🌟 Mastering Novations: A Buyer's Guide with Trever Ahing 🏡

What's up, you guys? Welcome back to the podcast, The New and Experienced Investor Podcast. We're the real estate podcast that brings investors from all walks of life together. I'm Alex Barnett. I'm one of your hosts. I'm the new guy.

Uh, my name's Joe Homs, and I guess that makes me the experienced guy.

Oh yeah.

So much experience. It just oozes out of you. Anyway, we got an amazing guest here today. I'm super stoked. He was hard to get. He's flying around the country. He's doing deals worldwide. Um, we're going to surprise you because we're gonna be talking about a creative finance strategy that you need to know to add to your tool belt to make extra dough. This year, starting today. Before we do that, before we bring him in, let's talk about our meetup on the 24th. On the 24th, yeah.

In Irvine, Hangar 24, 6 o'clock. Oh yeah, be there. And this young man, which we will introduce you to in a second, will be our guest speaker.

Oh yeah, I am looking forward to it. So make sure you guys show up. We have a ton of amazing investors, private Private money lenders, contractors, anything you need, they're, they are there. So it's always a good time. All right, well, let's not mess around anymore. Let's go ahead and bring our guest in today. We got Trevor Aying.

What's up? Bada bing, bada boom. What's up, you guys? You reeled me. I appreciate that, man. I can't wait. The 24th is gonna be a blast. It's gonna be an absolute blast. I appreciate you guys having me.

Yeah, absolutely.

Yeah.

Why don't we jump right into it? Let everybody know kind of how you got into real estate, what you were doing before, and you know, your whole story.

Of course. So my name's Trevor. You can find me at Invest with Trev. Um, I'm an 8-year Marine, you know, and so coming into it, I thought I was—

Thank you.

Appreciate the support, man. I thought I was gonna do 30 years in the service. Uh, from there I was able to find, uh, wholesale real estate and started dabbling with that when I was in, uh, in the ranks already. Started gaining momentum through that. And then from there, as I was flirting with the old ladies and talking war stories with the men, I decided to get my license if I couldn't, you know, wholesale it. And next thing you know, I started listing homes that needed some work. And then all of a sudden I found the novation path where I could come in and help partner with them and bridge that gap. And then, uh, created the company called BuyerBeater. And since then we've done over 200 novations nationwide and we're looking at already about 48 for the year this year. So.

Oh my God.

Nice.

Um, why novations?

Great question. Why not, man? Well, the, the, the company name BuyerBeater on that side is, I realized there was kind of a, a void where, you know, you can, I, I think people think I hate wholesale. I wanna preface this. I think wholesale is awesome. Okay. To bridge the gap between a seller and a solution that's within 30 days. Okay.

Let me pause you for a second.

I'm sorry.

Yeah.

Maybe describe what a novation is, cuz everybody may not know what that is.

Absolutely. Let's break it down into 2 camps. Novation is basically on one side, you're able to partner up with that homeowner. You instead of taking it under contract and trying to find an end investor on off the market, right, who's going to come in and position funds so they can flip it, all you're doing is locking that seller into a set price. And then you're working the optimism of the market by putting it on market and trying to find usually a first-time homebuyer or somebody who's willing to be able to buy it, who's pre-approved. And then we cover all the realtor fees and closing costs. And whatever's left over is the profit in our pocket for taking over the marketing, maintenance, and management of an on-market solution. You know, and so for the most part, it's kind of like an on-market wholesale, you know, but from there you're just trying to work them into their price. In some cases, I do put money into them, you know, on that side. And just to kind of get it to what we call a current condition retail value, something where, you know, it's a first-time home buyer is going to walk in and they're going to go, you know, the carpet is a little gross and the kitchen's a little dated, but honey, we can do that ourselves, you know. And so you're really trying to target that audience. And in the most part, you do find somebody and it does sit for a bit. But think about it as an on-market wholesale, on-market wholesale. But the other side of it, the equity split side is we'll partner with the homeowner and then we will fully front the renovation costs. Any appreciation we create through the renovation, we'll actually take as our fee. But when we list it, we'll cover the realtor fees and closing costs as well. So it's a really good way to start off with a good foundation in, in a cash offer. And the moment that they want a little bit more, Work them into a creative resolution by saying, why don't we just team up? Let's see what a little bit of money can do in this thing, right? You deserve some more equity. Let's test the market a bit. You know, we'll clean out that hoarder room. You know, we'll paint that fascia. We'll clean the landscaping up. You don't have the money for it. We'll, we'll come in there. I don't want to pay bank. You know, I don't want a 20% down, bank back, interest-only payments, credit checks, all that stuff. If I can come in with you, swing some hammers, get my crew in there, and we can collaborate, let's get you some more money. I'll just take whatever's on top, and I'll also just be able to put this thing on the market in a beautiful condition.

Nice.

So boom, give me your money. Nice, nice.

Okay, yeah, so I mean, you were— you started wholesaling, that's always like the gateway drug. Um, and then you mentioned you started listing, and then do you put the two and two together, or who's the one that kind of opened your eyes, or how did you find out about that?

Good old Daddy Pace Morby, man. Oh, you know, wow. Yeah, Daddy Pace, man. So I would wholesale and look, I'm not going to lie. I, I, I got lucky with wholesale. My first deal was like $60-something hundred bucks. My second deal was $150,000 as a wholesale.

There you go.

You know, and I'm like, I'm rich. I could do this every month. Yeah, it's so easy. Disclosure, never did a wholesale that big ever again, you know. But coming in front of that, it was because I went to the property to list it. Because they didn't accept my cash offer, you know? And then I said, I can list this. And they said, I need to close quickly. And I said, well, I'm here. And they just agreed. And I was like, oh my gosh. Funny story, the dispo, because I, you know, that was when I first started, I dispo'd it and they actually dispo'd it for $340,000. So they made like another $100,000. I got the lower end on that. And I was like, what?

Yeah.

But yeah, to go back to your initial question, the gateway of what wholesale created was I was you know, finding success listing or I'm sorry, wholesaling homes. But if it was just too high, I would list them. Right. But now I have all these listings that are just stagnant, just sitting. And I heard about the Novation model where you could put some money in the homes and try to test the market. And so I started thinking about that. I went, excuse me, I went to an Air Force guy at the time and I walked in and he owed way too much. And I was like, shit, I can't wholesale this. I'm going to list it. You know, it's a, it's an okay condition. But as I got it, he got orders. He, uh, he, he took apart the floors. He was gonna remodel it himself and he's gotta go. Right. And he did not do a good job. And so I'm looking at this thing and I know fully renovated it could go for like $400,000, you know? And this guy really wanted to walk away with like $315,000. And it was just, I could list it for like $340,000. And after everything for it sitting, it was gonna get like $300,000. And I just, Mm-hmm. I just pitched it. I literally was like, look, I'm an investor. You know, I put my investor hat on, I'd be like $240,000. Um, I could list this at $350,000, let it sit, but I got something better for you. You know, I got a crew ready to go. I had nobody, dude. I've never done this. I got, I got a crew ready to go and I got funds ready to deploy. You know, when I had some money and I do this all the time, you know, I've never done this. And I said, if I can guarantee you $315,000, why don't I just come in and why don't I just do the work with my guys? And then afterwards I'll just list it. I'll in-house my commission. cover the buyer's agent costs and your closing costs. And if there's anything left, I'll take. He loved it. We flipped over our listing agreement, started writing terms. I'm like, I promise you I'm professional. Like, you know, I went back and I went to Pace's community. I got the right contracts. And about 2 and a half weeks later, it was on market, sold for $5,000 more. And I made about $60 grand on this deal. And I went back and revisited all of my dead leads to do the same thing and made a bunch of money through that. 'Cause nobody's really, Doing it like that. And so it was a really cool model to bridge the two of on-market agency that are stagnant listings and dead wholesale deals. You just combine the two and you can play middleman all day.

Right. And I was taking a look at BuyerBeater and you're talking to wholesalers, right? They can come and they can work with you and you're like, bring me your dead leads and we can work together. Is that something that—

Yeah. Yeah, I've never actually gone direct to sellers in years, probably about 3 years. I foster a community now where you got all these dead deals collecting cobwebs. You know, you guys are hyper, you know, high producers. If you guys incorporated this and you're like, look, you know, old dog, new trick, I don't want to recreate the wheel. I want to partner with a company that specializes in this. I'm a dispositions company. I dispose via wholesale or I'm sorry, via innovation. So if you find it, we'll fund it, take it to the finish line and we'll, you know, we'll collab. But all of my deals just come from wholesalers and fix and flippers and agents submitting it going, hey, There's room in this thing. Can this be a novation? And we take a look at it, provide our service, and walk away with a lot of money on, on things that, you know, necessarily wouldn't.

Love that. Have you done any novations, Joe?

No.

Oh.

We're gonna change that.

Okay.

I never, never have because, uh, I'm sure there's paperwork involved. And my question has always been, well, uh, you know, I know you're a professional, I know you know how to do this, but what happens with that one deal That you can't sell at the end of the day?

Great question. That's probably the number one rebuttal that we get. So I'm going to use some quick numbers. If a deal, let's say the ARV is $500,000 fully renovated, right? And it needs $50K worth of work in it. You're going to, you're going to wholesale this thing, what, $280,000, $300,000? You know, you're going to come in there 70 cents on the dollar, normal formula, right? The moment that, that, that seller says, kick rocks, Joe, that's way too low, right? I need $350,000. Dead wholesale deal turned into a perfect novation. Let's say it's vacant. I'm going to get— it's a long story longer, right? Because I love this question. So if we're at $350,000 for the seller and we can collaborate and we bring in $50,000 ourselves, now we're at $400,000, right? The thing's going to appraise for $500,000 like all the other comps in the area. After realtor fees and closing costs, we're at what, $465,000? And then, you know, now we're all in $400,000. Our $50,000 just made us $65,000 private, right? So in the case it doesn't sell, right, let's just say you're putting it out for $500,000, market takes a correction, rates go up and nothing's selling above $470,000 now. You know, now our $50,000 just made us what, $30,000, $35,000? You see, so it's still over. I mean, our margins are on average about 68% cash on cash on the low end. But we in California and certain states will average above 106% cash on cash because of the equity that we create. So I'm okay reducing. So I'll put it out there. And if I have a buyer and I'm honest, you know, I've tried to tease a little bit and really try to fish for the— for a higher price. Never again. You know, if I got somebody coming in at $490,000, you know, and my agent goes, hold out, we know this is the first weekend, I just take it. You know, my minimum's around 70%. They come in, we're good to go. So our baseline of that $100,000 of equity that we create through that $50K is all the wiggle you need to make sure that you're getting an offer where you can still make a sizable return and make sure the seller gets exactly what they want.

