The Spouses Flipping Houses Podcast With Doug & Andrea Van Soest

by Doug & Andrea Van Soest | Spouses Flipping Houses

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After you get a deal, how do you fund it? In today’s episode we will be going in-depth on 4 of the BEST sources for financing your real estate project.

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Download the Episode 11 Transcript

Andrea: So the coolest part about private funding to me is that you can make your friends, family, and other people money.

— Intro/Music —

Andrea: Hi, and welcome to Spouses Flipping Houses, Episode 11.

Doug: Number 11.

Andrea: We have a really important subject today.

Doug: Very important, essential.

Andrea: Essential. How to fund you deals.

Doug: We talked a little bit about it in a prior episode, but we are going to go in-depth a little bit more, get some more detail, squeeze the juice out of this topic.

Andrea: Yeah, because it’s one thing to find a property and have a seller say “yes” or a bank say “yes,” and then what?

Doug: Then what, what do you do?

Andrea: You got to buy it somehow.

Doug: You’re looking at that bank account going, “Uhh, I can’t buy this house. What do I do?” So we will get into that for sure in our main topic, but before that, we just got home a couple of days ago from our Mastermind meeting which was amazing.

Andrea: Absolutely amazing.

Doug: Yeah, it was a little bit of a fire hose, if you’ve heard that, of information that just comes at you, and you kind of have to hold your mouth open and hope to get a mouthful of water there. Because it is just an overwhelming three days of just great content and information, but Masterminds in general are one of those things where they can be great for any business that you’re in.

Sometimes you just feel like your business is on cruise control and has hit a plateau, and maybe things are going well, but you’re not really growing, you’re not really changing, progressing, or learning, and you get kind of in a rut.

And when you get together with other people who have businesses similar to yours, but they’re maybe a level, or two, or five, or ten ahead of you, and you’re seeing what they’re doing, it just inspires you to just get going.

Andrea: Yeah, so inspiring. One of the things I love about Mastermind meetings or even going to real estate investment clubs can do the same thing for you, and most towns or large cities have come kind of a real estate investing club that you could Google search and find to go attend these meetings.

But one of the things that I really love about this is that when we first started real estate investing or even way back when we were just learning about it, we read all of these books on entrepreneurial mindset and just getting your brain focused and all of the things you need to do to prepare yourself to be successful, and a lot of them said that your income will be the average of the five people that you hang out with the most.

And so basically, their point is to be careful who you are hanging out with and spending time with, because that is going to rub off on you. And that really bugged me.

Doug: Yeah, it always kind of rubbed us the wrong way. Like what, you’re telling me I have to hang out with only people who make a lot of money if that’s what I want to do?

Andrea: Well and they’ve proven that it can be true for some people. It’s not true for us, and our friends are our friends regardless.

Doug: Because we like them.

Andrea: I don’t care what their income is, but I do see some validity in hanging out and spending time with people that inspire you and keep your focus on track. It doesn’t have to be your best, closest personal friends, but even just going to these club meetings or Mastermind meetings keeps you focused.

Doug: Yeah, it keeps you focused, draws you up or keeps your mind sharp on those topics. For me, it’s just inspiring. Even just clubs where you’ve heard something maybe ten times, but that day for some reason it struck a chord a little bit more than in the past, and you just think, “Wow, that’s something that I’m going to put into our business. It’s going to help us and be inspiring.”

Andrea: Yeah, and what’s a website they can go to if they want to look for real estate investing clubs in their area?

Doug: I would just go to Google and search “Real Estate Investing Club.”

Andrea: Or REIAs. A lot of times they’re called REIAs.

Doug: Yeah, REIA, which is R-E-I-A. It stands for “Real Estate Investing Association,” so that’s a nationwide organization. There’s REIA clubs in most big cities and stuff. So yeah, they can go to REIA or just search “Real Estate Investing Club,” or go to meetup.com.

I think there’s a bunch of little ones probably everywhere, little meet-ups for real estate investors in your city. So check those out. It’s definitely worth going, especially if you’re new, to meet people who are in this business, and you guys can collaborate, work together, sell each other properties, buy properties from each other, or just learn.

Andrea: Bounce ideas off of each other, I think. Sometimes just feeling like you can ask somebody who knows what they’re talking about: “Hey, am I on the right track here?” And have them say, “Yes” is all you need.

Doug: Yeah, so good stuff. We are glad to be back in it though. Main topic today is funding your deals. So, you’ve got a deal, now what do you do? So we’re going to go over what we have narrowed down to be the four primary sources for funding your real estate deals, and we’re going to go a little more in-depth in these topics. So what is number one?

Andrea: The first one is bank financing. So this is probably what most people think of first if you’re a new investor and you don’t know all of your options, you may think that this is your only option. To go to Wells Fargo, a Bank of America, whatever, and try to get a loan through them.

Doug: Most people think of it when they think of lenders; maybe this is the only thing they know of is that you go to your bank to get a loan. That’s just what you do. And if you’re buying a home to live in, and 95 percent of the population when they’re going to get a loan to buy a house, this is a great way to go.

Andrea: So there are pros and cons to all of these options that we’re going to talk about, and the pros to bank financing would be that usually they have the best interest rates. You can get a long-term fixed amortizing loan, which is fantastic for rentals. If you’re doing rental properties, that is a huge plus.

And a pro and a con to bank financing could be the down payment. Sometimes you can get a low down payment loan depending on the loan structure. Sometimes you need more like 20 percent and that can be a deal breaker.

Doug: Yeah, so there are different loan programs, different down payment things, just like Andrea was talking about. And we’re talking about investment properties specifically here, so there are construction loans or loans for properties that need fixing up, like the FHA-203K loan, which I’ve never used, but that is a loan specifically for someone buying a home that needs a lot of repairs.

And they can still get good bank financing on it, but it’s just a lot of hoops to jump through. So some of the cons for bank financing— well first of all, Andrea mentioned the pros. I mean to get a loan with a low interest rate today, which is what four to five percent interest. Historically, we are at rock-bottom interest rates, and to lock that rate in for 30 years is phenomenal, in my opinion.

If you’re going to have a rental property, and you can get one of these loans on that rental property, because rates could be eight, nine percent. They have been that high and higher in recent history, so financing is the deal of today’s market. So if you can get that on a rental, I think it’s a great thing to do.

But the cons of trying to get a bank loan, especially for a flip project, are number one: it’s so slow. We sell properties a lot to people getting bank loans, and what would you say our average escrow time is?

Andrea: You know anymore these days if somebody puts 30 days on the contract, I’m like, “Yeah right. We’ll see.” And if a lender does get it done in 30 days then that’s fantastic right now. It used to be that was the norm, like you’re expected to get it done in 30 days. But now, it’s just taking longer. So 45, 50 is kind of the norm.

Doug: And it’s not all the bank people’s fault that are doing it. I mean there are so many hoops you have to jump through and regulations that the Feds have imposed, and waiting times, and just an enormous amount of red tape you have to go through. And it just takes time. So it’s not fast. That’s definitely a con. It’s paperwork heavy.

We just closed a loan, which could have been considered in the category of this bank financing, and the paperwork needed— if you’ve done this recently you know— is just unreal. They’re going to want every single piece of paperwork pertaining to your income, your financial history, your kids’ birth certificates. You name it; they want all of it, and they’re just being overly cautious due to what happened in the crash.

But they certainly are being overly cautious in my opinion, so yes the paperwork is crazy. You don’t want to be doing that over and over. And another con is that you’re going to be limited. Say that you’re getting these four rental properties, and you’re limited to four loans max, and then maybe ten for some programs. But the qualification process for numbers five through ten is just unreal.

They want, I don’t know, there’s lot of massive reserve requirements and all kinds of different things, so it’s really difficult to get that many loans. Another con is that they don’t typically lend to corporations, and if you’re a house flipper then you typically want to buy in a corporation, not your own name. And then also, they’re credit and W-2 driven, so you can be a self-employed person that has great income, but if you’re not receiving a W-2, and you can’t prove that with pay stubs, they don’t even want to talk to you.

And maybe there are some programs that are coming back that people say you can get loans still, but it’s just a challenge. Say you have bad credit for some reason; that’s another thing. You’re going to have a difficult time getting one of these loans.

Andrea: So basically bank financing is good for people who maybe already have a job and you want to use this to acquire a rental property. It’s really not the best for flipping, unless maybe you’re only going to do one a year, and that’s assuming that the person selling you the property is willing to wait that period of time while you get the loan.

Another option for you through bank financing is if you were to already have a line of credit on your home that you can pull out real quickly, but with flipping, speed is everything, especially if you’re buying direct from a seller. They want to close, generally, fast. So this is probably not going to work, bank financing, for flipping.

Doug: Yeah. So the second source of funding is what’s called a “hard money loan.” Andrea do you want to explain that to us?

Andrea: Sure. So hard money loans are used primarily for construction and short-term loans, and they’re usually smaller lending companies. They are not backed by the Feds, so their underwriting standards are different. It’s not a Fannie Mae or Freddie Mac loan. Their money usually comes from hedge funds or private individuals, private groups, so they’re able to make up their own rules basically.

So they can make it a simpler process, but they are taking higher risk, so they get a higher return for that. You pay a little bit more, but generally a little bit easier.

Doug: Right, and some of the pros of a hard money loan are that they are fast. That’s exactly the biggest difference to me anyways, if you’re a house flipper, is depending on how good your hard money lender is, it can be as short as three, five, seven days. Typically it will probably be more like ten days, two weeks, but still, way faster than getting a traditional bank loan, which is very important in real estate investing. Sometimes speed is everything.

Another pro is that they’re flexible. So your hard money lender, once you get to know him and prove yourself, they can be flexible with you. Like sometimes properties are hard to access, you know hard to get in. Maybe there’s a hostile situation in the house and you just can’t get inside, and you have a few pictures to go buy, but if you’re a trusted person they’ve lent to and they have some other information, they’ll still fund the deal for you.

Not everyone of course, but a lot of them will. And that’s due to your relationship and due to some other factors, so that’s definitely a positive when working with a hard money lender.

Andrea: So then the cons would be that they are definitely more expensive than regular bank financing, so you’re usually going to pay for hard money 10-15 percent interest rates plus two to four points plus fees. And the points are basically a percentage of the loan amount, and then fees on top. They have different closing costs. They have their own underwriting process that they go through.

You pay for that. So it’s definitely more expensive, quite a bit more expensive. Another con would be that it’s a short-term loan, so they usually want to be paid back in between six months to a year. And then if you go over that, you might end up paying even more, some kind of a penalty or an increased interest rate, however they might have it set up.

So if you have a delay in your process, let’s say for example, we had a property that we did down in San Diego and getting permits through the city took so much longer, and we didn’t end up going over a year, but it took a lot longer than we thought. So you have to have a hard money lender that might be willing to be flexible with that or has term that are going to work for you. So that could be a con.

With all of those things said, we use hard money quite often. We really prefer it because of the speed and all of those things. Hard money lenders, I think, are great.

Doug: Yeah, and I think the majority of house flipping people utilize hard money loans in some way or another. Another thing I forgot to mention is that it’s typically driven more by the property and project and less by the borrower’s credit or their qualifications.

Now they will qualify you to whatever standards they have a little bit, but they’re more based on the value of the property, what you’re going to do to improve it. They’re looking at that as a house flipper should and minimizing their risk based on the deal itself.

Andrea: Right, and that’s huge.

Doug: Definitely. You want somebody to look at the deal that way.

Andrea: Right.

Doug: The third avenue of funding is called private funding. So private funding is basically just people, private individuals who lend you the money for your deals. I mean that’s the easiest way to explain it.

Andrea: And this would be our favorite option for financing deals. So the pros are that it is fast and typically very easy because the paperwork is just going to be whatever it is that you set up between you and that individual. Whatever agreements you guys have, so fast and easy, not a lot of paperwork.

The terms are totally negotiable, so whatever works best for both parties. And you’re not going to have all of the closing costs and things you have from a hard money lender. Points and those things are all totally negotiable.

So the coolest part about private funding to me is that you can make your friends, and family, and other people money. So it’s awesome that we can do this business, and make money, and be successful, but if you can help other people to be successful and make money along the way, even better. That’s so awesome.

So we’ve had lots of family members and friends that we know that have invested with us, and they make a much better return with their money than they would in a savings account, CD, or anything else, and they’re very happy.

Doug: Yeah. We pay them off, and they’re calling us the next week like, “Okay, when’s the next one?” They’re ready for it, and obviously I want to put a caveat here. Don’t take Aunt Judy’s life savings if you’re brand new and just put it all in some property. Don’t do that. Be responsible. Make sure you know what you’re doing before you put friends and family’s money at risk, because that is sort of what you’re doing.

And you know, we always go with the belief that listen, you’re going to get paid back before we do. If this project goes south, we’re still going to honor your loan and pay you back, and if we lose money, we lose money. That’s just part of it.

Andrea: Yes, if you don’t have integrity, don’t do this.

Doug: Don’t do it! Literally, if you don’t have integrity, don’t do this. You won’t have friends and family before long if you do. But like Andrea said, it’s definitely a win-win for people, especially if people have money sitting in the bank. I don’t even know what it’s earning, if it’s earning anything.

I mean it’s really a negative if you count inflation in there; it’s losing value over time. So if you can give them a good return that is still affordable for you, and it makes sense to do these deals, man that’s just a win-win. So definitely we love private funding.

Andrea: Oh wait, there’s one more thing we had under the pro category. Let’s say you’re buying a house direct from a seller, and sometimes they can provide the loan for you. So they can carry back while you’re fixing up their property to sell it or whatever you plan to be doing with that particular deal.

Or sometimes maybe you can take over their loan in the short-term while you’re fixing up the property, so there are some different options there that can be beneficial.

Doug: Yeah so when we’re talking to sellers, often times we’ll kind of look at that angle because it could benefit them even more. They could get more money for their house. You can pay them more, in a sense, because you’re not having those costs to other private lenders or mortgage brokers and things like that. It definitely can be a win-win. So the seller-financing aspect of private financing we utilize a lot as well.

And now the cons: you know, we’re not attorneys. Let’s say that, number one. So we don’t know all the laws and stuff, and there are laws with borrowing money from individuals.

So you definitely need to check the SEC laws, check with an attorney, or do some research in your state, your area. Find out what the laws are with this because you don’t want to be breaking the laws on borrowing and lending money.

Andrea: For sure you cannot go advertising for this. It needs to be something that you do privately between people that you know.

Doug: Yeah, we do know that much. You can’t go throw an ad on Craigslist saying, “I’ll pay you x-percent. Come invest in my deals!” That’s a direct solicitation for money, and that is not allowed unless you have all of the licenses and you’re an actual lender.

So do not do that. It has to come organically from people you had a relationship with prior or you know in some way you did not bring about that.

You did not ask about that loan; they came to you, or something like that. So definitely be aware of those missteps because you don’t want to go down that road. And also another con might be that it can be limited.

Let’s say you have two great private investors, but they only have so much money, and at some point your business and your growth might want to do four or five more deals, and they just don’t have any more money to lend you even though they’d like to. And then you run out.

So the more sources you can get of this, the better. But that’s one con, that you always need to be looking for new private money sources who want to invest with you. Anything else on that one?

Andrea: No, that’s good.

Doug: Ok cool. So the fourth and final one is kind of a new one. It’s crowd funding, and we have not used this source before. Basically the easiest way I know how to describe crowd funding is— I don’t know if you’ve heard of KickStarter on the Internet, and that’s different.

That’s where they’re just kind of donating to some cause or project, but it’s essentially an online portal where investors are accredited investors (and look that one up because you have to be an accredited investor usually), and they can go to a website and pool money together to put towards an investment, and then they get paid a return when it closes out.

So some of the pros for this, and again we have not utilized this one, these are kind of assumed pros. This is kind of a new thing. I’m assuming the rates are fairly competitive to hard money loans, so you’re probably going to be paying more than a bank loan, but it could be similar to a hard money loan, maybe less. I’m not sure.

Because they’re utilizing new technologies it could be an easy process. I’m thinking that they’re probably streamlining the processes, so you enter some basic information about the property and yourself, and they’ve got all of your information on record after a time, and then maybe the process is an easy one to use.

So I just foresee that being one of the possible positives to this type of funding, and probably there’s an unlimited amount of sources out there since this is a growing industry. So potentially you could find all of your deals this way.

Andrea: And so the cons to crowd funding would be the fact that it is still new. So there could be some kinks that show up along the way that we don’t know about yet.

We have actually never used crowd funding, so just keep that in mind that it is new. So maybe not everything is worked out with all of that quite yet.

Also, the turn times, so for example with private money and hard money lenders, they can fund your deal in under a week most of the time. Crowd funding, I’m not sure if they’re able to pull off the turn times that you’ll need.

Doug: I would guess not that quickly. Yeah, maybe more comparable with hard money loans, like a two weeks or something, but I doubt in under a week you’re going to get funding for a deal you may need at some point.

Andrea: So just something to keep in mind.

Doug: Something to keep in mind. If you want to check out some of those crowd funding sources, I did some research and found a couple that seemed to be legitimate online. One is fundthatflip.com and another kind of big one that had some press a while back is called realtyshares.com. So check those out if you’re interested.

So that’s funding in a nutshell. Well, hopefully we dove into enough to give you some good idea of what types of funding are available and commonly used in real estate investing.

Andrea: If you have any other questions about this, feel free to shoot us an email through our website, spousesflippinghouses.com. We also have a couple of free gifts for you there that you can download.

One is an e-book on working with your spouse, and there are lots of tips there. And then the other one is a deal analyzation course that Doug has put together. It’s a three-part deal analyzation course.

It is awesome. I cannot even emphasize this enough. He has gone through how to break down a deal for a flip and how to break down a deal for a rental property that you want to keep, a step-by-step guide. How to comp out these properties, how to know if you have a deal or if you don’t.

He goes through so many things that you need to know. It’s absolutely so valuable. We may be taking this off the website soon, so if you’re interested, get it know.

Doug: We put a lot of work, both of us, into those gifts, so grab them while we can because we might be making some changes with what we’re giving away for free there. So yeah, great! That’s pretty much it. I think this episode will be coming out right before Thanksgiving, so if you’re listening to it, have a Happy Thanksgiving, enjoy the family, watch some football.

Andrea: Eat lots of turkey and pie.

Doug: Stay out of the malls on Black Friday and just have a great week. We will catch you when you get back.

Andrea: Talk to you soon.

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The post Episode 11: Funding your deals! 4 of the BEST Sources for Financing your Project! appeared first on Spouses Flipping Houses.

by Doug & Andrea Van Soest | Spouses Flipping Houses

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Today, we will be talking about Rental Properties & Cashflow. This is THE reason we got into real estate investing. We’ll cover some of the benefits of Rental Properties, the method we used to purchase rentals, one of the common mistakes people make when getting into rentals, and share 3 things to look for in a rental property to help you get started.

Rich Dad Poor Dad

The Norris Group Mike Cantu

Download Episode 10 Transcript

Andrea: Shelter never goes out of style.

Doug: People always want a roof over their head and a place to live.

Andrea: They need it.

Doug: And so why not provide that for them?

— Intro/Music —

Doug: Welcome to the Spouses Flipping Houses Podcast. This is episode 10. So excited to be here today and so excited to bring this episode to you. Andrea, my partner in crime across the table, how is it going?

Andrea: It’s going good. How are you?

Doug: I’m doing well. I had the flu all weekend, so I’ve been a big grump.

Andrea: So you’re really not doing so well?

Doug: I’m letting better now, feeling better today.

Andrea: Yes, you’re amongst the living. That’s good.

Doug: I’m amongst the living, and I’m getting stronger everyday. So hopefully by tomorrow I’ll be back to 100 percent.

Andrea: Well I hope so, because we are headed to a mastermind meeting that I am super excited about, and I need you.

Doug: Yes. To be there!

Andrea: My introverted self needs you to be there.

Doug: Yeah, no we’re really excited about it. This Mastermind group is going to be a good thing, and we’ll probably have an episode in the future on the importance of Mastermind groups, and just collaborating with like-minded people, and helping do that to move your businesses forward. But today, what are we going to talk about?

Andrea: Today, we are talking about one of our favorite subjects, which is rental properties and cash flow.

Doug: Yes, very exciting topic for us. The reason, really, that we got into real estate investing, so if you’ll remember, when Andrea and I were early in our relationship, when we were dating, we read a book called Rich Dad, Poor Dad, and in that book the idea was to create cash flow to escape the rat race.

And our whole goal getting into real estate was to buy rental properties as our cash flow to eventually escape the rat race, and we’ve had that goal and maintained that goal to this day. Now we did discover flipping houses along the way there, and that’s been a big part, obviously a big part of this podcast and our business as a whole and what we do.

But, we also buy and manage our rental portfolio, which we are going to talk to you about today. But before we do that, I’m just going to break down what our rental goals are and what they look like today. But before we get into that, let’s just talk a little bit about the benefits of a cash flow rental property, okay.

Andrea: Yes, lots of benefits.

Doug: So, number one: if you were to go buy a stock or buy gold, you know buy gold or silver and then sell it later on, you’re hoping that it goes up, and you have to go buy it with cash and just hold it there, hoping that someday it will go up, and you can sell it for more.

Well, if you’re going to buy a rental property, number one, you can buy it with cash, but a great benefit is you don’t have to buy it all-cash. You can put a down payment and get financing on that property. So, you can get a loan, and it’s easily available, especially if you have a normal W-2 job, you can likely qualify for a 20 percent down payment, get financing for the rest, and acquire a piece of property.

The second benefit is that you can rent that property; somebody can pay you to live there. So you own this asset, and they’re paying you to live there. Essentially, they are paying the mortgage for you, as long as the numbers work out. So let’s say you rent that property for 20-30 years.

That tenant has been paying off that loan the entire time for you, and eventually you own this asset free and clear, which you only paid 20 percent for (because you got financing on it), and likely it has appreciated in value. Who knows? Ten, fifteen, twenty times or a huge amount over what you paid for it.

Maybe it didn’t appreciate at all, but in that case it doesn’t matter. You still have a free-and-clear asset that’s worth something that is paying you cash flow every single month. Plus, there are tax benefits and all kinds of other benefits, but that’s just a few of them. That’s why we like rental properties so much.

Andrea: Yes, as Doug said we have known we wanted to purchase rental properties for a long time now, but we actually started buying rentals in 2008, and that’s about the time we started our flipping business as well. And so we had originally heard all of this different education, and we decided that we were going to flip two and keep one. Which is a great goal, in theory.

Doug: Sounds good, yeah.

Andrea: But the reality is, it just doesn’t always work out to do it that way because maybe your third one each time isn’t something you want to keep. So, our goal’s shifted and changed, and we decided that our end goal would be ten properties. If we can get to ten rental properties, that will be perfect because once those are paid off someday, that’s all we will need to live on. It’ll be perfect.

Doug: Yeah, and that’s a great goal by the way. And that is probably more than enough for 95 percent of America.

Andrea: Well, we got to the ten properties pretty quickly, and so we decided to up the goal to 25. So, within a couple years, we hit 25. Okay, well let’s try 50. Is that crazy? Let’s try for 50. So our new goal became 50, and we have surpassed 50. We’re actually at 57 right now, 57 doors.

So our new goal is to pay them off. So that was exciting. It’s exciting to reach those goals, but it’s a lot of hard work. So how did we get there? Well basically, for the first five years that we were flipping properties, our income increased substantially from the flipping business, but we kept our lifestyle very minimal. We did not increase our lifestyle. We put literally every dollar, every spare dollar, towards rental properties.

Doug: Yeah, because we knew our ultimate goal was to acquire more rental properties and not just to increase our income.

Andrea: Yeah, so it was worth it to skimp, and save, and cut back on things, or not buy a new car or whatever it was to reach these goals. It was worth it to us. So we basically purchased the majority of these 57 properties within five years, between 2008 and 2013.

And people choose to buy rental properties in different ways for different reasons. Some people save up and pay all cash; some people use bank financing; some people have partnerships and whatever they choose to do.

But for us, we knew that California had pretty much bottomed out. It was the bottom of this market cycle, and prices were as low as we had ever seen them, and possibly as low as they may be in our lifetime, and we wanted to get as many as we possibly could during that time frame. So we are self-employed individuals. We knew that qualifying for a bank loan was probably going to be near impossible, and if we did qualify for a bank loan, we were only going to be able to get four to ten.

Doug: Yeah, I think four was the max at that time.

Andrea: Yeah, and so the method that we used to purchase so many properties was to use hard money loans.

Doug: Yeah, there was a local lender that we knew here that we knew about, someone well-respected in our area who was also an investor themselves, this whole company and an educator, one who we learned a lot from.

Andrea: Called the Norris Group.

Doug: Yeah, their name is the Norris Group if you haven’t heard of them, a phenomenal company that I highly, highly recommend. But they have the hard money loan program, actually several programs, and one of them was this “long term rental” program.

Andrea: Yeah, so they basically would lend 60-65 percent of the after-repaired value for five to eight years, and their loan program has since changed. I think it’s now a three-year term.

Doug: Yeah.

Andrea: But at that time, that felt really safe for us to be able to pick up these properties for that period of time, and then we had five to eight years to decide what to do to fix that loan, basically.

Doug: This was the time when all of the banks had just died and were going under. There was no other financing like this available that we knew of.

Andrea: Right. And so the coolest part about this is the fact that because they were willing to lend based on the after-repaired value, 60-65 percent, we could buy these for not a whole lot out of pocket.

So let’s say the after-repaired value of one of these properties was $100,000, and we’re buying this REO from a bank that the bank had taken back on a foreclosure for, let’s say, $55,000, because we did this all day long in 2009. So we’re buying it for $55,000; it’s worth $100,000. They would give us a $60-$65,000 loan. The property needed $10-$15,000 in repair and then plus our closing cost, so we could be out between $10-$15,000 out-of-pocket. It worked great.

Doug: Yeah, rinse and repeat. So we would try to do this as much as possible.

Andrea: Yeah, so we are now starting to refinance these into commercial loans that are fully advertised, and we’re taking advantage of the great rates that are out today and paying off other properties. And it worked out beautifully for us.

Doug: Yeah, the plan is in action and working currently as we speak. We just closed on our first commercial loan on a package of these properties, so really exciting stuff. Now, one of the common mistakes that people make when they’re wanting to get into rental property is they’ll get a property and say, “Oh House X we’ll rent for $1,250 per month, and my mortgage payment is going to be $1,000 per month, so guess what. I’m going to have $250 per month of positive cash flow. Yes! That’s great, let’s get it!”

Err, wrong. Not going to happen, a very common mistake. In fact, I would be willing to bet you’re probably losing $200-$250 per month on that property if those are the numbers. The reality about rental property is that you’re probably going to have expenses that total somewhere between 30 and 45 percent right off the top of whatever your rent is, just due to the things that you’re not considering like property taxes, insurance, maintenance, vacancies.

All of these things add up. They’re not all going to hit in one month’s time, but over the time of owning the rental property, those expenses are real. And 30 to 45 percent, in our experience, is an accurate number. Now I go into this in great detail in the free gift that we give on our website when you subscribe.

In fact, there is a three-part video series on analyzing deals, and the entire third segment of that video series is dedicated to analyzing rental property, and I go into detail on the expenses, and what they are, and what to expect with that. So just know that going into it.

When we were initially buying these rental properties, we were really looking for anything that was cheap enough that we thought we could get our hands on that we could buy in 2009-2010, because the prices were so low. They’d been cut in half, and we knew they would go up.

But what we look for now has kind of changed, so depending on what market you’re in currently, where you live, things are going to be different and are going to vary market-to-market if you’re looking to buy a rental property now. So I’ll touch on it real quickly: there are three components to rental property that you want to consider when looking for a property.

Number one is the property itself. What type of property is it? Is it a new house? Is it an old house? Is it a condo? Is it a mobile home? Does it have two bedrooms? Does it have four bedrooms? One bathroom, two bathrooms, a garage? All of these factors are pretty important because those are features of the home that a potential tenant will look for, and it’s going to affect what the property will rent for. And also where is it located? Is it a desirable area? It is a good area or not a good area?

Andrea: Some things you might want to consider also is the school district that it is in. There is a particular neighborhood in Rancho Cucamonga where literally on the same street— is it the school district or is it the zip code that changes? On this one street, it changes the value by almost $100,000.

Doug: Yeah, literally across the street is one awesome school district, and then if you go across the street it’s another school district that is not as good and not as desirable, and the values change by about $100,000 we discovered.

Andrea: It really boils down to knowing your market, and your cities, and the different details about them.

Doug: So anyway, number two is the financing available. If we didn’t have the Norris Group loan available to us that we used to acquire a lot of these rental properties, our strategy may have been a little different. If you have an endless amount of financing by some other means, that’s going to maybe affect what you buy, and how many you can purchase, and these kinds of things, and what type of loan you can get (if you’re going to be using a loan) on these properties.

So that’s a big component when you’re considering rental property: the financing. And of course the third would be the tenant. And this is one that people just don’t even think about until after they get a property usually, but it’s something you want to think about before. What quality of tenant, if you will, do you think you can get with this property?

And you may think, well it doesn’t matter if the rent is for $1,000 or for $2,000. What difference does it make as long as you know what the rent is? That’s not necessarily the case because with a lot of types of properties in certain areas, you’re going to have certain challenges, and higher turnover, and things like that that are going to cost you money essentially.

Andrea: For example, one of our highest cash flowing properties is our biggest management headache. So is it really worth that cash flow some months? No.

Doug: Absolutely. A lot of months no, so definitely something you want to consider. Now, what’s our recommendation? I mean, today we don’t necessarily go for the cheapest price for the highest rent. That’s not necessarily what we look for. You want to consider all things.

So what we’re looking for is a good, desirable house in a decent neighborhood with maybe some upside potential for appreciation. That’s going to be hopefully a good school district, and at the end of the day if you have financing on it or whatever, you’re going to be cash flow positive after all of the expenses, at least around $200 per month out of the gate.

So that way you’re not counting on appreciation or anything like that. It works from day one. That’s a very general description, but for the most part that’s kind of what we look for in a rental property.

