SoCal Real Estate Flipping Secrets Unveiled

Hello and welcome back to the podcast, The New and Experienced Investor Podcast, the real estate podcast that brings real estate investors from all walks of life together. I'm one of your hosts. I'm Alex Barnett. I'm the new guy.

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

Yes, and we're back. It's 4 o'clock Thursday, 4 PM Pacific Standard Time. Hope you guys are having a wonderful week because we are. Isn't that right?

It's, it's wonderful. The weather is wonderful.

Yeah, I've been missing it.

We're doing good.

I'm seriously a different person when we get good weather.

It's typical California weather. Very nice.

Thank you.

Yeah.

Um, thank you whoever's responsible for that. So today it's just gonna be us 2.

Us 2.

And I put a poll up on the Instagram and asked people, you know, kind of what they wanted to hear about.

Mm-hmm.

I put, did you want to hear about, uh, flip, uh, deal breakdown, real estate scams, or mobile home investing? And it was a flip breakdown. So that's what we're going to be doing.

Nice.

Yeah.

Do you think they picked that because that was the first choice?

I don't know. That's a good idea. Maybe I should— I don't know how to test that. Maybe it was they just picked the top one, and then once everybody started picking the top one, then they just picked the top one.

Hmm.

Yeah.

Does it show like who's picking what?

Yeah.

Oh, maybe you should— is there—

Well, no, it shows you after you pick it. I think it'll show Okay, but it doesn't—

does it like show you like there's 100 people picking, right, the first one?

I don't think it does. I think it just gives you the thing and then—

So it's, it's an actual—

It's a pretty accurate poll.

Yeah, scientific.

Yeah, it's scientific.

Yeah. Is Bein winning or losing?

Third, he's losing right now, but that doesn't mean he can't come back at the very end in the middle of the night.

Yeah, never can tell.

No. But before we jump into our flip breakdown that I think you guys are really going to enjoy, let's talk about our meetup because we got a special one coming up.

Yes, and it's a week early.

It's a week early because every— these guys, our audience, are mostly alcoholics and they have to drink on Memorial Day.

It's, it's— what did I title it?

Stand Up and Connect.

Connect. Stand Up and Connect. And the reason I titled it that is because I want new people to come tell us why they're there. And I want them to come up front, take the microphone, and ask for help.

Yep.

And everybody that's there is going to be offering some guidance, some assistance, what you should do, what you should not do. Write your name down if I want to call you later to talk to you more about What I'm looking to do, then I will do.

That's great.

So I want more participation. That's that's why we're doing.

No, this is going to be good because I need help.

You need help?

I need a lot of help.

Yeah. Okay.

Just in general, does it have to be real estate related or? It has to be real estate related.

All right.

Yes.

I'll keep that to myself then.

Yeah.

But I do have to say you were mentioning like what if people are scared or this is what we brought up. You know what if people don't go up? And you're like, I'm just gonna straight up call people out.

I'm gonna pick 'em.

Yeah.

Yeah. So don't like, uh, you know, put your head under the table and try to hide, 'cause I'll see you.

Yeah.

And I'll walk over and I'll say, it's your turn.

Mm-hmm.

Get up there. Tell us who you are, why you're here, and how we can help you.

Yeah.

And, and I mentioned like, that's great because that's exactly what you did to me when I was sitting in one of your Zooms.

I went to lunch. An investor lunch, I call them.

Yeah.

Where somebody buys me lunch and picks my brain for an hour today. And I told him about that. Yeah, I did. I told him, I said, hey, this is how Alex got started.

Yep.

You know, I was just sitting there. I saw his, like, you know, staring at me over Zoom during COVID And it was like, man, what the heck? That guy looks a little lonely. I'm gonna pick on him.

Yep.

And I did. And it's like something Blew up inside you.

My voice cracked and I was like, I want to learn how to flip, but I don't know how. And, uh, you're like, all right, just come to the office.

Yeah. And you came.

And I came and I didn't stop coming.

Did you bring Lauren that day or just by yourself?

Yeah, no, I came. I was here. I, yeah, I don't show up anywhere without her.

That's true.

So yeah. Okay.

Yep. We did the flipping, the flipping class and there was another couple here. So there's 4 people total. Oh, you were teaching us like the math and how to do comps.

Oh wow, that was— that's been a while ago.

Yeah, we went to one of your Leisure World flips. Yeah, yeah, back then.

So yeah, where people are dying to get in and dying to get out.

Oh yeah, that's what they say.

Yeah, I know.

Yeah, but yeah, so that's, that's what we're going to be doing, and it's going to be a great way to actually connect with people.

May 20th, May 20th, May 20th. The flyer is a bit out of date that we're showing on the screen right now. It's May 20th, Monday, May 20th, not the 27th.

Oh, whoops. All right.

Yeah.

May 20th.

May 20th.

There we go.

Okay. And I just announced on Saturday, May 18th, so before My broker has decided to put a training class together on how to use the Pelago website to search for properties that are listed that are good potential flips.

Oh.

So he did some revamping of the website, and he wants to introduce that to everybody in the meetup group. So I posted it out.

Is it already live?

It's already live.

Oh, I gotta mess around with that.

Yeah, so check it out. And it's going to be, um, a Zoom call, not, not in person, because he's in Washington, so he doesn't want to drive all the way down here.

Okay, can anybody join?

Anybody join.

Okay.

And I think you should start posting it on your social media as well.

All right.

Yep. So anybody.

Cool.

Yeah, get the link and then we'll, we'll post it up.

Yeah.

Cool. All right, well, let's go ahead and jump on into it. Uh, we're gonna be breaking down a deal that we did at the end of this last year, and this one's kind of cool because it was a creative finance deal. It was a foreclosure deal. Um, it, it went smooth. We tested out new contractors on this deal. Um, it was in like a new area that we had never flipped in, so it had all the markers of You know, just a good flip.

And it had a bunch of different stuff going on that, you know, we had to deal with, which was interesting. That's what makes it interesting to me, at least.

Yeah, yeah, yeah, yeah. Whenever Joe gets interested, you know, that's when you know it's a good one.

Yeah, it is, it is. I like the complicated ones, you know, the more complicated the better. Try to resolve some issues, some problems. Yeah, go from there.

Exactly. Okay, well, uh, maybe you could throw up the first HUD. HUD. Yeah, and you can— we can show you guys. Um, so this is— this right here is what's called a HUD statement. Um, and can you explain what a HUD statement is? Because I don't know how to describe it.

I don't know what it is.

Okay, so it's—

it's It's a standard form that's used by the industry, HUD, Housing Urban Development. And basically, it puts down all the credits in a transaction. Now understand that this is— was this the purchase?

This is the purchase.

Okay, so this is going to be the buyer's side of the transaction. Remember, there is a seller side as well, but they keep everything separate. So you don't necessarily see the the seller side, right? So all you, all you do here is just see the buyer side. But this is standard. This is, this is what they use all over the US, right? I mean, very similar. It'll show you may have different line items in different places, but this is pretty much standard.