Okay. And then obviously you have a contract and you put the seller under contract.

How is that process handled?

How do you, how do you get paid?

We get paid 2 different ways. So, um, we open up escrow with the intent to purchase, right? Purchase and sale agreement, right? We do. We are a buyer and/or novator though. So we do come in, we've escrowed, we've opened up escrow, we have an earnest that we put in. Um, and so we have the intent to buy and a novation is just a replacement of one's position on a contract. So they had, they understand what our closing conditions are and that's where we come in. We will then renovate the home on behalf of them in an as-is condition. We're going to get it to a 2024 turnkey status, and our closing period doesn't begin until the property is listed on market. So we usually have about 3 months on market once we're fully renovated to sell. Now, in the case it doesn't sell, right, we've never had to do this, but in the case it doesn't sell, we'll just buy it. Same, same exact numbers. You know, if we— they need $350,000. We put 50 into it. You know, we have 100k worth of equity on this side, and nobody wants to buy it anymore. You know, my worst case is I'll position the A to B out for 350. I keep a home with 150k into it. Let my private money lenders know, and we midterm it. You know, so the worst case is I grow my rental portfolio, and I just I still exercise the sale if they don't want to extend for that for that seller.

Okay. Another another question. So. You know, you have an end user, a buyer buying your property. Have you had any problems with lenders saying, you know, like, here's a line item that says they're going to pay buyer beaters? Why is that there?

I— yes, to piggyback off that initial question, we get paid 2 ways. One way, it's still an assignment fee, right? For the most part, most lenders will let them know how we've collaborated with the seller. And if they're cool, they're like, yeah, you know, we never really have too big of an issue. The second way, which we do in some states, is a lien payoff, right? We'll lien against the home.

Mm-hmm.

We'll cloud title, right?

Mm-hmm.

For the service that we've provided.

Mm-hmm.

We state all of our, you know, contractual, we state all of our receipts of what we've been able to put in the home via the scope of work. And at the, at the close of escrow, we'll let that seller or we'll let the lender know when they come in that that payoff amount for that release of, of interest on the notice of interest is going to be the difference between what the seller's going to get and what we were able to sell it for minus the fees encumbered. That difference is our lien amount that we do get positioned. And we've never had an issue with that at all.

Okay.

Mm-hmm.

Nice.

No, that's good. That's, that's a smart way to protect your money.

Absolutely. Yeah, absolutely. And we have the, we have the rights to still buy. Obviously, we can make sure that we have the sellers perform, you know, because we're still under contract as a purchaser. But if we do end up novating and indemnifying our agreement to somebody else, we will, of course, then lien and make sure that we protect our position at close.

Now, you said you had a contractor crew. What, where are you doing all this stuff?

You know, here and there and, you know.

Yeah.

We, uh, you know, we're in 5 big markets. Last year we were, I was just telling, uh, we were everywhere, you know? And so we will do a deal nationwide. And I do pride myself in going nationwide. It doesn't mean I got boots on ground everywhere. You know, it means I can get boots on ground. But our 5 major markets are California, Florida, Texas, uh, Arizona, and Nevada. Right? We got a lot of good people there. A lot of good money that likes to get parked. Great crews. If it's outside of that, We will then end up usually positioning our project manager to go fly over there, manage the deal. But the cool thing is, is we also target good local listing agents where our boots on ground are agents that are going to sell the home at a full commission. So they help project manage as well. And a lot of agents have great contractors, you know, so we'll end up vetting it through there. And man, I got, I got contractor stories, you know, but coming in front of it, that's been a big thing is we are very tedious or, you know, we're very picky on who we work with now outside of those 5 markets. And if it passes everything, you know, we can, you know, dot our i's, cross our t's, we'll do them, we'll do them anywhere.

So there's big companies here that, you know, reach out to agents and they say, okay, well, if you have a seller that's looking to sell a home that needs some repairs, we will come in and rehab the property for you, not charge anything upfront. Obviously collect it at the end. Would you like connect with those type of companies to use their services, or you, you're just totally independent?

I'm totally independent.

Okay.

You know, I'm totally independent. I've heard about services like that. There is one— oh my goodness, I was just hearing about this because the seller was like, well, you're pretty comparable to this. But I'm like, yeah, you know, we are, you know, but I'm an investor. It's more of a mom-and-pop. I got a great intimate team. This is what we do. You know, we're not going to treat you like a number. We're going to treat you like family, you know. And so coming forward from there, I'm a big fan of over-communicating with them. And they tend to like that. So there definitely are companies that do it. I know a lot of brokers and agents who, who will put money in the home and they don't charge anything. You know, they'll just get it on the back end. This is just a way to be able to, you know, remove that exposure for them, let them focus on listing, and we come in as, as that service. So I've definitely heard of companies. I don't think I've recreated the wheel on anything, but I've definitely just kind of automated it, you know, for investors that want to be a little bit more intimate and kind of fire and forget on deals that don't fit your buy box per se.

Okay, maybe walk us through a deal. So seller ring ring. I'm in Texas. Obviously, you live out here, correct? I do in California. So I'm in Texas, and I want to you know hire your services. I want to sell my house. I'm not getting enough from wholesalers. Hopefully, you can beat that. And you say yes. So what what what are the next steps? What What do you specifically do and your team do?

So for that, our we call that the warm handoff, right? So a lot of wholesalers will use you, Joe, as an example. If you're talking to a homeowner and then that's your that's your model is a wholesale, right? You're going to come in as a cash investor. We want you to set the precedent, and I tell everybody in my community, right? I work for you. You know, I'm I'm your creative finance department, so I don't want them to feel like you're just passing them off. Biggest thing is when you get in front of them, you go, "Hey Becky." Every seller for some reason is always Becky to me. Hey hey hey hey. Becky, you know, this is where my price is. Unfortunately, this is going to be my ceiling because I'm going to be buying all cash. I got great news though. You know, I've spoken to my creative finance department. You know, it seems to me like you want a little bit more. They stated that they can probably be around that, but on terms, you know, why don't I get you on the phone with them? You know, they specialize in this. We'll go over some properties that they've done local to you. And if that's the case and ends up working out, I'll just be on the sidelines making sure that everything goes smoothly. Right. And so from there, you've set up that conversation. You find out when Becky can talk to our team, and then Paige or whoever's, you know, she's our lead acquisitions. We get on the phone. You have an entire Podio submission form. You submit the deal up to us, everything that you've done, all the rapport that you've built, where you think the numbers are. We have a verification department that's gonna take a look, make sure it's gonna meet our minimum. We're gonna see kind of where it's at, make sure it's an area that we like. Then from there, we're gonna figure out the time that you schedule the call for us. We jump on the phone on behalf of you. Oh my God, he spoke to Joe. Love Joe. You know? Okay. We do a lot of stuff that's a little creative for him, right? That's outside of the traditional norm. This deal, it's looking like we're going to be able to approve you for our equity protection program or our equity split program. You know, and in doing so, what does that entail? Equity protection is a property that's currently occupied, right? So it's somebody that the seller lives in it. You know, even though it needs work, we're not going to move them. I've done, you know, live and flips and it's, it's a headache, right? You know, it's worked, but it's a headache. So for this, it's a traditional novation. We just say, hey, we're going to protect you with your equity. This is your asking that we've gotten from Joe. Is that correct? Okay. Well, hey, I do know the property does need some work. If we can come in there, we've actually approved up to $5,000 worth of work at no cost to you. Right. And in doing so, we'll have our contractor walk it, right? Probably with one of our agents. When they go, agents, you go, yeah. You know, not only are we going to check the, you know, the optimism or, you know, work with some of our off-market guys, but we want to make sure that we can target this to everybody. So if we do put this on the market, we do start marketing. We're gonna cover all our realtor fees and closing costs, you know? And so in doing so, if it does get lent on, that $5,000 is gonna go towards cleaning out your, you know, the landscaping, painting the fascia, getting it to a current condition standard that's suitable to sell. And you've been approved for that, you know? And so they go, okay. So if they get a certain amount, let's just say those initial numbers, they need $350,000. Well, we know we're not gonna get $500,000, you know, but if I clean it up a little bit, change the water heater out and get some really good photos in there and a top 1% agent, I put it out there for $439,000 and somebody walks in a couple weeks, they offer $420,000. Well, after everything, you know, my couple thousand dollars still made me about $30,000, you know, and our average equity protection's about $33,000. Seller gets exactly what they want. We get the exposure of the market. And the good news is we tell them that we take over our marketing, maintenance, and management fee. That's our cost, right? So the only time that we get paid is if we procure an end buyer, right? They pay for our fee because technically they do. They're already approved for a certain amount higher.

Right?

And we were able to take care of anything necessary for the home. And we never really get pushback at all. You know, for the most part, they get exactly what they want. We're concrete with that and our contract states that. Then we get our, our price from, from selling it on market. Now, if it's vacant, that's our equity split. We just let them know. We go, oh my goodness, this is our favorite model. Right, Becky? So we'll partner up. We go, hey, we got fit. We got funds burning a hole in our pocket. Great news is we love this area. So we can approve, you know, funds that's standard for a suitable to sell, fully turnkey, right? This thing's vacant. What we're going to do is we're going to come in, we're going to partner with you. We're not going to initially buy it right now because I want us to be able to go to the closing table together and we're going to fully renovate this home for you. You know, any appreciation we create through the renovation, we're just going to take as our fee. But when we list this, we're still going to cover your realtor fees and closing costs. Whatever's left over is going to be our risk, but it's also going to be our reward, you know? So if you want that $50,000, $70,000 more than what Joe can offer, This is a great way to get worked into it while we mitigate risk on behalf of you. And they love it. It's like a partner and everybody wants to flip a house.

