How To Wholesale Real Estate | Real Estate Investor Meetup 10.24.22

Thank you so much for being here, guys. I've never really spoken in front of more than 20 people, so if I choke, stutter, or whatever, just chill, okay? Thank you again, Joe, for having me. It's, it's an honor to be here. Like he said, I've done, I've done a few Zooms with like 100 people, but it's not the same. Like, and I've talked to like thousands of sellers And I got that down, but these real people right here watching me, that's kind of— I'm kind of nervous. So my hope for you, my hope today, my hope for today is to bring you some value, whether you started looking into real estate like Carl, or like you've already done some deals like you got, you guys in Indiana. So I kind of put this together in a way where I'm hoping that you'll get something out of it. And to touch a little bit more on Joe's story of how he met me, I was actually sitting there. It was like late 2018 and this was my first meetup ever. And my challenge to you guys is gonna be to at least like get 2 or 3 business cards or phone numbers from today, 'cause you never know, you're one conversation away, one text, one phone call from like changing your life, literally. Like I was sitting there and I waited until the end to speak to Joe 'cause he had a line of people trying to talk to him. Then I waited until the end, I was like, hey Joe, like I wanna learn. And he was like, okay, yeah, here's my calendar and schedule it. And we went to Wawa Grill. Yeah, I went to Wawa Grill. I had a notepad and everything. And then I maintained that relationship. And like, fast forward 3 years, like, I've done close to 100 deals. And he's— him and his son-in-law have been a huge part of everything I've done. So with that being said, let's get into this. So, wholesale in nine simple steps. This is based on my experience. There's a ton of stuff out there from a bunch of experts and gurus and YouTube videos and influencers and all this stuff. These are the nine steps that I think are going to help you to like tomorrow start taking action. Like I want you to take action. I want you to. I didn't want to just give you information that you can go on YouTube and search. I want to give you. Steps, like specific steps that you can take starting tomorrow so you can get a deal in the next 30 to 60 days or 90 days or a whole year. So number 1, pick a market. Number 2, pick a way of generating leads. Number 3, start having conversations. Number 4, analyze deals. Number 5, make offers. 6, follow up. 7, close. 8, find buyer. Number nine, get paid. Who here likes to get paid? Right. And who here likes to get paid without going through the whole process of nine steps? Like right. Like yeah, everyone. But unfortunately, there's a process to everything. Has anyone here done a wholesale deal before? How long did it take you? A month. A month. Dang, that's lucky. How about you?

It was a creative one because I represented the buyer on the purchase and I also wholesaled it. It took about 60 days.

Yeah. So, like Joe said, it took me 6 months. I started full-time April, right after COVID, right after COVID hit, full-time. I didn't get a check until— I didn't close, I didn't put a deal under contract until January. of 2021, so like 6, 7 months later, and I didn't get a check until January 21st, I think, 2021. So number 1, picking a market. Your backyard. It's going to be the best and the easiest way to start getting started. Like here in Orange County, there's like— everyone out there tells, like, will tell you like California is really hard and Blah blah blah, and all this crap. And we've done close to 100 deals here in California, and it's definitely possible. The four markets right underneath right there, those are my favorite markets to wholesale right now: North Carolina, Florida, Texas, and Georgia. That's where the big dogs are buying, like Blackstone, like the big big hedge funds with billions of dollars. That's where they're buying. That's where like. I was at the BiggerPockets conference a couple, a few weeks ago in San Diego, and I was talking to guys that have like 3,000 rentals, 4,000 rentals, 5,000 rentals. That's where they're still buying. Job growth, population, all of those are indications that those markets are going to be really strong even if like shit hits the fan in the next 12 months. So, that's where you want to buy, whether it's for buy and hold or wholesaling or whatever. Those are the markets. And within each of one of those states, obviously the big metro areas. So like North Carolina, Charlotte, um, uh, Raleigh or Raleigh, however you say it, uh, Florida, Jacksonville is blowing up. I'm sure you've heard of that already. Uh, Texas, Dallas, Houston, the, the popular ones, Austin, um, and then Georgia, Atlanta. So number 2 Generate leads. In order to do deals, you have to generate leads, right? So these are some ways that I still find deals: driving for dollars, cold calling and SMS, social media ads, Google Ads, referrals, and door knocking. So driving for dollars—that's how I got my first deal six months later. I was driving. I ran into a—I was driving in Banning. You guys know where Banning is? Yes. I was driving in Banning, and I met this owner. Little short Mexican guy. And, uh, I was like, I started speaking Spanish, and he's like, you speak Spanish? Like, Mexicans are not tall, what are you doing? Like, um, and, and then we hit it off, and before I knew it, he literally owned half of Banning. Like, I searched him up and he owns— he owned like half the town. He moved from Mexico in the '90s, and I don't know who taught him about real estate because Hispanics don't know about real estate investing or any type of investing. Um, so that's one of my missions, to get my people to get to, to change their lives. And they said that's a whole other thing. But, uh, he owned half the town. He ended up selling me like 12 properties. And that January where I got my first deal, he, he sold those 4 properties. So I did 7 deals that January, the 7th month of, of me being full-time. Um, so that's driving for dollars. Super easy. All you need is give up your time and, and gas. Like, if you don't have money to spend in marketing, then you're gonna have to give up your time. Cold calling and SMS. Good old cold calling. It's still one of the best ways to get deals. You can hire VAs. You can cold call yourself. If you're getting started, I would definitely recommend you to cold call yourself first just so that you can get the reps. Cold calling is not easy. It's hard. It's really hard. It's hard. Nobody wants to do it. But if you want to be good at it, I would definitely do like 1,000 calls and then you can hire out, hire somebody else. Social media ads, Facebook ads have been really effective for me, for us, for my team. We've done really well from Facebook ads. If you're going to do that, make sure that you hire somebody that knows what they're doing because Facebook changes their whole science behind their backend. They change it all the time. So if you don't keep up with it, you're going to be just spitting out ad spend and ad dollars and you're not gonna get anything. Google Ads is really good too. It's a lot more expensive than Facebook Ads. Referrals and door knocking. Referrals, again, my challenge to you is that you exchange information here with somebody here because you just never know who has the next deal. I went to a meetup in Riverside 2 months ago, the big one, Inland Empire Real Estate Meetup. real estate investing meetup, and I connected with a buyer that has a bunch of rentals in San Bernardino. And that month I assigned 2 of my wholesale deals, I assigned them to him because I met him there. So it took me 2 hours of my time to drive out there, make some connections, have some conversations, and then I assigned 2 deals. So talk to people, tell everybody, tell the whole world, post it on social media, tell everyone that you're investing in real estate. Tell them that you have capital partners and that you have mentors. That way they take you serious because if your family or your friends have never seen you do anything with real estate, they're not going to take you serious, right? But start telling people. Don't be scared. See it, believe it, and make it happen. Door knocking. Door knocking works. I've done a little bit. I always encourage my contractors and my And my students and my people that I work with to go and do it. And we've gotten deals that way. I have one flip in San Bernardino right now that it's next to a flip that it's in escrow right now that we're about to close. And we literally got it because my contractor went and knocked on the door and just asked her if she was looking to sell. She happened to be interested in selling. He gave me her phone number, I called her, and I closed it in 3 days. Number 3. Oh, and by the way, the 67 is driving for dollars. The 17, it's Facebook ads. And then I gotta update it, but we're getting mainly most of our deals from driving for dollars, Facebook, Google, and cold calling, in that order. Charles, what's the difference between driving for dollars and door knocking? What is driving for dollars? Driving for those, you don't have to go like this. And you have an app. There's a bunch of apps and softwares that you can use to just drive around and then tap the addresses or the house that you're looking at so that their information gets pulled into the app. And then you later on kind of skip trace it, which means you pull the owner's contact information and then you can reach out to them. So number 3, conversations. You must talk to people. Conversations equals leads equals offers equals deals. If you don't have conversations, you're never going to have a deal. And by conversations, I mean start calling people, start calling homeowners, talk to homeowners. Who here is trying to wholesale or trying to focus on wholesaling? How many? Have you made any calls yet? Why? Just in Joe's office, just like practicing. How many? Not a lot. How long ago was that? Like two weeks ago. And have you called since? No. Okay. So Eric reached out to me. He found me on Facebook like what three years ago? Like two years ago from grads. Two years ago, he said he sent me a message and I don't think I responded. Or maybe I did, but 2 years went by and then he finds me on Instagram. He's like, hey Carlos, I reached out to you on Facebook a long time ago. He sends me screenshots. He's like, I'm super hungry. I dropped out of high school. I've done a couple deals already. And then I invited him over. I was like, I didn't take him serious. I got a lot of people and just out of those 500 launches, maybe what, 3 people did something? It's a hard industry. But anyway, didn't really take him serious. I was like, okay, sure, go find me 1,000 houses driving for dollars and then you can come to the office. He found like 1,000 properties around Hemet area and San Bernardino area in like a week, like 4 days.

