. I mean, there were days, that's all I spent on.

And it's a great idea, by the way. It's a really good idea. I mean, I don't know what you're talking about, but I think that's fantastic. Fantastic.

Right, Right. Yeah, There's a balance. But, you know, just. Just talking to. Spending all kinds of time with people. If, If I talked at a ria, you know, people would call, call and say, hey, I heard you speak at the RIA and it was just like they had no agenda for the call. And so it ended up being like a counseling session.

Yeah.

Yep.

Hey, and you know.

I think I know what you're talking about because, you know, I've kind of got a self policy which is, you know, if somebody's like, hey, Josh, let's hop on a call. I will never. I don't answer calls from people I don't know and I don't hop on calls. I just don't do it because inevitably my week is gone if I do that. So, you know, if I'm going to talk to somebody, I literally, they have to email me and tell me, what are we talking about? About what's the agenda, what's the point? Because next thing you know, you spent an hour on the phone with somebody and you're like, oh, where did that hour go? I just wasted an hour of my. I helped somebody. That's great. But I could have done that in two sentences responding to an email question.

It's very Tim Ferriss of him, isn't it, Travis?

That's right.

All that and I didn't even read the book.

I know.

Really?

You're already four hour work weekend.

Yes. Yeah.

All right, well, cool. Well, what other. Like you talk a little bit about you and I did before technology, things that you're using to kind of make your business run smoother, I guess. Can you share any examples of that?

Sure, yeah. So I used a virtual assistant to submit the HUD bids. And what I mean by that is the VA can go on to hudhomestore.com they can search according to my criteria, they can export the properties to an Excel and then they can come up with a list for the agent, you know, case numbers and bid amounts. So that's a lot of spreadsheet work. It's a lot of website spreadsheet work. Something that they can do really efficiently for a few bucks an hour.

Now that seems, I mean, if you're gonna be putting offers on these properties and you're gonna have earnest money on the line for all of them, to me it just seems a little bit nerve wracking to give that to somebody that you don't. I mean, that you're paying what, three, four or five whatever dollars an hour to overseas.

Yeah.

How do you know you're. I guess. How do you know what you're doing is correct, I guess is what I'm wondering.

Well, I did it myself first. I mean, I'm not teaching or giving the VA anything to do that I haven't done. So I mean, there's quite a few checks and balances in place there. And again, you wouldn't do this often, but if you get an offer accepted that you don't want, all you do is you don't send earnest money in.

Okay.

Yeah, yeah. So now I'm not saying do that a whole bunch because of course you're going to lose credibility with everybody. But that's the worst case scenario. You get, get an offer accepted and something, something's wrong. Then you just don't send the earnest.

Money because it's not binding till they have the earnest money. Right. Or at least not, not a deal until they get that. I don't know how you'd call that. I'm not sure how the legalities work up the hud, but yeah, you're not going to be out anything if you didn't submit the money yet.

Yeah, yeah, they just cancel it and that's, that's it. Okay. Yeah.

All right. Well, I mean that's very. That that whole thing is very e myth, right? I mean like you're making a system, you're making your whole business into systems with different moving parts that all work well together so that you can pull yourself out of that system. I mean that's again, comes back to the same idea we've had a lot of guests talk about on the show is the business aspect of running your business. And that seems to be one thing that you're, you're doing really well and you're improving upon. So kudos to you for that. So. All right, Lola, we gotta get moving.

Buy and hold.

Do you do any of that yet? Why or why not? And will you?

Yeah, good question. The answer to that is probably by accident.

If I was honest. So that right now we're holding properties that we wanted to either wholesale or fix and flip and we weren't able to.

Okay, so you have an alternative to your exit strategy which is buy and hold.

Yeah, yeah. So we've done, we've got a few that we did a short term lease option on to get around the 90 day anti flip for, you know, the deed restriction. And then like I mentioned the other one, we weren't able to sell retail so we seller financed it. Yeah. So it's on a note, but it's got a year or two year balloon.

