Get Rich With Pre Foreclosures ! Real Estate Investing

What's up, everybody? Welcome back to the New and Experienced Investor Podcast. Today we got a special one for you. We're talking about pre-foreclosures.

Cool. Yeah.

I'm one of your hosts. I'm Alex Barnett. I'm the new guy.

And I'm Joe Homs and I'm the experienced guy.

Oh yeah. And this is near and dear to our heart because one of my, or at least it's near and dear to my heart because one of my best flips was a pre-foreclosure.

It was.

And we're going to talk about it, so stick around. But let's, uh, let's, you know, let's take it from the top because I'm sure there's a lot of people that may have misconceptions about pre-foreclosures, and you being the experienced one are going to break it down for them.

I will do that.

Okay, so let's get into it. What even is a pre-foreclosure?

Just what the name says. Pre- Foreclosure. So you're buying it before it gets to the foreclosure auction, and then everybody else has the same chance to get this property, um, and bid on it.

Mm-hmm.

The difference is there's lots of options, uh, in a pre-foreclosure process. So the pre-foreclosure is a process that takes about But, you know, like if we were to say from day 1 to end, the legal process is 3 months and 21 days, but that's not usually what happens. It's extended out, let's just say that.

Mm-hmm.

It's extended out for whatever reason. It could be extended out because they file bankruptcy. Now in California, there's a law, if you list a property, they have to extend it out for 45 days. So there's lots of reasons that it can be extended out, but the normal Okay. The next stage is notice of default stage. And that's when the bank sends a document over to the recorder's office. And the recorder says, hey, look, this property is in pre-foreclosure, and they let everybody in the world know. Okay, so it's public record. And then that's when, you know, you as an investor is going to start getting on the phone, sending letters, door knocking, doing whatever it is to negotiate directly with that homeowner. That is going to get you the best deal. And it's going to get you that deal before anybody else. Now, that does not mean that nobody else is doing the same thing that you are, because everybody's doing the same thing. But like I, you know, tell my wholesalers, you can be the first call, you can be the last call, you can be any call in between. It doesn't really matter. It— all that matters is when this person, this seller, is ready to make a deal. So yeah, if you're the first call, awesome, they're ready to make a deal. Or you could be the last caller, it doesn't really matter. They could, they could go through that entire process and wait those 3 months before they go into the actual auction process, which is the 21 days, and you could still do a deal with them.

Well, and what's great is you know that they're motivated. I mean, they're I've been to somebody's house where they have stacks of letters from people and it doesn't, it doesn't stop.

No.

You know, so—

And why'd they let you in?

Because they liked my dimples.

There you go. See, it, and it's just like that. It's like, you know, I like the way that you're talking to me on the phone. I like the way that you look. I like the way that, you know, you came out and, you know, you're kind of dressed for the occasion.

They liked the way I smelled. I was wearing, um, CK One. Yeah, Calvin Klein from my 8th grade. I'm just kidding.

Okay.

Yeah.

And there's lots of different motivating factors to what gets a seller off the dime, so to speak. Right.

It will. And I mean, okay, so you know that they're, they should be motivated, but a lot of times, even if you're going out there and talking to them, they're gonna act like they have no care in the world, which is the most frustrating part with dealing with these. People there, you know, they're on the clock. And some of them, when you're talking to them, they act like there's nothing going on. They're not worried about it.

It's just the way they live their lives. You know, I mean, I manage places, I rent my own places. And it's just incredible how many times, you know, the tenant sends a late payment in because they're late. It's like, it's almost like me raising the rent that month, you know, without Raising the rent that month. They were late and they're constantly late. And every month they send me a late payment. I'm like, okay, you know, that's just the way they live their lives. And, and the pre-foreclosures aren't any different. They're, they're about the same.

Yeah, they're about the same. And so it's kind of like your job to explain the severity of the situation.

Yes.

And even then, as we're going to go into it with the Huntington Beach house, it's like this guy He, he, he'd had no care in the world until we were like 2 days before he was gonna get nothing.

Yes.

And then he was like calling me and crying and be like, you gotta do something, man.