Andrea: So we highly recommend that you consider adding rental properties to your investing strategy, because it is basically creating long-term wealth. Whether you decide, “Okay, we’re going to set aside this much money per month, and every year we’re going to try to buy one rental property, or every two years we’re going to buy one, or every five years.”

Someday when you go to retire, you’re going to be so thankful. It’s something you can even pass onto your kids or your grandkids, and for us it just feels like the simplest and safest way to build long-term wealth. The stock market these days rises and falls constantly, and the latest investing trends are here today and gone tomorrow, but as Mike Cantu actually says, “shelter never goes out of style.”

Doug: People always want a roof over their head and a place to live.

Andrea: They need it.

Doug: And so why not provide that for them?

Andrea: After talking about Mike Cantu so often we really need to bring him on.

Doug: We will.

Andrea: He’s the greatest.

Doug: We’ll have him on here eventually. So that was rental property in a nutshell, very much a nutshell. Again, I go into much more detail on analyzing these rental properties in the free gift. Please head over to our website and get that, but we’re headed out to the Mastermind meeting, and we really look forward to that, and we’ll report back how that went. Other than that, anything else?

Andrea: Nope. Our website is spousesflippinghouses.com, so you can just go enter your email address, and that three-part video series will be emailed right to you.

Doug: Alright, so go check it out, and we will talk to you soon.

If you would like to learn more information from our Podcasts, check us out on iTunes & Subscribe. Also consider leaving us a rating (5 stars would be great) and a review would also be helpful so others can learn more about us and get in on our upcoming episodes. For questions or comments please fill out the comments area below and we’ll answer them. Thanks!

The post Episode 10: Building Cashflow for Financial Freedom – How We Bought 57 Rentals & Counting! appeared first on Spouses Flipping Houses.

by Doug & Andrea Van Soest | Spouses Flipping Houses

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Technology is your Friend!  Don’t be afraid of it…embrace it!  Today we dive into the SIX primary Tech Tools that we use every day in our business.  These tools save us 100’s of hours per month and make life SOOO much easier (and thus, more fun)!

SIX Tech Tools that we use everyday!

Helpful Apps

Autoresponders and email list management

Virtual assistants can be found at

Voice Mail Services

Google.com has many different features that are super helpful!

Download Episode 9 Transcript

Andrea: Welcome to Spouses Flipping Houses, Episode Nine! Today, we are talking about the fact that technology is your friend, and how we use the latest tech tools to help us in our investing business.

Doug: Which is really ironic, those of you who know Andrea– let’s just say, she doesn’t embrace technology like– I don’t know, like most of us do.

Andrea: That’s what makes this podcast episode so perfect, because it’s coming at you from two sides of the coin; one person who is very much tech-savvy and that would be Doug, and one person who is very much a tech bozo, and that would be me!

Doug: And I’m not even– you may think I’m very much tech-savvy just because of maybe where you’re at! But I’m not even– I don’t consider myself a techie. I like technology, I dig in to what I need to know and learn it because I like it and it helps me, but I’m not a techie- like I can’t do code, I don’t really know a lot of stuff, just I know how to do website stuff and–

Andrea: Well, I still have my Yahoo e-mail account from college so–

Doug: Yeah, that could be a problem.

Andrea: To me, you’re tech-savvy!

Doug: Yeah, how many unread e-mails do you have right now?

Andrea: Oh, it’s in the multiple thousands! Friends of ours laugh at us and we drive them crazy — well, I drive them crazy, because my little inbox on my phone shows, you know, twelve thousand nine hundred e-mails and it doesn’t bother me a bit. I just scroll to the next page and ignore the e-mails that are not important, and respond to the ones that are.

Doug: So the moral of the story is don’t e-mail Andrea if you want to get in touch with her.

Andrea: I respond to the good ones, don’t worry.

Doug: So yeah, technology is your friend. But, before we get into that, we just got home a couple of days ago– if you remember, we mentioned that I was gonna be going to go on a surprise birthday trip.

Andrea and some of our best friends took us, took me, on a birthday trip and had me fully convinced through carefully planned and dropped hints along the way for the past several months that I was going on a road trip. And I assumed it was somewhere out in the Rocky Mountain states — Colorado, or somewhere around there, which I love those states and would love to visit that area.

Andrea: We even made him pack his suitcase full of sweaters and jackets and coats and pants, and then when he wasn’t looking, I swapped out all his clothes for what he actually needed.

Doug: And little did I know, we got in the car and headed straight to LAX. We went to Costa Rica! For a tropical vacation.

Andrea: It was so cool.

Doug: Amazing! So I pretty much have the most awesome wife in the world, to surprise me on my fortieth birthday with an adventure trip in Costa Rica. We had the best time, ziplining and surfing and seeing lizards and monkeys and just having great food, and it was just an awesome, awesome trip. We are back.

Andrea: Yes. So what was your favorite thing we did in Costa Rica?

Doug: Oh, I have to say surfing. The water was bath water, like eighty degrees, and it was just- I’m not an expert surfer by any means, so it was nice gentle waves where we were, and we could catch them and just– oh, so fun.

Andrea: Me too– actually, surfing was my favorite even though I got a bunch of bruises and I’m almost too old for that! So much fun, I loved it! I also loved the zip line thing that we did.

Doug: Yeah, we did one zip line that, one leg of it was a half-mile long.

Andrea: And you’re literally over the jungle, like from peak of a mountain to peak of a mountain, it felt like.

Doug: Yeah, and you’re looking at a volcano on your right.

Andrea: And a big lake to the other side.

Doug: Yeah, it took fifty seconds for that one section of the zip line to get down, and you’re going about, I don’t know, forty or fifty miles an hour, or so. Really awesome time. But anyway, just wanted to fill you in on where we were. And now I kinda feel– you think, oh, I’m rested and ready to go, but we sorta jumped back into life with two feet and realized all the stuff that we have to get done in the next couple weeks, and now I need a vacation from the vacation!

Andrea: So true!

Doug: Kinda feelin’ that way, but, anyway.

Andrea: No, it’s okay, we’re good, we’re refreshed and ready to go.

Doug: Fresh and ready to go! And we wanted to thank anyone who’s left us a rating and review on iTunes, we are so grateful for that. I wanted to read one that we just got here recently. Five star rating from Photosteve2003, whoever you are– title is “Great House Flipping Resource.” “Thanks for creating this podcast. As a full time real estate investor, I’m constantly looking for good education on flipping houses. I’m looking forward to future episodes.”

And that’s just one of many five star reviews we’ve had. Thank you so much, it really helps us! If you haven’t left us a rating and review, please do so; head over to iTunes, and just leave us a quick rating and review.

Andrea: You can also subscribe to our podcast by going to our website, SpousesFlippingHouses.com, and enter your e-mail, hit subscribe, and you’ll be notified of all future episodes.

Doug: Plus you get two awesome gifts that we really worked hard to create for you. You get an e-book that Andrea created on twelve tips for working with your spouse–

Andrea: Eleven, but that’s okay.

Doug: Eleven! I’ve been gone, out of the country, so… and then I created a video course on deal analyzation. I put a lot of thought into it, so I hope you’ll really enjoy those. Grab those two absolutely free gifts by heading over to our website. So, enough of that! Let’s get into our main topic today, which is technology. Andrea, why don’t you start us off?

Andrea: Okay, well I’m going to be talking about the few basic things that I know anything about! First one is Dropbox, and we love Dropbox. We use it for our business, we use it in our personal life. The cool thing about Dropbox– it’s basically a file-sharing service. Fill in the gaps…

Doug: Yeah, no that’s exactly what it is. You know how you have folders and files on your computer? Well, Dropbox, it’s one of those, it’s just a folder on your computer, but it syncs to the Cloud. You know what the Cloud is, obviously, everybody’s heard of the Cloud. Basically it syncs over the Internet to other devices, other people, whoever you invite to it, so that your little file–

Say you save an Excel spreadsheet into one of the folders, it automatically syncs to the Cloud, syncs directly to that other person’s computer, or phone, or tablet or what have you. This is not new, but some people may not have heard of Dropbox, and we absolutely love it.

Andrea: We use it in so many ways. And the cool thing is that you can invite certain people to specific files; they don’t have to be a part of every file within your Dropbox, so– like the personal ones that we have is just between the two of us, for our family photos and stuff like that; but then for each property that we do, we have a whole separate category for our real estate business and then separate categories for each property, and then what’s going on within that property.

There’s folders within folders; it’s just such a great way to organize things. And so we’ll have our assistant and our contractor invited to certain folders that are for each property so that we all have access to the same stuff.

And one thing I wanted to point out was the fact that all of these different tech tools that we’re going to be talking about today can help you to manage your business from anywhere that you are. You don’t have to be in front of your computer in your office, and that’s the cool thing.

So we were just, for example, in Costa Rica this last week, and we could pretty much take care of anything that we needed to, because we had access to everything through Dropbox and the Cloud and all these other different things that we’re going to be talking about.

Doug: You literally can run your business virtually.

Andrea: Yes.

Doug: From anywhere if you wanted to.

Andrea: Totally.

Doug: And if you’ve ever been the person who has had your hard drive crash, or your computer crash, rather, and you’ve lost your information– raise your hand, me— if you’ve ever had that happen, this is another great thing to have just for that reason. It automatically backs up every folder or file you want to, instantly, to the Cloud, so that if your computer explodes and catches on fire in the next five minutes, your stuff is saved.

Andrea: Yeah, and we save all of our family photos now on Dropbox because of that very thing. We had a bunch of just priceless treasure photos of our children as babies on a hard drive, a computer that fried out, and we still have it sitting in our garage, hoping that someday, someone can recover those photos.

Doug: If you know an expert on recovery on a hard drive that was physically damaged, let us know, because it’s sitting in our garage with baby photos on it! So, that’s Dropbox.

The next resource, tech tool that we use, and we’ve mentioned it before, and we’ll probably have a full episode coming up here on it, but it’s Podio, Podio.com.

This software, this resource completely revolutionized our business about a year and a half ago when we started using it. It is a complete lead management customer relations management system, and this is where we primarily manage all of our seller leads that come in.

And right now, currently we have around 2500 leads in there. So if you can imagine having pieces of paper for each lead, or a file, or whatever something physical that you might be using, and it starts stacking up where you have hundreds and then thousands of these things, how in the world can you possibly manage that and keep track of those things, and what you need to do in the next step of managing that lead?

Podio, and there are a lot of other resources that do this, but Podio seems to be the best for a lot of reasons, but we love using it. And the best thing about it is it is free. Free, absolutely free, up to five users. Which, until recently, like a month ago, we used the free version, all the way ‘til then, so it cost nothing. You can get it on your phone and run everything from your phone as well, or your iPad, or whatever– it’s an amazing resource.

So we use that for lead management, we also talked about before that we manage our contractor through there, different projects, there’s a whole system that we’ve built for that and again, you don’t have to be super techy, you don’t have to know how to speak computer language, if you will, it’s all drag-and-drop click stuff, that once you kind of get the feel for how it works, it’s really easy to create and customize whatever you want.

Andrea: It really is user-friendly, because Doug has even taught me how to use it! I fought him a little bit at first, a little bit of pushback because I hate learning new things, for some reason! But anyways, I’m so glad that I know how to do it now, it really is user-friendly.

He uses it to manage our marketing as well, track our marketing, and also we used to pay for a rental management software, and now we manage all of our rentals through Podio because Doug’s created like a whole separate category for that and all the different things that we have–

Doug: Which saves us, like, sixty bucks a month, which is what that software used to cost. I was just able to create a similar system, but one more customized to what we needed– to manage rents, deposits, all the different tenants and their information that we need and repairs and maintenance tracking and all that kind of stuff, to be able to see it at a glance easily– we create that stuff in here.

Andrea: We also have our goals tracked through there, too. So we’ll have our yearly goals that we put in there, we can go throughout the year and revise them, update them, see how we’re doing in certain, you know–

Doug: Yeah, goals are on there, also as far as running the business, we can send offers at the click of a button. I mean, really, we can get into this in another episode, but it has just saved us– it’s saved us hundreds of hours a month, no joke.

Just in normal tasks that you would do that take time, like writing up an offer and signing things, and stuff like that. It’s just so much faster. And the follow-up systems that we use it for are unbelievable. So Podio, check it out, definitely worth it.

Andrea: So the next tech tool we’re going to talk about is your smart phone, which is a pretty obvious one, everybody these days has a smart phone, but you can actually use your smart phone in some pretty incredible ways these days to help with your investing business.

First one, actually is Dropbox. You can have it right there on your phone, photos in front of a house or walked through a house with a prospective seller and you took pictures of all the rooms– you can save them right there, directly to a folder for that property in Dropbox, directly from your phone. There’s also tons of apps that are super helpful.

One app that we love is Redfin. And so, everybody’s probably heard about Redfin, and you may or may not know that they have an app for your phone so you could be driving through a neighborhood and you see a house that looks a little bit run down, you want to know some more information on that house or possibly what the value could be.

So you can pull up your Redfin app and it will tell you which houses are for sale near that property, which houses have recently sold near that property, you can actually get lots of information just being right out in front of it and not having to actually look up too much stuff. What other good pieces of info can you give about the Redfin app, Doug?

Doug: Yeah, you can customize your– just like when you’re going to search for comps for a house, you can customize your parameters, so let’s say you don’t want to see everything, you just wanted to see once you found out about that house and it was 2000 square feet, you just wanted to find everything that was 1500 square feet to 2500 square feet, and eliminate everything else, because that’s what you’re looking for.

And it’s really easy to do that with the click of a button. You can find sold houses that are recent, or a long time ago, there’s lots of different ways you can search it.

Andrea: And the next app is called Scannable.

Doug: Love this one!

Andrea: This one is so cool! So what you do is you can line up certain documents– let’s say you need to send documents to somebody really fast and you’re not near a scanner or fax machine. You can literally use the Scannable app– you hover your phone over each page, and it will essentially take a photo of that page and turn it into a PDF. But it removes all the shadows– it literally looks like a scanned copy of each page, and it zeroes in, you know–

Doug: It trims it, it trims the edges.

Andrea: It is so cool, I love it, it totally looks like a scan, and so, for however many pages you’re willing to sit and do that for, it’s great! We’ve used it to send whole offers, twelve pages, you know, really quickly, you just hover it over each page and it puts it all together, like a beautiful PDF. You’d never know.

Doug: You’d never know. And I’ve had apps that kinda did similar things in the past, but they were cumbersome, they didn’t take, just more like it was just a photo of the page, didn’t look good– this one’s way different, it’s high-quality, it’s free.

Andrea: You can immediately e-mail it to a person, you can text it, you can save it to Dropbox, there’s tons of options of what you can do with it once you’ve then created that little PDF, so it’s very cool. Another app we love is called HelloSign.  Is it called HelloSign?

Doug: It’s HelloSign, yeah.

Andrea: HelloSign, okay.

Doug: It’s actually a Google app, I think, but it’s for signing documents.

Andrea: So you basically create, let’s say it’s an offer or whatever it is that you’re going to send to somebody, and then you can mark where it is you want that person to sign. And then you e-mail them and when they open it, it goes directly to the spots they have to sign, and they can digitally sign it on their phone. It makes it so easy for a prospective seller who might be overwhelmed by paperwork, or that seems cumbersome to them, that they can sign it so easily, right from their cell phone.

Doug: Yeah, it’s similar to DocuSign, if you’ve seen that, but it’s just more user-friendly. It’s simple, I think it’s cheaper. And plus you can sign your own documents; you can pull ‘em up and sign ‘em with your real signature right there on the phone. It’s great, yeah, great resource, we use that all the time.

Andrea: And the other app we wanted to talked about was called Homesnap— I’ve actually never used it, just seen Doug use it, it looks pretty cool, so you can go ahead and talk about that.

Doug: Yeah, similar to Redfin, but maybe a little bit quicker and easier if you’re just in the neighborhood or in front of a house, you can pull up Homesnap, and it will find where you are and it will pull up the house that you are in front of, and you can take a picture of it, and all the other users in the world who are using Homesnap also do this when they’re around houses, or other agents do this, and there’s usually a recent photo of that house and it will have all the information on it– when it last sold, or if it’s listed, what it’s listed for.

As well as neighboring properties, you can kind of see the little map and you can look down the street and five houses up there’ll be a house that’s a different color, and you can click on that, and it’ll tell you if it was a recent sale, if it was a house that’s listed or pending, all the information, there’ll be pictures of that.

So, similar to Redfin, but just maybe quicker, easier. It also does other things but that’s what I use it for, is when I’m out in the field and I just wanna know about a property that I’m in front of at that given time.

Andrea: So it’s pretty incredible that this little device that you can fit in your pocket can literally run your business.

Doug: Yeah, it can do so much. And there’s new apps being developed all the time, and there’s so many more that we didn’t mention here. These are just a few of the ones that we use a lot that we recommend.

So the next tech tool that can help you is website for lead generation. Now I don’t know how to build a website. I don’t. I can’t get on WordPress, which is a popular format for people who develop websites. There’s other ones– I can’t do that, it’s just too much work, I don’t wanna learn it. So, we didn’t have a website for a lot of years, but then we discovered a quick and easy website builder that is also free, that we are able to create websites– even Andrea has created several websites!

Andrea: I have, and it’s fun!

Doug: And it’s fun! It’s drag-and-drop, click, drag-click-drop, whatever, it’s very simple– it’s called Weebly.com.

Andrea: It is very user-friendly, and believe me, if I can do it, anyone can do it!

Doug: If you’re looking for a basic website that you want to put out there, that you can have a little form where people can put their information in about their property and you can contact them back and see if they want to sell it, or other reasons– maybe you’re looking for buyers– whatever the reason, you can easily create that in Weebly.com.

There’s another website out there called Wix.com— I’ve not used it, but I think it’s very similar. And we had a Weebly website as our lead generating website for probably a year before we actually had a better one built, but definitely it’s possible to do it, even for the least techy of people, and who are on a budget.

Andrea: It’s a great place to start, yeah, and everybody needs a web presence, I think. It just gives you some validity, to tell people, hey, this is where you can go on the Internet to find me. People want to see that you are there, and that builds trust.

Doug: Good point! It’s good to have, even if you’re going to create like a brochure website about your company, about yourself and what you do. Because when you’re dealing– we find when we’re dealing with people in negotiations, looking to buy their house or they receive an offer from us, they don’t know who we are. What do they do? They go to Google and they look up our name.

Andrea: Most of the time they’re like, you have three kids, I saw, I saw your Facebook account!

Doug: Yeah, we get that classic, oh, you have a beautiful family! Ooh, creepy… They tell us I saw you online, I saw you on your website, saw you here or there Facebook… they will find you, they will do their research. More and more people are doing that. So yeah, great to have a web presence, it shows you’re professional. So you can do that easily on Weebly.

Also, if you’re going to be managing people who put their information in your website, you want an auto-responder. Again, don’t freak out when I’m using these tech terms, it’s not that big a deal. All an auto-responder is, is a tool that will automatically respond to that person for you. So if you’ve ever gone to a website for any reason, and put your name and e-mail address, phone number, like people do when they come to Spousesflippinghouses.com, we use an auto-responder.

It kicks back an e-mail quickly to them that says thank you and some other things, and then it sets them up on a system where if you’re gonna be e-mailing a few things to them over the next week or month, it will automatically do that; you don’t have to think about it. Gotta have that tool if you’re going to be managing any kind of leads that come in.

One of the auto-responders– there’s several of them– but you can use AWeber.com, that’s what we use. There’s also MailChimp, Constant Contact–those are the three of the main auto-responders that I know of. I think they’re, like, twenty bucks a month, it’s not too much.

Another thing you can do– and this is sort of its own category, but– is hiring a virtual assistant. So a VA is the slang for this– virtual assistant– if you’ve never heard of that, or what that is, you’re basically just hiring somebody who doesn’t live near you to do some tasks. And you’re usually hiring them on a per job basis.

So, again, a whole other episode dedicated to this, but we use virtual assistants for things like having a website built, if you want to hire someone to do that, or doing some research on a certain area, or data entry if you need a bunch of stuff entered into an Excel spreadsheet, hire somebody to do that.

Why would you do this virtually? Well, lots of reasons, but the main being: there are experts out there that specialize in these specific fields that you’re probably looking for, and you can hire them for a fraction of what it may cost you to actually hire someone locally, live, because these people are located all over the world.

Andrea: And usually it’s freeing up your time to do more important tasks. So we have found VAs to be really, really invaluable.

Doug: Yeah, in fact we just hired– I just hired somebody, he just entered in about 450 names from a website that I wanted him to go through and get all those potential leads out there for me, and I think it was $5.50 an hour, and he did an awesome job while we were in Costa Rica, and I get home and we have this document full of names that we can now go through and call all these people and reach out to them.

So, how do you find a VA? There used to be a site called Elance.com, and oDesk; those have merged into a website called Upwork.com. That’s where I would recommend you go. There’s other places, of course, but that’s a good one.

Another place is Fiverr.com. That’s known for having people do a job for five bucks! That’s why it’s called Fiverr. There’s usually add-ons, depending on what you want to do and it costs a little more than five bucks.

Andrea: You can have graphic design work done, you can have so many different things, just simple basic things, having lists scrubbed, or, all the way down to artwork and anything you can think of, pretty much. You can have somebody do it for you.

Doug: Very reasonable cost.

Andrea: And some things are more expensive, you know, if you want something done a little bit better quality, then you might look for a different person that specializes in what you’re looking for and it might cost more, but you have tons of options on there.

Doug: But look, you could spend hours of your own time and frustrations and do this and not pay what you’re going to pay, but what’s your time worth, really, and your headaches worth, when you can get some video editing or website built for really a very minimal cost and it’s done, you won’t have to worry about it? So, virtual assistants: great resource.

Andrea: So the next thing is voicemail services. And there are a number of different options that you can use and different companies for voicemail services, but basically what it is, is that you pay a subscription fee to them– a monthly fee and within that you get a certain number of phone numbers.

So, the way we like to use this is that you can assign each mailing campaign a different phone number, and you can track how that mailing campaign is doing. So people will call into that phone number and you can have it go to a live person, or you can have it go to a recorded message, however you want to do that. We use a recorded message, and then when the prospective seller calls and leaves a message, it’s e-mailed directly to whoever that number is assigned to, whether it be Doug or other sales people.

Another way you can use it is to assign certain numbers to certain salespeople, so you want, let’s say you have a couple salespeople, then maybe all of the calls that come in from one neighborhood go to salesperson number one, all the calls from this other town go to salesperson number two.

But if it’s just you and you don’t have other salespeople on your team, you can then have all the calls come directly to your cell phone if you want, or to different voicemails and just track based on mailing campaigns. That way it doesn’t fill up your personal voicemail and you can have it go to these different messaging systems.

Doug: Yeah and if you have turnover in your salespeople, you don’t have to change the number. You still have a number that you’re using; you can just direct it to the new person’s cell phone number, so people don’t actually have their personal cell phone number, either.

Andrea: Right, it’s also a privacy kind of screen, which is great. So we use CallRail, because it integrates with Podio, that’s CallRail.com. We really like that one. We have also used FreedomVoice.com, I think we still use that one a little bit.

Doug: Yeah, we still use it. That’s the one we started with a few years ago, when we started our own voicemail system, we still have it. Both of those are between thirty and fifty bucks a month, depending on what level you want, what services you want there.

Andrea: There’s also Grasshopper.com and RingCentral.com, are two other options out there.

Doug: Never used those, but I know those are popular services as well. So, the last tech tool, if you will, that is super helpful may seem obvious, but it’s Google. So, everybody’s heard of Google, but the company itself has so many different apps and different companies they’ve acquired that do different things that really make life easy. So first of all Gmail, which is the Google e-mail service, is awesome, and I’m still trying to convert Andrea over here from Yahoo to Gmail–

Andrea: I’m working on it, I’m working on it!

Doug: She’s working on it! She does have a Gmail account, we’re trying to convert everything over there, but it’s very simple. There’s a lot of reasons why I like Gmail, but one the main reasons is you can do– and other services may have this as well– but you can do what’s called a canned response. So you can save an unlimited amount of canned responses.

Let’s say, for example, here’s how I would use this: if I was going to be e-mailing people on Craigslist who put an ad that they have a house for sale, and I’m going to be e-mailing thirty people that day– instead of writing the same thing like hey, I saw your ad, I’m interested, what do you want for it?– I can write sort of a template e-mail and save that as a canned response, and then when I pull up the e-mail, I just hover over the little arrow button, go to that canned response, whatever I called it, and it populates right in my e-mail.

So you don’t have to re-type that over and over and over again. Super helpful tool, there’s lots of other reasons why I like Gmail, but that’s one of them.

Another Google tool that I still use a lot, and used to run our whole business, is Google Calendar. I use this for life, for time blocking, scheduling appointments, other things; it syncs well with Podio, it syncs with a lot of other services you have as well. But it’s a good online calendar to use and it’s free, Google Calendar.

Google Docs is another version, sort of, of Dropbox, which Andrea talked about earlier, very similar, not as robust, not as awesome in my opinion, because it converts every file to a Google Doc format and I don’t want to get too techy on you here, but– boring!

Andrea: I’m looking at him, giving him the all right, wrap it up!

Doug: But it’s free, you can use it for specific things– I do use Google Docs just to share one particular file with somebody, rather than a whole folder that they don’t need to know. So I still use that. Also Google has free photo album storage called Picasa— Picasa! — if you want to use that, I used to use that.

Another Google service, which is a must, is a Google Voice number. Free to get– you can get a free Google phone number, and you can direct that to your cell phone if you want. It has its own voicemail if you just want it to go to voicemail, you can make calls from it so that people only see your Google Voice number as their Caller ID. You can keep it forever, it’s free. I use my Google Voice number as my business number. It’s also got a call screening feature– really cool stuff.

Andrea: And if there’s any of these tech concepts that we’ve talked about that you would be interested in implementing in your business and maybe we didn’t go into it in detail enough, and I know we sure didn’t explain how to do certain things like, especially auto-responder and things like that– if there’s anything you would like to know exactly how to do it, you can literally go look up a YouTube video.

They have step-by-step guides on almost anything. That’s how we’ve taught ourselves lots of different tech things, by just watching YouTube videos. So definitely check that out if you want to know more in depth.

Doug: Yeah, definitely. Check out YouTube for any of this stuff. There are lots of other resources that Google has. Great company, good resource, good tech tool that we use every day. So, let’s recap!

Andrea: If you’re all still awake–if you’re like me and you’re still awake, let’s recap!

Doug: Hopefully you found this helpful. You know, one thing I wanted to say about technology is it is not essential to do this business. In fact, one of our mentors, a friend of ours, Mike Cantu, doesn’t have a computer at his desk. He doesn’t really use e-mail, I think his assistant does but he doesn’t really know how to do it–

Andrea: He still uses yellow notepads for just about everything.

Doug: He uses file folders, yellow notepads, and a landline phone and an old answering machine.

Andrea: And he’s super successful.

Doug: And he is super successful. Buys a lot of houses. And that’s what works for him, that’s his style. I’d say he’s probably in the minority, most people do use technology, but it’s not essential, you don’t have to. But we find it super helpful for a lot of different reasons.

Just to recap, the main technology tools were Dropbox, check that one out; Podio, love it; your smart phone, you can do so much with that; websites, gotta have a web presence out there; voicemail services; and Google.

Andrea: So that is it for today. Go ahead and if you would like to know how to value a deal like an appraiser, head on over to our website, Spousesflippinghouses.com, and we have a free gift for you there. Doug, who is a former certified residential appraiser, has created a three-part video series on how to analyze a deal, to know if it’s a deal or if it’s a dud.

So go check out this video, and also on our website, we’ve got some great before-and-after videos of projects that we’ve done, other blog posts, some cool different speaking events that Doug’s got coming up soon, so you can check that out.

If you haven’t left us a rating or review on iTunes, we would so appreciate that! It really helps with our rankings on iTunes. And we also appreciate the feedback.

Doug: So that’s it for this week, we hope you enjoyed it, and we will catch you next time!

Andrea: Have a great week!

If you would like to learn more information from our Podcasts, check us out on iTunes & Subscribe. Also consider leaving us a rating (5 stars would be great) and a review would also be helpful so others can learn more about us and get in on our upcoming episodes. For questions or comments please fill out the comments area below and we’ll answer them. Thanks!

The post Episode 9: Technology is Your Friend appeared first on Spouses Flipping Houses.

by Doug & Andrea Van Soest | Spouses Flipping Houses

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In this episode we break down the 6 most important team members that you will WANT to have on your Dream Team!  Also, Andrea opens up about her hesitations and discomforts around starting this podcast.  Also, she shares an inspiring message she heard recently.

Download the Episode 8 Transcript

Doug: Hello, hello, and welcome to the Spouses Flipping Houses podcast! So glad to be back! Episode number…

Andrea: Nine!

Doug: Uh, eight.

Andrea: Eight?

Doug: Well, we recorded nine, but we went to that last episode.

Andrea: Oh, that’s right!

Doug: So it’s actually episode number eight, I believe. So anyway, what’s happing, Andrea? How you doing over there?

Andrea: I’m good! Not much is happening, except I heard something really cool this morning that got me kinda fired up in a good way. So I was at the gym, and I know we’ve both talked about before, that we really love listening to podcasts when we’re driving around–

Doug: On your stationary bike–

Andrea: On my very boring stationary bike… And so I go through a lot of podcasts, actually. Not just real estate investing, but also business, entrepreneurship, all kinds of different topics that I like. And one of the podcasts that I love is called “Being Boss,” and it is done by these two women who are creative entrepreneurs.

They’re both successful business owners, they run online businesses, and they are both very creative, and they brought this lady on a couple weeks ago named Brené Brown.

 She wrote a book called Daring Greatly, which I haven’t read yet but after hearing her talk I am like, literally going to run right out and get this book.

And she was just really inspiring to me; she talked a lot about kind of not caring about what other people think, and just getting out there and getting after it, whatever you feel led to do, whatever you’re inspired by, whatever you’re gifted at. Get out there and do it, and don’t worry about what other people think. You know they say, “Life begins at the end of your comfort zone,” have you heard that before?

