Drip Market To Motivated Sellers For 2.5 Cents – Video 3

I’m going to show you how to drip market
to your seller leads and your buyer leads for 2.5¢ per message. Instead of having to
send out a postcard that costs you a dollar to send out, you can send out a text or a
voice blast that costs you 2.5¢ and you can also put them into a drip system that sends
them a sequence of messages over a period of time.
The Automarketer is actually set up with sequences already in place. We’ve got a three-month
sequence for For Sale By Owners to help them, to make offers to them so that they will contact
us and allow us to buy their property on terms. And when we buy properties, by the way, we
buy them with no money down and in fact we’re not just able to buy these property without
using our money. When we close, we get money. So we set these structures up so that we get
money. And all this is taught inside the Automarketer.
You can also look at my blog and my other videos. I talk a lot about the For Rent Method.
I talk about the other Zero Down Structures. The whole hierarchy of zero down structures:
Subject To, Multi-mortgage, Land Contract, Contract for Deed, Assignable Cash Deal and
Lease Options. If you’ll understand how these zero down structures work, you can make
an offer on For Sale By Owners. You can make an offer on expired listings, you can make
an offer on absentee owners or any other type of seller lead that you come in contact with.
The Automarketer is actually set up so that you can create your own campaigns if you want
to, or you can use the preexisting templates that we use, that we have tested and tried
over the years that work very effectively. Let me how you how the drip campaigns work.
Let’s take a look. I’m logged into the Automarketer now, and
if you’ll remember from the last video I showed you the Automarketer, Zillow Automarketer,
and showed you how the campaigns work, how they scrape leads and how they put them into
the system and how they send them out with a campaign. In this video, I’m going to
show you how to use the follow up campaign that will, how we actually set up the follow
up campaign. So the system scrapes the lead, it then puts them into a campaign and these
campaigns will actually send out a series of messages. And they can be voice messages,
voice blasts. They can be text messages or they can be emails.
And the emails can only go out to opt-in leads. We don’t have a way to scrape leads from
craigslist or Zillow with emails. But we do have their phone numbers. So, what I’m going
to do is go into the Automarketer campaigns, because we’ve got different campaigns that
do different things. But I’m going to show you the Automarketer campaigns that are set
up. And let’s look specifically at the three-month
campaign because that’s the one that I was showing you yesterday and that’s the one
that we use the most. So, I’m going to go here and I’m going to actually – and you
can see here I’ve got 655 people that are currently in the Automarketer, and 1,700 of
them are in the system right now. So I’m going to look at the details of this particular
campaign. You can create your own campaign. You don’t
have to use this one and there’s a lot of different ways that you can create these campaigns.
And I want you to know right up front you don’t have to do this at all. This is already
set up for you. You don’t have to know this stuff, you don’t have to understand how
it works. You don’t have to do any of this stuff. I just want you to see what the capability
of the system is because it can do a lot more than you’ll probably ever need it to do.
And we set it up so not just, so that you couldn’t just send out the kind of campaign
we think you should send out, but you can send out a campaign that you want to send
out. Or, you could modify one of the campaigns
that we create. And we’ve got it set up here so you can actually clone our campaigns
and then you can go in and modify a campaign so you wouldn’t have to start from scratch,
or you can start from scratch. So, let’s take a look at what this means and how this
thing works. This is a campaign. You can see that there’s
14 total events. In this particular campaign it’s all text messages. But it could be
a text message, it could be a voice message where it leaves a message on their voice recorder,
on their phone. Or it can send them an email. It can also set up a task system so that we
can say here’s a task that needs to be done and have that message go out to one of your
team members and remind them that hey, you need to do this today, or you need to do that
today. And you can create templates of tasks. I’m going to show you how to do that in
a later video. It’s a very cool thing that will make it possible for you to completely
automate and systematize your business. It’s absolutely an amazing addition to this Automarketer.
But this is a text blast campaign that is designed for the Automarketer, for the scrape
ads, the FSBO scraped ads, of the For Rent ads that are coming in from the Automarketer.
And you’ll see here I’ve given it a title. We gave it a category so this in the Automarketer.
And I could set it up so that if, when this campaign ends I could have it start another
campaign. I’m not going to do that on here. I’ve got it set up as active. I’ve also
got it set up so that the email events, the mail events, oh, yeah – it also sends out
snail mail which I’m going to show you in a later video.
This will send out postcards, self mailers, letters – We Will Buy type campaigns that
all you have to do is click a button and it’ll send those things out. But I’ve got that
turned off. You can put them in a campaign so that you could do a series of postcards
that go out over time. It sends out text messages, I’ve got that turned on. And voice blasts,
I’ve got that turned off in this particular campaign. You can see I’ve got 2,400 people
that are active in this campaign right now. Now, as I scroll down the page, this shows
you the events that are going out. Again, it’s got 14 events. That means 14 texts
that are going to go out over a three-month period. Because I set this up as a three-month
campaign. And I can create new events on this and I can put as many in here as I want. If
I wanted to add voice blasts into this campaign I could. If I wanted to add snail mail into
it I could. I could add, you know, email into it as well and create these new events if
I choose to. But I just want to show you how these events, what these events look like.
So, on day one the first thing that gets sent out is a text that says, “I saw your home
advertised and I was wondering if you’d consider selling it” and this would go out
immediately. If I wanted to change this to go out over a period of time I could change
it to this and then I could change the days, hours, weeks months – how often it needs
to go out. But I’m gong to have it go out immediately. So as this campaign is attached
to a lead that is scraped it’s going to send out this text blast. “I saw the home
you had advertised . . .” If I wanted to modify this message, I could.
All I have to do is click on this little button here and it’ll open up this in a window
and it’ll allow me to change the text message that is going out. The second message that
goes out is on day four, and these are days that I decided. You can change them if you
want. I think this makes a lot of sense and you probably want to use the system that I
set up at least until you understand what you’re doing and are able to get going on
it. And it’s going to send out a different message on day four, with a URL this time,
that goes to one of the clone sites. This goes to the Rent To Buy seller site.
On day eight it sends out another. And again, I can modify these, change them, I can add
things to them and make that work. And down below, if I scroll down below, you can see
the activity log of this campaign. So, you can see all the ones that have been sent out
since you know, since I’ve been running it. About 40,000 text messages have been sent
out through this particular account to these particular campaigns that I’ve run in the
Automarketer. If you’re watching this video on YouTube
make sure to hit the subscribe button. If you click the one with the little bell, YouTube
will send you and email every time I release a new video in the series. If you go to JoeCrumpBlog.com
you can also sign up for my email subscription and you’ll get all sorts of free content
that I don’t have on YouTube.

How Real Estate Investing REALLY Works – Real Estate Investing 101

What’s up everybody,
I am Jaspreet Singh, and welcome to the Minority Mindset. If you’ve been
watching our channel, you understand that the best way to build your wealth is not
by listening to your math teacher and just saving 10% of your income in your savings
account. Keep saving, Johnny, you’ll be wealthy one day, hopefully. The truth is,
the real secret to building wealth is investing. With investing, you’re not
buying things that lose you money and make you poorer, like cars, and shoes, and
clothes, you’re using your money to buy things like real estate, which will, one,
pay you with cash, and they’ll make you wealthier. So today, I’m going to give you
a crash course on real estate investing because, I wish somebody would have told
me these things when I was getting started in real estate, but, before we get
into it, make sure you hit that thumbs up button below, and subscribe to the
Minority Mindset YouTube channel, right below the screen, and make sure you hit
that little bell too, because if you don’t, then YouTube doesn’t tell you when our
new videos are released. First, so we’re all on the same page:
how does real estate investing work? Real estate investing is when you buy a
property—not to live in yourself—but to rent out to somebody else. You’re buying
property like a house, an office building, a real estate building, a strip plaza,
this way, you can let other people live in, or use this property, and in exchange
they’re going to pay you rent every single month. That’s what real estate
investing is, but let’s talk really briefly about what real estate investing
is not. As much as your banker and all of your friends want you to believe this,
real estate investing is not going out and buying a big beautiful fancy home
for you to live in, because you think you’ll be able to sell it for a profit in
a few years. That’s buying a liability. You’re buying something where your money
is going out, and your money’s not coming back. Real estate investing is also not
buying a property, fixing it up, and then they’re trying to sell it three months
later for a profit. That’s flipping. It’s very active, and
it’s cool, and you can make money doing it, but it’s not real estate investing.
Second, why should you be investing in real estate? The simple answer is: so you
can make money. The complex answer is: so you can be financially free. Real estate
is a tangible investment, and it is robot proof, because people will always need a
place to sleep, people always need a place to eat, and
people will always need a place to work. When you are a real estate investor, you
will be getting rent checks every single month, even if you’re sitting on the
beach in Hawaii. Plus, real estate investors get tax breaks. Now, while I am
a licensed attorney, I’m not your attorney, so if you have
specific tax questions, talk to a tax professional in your area, but, have you
ever wondered why people like Donald Trump can own a bunch of real estate, and
they can make millions of dollars a year in rental income, and then they can turn
around and pay close to zero dollars in taxes? It’s because the tax code says
that real estate investors get tax breaks. And yes, it is legal. Let me show
you what I mean with some numbers. If you are a highly skilled, and highly educated,
and highly talented heart doctor, you might be able to make—my heart is
lopsided, sorry—1 million dollars a year from all the heart surgeries you do. Now, a
million dollars a year is a lot of money, but, because you are making this money
from your job, you don’t get to keep all 1 million dollars, because that’s what
the tax code says, you will get to keep somewhere between 500,000, and 600,000
dollars after paying your taxes. Still a lot of money, but you didn’t get to keep
all 1 million dollars. Now, on the other hand, let’s say you are a real estate
investor, and you bought this property for $100,000, and a few years later this
property goes up in value to 1.1 million, so you sell it. You have a profit of 1
million dollars, and now, you think that you have to pay taxes on this 1 million
dollars of profit, right? Well, the tax code says: if you take this 1 million
dollars and you reinvest it into a bigger piece of property, you don’t have
to pay any money in taxes today. It’s called the 1031 exchange, and now you own
a bigger piece of property, and you’re going to get bigger rent checks every
single month, and now if you go back to your beach in Hawaii, you’re going to
continue getting paid vs. if you were this heart doctor, and you go to a beach
in Hawaii, you won’t be getting paid anymore because, well, if you’re on the
beach, you’re not doing heart surgeries, and
you’re not getting paid. And in case you were wondering, you also get a bunch of
special tax breaks for the rental income that you get, so if you make a million dollars
a year in rent, you get a bunch of special tax breaks for that too. Third, let’s talk
about some of the kinds of real estate you can invest in. You have single-family
homes, apartment complexes, shopping plazas, land, mixed use properties, mobile
home parks, office buildings, retail, hotels… There’s a lot, but, what you have
to remember is that each piece of real estate has two different businesses
involved. You first have the business of owning the real estate, and then you have
the business inside of the real estate. Look, you can own a CVS building without
operating a drugstore, and you can own a hospital without being a doctor, or you
can own an apartment complex without managing the tenants inside. When you own
the building that CVS is renting, now you own the property, and CVS is doing the
work to find customers, and manage inventory, and hire staff, and sell their
stuff, your job is to collect the rent. When you are a real estate investor, your
job is to own the real estate, not run the business inside. Now, this is easy to
understand when we’re talking about investing in a CVS building, or investing in a
hospital, but what about when you invest in a house, or an apartment complex?
Instead of being the person who gets the phone calls when the tenant says: Hey, I
didn’t eat something too good last night and I clogged the toilet. Can you come and
fix this? You want to be the real estate investor. You can hire a property manager
who will get paid a percentage of your rental income, and they will handle all
the management work. So, they will pay your bills,
they’ll make sure the tenant’s paying on time, and if they have to kick out a
tenant, they will handle it for you, this way you can focus on being the
real estate investor. Number four, how do you get in? If you want to invest in real
estate, you need money. Okay, you can buy
properties with cash, you can go to the bank and get a loan, or you can get a
bunch of friends who have money, and you can pool your money together to go and
buy a bigger property. And then beyond these three, you have this whole world of
creative financing, but you need to understand that the numbers have to make
sense. You do not want to buy a property where you’re losing money every single
month. Crunch the numbers, make sure that the income that you’re getting is enough
to cover the expenses and put some money in your pocket every single month. Once
you’ve got your numbers down, make sure, this is not a recommendation, this is a
must, make sure you have a real estate attorney, and you have property insurance
for all of your real estate. You have to do this, this is coming from somebody
who’s not just an attorney, but from somebody who’s a real estate investor
who’s been sued by a tenant because they claimed that the bathtub got too
slippery when it was wet. This is a true story, so make sure you have an attorney
and insurance. And number 5, you need to understand the real estate market. Not
only do you need to understand where you’re buying, which is the micro-level,
but you have to understand the macro level, which is that real estate has
cycles. There are times when the real estate market is booming, and then
there’s times when the real estate market is coming down. Remember, when
you’re a real estate investor you’re not buying property so you can flip it in 6
months for a profit, you’re buying it so you can create a positive passive income,
this way you can make money each and every month, so when you’re buying real
estate, make sure the numbers make sense. And second, you want to buy in a location
where people are moving to. I have paid premiums for real estate in locations,
while still being profitable, because people were moving into a location, and
over the long run, this has proven to be much more profitable. I’ve talked about
this before and I’ll link it in the description below.
The key here is to make smart money decisions, and in order to do that, you
have to understand what’s happening in the finance and business world, which is
why we created the free Minority Mindset newsletter. In our newsletter we break
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My Business Allows Me To Help People And Communities In Need