Mm-hmm.

You know, so all the Beckys and everybody, they're like, oh my goodness, this is so much fun. Cuz I let them be a part of it. You know, I, I, uh, it happens. I still get Christmas cards from some of my novation, you know, clientele because they, they loved it so much. And so we will do that and we make 'em as, uh, as much a part of it as possible. This is where people mess up. Everybody who does novations, you know, you need to overcommunicate and make them feel like they're part of an HGTV You know, they, I already know what I'm gonna do for the backsplash. It's either gonna be eggshell white or Swiss coffee or something. But Becky decides, you know, hey honey, which one do you like? You know? And she's like, oh my goodness. They get to feel like they're a part of these processes. And when it's done and they see you making a couple hundred K, they don't care because they see all the work that you put into their, their dad who passed or whatever situation they're in. 'Cause I, I, I target the 5 Ds. I say it all the time. I should get, should get it tattooed on me. You know?

5 Ds.

The 5 Ds, man. Death, distress, divorce, debt, and duds, like dud listings. You know, when you target those people out and you can position a collaborative way to both make money, they don't care how much you make if you do it correctly.

Right.

Yeah. And cuz, cuz you know, you're on the internet, you hear all the horror stories where somebody did an ovation and then the last, they put all the work in.

Mm-hmm.

And then the last second the seller tries to, tries to wiggle out of it. Um, you know, what, what did they do wrong there? I've seen it like in, in the, you know, the Sub2 group where I don't know what they're doing, but they're like, I just dropped 40 grand and then the seller's like backing out. And I mean, can they do that?

They, they, they can't, right?

Yeah.

There's a level of protection. There's multiple contracts that go in, right? It's not just pinky promises, you know? Right. And some people do, man. Some people are like, no, the seller's totally cool. I'm like, I bet they are.

Yes.

Buyers are liars. Sellers are worse, dude. You know what I mean? So coming in front of that, yes, you have your purchase and sell, right? You can of course execute a, not, you know, a, a right to perform so that way they can make sure that they still close with you if they, if they were in jeopardy. You have your novation indemnification, you have your attorney in fact as well. And then for us, in most cases, we'll do a limited power of attorney as well.

Right?

And when people hear that, they go, what? No one's gonna sign that. Well, if you, if you creative should be complimentary, it shouldn't be confusing. So if you go, oh my God, let's make you that money. Except, you know, if you do decide to back out and try to completely run away when I put 40 grand in your deal, then I have the power to execute the limited authority to sell this home and still give you exactly what you want.

Right.

I'll just take anything above. I still can't cut into your costs. When it's performed that way, they're, they're completely fine. But there is paperwork to protect you, or you can just close out that position. But I'll tell you right now, novations that go awry, it is a communication issue. They treat it like a wholesale, you know?

Right.

I'm not saying wholesalers don't communicate, but you're in bed with the seller for like 4 to 6 months, you know what I mean? You're working with them every day diligently. So if you don't have a department to give them the updates necessary, They're in a bad situation. You know what I mean? They're not just like letting you collaborate because they want to, you know, just see what it's like. They're in probate or pre-foreclosure. They're dealing with something where they want to wipe their hands clean, except the offer was too low. So that's your avatar, you know? So you really need to make sure that you're leaning into it and you're always staying on that right side of the fence. And when you don't for a couple of weeks, who's still calling them, by the way? Every wholesaler ever, right?

Mm-hmm.

People who are trying to buy. So if you're not their guy, They don't know the legality. They're gonna start shopping it, which next thing you know, they wanna take an offer and all of a sudden, you know, they're, you're, you're, you're fighting, you know, legal battles. So we make them feel like they're in the driver's seat or they're at least in the car with us, but we're steering. You know what I mean? That's a big thing I tell my team.

Love that. Yeah. Yeah. Yeah. I think you're totally right. It's like when you get the person on your side, they'll, they're, they're, they pretty much don't have any issues, especially with what you're making. And like you said, You know, because that was one of the other things I think I saw recently was like, yeah, they saw how much we were making and they had a problem with that.

Yeah, you know, and, uh, you know, to piggyback off that as well, like when it comes down to it, that you're letting them know that you're able to kind of work them into what we have. We let them know what we're going to sell it for. Hey, we're going to try to target this, you know. And something that I see as well is I have a minimum I want to make, you know. And so We've had properties in Chino that we sold and we, we targeted $749,000. You know, it ended up selling for $820,000, you know, but I told our seller and they called it. They're like, this is gonna sell for like above $800,000. And I didn't see that. And I go, okay, Becky, you know, like it's gonna be $749,000. And I told her, I said, look, anything above $750,000, we're gonna split. So that way, no matter what, they feel like they're getting, you know, they're on the same, they're, they're working with you. And so lo and behold, they made like another $30,000. And she was like, called it. You know?

Yeah.

And I've already hit what I wanted to make.

Yeah.

So making some extra for me is great. But what's our number one model? It's, you know, creative solutions for sellers in any situation, work them into more equity. 'Cause, you know, all of a sudden all that money that you got that you saved on interest payments and everything, you know what I mean? Like you're able to work with them, so you might as well scratch their back as well. You know? So a lot of the times they do end up selling for more and the sellers get more as well. So it's pretty cool to see, you know what I mean? When the, when you're able to under-promise and over-deliver on these homes.

Yeah. That, that's really smart to where you're working them into the extra too. Mm-hmm. Because then now you guys are truly collaborating and now they're hoping you make more.

Exactly. So now it's like, hey, if I put 20 more, you know what I mean? Where then they know, and it's like, it's a recoupment of cost. They see how much you're doing and I let them know everything. Like, oh my God, you know, I removed 8.5 tons of trash from a home, you know, thousands upon thousands. And you know, you let 'em know, you're like, this is a headache.

Yeah.

You know, they see what you're dealing with. You know, you're dealing with a lot. In order to make their dream price come true. And so if you hide that from them and shelter it at close, they just see a number, but they don't see the process. They gotta see the journey, you know? And that's a big piece.

Yeah.

So we, we say no more than yes. Don't mean to cut you off, man.

No, no.

Yeah, you're good.

But when you get submissions, you're like, dude, this seller is the worst, bro, but a great novation. I'm not gonna work with that seller. Mm-hmm. You know, unfortunately it's, if you want your cake and eat it too, you want to be in control, then close on the property and take your, you know, cash price. If you're okay with the patience for more profit, it's more of a collaboration, but we don't just do it with anybody.

That's, yeah, that's, that's, oh God. Yeah. I've had some sellers where they're like, why did we do this?

Yeah, dude, for sure. And it's always the lower priced homes, man. Anything up there, they're like, eh, we're good, man. Anything that's low, it's like, don't.

You don't work with Karens.

You don't work with Karens. Just Beckys.

Yeah.

Just, just Beckys. No Karens, guys.

Yeah, yeah, that's, that's, that's good. I mean, I think— I feel like we're starting to do that now too. It's like you can see it coming a mile away once you've done enough deals. You're like, this isn't worth freaking whatever we're gonna make on this. It's just—

It's the truest thing. It's so true.

Okay, um, well, how can like people submit deals, or like how do they partner with you?

Yeah, you're more than welcome. So if you go to, um, buyerbeateruniversity.com, we got multiple levels that you can come on in. It all is dependent Upon how much you want to make on the deal, right? Because all this is procured off of our funding. So my whole thing is if you find it, we fund it. So depending on if you're just an avid wholesaler and you're like, hey, I know I got deals collecting cobwebs and I want to submit them on up, you know, you don't got to, you know, it could be a free piece of the community. You just come in, get a wholesale fee for these. If we end up moving forward and you just come in, you can make between $2,500 to $5,000 on every dead deal you give me, right? And that's totally fine. But the profit after the process is going to be ours. And people are totally cool with that. But if you want to come into it, learn more, we have weekly Zooms. A lot of our deals have been coming through the on-market channels, like almost 80% of them right now from listings that have been sitting for 3, 4 months. That's a whole different convo. We just call them up. We tell the agent, we go, what are you doing? What's going on with this thing? You getting lowballs? Yeah. Your seller got money to renovate? No, it's vacant. I got something for you, you know, and then we'll go into it. So we teach how to do that. So depending on how much level, like what, what type of education you want, we can work into, you know, different classes, mentorships, all that fun stuff. But for the most part, we take any submissions from anybody. And then once you get started though, yeah, you won't stop, right? You're gonna wanna learn more and more. And then we teach you how to do this in your own industry.

That's great. And Ben, you said you'll work anywhere. You have your, you have your top markets, but you're, you're, that you're focusing on for yourself.

Or—

Yeah, for, for me, great question, man. Cool thing is though, so we do a mentorship program called the Dominator Program where we teach you everything, give you the contracts, we give you unlimited funding so you can do multiple, as many deals as you want with our private money, but we do them in your market. So we had a guy come in, Ivan, shout out to him. He's done multiple deals now where he, he's in Idaho and I knew nobody in Idaho. But the cool thing is, is as we're starting to kind of expand our footprint, he now is a Dominator. He understands the model perfectly in Idaho, so he's able to crush that market with no competition. Submit them up and then we'll just provide the funding. And he manages the entire novation because that's, you know, what he paid to learn, you know. And so one deal tenfolds your mentorship costs. And so now we're kind of starting to pocket ourselves all around America of people doing that. And it's been, it's been pretty awesome. So they're like an extension of us, but they get to be, you know, rooted and on the, on the ground with the, with the deal.

Okay, nice. When did you like create, um, like BuyerBeater? Because I remember it was You had it. There was something else before.

Yeah, we did. I mean, I had Resurrection Real Estate. Okay. I had Brokers in Arms was my company. Oh yeah.

Yeah. I think I remember that.

Brokers in Arms was giving those who serve what they deserve. As an 8-year Marine, I transitioned out. And so if I, if it's like a play on Brothers in Arms, you know what I mean?

Yeah.

Yeah.

Yeah. I thought it was clever. And, uh, and getting in front of it, it was, we would give a portion of our proceeds to homeless veterans and stuff. And that ended up transcribing into me doing more creative stuff. And so I was leaning more off market with my license.

Right.