He didn't like me. He didn't like me. He liked Alex. I was, I was a bad cop that day. Yeah, but that's what he needs. I like to say it's like, it's like an ostrich, okay? You're dealing with an ostrich. They've got their head in the sand and your job is to pull their head out of the sand and say, wake up. You're losing your property.

Yeah.

You need to do something, whether you do it with me or not. You need to do something. If not, everything's gone.

Absolutely. Yeah. And that's, that's probably the best line you could give them is, you know, even if you're not working with me, for the love of God, you got to do something. Because if you just sit here, you, you're going to be, you're going to be sad. And I've gotten those calls where someone called me at, you know, a couple days after. Yeah. Like, hey, it went to auction.

What can you do? Yeah.

What can you do? Somebody just showed up with a letter that said I have to be out of the house in X amount of days and I was like, I, I tried to tell you, but yeah. Um, so here's why pre-foreclosures create the wealth that we're looking at and, or at least make you rich. Um, if you're going to flip it, you got built-in equity sometimes if they've, you know, paid over all the time. All the time.

All the time.

They are motivated. They need a solution today.

Uh, today, yesterday, yesterday, yesterday.

Uh, oftentimes there's less competition because, you know, just for the fact that it's not necessarily on the MLS.

Correct.

When you start dealing with the seller, you're going to realize, you know, you're competing with lawyers and insurance or not insurance people, but lenders who are also trying to reach out and solve their problem. But that's less competition than just it being listed on the MLS. And then number 4, it opens it up to possibly doing a creative deal like taking over the payments, catching them up, taking over their loan. So a lot of, a lot of benefits to going after this list.

Lots of benefits. And we've actually used all those benefits. Um, especially the creative deals. We've done subject-to deals. We, we don't do short sales. I don't know why you put that in there, but, uh, cash offers. Um, yeah. And, you know, dealing with pre-foreclosures, it is really just a matter of, you know, bottom line, what, what is it that, you know, you want at the end of the day? Joe, I want to stay in the house. Okay, let's come back to reality. That's not going to happen for you. You lost your job. This is a 3-month process. Are you going to get another job and then make up those payments that you were behind already for like a year? Yeah, just, it just doesn't happen. But anyways, when you get to reality, it's like, okay, so here's the cash offer we can give you. And then if not, we have, we do have agents that we deal with. And so if you want to list the property, but again, that's a short period of time. So. They may just end up taking the cash offer. We've done a short subject to, not short sales, but subject to. So we'll catch up what is owed and take over that loan, go in, rehab the property, put it back on the market and flip it.

Boom.

Yeah.

And what's great was the, I think the one that we did was like a 4% interest rate when, you know, rates were starting to creep up. So yeah, it's a benefit right there.

Yeah.

That would— that one was crazy, um, because when we looked it up, she had been behind for like 10 years, and then the, the company was just coming after her at that point. So I don't know, yeah, what was going on. Maybe it got sold a bunch of times or something.

But yeah, it was a little crazy.

But yeah, when you look into the history of some of these people, they've been in pre-foreclosure numerous times, and somehow, maybe by the skin of their teeth, they get out of it and work something out. But eventually, you know, the bank comes.

You want to try to create a win-win for everybody, you know. Don't get me wrong. Yes, we want to buy the property at a good discount so that we make good money at the end of the day. But it should always be a win-win situation for everybody, you know. If, if they get foreclosed on, they get nothing, you know. How can that be, uh, not a win-win to get them out of that issue, again, get them out of that problem?

Yeah, absolutely. No, that, that's kind of like how we, we start the conversation when we're, when we're talking with these people. Um, so here's, here's the 5-step framework that we're gonna go over because we're not just talking theory. This is actual action steps where you can take, and we're gonna go through each one. So you gotta find the people, we're gonna go over that. Then you gotta see if it works because, you know, sometimes you'll run the numbers and what they owe versus what you can resell it for, it's just You know, there's not really anything you can do if there's no equity and—

Yeah.

And the price doesn't work, you know, or, or the monthly payment doesn't work. Then number 3, pretty important, you got to make contact with the person. They're going to be ducking calls left and right. Um, but you know, sometimes you just get lucky. Like Joe said, it could be the first, could be the last. And, uh, then you get your foot in the door. Then you're going to structure the deal. And then number 5, you're gonna pick, uh, pick which exit for, uh, how you're gonna profit. So let's go over that.