Okay. And so a couple things to pay attention to. Um, we can just— I'll start. This was a texting campaign. Uh, the guy reached back out to us and said, yes, I need some help. I have a balloon payment due. In the amount of $525,000, which, yeah, you can see on the credits right there. And he said, if you can pay that off, I already have a place to go. We've worked it all out with our kids. We're going to move in with them. This house is too big for us. We're starting over basically. He had already been bailed out previous year and they had some medical issues which allowed, or made it to where they couldn't work. And so he was unable to, you know, obviously you gotta come up with half a million dollars in a year. That's, you know, that's hard for anybody.

Yeah.

So, you know, we looked at it and the comps were around like $700,000, $725,000. And we're like, okay, yeah, I think, I think we can make that work. Obviously we gotta come up with $500 grand. I think it was due like maybe in a month or 2, but he's like, I just want to move in 3 weeks. So—

But really, before you keep going, where he got— how he got here was an interesting story as well. And I think it's an important story to tell you. He was in pre-foreclosure a year ago.

Right.

And some lender, private lender, not a bank, but a private lender got ahold of him and said, hey, I can help you out. Let's just refinance or, you know, pay off your loan and I'll give you a loan for a year. And I'll also put all those payments that you need to make for me for a year onto the loan.

Right.

And so that, that's where we were here. And obviously a year later, he hadn't been making the payment, you know, according to the contract, that's fine. But a year later, he's back in the same position, but with more debt.

Yeah.

And I think the interest rate was like, was it 11 or 12, somewhere around there?

Yeah, somewhere.

And then they charged him like 4 or 5 points. It was, I looked at that statement, the previous HUD statement.

Yeah.

It was like, they really took advantage of this person.

I know.

Absolutely took advantage of him.

I know. I think they originally, I think he originally owed like high 3s.

Yeah.

And then after all the fees plus their payments, it got up to like $525,000.

Yeah.

It was like, it was, Terrible. It was, it really was.

Yeah, that's a bummer. And, you know, you could tell it was really weighing on him. And, um, yeah, so we came in and we're like, all right, you know what, and what we're gonna do is we'll take over the mortgage basically, which was I think due in maybe a month or so.

Um, correct.

And then there was also a solar balance. He had just signed up for solar Which we're finding out is like the most annoying thing to do. Um, but he owed $32,000 on there.

Well, he got approved for the solar while he was in pre-foreclosure, which we were kind of just scratching our heads. Yeah, how did that happen? Yeah, who let that through?

Some solar guy came knocking at his door and said, hey, you need solar. It's like, really? Yeah, let's pay $40,000, whatever was the original, right? You know, and then you can pay it over 20, 30 years. There you go. Which is what, what it was. It was just, it was just another loan on the property. Yeah, it was just terrible.

The only good thing, which we found out when we went to sell, was that he had actually bought— like, he owned the solar. Because there are solar liens that you just are leasing the panels.

Yeah.

Which becomes you don't even own it once you pay it off. So this, at least it was paid off on the sale. And then, you know, those, the new owners own them now outright. Yeah, just better than leased, right?

No, no, no, it's all the same. He still owes that money. You know, it's either pay it off monthly and then yeah, you own it at the end of the day. But a lease is the same thing. It's not any different.

Well, he could—

we had to take care of this upon the sale. Yeah, yeah, I'm sure we'll get there and you can talk about it.

Yeah, yeah, yeah, yeah, we'll get there because we were trying to do some creative stuff on that. But anywho, so all that to say, when we, you know, went to purchase it, basically all we had to cover was the closing cost. And as you can see, it's, you know, $5,297.50. That's it for a house.

We bought a house for $557,000. And paid $5,297.

Yeah.

Here, let me zoom out. It's a little bit—

So it's a house on the golf course in Fontana. You know, big, big house.

Where is that?

That's crazy. It's down at the bottom.

What's that?

This?

Yeah. Yes.

Okay.

Yeah. No, you had it. Oh, she had it good before. But yes, this is subject to The loan that was on the property, and this again, this was a private lender, right? And so the loan was due like a month after we bought it, correct?

Yeah.

In October, November, somewhere.

Yeah, it was October, a month or two.

Yeah. And then I had Alex call him and say, you know, we bought it, we're going to rehab it. Can you hold off on you know? Getting paid for a couple of months. And to our surprise, he agreed.

Yeah.

And it was like, you talked to the wife first?

Yeah. It was interesting because we looked up, we're like, okay, who's the borrower? Or who's the lender? And we were like, oh, it's just a couple names. It was just like Joe and Mary. And we're like, huh. Okay. Yeah. Let's give them a call. And then the wife answers. She's like, oh yeah, I know about that property. And then we gave him the story and she's like, oh yeah, I don't think that'll be a problem. She's like, let me ask my husband. And then later we get ahold of the husband. He's like, yeah, you know what? I think we can do it, guys, but there's gonna be a fee. And we're like, oh God, here it comes. It's gonna be $300.

$300 to postpone it for 3 months, basically.

Yeah.

And we're like going, oh man, really? $300? Yeah, it's gonna be $300. Really? And I'm like in the background, I'm listening to the conversation. I'm going like this to Alex. Yeah, yeah, we're doing good. You know, just pretend that we're, we're not, but yeah, yeah, we're doing good.

Yeah, it was amazing. So they were really easy to work with. They're like, just let us know what's going on along the way. And yeah, so that was— you don't ask, you don't get. You know, that was another example of that. So Yeah, we were able to wait until we sold it to pay it off.

Wait, okay, so I'm looking at the HUD statement. You guys are saying you paid $52,000?

$5,200.

$5,200. Yeah, so you basically just paid all the escrow fees?

Correct.

Exactly correct. Just the closing costs.

Zero down.

This is a zero down.

Yes, zero down.

Zero down.

Wow. Yeah, so that's pretty cool.

Yes.

Um, But you know, it's different. Like people would say, well, why don't you just do a novation? And it's different because you were taking— we're taking control of the property. We're getting it in title in our name. That way there's not any shenanigans after we fix it up and you go to sell it.

Correct.

So that's why we did that. That's how we got it. And maybe we can jump into some of the before pictures.

Sure. Let me just load those up.

You know, when you're— I talked to the seller and he's like, yeah, there's just like— I'm like, okay, so, you know, how's the condition? Because that's a big part of it when you're doing your comps. You want to make sure, you know, there's enough spread in there. Um, he's like, yeah, there's a little bit of like wood rot by the door, and then one of the windows is broken. So that was it. He's like, everything else is completely fine. So that's what he—

how many times a day do we hear that, you know?

And now, now I'm just assuming everyone's lying to me.

Yeah.

Um, yeah, so we'll go through this. This is the kitchen. Now they had— now we just went to a hoarder house and I wanted to kind of— I don't know what to call this now because we were calling this a hoarder house originally, but we just went to a real hoarder house.

No, this, this is a hoarder house.

This is a hoarder house still.

The other one was, uh, the king of hoarders.

Okay.

Yeah. Yeah.

He is definitely hoarder-ish.

Okay. Yeah, hoarder-ish. Yeah, for sure. They just had a lot of stuff.

Yeah. No, there's nothing wrong. Like, this drawer is missing.

Yeah, the drawer is missing.