Got it, got it. So, you know, I mean knowing how to get out of these deals is definitely something important so you don't end up holding the bag and not knowing what to do. Right.

You got it?

Yeah, go ahead. Sorry.

Oh, I want to. I mean originally my goal was and I want to keep that goal of holding one out of every 10 properties.

Got it, got it. Yeah. And really quickly we talk about exit strategies a lot in the Ultimate Beginner's Guide that if anyone hasn't read it, definitely check that out. It's BiggerPockets.com UBG for Ultimate Beginner's Guide. Also, just to rehash, this is show 38 of the Biggerpockets podcast. And if you want to check out the show notes, please do so@biggerpockets.com show38 with that, I think we should.

For the fire round.

Yeah, that's scary, Brandon.

Thanks. I try.

Yeah.

You noticed that Brandon looks like he's kind of got a Fu Manchu mustache and he goes down over the mic there like that. Yeah, yeah, right there.

Yeah, yeah, yeah. It's kind of awesome. Yeah.

You know, I once had a Fu Manchu. I. It was blonde back in the college, so I colored in with mascara. Mascara.

Okay, you really don't want to admit this in front of.

Oh, it gets better.

13,000 plus people mullet.

Raging black mullet that went down, I don't know, down the back. I mean, I did it on purpose. It was college. We do stupid things. So for the fun of it, I.

Didn'T have a mullet in college.

All the cool guys have molds in college.

Did you get it permed in back too?

It naturally curls. All right. I have naturally curly hair, but I did dye it black. Anyway, long story. I got my girlfriend who's now my wife during that time, so it works.

Your wife during the mullet phase.

I didn't meet her, but I asked her out during the mullet phase and she said yes. She's the one who cut my hair into the mullet, so, yeah, she was a friend that cut my hair. Anyway, long story. We'll talk about this.

Can we get back to the fire round?

All right, these all quaint. Came from the Bigger Pockets forums. So we're just going to fire them at you and you're going to fire them back at us. Number one, if you could only do one thing. Flipping, wholesaling or buy and hold for the rest of your life, what would you choose and why?

Wholesaling, because, boy, low risk, you can do volume and you can put systems in place, I think, for more than you could with those other strategies. Okay, Right on. Yeah.

What about condos? Would you buy another condo for either flipping, wholesaling, or buy and hold? Well, just answer that first.

No.

Why not?

Because of the hoa. I went to one meeting and it was like A mini A U.S. congress. One meeting. There was one guy, all he said the whole time was, who authorized this?

Who authorized this?

That was me.

And the other board member just sat there crying for an hour.

That's awesome.

Yeah.

I am not a Huge fan of dabbling in the condo. Or not even condos. Properties that exist in an HOA scare me. Co ops. Even more like co ops. I think I've got a friend who's got an apartment that he's been selling in New York City. And I can't tell you what just enormous pain in the backside it is to have to negotiate with a bunch of old folks whose power comes from owning a property and managing who gets to live there and who doesn't get to live there. Because fair housing rules don't apply to co ops. It's like, oh, that guy. Well, geez, he looks like this. We can't. Yeah, co ops, man. Scary, scary stuff. All right, rant over.

All right, what was the question?

Oh, yeah, I didn't ask it yet.

The question was Brandon.

Yeah, that's good. How do you find a good contractor?

Good contractor, wow. Boy, I don't know that I found a good contractor yet.

But I'll put that on. You know, that's my fault, not the contractor's fault, just interviewing, getting references, getting current references. What was your last job? Can I talk to them? What jobs are you on now? Can I talk to them? Well, that's about all I know as far as finding a good contractor.

Hey, can I bounce off that for a second? I know it's a fire round and I always tend to screw it up, but they were doing a flip in my neighborhood and I walked over one day and was talking to one of the contractors and I was like, hey, guys, what's going on? I've noticed it's taken a little longer than it should be. What's the deal? They're like, yeah, well, we're flipping another property at the same time.

I was just like, wait a second. So you're literally simultaneously doing well, and some contractors can do that, but this was a team of two people or three people, and they were all on one site or all on the other site. And that scared the hell out of me. I was like, my God, that's. That would be horrifying to experience. Because suddenly the 30 day flip is the 90 day Brandon flip.

