OCREIN - How To Flip A House in An Hr

Thank you for coming. I appreciate it. My name is Joe Homs. I am the sponsor of this event that I've been doing for a little over 10 years now. on a monthly basis. Let's first start out with the youngest investor here today, little baby Barnett. Alex has been gone for the last 3 months, 2 months? 2 and a half months. Okay, call it 3 months. And that's the reason why, Lauren wouldn't let him come. He's back with baby. He's back with baby. And I am gonna pick on some other people here, but we'll get there. I am going to teach you how to flip homes in less than an hour. Okay, that's my goal, teach you how to flip homes in less than an hour. As I go through these slides, if you have any questions, just please raise your hand and I'll try to answer them so that everybody knows what the question is. You don't have to hold it till the end. I will pause at the end if anybody has any questions, and I'm happy to ask or answer any questions at the end. Started in real estate in 1975, currently a broker, investor, and mentor. I'm the regional broker for a company called Pelago. If you're a real estate agent, come see me. Founder of H&M Real Estate, that's the company I founded before Pelago, and I've done probably over 300 flips since 1975. My contact information, that number goes directly to my office, and there's an AI that answers that. So if you want to skip what the AI is asking you, just say Joe Homs, and it'll automatically transfer over to me. Because if not, I'm a broker and that number is on every one of my agents' listings. And agents, sorry to say, are not brain surgeons. And they look at that number and they say, oh, here's the number for the agent that I want on this listing. No, it's my office number. So that's why I had to put the AI together, because it asks you, are you an agent looking for an agent? And The AI looks in my phone book and gives you their number instead of bothering me. Okay, my website, my Instagram account. Okay, so what we'll cover today: building a team, sourcing deals, analyzing deals— less than an hour, by the way— funding your deals, case studies, other types of investment opportunities. And my market outlook. Building a team, real estate agents. If you're not a real estate agent, you're eventually going to need a real estate agent if you're flipping homes to sell that home. So it's good that you find a real estate agent, whether they're investor-friendly or not. My criteria that I tell people for finding real estate agents Number one, ask a few questions. Number one, do you own your own home? If the answer is no, then let's move on to the next agent. Okay, yes, you can get a license in California and anywhere, but if you've never owned your own home, how are you advising other people on how to buy houses and stuff? Okay, does that make sense? Yes. At least it does to me. Next question. Do you— 3 or 4 different companies, and I follow her— encourage you to send out mail unless you're sending it out to a specific group. What's that group? Does anybody know what the best mail openers are in the world? Old people. Old people, yes. They got nothing better to do. They're 55 and up, they're retired, they're in a mobile home. So you send out, hey, I like to buy your mobile home, and they open up there. Ethel, Ethel, we got mail, we got mail. Look, this guy wants to talk to us. And then they put you on the phone, and then Alex talks to them for an hour and a half. You know, it's like, yes, sir, I appreciate your service in World War I. I appreciate that. Yes, sir, I'll do anything for you, sir. An hour goes by, and I'm like this. Alex, that's enough. That's enough. You're not even talking about the house anymore. Like, they love to talk. They love to open mail. So if you want to try to target that type of group, then that's what I was— regular mail. What does everybody do when they get junk mail at home? They throw it in the trash can. I don't even open it. That's like my, uh, my— one of my best friends who's not with us anymore used to tell me he used to get a lot of junk mail from Banks and all this here, fill this out and stuff. And he used to fill out, I don't want this, put it back in the envelope and mail it back to them. Those were the days where they actually paid for the stamps as well. So that's what he used to do just to mess with them. But anyways, they don't even pay for stamps anymore. Um, Direct to the D4D, whatever that is. Direct mail, cold calling, PPC, Facebook ads, trustee sales is the last one. Does everybody know what a trustee sale is? Foreclosure sale at the courthouse steps. Is there anybody who does not know what that is? Foreclosures at the courthouse. We're good? Okay, that has changed. Okay, about 4 or 5 years ago it changed. When, when I was buying at the courthouse steps, it was called an absolute auction. If I went there and they were bidding $1 for the property and there