Those 2, and then the cabinet door is missing.

Yeah.

Like, what, what do people do with this stuff?

I don't— well, he had them all, actually. He ended up having them all, but And then once we got the bid from the contractors, they're like, for $2,000 extra, instead of painting it, we'll just put new ones in. And we're like, all right. Which I think was a good move.

I think it was a great move.

I do too. That was producer's idea.

That was producer's idea. Yeah. Yeah. Everybody loved it when they came to the open house.

Yep.

Here's the kitchen. Just that old style builder grade.

See, that's hoarder-ish.

Hoarder-ish.

Yeah.

Hoarder-ish. Not completely, but hoarder-ish.

It took 2 or 3 of the big containers, the 48-foot containers, to clear it out. So it was worse upstairs than downstairs, which we'll get to.

Yeah, and they both had medical conditions, so, you know, it's like, it's— it is what it is. Like, they had a hard time being mobile, and, you know, you bring stuff in, you can't really get rid of it.

And they couldn't get it— they couldn't take care of the house after a certain—

Yeah, I mean, it's a big house, so they just—

We had more problems Yes. So the piano.

Yeah.

Yeah.

The piano has—

because, um, I, you know, I, I said, well, why don't you just leave the piano there as staging?

Which we did.

But then, no, you know, we posted it on Facebook and everywhere else and nobody wanted it.

We called around to some schools.

Yeah.

You know, like we're doing it, but I think once people realize kind of how hard it is to move, they, they, they bail.

Pianos are a thing. They are definitely a thing.

Yep.

Uh, they had their kids living with them originally, and then the kids moved out, moved on their own, and then that's, that's where the mom and dad went to go live with them after that. So they still had the kids' stuff in there.

One of the kids lying on the bed.

Yeah, yeah, that's one of the kids.

Yeah.

Um, so yeah, just kind of stuff scattered around. The kids— I think the kids grabbed all their stuff and then they pretty much just left everything. They're like, we're gonna take everything, we might have one or two items left.

They left everything.

And then I think he asked you directly, he's like, is it okay if we leave some stuff? Jen's like, yeah, just whatever, just leave stuff behind.

We didn't realize—

I didn't think he was gonna leave the whole house.

We didn't realize. Okay, so— oh wait, go back.

Sorry.

Yeah, that's okay. So this is the, uh, this is underneath. We had to replace this. You can't really tell, but this is all black. Um, It's just, it's, it's just dirty.

Dirty.

Yeah.

We don't use the M word.

I know. Sorry. No, no, I wasn't going to. I was just saying that's what color the pipes are. Um, but yeah, that's normal. Yeah. Okay. That's normal. Yeah. Black pipes. But, uh, we had to just replace some of this stuff in here. But so that was good.

We replaced all of it.

We replaced all of it.

Yeah.

But I mean, like some of the drywall just because it was a little bit—

yeah.

Old.

Older.

Yeah. Normal.

Yeah, of course.

Normal.

Yep. Side. Oh yeah, this was all overgrown.

All this had to be cleared out.

And they're, you know, they had a beautiful view of the—

This, yeah, this is the golf course back right there. You know, what is all going on with all that stuff?

They just couldn't upkeep the property anymore.

Crazy.

It's just a lot. Oh, broken windows. So they're on the first hole of a golf course.

On the approach, we found out.

On the approach. So yeah, boom. Yeah. So right there, imagine waking up to that.

Yeah.

And then you're like, come on, man, work on yourself.

This is one of the side yards.

Yep.

So this is where it starts getting, I think, a little—

Oh yeah, this is where the guys kind of started piling everything up.

Yeah, this is after we took possession.

Yeah, yeah, yeah, yeah.

The piano's still there. They took all that stuff, but yeah.

So I think a lot of that was from upstairs. The upstairs was way way more stacked with stuff.

Oh yeah, we can come back.

Oh, here's— okay, we'll come back to that.

So yeah, but, um, so we worked with new contractors on this one. So people are always asking, how do I find contractors? You know, people will go to you, can I use your contractors? How do I find contractors? How did you find these guys?

This was really a surprise. I got It was either an email or a text. We rehab houses, we're contractors. Are you looking for anybody right now? It was like, really? Like, yeah, actually I am. I am. And so I said, okay, yes, we're looking for someone. Can you send me some photos of, you know, what you've done? Tell me your experience, all that. They sent all that and it was actually pretty impressive. And so we ended up hiring them at the end of the day. They were rehabbing this one when we got possession of another one and hired them to do that one as well.

Yeah.

And since, I think they've worked on your mom or your dad's place?

Yeah, my mom and my stepdad's house.

Okay.

Yeah.

Then they're working on our mobile home flip.

Yeah.

As we speak.

Yep.

Yeah. Rehabbing that. And then we have another property in LA that we're going to close on probably in a month or so that they've already gone out and given us an estimate on that one. So, right, um, I think we were lucky. Yeah, we found them.

I know.

And they worked like I want contractors to work. I, you know, I told them, I said, give me a bid, you know, your best bid for the whole thing. I don't, I don't want to get, uh, another work order because you opened up a wall and you found termite damage on one piece of wood. I don't want to get a, a bill for that. Right. So give me your best, you know, guesstimate of what it's going to be and we'll hold you to that and move forward. And so far so good.

Yeah.

Mm-hmm.

Yeah. One of the things that was like, um, I guess, uh, not a red flag, but just something that was good was I think you talked to them and you were like, hey, we're going to a property tomorrow.

It was the day before.

It was the day before. We're like, meet us out there tomorrow at 11. And sure enough, they showed up.

That's step one.

Yeah.

Show up to the walkthrough.

All right.

Absolutely.

Yes. Okay. And then we started walking it and then they were bringing up suggestions of stuff that may save money, save time.

Yeah.

Which is always good.

Yeah.

Because you don't want to—

I could pretty much tell right away that they were experienced, that they, they have, they have been doing this. They told me they had been doing this for another flipper.

Right.

And they just didn't have enough work for them. So they decided to go out and see if they could find some more stuff on their own. And they found us.

That's amazing.

So now we're trying to keep them busy.

Yeah.

Because they're great. And I mean, every walkthrough, they show up every time. It doesn't matter. Sometimes they'll come back and see if they can do it on a Saturday when they don't have their jobs going on. But I mean, they drove all the way to Winnetka. They're going to take that job, which is, I mean, that's pretty out there.

It is out there.

Yeah.

Yeah, it's good. So, I mean, really, you gotta vet people and it starts with show me your credentials, show me your, you know, your, your, the, the, your pictures.

Show up.

Show up. Yeah. If they don't show up on the first time, like just right there, just don't, don't even, don't even entertain it. Don't give 'em a second chance.

Yeah.

There's, there's plenty of people out there.

Yeah.

I'm telling you, don't feel bad. Like even if they have an excuse and their tire popped, it's like you're gonna get that the whole way through.

Yeah.

And if they ask for money up front, No. No.

Yeah, they should be able to get started on like the demo and things like that. Um, pay for your own materials.

You can? That's what we do.

I like to do that because I think— oh, I mean, this guy's not solid.

