Orange County Real Estate Investor Networking

Okay, great. Um, let me start my video here. Welcome everybody, appreciate it. Thank you for attending this month's meeting. Um, we're going to be a little bit informal this month. Um, I do have a speaker planned for next month. He's my wholesaler and, uh, he's been killing it lately, and so I asked him to come and talk about wholesaling next month for those of you who are interested in possibly doing wholesaling. For this month, I wanted to kind of keep it open, and, um, I, I want to go over a couple of things, and then I just want to open it up to the group. And if there's something that somebody wants to talk about or ask of the group, um, I'll give you the floor and you can ask away. I was on another Zoom meeting earlier with a, a guy from Think Realty, and he said there's about 800,000 people right now in forbearance. 10 years ago, when we went through the massive downturn foreclosure, there were probably about 3 million people that went through foreclosure back then. So we're not as bad as we were 10 years ago. And then the other difference is the people that are on forbearance now, for the majority of them, they do still have equity in their homes. They are quickly losing that equity because you can imagine here in Orange County, if you're paying $4,000 a month for your mortgage, you know, that's, that's a hit about $50,000 a year. So who knows how much longer this is going to last. Not to bring politics into it, but with the Democrats, they like to throw money at things and kick the can down the road. So I think I see a lot more of the forbearance continuing, even though we've put— in the last month, we've put 6 properties under contract to the wholesaler I'm talking about and his team. And most of those are from absentee owners that are living in different states. Their tenants aren't paying. And we have a couple that were in forbearance and still don't have jobs. And, you know, so their option is, you know, just sell the property and take whatever equity's in there before they lose all of it. So those are, those are the deals that we've been putting together. Um, and moving forward, we're, you know, we're trying to get as many more deals as we can, uh, to flip them. This is still an extremely hot market— multiple offers over asking price. Um, it's, it's a pretty crazy world out there right now, um, for buyers. You know, the, the only saving grace for them is that the interest rates are so low. So, uh, anyway, um, with, with January being the month where everybody, um, you know, sets their goals for the year and stuff, um, we, we've set a goal to buy 100 properties this year and flip them. Um, and we did about, uh, 30 last year. So, uh, you know, triple our amount from last year is, is a big goal for us. But that's kind of where we're headed and where we're aiming this year. So anyways, let me open it up. Does anybody have anything pressing that they want to talk about or ask the group about?

Wow.

Don't everybody start it.

I have a question.

Okay.

Thank you.

I have a question. Hi, I'm Tina. I live in Fullerton. And I wanted— I'm still in college. So I'm planning on doing my first deal when I start my W-2 job, just to have income in place. And I was looking to get a property in the Inland Empire, just because prices there, you know, a little bit cheaper, and you can buy something that doesn't cost like $500,000, $700,000. My question is, so when you look at deals, and like when you're underwriting deals to see if the numbers make sense, how do you underwrite the rehab costs? Like, does anyone have any tips, advice? Like, do you guys do it per square foot? Like, how do you do just to make sure that what you underwrite is enough to actually, like, rehab the property?

Anybody want to take that, or you want me to answer? Anybody want to throw their 2 cents in?

Well, I can go my idea, so I'll tell you how I do it, and that may or may not help you. Uh, normally for me, I, I first have to walk the property because every construction job is different. I do have a construction background, but I do try to meet with several different GCs or general contractors as well, just to get their input. But usually, if I've walked it with people that expect to maybe put a bid on it, it makes it easier for me to tell them what I'm looking to do and for them to put a list together what they think that I might be needing or missing. Normally, I won't describe that I was a builder or how many flips I've done. I'm trying to get their opinion and then I would analyze it. Oftentimes, the bank or the hard money or the styling I'm using, They'll also send an inspector out to validate the numbers that we're putting together and also point out other things that we might be missing. So even though I might have a preliminary list of things that I think to replace the sheetrock, I can estimate example of just going online and just seeing how much per sheetrock or whatever, but I usually get faster bids from my contractors just to have my rough ideas. And then the inspector will come in, he may budge me up a little bit on here, a little less on there, if he thinks I've undercut or overcut my values a little bit.

So do you walk every single property you analyze? Like, I assume not. So how do you like narrow down? Because obviously, like, I don't think contractors want to go with you to like look at every single property because obviously you don't close on every single one.

No, I normally, for one, I normally don't get too many properties under contract that I'm gonna do without being certain I'm moving forward. So normally, I would walk every property myself without contractors deciding what I think the reasonable expectation of the job would be. I probably, because I've been doing real estate over 20 years, I think a lot is easier for me to just walk, feel if the foundation feels off, feel if I could smell for the mold, seeing how the gas lines might be set up, if it looks like it had a reroute, how the roof might be sagging, things that I might just notice visually. So, finding somebody either in real estate or here or investors or anything that are willing to share time or help bring up a partner, a deal, or do something to where they can help you see some of those things that might help. And then, that way you're only picking properties that you're pretty sure they're close. There may be some stuff you're missing, but no deal killers. And unless you're doing something where you're just gonna wholesale it or something different. But usually then, when I'm taking somebody on, I already know I'm gonna do the job. I'm just hoping that I can get it done at the right budget that I feel is fair in my mind, even though I might be only thinking it's a $25,000 job or $250,000 job, whatever. And they come back a lot higher or lower than Then, then I get a little bit stressed. Like, on one property, for example, the foundation repairs were astronomical from one bidder and then way too small from another bidder. And I just had to decide on what the actual risk and reward to keeping that property was. It's a long-term keep, was it worth the risk? But give an example, it's a small job, but foundation was $30,000 to $3,000. It was like a huge difference. So, we were keeping the property as a long-term rental, so it didn't matter as much. So, we'd still move forward, but that could have been deal killer.

Okay. Gosh, that makes sense. Thank you.

Um, what I use myself personally, rule of thumb, before I get off my chair to go out and look at anything, uh, I'm looking at property at 70% of the after-repair value. Um, and then if it meets that criteria, I usually say that it's probably going to cost about 10% to rehab the property. So for example, I bought a property the other day for $500,000, and I know the rehab is going to be, you know, $50,000 on that property. And that's just a rule of thumb. Like Dante was saying, that gets me off my chair, gets me over there to look at the property, and then find out what the actual issues are. I don't do any foundation issues. I really much pretty much shy away from foundation issues because here in California, we're totally disclosure states. You have to disclose it at the end of the day. And a lot of people, you know, look at that and they go, I don't want to buy that. You know, it's like, if it happened once, it can happen more than once, even though you get it properly fixed. And even though these companies, you know, tell you that there's a 10 or 20 or 30-year guarantee on it, What happens if the company goes out of business tomorrow? You know, so there goes your guarantee. So personally, that's why I stay away from that stuff. You know, if you're a contractor, you could probably make really, really good money doing properties like that. And again, that's just a personal thing for me. So as you're looking at properties and you're evaluating them, you know, 70% of the ARV, And then you can use 10% for the rehab costs. And if those, all those numbers work out for you, then I would get up and go out and take a look at that property.

Okay.

70% ARV, like that's including your rehab costs or just the purchase price?

For me, that includes everything.

It's just purchase, you know?

Okay.

For me, it includes everything. Yeah.

Then what's the 10% for? Is that Isn't the 10% for the rehab too, or is that in the 70%? Is that how you do it?

You do 70%?

Yeah, that's in the 70%.

And then we're similar. I typically, and our margins are a little different, I'm in South Texas right now. We're moving to California this summer, but we do almost the same thing. We do a 50%, like, when we're looking for properties, I wanna see that I could probably sell it for double what it's listed for or close to it, hope I can get them down. So that way I can have 20% room, but Y'all deal in higher numbers there so that yours makes better sense. But if you're dealing on a lower number scheme like we are, where we might be buying a property for $70,000, example, and then we need to have at least a 20% repair room to cover most, even general cosmetics. But if you're buying something, for example, $500,000, then you're right. If you could figure that 70%, let's say, if a property is gonna be worth $850,000, 70% of that would be $560,000, $550,000.

Yeah.

$95,000. So, if you bought it for $500,000, you can rehab it for $95,000, you'd meet your numbers. That would make it a good idea. And you won't know, obviously, that you can rehab it for $95,000 because you're so new, but you may say at least there's some room for a decent work job that makes it worth looking at and trying to get closer.

Correct. And California is a very competitive market. So, you know, you may— I mean, we've gone up to 80% of the after-repair value on some properties. But that's because we get out there and we, we know that we're not going to have to use 10% of our rehab budget. It'll be, it'll be less. So, like Dante says, you have to go out and look at these properties. Just, just to get you out there, those, those are kind of rule of thumb numbers that, that we use out here in California.