My name is Malikah Woody and I’m originally
from Columbus, Ohio, but I now live in Tallahassee, Florida. I had been involved in real estate for some
time, just as a person who was a property owner who didn’t live on the property and
wanting to rent it out. But then over time became more and more interested
in the concept of making money that way, making passive income. And so over the years I would go out onto
the internet and search for information about how to acquire more properties and build more
passive income that way. By doing that, eventually I came across Joe
Crump’s website and I just really, I really liked the way that he spoke, the information
that he shared. He seemed really trustworthy, genuine, honest
with the information that he presented. And so I just looked further into his information
program. In order to make my first deal it really took
only a couple days. I started by using the Automarketer and calling
people who had responded to what was sent out. I ended up speaking with a person whose sister
owned the property, but the sister was not capable of being involved in its management
or care. So, I just talked with her, the person who
didn’t own the property, and her husband and tried to help them figure out what I could
do to assist them with what to do with the owner’s home. The home was in severe disrepair, the yard
was overgrown, they did not live in the same city and they were all up in age. So it was a burden for them to try and figure
what to do hours away with a property. And so I really just researched things that
Joe had suggested, different options, and found something that worked for them and was
able to kind of help solve their issue and help take that off their hands through finding
a buyer for them, getting it at a really reduced rate and getting it over to a buyer that way. What I consider to be the best deal so far,
actually it’s probably the one I just described to you. It was my first, but it was also the one I
feel most, I have the most sentimental attachment to. I made a smaller profit on that one, but I
felt like I made the biggest impact for everybody involved. So, on that deal I made $5,000, which is about
average still. In the coming year I plan on really ramping
up my business and I think that I’ll be able to hit six figures with real estate investing
in this way. Also, my person goals moving forward as a
real estate investor outside of my own financial security and stability, I really want to use
these methods to help other people and other communities. Really, that’s the best part of it for me. I would like to help regenerate communities
that are falling into disrepair, help people be able to learn how to take better care of
their finances, but also grow and establish legacies for their families. So, that’s really my long term goal. In terms of personally, I plan on leaving
my full time employment and being able to spend more time with family as well as travel. I know people who live in lots of different
countries around the world and I’m getting older and getting close to retirement age. And so I want to start moving into that phase
of my life where I can spend time traveling and volunteering. So, the impact that real estate investing
has had on my life, it has been freeing. It has allowed me to not have fear of financial
instability or fear of markets. It has allowed me to be independent. I used to be a stay-at-home mom. And having financial independence, even though
that wasn’t something I really sought, it is nice to have that and to know that I can
do things on my own and be really well financially off. Financially well off. It’s not currently being automated. I’ve used the Automarketer in the past. I have not used it the last probably two years. I see myself doing that, automating, again
though in the future. So, the event this weekend. I really hope to get some new information. I also hope to meet people. I’ve already been networking with other
attendees which is really easy to do here because everyone is so kind and down to earth
and easy to talk to. And we’re all here for similar reasons. But gaining knowledge, information and inspiration
from the other event attendees is the best take away for me. I would say jump in and do it. Don’t wait, don’t over analyze. Don’t allow yourself to not take action
out of fear. Go ahead, pick up the phone. Go ahead, figure out what you’re going to
say and say it. But also listen to your potential clients. Listen to your sellers, because they will
tell you even without you asking, they will tell you what areas they need helps with and
that allows you to then propose solutions. This is a family affair for me. I brought my little brother here today. I am significantly older than he is. I’m eighteen years older than he is. So, we did not really grow up together as
siblings in a traditional way. But he’s all grown up now, and graduated
form college and entering the work force and things like that. It is so exciting to me, the idea of being
able to share this opportunity with him. And we’re sitting at a table with a father
and daughter. The young lady’s in her early twenties. So I’m really excited to see other people
making this opportunity a family affair and recognizing how extraordinary it is to change
not only our lives but the generations that come after us.