How do you find them?

Well, I'm glad you asked. So, so it's just, you know, lead generation. So you could either go to the county courthouse like they used to back in the day. Some people are still doing that. You want to get the freshest things, or, uh, PropStream is a great Aggregator of all this data. So, you know, there's numerous other software you can use, but we like PropStream. And then all you do is you pull a list, Orange County, California, people that are late, you know, 30 days, 60 days, 90 days. Or what I like to do is go from the auction date, you know, auction date in 3 weeks. Then, you know, okay, these people are, they got the clock's running out.

They're really hurting.

They're really hurting. The clock's running out.

They should be, but some people aren't.

But But still, that's step number 1. And then you just kind of go through the list and you can door knock. Well, we'll go over that next. But yeah, step number 2 is you're going to research the deal. So you gotta find out the ARV to the best of your abilities, the repairs. That one's gonna be kind of tough until you actually make contact with the person.

And see the property.

And see the property.

Yeah. But you can do some, You know, numbers in your formula. I always like to use 10% of the after-repair value and we start there. And then obviously if I get out to the property, it's a hoarder house, that's a different story. But, you know, that's kind of where I start. Put them under contract. Once they're under contract, then go do your due diligence.

Yeah, absolutely.

Yeah.

And then, you know, part of your due diligence is finding out how much actually is owed. And again, We're gonna go over all the numbers with the Huntington Beach house, but he, the seller owed a divorce attorney.

Oh, wait a second. So when you call me as a seller and I say, all I owe is the bank.

Right.

You don't take my word for it?

Unfortunately, I can't anymore. I used to, but I, I don't anymore.

Oh, come on.

Yeah, I'm sorry.

Alex, this is all I owe. Really? This is all I owe. Yeah.

Yeah.

Yeah.

And that, that was the story in the beginning. And then we, you go into title and it's like, actually he He owes his, uh, a divorce attorney. He owes his dentist.

From 20 years ago.

You know, there was like 5 liens on the house. Uh, and a couple of the liens had already been paid off, but we had to track down that they had been paid off. So it could be a whole mess. Um, and that, yeah, that's where those second liens can really mess up the deal if they owe too much. It's just, just, it is what it is. Just a numbers game. And then at that point, you're going to calculate what your max offer is. And, you know, a lot of people use this 70% of ARV minus repairs. That's a good place to start if you're just going to do a real quick max offer.

Yeah, absolutely.

And you see if you're in the ballpark. Maybe you are, or maybe the person is, you know, just not in their right mind and they want to hold out for a lot more. And you just say good luck at that point.

Good luck.

There's nothing else we can do.

Yeah, we tried.

Yeah. Um, and then so step 3, you obviously got to make contact. Um, all these, all these ways work. SMS, cold calling, door knocking obviously may have the highest conversion rate because, you know, like if you're like Joe and I, we're like, hey, we know you're in there, come to the door.

Yeah. Hello? Hello?

Hold on, the lights on. They just turned the lights off. They just turned the lights off. Someone's in there.

Yeah. Hello. Hello. They're hiding.

They're hiding. Or, uh, you know, mail's gonna be, I guess, kind of tough because, you know, might get too late.

You didn't put your cologne on that day is what happened.

That's exactly. Yeah. They couldn't smell me through the door. But yeah, like we said, we always lead with compassion. We help homeowners find solutions. Not necessarily, I'm here to buy your house really cheap.

Yeah. Don't, don't lead with that.

Don't lead.

Yeah. That's, that's just, that's an odd starter.

Yeah.

You know, and, and the other thing, don't go door knocking in the neighborhood and you find the ugliest house in the neighborhood and you knock on the door and you go, hey, my name is Joe. I'm a real estate investor. I was wanting to know if you wanted to sell your house. Joe, why are you at my door? Oh, 'cause yours is the ugliest house in the neighborhood. So I figured you're ready to sell.

Yeah.

Joe, see you later.