Yeah, I walked one just yesterday and the issue wasn't the repairs, quote unquote repairs, but the functional obsolescence of the add-ons and the design of the structure. Made it very difficult. Like, it had a remodeled bathroom, but you had to go through bedrooms to get to other bedrooms for the rest of the house, and the bathroom would have to be torn out to create a better flow to where you could have a 3-bedroom or something that would make more value. And so, that was just one of several things that I wouldn't have known by just looking at square footage, that it was gonna tear down to make more room. And then also, without having the central air that it would need and the flat ceilings, it was harder. So, but I wouldn't have been able to tell that without walking it, but it looked good on paper, and it still may be okay with today's market, like he said. We're not able to stay quite in that 70 range as we sometimes might go 80 or 85, otherwise we won't get any investments.

Right.

Because there's just not enough properties overall total. And then, with rates lower, that also creates people to get cash quicker, which means they invest and flip more. It's just more competitive, you know, at least until evictions and the virus thing get better or solved or whatever.

I don't hear these 2 words, functional obsolescence. Too often. Dante, can you tell the whole group what that is?

Okay, yes.

So, um, normally when homes are designed or built, there's a normal layout or flow that makes sense. So when you walk into a house, for example, it would be probably strange if the minute you open the door you were in the restroom, as an example. You usually walk in the house and you're in the living room or a foyer or something like that. So anytime something doesn't make logical sense. It's a functional obsolescence. A lot of times here, and probably anywhere, when people add on to their house, they do it just based on what they think will make a game room or make more space, and they don't actually redesign the configuration to where it would make a whole bunch of sense. And same thing here. If I have to— if every time somebody wants to go to my backyard, they've got to walk through my bedroom to go to someone else's bedroom to go through a door to the backyard, that would be very weird to get max value. You wouldn't see that normally. So anytime that, that's going to be the case. If, you know, if for example I've got an 8-bedroom house with 1 bathroom, that might be a different version of functional obsolescence. A lot of people convert a garage into 4 rooms and try to make a master into another room. So I think the more rooms you have, the more value you may have, but that wouldn't be the case. And so that's what we're talking about. Things like that make it real difficult.

Where I see functional obsolescence out here is You'll go into a neighborhood that has single-story houses, and then all of a sudden you come up on one that has 2 stories. Obviously, they've added a second story on the top. It's what the word says, it's functional, but it's kind of really obsolete for the neighborhood because how do you end up determining what the value is of that property in a neighborhood that has all single stories?

So it just again, functional, but it's kind of obsolete. And then for all of you who are aspiring to become realtors, that's on the test. It's always been on the test. It's just like, for some reason in California, that's one of the questions, you know, what is functional obsolescence? And then they give you, you know, 4 little examples. So hopefully everybody knows what that is now. Any other questions? Sugar.

I have a question. I'm Julie. I'm a newbie, my first time newbie at investing and just being a sponge right now trying to gain as much knowledge as I can. I'm excited to hear that next month, you're having a wholesale person come on. That's kind of where I want to specialize here in California. Currently doing my first flip, but in Oklahoma. So when you were talking about the 800,000 people in forbearance, is that pre-foreclosure or they are in foreclosure?

Okay, so forbearance is a different term. Forbearance—

Okay.

Oh, excuse me. Forbearance basically means that you can stop, legally stop making your home mortgage, and we will not report you to the credit bureaus. We will not call the loan due, all that stuff. Okay, pre-foreclosure. Pre-foreclosure means that they, the bank, has submitted the paperwork To start that process. Here in California, it's called the notice of default. That notice of default is filed with the county recorder's office, puts everybody on notice that you've stopped making your mortgage payment. Okay, you think those are good leads to go after? Yes, I go after them all the time because it's like they're raising their hands going, hey, you know, come bother me please, you know. Um, so that's kind of the process. So Forbearance is like everything stopped, everything's put on hold. And okay, as long as the bank and the federal government has agreed to all this, it was supposed to end at the end of the month. If the current government, the, you know, the current president decides to extend it, then that's possibly what's going to happen, but we don't know yet.

Okay, so, so for those people that potentially may be going to pre-foreclosure, they have a lot of— they have equity in their house. Are they— would they be more inclined to working with a wholesaler? Or what stops them from, you know, going to a realtor instead of a wholesaler?

Nothing.

You know, why would they go to—

That's like any deal.

Give you kind of an idea.

You know, it's, it's, it's all the same. It's What's the urgency? Is really the main concern. You know, with the stuff that we're getting, it's, you know, my tenants aren't paying. They haven't paid for 7, 8 months. I can't get them to pay. I'm tired of it. One of the properties, the tenant was her son, and she says, I'm tired of it. I've, you know, he's been doing this his entire life, and I just want to get rid of this property, and you guys you guys take care of them after you buy it. So it just depends on the urgency.

Okay.

If, if they're on forbearance and they know they're not gonna be able to get a job and start making their payments, then, you know, yes, they can reach out to a real estate agent. It is that— it is at the point where the notice of default gets filed here in California that starts the foreclosure process. Foreclosure process in California is 3 months and 21 days. Now, that's the legal process. Does it happen that quickly? No, but, you know, it can. So there's an urgency there, you know. It's like, okay, should I just take this guy's cash offer, or should I wait a couple of months to see if I can get an offer through a real estate agent? Yes, it might be higher by the time I pay commissions and closing costs and everything else, You know, I'm almost the same as this cash offer. Maybe I'll get, you know, $10,000 less or something. Well, I'd rather do this right away.

Well, like he's saying, it's the same idea is that a lot of times the people got behind and they're like, I'll call a realtor, I'll do something, and they don't do it.

Right.

And then time builds, stress builds, and then you, if you come in as a wholesaler, oftentimes it's just like you're there in their face, you're there now, and you're not asking them to fix something, clean something, Pretty it up, move the sun out, and the convenience and the timing will make up for it. Although maybe it takes a few communications to develop a bond and trust and to get the pricing in a good number. That's where it usually works in, especially distressed, uncomfortable situations, tired, you know, timing, things like that. That's exactly right.

So, how do you find these forbearance owners? Because it's not like you can, can you, you can't go to the county assessor, right? I mean, that's not a pre-foreclosure yet. So, How do you find forbearance owners?

Um, there's, there's list source that's out there. I use PropertyRadar. So there's companies out there that keep track of all this stuff. Uh, if you're a lender, um, or know a lender, you can get, um, what they call them, 30-day lates, 60-day lates, and 90-day lates. Okay, and these are people that are just like I just said, 30 days late on their payment, 60 and 90 days late on their payment. This— all this information gets reported to the credit bureaus, and it, you know, the credit bureaus sell all this information. They make a lot of money with this stuff, okay? Um, and then there's, like I said, there's other sources out there you can get this information from.

Well, and on the forbearance, it wouldn't actually show late on the credit because they've worked it out usually before they went late. So, but they will be reported on the credit bureaus as in forbearance.

Yeah.

So, even that statement alone probably has a trigger that you could purchase those leads somehow through either the credit bureaus themselves or some subcompany that the credit bureaus own that sell off lists. I know several people that are in forbearance right now that aren't late, but they're on like a 90-day forbearance or whatever. And now, the thought is they're gonna sell the property at the end or something. They got a plan in place or no plan at all, and they're already getting behind. So, on that plan that they even told me that they were gonna do. So, at some point, they're going to run out of time and wholesaling may be the only option before it affects their credit. If they're, especially the ones in forbearance, might be at least have a chance to protect their credit because it hasn't actually affected them showing the lates. So, sometimes a quicker sale, even for less money, that just gets it done will be a good leverage point.

So, credit, can you, are there lists for credit reportings of people's forbearances? And then, do lenders offer that information to you if 30-day late payments or 60-day late payments?

I'm sure those lists exist. I don't chase wholesale leads. I buy from the wholesalers. So, I don't get those lists. But they get those from there. They tell me, hey, I got this one off a forbearance list, or other stuff. So, I know they get them. And I'm sure it exists out there very readily. And, you know, anything that can make money, you know, and sell to people lists, they'll do. So, and the only reason I don't do the wholesaling side is I'm spending more of my time with the rehab, and the construction, and the resale of it. So, there's only so much any person could do. That's why there's always a job for somebody in real estate doing something.

Absolutely.

Even project managing the job rehab is a great help if someone does a really good job. I mean, there's all these little things.

So—

Okay.

Thank you.

Hey, Joe. Just a question.