That's why I think mine took so long. I think he was doing another project. He said he wasn't, but.

Well, so what do you do to avoid that? I mean, that's just something. It's over my head. What do you do?

And the only thing I can think of there is, again, is this enforceable? Probably not, but sign some kind of agreement then. Hey, listen, you're going to Be having this many people on the job, this. This amount of time, if you go over, it's going to cost you this much per day beyond what we talked about. I mean, I would just have an upfront conversation with them, too, say, hey, hey, look, is this the only job you're working on?

Yeah.

Do you have enough guys? If you don't, that's okay. Just. Just tell me. I may or may not use you, but if you. If you say you don't and you do, or vice versa, this is going to be the only job that you work on.

For me, I think having those deadlines and having penalties in there potentially might work. I know we've kind of talked about this on the site, and the contractors go crazy, and they're like, hell, no, but they want the job, I guess.

Cool.

All right, let's move on.

Okay, so how do you find a good private lender? I know you've talked about working with them. What. What advice do you have on that?

Well, I learned this from a guy who raised $5 million in private money. And what he said is, he said, go and talk to people. I mean, of course, one on one, but he talked about groups, whether it's a REIA or a landlord association. And just tell them what you do and how you do it, just briefly, don't pitch them, don't ask them for money. Just tell them what you're doing. I'm buying these houses at deep discounts. I'm putting tenants in them, whatever you're doing, and then just let them know if they want more information, you know, that they can contact you and people will want to invest with you. If you have credibility, they like what you're doing, and you'll be more effective than if you go up front and say, hey, look, I'm raising money.

Yeah.

So is that one of the reasons you mentioned that you go to different real estate agencies and you kind of basically talk about the guide, the guide to working with investors for agents. You kind of talk about how to work with them. Is that why? Is that kind of part of your strategy?

Yeah, that. That article. Because I'd spoken at Ria's and at real estate agencies before, but when I read that article, I thought, hey, this is perfect, because I can go to real estate agencies and say, hey, look, I'm going to do something, a class or presentation, whatever you want to call it, that'll help agents work with investors or work better with investors or not work with investors if they decide they don't want to. I'm not there to sell them on the idea. I'm there just to help them make the decision. And I will find that way. I'll find buyers, I'll find sellers, I'll find private money by networking. And the article were great. I mean I just took the article, made it into a presentation.

Cool.

Cool. Yeah.

Alright, next question. If your goal is to make $2,000 a month in passive income, how do you make it happen in seven years? That was the form question. In seven years you need to have 2,000amonth in passive income. Starting now. Like what's your plan to do that?

2,000Amonth in seven years?

Yep.

I would probably do one of two things which would be similar, but I'd hold some property either with seller financing or just as a straight rental or lease option. I mean, $2,000 figure, a couple hundred bucks per, right? You're not talking about a lot of properties. That's only 10 properties in seven years. That's. I mean, I'd say in seven years you could probably do that with them.

Mostly paid for, depending on where you're buying. But yeah, that's what I would do. Okay, cool.

What is last but not least, what is your version of the perfect deal?

The perfect deal? Perfect deal is you got a motivated seller. You're able to get the property at a price that's low enough that if you had to turn around and sell it tomorrow on the mls, you would still at least break even after paying all your closing costs commissions, front end back and everything.

And it's a property that you can have multiple exit strategies with. So you could wholesale it, you can fix up and flip it, you could rent it, you could turnkey. I mean all those available. So it's a three, two, bread and butter. It's not crazy high end, crazy low end. It's not in a war zone. Perfect deal.

Cool. Nice, nice, cool. Well, let's very quickly move on to our famous voice for.

All right, these are the famous four questions.

Famous four. The eyeballs. Eyeballs. We're getting eyeballed. He doesn't like your barbershop.

I used to be in a barbershop quartet. Anyway, Josh, take us on.