was nobody else and I bid $2, it was mine. What they did is they changed the law now that you have to hold on to it for 3 months, and anybody who wants to live in the property can buy it from you for a dollar more. Okay, but they have to live in the property. If you're a nonprofit, the same way, a dollar more. Yes. Who can't— who— she said they can't sell the house for 60 or 70% less than the ARV. Who, who said this and where, where does that occur? But who, who— I don't understand, because at the courthouse there's 10 bidders there. If it goes up to $700,000 and the property's ARV is $1 million, it's sold. It has nothing to do with the value of the ARV. The opening bid. I thought that was the law. Okay, yeah, that could be. I haven't heard that one. So what you have to understand, when these properties get foreclosed, they're foreclosing on the loan on the property. The lender cannot ask for any more than what is owed. So I'm a lender, And I have a loan on a property that's worth $1 million, but my loan is for $500,000. My opening bid as the lender is $500,000. Okay, because as a lender, I cannot make money on that property. I can only get paid back what is owed to me— interest rate, attorney's fees, all that stuff is added in there. So I don't know. I mean, laws change all the time. I don't know who would get the difference there. Who gets that? The bonds go to the owner. Okay, so that's always been the case. So if anybody's ever heard that if you get foreclosed on, you lose everything, that's not true. That's what we want them to know and we want them to believe, okay? But a lot of my properties I would buy, for example, $500,000. It was worth a million and I bought it for $500,000. I bought it for— I'm sorry, I bought it for $700,000. So I paid the bank $500,000. There's $200,000 left. That money technically needs to go back to To the seller of that property. But guess what? Nobody ever notifies them. Nobody ever tells them that there was a deficiency. Okay, nobody tells them. The bank's not going to tell them. They've been trying to foreclose on this for, you know, months. Why would they say, hey, by the way, we got $700,000, we only needed $500,000, so we're going to send you back $200,000? It doesn't work. There's actually companies out there that will call the seller and say, hey, if I can get you $100,000 back on the house you just lost, would you be interested? Yeah. Okay, here, sign this paper for me and I'll show you how to do that. And by the way, I'm also going to get the extra $100,000. Wow. There's companies out there that do that. Okay, so is it fair? I don't know. I've never done it. What I have done is we bought a property. Older lady, she was in her 80s or whatever. Her son talked her into reverse mortgage, or, you know, just— they mortgage this up to as much as they could. And we did overbid, and there was about $150,000 that was owed to her. And I said, okay, I'm a nice guy, which I am. I'm a nice guy. If you can move out by the end of the month, okay, because if not, then my options are cash for keys or evicting her. I'm not going to evict an 80-year-old lady. I'm sorry, you know, I have Some ethics there. And like, anyway, so I said, if I can show you how to get $150,000 back on this property, would you be able to move out at the end of the month? Oh yeah, I can do that. So she literally grabbed her pocketbook, went out the front door, and left everything behind. Okay, so which is fine, I took care of everything. But a few months later, we finished the flip and sold it. I got a call from her son. Son goes, Joe, I can't thank you enough. I don't know what we would have done if I didn't get that $150,000. And then I moved my mom into Laguna Woods Leisure World. I took and bought a property for her over there with $150,000. I'm thinking, yeah, you're the son that was trying to take all this money out of your mom's property. Okay, got it. Thank you, but it was a nice call to get. Appreciate it. Hey, thank you. Multiple Listing Service. If you're a realtor or become a realtor, you have access to the MLS. No need to rely on another realtor. Earn money purchasing your own deals. Save commission selling on your own deals. Investor-friendly realtor, an agent who invests themselves. Will credit commissions and/or reduce listing fees? So let me stop there real quick. I've always said at this meetup that if you're not a real estate agent and you're going to start flipping, I will list your flip for you for 1%, okay, instead of 3%. So 1%. So if you have something like that and you want to come back and have me help you, Sell the home, I will do it for 1%. Find realtors out there that are willing to do these things because there are, they're out there. Use my MLS app to search on your own. Find a listing agent and have them represent you. So this is another trick that we use. So Andy has a home that's listed for sale, and Andy or any agent, their number