So, what's the process look like once you're buying this property and say there's a tenant in there? For LA, what kind of process do you have to do to, I guess, kick them out? So if you buy a property that has a tenant that's in that pain.

Yeah, in, in California, there's actually, um, laws that are on the books that if you're going to do a major rehab of a property, then you can evict for that reason, and it's still in place. What we've been doing is called cash for keys. So we're trying to get cooperation from the tenant. The easiest way to do that is offer them money to get out. So, we're spending— when I was buying properties at the courthouse steps, you know, 5, 6 years ago, we were probably spending about $1,000 per person cash for keys. Prefer per property, not per person. We're probably up to like $5,000 now and sometimes more. I don't want to pay over $10,000, but when you flash $5,000 in front of somebody They, they tend to listen and, and, you know, then they say, okay, yeah, for $5,000, I'll move out. So that's kind of what we've been doing is offering cash for keys. But at the end of the day, if we don't, we have a foreclosure attorney that will get them out for— I think he's up to $1,200 now, which is kind of cheap to me. But, you know, I You'd think, well, okay, why don't you just, you know, get your attorney to get them out? It's less expensive. It is, but I also run the, the risk that the tenant is going to destroy the place on the way out. So I would, I would rather have them cooperate in the move than, you know, destroy the property.

Got it.

That makes sense.

Thank you.

Quick question, what are the counties that you guys are finding more forbearance or properties that make sense to wholesale? Because I'm in Orange County and power right now doesn't make sense at all.

Yeah.

Um, the last property I bought was in Orange County. It's in Aliso Viejo. Most of the stuff we're getting is in Riverside, San Bernardino, Uh, we've got a duplex that we just put under contract in Compton as well. Um, I think actually my son-in-law, um, is going to wholesale that one. So if anybody is interested in a duplex in Compton, um, you know, reach back out, uh, to me and then I'll get you in contact with my, with my son-in-law. Um, but, you know, really, deals are there. They're, they're, they're available. You just have to do the legwork, you know, to find them. Um, I have, I have 15 people, um, literally cold calling just on the phone every day, um, just cold calling for us for leads. And so, you know, they, they come across, uh, the leads and, uh, feed them to us. And, you know, if they meet our criteria, we buy them. If not, then They'll wholesale them out to somebody else. They're there.

Typically, like, for us, we don't necessarily not do nicer areas or do certain spots. I think a lot of times, like he says, it's a matter of the leads come in. There could be a hoarder or there could be somebody that just outright never took care of a property. I do think you tend to have better shots when properties are older versus newer to have long-term uglier looks. That may allow you to get better pricing and better deals, and plus the chance to improve the value is there. So, like, obviously looking at homes that are built in the last 10 years, you could find something maybe, but that would be more difficult than it— even if it was the worst person living there, they could run it down so bad. Maybe they put some holes in the walls, but it's probably not going to be as ugly as a 30-year-old or 40-year-old or 80-year-old property. So sometimes age has a little bit to do with it.

Anybody else?

Thank you.

Okay, anybody else? Questions? Want to jump in?

Yeah, how you doing? Um, my name is Lucas. I don't have a working camera, wish I did for the moment, but I'm on my laptop. Um, just like Julie, myself, um, I'm, I'm kind of a newbie to the situation of wholesaling. Um, I really like the community though and, um, how everyone is networking and the options available for it. Um, Dante or Joe, I kind of have a question for you. I'm underlooking a property in Kansas City right now. I really want to put it under contract, but I can't see the property myself and my investors can't see it because the property isn't vacant and the tenants don't want it to be shown for another 30 days. And I've talked with a couple buyers. They said the property is just way too much. The seller's asking for way too much in a really bad neighborhood. So I was wondering if you guys had any tips or advice just so I could talk down sellers, how to negotiate, because on my buyer's end, I'm good, but it's just hard getting to the seller standpoint.

I'll give mine, Joe can go his. For me, usually what'll happen is, it takes the time of getting to know the people and their pressure points and trying to work within them. As an example, when I'm— usually when I first meet somebody, it's going to be a potential wholesale deal. Although I don't do the wholesale myself that often, I usually am catching it from a wholesaler just because of my timeframe. Like, I met with the family yesterday and the mom wants to stay in the house and keep it. The daughter wants to be sold. But the main thing is, is I came there trying to help, trying to see what I could get them. I could probably get an investor to buy this, what pricing they're thinking they're gonna want. Just kind of all nice comfort. I'm on their side. I'd like to get it done. I know the stress there. So, I normally don't try to negotiate the lower pricing in the beginning. I try to get a feel for them, feel for me, and where it's gonna work. I like to keep up with them and let them, you know, even during the process and be like, hey, I know you really do this, you know, with this and this going on, like in that particular house, there's stuff all over the place. There's floor that's got water everywhere that's all ripping up and there's stuff that's getting bad just by sitting there that, you know, that I could use the fact of having yet, but I could use that, that I do have an investor that would pay cash as is, but, you know, right now because of this issue, this issue, this issue, it's there and if it waits longer, they're worried that there's gonna be more water damage if we get rain. Or other stuff that's going to happen that's just going to make it not feasible. And they're worried about the market and the way things are going to be changing with more foreclosures, prices might be dropping. So, I don't know that I'll be able to get you much more than this because of these changes. You know, we got to forecast they're getting it, they got to work on it and sell in the future, and futures don't look good if people start evicting people and then there's a lot more property. So, a lot of times I will use realistic market data to counter things and actual repair stuff. But I'll first do it from trying to see what the most I can get. And then after talking to some investors, this is the feedback I'm getting. I think this is the best I'm going to get, which I'll probably say a little lower than I'm willing that I can get from my investors. So hopefully I can negotiate something okay, because obviously they're always going to want as much as they can get, probably a little bit more than they can get. And obviously your investors are always going to want to get it for less than, than they really could get it for. And it's just, it's a battle. budgeting their situation. But always listen to your investors before getting it way too under contract. I do know on some cases, we've— it's not often because I don't like to work this way too much, but on some cases we have gotten it under contract with a lot of stipulations and then got inspections renegotiated and then things didn't go well. And so, longer times and dropped the pricing, dropped the pricing, and just like anything, got it negotiated lower. at a lower price. So, there is ways to do that. And most of the wholesalers I know, even if they convince them to get it at a certain price, they renegotiate it and renegotiate it. Sometimes there's title issues, there's closing issues. So, the end price may not even be that beginning price by the end. So, sometimes locking it up is okay if you can then bully the pricing on down later. It's work, you know, but I don't know what your thoughts are, Joe, but—

Carlos, you want to unmute and answer that question? Carlos, are you there?

Hey, hey, uh, I'm actually driving and I was texting a seller because we actually got another one, but let me jump— let me park and I'll jump back in if you don't mind.

Okay, um, my 2 cents, it's, it's just a negotiation process, you know, like, like Dante said, you know, find out what their pain points are and And work on that. I know Carlos, you know, he may be working on one deal for three or four months. You know, literally, I want the moon, and then he calls back a few weeks later, keeps in touch with them, becomes their best friend, and to the point where, you know, if they're really serious, then they start to ask questions and and maybe ask a real estate agent what's my property really worth. And then finally reality hits, and then hopefully Carlos calls back at the right time and they're ready to go. So I know that's, that's what, what I used to do, and I know, and I know that's probably what Carlos does. And as soon as he parks, then he can give his 2 cents as well. While we're waiting for that, what I want to do next Is I'm going to break you up into smaller groups. So I'm going to put like 4 people to a room, and that way it's going to force you to talk to each other. And you're going to find out, you know, what's going on with the, with the people in your room, what they're doing. Are they interested in doing something, you know, along those lines? So that's, that's what I plan on doing next. We'll do that for about, I don't know, about 15 minutes or so, and then we'll come back to the large group like this. And then hopefully somebody says, hey, you know, pick somebody's name. Tina's really interesting, and, you know, she said this and this, and I think we ought to talk about it. And so we'll pick it up from there, and then after that, we'll, we'll close out the meeting. Carlos, are you ready? This is California. It takes a while to park the car, especially if you're on the freeway.

Carlos.

Okay, does anybody have another question while we're waiting?

Yeah, I was—

I had a question for Dante Miller.

He said, you said you were from Texas, you were moving back to California.

What making you—

I know, right?

Doing the opposite to Texas.

Yeah.

Well, actually, I was born in In Colorado but raised in Southern California. But no, my, one of my daughters I think is going to, was it Irvine? Concordia University in Irvine. And I was looking to make a change. I got divorced here and my other daughter turned 18 and she's going away to college. So, it just seemed like a time to make a change, you know, and I had a very fond childhood there. And in my industry and business, I could work anywhere really. So it just doesn't truly matter. I don't work tech. I don't work anything special. There's houses everywhere, real estate everywhere. So I figured I'd go back, relive some childhood memories, I guess. So yeah, that's probably it.