Yeah.

I was like, okay, all right, all right, I like, he's hungry. And then I was like, okay, I'll see you at the office 8:00 AM or 9:00 AM on Monday. And he lives in Hemet, the office is across the street. So he drove 2 hours and he was there at like 8:45. He was early. I was like, okay, this kid is serious. But yeah, I don't know where I was going with that, but talk to people, have conversations. Oh, oh, because the conversations. He made a bunch of calls that day and he hasn't gotten a deal yet with me yet, but he's having those conversations. You guys have to call. It's uncomfortable, it's hard. You're going to get hung up on, you're going to get cussed out at. But you need to do it in order to do— to, to be successful and just get good in this business and get good at sales. And sales is a skill that even if you don't stick around with real estate, it's going to serve you well. Any questions? I want to keep it to like a couple questions per slide, and then at the end we'll do a big Q&A. Driving for dollars, you're looking for houses. What, what's the criteria for what you're looking at? You're driving past, like, what's the thing that catches your eye fast? Broken windows, the lawn not being taken care of, broken mailboxes. You can tell when doors are old, the windows are old, the stucco is kind of like messed up, the roof. There's clear signs when someone's not taking care of their property. Are you driving for dollars in person or are you going to digital? I know some people that are doing it digitally. I've never done digitally, honestly. Yeah, yeah, I don't, I don't know. I don't— I wouldn't do it. I wouldn't recommend it just because virtually it's gonna take you a lot more— a lot— I think it's gonna take a lot more time for you to like go through Google Maps or whatever to try to find a distressed property.

If your market's—

Right, right. If you're virtually— if you're— yeah, yeah, yeah. So I know people do it, so you can, you can give it a try.

It tells you the date it was taken, the photo of that house. True.

Make sure it's a recent photo. Okay, so my step 4 is analyze deals. Because let's say you already have some leads, you already have some conversations, so how do you analyze deals? This seems to be one of the biggest struggles as to why people don't pull the trigger because They say, whoa, if they say yes, what do I do now? And I was like, how many calls have you made? Zero. I'm like, okay, get a yes first and then call me. This is a simple— this is literally the formula that we use. It's super simple because we analyze a lot of deals every single day. So ARV minus carrying costs, closing costs, minus repairs, minus profit, minus assignment fee. That gives you a total cost. You subtract that, you subtract that from the ARV, and then it gives you the $254,000. The $259,000 is the 70% rule that I'm sure you've heard of, which is 70% of the ARV minus the repairs. But the $254,000 is what we're going for, and then the $325,000 is the MAO. And the MAO, pretty much that increase, this increase right here of like $29,000 or $31,000, it takes— it gets taken away from the profit. So if you want to increase your offer, it's going to shrink your profit. That's where it comes from. And then the repairs, the repairs, again, that's one of the things that seems to be a struggle of people don't know how to do. Guys, now like I've done maybe like, I've been a part of, I've done like 20 flips with a partner and I never knew anything about construction. I deal with contractors and I don't know how to change a faucet. My point is don't get so caught up in trying to know everything. Just use that rule, $35 per square foot for For a light rehab, $45 per square foot for a medium rehab, and $55 per square foot for a more extensive rehab. Multiply that by the square feet. So for this example, $66,000, that's from 12,000 square feet times $55. But yeah, take a picture or send me a message on Instagram, I can send it to you. It's very easy. 15% of closing costs and carrying costs. That's like, That includes your 6% of sales agent, that includes your holding costs, that includes your carrying costs, your hard money, all of that stuff. And then your assignment fee, you can make that $5K, $10K, $15K, whatever you want. Okay, step number 5. So make offers. I wanted to give you something that you can, something practical. So I wanted to give you that. 3 to 5 offers a day will get you a deal in 30 days. Okay? Just write it down so you can get an idea of what it takes to get a deal. Because I get asked a lot, how long will it take? And that's why I was curious because he said they were pounding the phones all day, right?