Real Estate Investing: How to Play the Housing Market Without Buying a House

Chris Hill: Hey, everyone!
Thanks for joining us! We’re coming to you from Fool
global headquarters in Alexandria, Virginia. I’m Chris Hill, joined by Matt Argersinger
and Austin Smith. Thanks for being here, guys! We’re going to be talking real
estate investing. We have a lot to cover. But speaking of a lot of information about real
estate investing, we have a free 40-page e-book. It covers everything. Whether you’re a newbie or you’re an experienced
investor, there’s a lot of great stuff. I know you guys put a lot
of work into that. It’s free. You can get it by going to real.fool.com. We’ll take your questions in
a little bit about real estate investing. But Matty, let me just start with you.
We talk a lot in this studio about stock investing. Real estate investing,
why is it so appealing to you right now? Matt Argersinger: It’s been
appealing to me for a long time, Chris. I’m so excited at The Motley Fool,
we’ve really taken a big step into the asset class. I think a lot of investors who’ve been following
The Fool for years probably think of real estate, they immediately think of REITs,
or maybe they think of buying a rental property, a home, renting out part
of their home, maybe through Airbnb. And that’s the extent of
what they think about real estate. They don’t think about the idea;
can I own a piece of an office building? Could I own a self-storage facility?
Could I do those types of things? What’s remarkable is, yes. The answer more
than ever before today is yes, you can. The individual investor has more options today
— we’re going to talk about lots of them — to get into real estate investing and to
do it in a way that really was only available to very wealthy, very connected
investors as little as five years ago. That’s what Austin and
I have been working on. I’m trying to expand the investor set
within the marketplace. It’s really exciting. Hill: It’s a great point! Austin, obviously, stock
investing has revolutionized over the last 25 years. But I think, to Matt’s point, a lot of people
don’t think about real estate in the same way. And the fact of the matter is,
there are tremendous opportunities. Austin Smith: Technology is really
a tidal wave in this industry right now. We keep saying to ourselves, this feels like
where equity investing was 25 years ago. The door’s cracking open. Individual investors are really getting unprecedented
access and benefits in real estate that have been a challenge to access before. With things like crowdfunding, the advent
of technology that supports so many investors, really unique tax benefits like opportunity
zones, are really making this space so compelling, even beyond what people
have been used to. We’re really excited to cover all of
the ways that you can profit from real estate, which is more than just buying
a rental property or renting on Airbnb. Hill: Let’s talk about a few of the ways
that you can play the real estate market. Obviously, to Austin’s point, buying a home,
right off the bat, for a lot of people, if you do that the right way, let that expand
over decades, that can work out well for you. Argersinger: Absolutely! Buying a home, I think, is how
almost all of us get started in real estate. We don’t think of ourselves as real estate
investors when we maybe buy our primary home. But it can become that. You can think about, instead of buying a single-family
home, maybe you buy a duplex; you live in one, you rent out the other. Or, you could have
an accessory apartment attached to it. Or, you just buy your first home, buy another
home later on that you move to, and continue to rent your first home. I think that’s a lot of ways
we become landlords, in a small way. That’s our introduction into real estate investing. Beyond
that, the world gets a lot, lot bigger. It’s interesting. We’ll talk about REITs.
REITs came about in the 1960s. They’re mutual funds of real estate. It’s a great way, today and back then,
for investors, in a single investment, to own a piece of many,
many properties around the country. You get diversification instantly
through investment. We have a chart. If you look at investing in REITs over the
last 20 years, if you just invested in equity REITs vs. the S&P 500,
they’ve massively outperformed. I think $100,000 in REITs has more
than doubled, it’s grown almost to $700,000. That’s done much than the stock market. And that’s probably surprising to a lot of
people, given the fact that we had a pretty big financial crisis in 2007 to 2009,
which was driven in part by a housing crisis. REITs suffered during that period
of time. But they bounced back. And over that period, they’ve done
substantially better than the stock market. So, starting with your primary home, but then
maybe moving up to REITs, and then, of course, even beyond that, we can talk about. Hill: You think, Austin, about the individual
stocks out there, whether it’s home builders, or even companies that are in the home
improvement business like Home Depot and Lowe’s. I think for people who are stock investors,
who maybe don’t want to jump immediately into a REIT — we can get to some of the pitfalls
with REITs in a second — there are obviously stocks that they can go
to right off the bat. Smith: Absolutely.
You mentioned homebuilders. We think NVR is an
exceptional operator in this space. There’s also tech-powered real estate companies
like Redfin and Zillow that are really interesting to watch right now. Redfin in particular is a company that we
feel like has really strong leadership. Zillow just had a change of leadership.
There’s a lot of changes occurring there. Both are tech-powered real estate, but also
the advent of i-buyer programs being a really interesting addition
to these companies. There’s a lot of different ways to get access
to the real estate space in equities or REITs. If you want a microcosm of what Matt was talking
about, about the potential strength of REITs, today in the market, we were looking at a REIT
portfolio, eight or nine REITs that we follow. They were all in the green,
the market was in the red. I think there was one that
was just slightly below the line. But nice to see on a day that, when the market is zigging,
the real estate sector as a proxy is zagging. Argersinger: That’s another great point. If you look at just REITs, for example,
REITs tend to have a correlation to the rest of stock market between 0.4 and 0.7, which means
there’s some correlation to the stock market, but it’s a weak correlation. On a day like this, the market’s
down, REITs tend to hold up better. We saw in, I think it was May,
when the S&P had a really tough month. I think the S&P 500 was
down between 6% and 7%. The real estate sector and REITs were
the only part of the market in the green. If you’re looking at your portfolio and saying
to yourself, “Gosh, I love my stocks, I love the companies I’m invested in, but I’m pretty
heavily weighted in tech and maybe some other places,” maybe real estate’s
a place to look at. Hill: Let’s go back to something you
mentioned earlier, Matt — office buildings. That’s something I think a lot of investors,
myself included, don’t really think of when we’re looking for
opportunities to invest. But those are the types of deals that you
guys are working on in the service you run. Argersinger: That’s right. Austin mentioned the technology
that’s come about in the last five years. Really, it’s crowdfunding.
You have a lot of platforms out there. We’re working with several of them. Now, from the convenience of your laptop,
you can make real investments in single-asset commercial property, in institutional-quality
property, from around the country. One of the first investments we made when
we opened our service — we’ll talk about our service — we invested in a class A office
building in Tampa, Florida. Wonderful investment. Probably going to do about 17% annual returns
for us. It’s a signature building,
a signature asset in a great location. That really wasn’t even
possible more than five years ago. The passage of the JOBS Act, new regulations,
new technology, have enabled a lot investors with few clicks of a button
to make real investments in real properties. Hill: Well, and it’s a good reminder that,
just as investors, if we have a consumer experience at a store, whether it’s good or bad,
that’s not necessarily a reason to go out and buy shares of that retailer.
You mentioned Tampa. There are a lot of people who may be watching
and are thinking, “Well, where I live, it feels a little bit like a real estate bubble,
maybe it’s not a great market.” Tampa is one of the best markets in
the country right now, in terms of real estate. Argersinger: Absolutely! The whole state of Florida
has seen a huge influx of population. A lot of people think that’s because
a lot of seniors move down there. That’s actually not the case.
They’re seeing rapid employment growth. A lot of younger people are moving to
places like Tampa, St. Petersburg, Jacksonville. There’s a big trend, kind of a lot of the
Northeast cities — places like New York City, New Jersey, Pennsylvania, are seeing a lot of outflows.
Population is going South and Southwest. One of the places we look as we’re making
these commercial real estate investments is states like North Carolina,
South Carolina, Atlanta, Georgia, Florida. Texas is obviously seeing a big boom
in places like Austin and Dallas. And those are some of the locations
that we’re finding a lot of opportunities in. Hill: What are a couple of the metrics
people should be looking at when they’re looking to invest in real estate?
Whether it’s REITs or something else. Smith: Real estate’s going to have its own lingo,
just like any investing sphere. We focus on IRR. That tends to be one of the master metrics of real
estate investing. It stands for internal rate of return. It’s a total return you realize over
a period of owning an investment property. It includes distributions, or dividends, for our
equity investors out there, plus any appreciation when it comes time to
sell that property at the end. There’s also the capitalization or cap rate for short,
which is the inverse of the price to earnings ratio. This is a very quick way to look
at how affordable or expensive a property is. Hill: We’re going to get to a couple of REITs
for anyone looking to put REITs on their watch list. Matty, there are pitfalls. Despite what Austin was saying about what’s
happening in the market today, no one should just blindly go into REITs, just as they shouldn’t
blindly go into an entire industry worth of stock. Argersinger: Absolutely.
All REITs are not equal. First, there are REITs
for every part of the market. There’s hotel REITs, office REITs — we talked
about officers — retail REITs, senior housing REITs, self-storage REITs… there’s all kinds. Not all those sectors are going
to be performing well at the same time. For example, hospitality REITs are for the most part
trading at really bargain valuations right now. That’s because the
hospitality market hasn’t done so well. There’s been new competition that’s come
into the space, between Airbnb and others. There’s also fears that we’re at a cycle
peak for the stock market and the economy. Hospitality REITs tend to be the most
sensitive to changes in the economy. So, there’s that situation. Also, when investors start to look at REITs,
they’re always attracted by the dividends. REITs are required to pay out 90% of their pre-tax
income, so the dividends are usually pretty juicy. But just because you find a REIT that has
an 8% dividend doesn’t necessarily mean it could be a good investment. Usually, that’s a sign that it’s
paying out more than it should be. It’s probably not covering its dividend
obligations through its funds from operations. Plenty of pitfalls to follow. I would say, look for REITs that have been
around for a long time, that have consistently grown their funds from operations over time,
good managers with long track records. All the things we tend to look for in stocks
and good companies apply to REITs as well. Hill: Let’s get to some
of your questions in just one second. But, first, Austin,
I’m going to hit you first. What is a REIT that you’ve got your eyes on right
now that maybe people can put on their watch list? Smith: Sure. I have my eyes on it
and my hands, since it’s in my portfolio. Physicians Realty Trust, DOC, is really
interesting. It’s a relatively young REIT. It’s only been on the market for a few years.
It’s also still relatively small at $3.3 billion market cap. Pays a really enticing 5.3% yield. I hope,
to mass caution, I’m not yield-chasing there. We like this one a lot. It’s a really recession-resistant
industry in the healthcare sector. If you are believing that we’re late-cycle
and you want something that is going to be more durable in that volatile
environment, this is the sector to be in. And, there’s a really favorable macroeconomic
trend where a really large portion of the population is aging into a really
high healthcare need point in their life. We expect this REIT will see really high occupancy,
and we are seeing that today at above 93% occupancy across their portfolio.
Hill: Matty, what about you? Argersinger: Urban Land Institute
does this major survey every year. They’re an institute that has
tens of thousands of real estate professionals. They monitor and report
on the real estate industry. For two years running now, the No. 1 area
where their members are seeing the best prospects and the best opportunities
is warehouse fulfillment. That probably seems obvious, right? The rise of Amazon, even Walmart and
Target really required to have distribution within one mile of major urban centers.
It’s a huge trend, it’s been a huge trend. As consumers, of course, we’re used to the
idea of two-day shipping, one-day shipping, now same-day shipping.
That’s not going to change. These major companies need that. So,
the company I like is STAG Industrial, ticker STAG. It’s been around for a long time.
Really conservative management. They own major warehouse and distribution
facilities in nearly 40 states. Really broad. And, they have some of the best locations,
right outside major cities like Charlotte, North Carolina,
that’s growing, outside Dallas. Tenants include FedEx, DHL, companies that
need those types of facilities to process goods, distribute goods.
Pays almost a 5% dividend. I own the company.
I’ve owned it for a long time. It’s a recommendation for us in our service,
and it’s one I’m really excited about. Hill: A lot of great information.
Even more information in the 40-page eboo I mentioned. It’s free. Go to real.fool.com to get that.
Just type in your e-mail address. Let’s get to the questions.
A lot of great questions coming in from the viewers. Sandeep asks, “Can shopping mall
REITs survive the retail apocalypse? Will the retail bankruptcies
take the REITs down too?” That’s a great question because it gets that
a trend — Austin, we’ve been seeing these headlines for a few years now. Sports Authority, Toys R Us, more and more
well-known retailers that are either closing hundreds of locations or just
going out of business altogether. Smith: Sure. I’ll reference the oft-attributed quote here,
“Statements of my death were overly exaggerated.” That seems to be the case
with the retail space right now. We look at REITs like Simon Property Group
or Retail Opportunity Investment Corporation, ROIC, have been beaten
down on this downbeat perception. Now, I think you have to be choosy in this space. Let’s be
very clear, physical retail is under a lot of pressure. But when you look at some of these really
good operators, they might have central anchor tenants in grocery stores, which are going
to be a lot more durable in a tough retail environment. I’d say, can retail survive? Absolutely.
Is there pressure in the retail space? Absolutely. We’re going to be looking for retailers [REITs]
who have deeply undervalued assets in their portfolio, or maybe have exposure to tenants
who are going to be a lot more durable in a retail apocalypse.
Argersinger: Yeah, I agree. I think those are all good points. If you look at the retail segment of the REIT market,