Doug: Yeah- well no, but now I have.

Andrea: I love that saying. Isn’t that so great? And that’s something I get really hung up on because I’m kind of a shy person;I tend to be a little bit introverted and so it’s hard for me to get out of my comfort zone– doing this podcast is really outside of my comfort zone.

And then, so Brené Brown said this, just off-the-cuff and I thought it was so genius, she said, “He or she that has the greatest capacity for discomfort will rise the fastest and the strongest.”

And if you think about that it’s so true, not only in business, it’s true in sports– you know the athletes that are so phenomenal, they may not have that much more God-given ability than anybody else, they went after it harder and longer and stronger, and never quit.

Doug: Right.

Andrea: And same in business– the people who are successful, they have failed and they get back up and they fail and they get back up and they outlast everybody else.

Doug: Keep going, keep pushing themselves.

Andrea: Like, Nike got it right! So long- “Just do it!” That’s what it’s about. And so I just loved her encouragement about getting outside your comfort zone, since that’s something that I struggle with and I’m working on.

Doug: What is, is it just being on the mic, what is discomforting about the podcast?

Andrea: You know, honestly, I struggle with worrying about what other people think. And that is what it boils down to for me. I have been blessed in my life, I think, to know and to have grown up with some really awesome people, who are out there doing amazing things with their lives, and making a difference in the world. And a lot of them do it for little or no money.

And I was honestly afraid that they would see our podcast show up in their Facebook News Feed and think, well geez, that’s all she cares about now is money…

Doug: Flipping houses, making money…

Andrea: That’s not really what it’s about for me, I genuinely love business and strategy and creative entrepreneurship, and using those things to help people. I think it’s so fun, and that is really what it’s about for me. So I was afraid of being judged! Isn’t that silly?

Doug: Yeah, I mean, not that there’s anything wrong with making a living and doing that, that is obviously part of what we’re doing here, but that’s interesting– and thanks for sharing that.

Andrea: I just didn’t want people to misconstrue like, my heart, you know? And I hope that we are able to be successful and do different things and that that allows us to actually pursue things that we feel called to do in this life and anyways, that could lead into a whole other podcast episode! But–

Doug: And probably will be!

Andrea: Anyway, she just really inspired me this morning, I thought it was cool.

Doug: That’s really, yeah, that’s really good, thanks for sharing that.

So today, our main topic is going to be about building your real estate investing Dream Team. So Andrea, you remember the Dream Team from the 1980s?

Andrea: I do!

Doug: Might have been the 1990s, Michael Jordan…

Andrea: Magic Johnson…

Doug: Magic Johnson…

Andrea: It was exciting.

Doug: Scotty Pippen, I think, yeah, you had all these incredible players assembled together. So, that is essentially what we’re talking about, only doing it in your real estate investing business. I’m not referring to your staff, I’m not referring to people you hire in-house, that you actually employ and pay wages to do things.

I’m talking about people who have their own businesses or run their own trades that you need and are going to be working alongside a lot if you’re in real estate investing.

And the importance of those relationships and the importance of working, having them to help you accomplish your goals.

And in doing that you need to be a good leader. You need to kind of know where you’re going, you need to know how to work with people, and get the most out of people, if you will, in a respectful way. And people skills is a huge part of that, and working with–

This is the people in business, no matter how you wanna slice it, it comes down to you’re dealing with people in real estate, and that includes not just people you’re buying houses from or selling houses to, but the people you’re working alongside that can help you out. You can’t do this business alone. You cannot be a lone wolf and succeed in real estate investing; it’s going to be very difficult to do that.

Andrea: Yeah. You can do it alone, but you don’t have to.

Doug: You don’t have to. You shouldn’t have to; it’ll be a lot more positive experience if you don’t.

Andrea: Much easier!

Doug: Much easier! So, the first member, if you will, of your Dream Team– and we’re going to go over six different essential team members here.

The first one is the escrow and title officer. Now, a lot of people might breeze over this, oh, there’s a million escrow companies out there, a million title companies out there, that’s not important, you can just go call one up.

 And in a sense, that’s true, but hiring the right one– or working with the right one, I should say– can be very beneficial to you, and really help you along.

I would look for referrals. Well, first you want to look for a couple of things when you’re looking for, like an escrow company or closing agent, if you’re in a different state that doesn’t use escrow. Your closing agent, your title company– you want one that’s kind of investor friendly.

And how do you know if they’re investor friendly? Well, you wanna ask some questions of them. Do they work with– are they familiar with assignments? Are they familiar with double closings? Do they handle private lenders well?

You know, a lot of escrow companies just do the traditional transaction where you have agents involved, and you have a bank, like, Bank of America, who’s lending the money, and they just, you know, it’s very much in a box.

Well, in our investor world, we’re going to deal outside the box a little bit. So you want to make sure you have a company that’s familiar with those types of things: assignments, double closings, private lenders, other things like that.

You also want someone who has experience. Don’t go with a person who just started, this is their first time as an escrow officer, I mean– you really want someone who’s been around the block, and has dealt with all kinds of problems, and preferably has worked with investors. And you want someone who’s willing to do– to go the extra mile for you.

Now this might take time as you work with them, and build that relationship where they know they’re gonna get repeat business for you, but you know, we worked with our escrow company, now we’re going on probably three years exclusively with them and, our escrow officer will go the extra mile to call the other parties that we’re working with and solve problems for us.

She’ll do a lot of the explaining, a lot of the hand holding, a lot of the, you know, just calming of different parties if something’s going wrong.

And that’s huge! That really helps us to save deals.

Andrea: There’s been times were a deal was about to blow up and we didn’t even know about it until after the fact, and she’ll come to us and say, hey, this person was gonna back out because of this or that. And I explained to them, and I calmed ‘em down, don’t worry, everything’s good, we’re moving on. And we’re like, whoa, thanks Val, that’s awesome!

Doug: Yeah, Val over at Title 365 is who we’re referring to if you’re in southern California, Title 365 in Murrieta. She’s been excellent for us, and if you just pick an escrow company out of the phone book, you may or may not get that kind of service and that kind of assistance. And so don’t overlook the importance of title and escrow.

Also, title problems come– if you’re dealing with private parties, like we are, buying homes from people who’ve just inherited homes or you know, there’s oftentimes title issues that need to be resolved. And you need someone who’s a pro, who has experience and knows what they’re talking about and knows how to solve those problems and also to calm the other party to make sure that they they’re aware the title issue is being handled and they can be confident in that. So very important– escrow and title.

Andrea: The next person that should be on your Dream Team actually, this should be multiple people, is realtors. So, you wanna work with as many realtors as you can, really–

Doug: Realtors are our friends!

Andrea: Yeah. And they need to be investor-friendly; they need to understand what you’re doing and how you’re approaching your numbers.

You don’t wanna necessarily work with someone who thinks you’re low-balling offers all the time because they don’t believe in you, they don’t believe in your offer, and it’s not going to be a win-win partnership.

So you need to find realtors that are investor-friendly, that understand what you’re doing and want to help you in that way.

Also, take care of them. They are commission-driven, that is how they earn their living, so don’t shortchange them on their commission, it’s really important. They will keep coming back to you, and you’ll be the first person that they think of to bring a deal to, if you don’t shortchange them on their commission.

Doug: Yeah. Everyone wants to make money in this indus– yeah, if someone’s gonna come work for you and do a good job, make sure they get paid. You wanna take care of people. They keep getting paid well for what they’re doing; they’re going to work harder for you to get paid more. So it just makes sense.

The third team member is your lender. So, there are sort of three different categories of lenders. There’s the traditional banks, like you can go down to Wells Fargo or call up your, you know, your mortgage rep and try to get a traditional bank loan, to finance a property.

 This is– unless you have just a killer W2 income these days, it’s not really an easy route to go, so good luck with this one if you’re trying to flip a lot of homes and you don’t have a good W2 income.

The downsides are: it’s really slow, it’s paperwork-intensive, really paperwork-intensive, I can’t over-emphasize that, just a ton of things you’ll have to provide for each loan you’re going to do with a traditional lender–

Andrea: In all the transactions that we have done, we’ve done one–

Doug: One.

Andrea: Only one bank loan.

Doug: One bank loan.

Andrea: For a property that we have kept.

Doug: And it was a nightmare to do. The positives are the interest rates are usually really good, especially right now, and it’s usually long-term fixed financing, or you know, there is some short-term bank stuff out there, so that’s the positives, you can go through all those pains and get it worked out, that you can usually get pretty good rates for stuff like that. Not really a route most investors go if you’re flipping properties.

The other type of lender that you’re going to use is known as hard money lenders. So these are guys, they could be just individuals out there, or private brokers that broker what’s called hard money, or construction loans.

So these are typically catered for people who are flipping homes, catered for investors. And you’re going to pay anywhere from ten to fifteen percent, is kind of the going rate on interest, it’s going to be interest-only, you’re going to do probably two to four points, which is you know, a percentage of the loan just as a fee.

So those are kind of the downsides, it can be costly. The upsides are they’re fast, typically– the qualifying isn’t nearly as painful as far as the paperwork goes–

Andrea: They’re usually easy to work with.

Doug: Usually easy to work with, they understand the business, so they understand what you’re doing and the numbers there. Depending on the lender, the qualifying can be much easier, it’s more based on the deal itself and the property than it is on, say, credit– if you have bad credit, or whatever, it’s not as important, although, depends on the lender.

So those– hard money, we utilize hard money a lot in our projects, and a lot of investors do if you’re going to be flipping homes, so that’s a good way to go.

Private money is another form of a lender, and this is by far the best. So, what are we talking about with private money?

Andrea: That could be just about anybody that you know that has money that’s maybe just sitting around, not working for them.

Doug: Right.

Andrea: That could be your parents, that could be your best friends’ parents, that could be your doctor, your dentist.

Doug: Yeah, most people who aren’t maybe, you know, in the investing world themselves, they run another business but they’ve got savings, or they’ve got an IRA, or they’ve got a retirement account that right now is earning just pennies, fractions of a percent, you know, sitting in the bank, not really doing anything for them.

These are great people to reach out to in whatever way that you can help them make a lot better return on their money by them funding your deals.

So, excellent source. All the– the great thing about this is all the terms are negotiable, whatever works best for both of you. Typically very easy to work with because you’re talking about individuals that you’re working with. It can be fast, there’s just a lot, a lot of benefits to using private money.

We– this is our number one source of doing deals. We love using private investors’ money, we make our friends and family and those who are referred to us happy because they’re getting a great return, we’re happy because it works well for us, and it’s a win-win. So definitely private money is a whole other episode that we can have someday just on that.

Andrea: Number four person on your Dream Team is your contractor. And your contractor can make or break your business in a lot of ways–

Doug: So true.

Andrea: All these people can. But really important to find somebody that you trust, somebody that communicates with you and keeps you in the loop on everything that’s going on.

 In our opinion, we suggest that you do not try to do the contract work yourself, even if you have skills and knowledge in this, you can do that if you’re doing like one-off flips here and there, but if you want to make a business out of it and you want to scale it you cannot be doing all the work yourself.

So it’s really important to find a contractor that you can trust. You can ask for referrals, you can talk to different project managers on other job sites, maybe they can recommend somebody– do you have any suggestions on–

Doug: Yeah, I’ve never done this myself, but I’ve heard just going down to Home Depot and hanging out near the contractors’ desk early in the morning– because that where these guys congregate and they pick up their materials and stuff and you can just start asking around, you know, who’s got a business card?

What are you guys do, do you work with investors? You can probably find, you know, a handful of them there, and then get some quotes from that.

Andrea: We’ve been able to find our contractors, the first one– we’re pretty loyal to the people that we work with, so the first contractor was referred to us by a hard money lender, and he was awesome. We worked with him until he moved away, and then we found another contractor through basically, kind of a networking group–

Doug: Another referral from another investor.

Andrea: His friend that had used him spoke highly of him. He’s been phenomenal. Another piece of advice is the cheapest doesn’t always equal the best work.

Doug: Right.

Andrea: So you do wanna do it affordably, but you want to make sure that it’s quality work that you’re having done.

Doug: Yeah, quality work, and you want someone who you’re not necessarily going to have to micromanage.

Andrea: Absolutely! I don’t wanna talk bad about contractors, but there are some out there–

Doug: No! There’s great contractors.

Andrea: –that, you know, they might do a great job on one job, but the next one they’re like asleep at the wheel, and you can’t get them to return your texts and your calls and you don’t know what’s going on, and it takes twice as long as it should. You want somebody who’s running their business like a business.

Doug: Yeah, very good point. Somebody who’s organized, has crews, takes it serious, takes you serious, and you mentioned it before already I think, communicates with you, keeps you in the loop. That’s so big– returns your calls, returns your text messages, it’s very important.

Andrea: We choose to use a general contractor which might cost more money than if we were subbing everything out ourselves, but for us, it is worth it to pay a little more for that because he is essentially a project manager, so that’s one less thing that we have to do.

Doug: Yeah, what did Justin say, like a return on your time–

Andrea: Your time.

Doug: –Is so much greater than the headache and hassle of trying to sub out that yourself and run those projects, in our opinion. That’s definitely a way to go, get a good general contractor.

The next Dream Team member would be your insurance agent. Again, this is another one that’s kind of overlooked a little bit, I think. If you’re going to be doing this business in any kind of volume, you want to find a good not only affordable insurance, but someone who’s easy to work with, again, understands what you’re doing, understands your business and how to provide you the best product for what you’re, what you’re doing. When homes are vacant, that’s a different type of insurance than when a home is occupied.

There’s all kinds of different policies and things available so, for the volume that we do we recommend– there’s a product out there, it’s called a Ten Plus Policy, and it’s with American Modern Insurance. And our first couple of years, actually our first year investing, we didn’t– we just would get an insurance policy for every property that we bought, a separate one, and have to go through the whole process there with the paperwork and whatnot, for each property.

But somehow we got referred on to this agent who has this one product that’s– it’s more like a blanket policy go and you just make a phone call and it’s in and out, really simple and not only that it was probably about half the cost of what buying individual policies was, so it can be huge savings if you’re doing any kind of volume, if you’re getting the right insurance product there, so. Don’t overlook your insurance agent!

The sixth Dream Team member would– well, actually, this one encompasses many.

Andrea: Just a category.

Doug: This is just a category; it’s an honorable mention team member, so maybe this is like your basketball team who’s riding the bench there! Ready to come in. These are other people that you are going to work with, that need to be mentioned.

So, alongside contractor would be handyman; you would probably want to have a few handymen that you work with, people who can do smaller repair items, smaller jobs that don’t require a full general contractor to do, but maybe go replace a water heater for you or do things like that, at the drop of a hat when you call them.

So you wanna have a few of those guys on your team as well, to not necessarily bog down your general contractor with little tasks.

Landscape maintenance, another one that you know, it’s just time-consuming when you’re flipping a lot of homes. Each of these homes have yards to be maintained and taken care of, and it’s another person you gotta track down in that area to call so, if you can get some referrals and have one or two guys that you work with consistently that are good–

Andrea: This one’s tricky, we actually use a service that kind of brokers landscapers and it’s, to be honest, it’s not the best.

Doug: It’s not the best; it’s hit and miss.

Andrea: But they get it done, sometimes we’ll show up at a property and you can tell the grass hasn’t been mowed in a couple of weeks, but for the most part, it’s worth the little bit of extra headaches, because they take care of everything– we can go to one place, and–

Doug: It’s just another thing that we don’t have to worry about. Because even when we found our own landscape guys, it wasn’t–you know, we never know if they’re gonna show up or not.

Andrea: We work in so many different cities that we can’t be managing sixty different landscape people, so this one company– if you can find something like that wherever you live, it’s really helpful.

Doug: Definitely helpful. Another honorable mention would be an attorney. Not necessarily to go out and get an attorney before you do anything, but can be someone who’s valuable to have in your pocket, especially for if you have rental properties and you’re going to be doing anything involving removing tenants from houses and things, you wanna be sure you’re abiding by the law.

An attorney’s a good someone to have in your pocket. So get some referrals from other investors for that.

Another member would be your CPA, your tax advisor, again not essential when you’re first starting out, but can be extremely valuable to you in saving you some money down the road, if you have a good investor-friendly CPA who knows the business.

And then the last honorable mention would be property manager. If you’re gonna have rental properties of any size, and you plan to manage them yourself, you know, that’s a full time job, so be ready for that. So, if you can hire somebody, either in-house or externally, a property manager who’s good, that can save you a lot of time and headaches.

Andrea: We prefer to hire somebody in-house that works for us, that manages all our rentals. We don’t manage anybody else’s rentals, just ours, but we know we’ve trained her to do it exactly the way we want to, we know we’re not paying for erroneous charges, it just makes our life a little bit simpler. There are great property managers out there, I’m sure of it.

Doug: Oh yeah.

Andrea: But this is just how we choose to do it, so if you want to use a property management company, I would definitely suggest that you ask for referrals because–

Doug: Oh yeah.

Andrea: — that can be a tough road.

Doug: Especially if you’re out of the area, and you’re just relying completely on that property management company. You’re kinda rolling the dice, and you’re hoping you’re getting somebody good. Get referrals, do your homework, make sure that they’re going to be somebody who’s going to take care of your property like you would.

Andrea: Absolutely. So those are the six people that we feel like are most essential to have on your team in getting started as a real estate investor. One thing we really want to say is that it is not essential that you have all six of these people before you get started. You will find them as you go.

The more you network, the more you go to real estate investment clubs and different things, you will get more resources, so don’t get hung up on the fact that you don’t have all these six people and just the right ones lined up in place, ready to go. Just take action, just go after it, just get started, and those things will line up; you will eventually find your team.

Doug: Like we talked about in episode one, this is probably like step three or step four of doing the business, you gotta do step one and two first. These members will come when it’s time to get these members on your team.

Andrea: We just, you know, want to let you know be mindful of it, because it’s taken us a long time–

Doug: Yeah, doesn’t happen over night.

Andrea:–and different team members will swap out– you know, you might have a great contractor like we did and then they move away and you gotta find somebody new.

Doug: It’s constantly changing, shifting, people coming and going, but a good team around you can make your life so much easier, and make this business so much more enjoyable, and make you more successful.

Andrea: Yeah, and treat them well, and make their life and their job enjoyable, too, and they will be loyal to you.

Doug: Yeah, treat ‘em well, make sure they get paid, lead by example, you know: work hard, treat them as you want to be treated, with respect and professionalism, letting them know what you expect of them but in a kind, respectful way. And they’ll do the same; they’ll return the same back to you, typically.

So that’s it, so once again, the sixteen members, just in case you missed it the first time, escrow title– your escrow and title officer– your realtor; lenders, with three different kinds of lenders in there; your contractor or contractors; your insurance agent; and then of course the honorable mention of the handyman, landscape maintenance, attorney, CPA, and your property managers.

So that’s it for today, we really want to say a huge thank you to anyone who has been listening to our podcast and who has gone into iTunes and left us a rating and review. We’re so grateful for that, thank you, thank you so much.

Had some exciting news this morning, we pulled up the iTunes New and Noteworthy and we are number three on Investing on the New and Noteworthy after just– not even a week! So thank you, thank you so much for helping us out in that regard.

Andrea: That’s pretty cool because you put something out there like this and you don’t know if your listeners are gonna be like your mom and dad? I mean, that’s it?

Doug: I mean, are people gonna care? You know, is it gonna be crickets out there? And we’ve just had such good feedback and such good positive responses and we’re so grateful for that. So please keep it coming.

Andrea: Really appreciate it, thank you.

Doug: And you can head over to our website, we’ve got a couple of free gifts for you over there, Spousesflippinghouses.com, we have two gifts, one of them is Eleven Tips to Working with Your Spouse written by Andrea, great information in there, very valuable, and the other gift is a deal analysis video course that I put together, a three part video course, about an hour and a half of video there on how to analyze a deal. So head on over to our website.

Andrea: We also have a Facebook page, so if you Like that, then you will get notified of future episodes, it’ll just come up in your news feed. So if that is the easiest way to stay in touch, then, there it is!

Doug: Visit us on Facebook. So, thanks again for listening, we really hope you enjoy these podcasts and we’re gonna keep ‘em coming. If you have any feedback, hit us up on our website on the Contact Us form and let us know what you think.

If you wanna hear about specific topics, we’d love to hear that too. We can probably address those– if there’s something you’re wanting to know or a topic you want us to talk about let us know! Okay, anything else?

Andrea: Mmm, I don’t think so.

Doug: You ready for lunch?

Andrea: I’m ready for lunch! Let’s go!

Doug: All right!

Andrea: Have a good week!

If you would like to learn more information from our Podcasts, check us out on iTunes & Subscribe. Also consider leaving us a rating (5 stars would be great) and a review would also be helpful so others can learn more about us and get in on our upcoming episodes. For questions or comments please fill out the comments area below and we’ll answer them. Thanks!

The post Episode 8: Building your Real Estate Dream Team: The Importance of Finding the Right People to Help you Achieve your Business Goals! appeared first on Spouses Flipping Houses.

by Doug & Andrea Van Soest | Spouses Flipping Houses

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We are really excited to have this awesome couple on this episode. Kurtis and Cindy have been investing in Real Estate for nearly 20 years (and actually have a unique story about how they met).  They are very candid about the struggles they’ve had to overcome through different market cycles and changes in the industry.  They also share some helpful tips for what is allowing them to currently take their business to the next level!

Download Episode 7 Transcript

Doug: Welcome to the Spouses Flipping Houses podcast, with Doug and Andrea Van Soest!

Andrea: A podcast about real estate investing, business, entrepreneurship, and balancing it all with someone you love!

Andrea: Hi, and welcome to episode seven of Spouses Flipping Houses! We have another interview for you today, with Kurtis and Cindy Squyers!

Doug: Kurtis and Cindy are a married couple with kids, they live out in the Coachella Valley, out in the Palm Springs area, super hot out there.

Andrea: They have been real estate investors for a long time, they’ve been through a lot of real estate market cycles so they bring a lot of experience and wisdom and great content, and it was really fun to talk to them.

Doug: Yeah, and they have a really cool story of actually how they met. It’s really interesting; I think you’ll really enjoy it. The audio quality isn’t the best, so hopefully you can just bear with us on this one, and it’s not gonna be too distracting because there’s a lot of great content in there.  So, I think we should go ahead and get right into this interview.

Andrea: Yup, here we go!

Doug: Well, we’re super excited to have these guests with us today. Today we’ve got Kurtis and Cindy Squyers, two of the pioneers in the real estate investing and wholesaling world as far as I’m concerned. How are you guys doing over there, Kurtis, Cindy?

Cindy: Hi guys, how you doing?

Kurtis: Good, awesome.

Doug: So the connection’s a little– they’re out in the desert, way out there where there’s hardly a phone line…

Kurtis: Inside bathrooms!

Andrea: This is too funny! We’ll edit this out!

Doug: Our housecleaner just turned on the vacuum right outside our door and it’s like blasting…

Andrea: Oh jeez!

Kurtis: You can definitely epitomize spouses, like, doing business together, nothing else does. Like kids screaming or a vacuum cleaner, it’s perfect.

Andrea: Absolutely.

Doug: No kidding, that is true! Yeah, we’re here in our home office-slash-recording studio, we may have to wait a second.

Andrea: Yeah, I think it’s fine, I don’t think it’ll pick up on here. Should be fine.

Doug: Okay. So, Kurtis and Cindy, so why don’t you guys tell us a little bit about yourselves, about how you met, and how you got started in real estate investing?

Kurtis: We like to kid that we met from a personal ad, because when I decided that I was going to do real estate, I had read that you should find an investor, and I started calling a houses ad out of Pennysaver…

Doug: Are you kidding me, that’s how you met?

Kurtis: People don’t even know what Pennysaver is, a lot of people, but it’s like the old Craigslist, the paper version!

Doug: The Craigslist that comes in the mail.

Kurtis: Wasn’t it 2000? Wow, my God, that was fifteen, sixteen years ago?  And I think it was the third or fourth one I called, and they said sure. It was Cindy’s office, you know, we’ll talk to you. And I came down here, I knew absolutely nothing about real estate, I was a stockbroker, I’d had it with corporate suit and tie every day kind of thing, and that’s how me met.

Andrea: That is so cool that you met through real estate too, I had no idea.

Kurtis: Yeah.

Doug: That’s like the ultimate investor meeting right there, that is really cool.

Kurtis: Yeah, exactly, I always joke about my rate of return is my highest on that investment.

Cindy: Yeah, he doesn’t always say that.

Doug: So, Cindy, why don’t you just wholesale him off, you know, instead of taking it–

Cindy: I’m trying! I need a buyer, are you interested?

Kurtis: She’s still rehabbing me!

Doug: Yeah, how did he appreciate? That’s what I wanna know. That’s too funny! So you guys met, got married, you have kids, right?

Kurtis: That’s right.

Cindy: Only four.

Doug: Only four?

Cindy: Three of ‘em are teenagers.We have three in high school and a ten-year-old.

Andrea: So you guys are a little busy?

Cindy: Yeah, I don’t know how we’d do it if we had like regular jobs at a company.

Kurtis: We always wondered how nine-to-five people are able to do it because, you know, you gotta leave constantly.  Someone is sick, and you’ve got to take care of ‘em–

Cindy: Well, you guys know that, you have three kids, don’t you?

Andrea: Yeah, we do.

Cindy: Yeah, so you guys know.

Doug: Yeah, it’s so true. It’s so nice- we had to reschedule this interview with you guys because you had a sick kid, and we had to reschedule again because we had an awards ceremony to go to, and you know, it’s awesome to be able to do those things.

Kurtis: Exactly.

Cindy: It’s been fun. We were talking the other day, talking about how our kids were actually raised watching us flip houses and they have been used to, since they were in diapers, they’ve been used to being dragged around from house to house helping us point out all the stains in the ceilings, or whatever. We’ve had at least one of four, who’s expressed that she wants to follow in our footsteps, so that should be fun.

Andrea: Oh, that’s awesome. So you’ve been doing this pretty much your entire married life?

Kurtis: Yes.

Cindy: Yeah, and beyond, for me.

Doug: So, how did that get started? Cindy, how did you get started, and then what were you guys doing, in terms of real estate when you guys got married, and then how that progressed?

Cindy: Okay, well, I started a long time ago– actually, next year it will be twenty years. I had a furniture store, and we were having an outdoor sale, and I got a phone call at three o’clock in the morning from my security guard, telling me my store was on fire.

Andrea: Oh wow.

Cindy: So I raced down there expecting flames all over everything, but no it wasn’t the case, it was a small fire at the front of the store, and they had put it out with a fire extinguisher, so I thought I was going to be open for business the next day. But as it turned out the insurance company came and they deemed everything smoke-damaged. They handed me a big fat check.

You guys are probably too young to remember this but back in those days they had one real estate wholesaler guy that I know of on late night TV, he was CarletonSheets. And this guy had this whole program with all these, I don’t know, maybe cassette tapes and DVDS and binders and all this information you could buy.And I used to stay up late watching these and thinking, that doesn’t seem that hard.

So, after the insurance company gave me the check, I thought to myself, what if I didn’t end up with money back in furniture, by the way? What if I just tried what this guy is doing for one year, and if it doesn’t work out then just open the store again?

And so that’s what I did– it was 1996, and I did one house. It was a small little house in Fontana. I bought it for $85,000 and sold it for like $135,000, something like that.

Doug: Wow.

Cindy: And then I was addicted- so after that it became a couple more and a couple more, and then I forgot all about furniture.

Doug: Yeah, yeah I bet you did.

Cindy: And I got that phone call from Kurtis.

Doug: Yeah, four years later. Were you flipping houses, like buy, fix, sell, in the beginning?

Kurtis: Yeah, so, it was the tail end of the recovery, because ’90 was the recession, and it was kinda like a mini-version of what we went through, and Cindy and her team were buying homes from auction, they were doing fifteen at a time–

Doug: Wow.

Kurtis: Our meeting was just perfect timing, because the market was recovering, kind of about about where we’re at now in the cycle, foreclosures were shrinking,

Cindy: It was hard for me to even get the deals anymore, and that’s when we put the ad in the paper.

Kurtis: Yeah, they were not getting that many deals. I didn’t know much about real estate but I was really good at marketing, so it really worked well for us because I did massive mailing campaigns for pre-foreclosures and was able to just go knock on doors and get some deals that way. And Cindy knew had to rehab them and with escrow, I didn’t even know how agents worked or–

Cindy: Yeah, no, he’s not exaggerating, he did not even know what a mortgage was, I’m like, really?

Doug: Yeah, it just shows really what’s important when it comes to getting a deal from a homeowner; it’s not that that you know what a mortgage is,and how the amortization works, it’s people and marketing, right?

Kurtis: Exactly. And so that worked really well, that was 2000– about 2006 we got it really dialed in. It’s so funny, before Zillow, we had this program called Shark Bait, we would import county records data, and we almost like had our own version of Zillow and we were able to find equity.

We had gotten up to about fifteen houses at a time, and then the market crashed. We didn’t even know what a wholesale deal was, you know, we were just rehabbing and selling. We did learn subject twos actually, but then when the market crashed it just crushed us and we had most of our net worth out in homes, plus we had some hard money loans, and–

Cindy: And four kids. It wasn’t an easy time. That was a hard time.

Kurtis: Yeah, it was really bad. I remember we tried to sell a property and we’d get it sold and into escrow a few times, and the mortgage company would go out of business.

Cindy: The finance mortgage company.

Kurtis: We’d get a call from escrow saying there’s no lender anymore, they’re gone. I think twenty nationwide lenders went out of business. Lehman Brothers, which is an old bank, been in existence for a hundred years, went out of business. It was really bad, I mean, just all the businesses were getting boarded up, and not only–

So your net worth is your combination of cash and equity, and you’re making these hard money payments, and your equity is shrinking, literally, like twenty or thirty grand a month, they’re just plummeting, and people can’t even buy because there’s no lenders and then inventory’s flooding the market because foreclosures are flooding.

