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From Broke To 300 R.E.O. Deals Per Month With Reginald Perryman | The Real Estate Investing Club #2 · The Real Estate Investing Club

• 0:02
  Unknown Speaker: Hello and welcome to another episode of real estate investment. Place investors go to learn tips, tricks and stories from other investors in the field. Today we have a special guest with us. So buckle up, grab your pen and paper and enjoy the ride.
• 0:21
  Unknown Speaker: All right, we are live, Reginald, thank you for joining us on the show. How are you? I'm doing great. That's good. That's good. Where are you calling from today? From here from Detroit, Michigan. All right. All right. I have not been out to Detroit, but I've wanted to go especially those those very attractive housing prices over there.
• 0:43
  Unknown Speaker: Yeah, those can get you in trouble sometimes, too.
• 0:47
  Unknown Speaker: So you're saying right before the show, I definitely want to hear more about that. Yeah. So to get us started, just tell tell the listeners and everybody watching who you are, where you're from, and kind of how you got into real estate in the first place. I'm Reginald pyramid.
• 1:01
  Unknown Speaker: I am an Associate Broker here in the Detroit area at Keller Williams Metro. I've been in real estate for 28 years now. I originally started out at century 21. I worked there for 10 years. And then I had my own brokerage actually, which was rich Realty. I had that company for 13 years and then eventually went over to kW Metro. But during the time at rich Realty. I want to say maybe the last five years, I was Ario broker. And I listed a lot of properties probably I think we were averaging anywhere between four and 600 homes a year. I mean, we were we were cranking them out that market when everybody was complaining about the market. We were we were doing pretty good. So those were some of my best years. And during that time, that's when I really realized that they're real estate in real estate, there's always a good market for somebody. Because that was the first time in my career, I've seen real money come into the market. And when I say real money, these were people that had large sums of cash that we're waiting for downturn in. So, yeah, it was great. And, you know, I was able to buy quite a few properties, and we'll discuss it later. Some of my strategies, but one of the downsides of being a listing broker, primarily for like Bank of America or HUD was they eventually came out with requirements that we could not buy our own listings, which was fine. But eventually, they said, if you are a broker, you couldn't buy any HUD home. If you were a bank of america listing broker, you couldn't buy any Bank of America.
• 2:57
  Unknown Speaker: Wow, I did not know that. That is Yeah.
• 3:00
  Unknown Speaker: It was, um, yeah. So I mean, but there was still other opportunities out there in the market. But um, yeah, so that was the only downside, but you know, we did good during that time.
• 3:12
  Unknown Speaker: Yeah, definitely. And this was right after, after 2008 crash.
• 3:17
  Unknown Speaker: Yeah. Well, it was more or less we started so I will actually get into Oreo. Prior to that, I started Oreo right about 2003 2004. There was, you know, there was just more inventory. There was some independent companies here. So you may have, like, you know, the bank may give you, you know, four or five listings a year, for around 2008 2009. You would get, you know, 10 listings a month for one bank. At one point in time with her, we were getting as many as 20 listings a week, on average. So yeah, the price We're lower, but we just sold a lot more properties.
• 4:03
  Unknown Speaker: That is really crazy. I kind of taken it back real quick. You said you you've been in real estate for a long time over 20 years. So how you first started, how did you get into it? Like what kind of brought you into real estate?
• 4:15
  Unknown Speaker: Yeah, so originally, so when I got into it, I was 19. My grandmother was an investor. While she was alive, she would always say you should go into real estate. And when I graduated high school, she passed away. And she had like, three or four properties that she loved to my mother, my uncle, and she left me two properties. And but I went right, I had to handle the probate estate and this was before I was licensed. And going through that process. I was like, Yeah, I need I should go into real estate. Like she said, I wanted to be a music ended engineer. I was into music and rapping and everything. like that but I'm just working odd jobs and then finally I said let me go and get my real estate license and see what it's about.
• 5:08
  Unknown Speaker: I wish I had somebody like that in when I was 19 years old push me into real estate that's that's pretty good. So So you said your your you got into Rio when you had your own brokerage now you're at Keller Williams. So kind of tell us Keller Williams correct? Yep. Okay, okay. So what do you do in your own real estate investing What do you focus on and kind of describe your business model both go into reo kind of describe how that works for people who aren't familiar? And you know, kind of what you're doing right now are you doing buying polls are you doing you know, multifamily, whatever that is,
• 5:44
  Unknown Speaker: right. So overall, I'm I'm in real estate completely. So I'm just looking for great opportunities, whether it's buy a home fix and flip. I'm personally I don't under show or sick or residential or you just Mostly residential, I've only own one commercial property. And that was the property that we were originally opened up my brokerage. We were renovating that property, but then we sold it, and then went and leased space. It just made better sense. Financially at that time. Yeah. But um, yeah, um, I'm just looking for opportunities. So some properties make sense to buy how some are good for fix and flips. Personally, I don't do a fix and flip if I'm going to net under 25,000 because it's not worth the time, energy and effort. Do a wholesale a little bit as well. A lot of people are
• 6:45
  Unknown Speaker: wholesale as a broker.
• 6:47
  Unknown Speaker: Yeah,
• 6:47
  Unknown Speaker: yes thing i've i've never heard that happen. That's That's really interesting.