Well, yeah, thanks for sharing that. But I was thinking about actually investing in Texas.

Texas can be good. It's got some strong points. Obviously, it's hard Like, like, for me to invest anywhere but where I live is difficult because I can't see it, walk it, touch it. So, it makes it hard. And I know, like, with y'all too, same idea, but you work partnerships or you work timing and hopefully you network enough and you talk to enough people and you can work it. I'd say over here, probably like there, construction is difficult. You know, dealing with contractors, dealing with competition from investors, getting enough cash together to do stuff. Finding great deals. It's, it's, it's all highly competitive, just like y'all are wanting to do different stuff. There's not— oftentimes it's just the want to do it, that's enough to get you in. And if that is enough, it creates a lot of busyness. And from that, it's difficult to get through. But I think if you can find the right team, find the right people, and it's not just about who to trust, but it's also about how you communicate, getting people that know their flaws or what they're not great with. Like, for me, I'm not necessarily the greatest with wholesaling because I'm maybe too much of a caring person about the other person. So, I can't always get them as low as other people can. So, I really like my wholesalers to handle that a lot because I'm a positive person, which is great for the resale, staging, decorating, getting high prices, working finances, numbers. But that's my weak point. And although I was a builder for several years and rehabber, it's difficult.

Yeah.

to make a lot of money if you care too much about the consumer and not enough about your team. So I work my angles where that's certain things I focus. Plus, I do so much different stuff that I can't sit on a job site for 8 hours. So I also work in teamwork with either builders or really good GCs to handle projects, even though I'll tell them what I want done and I have to still check their work and I got to pay attention to them. But it's knowing who you are and what you can bring and finding the right group of team and then everybody being okay with sharing their pieces of that pot. And it's not hard necessarily, but a lot of people, even big syndicates and all that stuff, make a lot of money, but that doesn't always mean that they're the great team for you. So, I don't— doesn't matter what state. The only reason I like Corpus, even though I'm leaving maybe in, well, in June or July or whatever, is the pricing is obviously ridiculous. So, you know, it's like there's an acre and a half that I'm looking at right now for $69,000. I'm like, well, and we could do apartments there, multifamily. I mean, buy cash and raise the half million we need to get that first grouping done. I mean, it's much more feasible mentally for me just because I grew up poor and I grew up small town thinking. So, I don't have maybe the same background other people do with big corporations and used to doing big huge situations. So, for me, say Southern California might be a little bit intimidating. Because the prices will be so much higher than I'm used to working with. So, it'll take me a little time. So, I'll have to find people. That's why I'm starting now even networking and meeting people that when I get over there, I won't feel so much over my head with just the numbers and the cost. And obviously, being here 27 years, I know every niche pretty well. I know I'm not investing in Robstown. I'm not gonna go Kingsville.

I'm not gonna—

like, there's things that I know. I know Westside's bad, Northside's worse. You know, flower bluffs mix, but okay, unless you know the base with floods. I mean, all those things that you're gonna gain, that's where I'm developing. Well, that's the same thing too when you're looking to go into a market. You find those teams with those situations. And I see Carlos is even back too, but if you got more questions, I'm here too.

Carlos, yeah, once you head on out here, you know, maybe we can hook up and do some deals together.

Yeah, I'd love to. I really would. It's, it's I'm just getting out of that box of being in the hometown. I think that's why this COVID thing's kind of cool, is I would never be on this meeting right then. I'd be networking at a local restaurant or something like that, and that is fine. But in, in a small market like mine, especially where it's, you know, it's 300,000 people and it's, it's more of a retirement community, you're only going to build so much of your intelligence level and your build level from dealing with just people that only maybe 20 people can think past a certain spot. But like here, we could be from all different parts of town and we could still get together and we might find like-minded people. So, hopefully, it'll work out good over time.

Carlos?

Yes, sir.

Finally.

I forgot the question, but go ahead.

I think for Carlos today we're talking about wholesaling. I think you had something related to how he gets the wholesaling Like, them to negotiate those prices or do something when that guy had trouble getting the prices lower?

If you had any tips.

Yeah.

So, I mean, how to negotiate it lower. So, okay. So, I'll give you this example right now. So, the one that we're gonna send the contract tomorrow, I literally got off the phone right before I left the office. Our offer is $195,000. He wanted $220,000, right? So, this certain situation, there's tenants that haven't been paying. They haven't been paying for the past 3 months and then, since COVID started, they were paying like half the rent, third of the rent, etc., right?

Lost your audio.

You're on mute.

You're on mute. Okay, I'm here. So, in this specific situation, the tenants haven't been paying Since COVID started, and then they were paying like a little bit before that. So, first conversation with the seller, I'm going like, hey, like, besides coming to terms with the price, is there another reason why you're looking to sell? And he's like, yeah, well, yeah, I have these tenants that they're being a pain in the butt. But that's the key question. Most of the time, sellers are not going to be vulnerable. They're not gonna tell you, oh yeah, like, I have this situation going on and I can't wait to give this property away. They're not gonna tell you that. They're gonna be like, yeah, like, Give me an offer. You know, they don't want to be vulnerable. So you you gotta dig in for that motivation. But anyway, I went to see the property. One of my guys went to see it actually, and he was taking a couple pictures, and then the tenant got mad. He's like, "Hey, you're gonna you're trying to evict me." Blah blah blah. You gotta get out, right? So now I call the seller afterwards, and I tell him, "Hey man, like like these tenants are gonna be a headache. They were very disrespectful to my to one of my reps." And they kicked them out. They cussed them out or whatever. I don't know if we can do— I don't know if we can work this deal or whatever. I'll let you know. So, right there, I'm willing to walk away. I'm not being desperate for that deal. And then, I told him I'll call him back. I call him back after like a few hours or whatever and he said— I was like, I'll do this for $205,000, but otherwise, I can't go up any higher.

Okay.

And then he brought me down to— he got— he came down to $215,000, and then we went back and forth a little bit, but then finally we agreed. But that's pretty much just to keep it short. I'll go more into depth next month on this, but just to keep it short, like, dig on the motivation. Make them shift. Make them shift their mindset into why it's better for them to walk away now as opposed to continuing to to deal with that headache of losing money, tenants, Biden doing whatever to real estate. A lot of people are moving to Texas and out of state. Market might drop. We don't know what might happen. All of those points you can emphasize so that you can get them to shift that mindset.

Awesome.

Thank you so much for answering my question.

Of course.

Okay, let me break you guys up into groups here. Uh, let's see. I think how many?

Let's see.

Six, nine, four.

Sign automatically.

Wow.

Okay, stand by. We're, we're gonna open up these rooms here for you. Okay, so I guess I got left with, uh, The best people in on on the meetup, right? Is that right, Arun? Are you there? Oh, people are moving.

Hey there.

Arun, how you doing?

I'm good.

How are you, Joe?

Good. How's everything going with your property?

Um, so far so good. You know, um, I'm just, uh, waiting, I guess, uh, for a shoe to drop. I, I think most of my tenants are pretty good except one that I'm concerned about. This is only the second month, you know, all the, all the first month payments came in on time except one. And so I put a letter on his door today just reminding him of the options to, to pay the rent. So I have this online setup for payment of rent that I actually Got free through the home insurance company. They had their— are affiliated with another online company that provides free management of your property, so the tenants can have their rent deposited directly to my account through this website, and it's free of charge. So that was, that was a good thing.

Okay, sounds good. I'm glad your experience is going positive.

Yeah, so far so good.

Robin, are you there?

So, question for you, Joe. If I was, you know, I bought this property using an a real estate agent who was a friend of mine, and she was just getting into the business, and I negotiated a little bit of discount on the commission. But I don't know if it was the smartest thing to do because there was— she was very inexperienced, and I probably should have hired somebody experienced. But anyway, I was able to close the deal. But I was, you know, she was just not very knowledgeable. So for the next I'm thinking I want to buy maybe one more multifamily, so with another experienced agent. But I think I have enough experience now to be an investor, to look for an investor-friendly agent who can maybe, you know, give some commission back or give me some discount on the commission. Do you know of anyone? Or, you know, or would you be willing to, you know, we can of course chat offline, but, um, is that— do you have any thoughts on that?

Uh, yeah, that's fine. I, you know, I can help you out with that. Um, you know, depending on where you're looking, um, I've got a whole, you know, team of agents that, uh, that can help out with, uh, your search. Um, what area are you looking in? A particular area?