Yeah.

And that's what it takes. You have to have thousands of conversations every single day to get 2 or 3 leads. And then after that, you're gonna get— after a month, you'll have like 30 leads. And then maybe 2 or 3 of those are actually motivated, and you have to follow up, and you have to nurture those conversations, and you have to continue to follow up after 6 months, and then they ghost you. So like, just get an idea of like 3 to 5 offers a day will get you a deal in 30 days. How do you get to make 3 to 5 offers a day? You need like 15 to 30 leads every single day. And that will probably take about 6 VAs or $5K in PPC. I can really go into detail about that, but you can ask me if you want. Number 6, follow-up. Money's in the follow-up. I'm sure you've heard that before. So this is the formula that my team and I use to get ahold of anyone. You call 3 times in the morning, back to back to back. I'm calling one time. They don't answer. I'm calling them again. I don't waste time. They don't answer. I'm calling them again. They don't answer. I'll leave it alone and move on to the next person. And then in the evening, again, I'm going to do the same thing. Call, call, call. Now since it's the evening, I'm going to leave a voicemail. Then I'm going to text and then I'll do it again the next day. Okay? If it's an inbound lead, I'm going to leave a voicemail, a detailed voicemail like, hey John, I got your inquiry about receiving a cash offer on your property on 123 Main Street. I actually just found another property, so I wanted to jump on this one and earn your business because I want to beat my colleague John here. Give me a call ASAP. Okay? If it's an outbound, like a cold calling lead from like a VA, I'm not specific at all. I'm going to be like, hey John, this is Carlos. Give me a call back when you have a chance. That's it. Pretty vague. You want to pique curiosity and you want them to call you back and get them on the phone. And then same thing for texts. If it's inbound, like a PPC lead, those guys are ready to go. There's been deals where we didn't call a PPC lead right when it came in and then somebody else got it. Because those people are distressed. They're trying to go. And then same thing with text. I have templates for all this, but again, don't get caught up on not having a script or not knowing what to say. Just reach out, you'll figure it out. And then repeat. Any questions on this slide? Those 3 to 5 offers a day, those are in writing? No, no, no. Everything over the phone. Yeah, yeah, yeah. Unless you have an agent that is submitting offers for you for on-market properties, then that's a whole other thing. But this is everything off-market.

So you just actually talked about distressed. So what systems are you using to find those distressed properties, like the NODs or PropertyRadar or something like that?

Yeah, so we're targeting probates, violation codes, high equity, code violations. I already said it, right? Absentee, vacant, and mom-and-pop landlords from like three to five that own three or five properties. And we have niche lists. That we use. I can give them to you.

Number 7.

So step number 7 is gonna be closing. So once you get your offer accepted, you wanna send an agreement and open escrow and then get that whole thing going. So once you get your offer accepted, do not let time go by. Don't be like, okay, I'm trying to think of a story. Let's say that the seller already accepted my offer and I get excited and I hang up and then I go tell Joe and time is going by and I call back and then now they're not answering and then somebody else got it. Time kills deals. Once you get your offer accepted, try to get it signed on the spot. Try to keep the seller on the phone and get them to sign. They shouldn't have any more objections. There's been times, and I've learned from this mistake, I've learned from the mistake, my team has learned from this mistake. There's been times where we send the agreement out, hours go by, and we can see on the DocuSign that they opened it and they haven't signed it.

It's stupid.

Yeah, they feel me right there. They haven't signed it, and then we call again. It was like, hey, like wanted to see if like you had any questions about the agreement. They answer. Sometimes they'll ghost you, and then there goes your deal. They answer, and they'll be like, well, yeah, but I hear I see here on number nine that it says you have fifteen days for an inspection. I thought you were buying it as is, and then they start reviewing the whole thing, and like and that's fine. Like they have the right to do that. It's a big decision. They're selling their house, right? But I want to do that on the phone with them. So I can right away clear those objections and then get them to sign on the spot.

Okay.