And I created Resurrection Real Estate, but the name was like kind of hard, you know? It's like with sellers, it's like, what are you resurrecting? Like, I'm not dead yet, you know? And it's like, damn. So then with BuyerBeater, it's 'cause we beat out every other buyers through creative solutions to our homeowners, you know? And so that's where it came in. And people are always like, damn, BuyerBeater. I'm like, hey, if it sticks, it sticks.

Yeah.

You know, Pace likes it, so we're good. We got his approval. But that's where that came a couple, about a year and a half ago, you know, and then I've been doing deals way before then, but that just kind of cemented, you know, what we're doing and it just started taking off.

Gotcha. Now, um, novations work great for flips, as you're mentioning. Are you, does that work for any like long-term thing or like, are you starting to hold properties now or?

Yeah, man. So yeah, dude, good setup on that. Um, Renovations are great to collaborate with the homeowners to give 'em their price. And what we're seeing now is we're partnering up with PadSplit a lot. And PadSplit is a midterm rental, you know, space where you can rent out by the room, put up some drywall and get paid weekly. And what we started doing is we're working with our homeowners. They have a certain set price. We just provide the renovations to get it to a PadSplit position. We come in there, we have our DSCR lender walk it, you know, we have a conventional lender check it out. We'll refinance that A to B out. We'll end up taking that property and we'll pad split it. So we're renovating homes that we don't have to own, and then we'll leave some of our equity in the in the deal because it's going to appraise as a single family just as it would if we were to sell it, except we end up keeping this for our portfolio. And that's been pretty cool. And the sellers don't care what you do with the home; they just want a certain set number. So we'll position the A to B. We'll just take it over and and and continue to hold and start pad splitting. So we're doing that. Right now in Texas, Phoenix, Sacramento. They just, I don't know if I can say that, but they, they just started in Sacramento in like in August or something, a launch party. And then, and did I say Texas? Yeah, Texas.

Yeah.

That's where we're at right now. So we'll continue to expand, but it's a super cool way to really create seller finance opportunities to where we can grow a portfolio. Because all we need now is our private money. You know, we did one with only $15K to put up some walls and, you know, clean up the property, and it's appraised for a lot more. And we just, you know, do an 80/20, you know, loan out, get them out, and we just end up taking that bad boy over, you know. And so it's really cool to not have to put a bunch of money in to make a bunch of money. We can just start growing our portfolio 3 at a time a month now with the same amount of money you would need to put down with, you know, one flip, you know, or one, one hold, right?

And you have to furnish it and all that, or Yeah, they're, they're picky.

They're like picky on it. You know, you need, um, with Airbnbs, we were talking offline, you know, it's, we furnish everything, you know what I mean? Toilet papers, all this stuff. With this, it's kind of, it's, it's household amenities, toilet paper, but it's not, you do no dishware, no silverware. You know, they could bring their own TVs. You just need a bed, a nightstand, and, you know, sometimes mainly a desk and they want to come in and make it their own. 'Cause the common areas that you have are drywalled now. You know?

Right.

And so they don't really like people chilling, you know? And the people there, like I said, Starbucks baristas, or they just got outta college, you know, they're just kind of living somewhere to test the waters. The average, you know, span of somebody there is like 6 to 8 months. So they're, you know, pretty midterm, but you can rate them to make sure they're not a freaking weirdo and stuff, you know? And that's pretty cool. And they'll help manage that whole thing. So very minimum, you know, very minimal furnishings, just really by the room. But because there's not really any other common areas or couches or anything, they don't, they want nothing in the house really.

Wow.

So are you looking at every deal that comes in? You're like, could this be a pad split?

I mean, yeah. My team's like, yeah, we'll make more like this. I go, yeah, but no, it's by market. You know, I would say Texas and Northern California, yeah. Phoenix, yeah. But I mean, Florida, we haven't at all. All of our deals in Florida still, you know, I mean, for the most part, 90/10, 90% always novations, right? 2% wholesales listings if we can't make a novation work, if they want to go quicker, yada yada. And then the rest are pad splits because we just, we just started, you know, we just started with this and it's just, it's taken off. So I'm excited though. I'm really excited with pad splits.

Yeah, yeah, that sounds good. And, you know, obviously being able to hold as much as possible is—

Oh yeah, you know, the end game. Dude, it totally is. It's so funny. You know, all of my rentals right now are sub-2s, and I love it. You know, and I was telling you before, and they're like, you know, what do you do when it comes yada yada? I'm like, dude, I'm like, I have no idea how to landlord. You know, I have so many other people that help me out in regards to this. So as I'm growing my portfolio, I'm like, maybe I should know what I'm doing. You know what I mean on this? And so leaning into it with Pad Splits has been pretty cool to start looking at that stuff because Garrett and people I partner with, they are— I mean, people are so smart with that. It's so— my mantra was going deep with novations. Outside of that, I'm still— you're always a student. You know, now I'm looking at holds. I'm like, dude, Yeah. I should start doing this. And they're like, yeah, like years ago, dude. I'm like, damn it.

Yeah.

Yeah. It's like, there's so many ways to make money. You have to chunk it out and focus on one thing. Otherwise you just end up doing nothing.

Analysis paralysis, man. It's the biggest thing. I see it all the time, man. Imperfect action's better than perfect non-action.

Yeah.

I say that and it's the truest statement ever, man. Just do it.

Absolutely.

Yeah.

Only way to get better at pull-ups is to do pull-ups. Only good way to get better at calls is to make calls.

Yeah.

You know, and so if you're not doing that and you're asking yourself why you're kicking yourself in the butt and not getting a deal, you're the problem. You know, get on the phone and— Thank you. Yeah, get on the phone.

Thank you.

And freaking do it.

Yeah.

Yeah. So, you know, people, people might not like that accountability. That comes from the Marine Corps, you know what I mean? I'm like, dude, look yourself in the mirror.

Yeah.

And I hear it all the time, you know, I'm sure you guys always do as well. You know, you're special. Like, no, dude, just consistency, man. Real estate should be boring and consistent, man. You know, It's not rocket science, it's systems.

Yeah, yeah, totally. And I mean, it sounds like, like you said, you, you surrounded yourself with people that, you know, can help you if you're gonna jump into something. That's, that's one of the biggest, like, superpowers, just partnering with someone who's already doing it.

Huge.

And it's like you can just, you can cut out so many of the mistakes.

Yeah. And even mistakes, you know, my partner says the best. He's like, no, it's just a really expensive lesson. I'm like, yeah, you know, it totally was. You know what I mean? It's like, we probably shouldn't have spent $60 grand on that. And like, It's a really expensive lesson, you know, because you're gonna make it back. But the thing is, is, yeah, you're coming into it and sometimes it does work, you know what I mean? So you got to risk it to get the biscuit a bit, you know. Of course, you know, risk tolerance, you know what I mean? But, uh, I agree completely, you know. But don't look at it to, to get you down. Look at it like, well, learn that lesson, you know what I mean?

Yeah, yeah. You were just talking about that today. Yeah, you're like, that's just how you learn.

Yeah.

I watched Meet the Robinsons yesterday and he was like, you failed. And they were so excited. I'm like, why isn't this out in the world anymore? Because that's so true.

For sure.

You know, my wife is the best behind that. I'm like, honey, you know, and she's like, well, will you make it back? I'm like, yeah. She's like, yeah. You know, it's the— I got a great woman. You know what I mean? So we're young.

You can take some risks and you're like, why did I do that again?

I know. And, but she's always like, I told you. Yeah, I had a dollar for every time you said that. I would have made that money back, man.

Yeah, yeah, yeah, yeah, exactly. Yeah. Now we kind of have— we have a filtering system since we all partner, because I'm like the, let's just do it, we can make it work. And then it goes to Lauren, and then if she says it's cool, then it goes to Joe.

Yeah, and she runs it by me.

I love that. I love that. Yeah, they, they—

I don't even talk to him anymore, dude. I'm telling you, I don't.

That is my Robert. My Robert is my rock, dude. They call me the marketing and him's the— and him the terms and conditions, you know? Because I'm like, I'm like everything Oversharing is always great all the time. You know, it gets people excited.

And Robert's—

I'll be on the Zooms in our community talking to a bunch of people and I'll be oversharing and Robert's in the comments going, stop saying that. You're gonna make sure they do this, yada, yada, yada. And I'm like, damn.

That sounds just like Alex. Alex is talking to a guy on a wholesale deal for 2 hours. You know, where, what war were you in? World War II. You know, I was in Iwo Jima, whatever. It's like, what does that have to do with the property? I'm creating rapport. That's right.

Create rapport, baby.

Cut the report. Move on.

Yeah, dude. So true. Yep.

And I'll be like, but there's not a Betty.

You need both. You need both. It's not a Betty.

It's Karen. That is hilarious. Karen.

Yeah.

She's she's not gonna sell.

Yeah. Yeah.

I look we've identified that a lot like you. Yeah. Was not in the military. Appreciate your service.

Oh, thank you for your support.

Um, but yeah, get to the point. You know, it's like. Tell me what, what's going on. I'll tell you, I'll tell you the answer and hopefully a yes or no, and let's move on. You know, why do I have to discuss this for, you know, 10 hours?

Could be 10 minutes is 10 hours to you.

It is. Absolutely it is.

Dude, my— I— so my partner, we— he just got the house right next door to me, right? And so it's the best, you know. And so he bought Creatively. And as he gets there, it's so funny cuz the same solar guy, we have solar. I don't know why people still come to our house, but I'm like a Labrador, you know? So they come and I'm like, oh, let's hear sales skills, you know? And so we talk for like 30 minutes and, and yeah, same thing at the end. He is like, so you ready? I go, oh no, buddy, I got a bunch already, man. But great job. You can hear him go next door. And my partner, he'll answer the door and he goes, what kind of value are you about to bring me right now? You know? And it's so cut and dry.

Yeah.

And the guy's like, well, I, do you need solar? He goes, Does it look like I need solar? You know, and it's dude, you got to get both sides of the fence. I feel so bad for these guys when they leave. They get the complete opposite end of the spectrum.

Get a practice run on me.

It's all good.

I'll be an easy. I'll be an easy sell.