So, I would probably be more interested in the Inland Empire. That's where I live in Ontario, and the property that I bought is in Upland. It's only 15 minutes away. So, I kind of— I'm like you. I heard you say in one of the meetings that you like to be able to touch the property and have, you know, be able to have it accessible. So, I'm kind of the same way and probably more in the Inland Empire.

Okay, okay. Yeah, that's fine. You know, let's, let's talk, uh, you know, uh, later on during the week if you want, and, uh, we can go from there. You know, just tell me what, uh, you know, your urgency is and, and what you're looking for, and, um, and I can get started helping you out.

Okay, cool.

Hi, Joe.

Hey, Jesse, how you doing?

Good, good. I just, I was in a meeting earlier before the breakout room, but I got a quick call, so I got it out.

You've got full access to Pelago now, right?

I do, I do. Thank you very much. Yeah, thank you for the quick response. And I don't know what happened before, but now it's working.

Okay.

That's nice. Yeah, I would say I was able to generate a nice report to send to my partner that day, and it was beautiful. It was, uh, is, is it— did you make the, did you make the tool?

No, I wish, I wish I did. No, I'm, I'm the, uh, the broker for that company for California, and, um, uh, they, they, they approached me about 4 months ago and asked me to be their broker.

They were—

they are in Washington They're starting a brokerage here in California and Florida, and they plan on being in all 50 states in the next 5 years. So this is kind of a test. And, um, so my job basically is to hire agents that, um, you know, are experienced to deal with investors, uh, and on the, on the same token, be investor-friendly. Because our commission splits with the agents are $650 per transaction, so that gives them a lot of freedom to, you know, give away some of their commission if they have to, to make the deal work.

Yeah, okay, okay. Somehow I, I wasn't sure. Like, I, I see the, the logo and the brand is somehow associated with your website or your name. Uh, I, I I wasn't sure the relationship. I thought you're the owner of this platform. I thought, damn, Joe, you're good.

Yeah.

This whole software, you're so good.

I wish. Yeah.

Now it's my go-to tool to analyze my deal, everything, the layout, the PDF, the spreadsheet, just very nicely made. Good application. Thank you, thank you very much for helping. Yeah, yeah, yeah. Hey Joe, can I clarify real quick about the 70%, uh, you, you were talking about? Real quick.

So, okay, when I buy property, it's at 70% of the after-repair value. So if you go on to the Pelago website and it tells you what the after-repair value is I'm purchasing that 70% of that value. If, if I can't do it for that, then I move on to something else.

Well, 70% is your offering price, correct?

70% or lower. 70%.

Yes, that's the maximum. When you say includes everything, includes 10% rehab That means that the 10% is part of that 30% room or margin?

Correct.

Right. If they think that way, because, because, yeah, because earlier when you said 70% includes 10% rehab, I thought, oh damn, now you have to offer the 60%, uh, the purchase, like the offer price. But that, that's not what you meant?

Correct. Yeah, 70% after repair value. 10% of that is, uh, the rehab cost. And then I also— at the end of the day, you have to sell it, so I throw 5% into selling it. What's left is anywhere between 10% and 15%, and that's my profit.

That's your profit. Okay, that makes sense. So basically you have 30% to play, you know, 30% the margin to play with. That includes rehab money, uh, the escrow, uh, closing, everything, and profits.

Correct.

So you leave about 30% margin to play with?

Correct.

Yes.

It's actually pretty aggressive, 70%. It's hard to find a 70% though. I mean, today's market, like you mentioned, sometimes you even have to go As high as 80%.

Yes, yes, that's true. That's just— it's the market. That's the way California is right now. It's very competitive.

Yeah, yeah, particularly in, in LA, in Orange County. Yeah, uh, 70% sometimes.

It's—

yeah, it's, uh, it's hard to find, basically. Yeah, yeah. Okay, that, that makes sense.

Also, uh, Joe, one more thing. Uh, I— it was through your meetup, one of your meetups, that I met, um, a guy from Indiana.

He was on the—

I don't know if you remember him. His name was Hersh Rai.

He just—

he—

I think it was your meeting, your meetup, and not somebody else's. Actually, I can't— I, I'm sorry, I can't remember. But anyway, I'm just, uh, discussing the kind of the advantage of these kind of networking events because I ended up investing with him as well in a property in Indiana. He was— so, we got into a kind of a JV deal on this 16-unit multifamily in Indiana. So, thank you for putting these meetups.

You're welcome.

And, you know, like Dante said, I used to do these in person, and it's a lot of fun when it's in person. But obviously, this COVID's going to continue. I unfortunately don't see an end even this entire year. You know, I'm, you know, I'm 65, and I'm still waiting for my vaccination. You know, it's like, I don't know.

It's—

I don't think we're going to fully open back up until next year. You know, I hate to say that, but yeah, um, it's—

Even when we do open, you know, people will be kind of gun-shy, hesitant about fully, uh, mingling. You know, they might hold back. And so I, I don't know how that's going to affect everything.

Yeah, although I, I agree with, with you about the, the Zoom meeting things, but though one— although one advantage is Actually allows me to attend your meeting easy— more easily because I live in LA, in Pasadena area, you know. It would be far for me to drive down. I don't know if they meet in, um, in, um, Mission Viejo or—

Yeah.

Lake Terrace.

I don't know.

Yeah.

In that area. Yeah, that would be— it would be far from me, but with the Zoom thing, actually It's at least as far as attendance, attending goes, it's easier for me to attend the meetings, although of course I miss meeting people face to face.

Yeah, yeah, well, you know, you've got the good and you have, you know, the bad. I always like doing things in person. I love meeting people, you know, and having a cup of coffee or come into the office and And talking about all this stuff. This is the next best thing. I agree.

This is good.

Yeah, you have a breakthrough. Although I would love you— I'd love to take you to lunch or breakfast sometime when everything settles and to have a coffee or brunch with you, you know, or for a meeting someday.

Anytime.

Ron, are you there? Can you hear me? Ron?

Hey, Joe. Yeah, I can hear you.

Okay. How you doing? You must, you must have joined late because we're like, we're like in breakout sessions here. But if you want to introduce yourself to the group here, that's fine.

Yeah, sure. Hey, everybody. Sorry I'm late. It's the first opportunity I could jump on. My name is Ron Herrera and I live in North Orange County. I flipped houses, I've had rentals, and now I'm an apartment holder. I've got units in Long Beach and I'm planning on doing some ADUs and then maybe do some more acquisition. So yeah, that's my story.

Thanks.

Hey Joe, real quick.

Go ahead.

Uh, sorry to interrupt. Um, I've been on a call, so I'm almost done. I will join you guys. I received a couple prompts to unmute, but I just want to let you know that I've been on a call, so that's why I wasn't able to participate.

Okay, that's fine. I just didn't want to leave you out of the conversation. Uh, and, and of course, okay, uh, Ron, Ron has his own meetup group in, uh, North Orange County. And I think he has, or maybe already had— I don't know if you had your meeting yet or not, but he had a speaker on ADUs. Did that meeting occur already, or is it coming up?

Yeah, thanks for mentioning that, Joe. So yeah, that meetup was last Tuesday. The gentleman's name is Seth Phillips. And yeah, it was a great, great talk. If anyone needs an ADU referral, I think you know him too, Joe. But if anyone needs that person's referral, feel free to reach out to me. And yeah, thanks for mentioning the group too. Yeah, I run NoCry. We are kind of the North Orange County kind of sister chapter to Joe's group here. We built the group actually based on inspiration from this group years ago. So thanks for letting me plug that, Joe.

You're welcome. And when we get back to—

I'm sorry, when we get back to everybody, I'll let you plug it again.

Yeah, yeah, yeah. Um, so what's the name of your Meetup group, or is it on Meetup, bro?

Yeah, the Meetup is called NOCREI. It's N-O-C-R-E-I, and it, uh, it represents the North Orange County Real Estate Investing Yeah, so yeah, feel free to find us on Meetup.

I will, I will.

Thanks.

Okay, let me close out these rooms and get everybody back, and then, and then, uh, Ron, if you want to take a few minutes and, uh, talk about your group, that's fine with me.

Sure, thanks, Joe.

Okay, it says, it says they're gonna break— all the break rooms will close in 50 seconds, so we gotta wait a whole minute.

Hey, Ron, um, this is Arun. Um, I was just curious, since you said you have, uh, you have properties in, uh, Long Beach, how's the real, like, multifamily real estate market there? When I was looking a couple of months ago, there were a lot of properties for sale And I couldn't find anything reasonable, but do you think it's still pretty strong over there in Long Beach?

