S4 E17 - Cash Buildings

The number one question our girl Brittany Turner gets is, how do I get started in real estate? Well, guess what? We got the entire script for you right here in this episode of Broke to Woke.

We are continuing to drop knowledge bombs.

Season four. And I've been in the room where you get asked this question, so I'm going to ask it to you so I can take my notes. Where would someone start in real estate? They're at bottom ground zero. They know nothing.

Know nothing.

Yeah.

Do they have any money?

No.

Okay, great.

No money. They want to get started. They want to be like Brittany Turner.

Do they know the area?

Yeah.

Okay. Yes or no?

Yes. They know the area.

Either way.

Okay.

Either way. All right. Both. All three of those are factors. So do they have any education? Do they have any money? Do they know the. Those are the three most important things to say where you get started in real estate. So we talked in the last couple episodes about saying you want to get involved in real estate is like saying you want to be a doctor. So we've talked about that. You got to pick a lane because a divided focus is the number one cause of failure. By Billy Alsbrooks.

There we go.

And same thing in real estate. So what'll happen is most people join a real estate investors association and they go to the monthly meeting and every month they've got a new speaker. So selling a new course on a new topic. So it's either gonna be multifamily and how to make millions with no time or Airbnb or rehabbing or short sales or tax sales or liens. And there's so many things that you can do. So again, you gotta pick a lane. And literally the only course I've ever taken the time to create so far, probably we'll have more by the time this comes out is really where to get started in real estate, because it is the top question. And so I will give you the brief of that course now. And so the first thing you gotta think about, you just said something important. They're starting with nothing. So there's a building cash lane, and then there's building wealth lane.

Okay?

And if you've never read Rich Dad, Poor dad, this is by Robert Kiyosaki and Sharon Lechter. Number one book that everybody needs to read before you begin your real estate investing journey. But to build your cash up, we're going to get into that flipping type selling game, fix something up and move forward. But the best way to learn is, number one, go get your realtor license. And people are like, why you don't have to have it. I don't care if you have to have it. You're never going to be able to find out the value of properties. You're not going to be able to look at the comparables to know how to design it. You'll be able to see so much information by having a Realtor log in what people owe on the house if it's in a flood zone, if it's in a historic overlay. You still have a license? Oh, yeah, absolutely. Yeah, of course you do. Yeah. I make over a hundred grand a year every year on that.

That's cool.

Just still having it and still using it for stuff.

Sure.

Obviously, I'm not, like, hustling as a Realtor, but just still use it to sell my own stuff. It's amazing.

Love it.

So you can see how long properties have been on the market. Basically gauge houses that people want to sell. I mean, there's a million ways to find deals, but this is the best one because the people purposefully said, I want to sell my house, and then put it on the market through a professional Realtor, versus, like, door knocking and trying to talk them into it. So having your Realtor license is incredibly valuable, especially for the next two steps I'm going to give you. When you are new to an area or new to an asset class, this is huge. New to an area or new to an asset class? You want to start out being a bird dog. What that means is you basically get paid almost nothing to go find deals for somebody else. Why would you get paid almost nothing.

To find deals for someone else?

Yeah, because you're terrible at it.

Oh, yeah. Okay.

You're new. You don't know what you're doing. You're going to bring them houses on train tracks until you listen to the last podcast, you're gonna bring them the dumbest deals, and you're gonna be wasting somebody's time. And so you're not really worth a lot going out and hunting down things that are already on the market and all that stuff. So you. You now have your license. You go to the Real Estate Investors association in your area, and you walk up to the president of the association, you say, who in here is doing rehabs? So I'm gonna start you in the lane of renovating because it's gonna give you so many transferable skills that you're going to use for the rest of your real estate investing career, which is incredible. So who in here are doing rehabs? And they'll point out the top three people that are doing them and that still have values and integrity. You always want to ask those questions. And then you go up to Jane and say, hey, Jane, I am a deal finder. I'm new to this area, but I am a fast learner and a hard worker. Could you use any more deals? And Jane's going to say, yeah, always.

I like deals.

Absolutely. Everybody wants people to bring them deals because finding deals is a lot of work.

Sure.