Doug:Right.

Kurtis: And we had reached a point when we were telling our kids do not open the fridge because our utilities had been turned off and we had to conserve the cold air. You open the fridge, your food’s gonna go bad. And I’ll never forget that, it was full panic mode.

Cindy: I remember Kurtis and I, we looked at each other and said, what we’re doing is not working anymore. We’re gonna have to figure out a new wave to ride, because it’s not working, so, we had this kind of a heart-to-heart conversation with each other, what are we good at? What are we good at? And the answer was, we were good at getting deals. We’re good at that, we know how to get deals.

Kurtis: And there was this other thing that happened, we actually quit for about six months, and my big idea was Internet marketing, because that was just starting to take off. And kind of like the last little bit of money we had,I went to some seminars and boot camps on Google marketing, and that kind of thing.Cindy was going to do interior decorating, and we kind of realized it was not going to happen fast enough.

So like what Cindy just said, we’re good at getting deals, and you know, wholesaling was not any kind of buzzword back then.

Cindy: We thought we invented it! We did, we really thought we invented it, because, you know,if we would have had the cash we would have taken the deals ourselves that we could get, but we didn’t. But we knew investors who were really taking advantage of the market at that time by buying everything they could find.

Kurtis: Yeah.

Cindy: And we knew these people, so, we thought we invented wholesaling by catching the deals.

Kurtis: When the REOs started coming out, I know for sure we were the first ones to start writing on them. Because banks had no means to cope with the amount of inventory they were getting. And we were writing offers, like really low offers, not knowing what to expect on these REOs, because REOs just started to happen. I mean there was like no REOs before that.

And we’re getting- everything’s by fax. And we’re getting offers faxed that said, “Don’t waste my time.” Literally, it said, I remember, “Haha.”

Cindy: Filing it under T for try.

Kurtis: Yeah, all these smart aleck remarks from brokers saying you’re crazy to offer that. The same brokers, three or four months later, started calling us back, and we had no means to close on any of these deals, but we finally got one. And I think it was, we got an acceptance, we called an investor, and he came over and said, oh yeah, I love it, cut us a check for ten thousand, and like the clouds parted!

Cindy: Angels were singing!

Doug: Choirs were singing!

Kurtis: So tell us when you want us to stop going on and on, because we’ll go on for hours.

Andrea: No, this is so great! Because that downturn not only crushed, but totally defeated a lot of investors, and the fact that you guys were able to turn it around is just so awesome.

Kurtis: Yeah. Lenders were gone, what was interesting was the banks again, they had no idea how to evaluate that many properties, and our offers started sticking. The problem was now we’re getting all these accepted offers, but we only knew six or seven investors. So you keep calling them.

We applied, we had learned about this Internet marketing and I started writing a blog and basically did what those Internet guru guys were telling us to do, and it just exploded.

We just started, we hada web page with a sign-in form, that’s it, and I just started writing articles and it was just amazing what happened next, because we got, I think I got an e-mail from the editor from Investors Business Daily which is one of the main competitors to Wall Street Journal, saying hey, can we use a quote? I said sure.

And then from there, another big name periodical contacted us, all of a sudden people who we had no idea who they were started signing into our website, and then it was, oh! Sean O’Toole, who had just started for Foreclosure Radar, recommended an LA Times guy to interview us. He interviewed us at our house for like three hours, and we thought, oh that’s cool, that’s probably going to be at the back of the business pages- it was on the front page of the LA Times!

Andrea: Wow!

Cindy: Yeah, it was like a sexy topic at that time, flipping, because no one knew about it.

Kurtis: Flipping. And then, I think we got 400 sign-ins, like, that night from that article.

Doug: Yeah, I was one of those, I’m pretty sure, because I think that’s how I first heard about you guys.

Kurtis: Oh, really?

Cindy: Awesome!

Kurtis: It just took off from there. Inside Edition, Fox News saw that and it just kind of ballooned. So, that was like our fifteen minutes.

Cindy: We started getting phone calls to be on different TV shows, it was kind of fun.

Kurtis: What happened was that basically set us up for until now, I’ve hardly done any marketing, we got all the investors that we need. So then we would get the property, put it under contract, blast it out to the same e-mail list, and then we would start moving them very quickly. Aftera few years, we made a comeback and we started flipping again and we got three rehab projects– we keep it about two or three now, you know?

Andrea: So what does your business look like today, and maybe you can describe what each of your roles are within your business, because I think you guys are kind of similar to us, Cindy manages your rehabs, and Kurtis, you do acquisitions, is that right?

Cindy: Yes, that’s right, we have an office in Palm Desert, and we have, I don’t know we have five or six employees and we have some virtual employees as well, and we come into the office every day. I’m usually here about half the time that Kurtis is here, only because I have to go juggle kids and stuff.

Doug: Right.

Cindy: And he can stay where it’s nice and calm! But yeah, Kurtis does the acquisitions;actually he does almost everything that’s related to running the business. He’s the broker here, it’s a real estate brokerage the we have, we have agents, he deals with the agents, he does all the accounting, he does all the marketing and acquisitions. What else is there?

Kurtis: It’s taken us forever but we’re finally more of a company versus us doing everything. Our biggest change that we’ve had with our business starting to take off within the year where I turned over, finally I turned over the complete sales to a representative where once again something in our contract is handed off–

Doug: Okay.

Kurtis: It’s like, I don’t look at it again. Once we did that, it freed up my time tremendously.

Doug: So you’re still involved in the acquisition, but then after that you hand it off to like a processor, who just takes it to the finish line at that point.

Kurtis: Exactly. They sell it, they do– I mean, we’ve got a really good admin team; they do all the work. On the front end we have virtual assistants in India that do a lot of screening of the MLS, we’re very heavy on technology. They do a lot of screening, every night, even over the weekend; they load up good quality stuff that we call on.

We’ve got a great authorizing system now, we go on our database, we do a quick call and we just throw it in there what we want offered, and our admin team sends the offers out.

Doug: I’m going to pause you for a second and back up a little bit. You mentioned the MLS, so what’s your source of deals? What are you doing right now to find deals, is it all MLS, or are there other things?

Kurtis: No. Our manners are coming into their own, too. What happened was– the struggle was time resources just killed us just for the past few years. We would oscillate back and forth, we would do some heavy mailing and do, actually, I remember talking to you about mailing.

Doug: Yeah.

Kurtis: When we very first did it, just picking your brain, on what your numbers were like, I don’t know if you remember that. That was 2013.

Cindy: Yeah, (. . . . )

Doug: Oh yeah.

Kurtis: And so, we finally got the mailer going and I mean, really crushed it. But it would go back and forth between our mailer, and it would take time from our MLS. I went back to look at profit numbers. And it’s like, we would do really good when we mailed, but then the MLS would stop.

So, it’s taken us a couple of years but now we’re getting a lot of the MLS automated, and now I’ve spent the last four months on getting the mailer processing automated, and then getting another representative to handle the mailers. So we’re getting there, it’s just taking us forever, but we’re starting to get where it’s actually systematic and we’ve got other people doing stuff.

Doug: So am I hearing you right, that you’ve got people, you’ve got some in office, five to six, and you’ve got some virtual assistants working for you, are they actually, these virtual assistants or maybe it’s an in-office person, is scouring the MLS daily?

Kurtis: Yeah.

Doug: Calling agents, making offers, analyzing the properties, the whole thing?

Kurtis:No, they’re downloading the good stuff-

Cindy: And then we take a look, and that’s one of my responsibilities. I’m kind of in the field, doing buying and rehab, and then my other duty is screening what they–

Kurtis: We actually have three screening processes from MLS before it gets to us, and then after it’s gone through three screening processes, it’s hopefully the good stuff that’s left and that’s what we make offers on.

Doug: So is this like new listings, or–

Kurtis: Yeah. New listings.

Doug: Primarily new listings.

Kurtis: Old is huge too, a lot of our stuff. We’ve got–your database is so crucial. We’ll make an offer, it’ll get rejected, and then it’ll get scheduled for follow-up, so, you know, I’d say thirty to forty percent of our time is the new ones, and the rest is just re-offering. And I think that’s really, for someone wanting to do this, I can’t stress that enough,is follow-up.

Cindy: And processing the rejection.

Doug: Would you have an idea of what percentage of the MLS deals you get come from a follow-up versus a first-time offer?

Kurtis: Yes, I’m gonna say it’s about thirty-forty percent versus sixty-seventy, with maybe like a third of ‘em, we pop on the first shot.

Doug: Okay, so the majority of them come from a follow-up.

Cindy: Yeah. I mean there are leads buying properties that we’d offered on from the MLS for two years, we keep them for two years. That’s a long time for us to wait.

Doug: It just goes to show–

Kurtis: One of the homes that we’re wholesaling right now- I’m sorry, that we’re remodeling right now, I didn’t even know, we wholesaled it in 2008!

Andrea: Oh wow.

Cindy: (…)

Kurtis: She was like, see, you sold this, I was like what are you talking about? And we, sure enough, we’re in the (….)

Doug: Yeah, it just goes to show, that all forms of searching for deals work. I think that the common answer today, if you ask most people, ourselves included, would be that the MLS is just a hard road to go to get deals.

Cindy: Yes, it is hard! It is hard!

Doug: And it is, but you’re doing it, and you’re making it happen with yoursystems and the processes you’ve set up.

Cindy: And you know, you have to be persistent. We have to be persistent.

Doug: Absolutely.

Andrea: And Kurtis, you had mentioned, I think yesterday to Doug, that you guys are really using time blocking. Can you tell us about that, and how you use that in your business?

Kurtis: Yeah, you know, you have got to focus on the things that make money first, and we’re the first ones to admit, that we fall off of that, it’s so easy to happen.

Cindy: But thank goodness, Kurtis carries a big whip!

Kurtis: Cattle prod! Yeah, I have to use it on myself half the time. So I’m a statistics person, I way, way rather enjoy putting together our mailer thing that I’m working on right now, and it’s so easy for me to get carried away and just start working on it, and not keep the offers going out.

And Cindy’s an amazing designer, and would rather drive around Palm Springs looking for ideas for remodels. It’s what we’d rather do, but every time we do that, we pay a price. You start looking at your white board where your deals are and it starts to get empty. And you’ve gotta–

I went to a time management thing once, and the biggest thing I ever got out of it was one simple thing, it was like a jar and if you tried to put little rocks in first you’d never get the big rocks in, so you gotta put the big rocks in first and then you can put the little rocks in.

And for us the big rocks are hunting, so it’s nine, nine-thirty to noon, or one-ish, we’ve gotta get our hunting in. Now our quota, which we haven’t been real successful, is four offers a day, off the MLS.

Doug: is that per person or for your whole team or, how’s that go?

Kurtis: That’s just for me and Cindy. Erika, some of our other hunters have done pretty well.  We haven’t put a quota on them though.

Doug: Not yet.

Kurtis: Yeah, not yet, yeah.

Doug: You have any idea how many offers you’re making these days, and how many deals you guys are doing these days on average?

Cindy: Yes.

Kurtis: 41.5

Cindy: It’s a precise idea.

Doug: Can you be more specific on that?

Kurtis: It takes about, averages for me, it takes about two to three hours on average to find a writable offer. For writable, it’s gotta have either a motivated seller or the pictures have gotta be pretty bad–

Cindy: Or it’s been on the market for a long time. Because of stress of either the seller or the property.

Kurtis: It’s as much of an art as it is a science. You’re just not going to offer– if anyone thinks they can go out there and just start offering 200 on a $350,000 house, it’s clean-

Cindy: It’s a waste of time.

Kurtis: It’s not going to happen.

Cindy: Especially in this market.

Kurtis: You’re going to have a lot of agents angry at you. So–

Cindy: A writable offer–

Kurtis: A writable offer–

Cindy: It takes two to three hours–

Kurtis: Two to three hours to get one–

Cindy: And it takes forty to get a deal.

Kurtis: And it takes forty to get a deal. It’s absolutely amazing, because we track our offers like, to the– really, really minutely. And one month, it’ll be a deal for every twenty, and another month it’ll be one for fifty. But in 2014, it was on the nose one for just a tad over forty. And then this year, it feels like it’s all over the board. We went this year, I think in February or March, we had 125 offers without a deal.

We looked at it, I looked at it, and right on the nose again for 2015 it’s a deal for forty, forty-one offers, it’s inviable [sic], it just happens. And that’s a great thing to know, because every time we feel like–

Cindy: Giving up.

Kurtis: Oh, can’t do this, this giant thing here, everybody and their mom’s gonna be hunting for deals, and this and that– it doesn’t matter, it’s just, you get your offers out and you’re gonna hit one for forty, at least in our market.

Doug: That’s awesome that you track that. And I know you sent me a little, you called it a report card?

Cindy: We get a report card every week!

Doug: Tell me a little bit about that. How did that come about, and is that good for keeping you accountable to do your offers?

Kurtis: Yeah, that’s why we instated it. Because the plan is not there, and our personnel who write the offers and log the offer tracking make a report card and send it to us every week, and it’s got our average offers per day. For the week, it’s got a six-week average and for the month, it’s got for a quarter, and it’s got for the year. And if we’re under three and a half, it’s kind of like, it’s like red-alert, we need to make it happen.

Andrea: So then, what percentage of the deals that you guys are getting would you say that you wholesale, and then what percentage are you rehabbing?

Kurtis: Oh, that’s a good question. I’ll think about that for a minute.

Doug: Yeah, because it’s been a few months since we bought one from you, so we’re looking for another one, just to let you know.

Kurtis: We got you covered. (. . . . ) It should be more and more back into we’re closing on ‘em-

Cindy: (. . . ) so we put a cap on it.

Kurtis: I would say ninety-ten, and moving a little more towards eighty-twenty.

Cindy: Yeah, I think that’s right.

Doug: Okay. So, you only keep a certain amount of rehabs in your pipeline that you’re doing-

Cindy: Yeah, it gets too crazy, your quality of life, it’s just not fun anymore, when you have kids, they’re in high school, you’re looking at them going they’re not going to be here much longer. You know? Let’s spend some time with them, we can play a little bit later in life, you know.

Andrea: Yeah. Well then that leads me to our next question, which is how do you guys work together and balance being married, a married couple that works together, and parents and spending quality time with your kids and doing the things you want to do there- how do you balance all that?

Kurtis: We don’t.

Cindy: We don’t.

Doug: I love your honesty!

Kurtis: No balance whatsoever.

Cindy: You know what it is, we don’t know any differently, so we just do it.

Kurtis: I coach my kids’ soccer, I coached every one of ‘em, and that’s sort of a forced balance, because I’ll work until eleven p.m. sometimes, but soccer practice, that’ll force me out of the office, that’s a good thing.

Cindy: You know what, now that we say it out loud, I think it’s more that we know each other’s responsibilities and duties. Like, I don’t come in here and try to tell Kurtis how to do what he’s doing, and he doesn’t try to step on my toes in what I’m doing either. And for parenting, we happen to be very like minded, luckily, and it’s pretty much us against them.

Kurtis: She does a lot more growth and development. Of kids.

Cindy: Oh. Sports and recreation is you.

Doug: That’s awesome. You guys have obviously done well, you’ve been doing this your whole married life, and four kids, so kudos to you for that, because a lot of people can’t handle that.

Cindy: Thank you.

Kurtis: Thank you very much. You know what’s funny? It’s like, we don’t really fight over–we’re really like minded on money issues, kid issues, all that kind of stuff. Wanna know what our biggest marital fights are? Values on houses!

Cindy: No, that’s it! ARVs! I’ll hook up a deal and I’ll bring it to him and I’ll go here, I got one, and he’ll go–

Kurtis: Yeah, but that (. . . .)!

Cindy: Screaming about ARV. And that’s pretty much the only problem in our marriage!

Doug: That’s funny. Yeah, that’s a tricky area out there, the desert; you guys are in a unique market. And it’s a fun market; you have a lot of cool mid-century properties in your area, which I really like.

Andrea: But also seasonal issues too, right; do you guys deal with that?

Cindy: What was that, Andrea?

Andrea: Do you guys have seasonal issues out there, where you’ve got the snowbirds and people buy it specific times, and certain times that they don’t want to buy?

Kurtis: Yeah, it’s definitely quirky. We’ve seen it since we’ve been out here, it’s Coachella Valley, by the way, Palm Springs area. It’s about what sixty, seventy miles east of LA, I think. We’ve seen it become more year-round economy, so it’s not as seasonal as people think.

Certain types of properties remain pretty seasonal, it’s your, kind of like your resort, country club stuff that– a good Palm Springs 1950’s or 60’s house, that kind of thing, it’s going to sell all year–

Cindy: Any time of the year.

Kurtis: A starter home, it doesn’t matter if it’s August, it’s gonna sell. It’s kind of like the country club, golf course ones. There’s definitely some quirks here-

Cindy: But that’s anywhere. I mean, you learn your market–wherever you are, you learn the market and you can play the game.

Doug: So, our podcast is called Spouses Flipping Houses and there might be some spouses listening to you right now, saying, we want to do that! We want to flip houses, we want to get into that game. But maybe they’re new, maybe they’ve done a deal or two and they’re trying to work together and figure it out. I mean, you guys are seasoned experts on this, what would be one piece of advice that you would give to a married couple or even just a brothers, or father-son —

Andrea: Mother-daughter–

Doug: Yeah, people who have a relationship beyond the business, what’s your one piece of advice you’d give them?

Andrea: On getting started?

Kurtis: I think play to your strengths.

Cindy: Yeah, that’s it. Know what you’re good at, and let the other person do what they’re good at.

Kurtis: I think there’s kind of two levels to that question, it’s one is the dynamics of your spouse, which I think you’re leaning more towards. And then there’s just for anyone, you know, where you start. And I think in the anyone realm, it’s all about, everything starts with value, which is funny, we just said that–

You’ve got to understand value. It doesn’t matter if you’re flipping, if you’re selling antique watches, or what, you gotta know value, and it starts there. And if you’re just literally starting from scratch, couple or not, I’m thinking a good place is starting with realtors, and get access to MLS.

Cindy: People who are already doing it, like you did.

Kurtis: Figure out how to learn value. And that, because I think people starting out will tend to offer too much. And I would say the next part, if the goal is wholesaling, start meeting investors, go to some investor meetings.

Cindy: You can do that as a couple, and start together.

Kurtis: Yeah, and if you do that, and kind of extrapolate it to couple hood, you know, one may kind of start networking out with maybe some realtors and people who can help with value and maybe title.

Cindy; And wholesalers.

Kurtis: And maybe another starts, you know, reaching out more towards investors. You can get a lot of information from public records with research, like who’s buying at trustee sales. Again with your title, you can find out who’s paying cash, or who has multiple properties.

And that’s, I think your two places to start. Because once you’ve got value, and you know what to offer, and then you’ve got some investors that are looking, that’s pretty much it. Paperwork.

Cindy: Yep, and then you’re in the business.

Doug: Good, very good. Thank you so much you guys. I think– if people want to get in touch with you, I know you’ve had– Kurtis, I know you’ve been all over the Internet for the last twenty years, what’s the best way for someone to contact you guys? Where can they find you?

Kurtis: Absolutely, we’re happy to help. I would e-mail [email protected].

Andrea: And we’ll put that in our show notes as well.

Kurtis: Perfect! Yeah, thank you. And then, just regular old farbelowmarket.com is our website– I think it needs some work, but I’m pretty sure there’s a contact field there as well, I’m almost positive. But if you can’t get through on the website, just e-mail [email protected]. We’ll get back to everybody, be patient. It might take a couple days but we’ll respond.

Doug: Well, Kurtis and Cindy are the real deal, we can certainly vouch for that. I get deals sent to me from him via e-mail on almost a weekly or at least monthly basis.

Andrea: And they’re good deals!

Doug: And they’re good deals, they’re real deals from guys who’ve been in the business, know what they’re doing- good people to reach out to especially if you’re in that area, in the Coachella Valley.

Andrea: Thanks you guys, thanks so much for taking the time to talk to us today, we really appreciate it!

Kurtis: Thank you for having us, thank you very much!

Cindy: Thank you so much!

Doug: Get back to soccer practice!

Andrea: Take care!

Doug: Bye!

Kurtis: Take care.

Doug: We really hope you enjoyed that interview with Kurtis and Cindy Squyres, I know that we got a lot out of it, really a great couple. So we want to encourage you to head over to iTunes if you haven’t already, please subscribe to our podcast, give us a rating and review, let us know what you think of the show, helps get the word out to other people.

Andrea: Also we have a Facebook page, so if you like that Facebook page, then you will see the future episodes pop up in your news feed!

Doug: Yeah, and it’s just the Spouses Flipping Houses in Facebook, right, just search that to find it?

Andrea: Yep.

Doug: Also you can go to our website, connect with us there, we have two free gifts for you, just put your contact info there on the main page and you’ll get two free awesome gifts, let us know what you think about that. We put a lot of time into them, hopefully those will be valuable resources for you, and you can stay connected and know when the next episodes are coming up.

Andrea: Yep, and one of the free gifts is Eleven Tips to Working with your Spouse, a little e-book; the second one is how to value a property from an appraiser’s perspective, Doug’s a former appraiser, certified residential, so he put together a three-part course on how to know if it’s a deal and how to value a property. So, it is really good.

Doug: Hope you like it, so go check that out and we’ll talk to you next week!

Andrea: Good-bye

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The post Episode 7: Interview With Kurtis & Cindy Squyres of FarBelowMarket.com appeared first on Spouses Flipping Houses.

by Doug & Andrea Van Soest | Spouses Flipping Houses

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Today we talk about the SUPER, ULTRA-Important topic of Marketing.  You get paid when you sell a deal, you get a deal from making an offer, you make an offer to a lead.  If you don’t have some way to bring in that lead, your business will die.  Marketing should be a key focus for anyone looking to stay in business for the long haul.  We dive into 7 of the BEST strategies used TODAY by most investors to find their deals!  

Download the Episode 6 Transcript

Doug: Hello and welcome to episode six of the Spouses Flipping Houses podcast. Glad you’re here with us. Glad to be back.

Andrea: Has it only been six? [laughs]

Doug: Well, it’s actually been seven, because this is our second go around on this episode. What happened?

Andrea: Well, we are in a rush to get out of town, trying to record a couple of episodes before we leave, and so we poured our hearts and souls into this episode about marketing… [laughs]

Doug: [chuckles]

Andrea: …and it did not record.

Doug: It’s weird. I don’t know, we’re learning this whole technical thing with podcasting, and had our first hurdle if you will. Thought it recorded, and sure enough, go back into the file, and it’s blank. So, I don’t know, hopefully this time the record works. So this is our second go around. So it should be polished and ready to go, right?

Andrea: Well… we’ll see, we’re kind of scattered, we’re packing and getting stuff ready to go.

Doug: Where are we going?

Andrea: I can’t tell you.

[both laugh]

Andrea: Doug is turning 40 this week and–

Doug: The big four-O.

Andrea: –me and our best friends are taking him on a surprise vacation. He doesn’t know we’re going.

Doug: No. It’s kind of hard to pack when I don’t know where I’m going.

Andrea: Do you really not know?

Doug: Especially with El Niño quickly approaching.

Andrea: [chuckles] Do you really not know?

Doug: I don’t know. I have a guess.

Andrea: You have a guess. Hmm.

Doug: Yeah. And I’m not going to guess, because what if I’m wrong?

Andrea: And what if you’re right? I have a terrible poker face, so, don’t ask me.

Doug: And I like surprises, so I’d rather not know.

Andrea: Okay. Well then we’ll tell you next time where we went.

Doug: So I’m excited for that. We leave tonight. Hopefully. [chuckles] So, today, what are we talking about?

Andrea: Today we are talking about marketing in real estate investing, and basically what that means and how you find deals.

Doug: Yeah, marketing… it’s a huge part of any business, and especially real estate investing. If you don’t have leads, then you really don’t have a business. And the way to get leads is by some way of marketing. Advertising, generating leads in some fashion. Even if you’re not spending money you can still be marketing for deals, or for leads, sorry.

Andrea: Yeah. I like what you said. If you are not marketing, you do not have a business.

Doug: Yeah. Yeah.

Andrea: Or you will not have a business.

[both laugh]

Doug: You will not have a business. You can’t just wait for opportunities to fall from the sky right into your lap. Sometimes that does happen, and that will happen occasionally, but if you want to do consistent deals, consistent business, you have to be able to market in some form or another to be able to predict what you’re going to do, and know that you’re going to have a business in the next month or too. So…

Andrea: We’re going to tell you about seven ways to market for deals.

Doug: Yeah seven of what we consider the best strategies for marketing for deals in today’s market, at least according to us.

Andrea: Yeah. So there’s some that we’re going to leave off the list actually, that used to be really great strategies, but they’re not viable really today.

Doug: Right, yeah, and as timing changes, markets change, we’ll probably get into that a little bit… strategies for marketing for those deals, for those leads can change as well. Just like anything else. But today, these seem to be what are the most popular. So you want to go ahead and do number one?

Andrea: Sure. So the first tactic that we use to market for real estate investing deals would be MLS.There’s a lot of pros and cons to the MLS. It’s free, first of all, assuming that you have access to it. But it is highly competitive, because it is available to just about anyone. So everyone sees what comes up the minute that it’s listed, you are not the only person that sees it.

Doug: Now it gets fed out to Zillow, to Redfin, to Trulia, to all these free websites that– not just agents have the MLS anymore. Everybody has access to the listings on the MLS on their phone.

Andrea: So yeah, you have to have good systems in place to be able to search for these deals, to see them immediately when they pop up, to be able to recognize that it is in fact a deal, get your offer in right away, be able to write your offer that’s going to be clean, that’s going to be competitive with other people…

Doug: If you’re trying to buy homes on the MLS today, and you’re going about it in a nonchalant way, it’s going to be really difficult. If you’re just pulling up the listing for ten minutes a day, and making a call, and maybe making an offer, good luck. It’s going to be a really tough road. You can do it… deals are there. But you’ve got to have good systems, and a good strategy.

Andrea: One thing I would suggest is if this is the method that you choose, is that you make some relationships with agents.

Doug: Absolutely.

Andrea: Because a lot of times they know that you’re an investor, they might bring a deal to you first before they’ve even put it on the MLS, trying to help the buyer– I’m sorry, to help the seller to sell it more quickly.

Doug: Yeah. Yeah, if you’ve proven yourself as someone who can close on a house that seller needs to close, that agent’s going to remember that, they’re going to call you, and they’re going to know that they’ve got a transaction that will close. Because a lot of these things fall out, let’s face it.

We sell properties all the time on the MLS, so we know, for one reason or another, the buyer may change their mind, the financing doesn’t come through… they fall out.

Andrea: Right, there’s a risk to them in choosing just some random Joe Schmo that they don’t know who submits an offer, as opposed to going with an investor that has proven themselves time and again to that agent. They know they’re going to close, they know they’re going to do what they say they’re going to do. So go get in with some agents and be their go-to person.

Doug: Yeah. And another benefit just from making offers on the MLS and working it on a consistent basis is that you will build those relationships with agents, because you’re going to come across some of the same agents over and over again, and they’re going to start to get to know your name and your company. Which is another reason not to make silly offers as well, because you don’t want to get a bad reputation out there either.

Andrea: And there will be people who think your offer is silly, no matter–

Doug: Yeah, that is true.

Andrea: –what it is. Yeah. But if you have a relationship with them and they understand your numbers, and you can explain that…

Doug: Right. Yeah, if you can help them to understand why you’re making that offer, and how that makes sense for you, that’s important as well. Because you don’t want them to just discount your offer the next time it comes over.

Andrea: Right. Exactly.

Doug: All right, so strategy number two, tactic number two, would be direct mail. Now this is one of our favorites, it happens to be one of the ones that we get a lot of our leads and a lot of our deals from currently. And we’ve been doing this for about the past four years or so, and it’s become more and more popular as this market has changed and improved over the past several years.

And by direct mail, this means we’re mailing directly to homeowners. We’re not going on the MLS, we’re not going through other means of auctions or anything like that, but actually trying to contact homeowners directly, and see if they’re interested in selling their house. So there’s lots of different niches within direct mail, and different types of people to mail to, types of lists out there. I’m going to go ahead and name some of them.

Some of the popular ones would be like an absentee owner list, and by absentee owner we’re talking about somebody whose tax mailing address is different from the property address. And that person is likely a landlord, or somebody who owns a rental property or a second home, or a home they inherited, or something. They don’t live there.

Those people might potentially be interested in selling to you at some point for whatever reason. Maybe they’ve had troubles with tenants or the property’s just too far away for them to maintain.

Things like that. So absentee owner, and you can get those lists from your title companies, or from List Source, ListSource.com is one provider of lists. Another provider would be, if you’re on the West Coast, on the West Coast states, PropertyRadar.com – Sean O’Toole’s website. Fantastic resource for investors.

Andrea: Not just for lists. For so many other things as well.

Doug: Right, in fact I don’t think lists is even his primary reason for that website, there’s all kinds of data on foreclosures, notices of default, sales data, trends, all kinds of information in his website on real estate. But you can get lists, and they’re actually cheaper than going through List Source or some of these other providers if you know what to do, so PropertyRadar.com, definitely check that out. I think it’s 59 bucks a month, it’s really affordable. US Lead List is a provider of inherited properties, that’s another good list.

So if people inherit a property, they may or may not want that property. They may or may not have an emotional attachment to the property, because maybe it was somebody in their family member had some rentals and that got passed onto them, and they don’t know what to do with it other than sell it for the money that’s involved there.

So those people could be potential motivated sellers, that’s a good list to get. I don’t think I know they limit their number of people they’ll sell that list to just for competition, but check them out, USLeadList.com.

Other lists that people mail to would be expired listings, off the MLS again. These are listings that didn’t sell on the market and expired. So you know that the people wanted to sell at one time or another, maybe their price was too high, maybe something else has changed, but you know that they did raise their hand at one point saying, “yeah, I’m interested in selling.”

But it didn’t happen on the MLS, so you can mail to them, and maybe they’ll become more realistic on their price, or maybe they’ll be interested in calling you up and selling to you. So that’s another popular list to mail to.