one goal is to To what? Earn a commission. Okay, so what I'm calling and telling Andy is, how would you like to earn 2 commissions? Why not represent me? Andy, between me and you, okay, how much less can I— you think I can get for this property? Because he's dealing with the list, the 8th seller, right? How much you think I can get Yeah. If you can get it down to this price, I'll let you represent me. Now you have 2 commissions. Great strategy. Define your market, high-end or low-end. I like the middle to low-end. I don't like the high-end. It's very, very difficult to sell a house $2 million, and I say that now, think Thinking that $1 million is literally average in Orange County. It's like nuts to me, but $1 million's average. Anyways, once you start getting up to $2 and $3 million, you don't have a lot of people running around with $2 and $3 million in their pocket. So it just takes a little bit longer. It'll sell, it just takes a little bit longer to sell the property. We'll skip that, we'll skip that. Wholesalers, what is a wholesaler? What makes a good wholesaler? Do your own comps and due diligence. Again, you need to double-check what the wholesaler's sending you. I literally get 15, 20 deals sent to me a day, and I look at the ones— I'm pretty good at just looking at them and saying, this is not going to work. But I do actually do my due diligence. And go in there and figure out whether it's a good deal or not. But that's what you need to do with all the wholesalers. Understand contracts. So the difference between a wholesale contract and a regular, you know, MLS CAR, I'm a real estate agent contract, there's big differences. The wholesale contract, you're buying the property basically what you saw. What's the difference between a wholesale contract and an MLS contract? What you saw that day. There's no disclosures that are headed your way. There's nothing. It's like, yeah, remember you saw and there was a hole in the wall? And it's like, yeah, I'm not going to fix it for you. That's why you're getting it at a good price. So that's the wholesale contract. The California Association of Realtors contract with a realtor, you're going to have somebody watching out for you. You're going to do an inspection. You're going to get disclosures. Did somebody pass away in the property in the last 3 years? There's an angry neighbor across the street. The neighbor behind me is growing weed. I can smell it in my backyard. You think it'll be difficult to sell a house if that's occurring? We had a property like that. We sent the agent that was buying the property, sent them over to knock on the door and said, hey, I'm buying this property over here. I wonder maybe if he could take care of the weed problem, and he actually did. He complied and he cut them down and stuff. But yeah, just ask. Sometimes they'll say yes. So understand the difference between all the contracts, where to find them— calling bandit signs, networking, BiggerPockets, LinkedIn, online cash buyer websites, handyman— or at the end of the day, just call me and I'll send them to you. Okay. I told them you'd have Create your own website. This is my son-in-law's website, and I'm sure you've seen these around. You know, just fill this out and send me the details on your property, and I'll let you know how much I'm going to pay for your property. In Orange County, we're like around 80% after repair value. Riverside, we're at 70-65%. San Bernardino, we're down to 60% of the after-repair value. Okay. Off-market, where the best deals can be found, and if you're willing to put in the work, direct mail, again, not something I recommend. Driving for dollars. Now, driving for dollars is exactly what it says. I'm literally getting in my car, I'm driving in a neighborhood, and I go, Look, that guy hasn't— I can tell that guy hasn't painted his house in 10 years. It looks like, you know what, it's terrible. Okay, what I don't want you to do is get out of the car, go knock on the door and say, hey, I'm a real estate investor and I'd like to buy your home. And the guy looks at you, goes, why are you knocking on my door? Well, because yours is the shittiest looking house in the neighborhood. That's not going to go over very well, okay? You just literally jot the address down, skip trace it, and then call them on the phone out of the blue. I'm just calling to see if you're interested in selling your home. That's it. It's really easy, not hard. Yes, no, maybe so, whatever, okay? They actually have a Driving for Dollars app now that's Google— where's Alex? Where'd he go? He's walking around. Oh, baby walking around. Oh, that's so cute. They have it where Google Maps literally drives the street for you. Batch Leads does that. Batch Leads does that? Okay, Batch Leads does that. There's another one that he does as well, and Google drives the street for you. Okay, and if they see— if you see something that's ugly, then, you