Exactly. They may not, you know, they may not like that too much. But anytime you can get out there and door knock, I mean, it's probably the best way to do it.

Yeah, it's hard to slam the phone in your face when you're door knocking. I mean, they can slam the door in your face, but most people are pretty polite.

They are actually. Yeah.

You know, they're gonna want to know what's— why you're there to begin with.

Yeah.

You know, whether they should start calling the police right away or, you know, just give it a little time. Yeah. So yeah, door knocking is probably the best.

Yeah. The typical response—

But that takes a lot of time.

Exactly. Well, yeah, it takes a lot of time, so hopefully you can map it out. But the typical responses from people that don't want to talk to you is just going to be, I've already got it figured out, even though, you know, they probably don't.

Yeah.

So Yeah, I've been a few times and some people are like, wow, thanks so much. No, you got it figured out. And you're like, oh really, what'd you do? They're like, uh, all right, see ya. You know, then you just know you got to follow up with them, keep coming back. Maybe you can find places near your house so then on your way home you can just pop in, make that connection, build rapport. Just a guy down the street. Just kind of looking to help some people.

Yeah.

You know, so those are the ways. That's step 3. And then we got old step 4. You got to structure the deal. This is the fun part.

Yeah. Trying to figure out which way.

Yeah.

Cash, subject to.

What do we want to do?

You got that short sale thing in there again.

Well, I guess that's—

Seller financing.

Yeah, that's if you—

Wholesale.

That's if, I guess, if you get the listing and then you have to do a short sale.

Yeah.

It should just be listing. Yeah, because then—

but, uh, yeah, because only licensed agents are allowed to do short sales. Did you know that?

I did not.

Yes. No, you as a wholesaler cannot call and negotiate a short sale. It has to go through a licensed agent.

Okay, that's good to know. I'm sure you can get in trouble by doing—

well, you're not going to get any trouble. It's just that the bank's not going to deal with you. Yeah, they deal with licensed agents.

Like I'm the brother of the guy.

Yeah, no.

Yeah, so.

And we've we've used all those there.

Mm-hmm.

So yeah, we've we've used them all.

Right.

So there's lots of different ways to exit from a property that you buy pre-foreclosure.

Yeah, yeah, absolutely.

The thing is that you have to keep an eye on the time frame because you're talking about wholesaling. If you're down three months and you only have twenty-one days left, boy, you better have. a buyer ready to go.

Yeah.

Because if not, they're going to foreclose. They don't wait for anybody. The banks do not wait for anybody. When they're ready to foreclose, day 5, day 5, they close. Yeah.

You know, it's kind of scary.

Like, Joe, they closed yesterday. They told me they weren't. Yeah, no kidding. That's what they do. Sorry.

Yeah. Yeah. Well, and that's the part I tried to tell you. Sometimes when we've hit up people Sellers, and they're like, "Oh well, it's already listed. Clock's running out. The agents aren't really doing anything. They just have it listed at the at the price that the person wants, and obviously it's too high." Yeah. So what we've done in that case is I've said, "Hey, I mean you're going to auction in a couple days. So what you're gonna have to do is you're gonna have to cancel that listing, and then we got to get on the horn, and we got to negotiate with the bank, and do that." And that's pretty much the only way to make it work.

Which is very important that, you know, you know who you're working with. Not all agents are necessarily educated enough or experienced enough to handle deals like this. So if you're in that situation, then please just reach out to somebody who actually knows what they're doing. Because if not, you're going to get foreclosed on. And, you know, the next call is, hey, Mr. Agent, I got foreclosed on. What happened? Oh, I don't know. I just put your property on the MLS. That's all I did. Okay. Sorry. Yeah.

Yeah. And if you're out there and you come across one of these deals, I mean, and you don't have the money to, let's say, offer a cash offer, that's where you can bring it to Joe and I, and then you can wholesale it as we are buyers.

Sure.

You know? Yeah. Get a little $10K real quick.

$10K. We're offering $10K? I thought it was $5K.

It's inflation. Prices have gone up. Yeah. Yep. In this economy, $10K pretty much just pays your rent for one month. Um, so yeah.

You, you live in the OC, don't you?

Yeah, it's getting, it's getting high.