it’s amazing to see the cap rates in that space. Cap rate, capitalization rate,
also mentioned earlier, it’s the net operating income of the property divided by
the value of the property. Usually, the higher that number, the quote-unquote
cheaper in most cases the property is. Some of the cap rates in the retail space
are in the 7-9% range; whereas, when I talked about warehouse and fulfillment earlier,
we’re talking the 4-5% range. That’s a huge spread. There are definitely going to be opportunities
in retail REITs. Simon Property Group is interesting. They actually own
some really quality properties. They’ve been divesting
a lot of their lower-tier malls. I think at some point, they might
be a good turnaround candidate. One we’ve actually recommended
recently is STORE Capital. The interesting thing about them is, think
of Wawas, or gas stations, or convenience store REITs, that’s what they focus on —
places where there’s high customer traffic, or generally a pretty captive audience. Single tenants, triple net lease,
pretty conservative management team. Berkshire Hathaway actually
owns a percentage of STORE Capital. That’s one in the REIT category that
I would say, if you’re looking for opportunities, might be one to look at. Smith: Chris, if I may, real quick,
we’ve been spending a lot of time on REITs. There’s a lot of value to be had there. But let’s talk about one philosophy we have
as we approach real estate that we believe permeates REITs, fix and flip, crowdfunded real
estate, multifamily properties — dollars follow people. We look at migration patterns really heavily. We believe that if you’re going to be making
a real estate investment, let’s make sure that the geography makes sense. Going back to the retail REIT question, if
there are really strong geographies that have really great inflow — maybe in Atlanta, maybe
a Denver, some of these more affordable emerging 18-hour cities — they stand a much greater
chance of surviving a tough retail environment. If you have the opportunity to acquire REITs
or properties that have exposures to these cities, we think that’s a much
safer pond to be operating in. Hill: Several people asking, “You’ve talked
about REITs, are there some non-REIT stocks you like to play the housing market as well?”
Smith: Interesting. I have two. Interested in Redfin and Zillow
right now. Two we mentioned earlier. I wouldn’t say that I have a favorite between the two.
I really love the leadership team at both. Glenn Kelman over at Redfin, Rich Barton over
at Zillow, recently re-assuming the helm as CEO. You have i-buyer programs at both. I think
either company could really be a runaway winner. In fact, the real estate industry is such that you
could see both be runaway winners. I own both. Really interested to
see how they both develop. Argersinger: One that comes to mind immediately
— I think Austin might have mentioned earlier — is NVR. It’s a home builder.
The track record is tremendous. They have a really unique business
model, too detailed to go into right now. Again, one of those home builders that for
a long time focused in the Mid-Atlantic region. They really expanded down to the Southeast.
A lot of those stronger markets we were talking about. If you like the homebuilding space, and it
looks pretty interesting right now on a cycle basis, that might be one to take a look at. Hill: JR asks, “Would you consider REITs to
be defensive stocks in case of a recession?” Argersinger: Absolutely, I think so. You have
to remember, even in a recession, REITs will suffer. Everything’s going to suffer. But the advantage that a lot of REITs have, especially
in the office categories or industrial categories, is that you have tenants
who have signed multi-year leases. Five-year, 10-year, even 15 or 20-year leases. As long as those REITs have strong tenants,
creditworthy tenants, tenants that are large and have good balance
sheets, they’re going to hold up. In a stock market downturn,
we’ve seen that REITs tend to hold up better. Hopefully, there’s not another housing crash
or something like that around the corner, because everything will do badly. But REITs tend to have less
correlation to the overall stock market. If you’re looking for a little balanced in
your portfolio, I think REITs can be a great option. Smith: In the real estate space as a whole, a triple
net lease is another great way to approach that. Matt’s actually provided investment
recommendations to our premium members. I believe they’re assuming
17 years of a 20-year triple net lease. What this means is, you have a lease that
is guaranteed, there’s an agreed-upon rate. The tenant on the property pays
all taxes and maintenance on it. So, your floor is guaranteed.
You know what you’re going to be making. And then, typically, the way these leases are written
is that there is some upside if they outperform. You get to capture some of the upside
without locking yourself into a downside. If you believe we’re late in the market cycle,
which many people believe, a triple net lease investment could be a really interesting way
to approach investing over the next few years. Hill: If you think about all the headlines
over the last year about interest rates, and how often that is the dominant business story
of the day, how do you guys think about macroeconomic stuff like interest rates
affecting the housing market? Argersinger: It’s a good question.
I tend to weigh macro less than other factors. Interest rates are important. REITs and real estate stocks in general, financial
stocks in general, tend to be a little more sensitive to changes in interest rates.
Again, I always think that’s a short-term phenomenon. I think the best operators, the companies
with the best balance sheets, no matter what happens to interest rates,
they’ll do just fine. Also, I do feel like money tends to fall back
to REITs, actually, when interest rates go down, just because there
becomes a real chase for yield. So, if you can find a really great REIT or
operator that’s paying 4%, 5%, 6%, and you’re confident in that dividend yield, as interest
rates plummet, you’re going to get 1.5% to 2% on Treasuries,
they become very attractive. But then overall, looking at the economic
picture, I think Austin said it right. If you find REITs that have long-term leases,
where there’s even built in price escalators, usually — most leases include 2% to 3% increases in
rents every year from great tenants — you’ll do just fine. Hill: You guys have talked a little bit
about industry-specific REITs. We’re getting a couple of questions
about that. You mentioned warehouses. Someone asked me about
data center REITs like Digital Realty. Are there industries at one end of the spectrum
or the other where you just think that this is looking particularly attractive right now? Or, like, “Ooh, boy, I can cross this off
my list because this industry REIT is just not going to be as good an opportunity as
anything else I see on the spectrum”? Smith: There’s going to be opportunities and
challenges at every end of the spectrum. So we don’t want to make any blanket statements
that data centers are 100% certain and retail REITs are 100% doomed to failure. There’s going to be some fabulous opportunities
in the retail category, I promise you; but it might be more challenging.
Be careful where you step. Maybe something like senior housing has really
good favorable macroeconomic trends behind it; but if you are acquiring either an individual
property or a REIT that has exposure to the wrong geographies, maybe where that local population
isn’t aging as quickly, that could be challenged. I don’t want to make any blanket statements
and write off any category, or have people migrate their money
to one category wholesale. Hill: Paul asks, “Are there tax considerations
with REITs that would make them more or less suited for tax-advantaged accounts like IRAs?”
Great nuts and bolts question there. Argersinger: Generally, I’d say REITs are
very favorable for tax-advantaged accounts. That’s where you love to have them.
They’re paying dividends. A lot of REITs pay monthly dividends. By the way, because of the way REITs are
structured, most of their dividends and distributions are considered
ordinary income distributions. So you’re usually going to pay your ordinary
income tax rate on those if they’re not treated as qualified dividends,
as we’d expect from a normal dividend company. They’re disadvantaged in that way if
you’re having them in a taxable account. So, if you’re able, putting them in a tax-advantaged
account like an IRA is a great option. Hill: Are there any
international REITs that you guys like? We’ve talked about different markets with
in the U.S., what about outside of the U.S.? Smith: I don’t have any
international REITs on my radar right now. Doesn’t mean there’s not a lot of great opportunities.
I just haven’t brought that into my recent analysis. Argersinger: Actually, because the
United States has the real estate investment trust, REIT, structure, it doesn’t really
exist the same way in other countries. You will find U.S.-based REITs like American
Tower, funny that it’s named that, that has significant overseas assets.
You can invest in them. Most of their assets
are still the United States. But that’s one example, where a U.S.-
based REIT is doing things internationally. You can play it that way a little bit. Hill: For somebody new to the space, would you
recommend investing in individual REITs or an ETF? Smith: I think The Motley Fool’s had a really
great track record and wonderful experience buying individual companies with the caveat of,
don’t put all your eggs in one basket. Whatever diversification can afford yourself
while buying individual REITs or individual companies, that’s generally the
way that we like to approach investing. Hill: Vince asks, “Is it better to invest
in a REIT or for you to take the money you’ve saved and own a property yourself?” We talk all the time about stock
investing coming down to temperament. There’s a different type of temperament
that comes with being a landlord. Argersinger: Certainly, Vince. As a person who owns rental properties —
I know, Austin, you do as well — obviously comes with a whole host of headaches. REITs are certainly the easy and nice and efficient
way, and low-cost way to invest in real estate. We haven’t talked a lot about
crowdfunding as another option. There are certainly ways
beyond REITs to invest in real estate. It just depends on appetite
for risk, appetite for time. If you’re willing to invest the time and the sweat,
in a lot of cases, you can go those routes as well. Hill: One viewer asks, “I’ve heard the term
house hacking get thrown around a lot lately. What in the heck is house hacking?” Smith: This is a really great rebranding of
renting out a spare bedroom in your house to help pay down your mortgage. Hill: OK. Another viewer asks, “How does
the whole accredited investor thing work? What is or is not
restricted to accredited investors?” Argersinger: Let’s talk about
commercial real estate crowdfunding investing. We talked about earlier, this rise
of crowdfunding platforms out there. Most of the opportunities you see today are
reg D opportunities, which means you have to be an accredited investor
to take advantage of them. A lot of the recommendations we’ve made in
the service, the real estate properties we’re investing in, you’ve had to be accredited,
which means, if you’re a single person, you have to have at least $200,000 in gross income
per year; if you’re married, that’s $300,000. Or, you can have a net worth of greater than
$1 million, less your primary residence. Those are the qualifications. If you meet those, you’re an accredited investor,
and you’re able to invest on these platforms. But we’ve also seen the rise of reg A and
reg A plus offerings, which are also private real estate opportunities that are
available to non-accredited investors. It’s still a very small part of the market. There aren’t a lot of platforms out there
that are doing that right now. But it’s growing. There will be opportunities, even if you’re not accredited.
Smith: We’ve talked a lot about these platforms. Let’s put a name to them so the
viewers know what we’re referencing. There’s many crowdfunding
platforms out there. We’ve interacted with
some of the largest ones. We see a lot of great opportunities on platforms
like RealtyMogul, RealCrowd, CrowdStreet. They tend to bias
towards accredited investors. RealtyMogul does have an option available
for non-accredited investors who don’t meet that threshold, as well as Fundrise. They specialize in what’s called regulation
A access, which is for non-accredited investors. Hill: Let’s talk for just a second,
before we wrap up, about Millionacres. This is a new venture from The Motley Fool.
What got you interested in this in the first place? It seems like, among other things, one of
the themes that we’ve hit here today is how it really seems like we’re just
getting started with real estate investing. The opportunity, as you said, Austin,
it’s a little bit like the late 1990s for stock investing, when you saw the rise, not just
of companies like The Motley Fool, but of brokerages going online, and discount
brokers like Schwab and Ameritrade and E-Trade, etc. Smith: I can’t speak for both of us,
but certainly what got me interested in Millionacres, and why we’re here today, is that this
space is larger than the equity space. There’s so much money to be made. But also, up until very recently,
it’s been obfuscated and challenging. It’s really intimidating to people. The Motley Fool’s mission is to help demystify
these spaces, to shine a light on these opportunities and say, “Hey, there’s a really fabulous way
to make money here and improve your wealth and your lifestyle. Let’s educate you to get there, help you figure
out how to navigate these waters, understand where the good and bad opportunities are.”
Penny stocks? No, thanks. Great, well-run companies? Yes. Really derelict properties
down the street? Maybe not. But, a really great
crowdfunded deal? Yes. We’re here to play that same role that
The Motley Fool did in equities for real estate, and shine a light on all the ways that
people can invest in it. It’s really exciting. It feels like where The Motley Fool started. Especially with the emergence of technology
in the space, there’s so many great ways for people to invest all across the country,
either be it through REITs, crowdfunding, and half a dozen other excellent avenues.
Argersinger: Couldn’t have said it better. I would just add this one little piece. Earlier this week, we all went to Nobu, famous
Japanese restaurant right here in D.C. We dined with a lot of our members. We also dined with the folks who
managed that property, who we’re invested in. That’s an example of a recommendation that
we recently made to invest in a restaurant in one of D.C.’s hottest neighborhoods,
in a beautiful luxury condominium building. That was a real recommendation that
we’ve made, that our members are invested in. Just imagine the idea of investing in a property
just like you do if you bought shares in Starbucks. You go there, you order your coffee every
day, you feel like you’re contributing to the Starbucks brand. Well, imagine owning a property, investing
in a property, and going to visit that property, and dining at the restaurant that
is the main tenant of that property. That’s the experience Austin
and I want people, investors, Fools, members around the world, to get used to.
That’s what’s happening. These real estate markets and properties that
were only available for the very wealthy or the well connected, your rich uncle at the
golf club, that’s no longer the case. These platforms are out there for you to
make these investments and do it yourself. Hill: And we’re just getting started.
Argersinger: Just getting started! Hill: Go to real.fool.com to learn more.
Get that 40-page ebook, it’s free. Check it out at real.fool.com.
Thanks for giving us a thumbs up! Don’t forget to subscribe to our YouTube channel
so you don’t miss any of the live Q&A’s that we do. Austin Smith, Matt Argersinger,
guys, thanks for being here! Smith: Thanks, Chris!
Hill: Thanks so much for watching! We’ll see you next time! Fool on!