I talked to this guy today. He wants me to sit in on a podcast with his owner of his company, and he starts out the conversation. Calls me, starts out the conversation, goes Joe. I'm calling from blah blah blah, and, uh, I want you to know if, if you, if you need to say no, say no. And so right away I said no, you know. I knew who he was, and I go, I'm just joking with you. Why would you ask me a question like that up front? Because you're asking me to say no. So I said no. And so no, he went into his spiel, and I said, oh yeah, sure, absolutely, I'll do that, not a problem.

I thought you're gonna say no again.

Yeah, but Don't, don't start a conversation where, you know, um, you're not looking to sell your house, are you?

No.

Yeah. 100%. I just listened to some calls with, uh, you know, with some people that are making some dials in my community framework. I'm like, why are you calling them? Starting out, starting off by saying, well, you're probably not gonna like what I gotta say. It's like, what are you doing? What? I'm setting you up. No, you're not, man. Like, dude, you're putting all the, you're putting them on a pedestal, man. So. I agree with you completely. It's so funny. It's because they're trying not to be the bag. People are afraid of friction. It's the number one thing. Biggest thing my mentor said is lean into the no. Like, you gotta get— go get it, you know what I mean? Lean into it. Tell them why, you know. People avoid confrontation.

You have to get to the point where, you know what, I don't really give a shit about what you have to say. Sorry, you know. I mean, I, I respect you, and I respect her and other people in my life, But those people that, you know, are gonna blah, blah, blah and Karen me or whatever, it's like—

Oh yeah, the Karens.

It goes one ear and out the other just as quick.

There it is.

Yes.

Well, it's so true because look, the deal doesn't, you know, I don't fit the deal, the deal fits me, you know? So don't be afraid to go in there and, and you're not gonna waste my time. And it's the same exact thing. Oh yeah. You know what I mean? Don't be afraid to put yourself in the position where you just can let them know it's, that's not gonna work. You know what I mean?

Mm-hmm.

So identifying that people are afraid of that confrontation, they don't wanna be the bad guy. And in doing so, that's how you get put in positions that you, you regret to be in. Yeah. You know? And so I'm, um, I agree with you completely.

And, and sometimes like the price you're giving them is, they're, they're all about it. Like it's not even a bad thing.

Yeah.

Because people in their mind are like, why would they accept anything under this amount?

Yeah.

But some people are like, hey, if you can solve my problem right now and give me that amount, I'm good. Like, that's fine.

Absolutely.

So yeah, I mean, you're not just—

you're not forcing them to sell the house to you, right? You know, it's their choice.

Oh yeah.

You know, so—

No, but yeah, just like when you're starting, you're like, why would anyone sell for this amount? Or, you know, even take a discount at all? They don't realize it's a complete burden.

Yeah, you're like psychoanalyzing yourself before you even make the call, you know?

And it's— I, I always look at what the pain points are. You have to. I'm getting foreclosed on in two weeks. Okay, well, I'm not gonna offer you a bunch of money. Yeah. I mean, you know, your choice is no money in two weeks, or I'll give you a little bit of money to get out.

Yeah.

Yeah.

Okay.

Yeah.

That's that's for me. That's the choice. You know, if they don't want to take it, I'm moving on to the next one.

Yeah.

Okay.

There you go.

Yeah. That yeah. That's the experience right there.

Bada bing, bada boom, man.

Man, you got me stirred up here. Yeah. Yeah. Yeah.

I'm telling you, it's exactly. You gotta do what you gotta do. I agree completely.

So are you still getting on the phones or, or you have like your team now? Are you even closing at all?

Or, dude, I, I stopped because I was like, I'm gonna let them do it, and then I missed it. So yeah, I jump on. So our Tuesday power hours, man, it's just me closing.

Okay.

And I love it. It's like an addiction. It totally is, you know. And it's— but then I only do the— I only do that now. So I still have my team do all the contract stuff, you know. And they're like, you're half-assing it. And I'm like, yeah, you know, like I get, I get them all excited, get them locked up and I, I'll pass 'em off. But I still absolutely, yeah, I do it. I block, I, you know, I, I have a battle rhythm. I'll block my day out for it.

Nice.

It won't lead, it won't lead into it if I can't do it for the day. I still let people knock it out, but I'll, I'll have 'em throw a couple in there for me, you know?

Nice.

And so I'll get in front of that. Um, and a lot of the creative, creative stuff, I mean, you can get into the weeds of everything and my team understands the nuance of creative, but there's just a level of, you know, if it's gonna be, I don't wanna set them up for failure.

Mm-hmm.

So if it, if if I'm like, oh, it could be a seller carry, why don't we do a hybrid with yada yada? And they're like, why don't you take that? And I'm like, maybe I should. Yeah. You know? And so coming in front of that, I'll have 'em listen to it and kind of coach from the sidelines and stuff.

So.

Nice.

But a lot of my calls aren't really direct to seller that my team will take that from the, from the, from my community. I like talking to agents.

Mm-hmm.

For the, for the, uh, Novation model. So a lot of them, cuz I'm the one who I'm probably gonna take 'em out to coffee or, you know, Maybe they see me online already. You know what I mean? Right. So it's an easier way to build rapport with people who already have properties listed for the Novation model. And, uh, that's worked out extremely well. And then now we got a new model that's crushing it. If I can go into it, dude.

Yeah, please.

So haven't talked about it yet. Just, just broke it to my community yesterday. But what we've been doing is I created, I work with Project Valor, another, another, uh, uh, 12U Marine. His name's Matt Clanton. Deployed 4 times, seen combat all, all, all, every time. He's a huge lender in Temecula, right? Became a great friend. We shared the stage in Dallas and we've just been friends since. And he knew, cuz he has a network of 30,000+ agents that are usually transitioned from the service to go into real estate, right? So you have a lot of people he's been able to build that network. Well, I do creative real estate, right? So I do creative flips. And what I was seeing was I'm listing these homes and they're gorgeous and we get a bunch of offers on 'em. And a lot of the times VA are, you know, they're, they're the VA buyers are trying to buy it. Well, what happens is, you know, so are conventional buyers that can waive the inspection contingency and, you know, go $20,000 more. And you can't do that with the VA. Right. And so of course we're accepting the, the, the conventional, you know, over the VA. And I'm like, there's, this just sucks cuz they're getting very discouraged. And I've been in that same situation as well. So I created something called the Veteran Home Advantage Program where I work with buyer's agents through Project Valor, or if you're not part of it, it's totally fine. And I get their clients who are approved VA ready to buy, and they've been trying to put offers on houses. And guess what's happening? You know, they're getting overbid even in today's market, right? Anything that's a tract home, gorgeous, even they can secure financing. If you have a conventional buyer in there, they're, they're taking it, right? So, and the VA can be a little, you know, picky on the inspection. So. I kind of reverse engineered my model and I talked to the buyer's agents. I said, look, if you can give me your your buyer's criteria, you know I can look at my community or at least foster deals online, right? Where we can come in and put a full appraised offer on these homes that have been sitting for ninety, hundred and twenty, hundred and fifty days that need a bunch of work, and we'll come in there and we'll just provide all the work on behalf of both parties, right? And so that way that seller gets a guaranteed sell, right? The buyer gets to be able to come in in an area that they want to be in and buy a home, and they get to help. With the renovations as well. So if they want an accent wall or certain fixtures or whatever, we can help kind of renovate this Barbie dream home for our VA clients, right? Any appreciation we create through the renovation, we'll take as our fee, and both agents get paid at close of sale. But we never hit market now, right?

Mm-hmm.

Because the VA inspection comes in, they're already approved. They put an earnest down, full appraised offer contingent upon repairs being done. I fund the repairs and I'm getting 50, 60% returns every single time I do that. The sellers love it because they get a hero to come in their house, right? They get to sell to, you know, a veteran. They get a guaranteed home sale. Listing agent, buyer's agent love it because they get paid at close of escrow way more than they would've made on that home that's been sitting. And then I just make the difference in between both. And it's been—

Wow.

Super cool.

That is cool.

We like started guinea pigging it and now it's just taken off. And now we're just— if you're a buyer's agent, you know what I mean? You're trying to look at, you know, with VA clients, you need to come on over because we've Kind of perfected this model. It's been pretty cool to renovate the home on what they want, you know? And so they were really eager to move in. That way they don't have to settle for a home that these service members don't really want to live in because they can't get what they want.

Amazing, dude.

Wow. Congrats.

Thank you.

That's really cool.

Thank you.

That's really cool.

It's a lot to take in.

No. Yeah.

No, no, no.

Yeah.

I'm just like, that's freaking awesome, dude. Um, I mean that you're creating these things too, you know what I mean? Like taking all your skills and creating new opportunities for people. It's like unbelievable.

I appreciate that, man.

Yeah.

Uh, let's jump over into our reaction.

Yes.

Uh, time right now. So we're gonna throw up some videos and then you got— you give us your 2 cents.

I'll do it. I'll give you 3 cents.

Okay, perfect.

All right, first we have a Novations pitch.

Pitch to the seller is sometimes awkward.

What value are you bringing To the seller to do a novation that they can't just do it themselves?

This is the toughest thing. There's people out there presenting it as an option when they say no to your cash offer. The way I pitch it is completely different, and I build suspense and tension. Look, Mr. Seller, doesn't look like this is going to end up being a match, but we'd have to be at X amount, my low anchor. I have a short pause. You know, there's a program called the Concierge Service. They're very strict on the criteria. The good news is I've Full approval, but we have the network and the resources and the abilities to get deals done. We're going to be working with a third-party buyer. We'll handle any sort of repairs, inspections, anything that comes up. You get your net amount. We negotiate our fee from the buyer. We deliver the result on a silver platter. They hear the details when I'm running through the paperwork. Give them the basic idea and sell the sizzle. Don't wait for them to agree. I don't pitch the process. I pitch the result.

Yeah.

Follow Novation King, subscribe to him. That is a really good friend of mine named Rich Wonders.

Nice.

Um, he is, he is the epitome of what you want in a service for novations as well. We do ours a bit different. You know, we actually collaborate a bunch on, on deals. He does it where he doesn't put any money into them. He's able to provide the service and the product on behalf of it by helping them get worked into, uh, you know, to what equity they want. I usually do put money into mine, so he'll pass deals over to me. I'll pass deals onto him.