We went with a contractor one time who supplied his own materials, and it was just— I think it was just garbage from other jobs that he was like welding together. Yeah, it was awful.

Oh my God. Oh yeah, but, um, I mean, if you need someone to vet a contractor, can people call you?

Sure.

Okay, anybody can call me. I'll tell you the same thing. It's like, you know, find out what their experience is, how many places they've done. Do they have photos, you know, to back up everything that they've, they've said? If they have any jobs that they're working on now, can I go by and take a look at them? Um, just listen to what they say. And like, you know, you were saying when they come over, they're offering suggestions. A new guy that just got his license last week is not going to do that. He's not going to know.

He's just going to agree with everything.

Yeah, he's going to come in, you know, I can do this for $40,000 when you know it's going to cost you about $60,000, $65,000, and you're just going to have headaches along the way. You know, so, so deal with people that have, you know, done this for a while and are offering you suggestions on, you know, I've done like 20 projects and, you know, I can tell you that if we remove this wall here, it's not that expensive. It'll open this space up and you'll get a lot more money for it. You're hired.

Yeah, exactly.

What do you think about— I saw someone posting recently asking, so the contractor essentially walked a property for them and they were asking for a price range from the flipper instead of providing a bid, is that a red flag to you?

Like, what's your budget?

What's your budget?

Oh yeah.

Yeah.

That's like going into a car dealer when you're ready to buy a car and tell them, you know what? Money's not an object.

Yeah.

Hello.

You're like, I've got 50 grand. He's like, it's gonna cost 50 grand.

Crazy. Yeah. Imagine that. You were right.

You were right on.

You were right on.

Yeah. Yeah, have them bid it out. Have them bid labor and materials if they're, you know, if they're going to use some of their own materials, or as detailed as you can get. As detailed as you can get.

Yeah.

All right, do we want to see some afters?

Let's see some afters. The big reveal. So this, this one took, what was it, like maybe 6 weeks? I would say it was pretty quick, somewhere around there.

I can give you the real The lowdown.

Oh, okay.

They quoted us originally 5 weeks. It took a total of 7 because we had the unexpected hoarder haul out when they said they were going to take everything.

That's right.

And so it took an extra 2 weeks to haul out all the trash, but they were demoing at the same time.

Right.

And then we were over budget. I think they quoted us like $49,000 something. We were over budget by $5K because of the haul out. It was very close.

Very close. Nice.

Yeah.

Way to go, guys. I hope they're watching right now. I'm just kidding. They're working. So this is the property. It's a corner lot. Beautiful corner lot.

Really beautiful.

In a nice—

That's the golf course.

That's the golf course. Yeah. That's great. That's the first hole. You see families going by. It's a nice neighborhood.

Did we have it painted outside?

I don't remember.

Oh yeah.

We painted the outside.

Outside and inside.

Yep. Outside and inside.

Yeah.

I mean, it's important to Curb appeal is important. Yeah, yeah, it was good. It was good.

I went with some different colors on the outside to kind of go with the neighborhood. And Alex and I, the first time I saw the paint colors, it was raining, so it looked much darker because the stucco was wet. And I was kind of like, uh-oh.

Yeah.

But then the next time we went by, it looked like this, and I was like, wow, this looks— it fits perfect in the neighborhood. It was great. And there's the staging with the lovely piano.

There's a piano, stayed there. But yeah, people came in, they loved it right when they Walked in, it's a giant open space right here, all brand new. We had a lot of people at the open houses. This goes into the—

If you want to know who took the photos, it's a company called DYS Photo, and that's the company I always use. And I use them because they go all over the place. Yeah, you know, they've got photographers anywhere and everywhere.

Amazing.

Good company, good price.

Perfect. There's a new kitchen.

There's a new kitchen.

Brand spanking new. Kept the— we did the black.

There's a story behind this faucet here, Joe.

That's right.

Because I had different plans for the kitchen and Joe shows up to the office and just sets this faucet on my desk.

So I was at a silent auction, um, at, uh, one of my grandkids' church. And this was one of the silent auction items. And so I put a bid on it.

Boom.

Not thinking that I would get it, but like, how many people need faucets? You know, it was a gold faucet. Yeah. Um, there was 2, and I actually put a bid on both, but I ended up getting this one.

Nice.

$100. Okay, you know, what's at the end of the world?

I looked that faucet up. It's like $580 new. That is a luxury kitchen faucet.

So we would not pay $500 for a faucet on our flips. That's one thing that a brand new flipper would do, right? You have to flip to the area and, and, uh, you know, the aesthetics and everything else. But anyways, So we got that. And of course, then we needed the pulls to be gold.

Yeah, I originally, I think, was gonna do either black and white kitchen or just brushed nickel for kind of like the contemporary, the just to go with the neighborhood. And then Joe brings this faucet in. I'm like, I guess we have to go gold now. And then that's where the black island came from to give it a little bit of—

Yeah, came out great.

She did a great job.

She did a great job.

Thanks.

Loved it.

Yeah, I like this kitchen a lot.

Absolutely, it's gorgeous.

Came out really nice.

Yeah, gorgeous.

Yeah. All right, I think we're going to the backyard now so we can see that. Okay, that view. Look at that.

Yeah, mulch will do wonders. And so we just—

all this was full of that junk trees and all that stuff. We had them remove all that.

It's kind of cool they already had these accent trees. Yeah, yeah, planters, which you had no idea.

Yeah, but look, look, you know how beautiful that is?

Yeah.

You know, that's close to where it was.

During the open house, I had at least 5 to 6 different parties ask about putting a pool in, which there was definitely space for.

Oh yeah, yeah, there is.

They were having, yeah, a lot of plans in their head. One thing, um, when we were having the open house, there was these 2 little freaking dogs next door that would not shut up.

Oh yeah, they kept Yeah, over there.

They just lived outside. So I was like telling Lauren, I was like, should I go get some treats or something I could throw over into the—

nobody cared. He did.

I did buy treats.

Actual treats or some actual dog treats?

No, actual treats.

Dog treats. And he was like, I'm gonna go give these to these dogs. And then we're leaving. I'm like, why is there a whole bag of unopened dog treats in your car?

Yeah, I never used them. Nobody cared. They went outside. They're like, yeah, it's fine. It's just a neighborhood.

It's a neighborhood.

Yeah.

You know, it's a dog.

They were cute.

So they got a bed.

I think this is the downstairs bedroom, downstairs bathroom. Yeah. I mean, this primary suite too was huge.

Oh yeah. People were like, what else should I put in there? They were asking Lauren, like, what else can I put in there? She's like, I don't know, couch or something. A couch in there.

Another living room. Yeah.

And one thing we usually do to save some money is we'll refinish these rather than— I mean, you could take this out and fully tile it and do all that, but it's, you know, Montana.

I feel like you gotta go for the market, right?

Yeah, go for the market. Yeah, in OC we would probably do that if we're gonna go over a million with it.

OC, you definitely want to do some tile work and maybe a different layout, but I mean, it's fine. It was good condition. And with like all the brushed nickel, it looks very luxurious and inviting. Huge closet.

Walk-in.

Walk-in.

Another bedroom.