know, you skip trace it and call them. It's better than driving. Especially with the gas prices the way they are, unless you have an electric car. Yay, electric! Cold calling, tried and true. Hi, my name is Joe. I'm a real estate investor. I bought 3 houses in your neighborhood. I bought 3 houses. Are you interested in selling yours? Yes, no, hang up. Close call. Bad language, whatever, okay, you just deal with it, move on. Google Ads, pay-per-click, same thing with Facebook Ads, that costs money, but you do get leads from it, but it costs money. Deal Machine is another app. Mojo Dialer is a dialer that dials 3 numbers at the same time. While it's dialing these 3 numbers, if somebody picks up, it stops dialing the other 2 and lets you answer the phone for this person. You put in your 2 cents, and if they don't answer, you hang up and it starts dialing the next 3 numbers. Okay, that's just to speed things up, save time. Trustee sale, we pretty much talked about this, and I'm just going to leave it at that. Where we've been sourcing deals? MLS. We used to do a lot on the MLS. That doesn't happen anymore. Off-market is where we have most of our deals. Trustee sale has totally dried up, and then wholesalers. So the biggest sources are off-market and wholesalers is what we do and how we do it. Rehab estimating, so I use 10% of the ARV. So if it's a million-dollar property, I know that at the very least it's going to cost me $100,000 to rehab. Rehab this property. Okay, now that's just a number that I use to work out all the rest of my numbers, and if my bottom line says I'm going to make 10% or more, then I'm going to take the next step. The next step is literally going out to the property and finding out if my numbers are correct. If I, if I get out there and I look at the roof and it's like, man, you need to replace this, That's $20,000 right there. Okay, so my numbers are out the window right there, but I keep going. If there's foundation issues, I walk out the door and let somebody else buy it because I don't do foundation issues. Okay, it's just too much of a pain in the neck. So if you want per square footage, so a light rehab is $25 a square foot, a heavy rehab is $55 a square foot. If you want to Try that. Again, these are estimates. You have to go out, you have to look at the property and do your numbers while you're out there. Okay, rehab costs vary greatly. Find a contractor, be as accurate as you can. Change orders— does everybody know what change order is? No. They may not know what a change order is. Oh, come on, thank you for being honest. Anybody else not know what a change order is? Okay, this is a bad word in my opinion in real estate flipping. Okay, this is basically a contractor telling you, Joe, remember the budget we put together and it's going to cost you $90,000? I opened up this wall and I found a bunch of termites. I need to add another $10,000 to fix that. That's what a change order is. I I don't work with contractors that have change orders. I let them come in, this is what you see, okay. Now I'm not asking them to put an ADU in the backyard, okay, I understand that, but if they take the drywall off and there's like 2 2x4s that have termites that need to be replaced, I expect them to just replace that, okay. So make sure when they budget that they put a little extra into their budget to account for things like that because I don't work with contractors that have change orders and I tell them that up front. Always budget for the unknown, so 10% just in case something comes up that you normally didn't agree with or there was a change order that was rightfully so that needed to be done. Other expenses, Outside of contractor codes. Termites. A termite company is a termite company is a termite company. Okay, they're like everybody else. They're normal. They're human beings. You call them out to do an inspection on this property. They come out and they do this. They're spreading the termites. Honestly, I'm exaggerating, but if you call a termite company out, I have never ever called a termite company out and they said, oh Joe, you don't have nothing. Attributes. Pools. Pools, in my opinion, are worthless if it is literally what I describe as a hole in the ground. It's worthless. Sorry, Vanessa. Okay, she's a pool contractor. If it's a resort pool, then a resort pool, rock features, slides, palm trees, like a resort. That's what's worth money. But a hole in the ground is just worth $10,000 to $15,000, if that much. Okay, so make sure, you know, because you're gonna have real estate agents, pool home. Okay, you know, and I like the ones where it says You can build an ADU in the backyard. Is there one there? No, there's not one there, but you can build one. Yeah, doesn't that take money? Like, hello, it's marketing, you know. Build an ADU, build the pool, you know, do this, do that, whatever. I like to buy what's there, not what's going to be there