Yeah, Famous four. All right. What is your favorite real estate book? And I'm guessing I know it. Flip.

Yeah, slip in. Millionaire real estate investor we talk about without all the hype. I think those are. There's hardly any hype in there. I just, I read those probably each one took me a month. And I put in, I put together manuals based on that. Training, everything for. For myself and. Or employees, because it's so specific and so detailed.

Those are great.

Fabulous. All right. Favorite non real estate book. Did I. Was that. Was that your question? I'm going to take it.

My question. Take it.

Yeah, yeah. What's your favorite non real estate book? Favorite one. What is it?

Business. I'd say four hour work week. Yeah.

Another. Chalk it up for Brandon.

I'm going to take your question then. Hobbies, Travis, do you have any hobbies? What do you do for fun?

Yeah, well, like I said, when I was in between middle school and high school, Kenpo karate.

That's been for years, one of my favorite things. But anything outside racquetball, tennis, hiking, any.

Of that stuff, and kenpo is the style with the big old sticks, right?

That's kendo.

Oh, that's kendo.

Yeah.

Kenpo.

Kenpo. Gotcha.

I do Kenpo X with the insanity workout.

I've heard about that. I haven't seen it, but I don't.

Know how similar it is.

But anyway, I was kind of excited about the kendo because, you know. Yeah, like, Star wars, like, lightsabers I just read are now pretty much a reality. And so, like, I could imagine doing kendo with, like, these lasers, and that would be. Okay. Nobody's laser.

Are you one of those guys that gets in line and reenacts lightsaber battles?

You know that fat kid from the video on YouTube back in the day where he was spazzing out? Yeah, that was. That was definitely not me.

All right, final question. What do you believe sets apart the successful wholesalers or flippers from those who never really gained traction?

It's action.

I mean, there's good people. You guys have all met them, nice people. They mean well. But we've all seen people that have been a member at the RIA or whatever group, and they went to the seminar, they read the books, and they just haven't done anything.

Yep.

Cool.

Hey, listen, it's been a pleasure. We really do appreciate you taking the time, and.

I know folks will look forward to asking you any questions that they've got on the show. Notes@biggerpockets.com show38 and I know you'll be there, happy to answer them, hopefully answering those emails that do come in with alerts this time. But listen, thanks so much for being on the show with us. We appreciate it.

Thanks, guys. Really appreciate it. I told Brandon, as far as I'm concerned, I. I'm still learning, and I've just had some great teachers, so really thankful.

That's awesome.

That's what he's clearly talking about people other than Brandon and I clearly, clearly.

All right, well, thank you, Travis.

Thank you so much, Travis.

Thanks.

All right, guys, that was our show with Travis Daggett, man. There was a lot of good info in there, wasn't there, Mr. Brandon?

There was a lot of good info in there. I especially wanted to learn more about the whole buying at the courthouse thing. That's cool.

That was good.

I'm going to go back to mine again. I haven't done it in probably a year and a half, two years. Haven't been there.

Nice. Yeah, do it, man. And the HUD stuff is cool. I was flipping around on the HUD Home store site and looks kind of interesting. So hopefully our listeners will dig around if they haven't done so already. But listen, let's wrap this thing up. As always, guys, don't forget to leave your favorite quote from today's show on social media, Facebook, Twitter or G using the hashtag BiggerPockets and get a chance to win a free 6 month BiggerPockets Pro account. Thank you again. For those of you who have left us reviews on itunes, that's especially awesome. And those ratings and reviews are very helpful to spread the word. So please keep doing that. If you haven't already.

Come connect with us on G, LinkedIn, Twitter and Facebook. If you are not already following us on those channels, please do so. And obviously, definitely start connecting and growing your business by engaging on the BiggerPockets forums at biggerpockets.com for forums where there is just a ton of incredible content shared every day. Finally, as always, if you've got any questions for Travis, make sure to leave them for him. Questions, comments, feedback, anything. Leave them for him on the show notes@biggerpockets.com show38 and keep listening, keep learning, keep making things happen. Guys, I'm Josh Dworkin. Signing off.

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