It's not a bedroom. It's a walk-in closet.

No, this was a different bedroom.

No, no, I'm saying. Oh yeah, it was an actual walk-in closet. Not a bedroom. You could make it a bedroom, I guess.

Oh yeah.

It has a window.

Yeah, exactly.

Has a window.

Has a window.

Little closet right there. I'm just kidding.

Yeah.

My favorite part of the process is seeing after they paint because it's such— like, the paint and the molding makes such a difference even before anything else goes in. It's just—

Yeah, it's like brand new at that point.

Laundry room.

Yeah, we do the 4-inch molding. Yeah, and that's really updated.

That's it. That's the whole house.

Yeah, and we got a cash offer, right?

Cash offer. I think I had up to like after the first weekend, like I don't know, 5 or 6 offers and people nonstop calling me. Like I couldn't pick up my phone fast enough. And then a cash offer, everything removed above asking. And I was like, being an agent is easy.

This is awesome.

Wait, a real estate agent that actually picks up her phone?

I did have to start ghosting people when we were negotiating. You told me to and I was like, I felt so bad.

Yeah.

They're like, these people really want it, Lauren. I just need to hear something. Something back from you. She's like, I gotta tell him. Joe's like, no, just wait until—

wait.

Yeah.

So, um, but one thing, one hiccup we did run into, or I guess a couple, there's 2. So there was the solar.

Yes.

So there was a still— there was a solar balance. We were trying to get the new buyers to take it over subject to or assume it because you can't assume these. So we're about to close in 3.5 weeks. And I called the solar and they're like, it takes 45 days at least to process the paperwork for the assumption. Tried to just finagle my way into getting something approved faster, but they're like, there's no way. So we pivoted and asked them if they would take it over subject to. Most people don't know what that is, one. And then two, they're just not comfortable with it being in somebody else's name for whatever reason, if they need to— I don't know, claim a warranty or something. So they're like, can we just pay this off? Can you guys pay $15,000?

I think it was less. I think we paid $10,000.

No, I know. I think they wanted us originally to pay $15,000 or whatever.

We agreed to $10,000 and they paid off the rest.

Yeah, which was even more insane. They were really easy to work with the whole way through.

Yes.

And the agent on the other side, which I've come to realize is a big deal.

Yeah.

You have a competent agent that like really helps push the thing. It's like a whole group effort, and when everyone's working together, it works amazing. Um, so that was one thing, and then there was a random Chase lien, which was originally Washington Mutual. Um, from 2008 that they found. And Chase is like, oh yeah, we have this on our books somehow.

They didn't—

they couldn't tell you where it came from, or they'd have no, no paperwork on it. They're just like, do you owe us $32,000 or whatever it was, $28,000?

So— And one of the weird parts about that lien was that the original owners had refinanced and that lien was not wiped out. So yeah, we were trying to get a hold of the previous, um, Uh, title company and they basically were like, it's your problem.

Yeah.

But they somehow worked around it. They did a bond to refinance.

They did a bond.

I don't know.

No one could really explain to me what it was or how it works, even the bond people. And they would all just be like, well, it's the title company's thing. And they're like, well, we— it's the bond company's.

The title company should have forced them to deal with that.

Yeah.

It shouldn't have been our problem, but it ended up being our problem.

Yeah. We were like into the last days of the whole thing. I think even after it closed.

Well, I think, I think, um, what I remember is that we got good news.

Right.

And they were like, we don't have to pay it.

Yeah.

And we closed and we got paid out. And then what? The week after we got bad news.

Yeah.

Yeah. And we had to send the money back.

Yeah. And this is, You know, this is because of the relationship that I have with, uh, First American Title, uh, Noah Presswood in particular. Um, we do a lot of deals and he says, oh, you know what? We could probably write around this. Not a problem. So he did.

Yeah.

But he knows at the end of the day, which happened, uh, it came back. They said, you owe us this money. So we paid them. Yeah, you know, it's like he, he knew that I was good for it. Yeah, we were good for it. We were good for it, and we paid him back.

Yeah, I was—

so you're welcome, Chase.

I was okay for it. I was like, should I leave town? I could disappear.

I spent the money in Vegas already.

Yeah, what are they gonna do? They're like, we'll sue you. You're like, okay, I'll give you the money.

Yeah, but, uh, do you have the closing statement?

That's the fun part. Yeah, let's go to the numbers.

Let's Let's go to the closing table.

Um, yeah, don't think about what we would have made without the Chase thing.

I want to make it bigger. Okay, here we go.

So—

oh, I didn't fully redact everything, but anywho.

I redacted everything.

Okay, good. So go down to the very bottom.

See, I might have to make it smaller because It doesn't show on the screen.

Gotcha.

So sorry.

Yeah, it's all the way down at the bottom.

There we go. I got it.

Due to seller, $80,000.

$80,000. So it was like, yeah.

And that took from purchase to sale.

Yeah.

3 months. Yeah. How much, how much was it?

It was 7, 7 weeks. Oh, purchase to sale. Um, what was the closing date on there?

Uh, 1/8/24.

Yeah, so I think we extended the closing because we didn't want to close.

Correct.

In 2023.

I was just going to mention that.

Yes. So we could have closed earlier, but I think it was a total of 3 months. Exactly.

Yeah. And we didn't want to pay $80,000 and then, you know, get paid, have to pay taxes on that amount in 2023. So yeah, we pushed it to January.

Yeah. Isn't that cool? That was a good call.

Yeah.

That's cool.

That's a good call.

That is a good call.

There you go. There you go, people. It can be done.

Yeah, there's that Chase loan payoff, $26,903.

Yeah, would have been like—

Yeah, we'd have been over $100,000 if it wasn't for that.

If it wasn't for friggin Chase, which was Washington Mutual. It doesn't make any sense, but you know, what are you gonna do? You're not going to fight Chase.

No, you're just not. You're not going to fight them. And the other thing I want to say is, um, we get what's called a binder policy on our title insurance. And the reason we get a binder policy is because when we go to sell it, they charge us a lot less money on the sale because we get that binder and we pay a little bit more upfront, right? But we save literally thousands of dollars when we do something like that.

Amazing.

Okay, so yeah, it is amazing. And then, uh, can you— oh no, here we are. So our settlement, uh, fees, we use Corner Escrow. These are all the fees that they charge, and I'm sure you probably pay a lot more, but I've had a relationship with this title rep and this company for many years, so we get a discount there as well.

Nice.

Wire transfers. Every little bit helps.

Yeah.

What is— why special messenger?

I call them all junk fees, and they are. This is the first time I'm looking at this, you know, but it is what it is.

Oh, I gotta look at this a lot more. I mean, is this something you can negotiate? Can you be like, hey, can you give me $20 off the—

do you really want to negotiate $20? You know, that's the way I look at it at the end of the day.

No, I mean, but someone would really Really?

I mean, administration fee, what is that? Yeah, you know, I know, uh, archive fee. Yeah, a 1099 processing fee. Yeah, yeah, it's a small amount. It does add up, right? Messenger fee, uh, overnight delivery fee. Yeah, somebody came out and gave us this paperwork, right? Cost us $30.

Okay, you know, that's fine.