in the future. Plus, I don't do ADUs. Pay attention to negative factors: road noise, Proximity to freeway, airport, etc. Road noise. My parents were getting older and my sister got tired of going out to Lake Elsinore where they lived, so she demanded they buy a house in Rancho Santa Margarita where she was living. She's still there, my parents are not. We found this house But it had road noise. And I'm there with my sister and my dad, and my sister looks over, she goes, this is perfect. I go, can't you hear the cars in the back? She goes, don't worry about it, he can't hear it. My dad, I swear to God, my dad goes, I heard what you just said. I swear to God. We ended up buying that house for them, okay? But It does make a matter if you're gonna buy something like that. Know that it's probably gonna be— I put like a value of 10% or less. Okay. Housing tract, same house, same house built by the same builder, 4 bedrooms, 3 baths, 4,000 square feet. It's at the entrance. Okay, let's say I put a value of $1 million on it. Same house, I go over here and it's overlooking the ocean, 180-degree view. How much do you think that house is worth? Same house. How much more do you think it's worth? $250 grand. It's not worth the same, is it? No, it's got the view, so it's worth more. It's So it could be the same house in the same neighborhood, but because you have that view, it's going to be worth more. And that's what a professional real estate agent is going to tell you, that yeah, in my opinion, it's worth, you know, $200,000, $300,000, $400,000, $500,000 more for your house here. You want to list with me? Schools actually do matter. So people do look at the school scores. That, you know, you're in a good neighborhood. Imagine that. I never looked at that. You know, my kids went to bad schools. Not really, they went to good schools. But anyways, you'll find out when you're working with buyers that, you know, they ask you those questions. It's like, what kind of school numbers are here? And they grade them by ABC, I believe. Yeah. Kind of like I grade the houses to A, B, and C. Aren't you supposed to send them to a website that's neutral and not give your opinion about the schools as an agent? Is there a website that you can go to that's neutral? I think so. Yeah, yeah, no, they have— yeah, yeah, no, they have all those scores available. Yeah, yeah, yeah. They do. They have all those scores available and they're pretty much put out to all the public. That's where everybody kind of gets that information. I wouldn't rely on a real estate agent to say, this is a really good school, my kids go here. I believe you on all that, but, you know, let me see the score. Okay, but, you know, that's also me. I don't believe anybody. I have to have them prove it to me. Sorry, I just like— if you tell me this property is worth $1 million, I need to check the To make sure it is. Okay. This is, this is the website for the company that I work for, and this is the easy way, the easy way to get after-repair value. So you go on to Pelago, you put the property address, and then it'll populate with the information as to active listing, $439,000. What did you pay for your property? The ARV is $507,000, and then you go down here and you figure out, okay, what's the difference? Why is it that value? $439,000 because it's like a hoarder house inside. It's ugly. Okay? These are the comps that it generates as you go down the page. It tells you where it gets them from, what the values are, and then it goes into the actual rehab itself. If you purchase with a hard money loan, you're putting 20% down, 11% 2 points. Here's your rehab, and then it walks you through all these numbers that you can change. So for example, in this one, the after-repair value is $507,000, purchase price is $439,000, which you think, oh, that's a pretty good spread. But then you start putting in buying costs, carrying costs, selling costs, and your profit's $14,000, which is only 3%. This is not a good deal. Okay. But the website will walk you through this calculation. Okay, so this is something that I like to go with when the wholesaler sends it to me, and I can like literally do it in a minute or 2. It just puts all the numbers there for me. So if this number, total ROI, is 10% or more, I'm good. If it gets down to 8%, not bad, I'll look at it. If it gets to 12%, I'll I'm jumping up and down and trying to call them and lock it up. Yes, I cannot hear you. Sorry, that's Pelago website. Yeah, your company. Yes. What's the benefit of logging in and not logging in? I mean, don't you get the same answer? You can just save it. Yeah, if if you create an account, it's free, and you log in, you can save. This, okay? And then if you're a real estate agent, I can give you access to the backend where you can send this to somebody else, okay, in a PDF format. Right there, you don't even have the rehab costs. Yeah, look, you're right, I don't have the rehab costs here, so that, that's even worse than $14,000. That's way worse. Yes, you're right. Absolutely. So how up to date are the rehab costs? The rehab is something you put in. I put in 10%. You can put in whatever number you want in there. Okay, okay, that shouldn't be an issue. Okay, yes. Oh, sources of capital, we just talked hard money. Am I still okay with 1 to 2 points, 10 to 12% interest. That's about right, isn't it? Yeah. If you've been doing flips for a long time and have a lot of them under your belt, they will loan you 100%. Okay, but you better have a good track record. Most of them are going to loan you nowadays like 80, 85. Depending on experience. You can go up. I see 90%. 