Also, make sure that before you sign an agreement, everybody's on board. The wife, the uncle, whoever's on title. If it's a bunch of siblings that inherited a property, you want to get everyone on board and ask that they're on board so that there's no issues of sending the agreement and then they sit on the agreement and then the other sibling is shopping it around to other investors And then now they're getting an offer for $5,000 more, and now they come back to you and they're like, yeah, we didn't sign because we got $5K more from this other company. I'm like, keep them on the phone and don't let that happen. Okay, I gotta relax, guys. I'm a little— Number 8, find a buyer. So finding a buyer is also pretty hard. It's not hard, but it seems to be a hard thing to do for people that are getting started. And they struggle to find a buyer. So Facebook groups, realtors, search up recent flips in the area. Oh, I also assigned a deal in San Bernardino. I went on the MLS and I put out a 1-mile radius to where my property is, and I started calling all those people that flip there. A lot of these investors are license as well. So I reached out to them, I was just like, hey, I see that the property right here that you just listed recently, you flipped it. Are you taking on another project? Are you still buying? Et cetera, et cetera. And I found a buyer like that. Social media, you can go on Instagram and go on the search tab and search up a hashtag like Nashville cash buyer or Dallas home buyer, whatever. You can find a ton of companies that way. PropStream, InvestorLift. InvestorLift is a really popular one. It's really expensive, but if you know somebody or ask around, people have access to it. People have accounts to InvestorLift. It's pretty much like a marketplace for off-market properties. So we've been able to— we have 3 deals right now that we're about to close. One in North Carolina, Atwater by Merced up north, Northern California, And then Pacoima, LA. And all 3 of those buyers from Investor Lift. JV, guys, if you're getting started and you get an offer accepted and you're negotiating it, let me know. We'll JV it. I'll find the buyer. We'll split the assignment. Or find anyone that it's in that market. You can always list the property. Just make sure that you disclose it to the buyer. That way they know. Or you can just put it on Zillow as a for sale by owner. Okay? A lot of ton of wholesalers do that. Buyers get sellers, sellers get pissed, but just make sure that you tell them. Be upfront, be transparent. Don't be that wholesaler that just shouldn't be wholesaling. Final number nine: Get paid. Obviously, this is the best exciting. This is the best thing. This is exciting. The exciting step. And, uh, but it's hard. It's hard to get to that point, right? And hopefully, like, all of you guys, with whatever your goals are, you can get there, um, so that you can accomplish your goals and you can get to where you want to get to. Once you find your buyer, you're gonna sign it, you're gonna close and get paid. Um, also, guys, for all of this, you should already have like a, like a blank template for like an RPA and like an assignment of purchase and things like that. That way you have those ready to go. And contracts is another thing. It's— I can send you my contracts, Joe can send you his or contracts. Um, don't let that stop you, okay? Don't let that stop you from, from getting something signed and under contract. And that's it, guys. But KPIs, I wanted to share a couple other things. So KPIs, for those guys, for those of you guys that have already done some deals and you're trying to scale and do like grow your business, grow your company. These are some of the KPIs that we keep an eye on every day, monthly.

All right.

So cost per deal, cost per lead is gonna be your marketing dollars divided by your leads. Your outbound, it's gonna be like VAs cold calling. That should be about $15 to $35 per lead. And then your inbound, like Facebook, Instagram, Google, like those leads are a little bit more expensive. They're gonna range from like $50 to $150. Yeah, $50 to $150. Your cost per deal, marketing dollars divided by closed deals, $2,500 to $3,500. It's a good range per deal. Like if I'm paying $2,500 or $3,500 to make $25,000 on an assignment, it's a good deal, right? It's a good investment. Your conversion rate, it's gonna be your number of deals closed divided by your number of leads. So if you get 100 leads in a month and you convert 1, that's like 1%, right? So anything greater than 2%, it's a good benchmark for you to stay in. Anything under that, it's just gonna mean that you're paying a lot of marketing dollars in exchange for not that much money or not that much ROI. And then this one, this is more for your VAs, your LQI, which is your lead quality index, your leads contracted divided by the leads connected. So this is really important because you can make 1,000 calls, but if you only have one conversation, Doesn't do anything, right? So you want to aim at conversations. We aim at 150 calls a day for already warm leads. 150 calls a day, 30 conversations. What are you doing daily, Eric? 100? For the calls?

Yeah.

Yeah, around 100. And how many connects? Usually it's 40%, around 40%, or a little bit less sometimes, or sometimes it's more. It depends. Usually it's around 50%. But you wanna make sure that you keep an eye on this and that you're aiming at conversations. You wanna aim at having conversations. 'Cause it doesn't matter, again, it doesn't matter if you make 1,000 calls but you don't have a conversation with anyone. Anything above 0.56%, it's gonna be pretty good lead quality index. So any questions about KPI stuff?

Yes. Can you give examples of the types of Facebook groups that we should be using?

Yeah, there's thousands of Facebook groups out there. What market are you in? I'm thinking maybe Riverside, Imperial, San Bernardino. Okay, so you can just do Inland Empire cash buyers. You can type that in. You can type in Riverside Investor Club. Riverside Investor Club, Inland Empire Cash Buyers, Inland Empire Home Buyers, Orange County, LA County Home Buyers. Pretty much anything with those words and you'll find a bunch. SoCal Wholesaling, things like that. So this is the check that I was talking about. January 30th, 2021. That was my very, very, very, very, very, very first check that came from real estate. And UYP, that's my basketball academy. I didn't even have an LLC. So if anyone's telling you out there, I know Fortune Builders. Who here has heard of Fortune Builders? Yeah, those guys charge you like $40 grand to tell you nothing. And they tell you to go get an LLC before you do anything. Guys, don't waste time on an LLC. Yeah, you can get it after you've done a couple deals or a deal. I didn't even have an LLC. That was my basketball LLC. It's a youth basketball academy in Irvine. Thankfully, it's working, so if you have kids, bring them to basketball. It's running on its own. But anyway, very, very first check, Jefferson Street in LA. This property, it was crazy.

Divorced couple.