Yeah. I think Long Beach is actually kind of a gem among, you know, the South Bay and all the way down to Orange County for the coastal markets. It's really different and I think there are a lot of deals. You know, I'm constantly getting Calls from different brokers trying to you know you know garner some attention you know and share some of their deals and yeah I think if I was in the position to purchase today yeah that's probably where my and and in the future that's where my next acquisitions will be there there's deals I think the one difference there in that market is you really need to work with a you know an agent or a broker that I mean knows all those neighborhoods all those streets which areas are gentrified which ones are about to gentrify so you can get in the in the path of progress. So if you, if you are really interested, send me your information on a private message or something. I'll connect you with my broker. He's fantastic. I mean, just really knowing, like, you know, where, what the deals are, where they are before market, and how to accurately price where valuations will come in after you rehab those places. That's really what makes the difference. But yeah, if you want to talk about that more or talk to my guy, just let me know.

Okay.

Great.

Thank you.

Ronnie, can I ask you a question? What market is that in?

So if you're talking about submarkets of Long Beach, the one that I'm specifically in is Alameda Speak.

Okay. Got it. Thanks.

Sure. Yeah. I flipped another 6-unit In, I don't know if it would be called. It's not northern Long Beach, but it's I don't know at least ten blocks north of where I am now. And yeah, that that was a little bit different area, a little rougher. Still, you know, gentrifying and looking good. But but yeah, there are different submarkets in that area.

Ron, you want to take a few minutes? Ron. I've known Ron for quite a bit, and he started his own meetup group, and I just want to give him a few minutes to kind of tell you all about it in case you want to, you know, connect with him on his meetup group.

Yeah, thanks, Joe. So, um, yeah, it's good to talk to everybody. I'm Ron Herrera. So the group that Joe's referencing is, it's called NoCrei, N-O-C-R-E-I. And we are the North Orange County Real Estate Investing Network. And we're coming up on 5 years of having run the group this May. It's our 5th year anniversary. And we're a little over 1,200 members. And we have meetings every month similar to Joe's group. We'll often have guest speakers come in. We try to really keep the feel of the group, similar to Joe's group, where we're really people with expertise helping other people, not gurus with $10,000 programs or people who are really trying to sell you on something. We educate each other, we transact, and we network. And that's really the tenets of the group. We've got meetings once a month. Prior to COVID, we were meeting live, And yeah, it's a really great opportunity for people to introduce themselves, talk about what they need, what they want. If they've got deals, you know, they brought them to the group to transact. And yeah, it's— we've created something really special. Like I said, we kind of took the tenets of this particular group meetings that I used to attend, you know, with Joe, you know, 5, 6 years ago. And then, you know, brought something similar with a little different style to North Orange County. But ultimately, it's been really great, and it's great to, you know, been able to partner with Joe to bring him in for a few sessions too. He's been a guest speaker at our meetup, and yeah, it's great. I really appreciate the positive thing you built, Joe, and I'm happy to have tried to replicate it, and with some success. So thanks, Joe. And if anyone wants to participate, especially now that it's a virtual meetup solely until we're back in person, We post on meetup.com and we're also— we also post on BiggerPockets in the event space. So if anybody has any questions about that, you're welcome to reach out to me here on Meetup. And yeah, appreciate the time.

Can you post the link of the meetup on the chat?

Yeah, I can do that. Yeah, good call.

Thank you. I'm doing that right now.

Oh, thanks, Gary.

Yeah, there you go. Um, okay, so did anybody, uh, learn anything or want to talk about something that you heard?

Um, don't want to put anybody on the spot, but, um, does anybody have anything to share, talk about? Good.

Yeah, I'll go really quick. I'm really excited to be on this and, I guess, speak for next month. If you guys want to follow my Instagram or TikTok, I post all real estate stuff. I post live calls of the guys. I post negotiations. I've closed a couple deals. And that way, maybe you can have some questions in regards to how I operate or how we operate. But by But next month, right? And yeah, I'll see you guys soon.

Thank you, Carlos.

Oh wait, my— I, I already put it, I put it, I already put it on there as a message. Uh, I think I sent it on the chat.

Yeah, I see it.

All right, cool.

It's up towards the top if anybody wants to grab that information and follow Carlos. Uh, Um, he's—

feel free to DM me or whatever, I'll answer questions.

Okay, so anybody else have anything?

Any, any deals that they're working on? Uh, anything that they're looking for?

I have a question. So this is Megan. Um, I've, uh, typically been purchasing product, um, homes through conventional financing, and I'm considering looking at probate properties. Just wondering if anyone here has experience with that.

Um, there are—

there is a, uh, a probate attorney in Orange County that's very famous. Um, I'm trying to think of his— he's so famous, I'm trying to think of his name right now.

Um, it's Bill. Barbie, it's Bill. Um, yeah, I have his contact info. Hold on, let me find it.

Um, Bill Gross, here he is.

Um, let me, uh, he, he does nothing.

No gross.

He does nothing but probates, and, um, that's where I would get started. He offers free classes every once in a while. He offers some that you have to pay, but just look on his website, you'll find a free class from him. And then he has a website where he actually, you know, sells you the probate leads, and that's where you're going to get them from. He explains the process, how it works, all that stuff. I've taken all his classes. Very interesting, very interesting guy. That's where I would direct you if you're going to start doing probate and learning the probate process. There, there is an actual court process that people go through. That's what I call a true probate. And then there's a probate process where you don't need court confirmation. Those are the ones that I would target because the court process takes 9 months to a year to go through. Um, that's just way too much time for me to wait for somebody to decide, you know, whether they can sell their property or not. Uh, so yeah, take a look at that. Looks like there's somebody else on there that, uh, you can look at as well.

Thank you.

Anybody else have any questions?

Oh, I, I have, um, Sort of looking for a referral or recommendation. I'm looking for a CPA, like, that focuses more on real estate.

Anybody have a CPA they want to refer?

Well, I'm a CPA, but I don't want to take on any more clients.

But, uh, but I do know—

I'll, I'll, um, I don't know if they're still taking on clients as well, but, uh, Amanda Han is a friend of mine.

Her and her husband are kind of well known on BiggerPockets. I've worked with them.

Oh, so I reached out to Amanda Han and, uh, they're not taking on any more clients.

Yeah, as I thought, because she reached out to me asking if I wanted to take on some more work. Um, yeah, other than that, I, I do not have a referral.

What do you—

what do you need help with?

Is it just tax returns or—

Uh, I don't know. I think in the future, um, I, I want to Start. So I have a huge W-2 tax liability. So I work in tech. Um, and then, um, I'm trying to like plan out like how to reduce my tax liability, either like just buying properties and redeveloping them, or like I looked at cost segregation stuff as well, but then I'm not entirely sure how to go about that.

Right.

Gotcha.

Yeah.

Um, I would, I would, uh, recommend checking out TheRealEstateCPA.com. Um, they— the guy who runs that, um, site, and he's a CPA himself, he primarily, uh, worked with, um, people investing in syndication or is running syndications. But he's got a lot of really good information on the sites about it, just to kind of give you— it's, uh, things to think about questions to ask when you're asking CPAs and you're interviewing them and things like that to, to give you kind of a more informed approach to the actual process. Because if you don't know what questions to ask, you're not really going to get the good advice on what you need, in my opinion. So.

I'll check it out. Thanks.

Good one.

I posted my CPA on there. If you're interested, give him a shout out, reach, reach out to him. He's the one that does all my corporate taxes, all my flipping properties, pretty much everything that me and my team do go through him. So, and he's been, he's been doing it for the last 4 years, 5 years, around there. So he's, he's very versed on all that stuff, including, including the cost segregation stuff as well. So, um, that's his information there. Anybody else have anything?

Uh, just really quickly, I posted 2 links in the chat. Um, it's for Bill Gross. One is his meetup group and the other one is a YouTube channel, and he hosts, uh, weekly calls on the subject. So for anybody interested, um, he'd be also another person to, to follow.

Okay.

Uh, one question, another question, Joe. Uh, is there anybody in the group who can chime into what to expect in terms of return on investment, like for investors who are interested in investing in multifamily, small multifamily, like maybe it's a fourplex Or small commercial property, like what kind of returns should an investor expect in a deal? Like preferred returns and then split of profits after preferred return, those kinds of things.

Are you talking about investing passively or as the active partner in the project?

Both.