90%? Okay. And what if you don't have any experience? Depends on the loan, but usually it's 80%. Okay. It used to be 75%, but he's saying 80%, which is fine. So no experience, 80%. How about you? 85%? Going once, going twice, 85%. It also depends on structure versus cosmetic. Okay, at least our company, we look at cosmetic being— we'll do— we'll give a higher ARV on that. Okay, okay. He says cosmetic, they'll give a higher ARV on that. A full rehab, less? We'll do 90%. 90% on a full rehab. Okay, which is still actually good. So if you don't have any money but you have the, you know, the gap in between 10%, You can start flipping homes, not a problem. There's lenders out here that'll loan you the money. Just make sure that you add all this, all these costs into the deal. Okay, where you're going to be concerned is right here, 1 or 2 points. Okay, we get charged half a point, but again, we do a lot of deals with hard money lenders. What is your average? What do you— 1 or 2? 1.5. I'd say 1. 1? You guys are awesome, by the way. That, that's awesome. That's good. It used to be 2. Now remember that these points are for the person that's here. That's what their commission is, right? Yes. Okay, that's what their commission is. That's what you're paying for them putting the loan together for you. That's like a real estate agent making what it's 2%. Okay, uh, 10 to 12, that's about average around there. That's high. That's high. Oh, she said the same thing. Okay, so what's normal? I'd say 8.5, the mid-8s to the 9s. Mid-8s to 9s. A higher interest rate with No points. Nice, I like that too. I'm sure you can match it. He's already thinking, I can match that. Longer hold times will greatly increase finance costs. So example, $500,000, 85% loan-to-value, $425,000. $425,000 times 10% is $42,500 interest-only payments. $3,550 a month. Cash needed, $75,000 plus rehab. Now, do you also loan the rehab costs? Yes, we do. Okay, and you? I love these lenders today, you know, they give you everything. All you need is the expertise, which I'm giving you here in less than an hour, right? Everybody's going to go out and do this tomorrow, right? Okay. Monthly payment, do you require that upfront every month or can you put it on to the end? Paid every month, paid every month. There are some lenders that say pay us when you sell it, okay, but obviously not here. That's okay, not a problem. Everything else is sounding really good though. Thank you. Sources of capital, you can joint venture with somebody. Define the responsibilities clearly, create a joint venture agreement. Usually there is a financial partner and a partner that handles the rehab. Okay, when you partner up with somebody, make sure that things are in writing. You know, it's always good at the end of the day to have You're going to put the money into escrow to buy the place. I'm going to put the money in to rehab the place, and that's spelled out in a joint venture agreement so that nobody misunderstands anything. Because inevitably, if you're not working with somebody who's experienced, that could be an issue because they could say, well, I thought you knew that you were supposed to put all this No, it doesn't work that way. Okay, so make sure things are in writing. I mean, I don't have things in writing with Alex because I trust Alex from the beginning. I don't have things in writing with my kids because they know I'd kick their you-know-whats if something happened. Okay, but anybody else, if it's— it could be your best friend or whatever, it's always nice to have things in writing so that if there's Not on this $100,000. Do you have a contract to lend money in writing? Yes, right? Yeah, absolutely. So, you know, everybody knows this is how much I'm gonna pay, these are the points, these are everything. I know it, it's there, okay? Same thing with a real estate agent. You have a contract to list a house, they're gonna list it 1%, okay? Here it is, 1%. This is what you pay me at the end of the day. The problem with real estate agents— not a problem, but what usually happens is, Joe, like, I'm not gonna make a lot of money on this. Can you like make it half a percent instead of a percent? Okay. Case studies. I'm gonna go through