Honestly, at the end of the day That's less than— I, I was upset more at the $26,903.

Yes, that was a little— that stung a little more.

And man, we, you know, Alex mostly did a thorough investigation on how to get our money back. We could not ever resolve it.

No, no, no.

We had, we had 2 title companies checking into it, and of course they're, no, it's not our fault.

The bond company.

Go to this company over here and go to that company there and go to this one.

And the lady didn't have— because it was done so long ago, the lady didn't have Um, she had to go into the archives or something, or she was— no, no, it wasn't done that long ago. She was like, for some reason our digital system that week was down.

Yes, that's when it was.

So I need to go look into the archives of the actual paperwork. I'm like, is she just pulling my leg? You know, it's like the cameras went down and all of a sudden the inmate's dead. You know what I mean? One of those things. It's like, really? I've heard this before. And okay. What are you gonna do?

So, all right, that was a good flip.

Yeah, it was a good flip. So that's why you always gotta make sure, check all the liens, because they, you know, when I was talking to the seller, he's like, I think I owe this, I think I owe this. That's got— that's it. Nothing else on there, I promise you.

That's it.

You get the thing, it's like a rap sheet. It's like, yeah, like, what about all these other things? Oh yeah, I think that was— that was a while ago. Then their memory starts coming back.

With this deal, we weren't— obviously you saw we only paid $5,000 for this. Yeah, we weren't putting, you know, yeah, any more money. We couldn't take it out of his side, right? We just had to eat it on our side. So we did. We didn't know, but you saw the numbers. It worked. Yeah, it worked out good.

We did good.

I think that bought you your Tesla. Is that what that did?

Yeah. No, we got the Tesla before that. Worked out because—

okay, the Huntington Beach flip.

Well, the Tesla was like, yeah, Yeah, that was like divine timing because our car was starting to get to the point where we were having to get so much maintenance that it was like, okay, this car's about to go. And so we better start looking around. And I was here early at the office one day and I heard Ryan talking to someone on the phone and they were panicking about taxes. And then it made me have a panic attack. And actually on our way to one of the Fontana open houses, there's a Tesla dealership. And I was like, we should test drive these and see if we even like it.

Test drove.

the Y and the 3. And next thing I know, I'm like, we just bought a car. So they make it very easy, but we love it.

Basically just download an app.

Yeah.

Downloaded it. He's like, okay, is it downloaded? He's like, congratulations, you bought a car.

Oh, all right.

No haggling, no nothing.

But we bought it through the business. So it needed to happen for some write-offs and our car literally stopped running like 2 weeks after that. So it was like, Perfect timing. We needed a new car anyways. At least that's how I'm justifying it to myself.

I like it.

I love it. Yes.

Cool. I got a couple videos we can.

Do you want to? There's a couple people in the chat.

Oh yeah.

Let's go to the chat.

Hello, people.

Let's go to the chat. If you guys have questions, make sure you put them in now so we can get them before the end of the show. We got Liz in the chat. You know what she's saying?

Yeah, Liz.

What?

Hey, hey, Liz.

Um, Jacqueline was responding to, um, the Hangar 24 meetup.

Okay.

She says, beer me.

Oh, there we go. See what I'm saying?

Beer her.

Yeah. Yeah.

Okay.

These are all—

this is our audience.

Yeah.

They love beer.

Uh, Madeline says she's outdoor knocking but still listening.

Yeah.

At the same time.

There you go.

Go girl.

Nice.

Nice.

And then Madeline also, she just asked, I've been hearing about zombie loans from 2 owners lately. Have you heard of this?

Whoa.

I'm not a lender. I don't have any idea what a zombie loan is. Do you?

No, but I love the name of that.

Can she describe what a zombie loan is?

Madeline, can you elaborate on the zombie loans and we'll circle back?

Look it up really quick.

We're gonna go to a couple videos real quick.

That's one thing I don't do is lenders. I have lenders, but I don't do any of that stuff. I can tell you what the interest rate is, but that's because I look. But that's kind of where it stops.

Zombie Loan is an anime series out of Japan. So I don't know if that's what she's referring to.

Anime series? Yeah.

Zombie Loan. It's huge. Oh, here we go. What is a zombie loan?

Okay.

Couple facing foreclosure because of zombie loan. What the heck? Carson, California.

Is that a fraud?

The other one was, uh, a zombie loan.

The term refers to a second mortgage that seems to have been forgiven or written off until years later when a collector reaches out about the unknown but supposedly unpaid debt.

That's what we had to pay, a zombie loan.

Yeah.

And then, yeah, I'm sure you could try to fight it, right?

It's like, yeah, yeah, you're going up against Bank of America.

Yeah.

Oh boy.

You know what?

And this is going to be happening in a lot more because the, the, um, the banks, when they're crashing and they're going under, but like they probably sell off all their debts and then it's in some sort of limbo until they want to get paid and they're like, wait a second, Let me see. Oh yeah, here it is.

We never got paid for this. Yeah, really, we never got paid for this.

Well, Alex, weren't you talking about earlier too how a lot of subject-to deals you're seeing due-on-sale clauses being called because banks want to wipe out those low interest rates and— yep, refinance.

Yeah, they're going— I saw some guys on The Real, he's like, they're going through and then just doing audits of I don't believe it. They're, uh, low-interest ones.

I don't believe it.

Because they're seeing, okay, it's low interest, so if it's sold, then we're gonna, we're gonna accelerate the payoff. And then they want to go back and resell at a higher interest rate or reloan.

I don't believe it. Oh, maybe, maybe a little, you know, bank, community bank, credit union, or whatever that has You know, 1,000 loans. But a big bank like Chase or Bank of America doing something like that? No way.

They don't have the manpower.

No.

They don't got time for that.

No, we're paying McDonald's workers $20 an hour. Can you imagine how much somebody would have to sit there and do all that stuff manually? You know, it's boring, you know, unless AI can do it.

There we go.

Aren't the, aren't the, um, smaller banks and credit unions usually the ones that call it anyways?

Yes.

Yeah.

All right.

Yeah, maybe the guy was clickbaiting.

Clickbait.

Yeah, it's clickbait. Let's, let's call it that.

All right, speaking of clickbait, should we watch some videos?

Let's do it.

Here's the truth about flipping houses that nobody wants to tell you. I just bought a deal for $200,000 cash. We put $130,000 Into the property renovating it and sold it for $430,000. Here's the truth about flipping houses that nobody wants to tell you. I just bought a deal for $200,000 cash. We put $130,000 into the property renovating it and sold it for $430,000 plus. I made over $100,000, but it took me 6 months to recoup that $330,000 cash. Another way to do it is to go out and get hard money, but you're going to be paying points and interest on that loan. Here's the truth about—

I always have a problem when somebody starts out, here's the truth. How are you going to convince me that this is the truth when you're starting out that way?

Yeah, I mean, I guess he didn't really say anything that was not— no, not true. No, I thought he was gonna say something that was more controversial, but he just basically—

I don't know what the point of the whole video was.

He just said what flipping was.

It made him $100 grand, which is not true because he didn't talk about commissions or closing costs at the end of the day.

True.