Divorced couple. The lady was living in the house. The ex-husband sold the property without telling her. But he had an— they had an order from the judge that they couldn't sell it until their kid was 19, and the kid was 16 at the time, and he did not give a crap. Like, he sold it and title didn't catch it. So they sell— this— the sale went through, we got the property, we closed on it, and then the, the, the mom, the ex-wife, is like, what are you doing? Like, you can't— like, the judge said you can't sell it. So he— she sued him, and then they— and then title had to like Put up like like a remedy like fee of like forty grand, and that didn't come out of pocket. That came out from title, and it was a whole mess. But that deal worked out. I got paid, and yeah, it was it was crazy. But yeah, it's it's just very very it's it's it makes me makes me feel a certain way because. It was a long time. I was struggling during COVID and couldn't really pay rent, and I can tell you, uh, everything about that. But yeah, I just want to share this with you guys to show you that it's real. It's obviously not a lot for my first check, but it was, it was something. And this is real, guys. If you want to put the work into it, you'll— you can change your life. You can change your kids' lives. You can do— you can quit your job if you hate your job. Like If you don't want to work for anyone else, it's possible. It's real. Commit. Do it. We're here to help. And you'll get results. I found this from June, June 14th, June 16th. This was a wholesale $50K assignment, 24 assignment from North Carolina. And this one was in Yucaipa. Yeah, Yucaipa. So we get this monthly. Takes time. It's a lot of mistakes, a lot of learning, a lot of marketing dollars to spend. But again, guys, it's real, and I want you guys to win. I want you guys to experience whether it is wholesaling or flipping or short-term rentals or multifamily. Like, do it and Stick with it for a while. This was my very, very first flip. This is one of the banning houses that I told you guys. That was one of the banning houses. So this flip, I did it with his son-in-law, Ryan. He's my partner now. We're partners. And that was January, yeah, January 2021. I had like $10,000 saved because I spent all my savings trying to survive during COVID And I knew a contractor that he used to bring his kid to my basketball program. And I was like, hey, I have this flip, can you remodel it? But I don't have money. Can I pay you when escrow closes? And he did me that favor. He's like, yeah, don't worry about it. So I used those $10,000 of savings, my last dollar for the down payment, for this property because we use Harmony. And we flipped it. We made $60,000. We went halves. Out of those $30,000, for me, the next day I wired $20,000 to a mentor to mentor me. And that 5x'd my business in 90 days. So my point is, don't be afraid to Do these types of things if you want to really grow and scale, because that's just what it takes. Like, if you want to do 1 house a year and then have 10 houses in the next 10 years and that— and you're okay with that, that's fine. That's totally fine. But if you have a dream or a goal to, to own like millions of real estate or have a house for each kid or whatever, multifamily— like some of you guys mentioned multifamily— like if you want a portfolio of like 100 units, 50 units, whatever it is, This is what it's gonna take. And like, it's— I did not care. Like, I made a little bit and then it went right up, right out. This is another flip right here in San Bernardino. This is the nastiest house I've ever been to. There were cockroaches coming out of the outlets. Like, here, I'm gonna show you the toilet.

Oh no.

Guys, people were living here. And there's hundreds, like there's thousands of houses like this. So if you don't knock on the door, if you don't call the landlords— the owners of this property lived in Idaho. Last time they went to the property was 2012.

Wow.

They were getting like $800 a month, which is like way below market value. They didn't care. Like, they were in Idaho. They haven't been into the property in like the longest time. Look at this toilet. That's the bathroom. Oh, I walked into this property. My girlfriend's back there. She's like, you gotta shower before you come back. Yeah, guys, like It's— some of these are sad situations. The TV, I mean the, the kitchen. But there's thousands of properties. The backyard. There's thousands of properties like this. So if you don't go, if you don't go, if you don't go out there and get them, somebody else will. All of these properties are going to be flipped eventually, whether it's today or in 20 years. All of them are going to get flipped. Every single one of them.

How long was that one on the market before you sold it?

This one?

Both of them.

So this is right before the market exploded. So we had the ARV on this one like $280,000, and that was for like a $30K small profit. And we were hoping, like, the market was looking good, we were hoping for like $300,000, and then we got like a cash offer at $330,000. From like some— somebody out there, and like we were like super stoked. So that's, that's when the market started to explode. This was about March. We're expecting like $50K profit, and obviously with the market helping us and helping everybody else, um, we like almost doubled that. But yeah, I don't know, to answer your question, like a week or something. Yeah. Yeah, I have the address and everything, like if you wanna check the MLS. But, um, does your team plan on like changing like your wholesale strategy as far as what you're buying and what you're offering to your, to like your clients as the market slows, right? I mean, I'm not a real estate agent, but like I can look at the metrics and see that like year over year days on market for the market size, you know, doubled in the last year, right? So does that change Your mix of flips versus other strategies like multifamily, value, buy and hold? Yeah, yeah. So you have to adjust. So now we're not flipping as much, we're trying to wholesale more because there's, again, there's still buyers out there, there's still big people, there's people with deep pockets. So we're trying to wholesale more. And how we're adjusting is we're taking 10% off of the ARV, of the current ARV, We're taking 10% less than that, and then we do our numbers. That way, if the market corrects, then we have that cushion right there to still get the property under contract at a good price to where we're gonna be able to move it.

For your—

It's the same numbers. They're the same numbers. Yeah, but with your— if you're wholesaling multifamily, technically you're whole-time, Between buying it and then flipping it to— not flipping it, bad term, but like finding a buyer for it is considerably lower than like a 3-month flip, right? Which is why you would change your strategy, I would assume, to more like wholesale. Yeah, yeah. So we, yeah, we just adjust our numbers, um, like our holding time. If— have you guys heard of wholetailing? Like, if you guys wholesale, our holding costs are like way less. We do like, uh, like 6% instead of like 8.5%, and then we do a big flip, then we bump it to like 15%. Like little things like that. That's how we're adjusting. I don't know if that answered your question.

That's perfect.

Yeah. Um, and we're doing a lot of creative financing. Uh, we're doing a lot more of that. Um, we're just adjusting again. Um, we have no wholesale multifamily, but we started marketing to multifamily Last week, so. Like, your guys' market isn't like the best for cash flow.

Yeah.

'Cause it seems like the local market, like that's where a lot of us are in, you know. Yeah, yeah. I wholesale out of state now. This year I started wholesaling out of state too. Like those markets that I show you guys. And those are great markets for cash flowing properties. And this was a home run. This deal was the 7th deal on that January where I got 7 deals. That's what Joe meant by the pipe burst. I was not a part of this project because obviously I didn't have money for this big of a project, but I found the deal, I closed it, I negotiated it, and then Ryan flipped it and I got a little chunk from that piece. But yeah, the deals are out there, guys. Go find them, get yourself paid, have a nice Christmas.