And so Jane's going to say, yes. And then you're going to say, well, what areas, what zip codes are you interested in? In those zip codes, is there anywhere you want me to stay away from? How many bedrooms and baths are you looking for? Minimum and maximum. Is there a minimum and maximum price range that you are looking to purchase in? Is there any particular school zones?

Okay, good. These are great questions.

Yep. And then you're going to take order. You're going to write it down.

Yeah.

And then the most important thing you're going to say is, if I could find you this exact profile of a house, how many can you buy a month? And that's a really important question, because once you ask, they're going to tell you whether or not they are a whale buyer or not. If they say, I can buy 20amonth, okay, well, how many months in a row could you buy that? Every month.

Whale.

You have the money to buy 20amonth, then you're like, yes, let's get Jane some deals versus, like, well, I could buy one every four or five months. You know, that's just different. Not that you wouldn't talk to that person, but that's a different person. Absolutely. You've got somebody who's got a machine, and so you now want to take her order and go hunt for those deals. Now you're using your license. You can literally put in searches around that criteria that she just gave you. Or you can do the door knocking thing. We're not gonna talk about all the strategies of finding deals today. I'll have to go through my course for that. But there's a lot of different ways. So now that you've narrowed down that search, you say, jane, I found properties. And you could ask her this in the initial conversation that fit your profile. What is the best way for me to send them to you, and what other information do you want me to attach to each property I send you so that you can analyze them quickly? She's going to say, oh, yeah, well, if it's on mls, send me the listing, attach the tax card and give me the Zillow link. And if you happen to have a conversation with the seller's agent, then find out how much they could. What's the least they could take and still be okay. Just ask that question. And then you can also attach the comparables and tell me what you think the after repair value would be. She's going to do all kind of whatever her stuff is to look at it. Everybody has different criteria. So if I was searching for those deals, I'd say if I find you something, I just want you to give me $500 if you buy it. And. Or the real way to make money is to be her realtor on that purchase. So that's really how to get out of like even doing it. I'm telling you, the first two years of doing rehabs, I made nothing. I just telling you, I made enough to pay my investors. I made $180,000 though, being the realtor on the front end and back end of these things. And so you could say, hey, all I want is for you to use me as the realtor on the purchase of these things.

But 180 is no joke.

That's a lot of money.

Solid.

Yeah, that was great. I couldn't make more than $2,000 a month before that. It was like killing me to barely make 2000 doll. Having that realtor license is the key to being so much faster, so much more successful faster in real estate. It's the thing that a lot of people don't want to do though. It's like freaking two grand in a couple weeks of your life. Suck it up and do it. All right, so you use your realtor license, you find other people doing it. So now that you're really good at bird dogging and you can narrow it down, you're watching Jane buy all these houses from you. You ask Jane, hey, if I can actually go secure these properties for you at a price I know you'll want them at, do you mind if I make a little money if I get it for a little less and I can essentially wholesale these to you. But again, you don't have to negotiate the contract. All this stuff, I've already done all the due diligence. Jane's going to say, of course not. Now, if Jane is bothered by that, then you're working with somebody who's greedy and you probably don't want to work with them long term. So that's wholesaling. So if I know Jane can buy this house and her numbers work at 100,000, but I get it for 80. What do I make on that house?

20K.

$20,000.

Plus the realtor transaction.

Plus the dang realtor. That's the big money one. So you're getting your realtor fee. And ideally, you would have negotiated with Jane to get it on the back end, too.

But the part I like about what you just mentioned is you already know her numbers. She needs to come in at 100 for everything to work. But you did the diligence, the going after the deal, defying the deal, discussing with the home, either the seller or the person who lives in the house, or negotiating. Yep, you're doing all the negotiation and you got it for 80, which took a lot of work. But that spread, she's still happy to get it at 100.

Absolutely. Her numbers are perfect at 100.

Yeah.