Nice.

And he's got a great community and I gotta plug him in. We're actually going to be doing a mastermind together in August at Phoenix. Okay, so that was kind of a perfect, you know, segue into it. But okay, yeah, he, he's awesome, man. He's, uh, his pitches— he does lives a lot too, you know, and it's something I always, I always listen. I even tell my team, you know, who've been doing this for years, I go, go listen to him, you know, when it comes down to it, kind of, kind of come in there and bake in some credibility on that side. So nice, kudos, 10 out of 10.

Okay, awesome.

What do we got next?

What else we got?

Now we got like the polar opposite.

Yeah.

Don't do novations.

Okay.

Okay.

Here we go.

So you have to have the right contracts and such to be able to do a novation.

Number one.

Number two, I would say don't do novations. They're difficult to do. A flat fee listing. Just put a little clause that allows you to put that on there and look for cash buyers. It's so much easier.

So you have.

Okay. So do a flat fee listing, get the seller at a low anchor, do a flat fee listing, find a cash buyer to be able to create profit, which means that that listing agent, it doesn't have the fiduciary to their client because they know that that client could make more. So what you're telling is try to lowball your seller, right? And that way you can bake in a fee to be appetizing for an end buyer and just barely get a spread on that. It doesn't make any sense to me.

Right.

When we do novations, Our agents don't work for the seller, right? We understand that we're working in a fee. So in doing so with my attorney in fact, I'm looking at being able to present a service for our homeowner. And so I get an attorney in fact where that means I can employ my own agency so that way their fiduciary is over to me. And if I do end up putting money into the home and getting it to a status where I feel confident it's going to sell, they're going to list it, you know, off of my requirements. They're going to give me offers and I only accept an offer if the seller is going to get exactly what they want. So it's not a difficult process. All it is is he's trying to, you know, he's trying to kind of monetize on just still working, you know, the cash buyer regard without trying to test the open market because, you know, he wants to try to move quicker because novations take— novations can take 90, 120, 150 days, right? So if you're looking at getting paid quicker, right, that could be an option to go to a cash buyer. But that to me just sounds like it's the same thing as a wholesale, except you're putting it on market trying to sell.

That's exactly what I was going to say. It's a wholesale deal. And I agree totally with the fiduciary responsibility. He's just giving that up.

Yeah, he's giving up the fiduciary. Like, I mean, can you imagine that? Yeah, it blows my mind. So don't know who he is, you know, but I would, I would recommend Harvey Weinstein. Yeah, that's the issue. That's definitely— yeah, but, um, that's what I would— yeah.

Okay, so, so don't do the flat fee listing. Get an agent, get the, the, the attorney in fact, and then you can do a listing agreement with—

yeah, yeah, absolutely. And the biggest thing, people with, uh with their agents, they always say the same thing too. They'll be like, just get a flat fee agent in there and put it on market. Why? Why not get a local expert who's gonna be like, yeah, it's a, you know, a little bit of a home in distress, but you know, I have a great reputation. You're gonna pay me a full commission cuz I'm gonna make sure this thing sells.

Yeah.

I want somebody to be incentivized to sell my house than somebody who's getting $500 or $1,000. Mm-hmm. Where it's gonna sell when it sells. Now it's just being stagnant. You're waiting to collect your check. The, the homeowner now is not being worked into any type of, you know, Condition because, you know, you have somebody who doesn't care if this property's gonna be able to sell. 'Cause what's gonna happen? They're gonna do the same exact thing. They're gonna lock that deal up. He's gonna get a flat fee, whether it's $1,000 or $2,000. If no cash buyer wants it, what's gonna happen now?

Mm-hmm. Just sits.

That's just gonna sit.

Yeah.

You know, they're gonna have to lower your seller. Right. You know what I mean? Which is exactly why you want to avoid that situation.

Right. Boom.

Boom.

Okay.

All right, on to the next one. Dealing with real estate agents.

Just so you'll know, whenever you're dealing with real estate agents— and I see some of you guys segueing in there, and I saw some of you guys saying, hey, we want the Novation stuff— so I went ahead and gave you my contracts. But I will say something to you. In my opinion, the Novation is probably the easiest deal to get in trouble with because you're dealing with agents, and you piss those people off They have a little juice. When you're dealing with agents, you have to be massively careful what you're doing because remember, you're dealing with the seller, you're getting into an agreement, whether you're going to just get into a regular multi-listing agreement or you're going to try to sell your contract online or you're going to do a pure novation, you're agreeing to a certain price. Shouldn't be agreeing to repairs. I don't do repair novations. And you're agreeing that you're probably going to pay closing costs and commissions. You got to make sure there's enough spread there. So with the offer that you accept, Covers all that.

This guy is absolutely correct. You know, when it comes down to the agents, a good agent is going to have a good fiduciary, right? It's going to be able to make sure, how is my seller taken care of? Now, the cool thing about agents though, and why I love working with them so much is— and I always say this, and I love working with agents, but I do always like saying this, you know, agents have fiduciary to their homeowner, but they also have a fiduciary to their pockets, right? So when it comes down to making sure that— let's do an equity split deal. Where once you're able to, to describe to the agent that you're gonna come in, fully fund the repairs, this thing's been sitting anyway, you know, in 30 more days it's gonna be at the same price. You can't do seller concessions cuz it's gonna work into the equity. Let's guarantee your homeowner a sell, right? And this is what he doesn't do. What he just said is, I don't do repair renovations.

Mm-hmm.

I do.

Mm-hmm.

Right? So that's great. If you were gonna do, and you can see why a seller, why a listing agent would like repair renovations, because now they get to list a property that's gonna benefit their portfolio. It's gonna be fully renovated and it's gonna be a lot better for them as an agent to market find suitable sellers that fit that criteria, not these rinky-dink houses that they're listing right now. Right. Helps them out, makes them more money cuz obviously it appraises for more and their commission. Seller gets a guaranteed sell. When you're doing a traditional novation, 100% agree. I would never target a novation on market because all you are doing, if you're not putting anything into it, is taking over the responsibility. You know, if it's already not selling and still trying to market it out, You know, at a price and having that agent involved, they're just gonna get pissed off. And obviously that seller, it, you know, they've hired the agent for a reason. They probably look at 'em from an, from an authoritative, you know, perspective. So when that thing's stagnant again and you're not performing, and next thing you know, you are getting lowball offers, that's gonna have to cut into what the seller, you guaranteed them with closing costs and realtor fees. All you did was buy yourself a little bit of time to be slimy, to try to relist it to make a fee. You know, if you're not doing any value add and it's with an agent, don't ever do a novation. If you're direct to seller, you can make sure that you can work into the optimism of marketing, managing, and putting this property in the condition to sell. Hire an agent and then take over that experience. But that's why I do not. I do not guarantee a sell with novations. I don't with the equity protection. You know, with the equity split, I do if I put money into it. If I put five thousand or less, and we had three last year that did not go through out of all the ones we did, three that didn't go through. I tell the homeowners, I go, "Look, give me ninety days." Let me come in there. If I put some repairs, that's on my cost, right? We're going to put it out there. The buyer is going to be able to procure my fee. I'm going to cover your realtor fees and closing costs. And I say, if it doesn't sell in 90 days, great news is you got an updated home, you got great photos, you see exactly where it can sell, and you get the pleasure of firing me. You know, and they smile and chuckle, right? So I already set those expectations up front. I would never do a regular novation with an agent because I don't even think an agent would even take that. It's just the same thing the agent's doing, basically, you know?

Mm-hmm.

Okay, it was a long answer.

No, no, no, that's that's good. This is this is good. This is all good.

All right, we got one more video here. This is scary real estate prediction.

Dun dun dun. Big tsunami's coming. What's the big tsunami? The collapse of commercial real estate. Why does Berkshire Hathaway, Apple, Microsoft, Amazon all sitting on hundreds of billions in cash waiting for assets?

to drop.

Now, if you knew that 17 of the last 18 quarters Mayfair real estate has gone down in value—

you don't know that?

They don't publish it. Why don't they?

Because the banks have got a load of money in this property.

Correct.

But do you realize there's equivalent of 50 empty Empire State Buildings in Manhattan?

Empty.

And this is before interest rates went up.

But I mean, real estate crash is a good thing if you can buy when it's low, is it not?

Especially cash-loaded like you.

The big tsunami—

He's like, yeah, dude, don't you love that? Well, it's a good thing though if it drops for billionaires. Like, he's like, Well, shit. Yeah. I mean, yeah, it is. You know, look, he's not wrong. My buddy Garrett, he, you know, he's, you know, Garrett Long?

I've seen the name.

Yeah. Yeah. He brought this up about a year ago and he was like, dude, I got a lot of buddies in commercial who do development, you know, industrial warehousing, all that stuff, office leasing. He's like, they cannot rent anything price per square foot. You have empty, empty buildings. And so he's looked at doing wholesale with commercial buildings, you know, private capital, you know, ventures, hedge funds, people like that who wanna secure, 'cause you can get this at low, low cost and try to wholesale now Million dollar, multi, multi-million dollar buildings. I don't know if he's done anything with it, but yeah, you know, I can definitely see, you know, us not looking, you know, too good in regards to that. But I mean, if you look at the advice of anybody who bought a property in '08, you know, what do they regret? They regret not buying more.

Mm-hmm.

You know what I mean? So you can definitely climb, you know, you can, you could take the rise with it. Novations are just a positionary flip directly with the homeowners. There's risk in everything, of course, even fixing and flipping. But if you don't know how to be able to reverse engineer a downfall as well and try to make money on that, then I highly recommend going creative and seeing exactly how you can monopolize on both ends of, uh, you know, the coin.

Absolutely. Is there a tsunami coming?

Ooh, you know, we're both glass half full kind of guys, you know what I mean? We're just running the marathon, dude.

You know, it doesn't matter either way.