Driving For Dollars: The Origins of Deal Machine

(dramatic electronic music) – [Voiceover] This is
Wholesaling Houses Elite, the No Fluff and BS podcast; with tips and tricks to help
you become an elite wholesaler. Our guests will spill the beans on what it takes to be the best. (dramatic electronic music) – [Man] This podcast is brought
to you by Lead Gen Pros, making it incredibly easy for the average real estate
investor and business owner to get more leads. They work with a variety of companies who specialize in real estate investing and who are looking for a systemized way to increase their lead flow
and grow their business. If that sounds like you, check out the leadgenpros.com. Hey, what’s up guys, welcome to another podcast here at Wholesaling Houses Elite podcast. My name is Max Maxwell, and with me today, not only do I have one, but I have two special guests. These guys are from DealMachine. We have David Lecco and Joshua. How are you doing, man? – Doing good.
– We’re doing great. – So I know you guys hear me talk about driving for dollars and DealMachine, they go hand in hand. Now you get to meet the
guy that created it, you get to meet its VP of Sales. You get to kind of learn how
David and I first connected, all the way to where we are now. So guys, introduce yourself. Welcome to the podcast, and kind of introduce yourself. – Awesome. So, my name is David, and I created the app
for myself back in 2016. I want to introduce you guys to Josh, we went to elementary school. – Elementary school?
– That’s right. – All the way back?
– Way back. – Okay. – Way back. Fifth grade, I think we started
going to school together. David, as he was beginning
to build the DealMachine with our other friend Dave,
who’s another partner. They had some real success, and I had a sales and marketing background and joined after six months or
so after the initial launch, just to help spur on the growth that they were already seeing. – Yeah. – So David, let’s talk about like, you creating this app from scratch. This idea. What was your challenges? Why did you wanna create this? Were you an avid investor going out, closing deals and stuff? – Yeah, I was just getting into it. I first got into it because
I read Rich Dad, Poor Dad, – [Max] Just like me. – and I wanted to retire early. And so I played the CASHFLOW game, which is basically teaching you to use your income from
your day job and invest it. So that way, your passive income exceeds
your living expenses, and then you can do whatever
you want, essentially. And so, I was going to buy
my first rental property, and I couldn’t find any
good deals on the MLS. So I started driving for dollars, and that’s when it all started. – Yeah, so you got that term. Were you looking at, with talking to other investors, where did you learn that
term, driving for dollars? – So I found a real estate
investing Association, and I had no idea what that was. – [Max] Like a Ria. – Yeah, it’s a Ria. – [Max] Your local Ria?
– That’s right. And I showed up, and then I heard people
talking about it there. – Got it. So while you were driving for dollars, what did you find? And we’re talking not that long ago. – 2016.
– Yeah. So we’re talking like three
years or less ago where, you found out what
driving for dollars was, you were having problems
finding rental properties, anything to flip on the MLS. Said, “I’m gonna go drive for dollars because you learned it at your local Ria. What issues were you having that made you wanna create something
to solve the problem? – I was not following through. Because I spent all my time driving, that was honestly a lot of fun. I’d write down the addresses, and I’d take pictures of the house, and eventually, I just kept doing that but I
wasn’t sending out any mail. I wasn’t looking up the owners, I was just doing the fun part. – I think that’s crazy. You go back to where
we were three years ago when I started this business … We kinda started around the same time. I’m almost three years in. It’s like, three years ago, the best way to drive for dollars was to have several apps open and take screenshots and pictures, so that you go back home and look up each individual address on the tax assessor’s website. – [David That’s Right. – Just three years ago, to the point where we are now, obviously you guys know
what a DealMachine is, where like, taking a picture on-site and it’s automatically
sending out a postcard to the homeowner, instantly. So, walk me through that
place where you were like, “Listen, I’m frustrated with
the way this has happening,” to the point where you kind of was like, “Okay, let’s do this.”
– Yeah. So about three weeks into this, I was getting home from work and driving a couple nights a week. And I had a list of properties. I drove by, on that third
week, one of those properties, and somebody else was renovating it. And so I was like, “Oh, shoot, “did somebody buy this
before I even followed up.” And so, I felt really guilty. I had the sick feeling and I was like, “I need to go home right now
and look up all these owners “and get out the mail before
it kind of becomes out of date, “before my list becomes out of date.” – So you just decided, “Listen, I drove by a house. “I saw this house first, “but because of my inaction to
follow up and all that stuff, “I lost out on a deal.” – Yeah, awful feeling. But motivating. – So you decide you’re
going to create something? – Not yet. – Not yet?
– Not yet. Then I had to look up
the owners, all right? I didn’t have the idea
for DealMachine yet, but I was like, threw
on friends on Netflix. and it took like three episodes
to look up 40 properties. And then I was trying to
decipher my handwriting because I had kind of
written it in the car and it wasn’t totally clear, and then pairing that with
the photos on my phone, so I could put together a
mail piece with the photo that’s gonna be really personal
and get a better response. And that’s the point where
I had the moment of like, “I need a technology to do this for me.” – So, you were the best
coder in the world, and you decided the build this? – Not the best coder in the world, because the first time I coded it, it looked pretty bad. But it didn’t need to look good, it was just for me. – [Max] Correct, it was for yourself? – It needed to look up the owner, and it needed to send out a postcard. – Isn’t that crazy that
some of the best products come from your own personal struggles? – Yeah.
– In this industry, that’s kinda like when
we created our Ria rail, it came from a struggle of
being the double investor on the end of the phone. – That’s right – And it solved a big problem for you. You were trying to solve
the problem for yourself. – Yeah. I think a lot of startups will talk a lot about market research, they’ll talk about
doing surveys and stuff, I was just trying to solve my problem. – [Max] In your own case study? – Yeah. – That’s perfect. So at this point, you start building. And where we’re at, in the year is 2016 still? – That’s right. So we’ve got eight
full-time team members now. – Wow. – Yeah, people have done a lot of deals. – Yeah, I’ve done several, we drove by some today. – That’s right. – When did you bring on Joshua? When you bring on Josh? – So Josh was the third
person, including me. The first person I brought
on was our friend, Dave, and he is the main technology person. – Got it. – All right, Dave came on board in … I’m trying to think. I put the app on the App Store … January 2017. And then people started to kinda find it. And I was like, “Oh, man, we need to focus on this.” So I brought on Dave in about April. – It blew up. – Not yet. I mean, it took a while. It took like a full year and a half before Dave and I had taken any salary. And then Josh came on- – January-
– 2018, right? – Formerly January … Literally, January 1st or 2nd 2018 was the first emails I sent out like, “Hey, what’s that about DealMachine, “to people that can talk more than- – So you guys go to
elementary school together to the point where you’re
now building an app and you can reach out to a friend and say, “Hey, I need your advice.” – [Josh] Yeah. – We’ve always been
interested in business, and worked on projects together before. – Yeah, we worked on
projects together before. Dave, the other founder, and I, have done businesses in the past. Agency that we both worked
right out of college at, we had done together a group
from five to 75 people. So we were really, really
familiar with each other as friends as well as business associates from that perspective. – So, let’s talk about
when you and I met yet. We met in 2017? – [David] We did. – And that was at a Sean Terry event. What month was that? – October. – So October, I had just started a YouTube video. like just started YouTube at that point. And we met in the hall, I think in a break. No, it was at the pre-event meeting, at the pre-event bar- – [David] Happy hour.
– Happy hour, yeah. We met there, we started talking, and I was there big sip, Mississippi, and it was like, “Hey, look, “I got way better bourbon
back at the hotel room. “Let’s all just go back
there and kick it.” We kick it and you told me about the app. And I was like, “Oh my
God, that’s genius.” I think it’s crazy to go from that, where we were at the Sean Terry event, to a year later, exactly the weekend, we’re at my own event. And you had sponsored the event, and your app has done well. It changed my company, changed the way … I literally eliminated four processes and created one plus that sent mail, to where we are now. Even off the topic, that just shows the hustle, and how determination takes
you to that next level. So, you’ve built this app, it’s going. Traction is coming. You now have got eight
full-time employees. What have you seen the most? What are most of your customers saying that are using this successfully? Like, what is their best … What is the best way to use it? What’s the best tool? How are you managing? How are people managing that? – I gotta let Josh answer that because he works with
our bigger companies. – [Max] And that’s the enterprise plan, the bigger people go to
an enterprise, right? – Right.
– Yeah. And to your point, the reason they typically go to enterprise is because they do what
makes them successful, which is scale it with team members. And so eventually, especially
as you’re building a business, you don’t have the time
ago driving yourselves. Well, the first variation
of the app that we built was really for the individual driving; where we’re at now and where we see most
successful people was, “I need to get other people
sending me properties.” As many people as I can, whenever they see a distressed home, they’re trying to sell
to associate themselves with distressed homes to those people, so that they get those properties sent to them through DealMachine, and they decide what they want
to do with him from there. – That’s crazy because, I remember talking about this
DealMachine app for a while because it eliminated so
many processes for me. So, our good friends that we both know, the Polite’s, Dedryck and Crystal Polite. They took … I think they were the first ones I know of because they taught me something, how to take the app to the next level. Like when they started hiring drivers, from their mom on to more and more people driving for dollars for them and they’re making six figures on a deal, that changed my thought
process on how they do things, I was like, “I’m under-using this app.” And that’s to your point
where the enterprise plan … Let’s talk about the enterprise plan, to the bigger guys. What is the features
of the enterprise plan? – The biggest jump is gonna
be on the user limits. On our basic plan, you get one main user; so main user, being someone
who can actually hit send mail- – [Max] Myself?
– do all that- Yourself. And then three drivers. Drivers can only add properties, they can’t do anything
else inside the app. – So that’s the basic level. – That’s the basic, yeah.
– Okay. – So you get three team members, On our enterprise plan, you get five main users
like yourself on that plan, and you get an unlimited number of drivers that can be on your plan. So there’s literally no
limits on the number of people that can be on your team
sending you properties that are opportunities in your market, or even in the virtual market, if you’re trying to jump into it, throwing up Craigslist
ads in the virtual market for people to join your team
and jump into a new area. In addition to the user, the the unlimited users, you also have a automated signup workflow. So people can come to a live web page, sign up for your team as a deal finder, have the app and start
sending you properties without you lifting your finger at any point in that process. – So, I can go into a Facebook group, or Facebook Marketplace, or Facebook private … like the yard sales of North Galana, and literally put my personal
link in there and say, “Hey, I’m paying people
that $500 to $1,000 a deal.” And they don’t have to know you, they sign up. They go through the signup process. There’s a video that
tells them how to use it, and they just start sending you property? – [David] Yeah.
– 100% automated. – So that’s the scalability in the app? – That’s right. – Let’s talk about money because … Let’s talk about what’s
the basic plan cost? – The basic plan is $49 a month, and 99 cents for a postcard
or an enhanced search. – Got it. So 50 bucks a month, $49, and every time you send
a postcard costs you $1. And then the enterprise is the same, but just probably more because
more people you can add. – Exactly. So it’s 1.99 a month today, it actually is going to 2.99
in the next couple of months, we don’t have a hard time on that. – [Max] Better get on it now. – Get on it now. We’re grandfathering everyone that signs up before then and a big push to the 2.99. It is going to be a big feature update to the deal finder onboarding process, making it even more
educational for deal finders, in addition to automated on your side. So it’s gonna get to 2.99. It’s currently 1.99, and it’s 80 cents per postcard
and 80 cents per skip trace. So you save money on
the back end, as well, just as your volume increases. It eventually pays for itself. – Love it. Let’s talk about like most of the people. They’re beginning, they’re probably gonna be
at the $49 level, right? A lot of people are not doing
what the Polite’s are doing, what I’m doing, with hiring drivers are
just using a lot of people. The $49 plan, what are some of your
best case uses on people your success you’re
seeing with your users? How should somebody that
is driving for dollars now, the old fashioned way
like you and I used to do, and switch over to the app, how should they use it the best? And what will they most
use to get out of it? – I got a good answer. All right, your video on the Hot zip codes, is a perfect place to start and figure out where to go driving. Because a lot of times, it’s about just being in the right area. – So I don’t know if