Yeah. So she's got better relationships than you. Potentially. She can actually pay more than you, because maybe you couldn't have even paid that much. But again, you are still getting in the game of learning what's a good deal. Most important part of all this real estate transactions is why did Jane say no to that deal and not that deal? And that's where you're going to learn. Oh, if you didn't know, this side of the neighborhood does not have access to that school zone and it's worth $60,000 less to buyers. Or if you didn't realize this is a flood zone. Or, Brittany, the train tracks are not close by, but you can still hear the horn like it's in your backyard. Like Jane's wisdom in that area, priceless and gonna save your butt. And so, again, ideally, you're doing this for multiple people. One of the things you wanna negotiate, especially after you get really good at wholesaling, is, hey, in order for me to run better numbers, can I start watching your projects? Can I stick around? Can I learn more? Now? You never want to be your mentor's competition, ever. Never, ever, ever. You still wanna find a way to create value for Jane, but you do wanna be learning at the same time, because anything you learn in renovation, you're gonna use the next place. So ideally, Jane will let you hang around, learn everything from what vendors to use, how to design things. And another great thing you're going to learn as a realtor is, why is this house sitting on the market? Why are people saying no? Oh, it doesn't have a pantry. Did you know you cannot sell a house without a pantry?

I just assumed all houses had pantries.

No. Ask me how I learned that one. Yeah. And if there's not a bedroom on the main floor, you're going to have problems. Like, people want a bedroom on that dang first floor. It's important for grandma who comes to visit that there's no stairs. So you learn all those things through the feedback as a realtor, which, guess what, you get to do it, use it, hopefully make it part of your checklist on when you're designing a house. Never build a house without a pantry. I learned that one on Whirly Drive. Never build a house without this. Never build a house without that. So your bank basically taking notes on designing the perfect house in these areas that people say yes right away. Why are there multiple offers? What are those price ranges? So now that you've been around all those rehabs you can make, if you're not a licensed realtor, you can make like $500 as a bird dog. As a wholesaler, you can make between $5,000 and $20,000 on a wholesale. On average, the most I've made is $1.2 million. But we'll talk about that in another episode, I'm sure. But on rehabs, you'll make between $30,000 and $100,000. And so you do want to be taking this now, I don't know how to find deals now that I know how to contract them. How do I actually run the project myself? And so again, you're going into risky, dancy, fancy land now. It's much harder, but again, the payoff is much higher. And so you're now learning how to rehab. And after you are good at renovations, and then you can step into new construction. The reason I'm not saying jumping straight into new construction is you told me you started with no money and there's a lot lower barrier to entry for renovations because you're just fixing up something that already has walls, foundations, and a roof most of the time than the cost to get to play the game of new construction. So longer time frame, more money you have to borrow to be able to even do that project.

And just higher risk. And there's different guidelines. You have to learn so many, so many different rules and regulations. But again, if you know how to rehab, you've already started learning those because you've been pulling permits and stuff like that. So I love new construction because it's a thousand times easier to me because there's building plans. Contractors are just contracted against those building plans instead of going in and just having to point, no, I didn't say to do that to the shelves. And Arguing with people, sure. And so but renovations are the right next step for new construction and new construction is the right next step before you start doing land rezones. Now, land rezones are where there's a lot of money to be made. A lot of money.

This is one of your specialties, right?

It is my specialty, absolutely. And I love vision. Casting what's possible for an area and then working with the community to say what do you want to see here and how do we do something really great for this area with just an empty piece of land or an underutilized piece of land. And so again, start out Realtor license teaches you how to find deals, make money on the front end, hopefully back end of every transaction. Teaches you how to design and comps per what the area is doing. Bird dog, go find deals. Don't get paid a lot because you're still terrible at it wholesale. Now you're getting paid to contract properties, rehab. Now you're contracting and managing your own projects and then new construction, you're contracting, you're managing, but you're overseeing somebody building it according to the plan, which is so much better. Then you're getting into land rezones. Now that is the normal lane from starting from zero in building cash in real estate. And now what do we want to do with all the cash that we've made? If you've ever played cash flow, you.

Want to buy assets.

Yes. Why would we buy assets?

Newsom Assets solve all the problems that you don't have yet.

That's what assets do. They're sexy. They provide freedom, they provide generational wealth.

Assets are things that bring in money so you don't have to go work for money.

That's right.

And that is what we're going to talk about in the next episode.

Foreign.

Was recorded right here at the Aerial BVI Buck Island. The goal is to get you here. We want you to see the studio. But more importantly, we want you to experience the magic, the miracles and the healings that will only take place in person at one of our Elevate Summit events. They are life changing, they are incredible and we need you here. We would love for you to attend the Love the Abundance Dream. Presence and strength. Go to broketoak.com check out the next Elevate Summit where you can hang out with Bernie and myself, change your world and elevate together.