Andrea: For people who may not be really familiar with direct mail, do we want to give them a couple of sources for sending out mailers?

Doug: Oh for sure. You mean as far as the printing services and stuff?

Andrea: Yeah.

Doug: So you can obviously do this yourself, which we did in the beginning, we actually would print up our own letters — if you have smaller lists that you’re mailing to and you have time and you want to save some money, you can do that…

Andrea: We would sit in front of the TV at night, folding letters and stuffing envelopes.

Doug: [chuckles] Yeah, we would…

Andrea: And getting paper cuts.

[both laugh]

Doug: Getting paper cuts… and yeah, that’s not fun.

Andrea: We even hired our kids to fold some letters.

Doug: [chuckles] Hey, and you know what, that’s a good way to go. Put your kids to work, get them involved in the business, getting their feet wet… but no, you can definitely do that if you want to save money, but if you’re going to do this on a mass scale, it’s just not practical to do it yourself.

So you can buy a bunch of printers and have your own in-house printing company if you want to go that route, but we didn’t go that route. So there’s a couple different sources. If you’re going to do postcards, one of the popular ones out there is called click2mail.com.

That’s “click”, the number two, mail.com. And they’re pretty easy to use, and have reasonable prices for postcards. If you’re going to do letters, I highly recommend my buddy in San Diego, Todd.

He’s got a company called YellowLetterHQ.com. And if you don’t know what a yellow letter is, that’s a whole other topic, but basically what that is is a handwritten letter on — typically it’s on yellow padded paper. It doesn’t have to be yellow, it doesn’t have to be handwritten, but–

Andrea: There’s all kinds of strategy to these different mail pieces. And there’s a lot of psychology behind the fact that people are more likely to open a letter that looks like a handwritten note from somebody, even if it’s printed, they’re going to be curious enough to go ahead and open it.

Doug: Yeah.

Andrea: And so one thing I would say about direct mail is that there are so many ways to go about doing it. There are so many different types of wording that you could put on a postcard or a letter, and there is tons of merit to these different methods and wording, and what color ink do you use and all that kind of thing, but don’t get so hung up on that, just send out something.

Send out some postcards, send out some letters, learn as you go, figure out what works for you and what doesn’t, don’t get so hung up on that wording right from the get go.

Doug: So true. So true, very good point. Yeah. So yeah, Yellow Letter HQ, check him out for great prices for if you want to do yellow letters on a mass scale. Want to go to the next one?

Andrea: Sure, so the next one is bandit signs. You’ve probably seen these driving around your town. Basically it’s like a poster nailed to a telephone pole.

Doug: [chuckles] Yeah.

Andrea: That says “we buy houses”, or–

Doug: It’s these little corrugated signs that you see everywhere with a stake in the ground.

Andrea: Yeah, with a little quick, something that grabs a person’s attention about how they can sell their house fast and a phone number, is usually all that it is.

And so we actually don’t do this right now, we’ve tried it at different times, and it’s just not something that we want to spend the time doing, but I still think that it is a good strategy. I’m seeing a lot of them around our town right now, so I do think they work.

Doug: I think they work too. And again, it’s about– when we did them, we did it ourselves, so we would load up signs in the trunk and we would drive around Friday afternoon and put them around, and go collect them on Sunday evening.

And the reason for that is that most cities and municipalities don’t like them in their neighborhood, obviously, they don’t like a bunch of signs making trash everywhere, so that’s why they’re called “bandit signs”, because they’re typically not — typically allowed, if you will. [chuckles]

So try to put them up on Friday, take them down on Sunday, so you’re not just littering the neighborhoods. But yeah, they work, I think they work really well, you’ll get calls. Obviously it depends on the area, it depends on who you’re going after.

Andrea: Sometimes you’ll even get calls from wholesalers that see your number, and that’s a good contact to make as well.

Doug: Yeah, so definitely, bandit signs, a good way to go. Any resources there for printing, or? I think you can go to– what is it? Dirtcheapsigns.com?

Andrea: Dirt Cheap Signs, yeah.

Doug: That’s one of them. There’s a bunch out there.

Andrea: Really you can make your own, they have blank ones at Home Depot if you don’t want to spend a lot of money.

Doug: True. And you can cut them in half and have two for the price of one if you want to make a little smaller sign. But everybody knows what we’re talking about there, you’ve seen those signs everywhere.

Andrea: Yep, okay, so the next strategy would be internet marketing. And this one is becoming more and more important I think in the way that we live today.

Doug: Yeah.

Andrea: Everybody’s got a Facebook, everybody… when you want to search something online, you don’t say, “oh, go search it online,” you say, “Google it.” So that’s such a huge and powerful part of our world today, that I think it’s really important that real estate investors or any business in general that wants to market, you need to have an internet presence.

Doug: Yeah, ten years ago, instead of the internet this might have been Yellow Pages. [laughs] As a… not that that doesn’t work today, but internet is definitely… if you’re not in the internet, if you’re not on the web, you need to be because it’s just gaining more and more momentum.

Andrea: So there’s different types of internet marketing that you can do. The first one would be pay-per-click. So you are paying let’s say Google or Facebook, you’re paying them to put your advertisement in front of peoples’ eyes, and if a person clicks on your ad, then you pay a dollar, or two dollars, depending on the topic.

Doug: $100.

Andrea: Yeah, it really could be that much. Depending on your topic and how hot it is… in your area.

Doug: Your keywords…

Andrea: Yeah. So there’s a lot more to that, but the two main ones I would say are Google and Facebook. Both of them are probably a good place to start with pay-per-click. I would suggest spending your money on Google.

Facebook is a great way to get your business known. But Facebook tracks peoples’ “likes”. And Google tracks peoples’ wants and needs. And their likes, but if you’re on Facebook, you can like all the different real estate pages, and investing pages…

Doug: Mortgage pages, or whatever, yeah.

Andrea: Right, so they might target your ad to those kind of people who might like that topic, but it doesn’t mean they need to sell a house. Whereas if you’re putting out a pay-per-click ad on Google, they know who’s going to Google to search “sell my house fast” or “sell my Riverside house fast”, or “how do I sell my house that’s causing me problems?”

Doug: Yeah.

Andrea: People put those very specific wording into Google, and Google knows everything.

[both chuckle]

Doug: If you’re typing that in Google, the chances are that you really do have a need to sell your house. That’s a good indicator. That’s why Google pay-per-click is so valuable, because that is so specific.

Andrea: Totally.

Doug: Another form of internet marketing would be, if you don’t want to go the paid route, where you’re paying per click for ads, you can just do what’s called SEO on your website, for those of you who aren’t techie, that is search engine optimization.

Meaning you just have a website, you just have a landing page, the intent is to– for somebody who is interested in selling their house to find you on the web and put in their information, and you can contact them. And you can try to get your page to rank organically, meaning, without paying, by doing a lot of different things.

Now this is a very expert oriented field. You can spend a lot of money here, doing this, or if you happen to know how to organically rank a website on your own, great, by all means do it, but there’s a lot that is involved in that.

So just Google “SEO”, but it involves putting out good content, links, articles, that are keyword specific for what people would be searching for, which is like, “sell my house fast,” “we buy houses”, those kind of things.

But long-term this can be a great strategy, along with pay-per-click, because you’re building a website that’s going to have presence, it’s going to have– over time it will gain rankings if you will, and hopefully show up when people are searching for that kind of thing. And when they go to your website, it’s free. It doesn’t cost you anything.

Andrea: The thing that I love about internet marketing is that you are putting yourself out there for people who need you. So they are calling you because they have a problem that they need solved, and they’re happy to call you, and you’re happy to talk to them, whereas, with direct mail, which is a very good marketing strategy and I’m not saying don’t do it, but you’re going to get a lot of angry calls, people who are just so mad that you sent them a postcard.

Doug: Yes.

Andrea: Someday we’re going to play some of our angry calls, because we’ve just gotten to the point now where we just laugh at it, and it’s become pretty comical.

Doug: [simultaneously] It’s entertaining, yeah.

Andrea: With internet marketing, that’s the thing I love about it, is it just is happier. [laughs]

Doug: Yeah, it is happier. People want to talk to you. They’re going there to talk to you, and those are incredible leads. Internet leads are really good, we’ve discovered. So definitely pay attention to internet marketing in some form or another.

Another place on the internet you can go to, you can go to Craigslist, or other for sale by owner sites, that are basically just like classifieds, but you’re looking for people who are posting houses for sale.

Just like any of these strategies, it’s going to take some work to filter through, and go through and call them, and do research, but primarily what you’re looking for is those keywords, those “handyman special,” “fixer”, “investor property”, “needs work”, “must sell fast”, those types of words in their descriptions of the houses, are the people you want to focus on.

And you’re also trying to look for off-market properties here, not homes that agents are posting on Craigslist, but homes that actual homeowners are posting on Craigslist. Can be a great resource, and it is free other than your time to go through and do all that. Craigslist and all these other for sale by owner sites are free. So check that one out as well.

So the fifth strategy for marketing would be bird dogs. Bird dogs is kind of a real estate term for anybody and everybody who brings deals to you. [chuckles]

So, if you’ve got a bunch of bird dogs out there, and if you think of the hunting reference here, they’re out hunting for you, they’re out hunting for leads and deals for some kind of a fee or a commission or, however they’re compensated. So bird dogs can come in a lot of different forms.

They can be actual wholesalers, like wholesalers who are out there and you’re on their buyer’s list, and they’re sending you deals when they get them, they can be agents, realtors, who are out there looking for fixer type properties that you’ve specified to them that you’re looking for, and they’re calling you for those leads.

And then you can think outside the box – this could be anybody. Anybody who is out and about in the streets all day long, or is working with people a lot, or is looking at houses all day long, like a mailman.

You can work out a deal– I heard on a podcast a guy was interviewed and he was a mailman, and those guys see the run-down properties on their route, and they–

Andrea: They know who’s not picking up their mail.

Doug: They know who’s not– exactly, they know who’s not picking up their mail. They see the delinquent bills that come in the mail, I’m sure there’s some privacy laws there that you’ll have to deal with, but that’s just one example. UPS guy, he’s all over the streets all the time.

And if you work out something with these guys, like, “hey, let me know about these houses when you find them, we’ll do some kind of a fee split, or I’ll pay you if we buy the house,” or something.

Whatever it is that works for him and for you, or for her and for you, then do it. You can have all kinds of bird dogs out there looking for you, for deals. Definitely a good strategy, and again, free, other than taking the time to get all those people looking for houses for you.

Andrea: So the next one is something that we call “driving for dollars”. And pretty much, there’s different ways that you can do it. It can be as simple as just being conscious as you’re driving around, of properties that might be in distress, and jotting down the address.

Or it can be more specific, and you go out and you drive around a specific neighborhood, every street, looking for houses that look like the grass may be overgrown, somebody’s not taking care of it, it’s getting a little bit run down, and there might be a reason behind that.

So you might want to send that person a letter, or if you’re really outgoing, you might want to go knock on their door and find out what’s the situation and if they’re interested in selling their house.

Doug: Yeah, absolutely. Driving for dollars. And again, you don’t have to do this yourself. You could hire somebody to do this. Train them on what to do, what you’re looking for… there’s actually apps out there that are really helpful in this regard as well.

I think Tucker Mary who put out an app recently, a driving for dollars app, that’s specific for people who are trying to create their own in-house list to contact to mail to from the driving for dollars.

Great, great strategy. And the reason is, nobody else has that list. Only you would have that list of houses that you know the properties are just run down. They look like they’re vacant, or need work.

Andrea: Right, maybe that property hasn’t hit a specific list yet, maybe it’s going to be on the foreclosure list or the delinquent list, but it’s not there yet, and you know ahead of time before everybody else.

Doug: Yeah, and you’re contacting them before everybody else. Good. So great strategy. And the seventh and final strategy that we’re going to talk about today is networking. So networking is basically just telling people you know what you do. So in everyday life, just kind of make note.

Obviously don’t be obnoxious about it [laughs], but yeah, just so that you’re making people aware that, “hey, I buy houses, if you ever come across anybody with a house they’re ready to get rid of, or having problems with the property, let me know, because that’s what we do, we solve problems for people with problem properties.”

That’s a way to say it. If you go to local investment clubs, like RIAs that are around, great place to network and just let people know that you are a buyer looking for properties.

Because there’s guaranteed there’s wholesalers there, looking to sell properties. So you’ve just got to find them. The more you network, the more you can build relationships with people, agents, bird dogs, all of these things, that just kind of steamrolls on itself and expands, and eventually you’ll have people calling you who you don’t even know, somebody referred you as a buyer, and you’ll get leads and you’ll get deals that way.

So don’t take networking lightly, because it is a great strategy. And again, free. Doesn’t cost anything, can be a great, long-lasting source of deals.

Andrea: Yeah, a great example of this is a woman in our office building came to us, just because she knows what we do, because our sign’s on the door–

Doug: That’s right.

Andrea: –and she’s going to sell us a house.

Doug: That’s right.

Andrea: I think she inherited– do you know the–?

Doug: Yeah, she inherited a property, and just because she works near us–

Andrea: It’s in bad shape, yeah, she doesn’t know what to do with it…

Doug: She doesn’t know what to do, she doesn’t want to fix it, and so likely we’re going to buy that house. So that’s a great example. So that was marketing.

Again, to recap: the first one was MLS, the second strategy was direct mail, third was bandit signs, fourth was internet marketing, fifth was bird dogs, sixth was driving for dollars, and the seventh was networking.

Andrea: Cool. I don’t know if it was as good the second time around as it was the first time…

[both laugh]

Doug: I don’t know. But, nobody else will ever know, so…

Andrea: I will.

[both laugh]

Doug: Well that’s it, we wanted to again encourage you to if you haven’t already subscribed, please head over to iTunes, and subscribe to the podcast, we hope you like what you’re hearing, and leave us a rating and review, that really helps us as well. Also, we have a Facebook page.

Andrea: We have a Facebook page, yes–

Doug: We do.

Andrea: –you can like it, and then new episodes will pop up in your Facebook feed, so you can know about all that stuff, you can also go to our website, spousesflippinghouses.com, enter your e-mail in there if you want to be notified of future episodes, and we also have two free gifts for you. So check those out.

Doug: Check them out. All right, hopefully the recording worked, and we’re going to end this and wrap it up, and we will talk to you next week.

Andrea: And if it didn’t… well…

[both laugh]

Doug: I don’t think we’re going to do it a third time.

Andrea: We’re not doing it again.

[both laugh]

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The post Episode 6: 7 Marketing strategies to find deals in TODAY’s market appeared first on Spouses Flipping Houses.

by Doug & Andrea Van Soest | Spouses Flipping Houses

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Today we interview our long-time friends and very successful House Flippers / Entrepreneurs Justin & Tara Williams.  Justin & Tara have built a business that is a house flipping “machine” that has flipped over 300 houses in the past 3 years.  Justin & Tara are masters at creating systems that run like clockwork.

They also enjoy helping people get in the right mindset for success in their new podcast 8minuteMillionaire.  Learn how they have done all this while raising 3 young kids and taking lots and lots of “family time”.

Download the Episode 5 Transcript

Andrea: Welcome to Spouses Flipping Houses, episode five. We are so excited today, we are doing our first interview with Justin and Tara Williams of the House Flipping HQ podcast, and their new podcast that they’ve just launched, 8 Minute Millionaire. Both are awesome podcasts, and we happen to know them personally and know that they are awesome people–

Doug: [simultaneously] Great people.

Andrea: –they’re very inspiring. They’ve done some really cool things, become really successful in a short period of time, they’re both just total go-getters, and I am very excited to talk to them today.

Doug: And they are married. They are spouses. [chuckles]

Andrea: [chuckles] So Doug, what’s going on in our business this week?

Doug: So, if you’ll remember we listed a couple houses last week, I think we talked about it on the last episode, and put them on the market, and within about probably three or four hours, we got a full price offer on one of the houses.

And that’s really exciting when that happens, we tend to think, “all right, this property’s going to generate a lot of interest and get a lot of offers. And in years past, or months past, we may have just jumped on that offer because it was full price, but there were some things about it that weren’t great, they were asking for some credits back, and–

Andrea: Kind of a lot in closing costs they wanted.

Doug: Kind of a lot in closing costs, and the financing wasn’t the best type of financing, that we like to sell to, so we decided to be patient and wait, we wanted to let it be shown to the masses for the weekend, so we really let it go like three more days or so, and–

Andrea: Which is a little risky because sometimes they’ll continue to look at houses over the weekend and might find something even better…

Doug: Might find something else, yeah, it just depends, we’re not saying to do this every time, but we decided to be patient and wait, and it was shown a few more times over the weekend, and sure enough, yesterday, Monday, we got another full price offer, this one much better.

Andrea: No closing costs, conventional, 20% down…

Doug: Yeah. Better financing, no cost, regular thirty day escrow, solid buyer, full price. So, we’re going to go with that one, and I’m glad we waited, that’s a significant difference in the net that we would have received with those two offers. So that was really cool, and we also locked up another wholesale deal last week, so that was good to have. So it’s been a busy weekend for us. Been good. But we’re really excited to get into this interview.

Andrea: Yes. It’s good stuff. So let’s get to it.

Doug: [simultaneously] Let’s get right to it.

[audio interlude]

Doug: Super excited to have our guests here today, we have our first interview of our podcast.

Andrea: And we’re setting the bar very high.

[all laugh]

Justin: Yeah!

Tara: Yes!

Doug: Very high, there’s nowhere to go but down from here.

[all laugh]

Doug: We have with us today Justin and Tara Williams, two friends of ours, and actually we met back in 2010, or late 2009… do you remember Justin when exactly that was?

Justin: All I know is that our business exploded after we met you guys, so…

[all laugh]

Justin: So yeah, I think it was around 2009…

Andrea: I think Tara and I were both pregnant with each of our third kid, so.

Doug: Yeah, we knew that they were investors and they lived close to us, so we just got together and said, “Hey, let’s go to a Chipotle and see if we can work together, since we’re both in the same business and we live in the same area, let’s go meet.” [chuckles]

Justin: I went to the b House, I kept your key…

[all laugh]

Justin: It was the way I met you too I just kept your key, and…

Andrea: That like the date thing, you keep the jacket? You keep the key to his house.

Justin: Yeah.

[all laugh]

Doug: But anyway, we had a lot in common, and we could tell immediately that Justin and Tara were good people, and people of integrity, and people that were going somewhere, they were movers and shakers, and I knew immediately that hey, we can do something with this guy, we’re going to be friends for a while, and we can get along.

So we’ve been doing business together in some form or another for the last five years, really.

Justin: Yeah. I bought my first rental property with you, right? We did it together, with you guys.

Andrea: That’s right.

Doug: We did. We bought two together actually.

Justin: Yeah, yeah we did a few together, you taught me how to — actually I learned a ton, we learned a ton from you guys. Rental properties, I remember you came over to our office, and taught me the right way how to analyze properties for the first time.

[Doug and Andrea chuckle]

Justin: Because I was just doing whole selling before and I didn’t really care, and then I remember you came to my very first retail flip, because I was scared to death, it was like the most basic retail flip, and you were kind of laughing, and so, anyway…

[Doug, Andrea, and Tara laugh]

Justin: It’s been fun working together. You guys have been…

Tara: Yeah he shares that story all the time, it was big for him.

Justin: I’m working on a book that I was writing this morning, and you’re in it, man. [laughs]

Doug: Oh really?

Justin: Yep.

Andrea: Nice.

Doug: Oh very cool. [chuckles]

Andrea: Also about that lunch meeting I was going to say, what I think is really cool, you know what they say, “behind every successful man there’s a great and hard-working woman”…

Doug: A better woman. Something like that.

[all laugh]

Andrea: We knew that to be true also from meeting you guys. Just how awesome that Tara is, and it’s been so fun to see you now a part more publicly, because we knew what an integral part that you were, but to see you be more of a presence in your business publicly through your podcast and your new podcast has been so exciting.

All: Yes.

Doug: None of this happens without Tara, so…

Tara: Yeah I’ve just been hiding publicly for a while, and now I’m like, “here I am!” Ahh!

[all laugh]

Andrea: Right. That’s awesome.

Doug: Well we’ll get into that new podcast that you guys have as well, but I wanted to mention that, that may have been your first retail flip that you were doing, Justin, but I think you’ve done, what, over a hundred houses you guys, over a hundred houses per year the last couple of years?

Justin: Yeah.

Doug: Just incredible numbers that we’re going to talk about, so… we’ve kind of done a little bit, but hey why don’t you guys tell us a little bit about yourselves, your background, and then how you got into real estate. I’ve heard the story many times, but I want to hear it again, because it’s always a good one.

Justin: Okay.

Tara: You want me to share?

Justin: Go for it.

Tara: Well I was just thinking the other day, because I went running this morning, and it’s so funny, because we met at BYU, and there’s two sides to our apartment, there’s the guys’ side and there’s the girls’ side, and then there’s like this bridge in the middle, this open area.

And at 5:00AM in the morning, pitch black, rain, sun, shine, snow, whatever, two people would come walking out of their apartments. And it was me — we didn’t really know each other — and then I would see Justin going to football.

And I think it’s funny now that looking back, out of all the hundreds, thousands of people there at BYU, the people that we saw were each other, already being hard workers at 5:00AM in the morning.

Justin: Me by force, Tara by choice.

[all laugh]

Tara: Me by force if I wanted to go on a date, I had to–

[all laugh]

Tara: So we met there, and we dated, and I fell in love with Justin, we started talking about real estate, and–

Justin: [laughs]

Tara: –I wanted to talk about it all the time in our marriage… oh wait, wait…

[all laugh]

Doug: Are you sure that was how it went?

Tara: No we had a lot of things in common. We got married, and we started a Dish Network business, and I was pregnant with our first son, and teaching elementary school, and I quit that job, and we started that business, and we were going to make a million dollars within the first year, and take over the world… and instead, we ended up with $120,000 of debt… with a brand new baby, and we had to move to California, and we had to dig ourselves–

Justin: Well not had to– we had to move to Bakersville, which is different…

Tara: Bakersville, that’s even worse. [laughs]

[all laugh]

Justin: Having to move to California would not be a bad thing.

[all laugh]

Doug: “Had” is the optimal word there. You were forced to move to Bakersville. [laughs]

Tara: So we moved there, and the goal to start the Dish Network company was to build up enough capital so that we could get into real estate, because we’d heard that that’s where you– where a lot of people acquire wealth.

And so… the Dish Network business taught us a ton about working hard, and how to work with people, and how to start a business and do all those things. And then we transitioned into real estate, and…

Justin: And we realized we didn’t need to make a bunch of money to get into real estate, right? [chuckles] We didn’t have any money and we started anyway.

Tara: We started with no money, and leverage other people’s money… so we got into real estate, and it’s been pretty awesome.

Doug: Yeah, and you had this business… how did you not get overwhelmed with that kind of debt?

Tara: Oh we were overwhelmed.

[all laugh]

Justin: Oh, we were overwhelmed.

Tara: We were working our guts out, and we just knew we had to get it done.

Justin: Backs were against the wall… were living in an– we couldn’t even afford our own place, we moved in with a family and other employees, 2,000 square foot home, our son slept in the closet of a small room that we’d share, we had no choice.

We just had to get up and make it happen, and what’s interesting is I’ve seen a lot of people over the years; when you look at the route of where they started to being incredibly successful, it’s when their back was against the wall, and they had no choice, and they just made it happen, I just find that kind of interesting.

Doug: Mm-hmm.

Tara: And if you look back over all these years, there are so many times and so many situations where we could have said, you know what, let’s quit, we’re not doing this right–

Justin: [simultaneously] Let’s go get a job.

Doug: Right.

Tara: — we fell, we’re going in the hole, we’re going backwards… but we just held onto that belief, that we can do this, we can totally do this, and we just followed people–

Justin: Maybe I should be an appraiser, or something…

[all laugh]

Andrea: So what was it that shifted your focus to real estate? Because you guys were doing really well with the satellite business… what was it that changed your mindset towards real estate?

Justin: Well, we were always interested in real estate…

Tara: Our minds were always open to it. It’s like when you learn a new word, you see it everywhere, and so we were always open to it, and so when things would– friends would mention something, or we’d hear something, we’d read it or check it out, or…

Justin: Yeah, I read the book — we read the book, “No Money Down”–

Doug: Is that Gary Keller?

Justin: –as we were transitioning, yeah, and then I had a friend, the only guy I knew that had done anything in real estate, and this guy was one of those guys who’d move in the house, live there for a couple years — so nothing big at all, right?

Small potatoes, but that’s all I knew about. And I called him up, and he told me about this call he was going to listen to on something called “short sells”.

I had no idea what a short sell was, I had no idea, but I thought, “oh that’s cool, this guy’s going to share free information with us,” and I remember he did sixty questions in sixty minutes, and we were blown away to all the information he was sharing, and he was kind enough to… for only $2,000, let us attend his seminar, and then line up to work for him.

[all chuckle]

Doug: What a nice guy.

Justin: But to me, seriously, at the time I didn’t know any of that stuff existed.

Doug: Sure.

Andrea: Yeah.

Justin: I was totally oblivious to it, and I was pumped that someone was willing to share their knowledge with me, for how we can make millions, for only that price, so… hopped on a plane, didn’t even hesitate, signed up that night, and then we spent another $15,000 on his coaching program…

Andrea: Is this the one where you won the car?

Justin: Yeah.

[all chuckle]

Andrea: Awesome, yeah, you have to tell that story.

[all chuckle]

Justin: Yeah, so, go ahead Tara.

Tara: Well… so we got coached by this guy, and we’d fly to Kansas City, and we’d have these mastermind meetings, and they were good, we’d still learn information, but we started to notice that we were the ones doing the business, and so we would do half the coaching at these seminars.

[Justin, Doug, Andrea laugh]

Tara: And the guy, we’d talk to him, would sit there and be like, “yeah, yeah… yeah, that’s what I would do. That’s good stuff, guys.” And they’d be like, “How do you do this?” and the guy would give those people feedback, and we would be like, “Well actually we’re doing this”.

So there was a competition within the first year, and whoever did the best in their business was going to win this car, this Chrysler 300, and so he had another seminar, and there were a bunch of people there, and we had to get up and present our business model and what we’d done, and… they go to announce the people, and we’d won. We’d won a car.

Justin: Yeah.

Tara: I have never won anything like that in my life. We’d both not come from money, and I was driving around like I was on cloud nine.

Justin: We were so excited.

Tara: Got a trophy and a big poster, and… but we never got the car. Because who knows what.

Justin: He said he was going to send it to us, right? He didn’t know who was going to win, so he had to take care of some things, going to send us the car, and… it never came. [laughs]

Doug: You got the wrong address, for some reason…

Justin: Yeah, I don’t know…

Tara: Somebody got a really nice car in Bakersville. It wasn’t us.

[all laugh]

Doug: But what I hear between the lines, you had a terrible experience with the prize there, but… and even though it was a really costly seminar, you guys… it got you started, right?

Tara: We still got information, it still fed us enough.

Justin: We have no regrets. Later we found out the guy hadn’t invested in real estate for six years, so… my point, to anyone who’s looking for education, do you need a mentor?

Do you need a mastermind? Yes, these things are all good, but having that been said, there are good ones that are actually doing the business [laughs], and that’s probably where you should focus.

Andrea: Absolutely.

Doug: So you go from doing short sales to a hundred deals a year. Can you tell us how your journey’s been? How have you gone from that to what you’re doing now?

Justin: So when we started out we were doing short sells, and we were doing whole selling, so we didn’t really have any risk on these deals, because we actually started out in 2007. We were literally starting to hit that peak, and then the ahh, free fall.

Which is actually kind of a blessing, because at the time we didn’t know about guys as you and I know like Bruce Norris, and people who would kind of tell you what was going to happen.

We started out with whole selling so fortunately all the deals that we did for the first few years, we had virtually no risk into it. Which is a great way to start out, in my opinion, as you’re learning the business… and then, it was interesting because we were kind of on top the world… it took a while to get going, it took seven months to get our first deal, but we were like, “yeah we can move out of Bakersville, we’re making good money, we’re out of debt finally…”

Tara: Moved to Orange County…

Justin: Moved to Orange County…

Tara: By the beach…

Justin: Yeah, moved to the place of our dreams… and then we moved down here and we still had some momentum going, but in Bakersville, we are the king of short sells, we had all these things going on, and what happened is we moved down here — short sells were changing, we had moved to a different location, we no longer had all the contacts that we had, and at the end of 2009 and 2010, it started to be not the best years.

2010 was a pretty rough year, and that’s when we started to transition, because we were learning a lot of things, we were learning about trustee sells, I went and learned from Mort Hannigan, we were learning about buying on the MLS, believe it or not, we never had bought houses on the MLS as crazy as it sounds, we didn’t know how to properly analyze deals, which is where you came in and helped us out a lot…

Doug: So the cheese was moving.

Justin: Yeah, the cheese had moved and…

Tara: [simultaneously] The cheese was moving.

Justin: But this is a lesson I’ve learned, if you move with the cheese but try not to move too many things at once. We moved the way we were buying, we moved our house physically, we moved– all these things happened at one time, and it was like we had to start over. So it was like the perfect storm.

Tara: Yeah. We lost our major employee.

Justin: Yeah. Yeah, 2010 was a really… tough year. In fact, it’s pretty funny, whenever we look at our… when we bought our house now in San Clemente, our loan officer looked at our– he needed three years, for some reason, even though they only considered two, but he looked at 2010…

[Doug and Andrea chuckle]

Justin: …like $40,000 or something like that, and then the next year was multiple six-figure, and then the next year was like seven figure income.

Tara: Yeah. [laughs]

Justin: And he was like, “What in the world are you guys doing? Whoa, whoa, whoa, what happened?” he had all these questions he had to ask, and we just had to… anyway, it was pretty funny.