Yeah.

Um, but, uh, yeah, you can do some bird dogging. You can, you know, just, you can start the conversation with these people and say, actually, my— let me bring it to my partner. And then that's where we come in. We can walk you through the whole process. So don't be afraid to get out there and start.

I thought you were stuck.

No, no, I'm ready for step number 5. So which exit strategy? Typically we're just looking to fix and flip right now, but, uh, maybe in other markets you could, you know, keep it for a buy and hold depending on what the monthly payment is. You can BRRRR out of it when the rates come back down. Or like we just mentioned, you can wholesale again starting at $5K.

See, that's what I told you. $5K.

Starting at $5K. We're offering $5K depending on, you know.

And this was funny because when Alex— I was teaching him how to wholesale. When he first deal he did, he brought it back to me, which is one of my requirements when I teach people how to wholesale. Alex actually listened. Brought it back. I said, oh, $5,000. He says, oh no, $30,000. I think we ended up at what, $15,000? Yeah, we ended up at $15,000, which is like—

I think you were gonna give me $12,000, and then I was like, please, sir, it's Christmas. And then, then actually Ryan agreed to $15,000.

You were still living in your van at the time.

Yeah, still living in the van. And then I, I actually talked to Ryan. He's like— because I knew he would say, oh, see, yeah, Ryan's an easy guy.

He's like, oh yeah, okay, yeah, $3,000 more.

Yeah, that's not a big Yeah, yeah, that's life-changing money to a guy living in his van. But, uh, yeah, so you got, you got a plethora of exit strategies depending on where you get it. So choose accordingly, and if you need help, then let us know. All right, let's go over a real breakdown. So this property was in Huntington Beach.

Mm-hmm.

A couple, maybe a mile, maybe less, a couple blocks from the beach. So tiny house. I looked up the square footage again, it was like 950 square feet.

It was small. It was 2 bedrooms. It was 1 bath too. Yeah, it was too bad, but it had a pool.

It had a— yeah, it had a nice pool.

It had a nice pool.

Resort-style pool.

Yeah.

So that was good. It didn't need a lot of repairs, but this guy was, you know, days away from— I had been talking to him for, for months, months and months and months. And then he finally got down to days away from the auction.

Let me tell you how close. We're at the office and Alex says, I still don't have a deal with him. I think he's asleep on his couch. It's a Wednesday. The foreclosure date is Monday. And I said, You need to put a deal together today because we just don't have time to close on this. Okay. He said, I've been trying all day. I said, okay, let's get in the car and we will go down there and talk to him in person, which we did. We bought the contract with us. And where was he? He was asleep on the couch. Woke him up. And Officer Friendly over here was telling him, you know, hey, you know, this is reality. You're going to lose this property. You've got like a There's a bunch of money in this property that you're gonna just basically leave on the table if you don't sign this contract with us today, or at least negotiate with us. And so he started negotiating with us and I said, oh no, that's just too much. And so he didn't like me right away.

Mm-hmm.

And he kept talking to Alex and finally we got to the point where he said, okay, well, we'll agree to that. Okay, well, you guys can come back tomorrow. No, no, we can't come back tomorrow. We have to have it signed today because literally tomorrow and Thursday, Thursday and Friday, we're going to be working on closing this deal because we have to negotiate with the bank. The bank is back east. We have to tell them we have a deal. Please do not foreclose on Monday. That call did not go very well because they said, no, we are foreclosing on Monday. Okay. And you have to have the money to us by 2 in the afternoon, our time, California, 5 o'clock there. Okay. Because they were back east. If you don't, then we're definitely going to foreclose. So believe it or not, I was able to put together this transaction through escrow, through title, and put the money in before Monday. And we wired them the money on Monday morning, right before the auction, and they stopped the auction for us. And, and we were able to close on that property. Very, very rare. Very rare.

Yeah, but he was, he was very happy because he knew he was—

At the end of the day, yeah.

That close to losing everything. And he ended up buying a place in Mexico and living out his best life.

That's what he said he was gonna do.

Yeah.

He was a surfer.

He was surfing.