What city is this?

This was in, uh, next to Duarte. Um, uh, yeah, right there. It's a, it's a little, um, right there. It's a little tiny city that it's like 2, 2 streets. What's it called?

I remember, I just remember the city was It's literally—

yeah, it's Arcadia, Monrovia, and Duarte. Literally right next to Duarte.

Really small city. We removed a tree from the front yard. I'm gonna find Holly. I think the city cared more about that than, you know, what we did inside, and we had to get a permit to replace it. And they wanted, uh, you know, a street tree on there.

Yeah, there was a tree. Oh, well, that tree right there. Yeah, that's the one. Uh, Bradbury. Bradbury. Yeah, 2319 Gardee Street, Bradbury. Closed February 5th. Yeah, that was a, that was a nice one. But yeah, the deals are out there. This doesn't happen often. It's, it's rare. The owners lived in Arizona, 3 siblings. They were well off. And there weren't any comps, actually. There weren't any comps. Our ARV was $900,000. The market exploded and we made it really nice and we got a lot more than we thought. But yeah, Joe took me out for a nice dinner. That's all I got. Carlos, you said you didn't do this, you did the deal, you found the deal, but you didn't work with him? Yeah, I found the deal, closed it, negotiated it, and then I gave it to him and his son-in-law and they flipped it.

Yeah.

Yeah, but so, what's— yeah, it's fun. Um, this is my Instagram. Can you guys pull out your phone, follow me? If you learned something today, uh, or if you have any questions, DM me. I'm answering questions all the time. I'm happy to help you, uh, and answer any questions. I'm here, Joe's here, like I said already earlier. Um, and yeah, I'll open it up to, to questions. Let's just— because I mean, Joe can find you any property in Orange County. He has client— he has clients that—

Don't buy anything right now, honestly. We have to wait till the interest rates settle wherever they're going to settle. And that's not going to be for a couple of months. Once they settle, then we can figure out, okay, we've settled here. For example, when I bought my third house back in 1980, Jimmy Carter was in office. Most of you don't remember who he is, but he was a president.

The peanut farmer.

The peanut farmer, yes. It was very similar to what's happening today. Okay, interest rates were through the roof. I paid 14% interest on my— that house that I purchased.

Dang.

Um, to sell my house, I had to do what's called creative financing. So there was a loan on the property, the buyer came in, took over that loan, I took back a second on the property And then he put down 10%. That's how he ended up buying it. My second was for 3 years, and the guy paid me back in 3 years because the market turned around to the point where he could refinance it after that. So that's where I think we're headed. So you real estate agents, you need to start learning about creative financing, subject-to deals, all-inclusive trust deeds. If you don't know what I'm talking about, then you should get out there and start learning exactly what I'm talking about. Because our interest rate's gonna— it's at what, 7.5%? Who's the lender? Is, you know, you've got a license, so the state considers you an expert, but are you really an expert? And for those people who are buying, you need to ask those questions of the people that you work with. You know, how experienced are you? Do you Do you have investment properties yourself? What are you suggesting in this market? Things like that. Okay, but you have to buy at the right time. And in California, because I've always stayed in California, all my buy-and-holds here, they're all paid off right now because I purchased them over the years. 2008 came around and we had the big crash. Some properties that I still have in San Juan Capistrano, they were condos and they were worth at the time $500,000 for a 2-bedroom condo. Does that sound familiar? Okay, and then the market crashed and they went down to $100,000. What did I do when it got back down to $100,000?

Nothing.

I bought 10 more. They're back up to $500,000 today. Okay, but that's because I've been doing this for 40 years and I know the market and I know that particular market. But yes, you need to be prepared. I hear a lot of these gurus on TV. I don't agree with a lot of them, but I do agree with some of them. And there's some of them, they're out there basically telling you, you know what, save your money right now, get it ready. Get, uh, you know, whatever, uh, qualification you need with a bank and get that ready. Because when I was buying, uh, in 2008, I was literally putting 10% down on these properties, you know. Why not? What would cause— what would cause a crash? Because I mean, I, I study up and listen to a lot of different people, and I can't see a true cause for, for any crash. And I mean, certain things like the millennials being like the biggest buying power right now, you know, probably after the boomers. Um, and they're just— there's not a lot of inventory, so I don't see how like the demand is going to go down. And people like— a lot of builders— It's not— there's 3 things that'll cause a crash. One is interest rates. Unfortunately, they're going up, so that, that, that will cause a crash.

Unemployment.

In conjunction with unemployment. So if you don't have a job, you can't make a mortgage. So again, real estate agents, get ready. If you've heard the word short sale, then get ready. That's not going to happen because we've run up so much in prices that we're up here and they can't make their mortgage payment, but their mortgage is here. You know, let's say it's $500,000. And the house is still worth $1 million. So they're gonna have to just put it back on the market, sell it as a normal sale, but it's gonna be discounted because if they go into foreclosure, foreclosure is 3 months and 21 days and they're out. So again, agents, you should be targeting all these type of people that I'm talking about, okay, because it is coming. And then the third thing, if you see this coming, okay, which is the most dangerous thing out there. What do banks do? They loan money. If they don't loan money, they're not making money. So what do they do in these type of situations like now? Your FICO score minimum is 620. Oh yeah, let's go down to 550. These people down at 550, sorry, they can't afford the place and they shouldn't be buying anyways. But the banks are lending them. So now, okay, that's one problem. Next problem, like we had in 2008, we had warm body loans. If you had a warm body, you went to a bank, they gave you a loan. I don't care what it was, okay? Not everybody with a warm body should be buying a house. Then they had 100% financing, okay? So there's the third leg. If you see that happening, Then definitely start hoarding as much money as you can. Get ready because it's going to go down to the bottom, and then you start picking everything up at the bottom and just literally ride it up for the rest of your life if you're young. Yeah, if you're young.