So maybe he made $70 on this deal and not $100. So again, but it took— start out with, here's the truth.

Here's the truth about flipping.

My red flags go up when I hear that, you know.

All banks are now calling due every single subject-to loan because of Pace Morby. Yes, here's the truth. All right, whatever. That guy's gone.

Next.

Next. Why flipping houses can't create long-term wealth. Let's say you bought this fixer behind me for $560,000. Then you put in $140,000 to remodel this house to make it look nice. Now it's worth $900,000 because you actually put money in it to make it look nice. Let's say you decided to fix and flip this. There's $200,000 worth of equity. You don't really net $200,000 because you got to pay Uncle Sam the other half of the money. So you really only net $100,000. But if you decide to keep it and build long-term wealth like what I do, then you get to keep all $200,000 of equity in the property. On top of that, if I wait roughly about 10 years, the property is going to double in value. It's going to go from $900,000 to $1.8 million. That means that actually I will have a total of $1.1 million equity because I get an extra $900,000. Plus a $200,000 originally made from the get-go. You see that if you fix and flip it, the best you can do is make $100,000 net. But if you actually keep it, you can add $1.1 million to your net worth. That's not even talking about all the rent you could have collected the last 10 years, plus the write-off. This is why flipping houses—

true or false?

Obviously true for him, but lots of false stuff in there.

Yeah. What do we got? Break it down.

Lots of false stuff. Uh, first of all, if he has a CPA, you should fire him.

Okay. Because he's giving away half of his—

Yeah.

He's giving away half of his profit. Yeah, definitely fire him.

All right.

Uh, but really the biggest thing, what he doesn't tell you is, okay, I'm making $100,000 on this flip. And he says, if he holds this for 10 years, he's going to make $1 million. Well, what happens if you flip 10 properties in 1 year? How much is that?

Oh my gosh.

It's $1 million, isn't it? Yeah.

Whoa.

And I, and I got there in 1 year.

Okay.

Not 10 years.

Right.

1 year doing the same thing he's doing, sitting, waiting for it to get up to that level.

Right.

Which in 10 years, you know, our real estate cycles run every 10 years. So it's, it's up here and then can go right back down here.

Yeah.

You know, it's not unusual. So that's fine. I think the point he's trying to make is that, you know, you can sit on your butt and make more money if you wait 10 years, but I'm not going to wait 10 years. I can do that in 1. Why would I do that in 10? It doesn't make sense to me.

Okay.

Yeah.

It depends on the deal, right?

Flipping, flipping, you know, I know it depends on the deal, but flipping is a way to get you to the point where He's at, right, that you're starting to buy properties to hold on to so that when you get to be the old guy, right, okay, you don't have to work as hard as the young guy.

Gotcha.

And that's, that's kind of the point I think he's trying to make.

Yeah.

But as the young guy, wouldn't you rather flip 10 properties and make $1 million first year and then get a new CPA?

Yeah, exactly.

Yeah.

Pay zero taxes if that's possible.

Yeah.

You know, come on. Yeah. I mean, you know, you have to, you know, plan for the future.

Right.

That's fine. Yeah.

But— No, he's done flips. I know he's, I know he's just like breaking it down.

No.

You take the active income and turn it into passive.

Yeah.

That's passive income.

And he's, he's also got a really good crystal ball that says that his properties are gonna double in 10 years. Yeah.

No, that's how I think.

It will.

That's how I sell it to her. It will double.

Yeah.

Guaranteed. No, no guarantees.

No guarantees at all.

If you just hold onto it and guaranteed.

That's, that's the thing. Like people say, well, why don't you just hold onto this and rent it out?

Okay.

Let's talk about that. How much am I going to rent it out for? Oh, Joe. Okay. Let's say, say, let's say you're making, you're making after all expenses, you're making $1,000 a month. Let's, and let's just round that off to 10 grand. Okay. If you're making 10 grand, same, this, What this guy's talking about. $10 grand, but you're making $100 grand on the flip. So how long does it take you to make $100 grand on this property that you're holding on to?

Yeah, 10 years.

10 years. It's like, okay, Alex, do you want to make $100 now, or do you want to wait 10 years before you make that $100?

Hmm.

Why, why, why rent it? You know? Yes, eventually you want to Acquire property and have your tenants pay it off and all that stuff. But early on, you should be making as much as you can. Yeah. You know, and then deploy that money elsewhere.

Yeah.

Not California.

Right.

Go to Alabama.

We're going to Alabama, people.

Alabama. Yeah.

Here we go.

Average purchase is $30,000 to $50,000.

Yeah, there you go.

And just start buying places.

Yeah.

You know, it could be anywhere. I just mentioned Alabama, but it could be anywhere.

We're an Alabama family now.

Yeah.

Um, yeah.

Okay.

I had a feeling that was gonna bring out some stuff in you.

You did.

Joe got fired up.

Yeah, but you're right.

I mean, you're true.

You're right. You're true.

You're true. You're true. Um, we should do a video on that, actually. That's a good video idea.

Okay.

Clickbait.

Clickbait.

Clickbait.

Here's the truth about rentals that no one tells you.

I'm all about the truth.

Yeah.

All about thinking.

And nothing but the truth.

Yeah.

So, see, we gotta, we gotta stack the flip money. And then like Joe, if prices go down in California, that's when we go scoop up.

That's when you buy.

Yeah.

When the prices are rock bottom.

They're rock bottom right now. They're just rock bottom.

Prices?

Yeah.

No.

No.

They're just gonna go up from here.

Right.

So they're rock bottom.

No.

Yeah, they're suck—

I'm talking about—

That's never gonna happen.

Worth $500,000. 2008 comes around and that property's now $100,000.

That's never gonna happen.

Well, it's happened 3 times in my lifetime.

Oh yeah?

So I just got to live a little bit longer to see it again.

All right.

Yeah. Somebody's going to mess up this economy. I mean, it's already messed up. I was going to say. But somebody's going to mess it up really bad.

Joe, what are your pillars for looking for, I don't want to say a crash, but like a market change? You talk about them before, unemployment, interest rates, and what's the third one?

And the banks getting crazy.

Crazy.

Banks are in the business of loaning money.

Yep.

And if they're not loaning money, they have to come up with creative ways to loan you money.

Yeah.

Alex, your credit score is like 600, you know, it's like, we're not loaning unless your credit score is 650, but we've decided we're going to loan you money at 600. Exactly.

That sounds good.

I know. Yeah, it's like, we're going to loan you money. And so that's what I'm talking about. The banks getting crazy and then they'll throw out warm body loans.

You don't have any money.

You don't have money. Not a problem, Alex.

I know.

We'll give you 100% financing. How's that?

I don't see the problem.

And then 2008, we'll give you 110% financing. How's that even better? Yes. I close a transaction and I get 10% back in my pocket. Oh, that's a good one too. That was a really popular program, wasn't it? Yeah, until the world blew up.

I know, you know, because the rates though, that's the only reason. If you had a fixed rate, I think you could have ridden out 2008, right? It wouldn't, it wouldn't matter because your payment would be the same.