these real quick. So this is the final product. This is before and after. This is obviously what you want to make it look like. There's the bathrooms comparison, and this is about 10 years old. Not much has changed. Purchased owner-occupied, eviction versus cash for keys. We ended up giving her cash for keys, but then I showed her how to get that money. So the second one, we ended up making $61,000 $500,000 on that one. Okay, this is another one that we did. And if you get— if you kind of get the drift and the pattern of what we buy, we buy the ugliest house in the best-looking neighborhood. The uglier, the better. I mean, I've had people— the house that we bought for my son here, uh, 2008 with the downturn, and everybody was selling because they had to sell. It was a condo. And the wife and I went over there to look at the condo for him. We walk in and there was this horrible smell, just absolutely horrible smell. These people walked in behind us and they literally did this. They walked in, they go, oh no, and they walked right back out the door. And I go, yes. I go, yes. We ended up buying that property for my son. That was that property, Lenore. Again, that's what it should look like at the end of the day. Bought at the trustee sale, again sight unseen. We made $73,000 on this one. There's another one before and after. You like the before and after? Isn't that nice? Yeah. Got rid of the yellow. Got rid of the what? The yellow. The yellow, yeah. The yellow wasn't in. In favor. In favor, yes. Yeah, and then you'll see a lot of fences in Costa Mesa like that now. I mean, that seems to be in style. We did this like, you know, 7, 8 years ago. We were doing stuff like that. You know, the extra touches like this— all new windows, new door, painted blue or red, depends on which color you want. You know, make it look nice. We also replaced the driveway as well on this one. That one was vacant for 20 years, believe it or not. Why? Who knows? These people just like left it vacant. All of a sudden they woke up one day and said, we want to sell this place in the bad condition it was in. So we ended up buying it. Sold 40% higher than original comp. Okay, so we knew we would make a profit. So again, purchase price, rehab was $105,000, sold for $790,000, and we made $87,000 on that property. So you have to get your numbers correct. If you don't get your numbers correct, you're not, you're not going to make a profit like this. Okay, so then let me— What's the next I'll one? leave these as an example, which is pretty current nowadays as well. Most of the properties that my son-in-law is doing, he's making anywhere between, I'd say, $60,000 and $90,000 on each deal. So if you make $87,000 on this, and let's say you do 2 properties a year, $160,000. Can— are you okay living on $160,000 and quitting your 9-to-5? Maybe not in Orange County, but maybe so. Okay, what doesn't work here in California is the BRRRR strategy. So you buy, remodel, rent, refinance, repeat. That just doesn't work here. It just, it doesn't cash flow. So we're not going to talk about that. 70% rule still applies. If you're in Orange County, it goes up to 80% because if you're not bidding 80% on these properties, you're not getting anything in Orange County. Orange County is very competitive, okay? So you need to go a little bit higher. Full BRRRR is pulling out 100% of your money, and we're not— again, I don't even want to talk about that because it's not something that we do. What's happening now, we're still historically at a low inventory market. Still there. There's not a lot of properties on the market for sale. Turning into a buyer's market because of what's happening overseas and, you know, trying to take care of all that stuff. I think the oil market is back to where it was before the war, but do you think the oil companies are going to lower the price on the gas? No. Okay, I, I lived through the first oil embargo in the '70s. I know most of you weren't even born yet, but we've had this before. Okay, in the '70s we had the same thing and oil prices shot up. Okay, instead of 25 cents a gallon I was paying, it went up to 75 cents a gallon, a dollar. Okay, same thing. And then it went back down when We dumped Jimmy Carter and got Ronald Reagan in. It came back down, but it took a while for the gas prices to go back down to where they normally were. I expect the same thing. It's going to take a while for that to get back down. Foreclosure rates still extremely low. Margins will continue to become compressed. What will Trump do next? It's like I wake up every morning, I go, what the heck did he do last night? You know, like, oh my gosh, he's so much of an entertainer. He's very entertaining. Like, who do we go after next? Oh, wait a second, Cuba's over there. Let's go after Cuba next. But wait a second, we have to finish Iran first, and then we can go take care of Cuba. But in the meantime, let's go to