Doug: [laughs]

Justin: But yeah, it was a low year, but we got into trustee sells, and once we learned those things… so many times we could’ve quit, once again… I remember Tara crying on the bed one night, because we were going to have our third son born any day, and we were like, “uh, we don’t know how we’re going to–”

Tara: I was crying on the computer, I’m like, “what credit card can I open? I need another one…”

[all chuckle]

Tara: “…give me some money, somebody!”

Justin: We didn’t know how to pay the rent, and at the time we had started buying rental properties, because back then we thought, “okay, we’ve got to buy rental properties,” we had all these things going on, “we’ve got to buy rental properties”, and you remember this, we had this one challenge, and “we’ve got to buy rental properties so we don’t have to worry about flipping anymore…”

But then after we bought all the rental properties we ran out of capital to… we hadn’t made a lot of money from the rental properties yet, and so that’s when one day we decided, okay, we have to sell four of these houses that are supposed to be rental properties, and we did not want to do it. It was like, kicking and screaming, I did not want to sell these rental properties. I had the… the bug was bitten…

Doug: [laughs]

Justin: …and I… just keep buying rental properties. But once we sold those houses, we made more money from those four houses than we would need to pay for our expenses for over an entire year. And they were cheap houses, too. And I could buy all those houses I wanted at the time. So buying wasn’t a problem.

I knew we could make good money from flipping them, and it just — we had the epiphany, we were like, “what if… what if we could do this every month?

What if we could make more money than we need for an entire year every single month, and what if we could systematize it?” And that’s what our focus went to, and that’s what we did.

And in 2011, we ended up purchasing 60 houses, which was more than we had done the previous three and a half or four years combined, and…

Doug: Wow. So 60 houses in 2011?

Justin: Yeah, and then from then on out it was average of about 100. We’ve had a little bit more and a little bit less some years, but close to 100 or more a year, since then.

Doug: And in 2011, that was– you had mentioned trustee sales. So you were buying at auction, correct?

Justin: Yes. That was our main way of buying in– and we started doing that at the tail end of 2010, and we just located– and that’s the thing about this business, you’ve got to get started somewhere, enter the corridor, and then you adjust.

But I never would have discovered what I discovered had I had not just taken action. So where I thought I wanted to buy trustee sales was not where we ended up buying most of our trustee sales. I remember even having you over one time, and showing you like, “hey, look at this, Doug, we could buy these houses here and no one’s bidding on them,” and it was pretty awesome.

So we bought a few rental properties that way, and then every day I would see houses that I could buy but I just didn’t have the money. So then once we got that piece taken care of, we were just off to the races.

Tara: One thing I think too that Justin’s really good at, is he’s always looking– he’s always one step ahead, I think. A lot of times people get stuck in their business in the trenches, and they’re so down– they’re out rehabbing the houses, or they’re doing things they shouldn’t be doing so that they can’t step back and then also look into the future.

So, Justin would have never figured out that the homes in the high desert were such a great price. He was analyzing these houses, and I remember him saying, “Tara come here, check this out, look at all these houses, this can’t be real, right?”

Doug: [chuckles]

Justin: But no one was buying them.

Tara: But if he had been down in the trenches, he wouldn’t have figured that out, because he would’ve been too busy in the business, and so he was always thinking forward, seeing patterns, looking for different things to go, “hey, this is going on, let’s move with this.”

Andrea: Yeah that’s definitely something that we’ve noticed about you guys, is that you talk a lot about the whole… pay attention to who’s moving your cheese, but you really actually do that, you’re always focused on what’s coming next and being prepared for it, and I think that’s really cool.

Tara: Yeah.

Andrea: Another thing we really admire about you guys is your systemization, and you’ve talked about that a little bit, but–

Doug: Oh yeah. The king of systems.

Andrea: You are the king of systems.

[all chuckle]

Andrea: And so, how have you applied that in your business today? Because there’s no way you would have been able to scale the way that you have and in such an incredible way without having really good systems in place.

Justin: Yeah, so, recently we were listening to this podcast, and this guy was talking about Tony Robbins and the primary question, and basically what that means is, is, Tony Robbins basically says that there’s a primary question that we each have that drives most of the decisions that we make on a daily basis.

We ask ourselves this question time and time and time again, and for some people they might say, “what’s wrong with me?” Or what are some of the other questions people say, Tara?

Tara: “Can I do this? Do I have enough time? Do I have enough money? Am I good enough? Am I smart enough?”

Justin: “Is it worth the risk?” Guys like Tony Robbins, I think he says, “how can I make this better?” some people say “how can I add value here?” And I realized at that time my primary question is things like, I’m always saying things like, “how can I systematize this? How can I get someone else to do this for me?”

[all chuckle]

Justin: I’ve been literally asking that since I was a kid. I would get my little sisters to do all my jobs for me, by, like I would make tickets for a fake carnival that they could go to, and even though the work in creating that carnival was more work, it was enjoyable for me.

So my passion– I honestly am not passionate about real estate at all. I don’t really care about real estate other than the house we live in, really.

[all laugh]

Justin: But I am very passionate about systems. I’m very passionate about the process. And I am willing to make more time up front and invest that into creating a system that will later on pay me back in huge dividends.

People always focus on the ROI, the return on their investment of capital, we like to really focus on the return on investment of time invested, which I think is… what is that, R-O-… anyway, something like that.

Doug: R-O-T-I…

Justin: [laughs]

Tara: I think another big thing too is that a lot of times when people can’t systematize or don’t want to, is that, there’s two things: they’re afraid to let go of something, they want to control something. That keeps you stuck.

And then also, they’re also afraid to have open conversations and train and be blunt with the people that they’re working with.

And so even if they go for a minute, “okay, I’m going to let go, and I’m going to systematize and I’m going to train someone else to do this, and let go of the reins a little bit,” then that person starts to do that job, and then they go, “oh, my employee’s driving me crazy, and they’re not doing this,” and I’m like, “well, did you tell them that?” “Well no, I mean…”

[all laugh]

Justin: You don’t want to hurt their feelings.

Tara: [simultaneously] “I don’t want to hurt their feelings.” So they have this enabling relationship where now the employer is now stuck with this employee that they can’t do anything with because they’re not open and they’re not training them, and they’re not leading them… so usually fear and then not having open conversations is what keeps people out of the systematizing freedom.

Doug: I can certainly relate to those last two things you just said, Tara. In fact I think I called Justin six months ago about that very–

[all laugh]

Doug: — very topic.

Andrea: I think they had the very exact conversation that you just had.

[all laugh]

Doug: Yeah we’ve certainly learned a lot about training our team and systematizing, and one thing I’ve always been impressed with what you guys do is empowering your people to make decisions, and helping them to grow in their roles, in a way where you’re certainly not– you’re managing your business, and your team, but you’re not micro-managing them to where they don’t have freedom to make decisions because they’re smart people. You try to hire people who are smarter than you, from what I’ve heard.

Justin: [chuckles] Yeah, either they’re smarter than you, or they become smarter in a certain capacity. And at first, one of the hard things that people have with letting go, like when I hired Vanessa for example years ago, I think it’s going on six years now, I may have been better at analyzing a deal than her at the time, but if I wasn’t willing to teach her that, and let her do that on her own, she would never get to the point where she is now, where she’s better than me, or, even if she’s not better than me, she puts a lot more time into it, so she’s able to get much better results.

She does it consistently and persistently on a regular basis. And I might be working on another business, I might be at the beach with my kids, or be at Disneyland, and that process continues to go, those things continue to happen, because we built that machine, if you will, and now it continues to work.

And now we can choose if we want to expand the machine, or improve the machine, but the machine will work, regardless of what we choose to do with or without us, the machine will keep working, and that’s true freedom to us.

Doug: Can you tell us a little bit about the machine? You don’t have to go into–

Justin: No, it’s a secret!

[all laugh]

Doug: Give me the blueprints to the machine! No, you don’t have to go into detail, but people are probably going, “how in the world can you flip a hundred houses a year?” and you literally buy them and fix them and sell them, you’re not just wholesaling or anything like that.

So can you tell us a little bit about what your team looks like? What kind of machine do you need to be able to do that?

Justin: Yeah. So I’m happy to get into as many of those details as you want. I did used to cover all those details, I’m like short of breath by the end, and when I heard the primary question I realized, it’s not so much about exactly what you do, it’s more the mindset that you have that number one it can be done, and every day you’re constantly thinking on every single little tiny thing, and how can you outsource that?

So yeah I’ll give you a few examples though. As far as acquisitions, acquisitions in this business is probably the single most important part of a business, as you know, Doug, and we purchase lots of houses from you — I should have said we purchase lots of contracts from you, because I don’t want to get anyone in trouble here.

[all laugh]

Justin: But acquisitions, buying houses, is the single most important part of this business. If you can master that one thing, you can become rich in real estate. Even if you’re not the best rehabber, or the best at getting financing, or any of that, it doesn’t matter right? Because you can wholesale, and you can do, anyway, all these other things.

So I decided a long time ago that the number one thing I need to focus on is having a method, a system, for acquiring properties. And so I just thought about, “okay, what are the things that take the longest amount of time?” And at the time, we were buying a lot of houses on the MLS, and trustee sells. So I created a system for doing that.

But let’s not talk about trustee sells, that’s like a whole bear in of itself. We’ll just take MLS for example. One of Vanessa’s primary responsibilities when she wasn’t doing other basic things that I didn’t want to do such as utilities and paperwork and insurance and just all that stuff that just takes a lot of time; lock boxes, and… all those things should be outsourced, first of all. Every little thing that you can pay someone $10 to $12 an hour, you should not be doing.

Tara: Absolutely. [chuckles]

Justin: But then I also needed her to have something– we needed her to have something she could do when she wasn’t doing those things. And I thought, “okay, you’re going to put all your focus into acquiring properties.”

So she would be scouring the MLS, making offers, and it took us a little bit to get her trained on how to analyze those, but once she was trained on how to analyze those, I did not want to hear about or look at the property until she either had a contract or she had a counter back from the seller.

And that one thing, as simple as it might sound alone, literally probably saved me 20 to 25 or 30 hours a week in time.

Doug: Wow.

Justin: I mean think about that. If you were up every day scouring the MLS, or in today’s terms, because people are more focused on working directly with sellers, sending out marketing, taking calls from dead beat sellers… and just doing all these–

Doug: It is time intensive, yeah.

Justin: — analyzing properties that they send you, sending out offers, all of these things, if you can eliminate that? Literally, in your business you should be spending most of your — if you’re a solo person, that’s where you should be spending most of your time.

Now if you can eliminate that, all of a sudden you’ve basically duplicated yourself. And then all you need to do is be the final person to give the stamp, to give the go-ahead.

Or to say, “oh, we’re really close on this counter, can we make those numbers work?” or, “I’ve got a guy who might be willing to pay a little bit more than what I’m willing to pay, maybe I can wholesell it to him.”

So in acquisitions, that’s a huge part. And as far as rehab systems, I’ll try to make this quick, but basically, we try not to do– we try to have all the houses we do be pretty similar. We’re not doing any super high-end stuff… the goal is to be like Ford, right?

The goal is to have every house be so identical to where we can use the materials list and use the same materials on every house, we like to use the same general contractor if possible on every house, and then something else we do, something else we use is a price list, which kind of allows us to say, “okay, we’re willing to pay X amount per square foot for paint.”

So, to make an example, because I know some people might get confused…

When we started out doing this, if the house was 1500 square feet, we would pay about $1500 worth of paint for that home. And I noticed these patterns — now, prices have gone up a little bit, but that’s just an example.

So it’s like a dollar per square foot for that house. And I noticed these patterns are the same for laminate wood flooring, for tile, for carpet, for — there’s all these patterns, it costs about the same across the board, yet every time we worked with a different contractor, we would end up haggling and going back and forth, and getting multiple bids, and then there would be price creep later on, and all this stuff… and we just decided to eliminate all of that by agreeing up front on what the contractor was willing to receive for compensation for these different items, and that’s really helped us a lot.

So, those are a couple little ideas, little tips for you, to give you an idea of some of the things we do.

Doug: Yeah, actually I’ve heard you talk about that before, it keeps a good system to keep your contractors on the same page of what you’re expecting to pay.

Justin: Yeah, yeah. So.

Andrea: Now how do you guys work together and balance being married and being parents? Because we can vouch for the fact that you guys are an awesome family, you guys have three really cool kids, you spend a lot of time together, you guys get to take trips and travel and you have a good relationship with one another, and you also have this thriving and very successful business. So how do you guys balance those things and those dynamics?

Tara: Well it’s really easy.

[all laugh]

Tara: I mean, it’s just so simple. No, I think we’re constantly… we were even talking about this the other day on the podcast, it’s almost like there’s this line in the middle that you want to stay on.

It’s like, “okay, things are great with my relationship with my spouse, I feel connected to my children, I feel like I’m helping others and looking outside myself, I’m growing, I’m developing, the business is going well…

And I feel like within those little areas, you’re constantly going back and forth, like, “okay, I’m a little off…” and you’re kind of a little off… so you have to put focus onto those, and they come and go. Sometimes Justin and I are having a great day, sometimes we’re at each others’ neck.

[all laugh]

Tara: But I think the things that keep us connected as a family–

Justin: We’re not quite as nice as you guys.

[all chuckle]

Tara: You guys… there’s a little more–

Justin: There’s a little more sass over here.

Tara: –there’s a little more spitfire over here.

[all laugh]

Tara: But I think our focus is always, the business is here to support the family… and our number one thing is always, he and I are number one, and our children are always number one, and sometimes it’s easy to get distracted in the business and we get excited, and there’s ideas, and you know what, it’s harder to be a mom than it is to own a business.

Justin: Way harder.

Andrea: For sure.

Tara: Sorry. But that’s just how it is. So sometimes it’s just easier to be like, “you know what, I’m going to work over here, you guys are driving me crazy,” but you have to stay focused on those things, and so we’re constantly– you have to be very open in your communication.

Justin: But it’s important for people to realize there’s never going to be that perfect balance, because I think if you think that, you’re always going to be disappointed.

Tara: You’ll be frustrated.

Justin: We call it a counter-balance. I think even in ‘The One Thing’ by Gary Keller, I think he talks about counter-balance. Because one minute, you’re like, “okay, we’re too far over here, let’s focus on over here…”

[all chuckle]

Justin: You’re always going back and forth. But, yeah, I just think knowing your — we’ve had moments, we’ve gotten a lot better now, because we have a lot more fun in our life, but there were times when we had to set rules for me for example…

[all chuckle]

Justin:  …because I would talk about business twenty-four seven. So we set a rule that after 6:00… we had to get really anal on it, right?

[all chuckle]

Justin: Which is not ideal, but sometimes you’ve got to do that, you’ve got to set those boundaries, and I was not allowed to talk about it after 6:00PM. Now sometimes I can’t get her to shut up about it, but…

[all laugh]

Doug: The roles have reversed.

[all laugh]

Tara: The roles have–

Justin: But now we go on more vacations, we take more days off, we’ll do things, so we don’t fill that need… it’s more intercalated a little bit to where it doesn’t feel like a burden. But there have been times where we needed those strict rules.

Tara: I think the thing is too that we both really — I just am addicted to progression and learning, and I think this world is so exciting, and there’s so many cool things to do, within my family, within my relationship with Justin, within the business, and we’re both on that same page it’s like… I see some people dating some people and they’re watching their TV, and they’re on Facebook, and they’re just floating along.

And I feel like Justin lifts me up, and then he’ll teach me something, and then I lift him up and teach him up, and I feel like we’re just this little teeter-totter that you just lift higher, and then I go up a little bit, and he’s off one day, and I’m off, and–

Justin: She’s always higher than me.

[all chuckle]

Justin: She’s letting me try to catch up.

Tara: So it’s this cool relationship of — we just push each other and stretch each other, and keep going, “here’s an idea, let’s use it!”, and we–

Justin: We’ve always had big dreams. I think dreams are important. I remember since the day we got married, I remember talking about someday wanting to run an orphanage, or work with orphanage– all these different things, and I think when you have those goals and dreams that are bigger than yourself, it just helps you just keep pushing and driving even on the days that are a little harder.

Andrea: Do you guys do the vision boards, and– I know you’re big into written goals, right?

Tara: We don’t do a lot of vision boards, my brain is a big vision board.

[all laugh]

Justin: Here’s the thing, we’re–

Tara: I’m constantly wanting to do all kinds of things.

Justin: I don’t know what it is, but sometimes I have to literally– or we both have to stop reading and learning for a couple days or whatever, because we’re too wired. If I read–

Doug: You can go off in too many directions.

Justin: Yeah or if I read business books at night, I get too excited and I don’t sleep well.

Doug: [laughs]

Justin: So I think vision boards and goals and all this stuff are very important and necessary in a lot of cases, but I just see a lot of people… they get that dopamine from the vision board, creating it, they get it from thinking about it, they’ll shout, “I’m going to do this and this and this!” and like, “okay, now let’s go get that cheeseburger.”

Tara: Then they’re so tired, they can’t actually do the goal.

Justin: Just do it. Or they don’t reach the goal right away, just take action, just do it.

Doug: Right, and I think it’s the same for some of those people which go to seminar after seminar after seminar and never really take any action, just get the same satisfaction from, “oh, I learned something else!”

Justin: We are big on goals, though, I remember when I had the goal of buying a hundred houses, and that happened. We had a goal of making a million dollars a year and it happened, now our goal is to make ten million dollars a year by the time we’re forty, and, some people think we’re crazy and they’re like, “why do you need that much money?” We don’t know why. We just…

Tara: We like opportunity. I would love to do some big things in other countries or something, and I feel like those give us the ability to learn how to administer those kind of things, to work with people, and then to also have freedom with money and time.

So I feel like we’re just developing ourselves so we can learn and grow and be good people now, but at some point really help other people to a larger degree as well, or make an impact.

Justin: And we’re Christian, and who knows what God has in store for us?

Tara: Yep.

Andrea: Right.

Justin: If one of our abilities is to run businesses and make money, then we can maybe do some things with that someday. He’ll use us in those ways that– with the skills that we use.

Andrea: Absolutely.

Doug: That was good stuff. Yeah, what I’m hearing is, you have a very important why. And that might be broad and general, but you have things you’d like to do and you’re working towards, it’s not just about making that almighty dollar next week.

Andrea: And yeah, I think when the why goes outside of yourself, not “why? So I can have this nice car, why? So I can have this fancy house.” But because you’re wanting to help others and do really cool things with your income and I think that’s so neat, too. It makes it more satisfying.

Justin: And it’s good to reward yourself, too, I’m just putting that out there. I see people all the time who feel like they need to rationalize that, but what we’ve found is when we have a little… maybe it is a worldly goal or whatever, we always have that little side of whatever you want to call it, but it does give you that extra motivation every once and a while, too. So, I’m just throwing it out there, for what it’s worth.

Doug: Sure.

Andrea: [simultaneously] Yep. We have those goals as well, yeah.

[Andrea and Justin laugh]

Tara: I think what it is, too–

Andrea: Nothing wrong with that.

Tara: –a lot of people look at business as, “I do this so I can make money. I look at business as a tool to develop myself. Because when there is a weakness in our business, it is a direct reflection on me. And I’m like, “what am I doing? What is my belief that’s hindering me? What’s my weakness?” and then I so quickly get to work through that, and have a very measurable goal to go, “oh, there’s my weakness, I have to get out of my shyness, I have to get out of my fear of confrontation… money, and I have to face all those things so quickly within business.”

Justin: We have to improve these systems, or…

Tara: So it’s a huge tool for personal development.

Justin: See there I go to the systems again.

[all chuckle]

Doug: There you go again. So someone listening to this podcast might be a married couple, and they’re interested in real estate investing, they want to flip some houses, they’re hearing all these stories about huge numbers of homes and all of this big stuff, but they’re just getting started.

So what would be one piece of advice, working together as a married couple — or, loved ones, maybe it’s brothers or father-son — but you have a relationship beyond this business you’re trying to venture into. What would be some advice you could give to that type of person?

Tara: I would say find the person who’s doing what you want to do, pay them some money, and follow them. [laughs] Check them out, are they really doing it? And I would really just follow that person, stay focused.

Because you’re going to get a million ways to do this business, and some people go, “oh I like that idea!” and then they start and they, “oh I like this idea!” and then all of a sudden they’re super overwhelmed, and they can’t do anything, they’re just stuck because there’s so much to do.

So I would say find a person that’s doing what you want to do, you like what they do, pay them money, and follow them so that you can start to make that progress. And, for the [audio interference; inaudible], if your spouse is the one who wants to do something, you have to let them take that leap of faith. You have to believe in them for a bit, until they– because for a while I was like, “I don’t know about this, Justin…”

[all laugh]

Tara: “Okay, I hear what you’re saying, but…” but I just kept trusting him, and then now, I’m just like, “Okay. I like this, it’s great.”

Justin: You only have one life to live, right? Not to get into the afterlife or whatever, but for right now, take advantage of what you have. Go after your dreams. And if you fail, that’s okay, you learn from that, and you pick yourself up and you keep going.

We’ve failed many times, and something I’ve found from successful people is that they fail more often than unsuccessful people, and eventually they learn from those things and they succeed in a big way.

Doug: Yeah, “fail forward fast” is one of your favorite sayings on your–

Justin: Soliloquy.

Tara: Our kids say it.

Doug: [laughs] — House Flipping HQ podcast.

Justin: Yeah, they’re just so afraid of failing. Don’t be afraid of failing. Failing is an incredibly great blessing that we have to  learn and grow and it sets up for future success.

Doug: So you guys are talking about your podcast. You have a couple of things going on, why don’t you tell people about how they can– what you have going on in terms of podcasts and your business and how people can get in touch with you if they want to hear more from you.

Justin: So I have a podcast called “House Flipping HQ”, which is where I teach people how to flip houses… not just flip houses, but how they can create a business.

A house flipping machine, if you will, that they can flip houses with. [laughs] And then we recently started “8 Minute Millionaire”, I’ll let you talk about that.

Tara: Yeah, 8 Minute Millionaire came because… basically Justin and I walk around the house talking about all these ideas, and recently a lot more people have come to us, wondering how we’re doing what we’re doing.

Justin: They didn’t care before.

Tara: They didn’t care until we moved to this nice house in San Clemente.

[all laugh]

Tara: Even our movers were like, “you guys are kind of young, what do you do?” So a lot of people have been just wondering what we do, and as we start to teach them and help our family and friends, we go, “oh my goodness, we cannot do this with every single person…”

Justin: Every single person, individually, and there’s so much to cover, and it just leads to more questions…

Tara: Yeah. And it just didn’t seem fair that only family and friends could learn some of the awesome life lessons we’ve learned. So we just decided to put it out there, and from doing the HFHQ  we realized that you can teach people all about how to flip houses and all of the fundamentals and things, but one of their biggest things is their mindsets and their fears and their doubts, and the things that keep them stuck.

And so that there is to be able to talk to anybody who wants to do any kind of business or something in their life, be able to move past that, and be who they want to be and be fulfilled. So it’s been a lot of fun.

Andrea: And they’re both so good. We’ve been a long time fan of the House Flipping HQ podcast, and I recently got injured running and I’ve been stuck on the silly exercise bike at the gym it’s so boring…

[all laugh]

Andrea: So I’m loving having your 8 Minute Millionaire podcast to listen to as well. So that’s what I do, I listen to podcasts, so I sit on the silly bike going nowhere…

[all laugh]

Justin: We’re excited to listen to your guys’.

Tara: Yeah. You guys are awesome. I can see your picture right here, because we’re not doing video, but I’m like, “these are amazing people. They’re just so good.” You guys are amazing people.

Doug: Thank you so much.

Andrea: Aww. Thanks. Right back at you.

Doug: Yeah, right back at you guys. You put out a lot of great content, I listen to both as well, and I’m trying to keep up because it’s an every day, 8 Minute Millionaire podcast, so I’m a little behind, but I’m catching up.

Tara: [chuckles]

Doug: Great stuff, so, it’s 8minutemillionaire.com, correct?

Justin: Yeah.

Tara: Mm-hmm.

Doug: And houseflippinghq.com.

Justin: House Flipping HQ. If someone’s interested in more direct coaching, they can go to houseflippingformula.com. We may or may not be open for bringing on new students at the time, but we’ll let them know when we are.

Doug: Well I can certainly vouch for Justin. He knows how to analyze a deal because I taught him.

[all laugh]

Tara: Thanks Doug, thanks so much.

Justin: I really think you taught me, and then we taught each other, after I moved in from–

Doug: Oh absolutely. I’ve learned far more from you I think. [laughs]

Andrea: Yeah we follow in your wake. [laughs]

Justin: It’s been a pretty good relationship I would say.

Doug: [laughs] Absolutely, and, to be continued. Hey, thank you guys so much for coming on to today’s podcast.

Tara: Yes, thank you. Thanks for having us.

Justin: Yeah thank you guys.

Doug: Really excited and, yeah, looking forward to seeing what the future brings for you guys. Because there’s it’s always changing and there’s always something big right around the corner, and I know it’s going to be awesome.

Justin: Mwa-ha-ha.

[all laugh]

Justin: All right thanks guys.

Doug: All right. Thanks, have a great day.

Tara: You too, bye.

[audio interlude]

Doug: All right, so that was Justin and Tara Williams, we really hope that you enjoyed that interview and got a lot out of it. Please head over to iTunes and leave us a review and a rating.

We are looking forward to hearing back from you and it really helps our rankings in iTunes, so please head over there and do that for us.

Andrea: If you’d like to stay connected with us, you can check out our website, spousesflippinghouses.com. And we have two free gifts for you there, tips on working with your spouse, and a whole video series on valuing properties that Doug has done, it’s really good stuff.

So you can head over there, and if you have any questions, you want to stay connected with us, that is the way to do it.

Doug: All right yeah check us out over there. So I guess we will talk to you next week and until then, have a great week!

Andrea: Bye-bye!

If you would like to learn more information from our Podcasts, check us out on iTunes & Subscribe. Also consider leaving us a rating (5 stars would be great) and a review would also be helpful so others can learn more about us and get in on our upcoming episodes. For questions or comments please fill out the comments area below and we’ll answer them. Thanks!

The post Episode 5: Interview With Justin & Tara Williams of HouseFlippingHQ & The 8 Minute Millionaire appeared first on Spouses Flipping Houses.

by Doug & Andrea Van Soest | Spouses Flipping Houses Podcast

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In today’s episode we get to hear from Andrea, the design expert in our business, about rehabbing a house for MAX profit. Andrea has years of experience rehabbing properties and working with contractors and has mastered the art of repairing and upgrading a property to the optimal degree for maximizing your profits.

Andrea will share what are the most important areas of a house to focus on when doing a rehab project.

She also shares a great tool for how she manages and keeps track of the different material selections for each rehab project and the system she uses to keep track of it with the contractors.

Download Episode 4’s Transcript

Doug: Hello and welcome to episode four of Spouses Flipping Houses, thank you thank you for joining us, we’re really excited to get into it today. Andrea, how are you doing over there?

Andrea: I’m doing good, how are you?

Doug: Today I’m great. I’m actually very grateful. I’ve had a theme of gratitude in our household in the last week or so, and I’m just really grateful today. I’m grateful that here we are, you and I, middle of a weekday, we’re sitting here in our home office slash recording studio [chuckles]–

Andrea: [chuckles]

Doug: — recording a podcast about topics we love, and we’re going to go to lunch after this… and I’m just grateful. This business has allowed us to do that. I get to work with my best friend, my spouse, every day, and I absolutely love it. And we have things coming up that we get to go to because our schedule is flexible.

And I just think back to when we were initially wanting to get into business for ourselves and the reasons that we wanted to do that, and it wasn’t necessarily trying to create some certain amount of income per year for our lifetime or anything like that, it was more about the freedom. Freedom that working for ourselves, having our own business, would allow us to have. Freedom of schedule, freedom of lifestyle.

We never wanted to miss one of our kids’ sporting events or dance recitals for the world. They are a priority for us, those kinds of things. And we get to do that and experience that, so I’m very grateful.

Andrea: Me too. I’m glad to hear you say that. Actually on our website, we have an e-book that’s “Eleven Tips for Successfully Working with Your Spouse”, and that is one of the tips that I have listed in there, and I really feel like it’s probably the most important one.

Because if you’re focused on what’s negative in your life, then even the good things aren’t going to seem that good to you. So focus on what’s good.

Doug: Absolutely.

Andrea: And those things will just become more evident. All the good things will come to light. I think it’s so important. There’s actually been research studies that prove how it improves your physical health, your immune system, it improves your overall psychological health, the way you socially interact with people…

Gratitude is just huge, it’s so important. There’s actually apps you can use– Doug and I both actually use this app called “Gratitude 365“…

Doug: Yeah, it’s called “Gratitude” — let me just verify that, but I believe it’s called “Gratitude 365”, is that what it’s called? Yeah. And it’s just a very simple app — it’s a journal. It’s a gratitude journal. There’s a spot every day for you to jot something down, or put a picture in or a video, of what you’re grateful for that day.

And so I’ve been doing that for about a year and a half and Andrea’s been doing it for a while now, and it really is true, shifting your mind into that mindset of being thankful for the things that you have, even when everything else seems to be going wrong, focus on the things that are good in your life. That are positive. And just so much good comes from that. So, yeah. Grateful.

So today, we’ve got a really exciting topic. Today’s topic is how do I rehab a property for max profit? And we’re fortunate enough here to have a resident designer across the table from me, Andrea is an interior designer, she’s also a realtor, and she — in our business — she heads up working with our contractors, and basically deciding what happens with each house.

What are we going to do to it? How are we going to rehab it? What things are going to change, what aren’t?

Based on trying to maximize the profit, because this is a business that we’re running. So, she’s really good at that. Andrea’s got a lot of interior design training, she’s got a lot of experience in that field, she’s always been super creative, and has a great eye for design and what people like, and what people are looking for. And our house gets to benefit from that, thank you. [laughs]

Andrea: [laughs]

Doug: So we’re really excited to let her take the reins on this episode today, and go into rehab zen, and how we do it and what we look for, and some good tips for doing this for maximum profit. So, Andrea, take it away.