And this was his mom's property. And she was obviously not around with us anymore, but he had spent, you know, a lot of money, or not spent, but he took out a lot of money from that property. So, uh, he ended up walking away with what, a couple hundred grand? Yeah, yeah, yeah. I mean, it was a substantial amount that he was going to lose, but put the numbers back up.

Yeah.

So we did the deal. Uh, there you go. He, he was at $500,000 with $75,000 in arrears, which means that he owed that. Uh, estimated repairs were $50,000. Did you guys spend more than $50,000?

I don't think so.

No, no. It was a small place. So maximum allowable offer was $720,000, and that's what we negotiated the purchase price at, $720,000. Anyways, so you ended up making 3 or 2?

I thought it was 2. No, I think it was 3.

It was 3?

Yeah.

Wow, that was a really good deal, wasn't it?

That's what I'm saying.

That was a really good deal.

Yeah.

Yeah, and that was honestly, that was very surprising to me. Uh, that literally sold a week or 2 after you had it on the market. It was a cash offer, um, very little to no inspection on the buyer's part. They were looking to buy it just because they wanted a rental, and they thought this was perfect. It was, it was all fixed up at the time. Everything was, you know, redone.

Right.

Uh, so it was perfect for them, perfect for us. And, you know, and you closed and made lots of money.

Yeah, that's really good.

Yeah.

But yeah, it was, uh, it was a roller coaster.

Um, but that's, see, that's the fun part for me.

That is the fun part. Yeah.

That's the fun part. Yeah.

It's like, and, and it's, it's funny because he was, you know, you get to know these people like pretty intimately. And, uh, like he had family that were in real estate, but nobody wanted to help him. And Because there were so many things and he didn't tell the truth a lot of the times.

All the time. All the time.

So yeah, by the end we were kind of like pulling our hair out. But you know, like we said, it was, it was fun. Yeah, we had to track down the old divorce attorney and they had to mail us over like something. And title was running around with their heads cut off trying to help us. And yep, if you didn't have those relationships, it probably wouldn't have happened because, you know, I've used other title companies, other escrow companies, and they just don't care. No, like the closing day will be coming up and then 2 days before they're like, oh, we need all this stuff.

Yeah, you know, we should have asked like 3 months ago, you know, it's like, hello.

So yeah, that was a really big eye-opener about having the, the relationships that you have.

Absolutely.

And people willing to drop everything to get it done.

Yeah. Thanks to Corner Escrow, Christy Dellatore, and First American Title, Noah Presswood. Yeah. Without those two people, this would not have happened. Yeah.

And I didn't realize it. Honestly, I didn't. I was like, I mean, escrow's an escrow. Title's a title.

No, not at all. Not at all.

When it counts, yeah, it really counts.

Yeah, absolutely.

Oh yeah. Yeah, that was that was a fun. That was a fun one.

It was.

So we're looking for more of those. If you get any, you get any like that. Let's go over some mistakes. Because you can really get caught with your pants down.

You made mistakes?

I've never made a mistake, but I'm just saying in general.

Oh, okay. So you're saying I've made mistakes?

Oh, just in general, people.

Okay.

People. So number 1, not researching title liens before offering.

Gee, imagine that.

Yeah.

Like, Alex, I told you the only thing was on there was the loan, right? Don't worry about the, you know, divorce papers.

Oh man.

You know, back Child alimony and all that stuff. Like, yeah, it's gonna go away.

Yeah, no, I'm gonna— I got all that handled.

Yeah, okay.

Oh man. Yeah, I think actually he did owe some alimony.

He did, yes.

And we're like, that's coming out of your side.

No kidding. You're gonna take that out of your side, Joe? No, it doesn't work that way. That's yours. You take it out of your side. You're making that much less.

Oh my gosh, I forgot. It's all coming back. Um, so I mean, the only way you can really do it, I guess what we do is we hit up Noah, our title guy, and then he kind of pulls everything associated with the property.

Yeah.

And he's like, I got some bad news, guys. 7 liens on this.

Having a relationship and all that stuff, I want to let you know that that works both ways. We did close on a property, there was a lien, Noah said, don't worry about it, we're going to write around it because it's such an old lien. 2 weeks later, he calls me back and says, guess what? I go, oh God, this is bad news when you start with guess what. Yeah, that lender came back and you actually owe that money.