It doesn't matter either way. I will say my days on market have definitely, you know, grown. you know, they definitely have grown, but properties are still selling, you know, and that's kind of why, look, you know, why am I shifting as well? Why am I holding? You know, it's because I can acquire these creatively and I can do congested living. Congested living is, I think, where you should really focus your money. 2024, end of 2024, 2025, you're going to have a lot of people who aren't necessarily asset-backed or want to be able to put— be put in a position of responsibility with buying a home. They want to just have somebody take care of everything. Their space is their space, and they're going to have a renter-ready mindset, right? And What we're seeing, you know, a lot of people who just want to rent. If you can put a couple of people in those houses and just be able to create a sound environment for them, they're minimalists. You know, a lot of people are minimalists nowadays, right? They don't need much besides a backpack because they're free spirits, dude. You know, so provide housing for the free spirit.

We're back to the '60s and '70s.

I know, man.

I know.

I'm just throwing it out there.

I remember those days. You guys don't.

But, but I don't think those are gonna going anywhere. So look at holds, right? Position that out and let people pay your rent.

Nice. Okay, I do like that.

I was watching a YouTube, which as you get older you have time, the other day. I don't remember who it was or else I'd mention his name, but he basically said that there's going to be a large wealth transfer In the next few years. And then he described how, how that's going to occur. And I kind of wanted to let all our listeners know what that is. It actually made a lot of sense to me.

Okay.

So the banks are going to start targeting people with a lot of equity.

Oh.

Like me.

Yeah.

And?

Make— do a home equity line of credit.

Yeah.

We're going to make it really easy for you. Okay, we're going to take that money and basically suck it out of your house, and then you could do obviously whatever you want with the money. Uh, that's one of the issues that we had back in 2008. Everybody was just literally refinancing their properties, and then they couldn't afford the payment, and that's why they were losing it. And he says, be careful with that, it's probably coming back. Oh, you know, so maybe talk to your parents who own houses and people who have lots of equity that, you know, if you use your house like an ATM machine, the money's gonna run out.

Yeah.

You know, so that's just a word of caution.

You're not going for it.

Oh, Papa needs a new jet ski.

Let me describe it this way. I have a home equity line of credit.

Okay.

But I know how to use my money.

Yeah.

And I use it And I put it back. You don't see me in Vegas, or you don't see me.

You're going to Vegas this weekend.

You're going this weekend.

But you don't see me doing all that stuff. Yeah. So if you know what you're doing, you know you're disciplined about you know it's your money and you have to kind of put it back. I'm happy to take like your business. I'm happy to take money out and you know put fifty thousand into a deal and then get a hundred on top of that.

Yeah.

I'll do that every day.

Let's do it.

You know?

Yeah.

I'll do that every day.

Yeah.

It's like, why not? But I think what he was saying is that you're gonna run into people that aren't as disciplined. Yeah, of course.

Don't know.

Oh yeah, yeah.

If they spend the money, it's like, well, I spent the money and I, you know, I went to Hawaii, had a great time, but I didn't know I had to pay it back.

Yeah.

Yeah.

Especially with these low interest rates that just happened. You got a lot of people, first-time home buyers, next thing you know, they're getting those calls.

Yeah.

You got $100K, $150,000. Yeah, you know, pull some money out. Yeah, exactly. My payment's so low.

Enjoy your life.

Exactly. Yeah, it's happening. I'm definitely seeing it.

Yeah.

Can you sub-to HELOCs?

Ooh, uh, probably just taking over that existing debt with it. I mean, I'm sure it's a payment on top of it. Yeah, I think you can just make whatever your PITI is and then your interest payment.

Sub-to is, uh, reverse mortgages.

Yeah, right. Right.

Yeah. Okay. You can't subdue those.

Good to know.

You know, I mean, you can, but usually when the person passes away, somehow the government knows, you know, it's like, I had heard and prepared myself when my parents passed away. I had heard that if they collect, or they sent them their Social Security check, like at the first of the month, Yeah. They would go back into their account and pull it back out. Oh yeah. Because obviously they died on the 1st. Gotcha. Yeah. So you can't have that money. So I knew that when my dad passed away, I yanked his— all his money out of his account the next day.

There you go.

It's like, sorry.

Nice.

Yeah. Like, sorry. I mean, it wasn't a lot of money.

I didn't think about that.

You know?

Yeah.

But still, it's like, is, is that fair?

I didn't even think about that.

Come on.

No, it's not. Wait, you're telling me the government doesn't have our best interests all the time?

Oh no, they do. Yeah, they do. Especially the current government. Yeah.

Oh yeah.

Yeah. Of course.

Nice.

We got a couple people in the chat.

All right.

Drop it.

All right. You know who's here. Get ready. Say hello. It's Liz. And she says hi.

Nice.

Hey, Liz. We have a question from Elisa. She asks, can I do a novation and pay the seller upfront? I'm a contractor investor buying a mobile home in a park and the park charges $10,000 fee to flippers. The seller wants to get paid upfront, so I don't want to officially buy it until we finish renovating.

What a good— absolutely. You know, depending on what you're going to be putting into it, look at your risk reward, right? Your cash on cash on behalf of that. I've done it to where I've done a pre-release. So 2, 2, you know, 2 positions on this. If you were gonna do it, it depends on what you're buying it for. I mean, are they selling for 50 grand? You could do a pre-release of, you know, 30, 40 into it. That way there is some skin in the game for them to be able to close at, at that close of escrow. And that way you can position yourself with them accordingly. But I would, I highly recommend that. I've definitely done that. And that's a really good way to go about it, especially getting around fees. The reason why I like novations as well so much is cuz, you know, you're not transferring title for FHA buyers. You got a lot of people, a lot more buyer pool that's gonna come in and, and be able to, You know, buy these, these, uh, these novations. Um, I like that, you know, I, if it's $150,000, but a $40,000 reno, I wouldn't recommend positioning all your money on that to try to recoup it at close of escrow. Cause I think you're just putting too many eggs in one basket, but I would like to look at that a little bit more. I think that's a, a really creative way to go in about it.

And are you putting a lien on when you're doing the, the pre-release or?

Yeah.

Yeah. I always lien. When, when in doubt, lien it out, man. You know? That's on my lower back actually. So if you're gonna, if you're gonna do a pre-release, Liz or anybody.

Yeah.

Yes, absolutely. Right before you end up positioning it, right, you are in escrow, lean against the property, cloud title, make sure that you have interest on the home and then give them some money. Cool thing, cool thing on, on, on, on 2 fronts though. One, of course that's applicable to the purchase price, right?

Mm-hmm.

Second, something I've never, I didn't describe on this podcast, uh, what we do as well Every month they have a what? They have a mortgage for the most part, right? So let's, for you, if you're gonna give 'em some, as well as I do this, I go, look, you know, I'll give you $30,000 down right now. And then what's your mortgage? You know, let's say, you know, $2,800. I'll pay you $3,000 a month until it sells. So now I'm cash flowing them a couple hundred bucks.

Why?

A, it's a whole hell of a lot cheaper than interest only, right? B, it's applicable to the purchase price. And C, you know, it removes any headache that they have so they can kick their feet back and let you kind of completely take over. So if it does take 4 or 5 months to sell, it's that $350,000 or whatever set amount minus the pre-release minus every month I've paid their mortgage, which is just a dollar in is a dollar out. So I see all the money I always put in my novations.

Hmm.

And sellers love it, right? I'll cash flow 'em $1,000. I don't care. You know, 'cause I'm gonna see that money back. It's all about, you know, what your cash-on-cash tolerance is gonna be. But I would recommend leaving some in there, you know, Liz, and giving them what they need in order to relocate or move. Keep that title in place. And then of course, when you sell it, you know, transfer it and novate it.

Um, how, how do you lien a mobile home? I mean, in California, they're, they're basically vehicles.

Yeah. Yeah, that's true. I, I haven't done too many mobiles. I know we've, we've gotten some, some single-family appraised manufactureds, but is this in California? You know, I mean, you could record a memorandum, right? But you might be right. You know, so I, I'd have to look, I'd have to look into that where, I don't got the answer on that one.

Yeah, you may be able to. Um, I mean, because the lender has—

That's true. Yeah, there is a lien on it.

Yeah, yeah. But I just wanted to know if he kind of has done this before and he knew what the process was, because I know she's probably gonna ask.

Yeah, I'd probably record a memorandum, right? Cloud Title on that side. And then, yeah, just position it to where it's going to be a lien payoff rather than an assignment at close of escrow. I think it's all dependent on how much as well. I guess we got to see.

All right. We got Stephanie in the chat. She says, oh my God, Becky, look at her Novation.

It is so big.

That's good. Nice.

All right. And we've got Chad asking, have you ever had one of your listing agents try to blow up your deal?

Ooh.

Yes.

The short answer is yes. Look, so great question, man. So when I go in and I get involved with a listing agent, a lot of the agents I use are repeat agents, right? But if I'm on market and I pitch it and they love it, I have our agents sign, cuz the fiduciary's with me, I have them sign an agent rules and responsible— roles and responsibility sheet. And they endorse themselves to, because if I'm gonna work you into a bigger commission, mm-hmm, right? You're gonna get a guaranteed sell. Right? You're gonna come over here and make more money and, and sell a home that's, you know, gorgeous. Every single week you're gonna do things for me, right? Most of the time they're completely fine, right? You're gonna walk the property once a week or, you know, you're gonna make sure that our contractor's doing the right thing. You're, you're gonna show private showings if I have buyers or whatever. And if you are just an agent that's not on top of it, some of the best advice I ever got is hire slow, fire fast.

Mm-hmm.

You know what I mean? So I'll get in front of it. I'll give 'em a warning.

Mm-hmm.

You know, and if they do it again, then they're gone. You know?

Yeah.

You lost the listing. It wasn't selling anyway. And I look at their initial contract and I'm like, you were 17 days away from losing the listing anyway.

Right?

I, I, I gave you, you know, everything on a golden platter, you know, and you still dropped the ball. So we fired a couple agents and we always let the seller know, like we let them know, hey, this is X, Y, and Z. We know we PIFW, you know, put it in writing. You can see what the F is for. Right? And, uh, we'll, we'll, we'll get in front of it initially. We will do a, uh, like a counseling, like a hard warning, and then we will, We'll easily let them go and then we'll get somebody in there who is going to do that for a fricking full commission. You know what I mean? So, yeah, that is, uh, that is what we've done. But the good agents, you know, they have great feedback and their reputation is everything, you know? So if you're a first-time agent, you've only done a couple and you got in front of this, most of 'em are pretty excited actually. You know, like they, they wanna be more and more a part of it. But if you're just too busy, mm-hmm, then you're too busy. So, bye. You know, we've had some brokerages come back, you know, and they've been like, and look, We've even get if they're going to want to fight it or whatever, they're pissed. Well, at close of escrow, we'll give them some money. You know, I'm completely okay. I'm not afraid of putting money in people's pockets. You know, so if that's the case, I'll give you some money, but we won't work with you again.