people know that video, but somebody put it right here. Be at the description-
– Make it happen. – It’ll be on the description somewhere. But that video, I showed people how to
find the hottest zip codes in their market for free. Take that and start
driving in those zip codes to seed you can find any properties. But what type of numbers
does somebody have to put up to make this lucrative? – Totally. – You’ve gotta do at least 200 properties that look distressed in some way, meaning that the property
is physically distressed and run down. – So, if I’m getting this right, if I pay pay … If I sign up for DealMachine
at 49 bucks a month, and you’re telling me your average user usually adds 200 properties
before they get a deal. – You’re saying around 250
to 500 bucks worth of effort, I can probably more
likely be close to a deal than most people are? – I wanna be conservative, so I’ll say like 600, 700 bucks because you wanna mail a few times. – Because more it’s for mailers. – Yeah, because each time we mail, right? You’re finding out that 200 mail pieces in circulation is what’s what’s consistent. – Yeah, as long as
you’re repeating that … We always say at least
that’s what it takes because- – Obviously, this is no guarantees we wanna say, “You do exactly this, “you’re gonna get a deal.” – There’s so many stories
of people getting it on their 50th property, and they’re just … Crazy success stories. So we kind of bumped those numbers up to be a little bit more realistic. We had an example, here in
North Carolina actually. One of our basic users
that I met, Elbert Diaz, in Raleigh, he came to me one day and he said, “I saw this (mumbles) in our chat”. And he was like, “I’ve gotten
seven deals off DealMachine.” I’m like, “Dude, that’s amazing. “That’s so awesome.” Like, “I want to meet up with you. “Let’s grab a coffee.” Because we don’t always get
to see people in person, because we’re so virtual. So we got a coffee and like, “Hey, I know you said you got seven deals. “How many is that at?” So he pulls the app out? He doesn’t even know this. He had 93 properties to DealMachine, and had seven deals from those 93. – [Max] What a ratio. I’d kill for ratio like that. – That’s good. Not sustainable, but still, it’s such a niche list, and when those properties are distressed, it’s a great indicator-
– [Max] Let’s talk about- – that they might need to sell it soon. – Let’s talk about the niche list. Why is driving for dollars different than any other vacant list I can pull, any other absentee owners? Why is that? I know why, because I’ve talked about you
need to drive for dollars, tell me some of the benefits of why driving for dollars is the best and why that list is not anywhere else. – You’re gonna spend way less on mail because it’s a smaller list. These houses are in disrepair. – [Max] Because you’ve
physically seen them. – You’ve laid eyes on it, and compare that to
the traditional method, where a beginner wholesaler will buy an absentee-owner property list, and they’ll send out thousands of pieces. Everybody’s doing that. And you don’t really know what
properties are on that list, you just know they’re absentee, they might have some equity. But when the property is distressed, that’s an indicator about
their life situation. So that’s what I would
have to say about that. – I think doubling down on
that idea that everyone, all those other lists you mentioned, Vacant, Absentee, anything else, everyone’s buying this. It’s easy for them to do it. They can do it from their couch at home and just make it happen. And what they can’t do
from their couch at home, which most people fall off when it becomes more of an effort thing, is go out and drive in sales to verify that these properties are distressed. And the unique thing about
a distressed property, even if it fits some
of the other criteria, what you double verify in person when you see a distressed property, is that these people
can’t sell this property in this is current of- – [Max] Right, they’re not on the market. – Their only option is
to sink a bunch of money into it themselves or
sell it at a discount. – Correct. – And those are the only two options. – Those are the
conversations you wanna have. So not only do we verify that
they have to sell a house in a non traditional way, when they do have to sell, even if that’s today or in the future, we also know they’re not
currently taking care of it, and then we also know unless you are marketing to those people. So by the time that
your marketing overlaps with their personal timeline, you also hit that moment
where you’re getting a deal that no one else is marketing to, and you’re getting at a margin
that they know factually, they can’t sell traditionally. So you’re getting a better
margin because of that, as well. – That’s interesting. So what are some of the
features on the app? Once you driving, you drop a pin on a house that
you’re sitting in front of, what can they do once they do that. – So from there, you can see the owner. You can see if it’s
absentee-owned or owner-occupied, or corporate owners. And then you can press a
button to send a postcard. – [Max] You can customize the postcard? – Yeah, and it features
the picture of the house, you just took. – So the picture of the house goes on the front of the postcard- – [Josh] In the back. – in the back, and is sent out to the homeowner? – That’s right. – And it’s full color on both sides. – And you get a push
notification when it arrives. – I get it every day, I love it. I love it. – So like, you’re ready
to answer the phone in case they give you a call. That’s amazing. I mean, that’s game changing software. And what I like about the software, it allows somebody at
a very beginner level to get in the game, all based on their own effort with a little bit of money behind them. And it also allows somebody like me, who’s an enterprise customer, to scale my driving for dollars effort without having to create my own funnel, without having to have my
own proprietary software to sign people up. and literally just track who’s putting … That’s the best feature I like, is to track where people have
drove in the entire city, and the track who’s
actually put the deal up. Because when it comes to time
to pay out the commissions, which I love paying, I gladly pay those
commissions or those bonuses. Is because I can tell
who uploaded that photo. That’s amazing, that’s amazing. So what are some of your
favorite new features that you’ve rolled out recently? – Well, I like to pay by the hour because I like the consistency of it. So, I usually would get
these texts and be like, “Hey, I drove seven hours today.” And they’re always even
and hour and a half. So I’m like, “Are you really
driving a full seven hours, “and it’s just like six
hours and 20 minutes?” – [Max] Yeah, that matters.
– Right. So now, the app with the rat tracking, shows me where she’s been
and how long she’s driven. So that way, I can just verify that. And also, I want to keep
her in the right areas. So she like ventured off somewhere I don’t really wanna invest in, then I can just let her
know that very easily. – Yeah, pull back. – And there’s also accountability
that comes with that, because part of that driver report also says how many properties they added. So, if you have a quota, you need to add 18 properties
per hour to qualify, in addition to the time spent. So, you can immediately verify that that driver had an average of 18 per hour or whatever that number is for you, and how long they drove over that time. So it’s all all right there. – And if you have a question, you can actually chat
with us right in the app. – Yeah, that’s one feature I love, is your customer service is fast. – Will get back? Yeah, really under five
minutes during business hours. – Yeah. Don’t be 1:00 am frustrated and reach out. I have people do that. And they’re like, “Why did you answer?” “It’s 1:00 am? We’re just not gonna do that right now. I love DealMachine. I personally use it. I know a lot of people have
had a lot of success from it. Where can people find you at? You and DealMachine? – Well, I think you’ve got it
hosted on your site, right? – Yeah. – Is it therealmaxwell.com/dealmachine? – Yeah. So I’ll leave a link
below in the description and I think you gave me something where it’s like 30 days free or two weeks free or something like that? What was the feature, I don’t remember? – It’s 30 days and it’s extra … It’s like $40 of credits that
they can use to send mail. – Double bonus. – What, I didn’t even know that. – No one else gets that. – I didn’t even know that. So, your first month’s free and you get 40 postcards or something, or like skip traces? – Yeah, we want you to be successful. We want to show you the value. – I honestly did not know that. – How’s that coming out your shirt? – I didn’t know that. So, go sign up. I’m gonna leave the link below and you listen, basically get your first month free, and your first 40 postcards. Use them wisely, use them fast. I did not know that. But where can people
find you on Instagram? You’re on Instagram, people? – Yeah. So my handle is @dlocal, and our company’s one is @dealmachineapp. – Cool. And you’re at a lot of the events we do. Live ’19 was amazing, you guys were there. I just followed you and
you got three photos. So hopefully by the time
you guys listen this, he has at least a fourth photo up there. You can find me
@joshuajohnsont on Instagram. I will be there and I will
have more than three photos by the time you’re- – Anxiously awaiting the fourth photo. It’s probably not gonna
be from watermarks. – I’ll share my whole flip. The flip that I did last
year on DealMachine, I’ll share a bunch of pictures from it- – Perfect. – Along with my awesome dogs. – Content. And then they can also probably
find you in the chat bar. – [David] Yeah.
– Every now and then. – I’m there. I jump in, especially for all
of our enterprise customers, I try to do. I’m not normally Manning those directly. We’ve got other staff that
manages those directly, but I probably still spend an
hour or two a day on there, talking to people. – I love that. Can I put you guys on the spot? – Yeah, we kinda are already. – Yeah, right. I want to know if you are
working on any new updates that may be coming down the road, something that you can just maybe tell us a little peek about? – Oh yeah. – We got a few-
– We got some we’re always working on, but nobody knows what’s
coming next until now. – I feel like I need
to buy a movie ticket. What’s going on? – All right. So, we thought about the
main success people have is because of the personalization of the postcards and the list. And so we wanted to
take it a step further, and we’re gonna release
some ballpoint pen letters, so that your your letters
can actually be written with a ballpoint pen
that you would send out through DealMachine. – So real hand-written-type letters? – Oh, yeah.
– Right. – And it’s gonna be cheaper than anywhere you can find these. I think the cheapest we’ve
ever seen is like $5, – [Max] Yeah, that’s true. – For a totally handwritten letter. And so, these are gonna be two or below, $2 or below. – Perfect. – So we’re super excited
about that update. We’re just giving you
another unique piece of mail to put into your campaign. – So these are gonna be like postcards, like if I’m traveling
in Mexico and I write- – [David] Enveloped, like an invitation or so.
– Oh, full envelope? Oh wow. – You put a real stamp on it. Big color fumbled. – I know through reading a
lot really listening a lot is that that is actually
isn’t more open mail. If somebody sees a
hand-written piece of mail that is not computer ink, and real ballpoint pen, that open rate goes way up. Because that is a
personalized time took out. We all get mail in our mailbox, we can tell the difference
between printed mail and real handwriting. That’s a big difference now. I’m gonna try it. So, what do you think the best
use case on that would be? What do you think they
should use that more on? Because it’s a little bit more pricier, what should they use it for? – This can be exactly
double the cost, whatever. If you’re enterprise or you’re basic, double the cost of the postcard. My main thing, so part of what DealMachine also offers is a campaign feature. By default, you can repeat postcards in any number of times-
– I do eight, eight times a day. – however many days in between you want. And so, our campaign feature lets you actually reduce
sequential messaging. So you don’t have to
send the same postcard every single time or the same mail type. And so what I’m telling people
from a cost perspective, or from an impact perspective, have that first mailer be that letter, that really impactful, unique piece of mail
that’s gonna stand out, and then from a cost
balancing perspective, – Switch the switch to this. – Switch to the postcard, save money, so over the course of a year … Let’s say you send a letter
the first and the last time, and again, you can customize
the copy on both of those however you want, and then you send 10 postcards in between. It’s gonna cost you- – Set up your mail sequence, but you get that personal
touch in the beginning and towards the end. – Exactly, yep. And so that’s one of the things
I’m really recommend people. Is leverage it to where you’re not … Especially, balance your
budget appropriately. Leverage it to where you get
the high impact touchpoint at the beginning an
end where that can make a big difference in your
campaign performance. And then sort of the
savings of the consistency of the postcards in between. – So there you have it. That’s the bomb. They’re putting out handwritten postcards, I’m sorry, handwritten pieces of mail, real envelopes, in the very near future. And I’ll be the first to test that. I wanna test that. And when it goes out, I’m going to send one to myself to see if it looks really dope. Then I’ll report back to let
you know if it’s real or not. That’s cool, man. I really appreciate both of you guys coming to North Carolina, shooting some content with me, hanging out in the podcast room and … – Thanks for having us.
– Appreciate it. – This is awesome. – This is awesome.
– We have some fun time. So, make sure you guys go out, get DealMachine in the links below. You get 30 days and 40 postcards for free. I mean, if you don’t
sign up, you’re crazy. That’s a month your first
40 postcards out for free. You can’t beat that. So I appreciate Dave, I appreciate Josh, both you guys, and I’ll see you guys next. Peace. (dramatic electronic music) – [Voiceover] Thank you for listening to the Wholesaling Houses
Elite podcast with Max Maxwell. Make sure to tune in next week to see what Elite Wholesalers
will have in the hot seat. (dramatic electronic music)