Okay, yeah, there's a couple of, if you're looking at kind of the small, like 1 to 4 unit stuff, honestly, probably one of the better, just a simple calculator tools is on BiggerPockets. They have their kind of a deal analysis tool, and it kind of gives you an expected return over, you know, like a, a 5, 10, 15, 20-year hold period. And while yes, that will be very rough numbers, to do expected returns on things like syndications and passive positions, that's gonna rely heavily on what the general partner's strategy is. Are they doing a cost segregation? Are they doing value-add? Are they relying on cap rate compression? There's a lot of different things that will go into kind of the, the understanding of their model. But the best thing that you can do is ask them for, you know, the editable version of their model so you can actually dig into it and see what assumptions are being used to calculate things in what part of the model. That's really the best kind of way to do it. In my opinion.

Thank you.

As far as returns go, your goal, your goal should be to write off as much as you can, as much as possible, to lower your W-2 income if you have W-2 income. I know somebody else was talking about that. That's the purpose really of owning real estate. Um, you know, again, I don't want to bring politics into it, but you can look at the last president we had. He had several, you know, multiple years where he actually reported a loss, uh, on his, uh, you know, income taxes that he carried forward for 10 years. Uh, people don't understand that that's our tax system and didn't do anything wrong, but that's, that's really should be your goal as an investor when you're buying these properties is, you know, hopefully have some positive cash flow. But after writing off depreciation and maybe even doing cost segregation, you should have some big write-offs in the first 5 to 10 years of that property. And then, and then decide what you're gonna do after that. Move on to— to something else, exchange it, uh, whatever it is, whatever your game plan is. Anybody else?

Yeah, I have a question. Sorry.

Oops, sorry. No, go ahead. I, I just missed the introduction segment, so I was just going to introduce myself.

Oh no, go ahead.

Go ahead, Megan. You're fine. I can wait.

Okay.

Sorry.

I know someone was talking about buying using wholesalers, and I just wondered what's the best way to connect with wholesalers and how do you know that you found a good one?

Wow.

What a great question. You can find wholesalers anywhere. You go on Facebook, they're all over Facebook and in the meetup groups on Facebook. You can go to meetups like this and you'll find wholesalers. Um, they're honestly, they're a dime a dozen. The, the question that followed up with that was, how do you know if they're good ones? Um, if, if they know what they're doing, they're, you know, in a particular area. Like for me, I want them to be 70% of the after-repair value. Um, I want them to estimate the rehab correctly. Uh, what they do is they overestimate the ARV and they underestimate the rehab. And that's just simply, you just get to know that person. And if they're not giving you the correct numbers, then you move on and you move on to somebody else that has a wholesale deal. I've got a website. Let me put it up there for you.

So if you're interested, Uh, PellaGo is an all-inclusive investor-friendly website that you put in an address here in California and it'll go through everything for you. It'll show you the comps, um, it'll, it'll tell you, okay, is this going to be a light rehab, medium rehab, heavy rehab? If it is, then you should use this number. And then it goes into the flip process. And it calculates at the end of the day, um, what you want to buy it for and what you actually get it for. And then it'll tell you whether you're going to make money on that deal or not. Um, so if you get it, if you get a deal from a wholesaler, I would run it through Peligo and it'll kind of tell you, okay, this, this is probably a good deal. Um, obviously you always want to go out and look at the property like we talked about earlier. You want to walk the property, you want to do all that stuff. to firm up your numbers. But, um, Pellegrino will get you, you know, 90-95% of the way, um, in figuring out whether this is a good deal or not. But like I said, wholesalers are there. There's a lot of them out there. There's— they're a dime a dozen. You just have to find out which ones are the good ones and, and which ones are the, you know, not so good ones, so to speak.

Just give you my kind of way is, I focus in target markets. So, I know those markets fairly well. I know what I'm looking for. So, when I see wholesalers marketing in those locations, obviously, I'll reach out to them or I'll see the properties. It doesn't take too long after wasting your time with the wrong wholesaler before you don't waste your time with the wrong wholesalers anymore. So, usually, you can get an idea once you see a property too that they weigh over Underestimate the repair value, overestimate the after rehab value. They just, the way they style it, the way they picture it, the way they do their square footage, all certain stuff are different. And then, usually along the way, you'll meet several ones that are actually, I don't know, I call it more ethical. It doesn't really matter, but have a way of being that is more upfront, open, makes sense, logical, that we can all kind of agree on. I'll even have some, just because I've been in the lending industry so long and real estate so long, that They're like, I'm not really sure about this rehab value. This is what I'm thinking, but come take a look. Tell me what you think. So, oftentimes I might get first calls. Even if I don't buy the deal, we can come to some conclusion of what we think the rehab will be if I don't get it. But I like that kind of communication style. So, it doesn't mean that I can't find a good deal from a bad wholesaler every now and then, but usually once you isolate to the few good ones that you can really, they know the market and they know that you're a real buyer too. You got to actually feed them. Otherwise, it's a lot of extra effort if you're just not able to take on any other investments. It'll take some time and usually target marketing to do that. But if you can find a few, you'll be happy.

Okay.

Thank you.

Megan, also, like, the first question I would ask is, are you direct to seller? Right? Because especially nowadays, everyone is daisy chaining, daisy chaining, daisy chaining.

Right?

They get a deal from the wholesale, one wholesaler, and they add a little fee and send out again. Takes a change, takes a change, takes a change. So I think that's always like the first. Um, and you know, I don't know if you've looked or not before, but you're— you have to have your money lined up too to make sure you can close quickly. Um, I think everyone has their own preferences, but once you see the deal, is the deal good or the deal bad? You know, bad wholesalers have good deals, good wholesalers have bad deals, you know. Um, and then once you see it, you can make your own assessment.

I'm going to carry on that daisy chain thing too. Just like he's saying, there's a lot of wholesalers that aren't really wholesaling. Just like he's saying there, that they'll say they're wholesaling, but just taking someone else's deal. So if you can get to the actual person— I agree with that 100%— the actual person that actually got the deal.

And I know some big guys that, you know, that's their That's the way they do their business, which you know, look, there's nothing wrong with that, right? That's their they're pretty honest with their end buyers and make a small cut. They're fine with it. It's just high high volume transaction, you know as well. So and and transparently, you know I'm I'm a wholesaler. You know I do this extremely part time. I have a big W two, but I talk to all my buyers and I kind of always ask like what do you like? What do you dislike? Like I don't even like me personally. I don't even give estimated rehab money because I don't, I don't, I don't flip. So it would be a guesstimate at best. But I do have pictures, I have a video, I have a walkthrough, you know, I know the age of the roof, I know my location, I know how old the AC unit— like, I know the facts that I need to know. And then I let them see it and make their own assessment. And then I get it at the price that I think, and then we go from there, you know. So I'm very systematic. It's a little bit different. And I have had deals from other wholesalers that couldn't close on it. They gave it to me. We renegotiated. I got it under contract and sent it out. But I would specifically ask, are you direct to seller? That's very important, I think, because you just— there's so many unknowns when you don't— when you are not direct to seller.

Right.

So anyways, okay.

I think that's That was really valuable. Thanks, Charles. But in addition to that, since you're a wholesaler, how do you find your buyers?

Respectfully, buyers are a dime a dozen, just like wholesalers, right? I do have a very large buyer pool. When I got coached, that was actually how I started. My best friend's a GC, my father-in-law's a GC, everyone You know, I have hard money lenders that are like begging me to take the money. I just don't like flipping. I don't want to wait 3, 4 months for my money. I like getting paid in 30 days because I have a very big W-2 and I have 4 kids. So for me, there's— it's not that hard. Once you get a deal, you can just— the easy way, if you really want to do it, I don't do it like this anymore, but you just put it on Facebook and let's say, you know, groups that they were saying, you know, I've got a deal in Anaheim, give the zip code if you want. give too much information. Anyone interested? You're gonna get bombarded with wholesalers. That's why I don't do it. Um, everyone, oh, I buy direct to seller, New Westerns out there, you know, no disrespect to them. Um, I, I reverse engineer, you know, whenever I get a deal, I always send it to my buyers first, but I'm always trying to add. So I look at who flipped in the area within, uh, you know, a mile to 3 miles, and I'll either call them directly or I'll call the agent. Directly say, "Hey, I've got a deal. This is you know this we're looking at. It's actually you know twenty grand below what you bought it for. Same square footage. I'm very systematic about it. So that's the way I do it. Yeah, that's the easiest way to do it, to be honest. Craigslist, you know, and a lot of people get you know just put up. Hey, we got opportunities. We got a deal. This and that. We get people that way. Finding finding buyers is. Very easy if you have a good deal.