That's—

I think what Carlos is talking about now, if you wanted to do something now, and an important thing that he left out, again, as an investor, you to invest yourself, which is what he's doing. So he's purchased a couple properties. I don't know if you're holding any, but he is Airbnb-ing the ones he is holding, and that's where you're going to cash flow. Okay, my son-in-law just put an Airbnb property that I— did you find that one for him in Big Bear? Yeah, found that for him in Big Bear, 2 of them. He just put one on Airbnb, and he just started that And he's got it booked on January— well, he's got more dates booked, but he's got it booked on January 1st, 2nd, and 3rd, $1,800 a night.

Nice.

Okay, that's where you're gonna make your cash flow. If he's thinking about investing, you need to go to Joshua Tree where he's at. You need to go to Big Bear. You need to go to those markets where you can Airbnb property and get that cash flow. Because you're not going to get it anywhere else. Honestly, you're not. And then the last question, which is really tight, is, um, JV goes— stands for joint venture? Yes. Okay, brilliant. I'm brilliant. Okay, got it. Thank you.

Yeah, guys, don't let the market stop you. Like, I'm not an expert. He's been in real estate for 40 years. I've been in real estate for 2 years. Just pay attention to those that know. But still do, still take action, still save money. Wholesale is a great time because we get emails from wholesalers every single day saying price reduction, price reduction, price reduction, price reduction, price reduction. They have hundreds of deals out there under contract at prices that they cannot move. So what does that mean? It's going to weed out a ton of wholesalers that got lucky and got spoiled the last 2 years. So if you're trying to wholesale, it's a great time. If you're trying to buy short-term rental, Do your due diligence. It's gonna stay here. Like he said, in California, Big Bear is good, Joshua Tree is still good, pretty saturated right now still, but it's still getting booked. Lake Arrowhead is dead. Carmel is good. Paso Robles is good. Temecula, done. Lake Tahoe, done. Oceanside, good, huh? Like, it's not a good market to invest a short-term rental, or, or the regulations, uh, or they banned it. Uh, like, why do you sell your Lake Arrowhead one? Well, a few reasons, but the market mostly, because it was so good.

So yeah, late February.

But if you— Look at like ADRs, which is average daily rate, above $200, and make sure that you, you can cash flow 2x to 3x of your mortgage and you'll be fine. Because after cleaning fees, after Airbnb fees, after utilities and everything, like, you don't make as much as, as it looks on paper. So just make sure that you do your numbers And that you search up the ordinances for that city because every city is different. Um, and creative financing, like he said, agents— and even if you're an agent, like, there's deals out there. Like, start making offers to those that are sitting on the market for 90 days or more. Start telling them, hey, is your client— start asking them, is your client open to terms? You don't have to know much about it. You say, would you be willing to carry the note? That's it. Like, oh, like, you want your price? Give me terms. 30 years, 4% interest, whatever. I got a condo in Dana Point, Ocean View. ARV's $875,900. I got it for $575,000, 3% interest. I bought it subject to the first loan that the owner had, a 4% loan to Wells Fargo. Of $218,000, and then she's carrying the rest for, uh, she's carrying the second note, um, $345,000 at 3%, 2% down payment.

Is that one of those new build condos right there in Dana Point?

No, I wish.

It's existing. Her son was living there and he finally got out, and this lady used to call Carlos her son.

Yeah, she still does. Yeah, she said—

Those deals are out there. And, um, I found one the other day, it was on the MLS. Found one the other day and tried to get, uh, my, um, YouTube guy who does all my YouTubes, I tried to get him to buy it, but he's, he's just got married Saturday and there's too many things going on. But I can— I'm telling you, if this one was literally 10% down, it was It was a condo. It was just a 1-bedroom, but they were— the guy was willing to do financing at 5%. If you can get into something at 10% down and not have to qualify for a loan that's not in your name, it won't show up on your credit report. Hello! I mean, there's deals that you just have to ask. Honestly, just say— all of our cold callers ask. Are you willing to take back some seller financing? And it's just a matter of a discussion. What is that? And explaining it, explaining that to them.

Yes, sir. Question on the Dana Point deal. What happened with the spread equity between the $500,000-something and the ARV, which is $900,000? Did you put any down, or how did you close it on the $500,000? What do you mean, how do I close it? Like, how did I get it that cheap?

Yeah.

Because she calls me her son. Because she calls me her son. Distressed, distressed situation. The son hadn't paid a dime to her mom in more than 10 years. All he did was smoke weed and play with her, with his cats that pissed all over the place, and he didn't do anything. So she called me. She had already sold me 2 other properties in Palm Desert, and she called me. She's like, hey, David is he's a rat. He literally she said literally sent me a rat emoji saying David is a rat. She said I'm I'm trying to just retire and have some income, and we looked into flipping it. I was like it's a great spread, great location, great area. I was like huh. Sorry Joe, I'm gonna keep this one. So I I pitched it to her.

I think he wants to know how much money you put down.

2%.

Yeah.

Yeah, and the equity— yeah, and the equity, I'm putting about $80 grand into it, full remodel, and then I'll have the rest of that as equity. She did not value your wealth— I mean, its value more than kind of what you put into it? Yeah, she did, and I was like, Where the market is heading, this is what I can do. I'll take it off your hands. I'll deal with David. I'll evict him, and I'll pay you the terms. So three percent interest on a three hundred forty. I'm paying her like fifteen hundred dollars cash flow. That's net to her every single month. She's like, "That works for me." Just give me two percent down. She's she's she's a little. She's older, and she's like. I don't want to pay taxes. If I, if I sell this for cash, I'm gonna have to get— I'm gonna get hit with capital gains. And she was gonna pay in taxes like $190,000 in taxes or something like that. Um, so she was like, great, I want that monthly income for my retirement and then I won't pay taxes. But, but she was in a distressed situation. That's why she let it go for that cheap. I'm still not I think that's his question.

I'm still not clear. You had a first trustee, which is how much?