Example Deals: 100% Owner Financed Real Estate Investing Deal Analyzed – Does It Make Sense In FL?

Joe: Hey, it’s Joe. I’ve got another deal
to analyze here. This is another email that I received. This one came from C.R. Harpe
in Florida. Thanks, C.R. C.R.: “I have a deal that has some good features
to it but I’m broke and have bad credit. I need this deal to get some cash flow coming
in and start replacing my income and allow my wife to be home with the kids. I’ve located
a grouping of duplexes that the seller is willing to sell with 100% owner financing
for $109,000 for each building. They’re rented and in good shape. I contacted a local realtor
that I found on Craig’s List and she drove by and said that they looked good and that
his rents are normal. If I can get my own financing, he’ll give me a 20% discount for
not having to carry the note. I cannot go to traditional lenders because my FICO is
596.” Joe: And these days if you want to get an
investment loan you’re going to need a 720 and you’re going to need to show income to
support those properties even without their rent. It’s very difficult to get an investment
loan these days. C.R.: “I found a private lender but most won’t
touch anything under $1,000,000. The only one that I found that will handle smaller
acquisitions will do 65% loan to value on the appraisals or purchase price, whichever
is lower.” Joe: This is hard money he’s talking about
here and I would stay away from hard money, unless you know for sure that you’ve got a
buyer and you’re going to be able to get out of that deal quickly. Hard money — I can’t
say it’s never profitable — I’ve used it and I’ve made a profit from it, but it eats
into your profits so much and there’s so many other ways to finance a deal than using hard
money. This is one thing that I guess I should reiterate — you don’t need cash to buy properties
if you find the right properties and go after the right types of deals. What so many of
you are doing are looking at properties that are not going to be available that way. This
one looks like it might be possible to do it on terms without cash or hard money because
the guy said he would finance it 100%. So let me finish the letter here.
C.R.: “The county has the building assessed at $121,000. For the three that I would like
to buy, the total comes to $363,000, so I would need to get $265,000 to the seller.
That’s not quite the 65% loan purchase price.” Joe: He’s talking about the 65% loan to value
that he could use for hard money — don’t do it that way. First of all, if you try to
show that you’re paying a certain price for a property, and if you’re trying to show that
you’re paying more for it than you are, and then getting the down payment funneled back
to you through the seller, that’s loan fraud. You’ll get yourself in trouble; you’ll get
yourself put in jail — so don’t do that kind of thing. Make sure that the lender understands
exactly what you’re doing and that all of it is revealed. We’ve done some very creative
stuff in the past where we have been able to do rebates and things like that, and all
of that’s legitimate as long as the lender’s aware of it and accepts it. I’m not just talking
about the loan broker being aware of it but also that it’s in the loan documents and that
it’s obvious that that’s what’s happening. Because the broker and the actual lender are
two different entities, and a lot of times a loan broker will just tell you, ‘Well, just
do this this way and that way and the lender will accept it.’ When in fact, what he’s saying
is that that way the lender won’t know about it and he’ll get his fee and you’ll get the
deal done, but you will have committed loan fraud. That’s happening less these days simply
because investment loans are fewer and farer between than they have ever been.
C.R.: “How can I structure this to get no out of pocket costs and still pick up the
property? He has 17 of these to sell total. He wants to do 6 at a time and here are the
details. Don’t share the address or the city as it’s so small that others can find it easily.”
Joe: The thing you have to know that he didn’t give me the information for is how much they
rent for. And he doesn’t need to know just the amount that they rented for. He also needs
to know what the history of the rent is. So you want to look at the Schedule E of the
owner of this property. Ask him to just send over the Schedule E of that property so that
you can see what he reported to the IRS. Typically he’s not going to report more than what he
made. So if you can see the Schedule E you can tell that he made x amount of dollars
over the last year. If you average that out then you can figure how much you can expect
to make with this with this particular manager in place. Can you keep that manager in place?
Is that manager a good manager? Can you talk to that manager and find out a little bit
about the properties from him? What kind of condition is the property in? How long have
the tenants been in there? How often do they turnover? All of these things are going to
be important if you’re going to buy these properties as investment properties. If you
are, and he’s willing to do 100% financing, can you do them using the hierarchy of zero
down structures that I taught you in one of the earlier videos?
Joe: In this case, we’re talking about doing a subject-to deal. Now does he have a loan
on these properties? We don’t know if he has a loan on these properties; we need to find
that out. If you’re paying $363,000 for these properties, how much in loans does he have?
If he has a total of $200,000 in loans on them and he wants the rest of his equity to
get the $363,000, and if he wants the full assessed value and you’re willing to give
that to him, and the numbers make sense because it has enough income to cover the payment
on that — let’s say he owes $200,000 on regular notes and he wants to get to another $163,000
in notes — you could do a multi-mortgage on this, and have him deed you the property.
You could make payments on the existing loan for that $200,000 and then you could make
a payment on another loan that equals $163,000 for these three properties to him personally
to where he has a mortgage on all three properties so that if you default he can take all three
properties back from you and protect his equity. Joe: There’s lots of ways to do this. The
next way down is you can do it on a land contract from him. He could just say, ‘Okay, 363. Do
a balloon payment after 5 years, x amount interest rate.’ Let’s say your payments on
that thing are $3,000 a month and the income on it is $3,600 a month and the payment covers
taxes and insurance and you’ve got to figure in your property management — do you still
have enough money to break even and make these deals work in the long term? And if you do,
and they’re good selling investment properties, do you keep them yourself at that point or
do you want to try to make another chunk of money and maybe sell them for $5,000 more
to an investor who gives you $5,000 for each duplex so that you make $15,000 on the deal
and then turn it around and sell it that way? You have to — because then you can show,
if the investor only has $5,000 on each of these deals and they break even and again,
remember what we talked about in depreciation on long term investment and how properties
go up in value and you can take deductions even if you’re breaking even, it’s going to
make sense if they pay off over a period of time.
Joe: What you want to try to go for when you’re making this offer to this guy is to get as
long a term on these loans as you can. I don’t think I’d do it for 5 years, I’d want to try
15, I’d prefer 30 years — I want to be able to pay these off over a long period of time
so that I know that they’re advertising. And if there’s enough money to make them pay off
sooner than that then obviously you want to pay them off sooner than that so that they
start cash flowing for you personally. I hope that helps.

How to Raise Capital For Real Estate Deals

what’s going on guys this is Daniel
one half of the Kwak Brothers and in this video we’re gonna be talking about
how to raise capital for real estate deals let’s cue that intro and let’s get
right into action alright guys welcome back this video we’re gonna be talking
about how to raise capital for real estate deals now if you guys watched the
last video that it actually refers to we talked about how I’m raising 10 million
dollars worth of real estate capital right now which again I explained in the
last video I actually kind of surpassed that number a year ago we’re at a much
higher number now but in this video I’m gonna talk about kind of more of a
specific technical stance on how to raise capital matter of fact I’m gonna
share with you guys three ways that I’d like to raise capital for real estate
deals but before we go ahead and move on don’t forget to click that subscribe
button and also click on that notification bell because well we’re
putting a lot of great real estate content like this specifically talking
about how to raise capital and different specific topics and well just like any
other deal being the first person there is always the best thing so click on
that notification bell so you could be the first to watch our videos and
actually employ it and put some money in your pocket so when it comes to raising
capital I always say the one thing and one thing only and it’s a be the
investor that you’d want to invest you right so if you’re investing a million
dollars right and you have a million dollars in capital and liquid be the
investor that you would want to partner with right so if you’re imagining
partnering up with somebody you would want them to be competent you would want
them to be like whoa you know this guy really knows what he’s talking about and
also have a great team and also you know understand the markets and and have a
lot of great things in play and also experience right but of course that
comes with doing deals but overall a great knowledge base a great team and a
great understanding of markets you would want an investor that you invest into to
have those three aspects so what does that say about you well that means that
you would want to become that person so you know imagine the ideal individual
that if you had capital you would invest your money into them and just be that
person right so when it comes to specific things right we talked about
the one and I’m gonna talk a little bit
about more specifically in this video but we talked about the first technique
in the last one which is to create a thought leadership platform of creating
a meet-up or some type of a mastermind group that wheats them that meets on a
weekly or bi-weekly basis and you’re giving out content rather for free right
in my opinion right in my case I run a meetup I run a real estate meetup every
other week on a Saturday from 1:00 to 3:00 at my church that I attend and I
give out content for free I give out a 30 minute to an hour training along with
a Q&A session and a lot of great resources so that allows me for me to
network and further build my relationships with individuals and that
has a lot a lot of individuals to come up to me after the meetup and say hey
look I have a million dollars or I have half a million dollars in my bank
account I love to use it to get in some type of a deal with you now
specifically talking on the dolly Durr ship platform this allows you to do a
lot of great different things first off it allows you to build a brand
right I would encourage you guys that as you guys build your real estate
investing business and you do stuff like meetups and you know you go on different
YouTube channels and you go on different Facebook groups to build a brand right
so in our case our brand is the clock brothers right it’s me it’s my brother
we both do different things in the business yet we’re still under the same
umbrella and we do this business as the quoc brothers it’s super simple right
really another really good friend of mine Joe Fairless right his brand is the
best ever real estate investing whatever so he does the best ever meetup the best
ever book the best ever real estate investing podcast that’s his brand the
best ever ours is the clock brothers so I would
encourage you guys when you start a meet-up and you do different things
create a brand it doesn’t have to be cliche or it doesn’t have to be you know
something super complicated or something super awesome just something that people
will remember you buy in terms of whenever they think of it they think of
you right and it’s very easy and notable to remember and another thing it allows
you to leverage relationships so one of the things that I do commonly is that
with people that I meet in the meet up with individuals at half
but all right I like to do stuff like take him out to dinner take them out to
lunch take them out to coffee and just hear their stories and just build a
relationship one of the things that I say all the time right instead of trying
to raise money from investors try and build relationships instead right
befriend them create something that is beyond just business because for me a
lot of times that’s one of my favorite ways to do so so that’s number one
create a thought leadership platform number two create strategic
relationships with professionals now what do I mean by that well I mean
creating strategic relationships with individuals like a CPA with an attorney
with business coaches people who are going to refer you to individuals who
may be interested in investing in real estate who also have a lot of liquidity
who have a lot of capital and for me one of the things that I love to network
with our CPAs I work and network with a good chunk of CPAs not a whole lot but I
network with two or three CPAs that I’m very close with and there have been
moments where they’ve referred me to their clients who have a lot of liquid
who have a lot of capital and these are also individuals who may make a lot of
money and they need the real estate for tax purposes a lot of my investors that
I work with are doctors doctors make a lot of money they also get taxed very
heavily so they love buying apartment buildings because the apartment
buildings provide the tax benefits so when it comes to buying real estate for
tax benefits well who better to talk to then their CPA then their tax
professional makes sense so CPAs and also business coaches whenever I meet
business coaches they always want to do best for their clients if they want to
increase their passive income one of the best ways to do that is real estate and
I’ve had scenarios where I’ve had business coaches and consultants who
will refer me to an individual who have millions of dollars or even a hundred
thousand dollars in their finca count and they want to increase their passive
income so how do you create asset ritika relationship for them well figure out
what you could do for them I one of the things I love doing is taking them out
to lunch dinner and honestly I I am honestly surprised that I’m not like
300 pounds already was how much I take out investors and also CPAs attorneys
and business coaches out to lunch and dinner and a lot of times I’m trying to
identify what they’re looking for so for CPAs well I have a rather large
network right I have the Youtube subscriber base but Sam and I also
operate a lot of large real estate investing Facebook groups and along with
my meetups and different things that I’m connected with well that allows me to
refer my CPAs and attorneys that are good that I genuinely think are
kind-hearted to my network so I’m seeing what they’re looking for what is value
to them and we’re exchanging values right they’re providing me with
investors I’m providing them with clientele or whatever they’re looking
for you know what value I could provide for them so that’s number two creating
strategic relationships and well you also want to be the individuals who want
to connect other people right if you want people to connect people to you
well you should do the same for others so again be who you want to be in this
world right the god the Gandhi quote I think it’s by Gandhi or like Mother
Teresa but anyways let’s move on to number three number three is consulting
others right so being a consultant being a real estate expert and a consultant
for other individuals so even for me as I consult people and coach people here
and there and a lot of times I do it for free
matter of fact one of the things that I tell my investors a lot is I told them
listen you have a million dollars that you want to put into my deals here is my
goal for you my goal for you is for us to be able to do three or four deals
together and once you’re ready to be able to do it on your own let’s go off
and have you do it on your own I want to make you sustainable I want to
put you in a position where you actually don’t even need me anymore
and a lot of people kind of scratched her head at what I do and say well
Daniel if their investors don’t you want them to stick around forever for me no
because if I thought like that that would mean that I have a little bit of a
scarcity and how I do my business and I don’t want that I don’t want to live in
scarcity I want to do things in abundance right
so for me I taw a lot of my investors listen if you want to continue to be a
passive and that sir and do more than three or four deals
and you like the relationship where you just lend the money and I do the work
that’s completely fine I’m more than happy to continue that relationship but
if you’re in a position where you want to learn how to do this yourself I have
no problem coaching you in teaching you for free that way you could do it
eventually after three or four deals and I can make you self-sustaining well
guess what guys that’s allowed for me a lot of referrals to come in right all
the sudden they start spreading the news like hey man this guy’s treating me
really well he’s teaching me how to do stuff for free and after three or four
deals I’m gonna be able to do this stuff on my own you should hit this guy up
because he did a lot of great stuff for me a lot of that has happened in my
career I’ve met a lot of investors a good chunk of them a good number through
that method through referrals so again guys um the third option the third
strategy and technique I use is to consult others I meet investors right
and I teach them for free teach them how to do it on their own and I get three or
four deals using their capital so it’s a great way to go ahead and do that so
hopefully this video is helpful that was three specific techniques the overall
premise guys the overall premise is a solve a problem meet people’s needs
again there’s a lot of people out there who are looking for experts who are
looking for individuals and their problem is they have a lot of capital
and they just don’t know what to do with it they are out there and to kind of
some of this video let me ask you guys this question do you guys think right do
you guys think that there’s more people out there who have capital and they’re
looking for experts and investors will have integrity and know what they’re
doing or do you think there’s more people out there who actually are the
experts who actually have integrity and actually know what they’re doing I would
argue that the number here where they have the capital and they’re looking for
individuals who are on this side right these there are a lot more of these
individuals than these individuals right there’s a lot less people who actually
had the integrity who actually have the expertise and the knowledge rather than
people who have the money so go out there guys and just solve the problem
solve the issue provide vally right be a true
entrepreneur so hopefully guys this video was helpful right
encourage you guys to watch and check out our other videos when it comes to
real estate investing so that you can be the expert so you can actually know what
you’re doing so again guys feel free to click on that subscribe button hit the
notification bell and if you have questions on how to start in the world
of real estate investing click on the link in the description below where we
actually are giving out the 0 to 75 units it’s actually detailing my very
first step and real estate investing and how I got started and ultimately how I
did the road of 75 units in one single year one from zero units to 75 units in
one calendar year so again guys that’s my free gift to you hope you enjoyed
this video I’ll see you guys in the next one