How willing are homeowners, how willing are homeowners, um, for, you know, a wholesaler to come in and take pictures of their house and come in and look at everything? Is, is that hard to get agreement for homeowners to do that?

Our business quadrupled from 2019 to 2020. Um, and I literally worked the business 5 You know, maybe 5 to 10 hours a week, if even that. But they are very open to it. But, you know, we always had gloves, masks, etc. Some we don't even— like, I just did one today. I haven't even seen it yet. I drove by it because it's down the street from my house.

I live in Irvine.

So, um, people are very open to it. And if they're not, you can do a virtual one. I've done a virtual one. We literally got on Google Duo and just, you know, she walked me around the house. And one of them I've recorded before. But I always do a walkthrough anyway. But like I said, if they're motivated, you know, they're not going to be as worried about that. You know, they are, but we haven't had anyone— we haven't had any deals be a problem because people are comfortable with us coming into the house.

Where do you get most of your deals?

Um, networking. We do a lot of outbound. We do Facebook ads, agents We do texting, some cold calling, but we do a lot of outreach. But we do Facebook ads and I do YouTube ads like that too. We got a lot from agents recently.

Um, from Ben, he said, can you address the group?

Sure.

Are you still there?

I am.

Hi guys, I joined the group because I'm working on a real estate portal, a real estate website, and I'm hoping to speak with realtors or people in the industry who use these online platforms. And, you know, I'm going to put my number in the chat, and anyone who, you know, you can just send me a text message. It'll take, you know, 5 to 10 minutes. I'm going to talk to you about which online tools you're using, you know, what you like about them, what you dislike, any ideas you have, anything you can imagine. I ultimately want to build into my platform. So I've been working on it for several years. This is my last push. I did a lot of customer discovery in 2016 and 2017. I'm going to launch in mid-March to early April. So this is the last round. I'm just, you know, covering my bases. A lot has changed in terms of technology. So, I just want to talk to people about what they like the most and what they'd like to see. What would help them either finding properties, you know, finding tenants or buyers, whatever it might be. So, yeah. I put my number in chat and I Anyone who wants to talk to me, 5 to 10 minutes, I'd greatly appreciate it. So, just send me a text with your name and what you do, and then we'll set up a time to speak.

Okay.

For those—

And thanks for hosting this, Joe.

Thank you.

Yeah, absolutely. For those of you who are looking to flip properties, I put my, you know, the book that I wrote on flipping properties here in Orange County. There's a link to it there if you're interested. It's, it's, it's not as easy as you see on TV. It is very rewarding and lots of fun, but it's something that you need to educate yourself with, and that's a good place to start. Does anybody have anything else?

Yeah, I just love to introduce myself. Hi, I'm Michael. I've been investing now for almost 24 years. It's at this point, started really young, dragging my parents out to look at properties. But I've been in kind of all areas of the industry that you can possibly imagine. I own property, I flip property, I've worked for institutional property managers, for private equity firms, for hedge funds. I started my own PE firm. It's that I bought a bunch of property in. Now I'm working more on the technology side of the business, specifically in the capital allocation area. So if my platform, Correlate, is kind of like a hard money lending platform where if you can submit a deal and then it will get you dozens of terms back from, you know, there's hundreds of lenders in our network.

Network.

Basically, as many people as are interested in the deal, we'll get you terms from them. And then you can kind of pick and choose which terms work best for your specific deal. And then I have a capital placement business that primarily works for syndicators and large real estate investors to source European, MENA region, as well as Southeast Asia capital to purchase its US-based assets. And then I actually have a development going on in the LA area right now as well. So kind of been all over the industry, so I'm more than happy to answer questions and whatnot.

Thank you, Michael. Appreciate it. Uh, anybody else have any comments or questions? Is there any way to get everybody's contact information? You can reach out one-on-one.

Um, I don't, I don't have that information. Meetup group does not share that. If somebody— if you guys want to post your information on there, I'll leave this open for a while till everybody Grabs their information. If you want to do it that way, that's fine with me.

Yeah, and just a note on that, if you drop it in the chat, there's a little 3 buttons on the side of the chat window. If you can save the entire chat log, so you can go back and look up people's email addresses or phone numbers or whatever you need based on that. So that makes it easier than trying to write it all down.

Yeah, I just put my contact information. And Joe, yeah, it'll be great if you can leave it open for a bit, and then we can download the chat log and get everybody's contact. That's fine. I'm— I'll stay on until everybody says good night.

Uh, Joe, do you know of anybody who does cost segregation Uh, in this group, if, if you contact my CPA, he has somebody that does that.

Um, I, I did one of my meetups was a cost segregation person. If you look on my meetups and look like maybe a year or a year and a half ago, look through, look through my meetups, their information should be on there someplace.

Okay, great. Thank you.

And there's also like websites and kind of technology systems where you can, you can do it yourself. Depending on how complicated the project is, you know, that may or may not be a good idea. But there are, there are resources for that as well.

Oh, I see. Okay, good to know.

I had a question. Have you ever done— has anyone ever done their own cost segregation study and like it worked?

Uh, not anyone that I know personally, but it's, it's more about just isolating the land from the structure, from the, you know, uh, a sub-5-year consumable to the 5 to 10 year consumables, and then the 15 year consumables. That's really all it comes down to. And then it's, uh, it's taking the accelerated depreciation on that. Now whether you, you know, if there's a tax bill that's passed, whether you'll still be able to do the accelerated depreciation is kind of up in, you know, uh, up for question. But there's still going to be advantages for doing it. It just may not be as Great.

And I'd be, I'd be very careful doing your own. Um, you know, the purpose of having a company do it is that they're independent and they're experts at it. And the reason that you do it is in case you get audited. The chances of getting audited are really small, but if you do get audited, I would prefer to have something in writing from another company that said, hey, I can write off all this stuff instead of, you know, looking at the tax guy across the table and telling him, yeah, I did this myself. So, I'd be very careful doing it yourself.

I have a question. I do rent by the room in big houses and starting to evaluate small multifamily in San Bernardino area. Does anyone have any recommendations just for property manager. I think that'd be a good first step to understanding the market a little bit better.

I don't have any.

Anybody?

Anybody?

Crickets?

Yeah. You go on Facebook and find the Facebook groups in that area. And ask the same question on the Facebook group, and you'll get a lot of responses. You know, property managers are are kind of a pain point when you have a property to manage. They're like for flippers; the pain point is contractors. But yeah, you have to really be careful who you hire as a property. property manager and what they charge you. I do, I do property management here in Orange County, but I don't go out of Orange County. And most of the property management stuff that I do are for local investor clients that I have myself. And you really just do it as a courtesy for them, and, and I don't charge a lot of money. But you have to be careful with property managers.

Gotcha. Yeah, I self-manage so far. Um, since it's, uh, rent by the room, it's a lot of work. I'm not looking to outsource that yet, but if I'm, you know, I'm in Culver City, if I want to do something in San Bernardino, I want to have someone there.

Do you own the property? The one now?

Yes.

I'm sorry, I didn't hear you. Yes.

Yep, I do, I do.

I know some people that don't own the property and they're doing the same thing you are. They're just, they're renting it and then they're renting out the rooms.

Master lease kind of situation?

Yeah, I was just curious which, which type of, uh, investor you were. So you actually own the property, which, which is good.

Yeah, um, I see how people do it. the lease because I look at a lot of them and a lot of them wouldn't make sense if I just were to rent it from the seller or just rent it in general. So it's easier to get into versus you need a little bit more of an income to be able to purchase it for it to make sense.

Yeah.

If you have a—

if you're willing to connect me with any of those investors that work on those rent-by-the-room kind of big houses, I would love that. Okay.

Okay.

Um, yeah, and then to add just one note to that, uh, Dante, um, try searching for a Facebook group in that general region that's specific to like the short-term rental stuff because they'll have a lot more specific answers and will have probably a better recommendation in terms of finding property managers that are understand that property class, you know, it's like that asset type, just because they'll work with them more.

That makes sense.

Anybody else need more time to post your information?

Are we good?

Yes, sir. Thank you.

Okay, I'm gonna, I'm gonna close the meeting then. Thank you all for coming. Um, hold on a sec. Hi, Joe. I love an intro to the peeps, you know, doing rent buy. Oh, okay, got it.

Um, I'll send you my contact.

Hold on, I'll end it.

Okay, got it. Uh, I will see you guys next month, then. Uh, we're gonna talk about, uh, wholesaling. Okay, so again, thank you for, uh, showing up this month and spending almost a couple of hours with me. I appreciate it. Take care.

Thanks, Joe.

Thanks, Joe.

Thanks, Joe.