Venezuela and kidnap this dictator. Wow, how big do they have to be, if you know what I'm talking about, for somebody to do that? Wow, never in my lifetime have I seen a president like this. So what will Trump do next? I do foresee a recession, but I don't foresee it for 12 to 16 months away or longer. My fear is it's gonna be maybe 2 2 years. And my fear is that's when Trump leaves, unless he wants to become a dictator and say he's going to be president for life. I'm just kidding, okay? Come on. I think, I think he's like a one-off. If, if, if JD or if Rubio doesn't get elected, who are kind of like him, Then we may fall into a recession. It just it just normally happens. So be aware, be careful. That's why I flip. I'm in and out as quick as possible. I'm not doing buy and holds that I can buy at this price and then the market down goes down and it's not worth as much as I bought it for. Okay? Things to watch out for: trade war with China. That's always the case. Jobs report, foreclosure rate. So what's going to take a downturn is when you start seeing big companies laying off people. Okay, I'm sure you've heard the words AI. It's gonna come, it's gonna happen. Is it gonna affect jobs? Don't think it's not. It's going to affect jobs. I mean, I could literally have somebody answering my phone and saying, who are you looking for? You're looking for Andy? Here, let me give you his number. No, I have an AI doing that. Okay, it's like it's going to affect— I have a meeting every Friday of— they call it the big brokers meeting. My brokerage has 350 agents, so they allow me to go on this big brokers meeting with All the other big brokers and Carr and all their people, their attorneys and stuff. They have an app that's coming out where you can literally talk to it and say, hi, I am Joe. I'm a real estate agent. I have a buyer. His name is Andy blah blah blah. He wants to buy 123 Main Street. He wants to pay this price. He wants to put this amount down. Could you please write the offer for me? Do we need real estate agents? We're going to get to that point where, why do we need real estate agents? We just have the AI do it. You know, just have the buyer call in and say, here, this is what I want. Can you write an offer for me? It's not just writing an offer, Joe. It's not just writing an offer. No, there's a lot involved. Yes, those are words from a true real estate agent. Okay, yes, I've heard that a lot during my career. When I first started, we were actually talking about it at lunch. My— the people I was with, my son and my guests here from San Francisco, were asking me what the MLS looked like when you first started, you know, 40, 50 years ago? I go, it was a phone book. You young people, do you know what a phone book is? You know what a phone book is? Yeah, you know what a phone book is. But you're— oh, he's the youngest. You know what a phone book is? No. No. See, a phone book is literally a book, and we used to have all the MLS listings in this book. And if you were my client, I'd invite you into my office and sit you down and say, here, look for properties that I could get the property for them, which is the lowest price. So I got the property for them, they were still there 6 months later, and I closed the deal and double-ended it. Yes. If there's an auction date scheduled for your community and you submit that offer to the bank, does that automatically make you the buyer? Yeah, in California for 30 to 60 days. Yes, yes, but again, you need to let the trustee know that that's what's happening because believe it or not, I mean, I have agents call me and they go, you know, like, Joe, like, I'm in this short sale and all of a sudden the bank just foreclosed on me. I go, did you tell them that, you know, you were in the middle of negotiations or whatever? No, I didn't tell them. They didn't know, but they don't care. It's their rules. They're the bank. They make the rules. Sorry, they're not going to wait for anything. They're going to go through their process. Here is a bank employee. Oh look, I got another short sale in today. Okay, let me process this. Boop boop boop boop boop. Put it on this pile. Okay? When I get enough and I get to the bottom, then I pull that one back out and I go, oh look, it's been two months. It's time for us to foreclose on this property. Okay? They're just processors. They don't care about the property or anything that's going on with life, human beings. What they don't care. It's like. They're not paid to care, they're paid to process. So they process. That's all they do is process. And literally, when I was doing short sales, I would literally call these guys every day. How we doing on my file? Uh, let me see, Joe. Oh yeah, I, I guess I need to go to the next step. Okay, let's go to the next step. Put it on top. Then I call— Hi everyone, my name is Michelle. Now I'm a real estate agent with Pilego. I'm just here to connect and meet other.