Yeah, but the problem was they were loaning to, were loaning to people that weren't qualified, you know, and we had a massive job loss. Everybody lost their jobs. It was almost like COVID.

Mm-hmm.

Yeah, COVID, the only reason that, uh, we're in the position we're in is because the government sent out free money. You know, people were able to pay. I mean, we're in California, you know, the average, average mortgage around here is probably, I want to say, $4,000 to $5,000. But if you only pay $35,000 for a house in the Midwest, you know, your payment's what, $100 or something, if that much? So, you know, government's sending out lots of money, and so you're good. You're good in those states. You know, California and New York were different, but—

Well, but that's why we're here in this problem. Everybody knew it.

The bad weather we're having today.

Yeah, uh, that's good. Okay.

Uh, we got Stephanie in the chat.

All right, bring her on in.

She says, I'd like to flip at least one property. I feel, I feel like it's about eating an elephant.

There you go. One piece at a time.

One piece at a time.

Yeah, we don't eat elephants.

Well, here's the first piece, is find the deal.

Yes, that's the hardest piece right now, is find a deal.

Yeah.

Yeah, that's, that's definitely the hardest piece. And we're going out to look at another one. What, what's the story with that?

This one's on market.

On market?

Yeah.

Oh, you didn't tell me that.

Yeah.

Why are we going?

Because it's like, it's priced pretty well. There's tenants in there that have stopped talking to the seller. So he doesn't know what's gonna go on.

Are these the tenants in LA?

Yeah.

Yeah.

So I gotta talk to a lawyer first, but I need to talk to my attorney first. Um, and so he's thinking about coming way down on the price, basically.

Who is he?

The seller.

And is he gonna keep his agent, or—

Yeah, he's gonna keep the agent.

Fire him?

No, he's gonna keep the agent. I've just been talking to the agent.

Oh, okay.

I haven't talked to him though.

Seller. Okay.

No, I don't know.

Got it.

Could be something.

Okay.

Could be something.

Is it harder evicting tenants in LA?

Yes, a lot harder. Yeah, almost kind of impossible. Yeah, yeah, it depends on where it's at, depends how long they've been in there.

Yeah, that's what we were looking up last week.

Depends on if they know anything, you know.

I think they know something.

Yeah.

I think they know something's up. I have that one in Vegas, and now like the tenant, we gave him 60 days, and, uh, Renee just texted me. He's like, yeah, the tenants are saying that like they can live there 6 months free, uh, or something. Like there's families in their ear telling them they, they don't have to pay. Yeah, for 6 months. So word's getting out.

Yeah.

Is that true?

No.

God, no.

Well, yeah, you might want to tell them because You know, no eviction on your record.

No, exactly. That's what they don't know. They're like, maybe, like, maybe it gets dragged on that long, but probably not.

And the consequences at the end of the day for them is, yeah, not good, right?

Good.

They're not good.

I saw someone posting in a real estate group that they went through an eviction because same thing, they had people in their ear saying it's no big deal, it'll be off your record. And now she's living with her children in a motel because no one will rent to So that's a good story.

Oops.

Yeah, so oops, that's like an example you can bring up because— yeah.

No, we always— I do, I always bring up that example, and then it's their choice. And if they want to stay, then they know what the consequences were at the end of the day, you know. Yeah, we offer them, we offer them cash for keys. They don't want to do that. It's less expensive to try to evict them out of the property. It's more time-consuming, right? But less expensive, right?

Have you heard about tenants in LA now? Are they— they've been emboldened to ask for like $50K, $100K for cash for keys.

Yeah.

Crazy.

Yeah, it is. Absolutely. It's kind of, kind of freezes a seller. He can't sell. It's Just too cost prohibitive.

So then what happens? Um, I mean, I know what happens if it goes to foreclosure. The bank takes it back. They— the bank then, or like, they get evicted eventually, right?

They do. But you have to remember, with the banks, they got deep pockets, so, you know, they can hire lawyers and, and get them out. And any— even if it took 6 months, 8 months, a year, The banks are fine with it. That's, you know, what they do. You know, they don't want it. They don't— honestly, they don't want the property back, but sometimes they do. They have to take it. Yeah, because of these situations.

You know, so Madeline asks, if someone has a reverse mortgage, can you do sub-to or seller financing?

No.

Negative.

Is there any way to cure that, or That just has to go on market, or—

See, now that's, that's one, uh, where reverse mortgage, if the person is still alive, then you'll get away with it for a while. The problem is when they die, there's like everybody in the world knows. I mean, yeah, the— I can tell you this, when, when my parents died, they were getting Social Security. And let's say it was January and they had already been paid their Social Security for that month.

Yeah.

February— and I learned this like with my mom because she passed away first— February, we got her Social Security. 2 days later, it got yanked. It went back. It reversed out of her bank account. Yeah, I'm thinking like, how do they do that? It's okay to put it in, but you can't take You can't take money out of somebody's bank account. You can if you're the federal government. Yeah.

That is scary.

Yeah. So when my dad passed away, kind of a similar thing happened, but I zeroed out the bank account.

Oh.

Yeah. And I never heard back from them. So, I mean, he was getting like $400, $500 at the time for Social Security. He wasn't getting a lot of money. But, uh, because he had a pension as well. So anyways, be careful. Like I said, if they pass away, they're going to know right away and they're going to start reaching out and saying, okay, you know that loan, it needs to be paid in the next 6 months to a year. So I, I wouldn't necessarily— I wouldn't even go there. Yeah, with it at all.

Yeah, stay away.

So how does a family usually deal with that? It's through probate if they don't have a trust. They just have to put it on it and sell it and pay off whatever is owed on the reverse mortgage.

Yeah, or refinance it.

Or refinance it.

Mm-hmm. Yeah.

Good to know. Learn something every day.

Every day.

There you go. That's why we're here.

Every day.

Alrighty, you guys, that was a fun episode.

We done?

Yeah, we're done. That's that. Yeah.

Let me turn this way so everybody sees.

There we go. Yeah, so again, um, meetup May 20th. Beer yourself and come and connect. And we'll be here next Thursday with Taylor Smith and—

Taylor Swift?

Lender.

Taylor.

Calm down, calm down, calm down.

Oh man, that was too easy. Wow. Yeah, Taylor Smith.

Yeah, just as famous.

Yeah, okay, he's huge.

He's a lender. He's gonna be able to answer all these questions that came up.

Zombie loans.

You know, that's— remember zombie loans? Because I want to see if he knows.

I'll never forget that.

If he knows what that is. You know, I don't see him on the chat, so he's not watching. He should be, but he's not watching. So anyways, uh, May 18th as well.

May 18th.

A Saturday at 3 o'clock.

Yep.

Uh, I, I did that time because like New York is, uh, 3 hours ahead, so that'd be 6 o'clock there. So, I mean, and this is good for anybody in the US.

Yeah.

To, you know, to look at the Pelico website because eventually it'll be throughout the US.

Yeah.

Uh, so if you're interested in learning how to use our website to find fixers in your area that are potential dealmakers, please give us a call.

Come and do it. Thank you guys. Yep. Thank you guys so much. Uh, appreciate everyone in the chat and, uh, we'll see you guys next week.

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