Oh yeah.

Okay, so I said, okay, you know, you know me, you know, it's a 2-way street here, and I trust you, you trust me. We were able to close, we got the money. I'll send the money. Not a problem. I sent the money back. Yeah, it's like, okay, so we made that much less, but hey, that's just part of the business.

It's part of the game.

Yeah, yeah. I don't know that any other title company or rep would have done that. You know, they would have said, yeah, Joe, we can't close this property. I go, no, no, close it, close it, close it, close it. Yeah, close it, close it, close it. Yeah, if, if I owe you this money, I'll pay you back. You know I'm good for it. Oh, okay, got it. So he did.

Yeah.

Yeah.

Made it happen.

Yeah.

There's a lot of times I'll call him. He's like, hold on, let me, let me make one call. And then he comes back with the answer that I need. And it's like, yeah, we're good.

Yeah.

Oh, okay. Yeah. Uh, so yeah, doing your research and then obviously not being too aggressive. Um, I guess that's, that's maybe that's just on my side.

Yeah. Yeah. But you know, you sometimes you have to play good cop, bad cop when you're with somebody, you know? And I always know you're the good cop. I'll act as the bad cop. So that's not a problem.

No, that's good. I remember we were sitting at— there's one in Santa Ana. We were sitting there with the girl and she had her like kid with her, and you were just stone cold. You will lose your house, you know? And I'm like, well, I'm sure there's some stuff that we can do here. It's gotta be something. I'm like playing blocks with the kid.

Well, after I said, you know, maybe your kid ought to go in the other room while we're talking about adult stuff. No, no, he can stay. Okay. You know you're gonna lose your house. Sorry, kid. You're gonna be homeless here pretty soon. Little Timmy's gonna lose his house. I gave her a warning. It's like, sorry.

No.

Yeah.

But, uh, so I think you're just the right, just the right amount. And who knows, who knows if you can change these people's minds. Um, number 3 is just a general fundamental rule: underestimating repair costs. That's the classic one. And let me, let me tell you guys right now, things are expensive. Materials are expensive, labor is expensive. It's not going down. So no. You can—

or, or over-improving the property.

Oh yeah.

I would put on there as well.

Yep.

That's, that's not, not, that's not— number 8 mistakes.

That's a big one.

That's a no-brainer.

Over-improving.

Over-improving the properties. No, that's not good.

Just put in the white shaker, you're good.

Yeah.

Don't go crazy.

Yeah.

Um, not knowing exit strategy first. So if you're gonna flip it or you're gonna keep it, you know, you gotta, you gotta be ready to go in there with an exit strategy and then just execute and Keep with that exit strategy.

There is no plan B when you're flipping a property. It's like, oh, Joe, like, if I can't sell it, I don't make any money, then I'm just going to rent it out. Well, that was a plan B before you started. Like, why would you even buy a property if that's your plan B? No, there shouldn't be any plan B. Sorry, sell it. Yeah, move on.

Yep, exactly. Then we got, um, giving up after 1 to 2 follow-ups. I see this a lot. People get really discouraged When the person doesn't one answer or two, you know, gives them some bullcrap excuse, or they're just like, no, I gotta figure it out.

You do what's called a triple tap.

Triple tap.

Yeah, yeah. You're like, call, no, call, no, call, and they answer. Then they answer. It's like they figure, oh my God, this guy really wants to get a hold of me. There's an emergency with the family member so I can yell at him or something. Exactly. You know, so yeah, triple tap works.

Triple tap. Pull them out of that meeting. Pull them out of the PTA meeting. And they're like, what's going on? Hey, have you thought about selling your house? Um, the next one, I guess we don't really need actually. Skipping. You can skip that. Um, and then the, the last one, letting emotion drive the numbers. So, um, just don't get emotional.

I find that mostly on your end, not your wife's.

I know.

Because I have to go to her to get the reality check because Joe, Joe, we got a really good deal. We got a really good deal. Well, what's Lauren have to say? I talked to Lauren. She goes, no, he took me out to this place and it was terrible. I told him, don't even call you, but obviously he did. He didn't listen to me. Okay, Alex. Yeah, we're not doing that deal. No, it's a good deal. It's a good deal, Joe. No, we're not doing it.