How Do We Deal With Artificial Intelligence In Real Estate?

Hey, it’s Joe Crump. I’ve got another question here. This is from John Canada. He says, “How can we cope with AI in the
real estate business?” I’m not really worried about coping with
it, I’m excited about using it. Because AI is how we built the Automarketer. It’s a pretty smart system, and it goes
out there and finds the properties that you want. You have to put a little bit of input in there. It analyzes the responses that come in, let’s
you know whether they’re a yes or a no, it puts them into the appropriate follow up
system once they know that. It notifies you that somebody is interested
in the property so that you can call them and put the deal together. So that AI does a lot of the work for you. If I look at all the work that I had to do
before I had the Automarketer versus the amount of work that I have to do after it, 90% of
my work has disappeared. The other 10% still has to be done and I have
most of that done by outsource workers. So, I have somebody working for me as an admin
person, somebody working as a buyer finder, someone working as boots on the ground and
sometimes working as a seller finder as well. So, those different tasks, that’s about
10% of the work and then the other 90% of organizing and keeping track of all this stuff,
making sure everything goes out as it should, doing the marketing, which is the main purpose
of any business. If a business isn’t marketing it’s not
in business. So marketing is the main function of a business. Nothing happens in business, as Peter Drucker
said, until a sale is made. So, and marketing is what drives those sales. Everything else besides marketing and innovation
is an expense. So, marketing is the only real profit center
you have in your business and as long as you’re doing that, you’re in good shape. That’s why you want good AI, you want good
automation, you want a good system to do that work for you and that’ll keep you moving
forward. All right. Hope that answers the question.

Structuring Deals #1:”Subject To” Deals

Hey, it’s Joe Crump. In this series I’m going to do, I’m going
to explain the different zero down structures. There’s five of them that I’m going to focus
on that encompass just about every different type of structure that you can use. And there’s a hierarchy based on the type
of offer that you’re making, whether you’re buying or whether you’re selling. I’m going to try to explain some of those
things in these videos. The first five videos in this series are going
to be explaining each of those different structures. So you’ll probably want to listen to them
all eventually, one after the other. But right now we’re going to trickle them
out, you know, once a week or whatever, and you’re going to be able to listen to them
that way. After that, I’m going to do some example deals
and I’m going to show you here is a situation, here’s how much they want for the property,
here’s how much it’s worth, what kind of offer can you make on it that would work as a zero
down structure that would make you money. So that’s how I’m going to go through this
next series of about 15 videos or so. So let’s start, first of all, with subject
to. What is buying property subject to the existing
loan? Essentially, what you’re doing is asking the
seller who already has a property and has a mortgage on that property to transfer the
title to you. Transfer the deed to you. And so they sign over the deed to you, you
take over the property, and you start making payments on their existing loan. You’re not going to qualify for that loan,
you’re going to take over that loan payments. You’re also going to transfer the insurance
into your name and you’re going to start making the tax payments as well. So you’re going to be paying principal, interest,
taxes and insurance on that property. And you’re going to go out and find someone,
probably, to lease option that property. And they’re going to make payments to you. So you’ll, let’s say you have a property and
it’s got $150K mortgage on it and it’s worth $160K. You turn around and sell it for $165K,
$170K maybe. You get $5,000 as a down payment and you’re
going to get let’s say $1,200 a month for the income for it. But the payments on it are $1,000 so you put
$1,000 towards the payment, the PITI, plus you take $200 for yourself as cash flow for
that property. So that would be one scenario where you could
keep this property and pay it off over time, using the existing loan on it, getting, having
no money into it, making $5,000 pretty much when you close that deal because you’re not
going to close it until you find a lease option buyer to move in. So you’re making money immediately on it. But the way you’re taking control of that
property is having the title. This is the strongest way to buy a property,
having control of the title and not having your name on a loan. Now you don’t have to qualify for the loan,
you don’t have to have good credit, you don’t have to have any down payment and you have
full control over this property. The seller has no control over that property. You now have control over it. If you don’t make the payments on that property,
you trash their credit. So you’re obligation, your ethical obligation
is to make sure you make those payments. If you take that property, start collecting
rent on it, don’t make the payments, that’s considered fraud and they can put you in jail
for that. So don’t do that. It’s also not the right thing to do. I’ve seen people do it before. I’ve also seen a guy go to jail for it. So make sure that you do this properly and
you watch out for the people who you’re buying the properties from. If you get into a position ever where you
can’t make the payments, my promise to our sellers whenever I take a property from them
is that they won’t ever have to worry about this again. But, I tell them if I ever get into a situation
where I can’t sustain this property for whatever reason, I will give it back to them in as
at least as good a condition as I what I took it over at. And I won’t have, you’ll also get it back
without the payments being late. So even if it’s a few days before the next
payment is due, I’m going to do that. And if the next payment comes do, then I make
that payment so that they, so it’s never comes late on them. So you have to take responsibility. So by learning these things it gives you a
great power and with great power comes great responsibility. I feel like Spiderman’s dad, or grandpa. Anyway. So, use this stuff wisely. It is the best way to buy property and you
can build a whole portfolio. The likelihood that you could put together
ten of these $150K properties in one year, one a month even, is very high. That means that you just built $1.8 million
worth of property and it’s probably worth more than that. So, you can probably get close to $2 million
worth of property in a year doing it this way. I’ve had lots of students that have done it
that way. And a lot of these things you can get with
some equity in them. A lot of times you’re buying them without
any equity where you, like I said, you get $150K mortgage, and it’s got $10,000 of equity. Okay, $10,000 of equity isn’t real equity. You can’t turn around and sell it and pay
a realtor and get out of the deal. You’re going to have your expenses to sell
that are going to be higher than that. But if you keep the property, you’re going
to get some benefits from it. You’re going to, every month, you’re going
to get a buy down on that note, you know, ,maybe it’s a couple of hundred dollars down
on that note. You’re going to get tax depreciation which
is over 27.5 years on the tax basis of that property so it’s about 3.64% of the improvement
value of that property. So, on a property like that you’re probably
talking about, I don’t know, $4,000 or $5,000 a year and, which is you had, you’re in a
30% tax bracket, that means you’re making about $1,500 per year in you know, your tax
benefits. You’re also going to get appreciation on that
property. The properties typically go up over time so,
if it goes up just 1% in a year, it’s gone up another $1,500 in value. So you get the buy down on the note, you get
appreciation, you get depreciation and of course you get the rental income on the property
as well. And eventually, and you’re also going to get
the lease option fee. So anytime somebody buys it on a lease option,
they’re going to give you a down payment. So, let’s say they give you $5,000 and you
can get anywhere from $5,000 to $15,000 on a deal like this, on a lease option. Let’s say you get $5,000 so you get that cash. You probably want to put that in an escrow
account and hold that as a reserve because you’re probably going to get that property
back. The likelihood that they’re going to exercise
that option when they buy it is very low. Less than 30%. And if they do, then, and you sold it for
$165K, that means they still owe you $160K on it, you owe $150K, they give you $160K,
you get $10,000, you make a profit if they buy it. If they don’t, you get the other benefits
of owning that property as a rental property for as long as you own it. And you’ll pay it off eventually. If it’s 20 years left on the mortgage, in
20 years it’ll be paid off. If you’re making more cash flow on it and
as time goes by, you’re rents go up typically, and as your rents go up, you could start paying
more down on your principal and pay it off instead of 30 years you could pay it at 20
or instead of 20 years you could pay it off in 10. And you can get to that place where those
things are paid off a whole lot quicker. Or, you can just keep the cash flow for yourself
and use that to live on. Just make sure you keep a reserve on these
properties. I’ve seen too many people buy a bunch of subject
to properties and then they’d have vacancies and they wouldn’t be able to make their
payments because they spent all of the money that they got in lease options to live on. And that’s a mistake. So, don’t get into that situation because
you don’t want to default on these properties if there’s any way that you can avoid it. And you don’t want to have to give it back
to that seller later if you can avoid it. One thing, though, when you do have to give
it back, if that ever happens, it won’t damage your credit. It won’t cost you anything other than what
you promised them that you would do which is keep it current. So, that’s how you do a subject to. That’s the basic structure of this and all
it takes is them deeding you the property. Now, we have a whole package of documents
that we ask them to sign, you know, disclosures, and you know, giving us the right to have
control over the insurance policy, you know, those types of things that we have on every
subject to property that comes through. We also have the right to talk to a lender,
which we get in writing, we ask them to give us the password to their online account, their
bank account that shows the mortgage account so we have access to the mortgage. We can pay it online if we want to and do
it that way. One of the things I’ve talked about in previous
videos is the due on sale clause. A lot of people are concerned with subject
to because of the due on sale clause. Every lender has, or every mortgage has a
due on sale clause that says if you transfer that property they have the right to foreclose
on that property. There’s some ways around it by using a land
trust or doing things like that or hiding the fact that it got transferred from the
bank by not recording the deed, you know,. We’ve done those things as well, but I’ve,
we’ve done so many of these subject to’s, hundreds, and with my students, thousands,
and when I look at over all the years that we’ve done this for, I’ve never seen one bank
every foreclose using the due on sale clause as its reason. So, I wouldn’t worry too much about that happening. Of course I can’t give legal advice. I’m not an attorney, so, take my advice as
from my experience, not because I legally have the right to give you legal advice. I don’t. I don’t even play one on TV. So, anyway, hope that helps. That’s subject to. Next time when we come back, I will talk to
you about multi-mortgage as the second in the hierarchy. All right. Hope that helps.