Andrea: First of all, thanks babe. [chuckles]

Doug: You’re welcome. [chuckles]

Andrea: I appreciate it. Okay so, I think that the most important thing in fixing a house for max profit is that your house has to be as good or better than your comps’. Everything else I’m going to tell you from this point on is all relative based on this one’s point. Your house has got to be as good or better than the comps’.

So, if all the comps in the neighborhood have dirt backyards, then you probably don’t need to go put in an expensive sprinkler system and sod. You could probably get away with having dirt too, and save some money there. If all of the houses that you’re comparing to have granite counters and stainless steel appliances, and a custom backsplash, well, guess what? You gotta have those things, too.

Doug: How would I know what my comps have?

Andrea: Get on RedFin or the MLS, whatever you have access to, and scroll through their pictures, basically. You just gotta look. And don’t take the realtors’ description for it. It might say, “awesomely rehabbed house”, no, look through their pictures, because maybe it was not awesomely rehabbed. And so you don’t have to do as much, just be better than what that other person did.

Doug: A lot of realtors are very good at using words like “cozy”. [laughs]

Andrea: [laughs]

Doug: To describe a really small house. Things like that. So yeah, don’t take all the wording. Okay.

Andrea: Okay so then yeah, my next tip is: fix what’s broken. Don’t try to hide things, it’s going to come out on an inspection. And it’s kind of a given. You need to fix what’s broken. If the air conditioning doesn’t work, you need to fix it. You want to have a good name in this business, you want to sell somebody a good product, so first and foremost, fix everything that’s broken.

Doug: And it’s just going to cause you a headache later if you don’t. Because it’s going to come back, people are going to be upset…

Andrea: It’ll stall the escrow process.

Doug: Yeah. So very good tip. Those things that are essential in the house that are broken, gotta be fixed, even if they’re not aesthetic things that you see… need to be repaired.

Andrea: Right. Okay so next, you need to solve any problems that the house might have. So what I mean by that is, if the house feels closed-in, you need to make it look and feel more open.

People want that open-concept house nowadays, and a lot of homes that were built a long time ago, everything is sectioned off in these small little compartments, so if you can go in and find ways of opening up walls, painting things a lighter color, lighter flooring, whatever you have to do visually to make the house feel more open, that will benefit you — in my opinion, it’s a problem for the house to feel small and closed-off, so that’s a problem you need to solve.

Doug: Yeah this is huge, because openness is so important. Today everybody wants an open floor plan, open house, that feels bigger, and if you go to the projects section of our website, you can actually see some of the before and after slideshows of a lot of our homes that we do, and you’ll notice if you look in there, some of the floor plans have dramatically opened up, and the rooms look bigger in the after pictures, because, you’re very good at this. Taking walls down that aren’t necessary there, and…

Andrea: Well thanks babe. Another problem that you might need to solve is functional obsolescence. And this is something that an appraiser can actually take away value for if a house is functionally obsolete. So what I mean by that is, if you have to walk through a bedroom to get into another bedroom, that is functional obsolescence.

We had a house recently that we had this situation on in Redlands, it was a tiny little house, it had only two bedrooms, but you had to walk through one of the bedrooms to get to the other bedroom. Who wants to live like that? It’s just weird. [laughs]

Doug: [laughs] Yeah.

Andrea: So we were able to restructure the house, and make the living room in the middle separate the two bedrooms, you’ve got to get a little bit creative, but that is definitely a problem, and you need to solve it.

Doug: Especially in older homes, that’s a pretty common problem.

Andrea: Yeah.

Doug: You’ll have that a lot, you’ll have to walk through a kitchen to get to another bedroom, or vice-versa like you said. So if you can solve that, that’s a huge win for your property.

Andrea: Another problem that we often have to solve is that in the 1950s, they put the laundry hookups in the kitchen, so that the housewife I guess could be all —

Doug: Hey, you could be doing all of it, right?

Andrea: — doing everything at once, yeah. Well nowadays, nobody wants their laundry room in their kitchen. They don’t want to look at their washer and dryer while they’re cooking, they want their kitchen to be visually pretty.

That’s kind of what’s important to people these days. So we always look for a way to move that out of there, if at all possible. We’ll at least put it in the garage if we can’t put it somewhere else in the house.

Okay, so my next tip is, keep it neutral. You cannot get personally attached to a flip property. I think a lot of new–

Doug: But I like hot pink!

Andrea: [laughs

Doug: [laughs]

Andrea: I think a lot of new investors make this mistake and get really hung up, especially if they’re doing the work themselves, is thinking about the house the way that they would want it to be. And you really cannot do that. It’s not financially a benefit to you to do that, you’ll end up probably spending more money. You need to just keep it neutral.

Doug: Unless your style is totally neutral. [laughs]

Andrea: [laughs] I guess that would be the exception.

Doug: [simultaneously] Vanilla.

Andrea: So you may love red, but not everybody may love red, so you want to stick to tans, and gray color palettes. Light gray is really big right now.

Doug: Yeah, earth tones…

Andrea: Yeah. Well the “greige” [phoenetic: “GRAY-je”] sort of tan-gray…

Doug: “Greige”. [chuckles] Did you make that up? I like that.

Andrea: No I didn’t.

Doug: Oh okay.

Andrea: I wish I could take credit for it, but no, not me.

Doug: “Greige.”

Andrea: Yeah, tan or gray, people really like those gray color palettes these days, so I’d say keep it neutral. And don’t overlook the small things. And by small things, I mean mostly flooring and paint. We pretty much, even on a simplest fix, we always do paint and flooring. Because that makes the whole house feel fresh and new.

Doug: Yeah, absolutely.

Andrea: Just because the walls aren’t scratched up, or they’re not too dirty–

Doug: Right.

Andrea: — They need to be fresh.

Doug: Maybe that tile flooring is thirty years old, but it’s in great condition… doesn’t mean you want to keep that tile floor. Unfortunately.

Andrea: That’s just not what people want these days, and you want your house to be the one that sells the quickest, so that you’re not having all of your carrying costs… so just do it right in the first place.

Doug: Yeah, when people ask me, “what’s the biggest return I can get?” or bang for your buck in terms of rehab, I’ve always told them as an appraiser, “carpet and paint”. Or, “flooring and paint”.

Andrea: Mm-hmm.

Doug: It’s going to return you back more than just about anything else, in my opinion.

Andrea: I would say that the five main areas of a house that you want to pay attention to are the kitchen, the bathroom, paint and flooring, and curb appeal.

Doug: Definitely. Definitely. Yeah, kitchens and bathrooms on the interior of the home are the rooms that people would look at when they’re going to see if a home has been quote-unquote “upgraded”. And that’s the sizzle.

Andrea: So if you have it in your budget to upgrade anything beyond the paint and the flooring, you want to put your money in your kitchen, and in the bathroom. A lot of times if we don’t have it in our budget to do new cabinets, we’ll paint the cabinets white, the ones that are already there, and we’ll add some new hardware on them. They almost look new.

Doug: Yeah, they can almost feel like new — yeah, exactly, almost feel like new cabinets. We do that a lot in the homes where the cabinets read their condition.

Andrea: And if a kitchen is smaller, painting the cabinets white makes it feel so much bigger and brighter, and just like a cheerful space.

Doug: Right. Definitely.

Andrea: Same thing with bathrooms. If we can’t afford to replace the vanity, we might paint it, so that it feels fresh.

Doug: Yeah, paint it… a lot of times, you’ll have maybe some tile in the shower wall that is in good condition, you can just re-glaze it, or– it’s almost like a paint, but it’s a shower grade paint that is waterproof, and you re-glaze it white, and maybe just– what we do a lot of times is, what, we change out a whole strip?

Andrea: Yeah, we’ll just pop out a whole band strip, of the existing tile. We’ll glaze the rest white, and then put in a new band strip of glass tile or something decorative.

Doug: Makes the whole thing feel new.

Andrea: [simultaneously] It looks brand new.

Doug: Yeah, if you’re on a budget, then that’s a really good way to do it in the bathroom.

Andrea: And then, curb appeal, that’s kind of self-explanatory; don’t break your budget on the curb appeal, but if you have it in your budget to do new exterior paint, that’s awesome, if you don’t, a lot of times, we’ll just paint the trim — sometimes just painting the trim white, or adding some shutters, makes the whole house feel like a new property.

Doug: Yeah. And again, knowing what your competition is on this as well. So if everybody’s got dirt front yards, depending on your area, it may not be that important that you go completely fully landscape the entire yard of the house, but in most cases at least having a little green grass…

Andrea: Mm-hmm. Oh absolutely. And you want to add the bare minimum, you want it to be clean, cleaned up.

Doug: Clean, yeah.

Andrea: Maybe a few little plants in the planter but you don’t have to go crazy, it doesn’t have to be like HGTV where they do this whole big amazing landscape– you don’t have to do that, it can be minimal, as long as it’s clean and fresh-looking.

Okay so my next tip is on staging. Some people choose to stage their properties, some people choose not to, obviously it’s always a benefit if you do it, but sometimes it’s not in your budget.

We generally don’t pay a stager to go in and do a full staging, unless it’s a very expensive property like this one we talked about, the mid-century modern, we paid a professional stager to go in and do that.

Doug: Full staging can run five, ten, fifteen thousand dollars depending on what you do.

Andrea: Yeah. And absolutely, they do a beautiful job, they make the house look so great, but that’s not always in your budget. Most of the time I would say it’s not in your budget, you don’t want to spend your profit, really, on that.

Doug: Depends on the house, depends on the price range of the property, but yeah, for the most — go ahead.

Andrea: Yeah. So what I like to do is something I call basically a semi-staging. So I have– just because I love this stuff–

Doug: [chuckles]

Andrea: — a garage filled with staging supplies —

Doug: Oh, you love it. [laughs]

Andrea: [laughs] So I’ll basically just stage the kitchen, bathrooms, and the fireplace mantle and hearth if it has one. So nothing major, nothing over the top. I’ll put a bowl of lemons and some plants and some different things like that, maybe some plates in the kitchen, just to add some color, and to make it feel homey to a person, to help them visualize themselves living there.

Same thing in the bathroom, I’ll put out a pretty soap dispenser and a flower on the vanity, and a picture and a towel, and just that is enough to bring a little bit of life to the bathroom. You can do a very beautiful job of tile and flooring and all of that, but those little bit of staging items really does bring life to those rooms. I feel like it adds a lot. You don’t have to do it, but—

Doug: Yeah, psychologically, it does something to the buyer.

Andrea: Yeah.

Doug: If you ever walk through those model homes, and it’s completely laid out, I don’t know, psychologically you feel like, “oh, I’m at home here, this is comfortable to me.”

Andrea: Yeah, it helps a potential buyer envision themselves living there. And that’s kind of your goal. And really, any little thing you can do to help your house be the one that sells first, if you have maybe five other houses that you’re competing with, that are all active, you just want to set yourself up for success, and do whatever you can do to make your house sell first.

Doug: Yeah, again, it comes back to being as good or better than your competition that’s out there, and this is all part of it.

Andrea: Yeah. Mm-hmm. So then okay, my last point is that you need to find what works for you, and stick with it. Now, as an interior designer, this absolutely kills me to say, I hate it, but it’s true. From a business perspective, it does not benefit you to be running all over town hunting down specialty tiles and specific granite slabs that are just perfect, you are running a business, and you need to have systems in place, and you need to be able to replicate and–

Doug: Scale. Yeah.

Andrea: Yes. And so in order to do that, you might find a couple of color schemes that work for you. Let’s say, if we do white cabinets, then we do this color granite, we do this color backsplash, we do this flooring. If we do dark cabinets, then we’re going to do this color backsplash, this color granite, and this color flooring.

Maybe you have two set-ups, maybe — we usually have probably four. And I can tell my contractor, okay, we’re going to go with this one, we’re going to go with that one, and he knows exactly what it is. And we’ll talk about that here in a minute, how we work with a contractor on all of this.

But you really need to find a couple of things and stick with them. And then I would say, go in every couple of years and revise that.

Doug: Just update it.

Andrea: Yeah, it needs to be updated so that — you know, we don’t use the same granite that we used three years ago, because it’s kind of outdated. Now we use actually a lot of quartz. So, you’ve gotta stay fresh with it, but don’t waste your time on every single house, especially for just those average neighborhood homes.

Doug: Yeah I was going to say, this is obviously going to depend on what type of homes you’re rehabbing. If you are in a completely custom area that demands this type of attention, which we occasionally will do a house like that, like a mid-century modern home, or something that–

Andrea: Yeah, we did one actually recently, out in the desert that was a mid-century modern and it had to be spot-on mid-century modern. So I went out and chose everything…

Doug: [simultaneously] Yeah, very particular details for the, yeah, finishes in there.

Andrea: Mm-hmm. And we had another one in San Diego that was kind of an up and coming neighborhood, a little bit higher price point, we knew it was very much like a hipster, trendy neighborhood, and so we tried to appeal to who the buyer was going to be for that specific property, so we went outside of our typical four system plan and we had it totally custom and awesome.

We’re doing another one that’s a historical one, obviously, you’ve got to go within the boundaries of the Historical Society, and that one’s going to be totally custom too.

Doug: Yeah.

Andrea: But for your regular, average neighborhoods, if you can have a couple different specific plans that you use, and you can just tell your contractor, A, B, C, it’ll make everybody’s life so much easier.

Doug: It’s going to save you so many headaches and so much time, if you do it that way and systemize it.

Andrea: Yeah.

Doug: Yeah.

Andrea: So…

Doug: You mentioned working with your contractor, we have a special way do that, great tools, go ahead and talk about that.

Andrea: The tool that we use, and I’ll have Doug explain it actually because he set it up, but we use something called Podio, and this makes our life–

Doug: Love Podio. [chuckles]

Andrea: — so simple. In so many ways. But within Podio, there are so many things you can do. We’ll probably have a future episode that is all about Podio. But within Podio, we have a separate category for working with our contractor. So go ahead, Doug, tell us how you set that up.

Doug: Yeah so Podio is — it’s just a contact relations management, so it’s an online software that we use to systemize and manage our entire business operation. It’s very customizable, and it’s easy.

I’m not a techie by any means, but I’ve fallen in love with Podio, because you can customize it to whatever it is your needs are. So, we have a specific workspace within Podio just for our contractor and for Andrea.

And to make it quick, basically we’ll just set up specific projects in there, like, “Elm Street House” for example, and Andrea can just click and drop all these different items that she has saved that we talked about before like, a cabinet color, a countertop type, a backsplash tile, a wall color, and maybe a roof shingle, things that we use in succession with each other, and in a matter of a few seconds, click and drop those into that project, so that the contractor, who has access to that as well, can see exactly what she’s chosen…

Andrea: I’ve got the SKW numbers, everything’s in there. Every item I’ve already put in.

Doug: [simultaneously] It’s already been pre-uploaded. Yeah.

Andrea: Yeah I only have to put it in once, and then I can use those every time.

Doug: Yeah, so there’s different ways, we used to just send an e-mail every time and it would be custom– we’d have to re-write it every time, I’d like this, I’d like this, I’d like this, and then the e-mails get lost amongst a thousand other e-mails, and it’s hard to keep track of what you even said you wanted for that house.

This is a really good way to keep each other accountable, the contractor can make comments on it, he can upload photos after it’s done, put it in there immediately from his phone…

Andrea: I can upload photos to show, look, this is the tile that I want, but this is how I want it laid out. And so within our Podio workspace, he is assigned – our contractor is assigned specific tasks, so he goes in there and checks off when demolition’s been complete. And then I’ll get a notification, okay, demo’s been done. And then, the kitchen’s complete. I’ll get a notification of that.

So it gives me these progress reports as we go along, so I know what status should be of each property, and it saves me the time of always having to drive around and check on things. He’s constantly giving me updates of what’s going on. So invaluable.

Doug: Yeah. Great tool. Great tool.

Andrea: So that’s pretty much it for today. To recap what we talked about, what Doug just said, make sure that your house is fixed as good or better than your comps’. Fix what’s broken, solve the problems, keep it neutral — remember those five main areas of the house, the kitchen, the bathroom, paint, flooring, curb appeal, stage if it’s in your budget, or you can do it yourself, a little DIY staging goes a long way, and find what works for you, and stick with it.

Get your couple color scheme plans, and stick with those for a period of time until you decide to revamp it. It’ll save you time, it’ll save your contractor time, and your houses will look great because you know that those are proven color combos that you’ve already used, and it works for you.

Doug: Okay that’s it for today. Thank you so much for joining us, I hope you got a lot of great information out of today’s topic. We want to encourage you to head to our website: spousesflippinghouses.com. Go check it out. Big picture of Andrea and I in the front of it. [laughs].

Andrea: [laughs]

Doug: Little too big, maybe. [laughs]

Andrea: Yikes. [laughs]

Doug: Got two great free gifts for you there. One is an e-book, “Eleven Tips to Successfully Working with Your Spouse”, one of those tips which we talked about at the beginning of the episode and there’s great information there.

The other gift is a video course that I put together on how to analyze a deal in today’s market. Packed full of good information, I think you’ll get a lot of value out of it, and we just encourage you to connect with us on our website.

Andrea: Also we would really appreciate it if you would head over to iTunes and leave us a rating and review. That would be awesome. We would really appreciate it. You can also — if you have any questions, if there’s anything that you would love to hear us talk about, head over to our website, or you can e-mail us, and shoot us your questions, we would love to get to know you.

Doug: Looking forward to connecting with you. Thanks again for listening.

Andrea: Have a good week.

If you would like to learn more information from our Podcasts, check us out on iTunes & Subscribe. Also consider leaving us a rating (5 stars would be great) and a review would also be helpful so others can learn more about us and get in on our upcoming episodes.

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The post Episode 4: How to Rehab a Property for MAXIMUM Profit! appeared first on Spouses Flipping Houses.

by Doug & Andrea Van Soest | The Spouses Flipping Houses Podcast

Podcast: Play in new window | Download

Subscribe: iTunes | Android | RSS

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In today’s episode Andrea puts Doug, a former Real Estate Appraiser, in the “hot seat” and interviews him about how to know if a deal is a deal.  She asks the questions that most people would want to know when they are trying to determine if they should buy a house as an investment, and of course, what they should pay for it.

John T. Reed’s book “How to get started in Real Estate Investing”  http://johntreed.com/collections/real-estate-investment/products/how-to-get-started-in-real-estate-investment

Free sites to find comparable sales and listings

http://Redfin.com

http://Zillow.com

http://Trulia.com

Download Episode 3 Transcript

Doug:  Welcome to the Spouses Flipping Houses podcast with Doug and Andrea Van Soest.

Andrea:  A podcast about real estate investing, business, entrepreneurship, and balancing it all with someone you love.

Doug: Hello and welcome to Spouses Flipping Houses podcast. This is episode 3. We are super excited to have you with us today. Really excited about our topic. Good morning! Andrea, how are you doing?

Andrea: I’m good. How are you?

Doug: I’m doing really good. Almost through my second cup of coffee. By the end of that cup, I’ll be doing excellent. So we’ve got a great topic for you today. One that I’m really excited about and is near and dear to my heart especially because I’m a former certified appraiser in the state of California and the topic is “How Do I Know if it’s a Deal”. Deal Analysis. What is a deal and what isn’t. We’re going to dive into that in a little bit, but before we do that, what’s going on in our business this week, Andrea?

Andrea: Well, we are getting ready to list two houses, probably tomorrow. We finished the rehab on them last week. The photographer just went out there over the weekend and I just got those photos back. So we’re going to get those listed, hopefully tomorrow, and we are starting rehab on two new flips that we’re going to be doing.

Doug: Big rehabs.

Andrea: Big rehabs, yes. So we just walked those properties with the contractor and kind of made a plan of how we’re going to rearrange walls and everything structurally that needs to be done and changed and everything so that we get going on those two. Those are going to be pretty exciting before and afters, I think.

Doug: The two we’re just about to list were on the other side of that. They were more carpet, paint, countertops type of rehabs which are easier, quicker, but not necessarily better or worse, just different for those houses.

Andrea: Cool. Okay, so let’s get into it! Today I’m going to interview Doug and ask him a few questions. We’re going to pick his brain on his appraisal knowledge. I think this gave us a lot of confidence getting started in real estate investing. Just knowing from an appraiser’s perspective whether or not it was a deal. So, first question. Doug, how did you get started as an appraiser?

Doug: Well, if you’ll remember when we were in San Diego, we had moved back, we had sold our kettle corn business in Colorado. We moved back and we wanted to get into real estate investing somehow. And we read a book by a guy by the name of John T Reed about getting started in real estate investing, and one of the things he recommended doing was get yourself a career in real estate. Just to kind of learn the lingo, the business, kind of how real estate works, whether it be mortgages or as a realtor or an appraiser or other things like that. And you actually had the idea of becoming an appraiser and I sort of stole your idea.

Andrea: Well, I got pregnant, too.

Doug: Yes, there was a lot going on in life at that time. I was working two or three jobs just to get by and do what we needed to do. And Andrea came up with this idea of becoming an appraiser, started researching it, found out that I could get all the educational training I needed in about thirty days with an online course.

So I did that. Went to the coffee shop every day, studied, took my test, had my certification education done, and then literally just got on the internet and started researching appraisers in San Diego where we were living.

And started calling everybody in the book, just going down the list, calling, “Hey, I’m licensed. I had my education done. I’m ready to start learning. Do you have any room?”. Nope. Nope.

Probably went through thirty or forty names calling before finally I reached somebody who said, “Yeah, I just left this one office. You might try calling this other guy. I think they’re looking for somebody”. She gave me his number.

Called him. Went down. Got hired as a trainee which is what you do in the appraisal world. You become a trainee first and start working as an apprentice. So that was 2003. So that’s how we got started and I was full time as an appraiser from that point until we started flipping houses.

Andrea: And I would definitely say that not everybody needs to go get a full-time job in a real estate venue to get started in real estate investing. But we were in San Diego, a market that was way too expensive for us to get involved in anyways.

The market was going up, prices were going up like crazy and everybody was already starting to speculate that, oh, this could be a bubble. So it wasn’t really a time at the place in life that we were for us to jump in. So getting a job just made sense. Getting a job in this world.

Doug: In the field isn’t a requirement, but not a bad way to go if that’s something you want to do. It’s good way to kind of learn. So, that was how I got into it.

Andrea: Okay, so then you were an appraiser for several years, became certified, that sort of thing.

Doug: I got my actual license about a year later and then I became certified maybe two years after that, and those are just different levels of the appraiser license. But literally we worked on our own as our own independent appraisal company from 2004-2010.

Andrea: And pretty much all over southern California, so he appraised everything from the border of Mexico all the way up through LA.

Doug: Through LA, yeah.

Andrea: And that was a great experience. So Doug, from everything that you’ve learned, what are some things that determine the value of a house.

Doug: Well, good question. There’s a few things that are super important. Obviously location. Location would be the number one thing. You can’t compare a house in one city to a house in another city. It’s just a different area, so location is number one. Size. Bedroom count. Age. Condition of the home. Those are all key areas that determine the value of a house.

But really the thing that you need know as an appraiser or as an investor when you’re determining a value is what are the comparable homes selling for. The “comps” as we call them. “Comps”. It really determines what your home is going to sell for when you can compare all of the different features that your home has to a house maybe down the street that sold last month. What does my house have versus what that house has and you can add or subtract value from your house based on what that home sold for and compare.

Andrea: So how would somebody go about finding comps if they are not a realtor or an appraiser?

Doug: In this business, you really need to get access to the MLS. MLS for those who don’t know is the Multiple Listing System, or Service depending on where you are. Most areas have their own local MLS system for your market area. The people who generally are given access to that are going to be a realtor, someone who has a real estate license, like a mortgage broker, or an appraiser. Those three licenses will give you access, legally, to the MLS.

There are other ways to legally get access to the MLS. You can be an appraiser apprentice, or you can be an assistant to a realtor and have access to their multiple listing login. And you know, to do that, if you don’t have any of those licenses, I would call up a realtor and I would say, “Hey, can I help you in any way?

I’m going to be buying homes and be an investor. Homes that I’m not able to buy, maybe I can refer them to you and you can list them. But you definitely can get a real estate license. I mean you can take the classes online and get your license within a matter of a few months. To have your own login and there’s other benefits to that we can go into later. Bottom line, you really do need access to the Multiple Listing Service.

But it can be done without it and there are other ways around that and other ways to find comps. A few of the popular ones that are free services online would be redfin.com, one of my favorites. Zillow. There’s ways to run comps on Zillow. Trulia plus different public record sources, like Realty Track and other titles companies have their own websites with public data information that you can look up sales and things like that. That’s a whole other topic, but those are ways.

Andrea: Great! So how do I know if a house is a comp or if it is not a comp to my property?

Doug: Like I mentioned before, you want to look for similarities in features. You want to look for closeness and proximity, meaning the closer to your house the better. And you want to look for the most recently sold homes.

An ideal comparable, let’s say I have a house on the block that I’m trying to appraise, ideally the house next door is the exact same model, exact same square footage, built the same year, has the same features, bedroom, bathroom count.

It just sold last week. It was listed on the market so it had a normal marketing exposure, and it sold for X amount of dollars. That’s going to be the ultimate comparable because it’s literally the same house as yours.

Now that almost never happens because we’re talking about real estate and there’s differences. There’s differences in location so maybe it might have been across the street that backs up to a freeway, or maybe it had a swimming pool and other features that your house doesn’t have.

So there’s all these different things to consider. You’re looking for similarities in those major factors. Size, age, bedroom, bathroom count, and proximity being the major ones that you want to consider.

And we talked about recent sales. An appraiser, typically you don’t want to look for something within three months, no more than six months back if possible. So something that sold last year, twelve months ago, that’s not really comparable.

I mean, all your neighbors will say that’s a comparable and people think that but it’s really not a comparable because market conditions can change so much over that given amount of time that it may not be indicative of what your house might be selling for today.

Andrea: And I think that’s an important thing to know is that if an appraiser cannot use it, as a comp, it is not a comp because ultimately that house has to appraise at the price that you’re hoping for in order to sell it to a person for that price.

Doug: Right, and I go into this in detail in the free gift we give out. About how to look at these homes as an appraiser would look at them when you’re trying to determine value because ultimately that’s what the person buying the home is going to have to get an appraisal done.

Andrea: Right. So what if there are no comps? How do I determine value then? If I literally cannot find anything comparable to my house?

Doug: Okay, so if you put in those parameters, and you just don’t find anything that looks comparable, first of all you want to expand your parameters a little bit. So let’s say you looked up to a mile away and you looked for homes that were similar in square footage and there was nothing.

Well, expand your square footage a little bit. Expand to a mile and a half away. See if you can find anything there that looks comparable. Still don’t find anything? Go a little bit further, maybe two miles.

It’s really going to depend on the area that your house is located in, and a lot of other factors on how unique it might be. But if you’re not finding comps, it’s probably pretty unique so bottom line is if you just have no idea, and you’re not finding anything, and that house could be a one-hundred-thousand-dollar house, it could be a million-dollar house and you have no idea? I would just turn around and run! Just go to the next deal.

Unless you have a lot of experience and really know what you’re doing and you’re okay with taking big risks, I would run the other way. There’s going to be another deal come across your desk soon enough. There’s always another opportunity, and if you have it narrowed down to a pretty good range of what you think that house is worth, just skip it.

Andrea: Okay. So, my agent swears that this house is going to sell for $555,000. They’re my agent. Who am I to disagree, right? So how do I know if they’re right or they’re wrong?

Doug: Okay, so always respect your real estate agents, but never ever rely solely on what they’re telling you. A couple of reasons here. They may be a great person, but agents get paid by commission, so they get paid to list the house or sell it, or represent you as a buyer when buying a house. That’s how they get paid. They don’t get paid based on the profit you’re going to make on that deal, or lose. Just take that into consideration. They’re salespeople. They’re there for a commission. Now you’re an agent, so I’m not trying to knock agents. We need to work with agents and agents are great.

We love agents, but definitely you need to know the value for yourself. You need to know beyond a shadow of a doubt, based on the data that you’ve collected, and the research you’ve done, that you’re confident in what that home will sell for.

Don’t rely on the opinion of the agent. You can take that opinion for what it’s worth, and kind of use it, but don’t let it influence you too much. That’s the quickest way to get in trouble, I think in flipping homes for a new person who’s inexperienced is to just rely on what a real estate agent is telling them it will sell for.

Andrea: Absolutely. I would say the two deals we made the least amount on, in fact we may have only broke even on those properties, were two homes that a realtor told us he was positive was going to sell for this price. And we went against our own appraisal knowledge!

Doug: You know, and it was very convincing. I’ve got buyers in this area!

Andrea: Yes, that is what he told us.

Doug: I know someone who would pay this much for it. That’s very convincing.

Andrea: And guess what? That person he knew was out of the country and they had just bought something else and their money was tied up.

Doug: Yeah, yeah. That’s ultimately what happened.

Andrea: And we put it out on the market and guess what? People didn’t want to pay what he said that they would pay.

Doug: So we should have taken our own advice there. Just don’t be totally sold on something like that. If someone tells you they have a buyer for that. It’s guaranteed to sell. Know what it could sell for on the open market.

Andrea: Absolutely. Okay, so I’ve got some comps and I think I know what this house might sell for. So how do I know now what to offer?

Doug: Okay, so you think you know what the house will sell for. In order to know what to offer, you’re going to need to back out of the equation, back out your numbers, to determine what offer you can make. This is kind of a bigger conversation than just this little answer, but there’s some general formulas you can use, but first of all you need to understand your expenses, your costs.

There’s buying costs. There’s a cost to buy the property, the escrow fees, the things like that. There’s the rehab cost. How much work am I going to have to do it if any? There’s holding costs.

You’re going to hold that property for three months versus twelve months? That’s a huge difference in your cost there, just in utilities, and if you’re borrowing money, all that interest that you’re paying the whole time.

And your selling costs and those can vary a lot. If you’re going to sell it “For Sale by Owner”, okay. If you’re going to sell it on the market, you’re going to pay agent commissions. You’re going to pay potentially termite things. You’re going to pay for the buyer’s insurance. There’s a lot of expenses to consider there. The typical formula that you would hear that in most cases is a pretty safe offer to make and that’s why it’s widely used, a lot of people will teach to use this formula.