Wells Fargo, $218,000.

And she took back a loan for how much?

No, no, that's the first one.

Okay, the second one.

Second one, that's the one she's carrying.

Which is how much?

$345,000.

Okay, so you're basically saying you went in without paying any money down?

Correct.

Zero. That's, that's what he was asking. Are you on the title? Yes.

And she is on the title? No, her— the first loan is to her name and the second loan is to her name. I'm on title, I'm the owner, I have the deed. Do you have your cold callers explaining to them, to the sellers, what seller finance is, or do you just have them asking the question and then if they then say What is that?

Do you say, oh, a team member will explain it?

So we're working on that. We're working on training them. So Eric has been implementing that right away. So the first thing— so here, I'll show you guys. It's gonna be hard to find, but we have this chart with all of our exit strategies. And our first exit strategy is gonna be a wholesale right now with this market. So if it doesn't fit that, we go to flipping, we go to wholesale, we go to buy and hold, we go to subject to, we go to seller finance, we go to selling on a wrap, and then we go to listing. So based on the situation, the motivation, their asking prices, et cetera, et cetera, we kind of put them in these boxes to try to figure out Really, what's going to be the best so that we can convert the lead? Because any lead that you have, we do our best to try to convert it. But to answer your question, it's like on the phone, like, okay, it doesn't fit this, doesn't fit this. Then Eric goes like, oh well, we're not able to do a cash offer because we're $100 grand below your asking. Would you be interested in giving us terms? And Also, how we see if we're going to offer that or pitch that is based on their goals. We like to ask, like, Mr. Seller, what is your main goal? Is it to walk away with $300,000 cash and have him sit on the bank and lose money? Or is it have some cash, move to Arizona, and then maybe you can make more? And then they're like, well, I just need $20,000 to move and then I'm not doing anything else. Oh, well, great. I can give you $20 grand and then I'll pay you interest on the rest. You'll make money every single month and you'll make more eventually. And what's in it for me? I don't have to come up with $300,000 out of pocket. Instead of paying the bank, I pay you. How does that sound?

Yeah.

I think that second note that you— that the seller financed her equity, like, what was the payment on that? And did you pay interest on that, or was it principal only? Uh, yeah, there's a payment. So the first, the first one is, uh, like a $1,400 payment, and the second one is like $1,480, and then HOA is $480. So my payment is like $3,500 for a month. Yeah.

How far back are you running your comps to find the ARV?

90 days. Yeah, and we're looking now at, uh, the active inventory too. Yeah.

Yeah. For your Joshua Tree property and just in general vacation rentals, how are you calculating occupancy when you do the numbers, like vacancy rate?

So occupancy, I use strinsights.com and I use AirDNA. And those are— I've analyzed like based on my properties and my like my real numbers Compared to what AirDNA will say about my property and what STR Insights will have over. And it's pretty close. So I use those.

So how many days on your Joshua Tree property are you getting $1,800 a day?

I'm not getting that. That was in Big Bear. But I'm getting about $800, $400 to $800. 73% occupancy for October.

Is that like a unique property type or just like a single?

Yeah, yeah. Right now in Joshua Tree specifically and in general, I'm gonna say that you really have to make it a theme or you really have to go all out to make it stand out because there's, there's so many, especially in Joshua Tree, like there's so many like luxury and unique like bubbles and like these like things and like, yeah. So, so I, yeah, I put a good amount into it and I made it like Tulum theme. The link is in my Instagram. If you want to take your girlfriend or boyfriend, like, uh, go and stay there. How long was the permit process for you in Joshua Tree? We're doing glamping also.

We're gonna do those globes.

Yeah, so my 2 properties are in Yucca Valley. They're not in Joshua Tree. So one of them is in Yucca City. That was like 3 weeks. I paid and they gave it to me. And then the other one is in the Mesa area, which is sub-county. And that one took like, like 6 months. That one took a while, um, because county is harder. And but yeah, Joshua Tree specifically, I'm not sure, but I don't think it's as hard.

Um, I think we're estimating about 5 months.

Yeah, yeah. Do you have any rehab or is it turnkey already? No, we're ground up.

Oh, okay, okay.

Yeah, yeah, they still do well, like, uh, occupancy is there. March, April is a great, great, great— those are the best months for that area, for the desert. All the Coachella people, even though it's like 45 minutes away from Coachella, like, he gets— you make, you make, you make a ton those months. And then if you have a pool and spa, then you can make money in the summer and the winter too as well. Yeah. I also didn't—

I'm not sure if I heard you mention in any ADUs, have you ever added Have you ever used your renovation strategy?

I have not, no, no. I learned from Joe and that— yeah, see, she can't say it.

The ADUs don't make sense.

Get in, get out.

They don't make dollar sense. Flipping is a numbers game, and flipping is— if you add a $200,000 or $300,000 ADU on the property, you're never going to get that money back.

For Airbnb, I I would do it. I'm looking at one in Colorado right now as an Airbnb for myself, and I'm looking to add it, 'cause then you can analyze both units and you can double up your cash flow. Joe, I have one more slide, is that okay? Okay. Wholesale With Me, this is a group that I have. It's a free group. I do it with people from all over the country. You do have to find 1,000 properties just like Eric via Driving for Dollars to be admitted. I put you in a group chat. You have access to me and my team for any questions. We'll help you with all the resources, all the tools. We have escrow companies, closing attorneys, titles, contracts, assignment contracts, RPAs, addendums. We have everything that you can think of. If you want a JV or whatever, if you want help, That one's for free. And, um, yeah, it will take you to Deal Machine where you can sign up for the Driving for Dollars app. You don't have to pay for it. We pay for the premium account so that you don't. So if you're interested, just sign up and then my assistant will be able to tell who signed up. And once you start driving, um, we'll be able to keep track of that as well if you're interested. And yeah, that was it.

Thank you, guys. Thank you, Carlos.

Thank you.

Um, we have this room to