And that usually cures all with agents.

Yeah, yeah, yeah. Like Amy, so am I.

My seller.

Yeah, it's just you, honey. Your seller got what they wanted.

Okay. Exactly.

I would I would just work write up short contracts with these listing agents. I mean. And, you know, of course they want 6 months or a year, you know, but I, I would just do like month to month.

You know, that's a good idea too. I, I, I mean, yeah. You know, especially with a, with a residential listing agreement, we just come in there and position it 30 days at a time or something.

Yeah.

And renew it.

Yeah, absolutely.

Robert SOP. There we go. We're, we're doing something. I think with us it's kind of, you know, they've already been a part of it. So I think we just kind of, kind of give 'em, you know, kind of give 'em the, you know, the, the credibility behind it there. It's like, okay, you know, let's just see if we can collaborate a bit. Because we want them to really, you know, take it and run with it. But I, I do like that too, as another level of protection.

I mean, you know, you're setting milestones. That's one of the milestones. If, if you're not meeting my expectations in 30 days, see you later.

Yeah. Yeah.

You know, if you're at least, I can see that at least you're working, you know, you're putting the effort out, then I'll extend it for another 30 days.

I like that. I like that. I could see some maybe initial pushback from 'em, you know, 'cause they're like, well, I could just have this listing no matter what, or I could fight for it. But then so far, It's like, hey, just do your job. They're like, I don't know. I can't guarantee, you know, I can't guarantee I'm gonna do it. But, um, yeah.

There's like 1.2 million real estate agents.

Oh my gosh.

In the United States. It's like, come on.

Yeah.

You know, if you don't wanna work, then step aside. We'll find somebody who does.

Oh yeah.

Mm-hmm. Everyone's got their license.

Yeah. Yeah. Yeah. Everybody. Do you have your license?

I do. See, I list. I used to list, you know.

You have a broker's license?

I have— no, no, I don't have a broker's license. I'm with RE/MAX. Real brokerage. Okay. Yeah, and I haven't. Yeah, I haven't. I haven't done a transaction because so my last transaction I did was about maybe a year and a half, two years ago, and I got this deal, and I locked them in at $900,000. Right? I put about eighty into it, sold it for 1.129. Right? So I made a bunch of money, but I also made a full commission and that, and it's not illegal. But my board definitely brought me in. They're like, "You're you know your name's here," and it's like here, and I'm like, "Yeah," and I broke it down for them. They're like. I mean, that's super smart, but like pretty sketchy. You know what I mean? Because my fiduciary technically was, of course, for my homeowner. I gave them exactly what we want, but my investor hat was on where I was denying offers because I knew what we were going to be at. So I was focused on my return and focused on what they were going to get. So I kind of was able to double dip a bit. Totally not illegal, but I highly recommend that if you're going to do this with your license, that you just, you have somebody else, you know, take over the ownership of the novation and you list it or vice versa. You list it, take over the ownership and just disclose you're an agent. Never had an issue. Seller didn't care. It's just, you know, you got Karens in the boards and everything. Like they want to, yeah. They wanna blow it up cuz they didn't think about it.

Yeah.

So you're telling me you could just, I'm like, yeah. You know, like, yeah. They're like, how old are you? Like, literally that's what they said. How old are you? That's when I didn't have a beard. You know what I mean? I'm like, what, what's that have to do with anything? You might be 12.

You've been doing it like this for 40 years, young man.

I know. Exactly. Old dogs, new tricks.

You just can't do what you want. You can't.

just come in here and make more than me. Old dogs, new tricks.

Oh man, that was funny.

We're not just picking on Karens. Guys do the same thing.

Oh my gosh. Yeah, guys will position their strength all the time. They get— yeah, it happens all the time. All the time. All right.

We've got one more question if we've got time. It's from Chad again. He's asking if you can break down your minimum requirements on underwriting a novation deal.

Ooh, great question. So it is, so we don't have an exact formula like you do with wholesale, kind of a buy box of what universally people would buy for. For ours, if we're gonna be putting $100 grand in, we gotta be making at least $70 back gross. That's fine. So we're about a 70% cash on cash, right? So we'll put $300 to make, you know, $200, you know, it's completely fine.

Okay.

But if we're gonna come in there and we need to put $50 in there, we wanna make around $30, right? Because we wanna be able to create that cushion. Uh, we're not gonna do, even though it's a guaranteed sell, like, dude, it's a guaranteed sell. $50,000 to make $10,000. It's just too risk tolerant. You know, it's like, you just never know if the market's gonna sneeze, you know? Guaranteed though. So it's, it's guaranteed though.

It's probably like Alex. Yeah. Guaranteed deal, Joe.

It's guaranteed.

Did you run it by Lauren?

We, we got a submission for San Bernardino the other day and my team brought me over and it was like a wholesaler and he was like, if you just, he started with, if you just put a basketball court in the backyard. I'm like, oh, Oh, just a basketball court, guys.

Just gotta put that.

Yeah.

That's an ADU pitch.

And, uh, yeah, it's an ADU pitch. If you just, if you demo the house and build a bigger house.

Yeah.

There you go.

Really good. But, uh, yeah, you could put a pool right back here. Yeah.

Yeah. It's worth more with a pool. Is there a pool? No, but you can put one.

Put it. By the way, the rehab's $30K with the pool. No, but, uh, yeah, try to target 60, 70% cash on cash. I got people who, who dominate their area, dominate it. they're totally cool with the 40/50. They put 50 in and make 25 because they can really, you know, run it on all ends. That's totally fine.

Mm-hmm.

You know, and they understand that market very well. And a lot of them do the VHA program. They'll come in there and, and find their buyer first and reverse engineer it. And they're okay. If I have my buyer in place, then yeah, my 50 will make 25 all day. That's totally fine. But if I gotta go to the open market and days on market around 18, 21 days, I wanna make about 70% cash on cash. Because even if we drop 20, 30 grand, I'm still making 30, 40%. I'm totally fine with that.

Okay. I gotcha. So yours is based on cash on cash.

Mm-hmm.

Um, cuz I think with like Rich's is like you take the, whatever the as-is sales price. Yeah.

The current condition retail. 90% of that. Yeah.

Minus 30.

Mm-hmm.

And then that's like your price.

Yeah. He, he, he's got a great formula when you don't put money into it. Right. Cuz you still have to be able to work in your audience on the on-market side.

Okay.

And we do that. I think it's like, it's not ARV, we call it CCRV. Okay. The current condition retail value. Okay.

Yeah.

So whatever you think it could sell for, Yeah. At 90%, right? Minus seller concessions that they might ask for and like novation fees. So about 0.8, you know, about 8% equals your max allowable offer, right? Which is usually a lot higher than wholesale still.

Yeah.

You know, so even if it's $30,000, $40,000 higher, put it on there, see what you can do. I always offer, you know, right off the rip seller credit, you know, get in front of it and do a quick $5,000, $7,000 seller credit in the privacy remarks, you know, let the sellers Or let the agents walk their, their buyers through and they'll just say, hey, we want these 3 things fixed before they buy. And it's totally fine. You know? So I'm already baking in the fact that that seller credit's coming out of my equity.

Wow.

You know, like my fee. But it's, it's easy.

Love that. Mm-hmm. Good questions.

Good.

Yeah. Very, very good questions, you guys.

Um, and if you want more questions answered, you're gonna have Trevor all to yourself on the 24th. The 24th.

That's gonna be a funny Yeah, I can't wait for it.

Yeah, so that should be good. So make sure you guys bring a friend, come with your questions, and you know, learn something.

Bada bing, bada boom.

Absolutely, absolutely.

Yeah, well, thank you so much for joining us.

Of course, dude.

That was really fun. Yeah, and really appreciate you giving us your time on two days.

So of course, man. Let's lock and load, dude. It's gonna be a blast.

Awesome. Okay, we'll be back next week. Joe won't be here. He's going to Vegas, actually. Even though he said he didn't go, he just got that heel on.

I've been looking for a meetup group that beats while I'm there, but I can't find anything.

I got one for you.

Really?

Okay.

I got one for you.

Let me know.

I got you.

Trevor's got a guy everywhere.

I'm leaving on Sunday. We're going to stay a couple of days and then we're going to— where are we going? Where am I going? I mean, I don't even know. Utah. What is it?

Yeah.

Mount Zion.

Mount Zion. Yeah, that's cute, right?

Yeah, it's awesome.

Yeah, I've never been there. You know, my wife plans these things and it's like, okay, I just go. I feel that.

Yeah, you know, I feel that. That's fine. Same exact way with Amazon packages. Yeah, my wife just plans them. What is this? Yeah, I didn't know we needed that. It's crazy. It's the third one we have now.

That's Alex with Amazon packages. It's like Christmas every day.

It's just all studio gear, honestly.

Dude, she was so sneaky. She actually— I don't know if we got to go, but it just happened the other day. She would put my name on it.

Yeah.

And I'm like, oh, what'd I get? She's like, it's a surprise. Like a week later I go, wait, what's this for? And she was like, oh, I just don't want you to know. I'm like, what? Did it work too? It totally did work.

Awesome. I'll open that later.

Yeah, exactly. And then never get to it, man.

That's great. My wife's a big shopper. And before we go, my wife's a big shopper, and she goes, "Yeah, I was at Target or wherever today." She goes, "I saved 20% on this. Isn't that great?" I go, "Not buying it would have been great." Yeah, yeah, yeah, yeah. I don't care that you saved 20%. I spent the other 80, didn't I? Like, come on! Why is that good? Answer that one. Why is that good?

Answer that.

By the way, honey, I need you to pay my card. Okay, I'm. I love her though, dude.

That's fun. All right.

Thank you.

Thank you guys for joining us so much. I appreciate it.

Yeah. See you on the 24th.

Yeah. Awesome.

See you.

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