Yeah, that does happen.

Occasionally.

Not this year though. I've turned a new leaf 5 years into it.

Don't believe him. Don't believe him.

5 years into it. Nope. So, you know, just, uh, avoid those mistakes. So if you're ready to get started, here's your action steps. You're gonna pull the notice of default lists out from PropStream. If you need a free trial, Call Joe, hit up Joe.

You're going to call me, text me, email me, whatever you want.

Mm-hmm.

I'm out there. I'm available. Just Google me or something.

Google him.

Yeah.

Then run the numbers on just start small, 5 properties. Create an outreach plan on those properties, meaning you're gonna text them, you're gonna call them, you're gonna door knock. And then you gotta make sure to subscribe to this channel for weekly real estate strategies to stay on top of all the new things. Yes. So there you go.

Yes. Personalized help whenever you need it.

Yeah, exactly. I just had lunch with a guy that just found you off of, uh, Google.

You did?

Yeah. He, he then he found me. He found you. He's— I asked him, how'd you find Joe? He's like, oh, I just Googled OC Flipper. See, he had coffee with you. Okay. And then he watched the podcast and then he had lunch with me.

Nice. Yeah. And is he doing anything?

Not yet.

Oh, okay.

But I mean, he just is looking into it. No, no, he has— no, he has rentals. He lives in Laguna.

Okay.

With his wife. They have a house in Laguna, so he wants to get into flipping. So that's what I said.

Okay, sounds good.

Talk to the right guy.

Yeah.

So That could be you getting personalized help. So that's a— those are pre-foreclosures in a nutshell. Pretty fun stuff. It's pretty wild out there, you know, in the pre-foreclosure world. But it's, uh, you can really make a difference.

I would say it's probably the easiest thing to get into if you're going to do, um, flipping or flipping business, right? I would call this the low-hanging fruit.

Yeah.

And Why not go after people who have raised their hands? I'm not paying my mortgage and now everybody knows, you know? So yeah, those, those are the easy calls to make. It's, you know, getting a deal put together that's, you know, a little bit more difficult. But even then, if you're the right call on the right day at the right time, then the sun's out, you're going to be successful.

Yeah. Yeah, exactly. And you don't even need to know everything about what you're doing.

No.

I mean, because you can just call you.

That's what I did. Yeah, that's true. That's true. Hey, you still call me.

I was like, you know what, hold on, that's a good question. Let me, let me write that down. I'm gonna talk to my partner and then I will get back to you.

Yeah.

So yeah, that's simple.

That's a— yeah, that's really easy to do.

Meaning, because you can just take action, you don't have to know every single part.

Yeah.

Right now.

True.

And then if, as you learn in a deal, that's the best way to do it.

Yeah.

A to Z.

A to Z.

Then that check hits your account and then you're like, this is what I do now. This is what I do now.

Yeah.

So let us know what you guys think in the comments. Make sure to share this far and wide. We will be back here next week. And let us know if there's any topics you want to cover, as we have New guests coming in. We have old guests coming in to update us on all their success. So it's gonna be jam-packed this year. Really excited.

Packed. Mm-hmm. Yes.

So, uh, we will see you guys shortly. And again, we have a meetup on Monday. Monday. This coming Monday.

You almost missed that, didn't you? No, I would—

no, I got it right there.

You finally figured out I better push this button because we have a meetup on Monday.

That's right.

Please show up, 6 o'clock in Norwood. Uh, Mike is a fantastic speaker. He's going to be talking about multifamily, not just talking, he's going to show you how he purchases multifamily properties. Yep. So it's, it's like a, you know, 1-hour training session.

Yeah.

What he looks at, what you should be looking at, and what you do to find multifamily out of state. Not in state, but out of state.

Boom. So if you're into multifamily, which a lot of people are, you're gonna wanna be there.

Yeah.

Right on, you guys. Thank you so much for joining us. We will see you next week.

Take care. If you want some more advice on real estate investing, reach out to us one-on-one.