They take the ARV, which is what we talked about before, which is the After Repaired Value, ARV, get used to that term. That’s what you think the house will sell for when it’s repaired.

And then you multiply that by 70% and then you minus out the cost of repairs. That’s generally a pretty safe offer to make if you’re going to be flipping a home.

That 70%, taking that 30% off the top, what that does is that’s accounting for all of the general expenses, the cost to sell, the cost to hold it, the cost to buy it, other contingencies in there. And hopefully it’s leaving you with about 15% profit on the overall ARV.

Does it always work out? No, of course not. It’s just a general safe formula to use. But I want to say this about that formula. You really need to kind of know your area. And what market you’re in.

Andrea: How competitive it is.

Doug: How competitive it is. What other investors are paying for their flipped properties. And this will come with experience and the more you dive into this business and are working it every day and get used to seeing what’s out there, you’ll get a better feel for this. But if we were to use this formula on making our offers today?

Andrea: We’d never get a property.

Doug: We would rarely get a property, yeah. I don’t know about never. You might get a property here and there depending on how hard you work.

Andrea: It’s just very competitive right now.

Doug: It’s very competitive. Most of the time you’re not even going to get close to buying a house with that formula.

Andrea: But in the past, years past, easy. That was our formula.

Doug: That was our formula. Even maybe even 65% minus repairs was our formula in 2008 when we first started. 2009. It was different. Same area, the market was different.

The market was crashing, foreclosures, short sales through the roof, nobody was buying. Very different. It was definitely a buyer’s market at that point and it’s a seller’s market currently here today at this recording, October 2015.

That may change next year if you’re listening to this. You just don’t know so you really need to get a feel for the market and what’s a competitive number and know your expenses. Your own expenses. I’m not going to be able to save on that or that or that depending on how you go about the flip process.

Andrea: And what return do you want to make? So this is based on the return that we feel like our time is worth and what is it worth for us to go through this whole process. What do we need to make? Some people are okay with making less. Some people use their own money, they don’t use hard money, so you need to figure out what return you need to have and back that up.

Doug: Right. You’re going to have a certain amount of capital invested, whether it’s your capital or a partner’s capital or some kind of…you’re going to have capital and time and energy invested into this project. You were expecting to get a certain amount back at the end of the day. Is that return…are you happy with that? Are you not? Is it good enough for the risks you’re taking or not? Yeah. Stuff you have to determine.

Andrea: Right. Okay. What if I’m going to keep this house as a rental and not flip it? What would you suggest that I offer then?

Doug: Okay. Good question. Totally different in a sense but very similar. You still need to know your After Repaired Value, in my opinion. You still need to know what that asset is worth on the open market. Now, there’s another term that I’m going to make up called the ARR, After Repair Rent. I just made that one up.

Not only do you need to know your ARV, After Repaired Value, you need to know your ARR. What will that house rent for when it’s repaired to the rental standard for that area? And that’s important because if you’re going to keep it as a rental, you need to know what kind of income you can expect to get as market rent for that house.

You also need to know, again you mentioned what return are you looking for? So in a rental property you’re investing a certain amount of money into that home and expecting it to return a certain amount of money every month in a form of cash flow.

But if you figure that out over an annual basis, it becomes a certain percentage that you’re hoping to get. So you need to kind of know that number.

What kind of expenses can you expect? There’s a whole other podcast episode we’ll probably do on analyzing rental properties, but there’s a lot of expenses in there: vacancies, maintenance, management. Are you going to manage it yourself or are you going to hire somebody to do that for you?

Andrea: Water. Do you have to pay the water? Do you have to pay the trash? Some cities require that.

Doug: Yeah utilities can vary. Taxes that you have. Insurance. So there’s a lot of costs in there. And what type of financing? Do you have financing on the house or is it just going to be your own cash, your own capital?

Because if you have financing, then there’s a cost to that. You know you have to figure in all those things. So, how long do you want to hold the house is another factor you’ll want to consider. Are you buying that as a rental hoping that will appreciate in value? That’s kind of a speculation.

But, if you’re a market expert, or you have a pretty good sense that you feel the market is going to appreciate, it might be a strategy you want to do. Have a sort of an exit plan in mind before you analyze that deal.

But the reason I say you need to know the ARV is because even though a house might make sense on paper, as a return in terms of cash flow, you still don’t want to overpay for that house for what it’s worth as an asset. Does that make sense?

Andrea: Absolutely.

Doug: So you don’t necessarily have to buy it at seventy percent minus repairs to make it a good rental property, but I wouldn’t be paying 110% of its value just because it looks like it’s going to be a good cash flow property. Obviously that would be foolish. So, you’ve got to know those numbers again and just look at it from a little different perspective.

Andrea: Okay, so analyzing comps. What about active listings and pending sales? Should I consider those?

Doug: Okay, so people who are selling their homes and even agents will use these to justify their number a lot more than they should be. An active listing is just a home that’s for sale, It means really nothing as far as the number that they’re asking.

Andrea: In terms of an appraisal essentially.

Doug: Yeah, in terms of an appraisal or if I’m trying to determine the value of a home. If the home next door is listed for five hundred thousand, that doesn’t mean that this house is going to be five hundred thousand or even in the neighborhood of five hundred thousand.

You have to take the whole market and all the sales into consideration, not just that home. Because that’s just what somebody is asking for the home. It really doesn’t mean anything.

Now pending, you can put a little more consideration to, because that house is typically in escrow. There’s an offer. It’s been accepted. They’re just going through the process of maybe qualifying the buyer and going through all that to get the house closed.

Andrea: But as an agent I will tell you that they do not tell you what the house is pending for. So you might see that it was listed at 550, and it went pending. That doesn’t mean that’s it’s pending at 550, and you won’t actually know what it’s selling for until it’s a closed sale and they list the price that it sold for.

If you even call the agent and ask them, they might be cool and tell you, but most of the times they’re not going to tell you in case it falls out of escrow and they have to relist it.

They don’t want you to know if they came down on their price. So it’s kind of a hidden number. You don’t really know what it’s pending for. Maybe they came down by $50,000 and it’s actually pending for 500 now.

Doug: Yeah, excellent point. So you don’t want to give too much away to either the active or the pending sales. The one thing that they are, not the one thing, but something that they are valuable for is just helping to know your overall market conditions that you’re in.

For example, if there is a ton of active listings in a particular neighborhood, you’ve got to take that into consideration because all of those active listings are potentially your competition if you were to have this home listed on the market and try to resell it yourself. Your competition is all of those other active listing homes.

So you need to really know what kind of market you’re in now. Are the active listings lower than the average sales in the area? That could be an indicator that maybe this market’s going down.

Or are the active listings way higher than all the average sales? Maybe their expectations are for it to go up. So those an appraiser would look at, and an investor should look at when they’re trying to determine the market conditions.

A good thing to kind of know is with active listings and sales would be to figure out the months of inventory in your particular area. So let me explain that a little bit.

Generally, agents will tell you about six months’ worth of inventory is a balanced market. And what that means is if you take the current number of active listings, in your search, let’s say in a particular neighborhood. And let’s say I’ve got thirty-six active listings. You divide that by the average number of sales per month over the last six months or so.

So let’s say over the past six months there’s been 36 sales. And you divide that by six, that’s six per month. So if I have 36 currently active homes, and I’ve got an average of six sales per month, I have six-month’s worth of inventory. Is that too many sixes?

I hope that math equation worked out because I just did it in my head and I hope that makes sense. That would be a balanced market.

Typically, anything below that, four months’ worth of inventory, two months’ worth of inventory, that’s going to be a seller’s market. There’s less competition.

There’s typically a higher demand for that property than what is available. Anything above six months, if you get into the eight, nine, ten months’ worth of inventory, it’s the opposite. You’re in a buyer’s market. The buyers have more choice of homes. So those are certainly things you want to consider with the active listings and the pendings.

Andrea: Good! Great info!

Doug: Bottom line is when determining value, you’ve got to know what the sales are. You’ve got to have access to data, MLS, public records, so you can know what homes sold and have a general idea of what those homes have in terms of their features. Pictures are great. When you look at a sale, go into the MLS and you can kind of see what kind of condition that home appeared to be in. Read the comments from the agent about that house.

So you have to know your data. Don’t take people’s opinions of what it would sell for. Really know the numbers yourself. You have to be confident in your own research that you know what it’s going to sell for. Know your After Repaired Value. Know your numbers and just get out there and start making offers.

If you want to be conservative at first, great. That way you won’t get in trouble. But start making offers and practice at it. You’ll get feedback. Take it with a grain of salt, but the bottom line is kind of get started. Start making offers, and you’ll learn a little bit more about your market as you go.

Andrea: Cool. So we want to invite you to go over to our website and check that out, spousesflippinghouses.com and we have two free gifts for you over there. The first one is a three-part video series that Doug has created on deal analyzation, and he goes much more into depth on all of this information on a video that you can see.

You can see his screen as he’s going through comps and showing you how he finds comps and how he analyzes them, and what’s good and what’s not. It’s valuable, valuable information.

So we’re giving you that for free as well as a little e-book on working with your spouse and having fun doing that. So, check out our website.

Doug: And please give us a rating and review on iTunes if you would. Take the time to do that. We really appreciate it. We love your feedback and it would just help us to get the word out to other people who might want to learn more about this topic as well.

If you have questions, get on our website and let us know what your questions are. We’d love to answer those for you as well. So, that wraps up today! Anything else?

Andrea: I don’t think so. Have a great week everybody!

Doug: Have a great week and we’ll talk to you next week!

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by Doug & Andrea Van Soest | The Spouses Flipping Houses Podcast

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There are many, many niches within the business of Flipping Houses, and in Real Estate Investing in general.  So many choices!  How do you know what to choose?

In Episode 2 of Spouses Flipping Houses, Doug and Andrea give their tips for selecting a niche that is best for your personality, your resources and your time.  Also, they explain in depth about the three main niches within Real Estate Investing.

Download Episode 2 Transcription

Doug:  Welcome to the Spouses Flipping Houses podcast with Doug and Andrea Van Soest.

Andrea:  A podcast about real estate investing, business, entrepreneurship, and balancing it all with someone you love.

Doug: Welcome to Episode 2 of Spouses Flipping Houses. We’re really excited to be back here and thank you so much for joining us and listening to us.

The topic today: Choosing your Niche within Real Estate Investing. Very important topic, but before we get to that, we just a deal. Where were we today?

Andrea: San Diego.

Doug: San Diego. We got a deal and we were down there meeting with the seller of the house, and checking out the property for the very first time. It’s really interesting how this all came about, and just a good lesson for make the offer and stick with the follow-up regardless of what you think the outcome will be.

Andrea: Even if it seems too low.

Doug: Yeah, even if it seems too low, you have to make an offer that makes sense for your numbers and for your business. And so this particular person contacted us off our website, and had a house looking to sell, and Lisa, one of the negotiators in our office, talked with him.

Andrea:  Really built a great rapport with him. They had this connection about motorcycles and kind of formed a friendship.

Doug: Yeah, formed a friendship, said it went really well and you know, like we always do, hey we’ll get you an offer so she did the analysis on the computer and did all the numbers and sent over an offer.

And actually I looked at it. It was not a low-ball offer by any means. It was a very fair offer for the property, for the area and what it was. All of a sudden, the guy responded with an email and it was completely opposite of the conversation they’d just had.

Andrea: Very angry.

Doug: Yeah, the email was “I am insulted. Are you kidding me? I’ve done my research. I know what these houses sell for. My house has this and this and this and this and the neighbors don’t have it. This is insulting”. Why are you wasting my time essentially was the message of that email. And that’s not a common response, but occasionally we get that kind of response and you just kind of apologize and move on.

But because she (Lisa) had a good rapport with this guy, she called him back, left a voice message, and sent an email back just saying, “Hey listen, did not mean to offend you. We just ran our numbers. This is what I see and presented him with the comparables.

Didn’t mean to offend you. This was not personal. This is what we can pay for the house”. By the way he came back and he wanted one hundred thousand dollars more.

Andrea: And he said, “I will not accept anything less than one hundred thousand dollars more”. And he was very adamant.

Doug: I think we offered 285 and he wanted 385, not a penny less. So Lisa left a message and a voicemail and then a couple of days later something changed.

He emailed back and said, “Can you do ten thousand more?” and we have a deal. Lisa called him up and they met in the middle and she came up five thousand and we’re buying the house for 290.

Andrea: The interesting thing is that over the course of the weekend he traveled out to Arizona and he wanted to move his family out there and they found a house that they loved, and they fell in love with. And it had a pool and his house doesn’t have a pool. He’s always wanted a pool. And so that was what it was.

Doug: Yeah, a good mentor of ours Mike Cantor (?) always says time and circumstances can change all things.

Andrea: Changes all sellers’ minds I think he said.

Doug: Yeah, you just never know when the motivation will change and what may happen so just a good lesson in follow-up and sticking with it. Making your offer that makes sense. But do it in a respectful, polite manner. This is a business that we’re running. In this case it worked out really well. And the house was decent. It wasn’t bad, right? [Mm,hmm]. Yeah, it was a good house, so anyway that was interesting.

Andrea: And it totally feels like a win-win because this guy is stoked to move out to Arizona, and now he seems super happy with our offer. He was so kind to us and he’s excited about it too. Just as much as we are.

Doug: So kind. He pulled out his cellphone. He’s showing us the pictures of his house in Arizona and the pool. He just can’t wait to leave California and they’re so excited to get a new start in their new place.

Yeah, it’s a win-win. Problem solved. Get a house that makes sense and he gets to move out to Arizona and go to his new house which he’s excited about.

Andrea: It’s fun when it works out that way.

Doug: It’s great when it works out like that.

Andrea:  So back to our main topic for today which is “Choosing your Niche within Real Estate Investing” or business in general really. It’s so important to have a focus and to have a niche.

Doug: Real estate investing is a big broad term. There’s so many different niches within real estate investing as a profession. We narrowed it down to three of the main niches that are out there and we’re going to go into those here shortly. But it is important to, before you get started, at least our experience was we would go to educational events and we’d read books and we’d go to these seminars and clubs, and there’s so many bright shiny objects we call them. Oh, that one sounds great! Let’s go do short sales. Oh, that one’s better. Let’s fix and flip. No, let’s wholesale properties.

Andrea: Oh, short sales. That’s the best way to go.

Doug: Yeah, short sales. Oh no, Subject Two. Let’s go do that! Everything works and everything has its place. There all not necessarily good or bad ways to go, but there’s so many different ways you don’t want to get pulled in too many directions especially when you’re first starting.

We’re going to go over the three main ones that we’ve narrowed down, and possibly some good tips on how to narrow it down when you’re just getting started to get into a specific niche. Not that you’re in that niche and you can’t change because if you remember when we first started, we were going to go short sales.

Andrea: In fact, we worked short sales for probably eight months. With no return.

Doug: No deals. We took some seminars at that time. This was 2007-ish and we were working hard to do the short sale niche and we were taking a lot of the steps necessary. But for whatever reason it just didn’t quite work for us, didn’t quite happen.

Some of the things were good, we’d get some responses, but we could never get that entire deal to the finish line. We ended up changing niches eight months later and it still took us a while to get our first deal. But then it finally started clicking. So don’t think that once you pick one you can’t shift and change later.

Andrea: Or that you can’t do multiple niches, but figure out the one or two that you’d like to focus on and stick with that.

Doug: Right. So our first tip or thing you should think about when choosing your niche would be to think about your goals. What is your end goal here? Are you looking to generate cash quickly? Like, chunks of cash? Are you looking to make this your income right away?

Or are you looking for more of a long-term strategy for creating possibly residual income cash flow that comes every month in the form of a check or multiple checks. Think about what your goals might be when looking into your specific niche that you’re going to choose.

Andrea: Our second tip for helping you to decide what niche you should go with is to know your personality and to know your strengths and your weaknesses. A lot of people, I think, don’t feel confident in who they are and what they’re good at, and what they’re not good at.

So if you are one of those people, maybe ask a few people that you really trust. “Hey, can you tell me the things that you think I’m best at? What are the things that you think I’m not so great at?”

Doug: Someone who can be honest with you.

Andrea: Definitely someone who can be honest.

Doug: Ask your spouse, but then ask someone else, too.

Andrea: Yeah, maybe a best friend. Maybe it’s your parents. Somebody that you really trust who loves and cares about you and is going to tell you the truth in a loving and kind way. Another thing you can do is take a strength finders test, and I love these. You can learn so much about yourself.

There’s actually strengthfinders.com which is a test that gives twenty-five strengths, and there’s a book that goes along with it, and they basically through the test give you your top five strengths. What they’re suggesting is you learn how to operate within your strengths.

Do what you’re good at. Focus on what you’re good at and become better at it. Stop trying to do and be what you’re not good at. Let somebody else do those things.

You can go to strengthfinders.com, there’s another called kolbe.com. If you pretty much just google strengths test, there will be so many that come up. Personality tests. And you’ll learn a ton about yourself. You’ll learn about what you’re good at, and I think that can really help you to focus in on what you should do.

So another thing that you need to do really is determine your personality. Are you a people person or are you not? If you are a people person, you might be really great at door knocking. That’s totally for the extrovert!

Doug: Great way to go but you need to know how to talk to people for something like that.

Andrea: Also sending out mailers and taking calls, maybe you enjoy that sort of thing if you like talking to people. Forming relationships with agents, that’s another good way to go. If you are not a people person, that’s totally okay. I am very much an introvert. Some people are just kind of rough around the edges and they don’t do so great around other people, but you can still be good at this business. So you might want to consider bidding at auction. That’s kind of hard to do in California right now in this market, but I know in other states I think that’s still a viable option. You might want to consider Buy and Hold. You don’t need to get such a big discount to hold a rental property. So maybe that is a niche that you want to focus towards.

You could focus on getting in with some wholesalers, so go to clubs. You’re going to have to get outside of your comfort zone, even if you are an introvert, so go to some clubs and meet other wholesalers, and maybe get on their lists and they’ll send you deals and that could be your source. And you don’t have to talk to too many people, just a few wholesalers.

You can also go on Craigslist and search for bird dogs. If you don’t know what that is, it’s sort of like wholesalers, people who go out there and are maybe new in the business, and they’re kind of out there hustling, looking for deals in different ways and they’ll send you everything they got.

Another thing that kind of goes along with all of this is operate within any advantages that you may already have. So let’s say that you have a job that’s in some kind of a delivery service. Maybe you’re a mailman, or you’re a pizza man, or anything where you’re out driving around.

You have an opportunity to do what we call driving for dollars. That is just sort of taking notice of homes in these neighborhoods that you’re driving that are looking a little run down or distressed. Take note of that address and send them a letter.

Or maybe go knock on the door if you’re an extrovert. Find out what the situation is. Maybe they’re interested in selling their house, and that’s a fantastic strategy. Maybe you have contractor skills, you worked in construction in college. That’s a great skill that can help you determine what your niche you’d want to go because then you’d be a great fix-and-flip person because you’d know exactly what to do. What needs to be done.

Maybe you have sales skills. Maybe you already had some kind of a sales job. Well, that is huge. You can do just about anything, I think if you have sales skills in this business.

Doug: Yeah, absolutely. Maybe you’re an accountant and you know the numbers really well and you know how to calculate rates of return and Buy and Hold would be easy to figure out if this is going to be a good rental property cash flow for you.

Andrea: Yeah, so operate within your strengths, and operate within any advantages you already have. Or things that you’re already good at.

Doug: So the third tip that we would have on choosing your niche would be to look at your time. how much time do you really have to give to this endeavor you’re about to take on. Are you unemployed? Do you have all the time in the world?

Or do you have a full-time job that maybe you have and want to keep for a while and you can give an hour a day. Whatever it is, you’re going to really need to take that into consideration. Some niches and skills that you’ll employ out there are going to take a lot more time than others.

For example, if you’re going to be sending out letters to people, depending on the number of letters you send, you’re going to be getting a lot of phone calls and you’re going to be talking to a lot of people.

That can take a lot of time. If you’re going to go door knocking or things like that, that takes time. You’re going to have to get out there in the neighborhoods walking these neighborhoods and looking for properties, looking for opportunities essentially. It can all be done full-time or part-time, but you just kind of need to know going into it how much time you need to give and that may play a part in what niche you choose.

Andrea: And our fourth and final tip before we tell you these different strategies is to avoid Analysis Paralysis. Just choose something. For us, starting with short sales, we learned so much even though it didn’t work out for us and we ended up going with another niche. You will learn more by trying something than by setting everything and never doing anything.

I can’t tell you how many people that we have met at real estate clubs and at every single seminar we’ve ever been to that have never bought a property because they’re trying to learn every single thing that there is to learn before they get started.

Doug: They have a name: Seminar junkies. Don’t be a seminar junkie. Education is good, don’t get me wrong. But at some point you need to step out and take some action and choose something and go for it. And like she said, you’ll learn a lot more.

So, into our niches of today. The first niche that we’re going to go over, the first strategy…

Andrea: Basically there’s four, right. Oh, three.

Doug: Quick three. Three strategies, these are generalized of course, there’s niches within these niches, but the first one is very simple: Buy and Hold. What are we talking about when we say Buy and Hold? What we’re talking about here is generally buying rental property that you’re going to hang onto that could be commercial property, could be a residential house, could be condos, could be multi-unit properties, apartments.

Andrea: Vacation home, that’s a big one now.

Doug: Vacation home is a big up-and-coming one that a lot of people are getting into. Essentially what you’re doing is you’re buying a house and you’re renting it out.

And your goal would be to sell it at some point in the future, even if it’s a year or two years. I consider that long-term. It’s not going to next week or next month or even within six months that you’re planning to sell that property. This is a Buy and Hold strategy.

The thing you’re looking for here when you’re getting into this niche, you’re looking for cash flow, typically. You’re going to be looking for a rate of return on the money you’ve put into those rental properties. You can hope for appreciation, but that is more of a speculation.

The idea with a good rental property is that it doesn’t matter if it goes up or down as long as that thing is going to be rented it’s going to be providing you a return on your money and a cash flow. Any appreciation, that may or may not happen. That’s just kind of icing on the top that you’re looking for there.

Andrea: Some skills that would be really important for this niche would be deal analyzation. So if you’re a detail person, you need to be able to understand your numbers.

You need to understand rates of return. You’ve got to be good at property management or knowing how to hire someone to manage your property. That’s a big deal.

Doug: Very, very big.

Andrea: People skills are important in Buy and Hold, so if you don’t have them, know how to hire a good property that can deal with your tenants because it is like babysitting.

Doug: And selecting the right tenant even more so.

Andrea: And you’ve got to have patience because there’s a lot of things that require patience in this niche.

Doug: This one’s a waiting game. This is true investing here. A lot of these other niches could be considered like a business. This one is true investing. You’re holding on for the long-term. It’s a great strategy, a great niche. We employ this strategy in our business as well, not as our main one, but it is one of our strategies.

And this might be good for people who work full-time. You can do this on a part-time basis for sure. You can buy one property a year, you can buy five properties a year. All of that can be done part-time as you build your rental portfolio.

Andrea: And you will also have the W-2 income to maybe get some fantastic loans. So that might actually really be a great strategy if you have a job.

Doug: Right, that can be a complement to this strategy if you have a W-2 income. Anyone who’s tried to get a loan in the last few years knows what we’re talking about. Okay, so that’s the first strategy. Strategy Number Two: Fix and Flip.

This is what you typically see on those TV shows, on HGTV. Someone who’s going to buy a house, fix it up, upgrade it, do things to it, make it look beautiful, and then turn around and put it on the market and hopefully sell it for a profit. This is what most people think of when they think of real estate investing.

Andrea: Buying it below market, adding value, and hoping to sell it for a profit.

Doug: Right. It’s definitely a great strategy to go. It can be a little bit higher risk, but it can also be higher reward depending on the property and depending on how it comes out. Now this is a great strategy. It can take a lot of time.

It can be done part time. But typically if you’re going to do this on more than just a one off basis, if you’re going to have multiple projects going at any given time, it’s going to take a lot of hours, and it’s going to require management. You’ve got to manage contractors or subcontractors depending on how you’re doing it.

You’ve got to find the deal first of all, depending on how you get the house. You have to find the right property that’s got enough, where the price is right so you can actually invest money into it, and create a bigger value by what you’re doing to the house.

Andrea: And you need to have some money for this strategy. People will tell you that you don’t, and maybe you don’t. I’m sure that there’s ways where you don’t, but it’s easier if you do because even the hard money lenders want to see that you have a little bit of skin in the game. So you should have a little set aside to be able to participate in this strategy, even if you plan on getting some kind of a hard money loan.

Doug: Now if you have no money, we’ll get into another episode down the road where you can start investing with no money, but money needs to come from somewhere so somebody that is on your team or that you know needs to have a little bit of money to get going in this strategy.

Andrea: So some skills that would be important for Fix and Flip are deal analysis, and I’m going to say this every time, deal analysis is important. You need to know how to run your numbers, for sure.

Doug: The money is made when you buy. You’ve got to buy it at the right price.

Andrea: Yeah, you need to have some rehab knowledge. And actually you do and you don’t. We really didn’t when we got started. We just got to know a good contractor and we would bring him along on our inspections and he just kind of walked through silently with us and then afterwards we would go outside and he points out the things that we didn’t see. You can learn so much that way. And now we don’t need him. Now he taught us so much that we know exactly what to look for.

Doug: Yeah, after a few we could estimate our repairs within ten percent of what that budget would be.

Andrea: Get creative if you don’t have rehab knowledge. It’s still possible. But that’s a definite plus. Budgeting obviously is hugely important in this one because if you blow your budget, that’s your profit. You have your profit margin that is allocated and so you have to stick within your budget for your flooring and your paint and everything else that you’re doing. And there will be unexpected things that come up and you have to allocate for that as well.

Also, team management skills are important because if you are really going to go after this and you’re going to do a lot of Fix and Flips, then you’re going to have a team, so you need to have some leadership skills to be able to lead them properly and to manage them.

And then systems. I’m sure we’ll have future episodes about systems that we use and systems that we recommend, but you’ve got to have systems in place to do this smoothly and effectively.

Doug: Yeah, yeah. Definitely. So good niche but it does require a little bit more hands-on, a little bit more skills that could be needed for that one. The third strategy, or third niche that is widely popular out there is called wholesaling. Let me explain a little bit about what wholesaling is. We do this as well. We do all three of these actually.

Wholesaling is where you are getting a property under contract, and you are essentially acting as the middle man. You’re finding a seller for one price and then you’re immediately finding a buyer, typically an investor buyer, for another price. And whatever the spread is in the middle, that’s what you keep.

There’s lots of different ways to do this and we will definitely have future episodes on wholesaling. It’s one of our favorite niches. It’s a pretty popular one for beginners and the reason is that the risk can be very low.

You can do this with a very limited budget because you’re not actually going to own the property. You’re a property finder is what you are. The skills, or what’s important for the wholesalers is finding the property. So you’ve got to be good at marketing. You’ve got to be good at…what are the skills involved?

Andrea: Well, I was going to say again deal analyzation. That’s really important. That’s one of the gifts that we are giving away is actually a course that Doug has put together for deal analyzation.

He used to be an appraiser for a lot of years, and so he has this whole e-course, web course, that teaches you how to analyze a deal, how to look at it from an appraiser’s perspective. That’s really important to Fix and Flip as well as wholesaling. You’ve got to know how to buy right.

Doug: You’ve got to know what the numbers are. What the house is worth. Very important.

Andrea: Then marketing like Doug just said. It’s huge. It doesn’t so much matter what you put on the letter, but you’ve got to be able to send out letters or postcards or door knock. Whatever your means of marketing is, you’ve got to be good at and you’ve got to do it. Repeatedly. Don’t stop.

The other one, the next one is people skills. This is kind of a niche where you have to have people skills. You have to be able to negotiate because you are kind of sandwiched in the middle of a negotiation. You’re negotiating with the seller of the house and you’re getting it under contract, and then you’re negotiating it with the person that you’re going to sell it to.

So you need to get a good deal and then you need to sell it for the right price. So you’re right there. You’re all up in the negotiation. You’ve got to be good at it.

And then, well, sales that kind of goes along with it. Organization is really important if you want to be a wholesaler too. Keeping track of your leads. You need to have some kind of a system for that. It’s really important.

And then the last thing I would say is you’ve got to hustle because there are a lot of wholesalers out there. So if you’re not going to hustle, then you’re not going to get the deal.

Doug: Yeah, there’s no substitute for good hard work. So that pretty much wraps it up for today for the topic of choosing your niche within real estate investing.

Once again, the important things to remember: what’s your end goal; know your personality, your strengths and weaknesses; what opportunities are right in front of you; how much time do you have to commit to this niche; avoid Analysis Paralysis, choose something eventually.

And then the three strategies or niches are Buy and Hold, more of a long-term strategy, Fix and Flip, could be good profit and high risk, and Wholesaling, low risk and can also be very profitable. It takes a lot of time.

Andrea: And we want to encourage you to check out our website spousesflippinghouses.com. We have two free gifts for you if you go on there and enter your email address to stay connected with us. The first one is an e-book, Eleven Essential Tips that we’ve come up with for successfully working with your spouse. So you can check that out.

Also the e-course that Doug has put together for deal analysis, kind of thinking about a deal like an appraiser would and knowing how to buy it right basically. It’s really valuable stuff, especially for a beginner, but really for somebody who’s seasoned in this, you can never know enough about buying a property the right way.

Doug: Yeah so get on over there and connect with us. Also if you like what you hear, please leave us a review in iTunes. Go to iTunes, give us a five-star review if you liked it. Let us know what you think. That really helps us in our ratings and can get more people listening to what we’re doing here.

Andrea: If you have any questions or you want to connect with us, you can email us. Check out our website again for our email. And if there’s topics or anything that you’d like to hear more about, let us know.

Doug: Yes, we’d love to hear from you. So until next time….

Andrea: Have a great week!

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