• 6:52
  Unknown Speaker: Well, here, here's here's what I tell people.
• 6:56
  Unknown Speaker: At the end of the day, because people have all of these You know, they try to make money on social media, they make wholesale and seem sexy, right? Yeah. So I'm from, you know, I started in 92. And I don't know if you remember, you know, you see the late night commercials with Carlton sheets, and he's selling you these VHS tapes and audio tapes cassette tapes actually. So wholesaling is not new. it's legal. Now different states have like a Michigan if you transact more than six real estate transactions, you are required to be licensed. Most people don't follow that. But um, overall at the end of the day, wholesaling and being an agent being a broker, all it is you have a buyer, you have you have an end buyer, you have a seller, and someone was getting paid in the middle. I don't care if it's a commission, assignment fee consulting fee. So when we give these types wholesaler and all of this stuff is it's nothing different right? Now, the way you go about structuring that deal may be different and what you're disclosing so as a broker, and being honest and fair with my clients, every listing appointment I go on is a potential opportunity for me to invest as well. So technically, I'm the first potential buyer for every listing appointment.
• 8:27
  Unknown Speaker: I like that
• 8:28
  Unknown Speaker: I always disclose to the seller, Mr. Mrs. seller, here's what the market value of your home is, here's what the market value is, as is, and here's what I'm willing to pay for it a home today as is with no fees. Right? Gotcha. This is a situation where I'm going to buy that property. And I may know a potential investor that's willing to pay, you know, an extra 10,000 for it because the numbers make sense for them, but it's not as good Flip for me, then I can structure it like a wholesale deal, or I can just simply structure it. And there's no limit. People are stuck on this 6% Commission. There's no rule to say you can't charge 10% or 20% is whatever you negotiate, as long as you disclose to the seller, what they're getting and what how the deal is going to be structured, and they're satisfied with their bottom line, then you're fine. You can structure it instead of an assignment fee. They simply say, Hey, your house is 80. And you can charge a buyer a $20,000. commission, because as a buyer's agent, you can charge your buyer commission or retainer fee. So it's all about disclosure and and just explaining it to everybody. Now, some people do get mad. They don't want to make that much money on a deal, but there's just it's all about how you negotiate everything. Yeah.
• 9:57
  Unknown Speaker: No, that's good. I've never It framed that way and that it totally makes sense because really all you're doing is you just transacting a deal. It doesn't really matter what labels you put on it, you're still bringing out a seller and a buyer together and so it makes sense. So, okay, so right now you're, you're buying, you're doing buying holds, you're acting as a broker and you're also wholesaling. I'm kind of taking you back to Ario, kind of how that worked. And just the ins and outs of that business.
• 10:28
  Unknown Speaker: Yes, so are you always unique? One of the things I learned from Arielle before I got into our yo I absolutely had no systems in place. We would I didn't track anything we would just get business in the only thing I tracked is how much money I was spending, how much money I was making, and if there was a profit I was happy
• 10:53
  Unknown Speaker: to KPI
• 10:54
  Unknown Speaker: Yeah, but our yo made me a better business person. Overall because, for example, so in our yo SRL broker, at least at that time, let's use Bank of America for example, as a listing broker, they give you a property to list maybe two or three weeks before it goes on the market, sometimes a month or two, you have to do either weekly or bi weekly inspections, so occupancy inspections to see if the person has vacated the property. Sometimes they asked you to offer the person cash for keys. Depending on who your client is meaning the bank, they may ask you to front that money. So if they're giving someone $5,000 to relocate, you have to give that person 5000 you submit for reimbursement, and they're gonna pay you within 30 to 45 days. You have to cut the grass bi weekly and show before and after photos. You have to work Key to property, trashed it out. Depending on which bank you're working with, you have to pay all of the vendors and then they're going to reimburse you. Now, recently, some of the banks like Bank of America they use like national companies like safeguard where they outsource that work to those companies. But typically you would pay for utilities you would pay for Ricky's securing the property, lawn maintenance bi weekly, and you had to do weekly inspections or bi weekly inspections. So once once you get so many properties then I had two field inspectors, so I never seen the properties personally. So I have field inspectors that would go out and take photos. They would take both marketing photos and photos for our BPO which is our broker price opinion for each property and this We were required to do broker price opinions monthly. On some systems we had to use for like equator, which at the time was Car Audio trance. It's just a platform that several banks use so that you can upload documents and submit offers. And there was a lot of work for each property. And why I say it made me a better business person because at first I would just have money I would just spend it on have my assistant submit all the reimbursements to the bank. So maybe I have 50,000 now and we receive 30,000 in wait there's a problem. So So then I realized Wait a minute, I'm loaning the bank free money why am I fronting all this money for the bank? And they're like yes, some some of the Commission's on these properties, their minimum commission was $2,000. So if we're selling a $15,000 property, and let's say another agent sells it, so I'm getting 1000 the other agents getting 1000. But I've already fronted three or four grand on this property. Right? Yes, I'm getting the thousand back commission and I waiting 30 or 45 days. So you really have to be I'm good with tracking your numbers. And you have to you have to have some money up front in order to be an reo broker. So, um, so eventually, you know, we got a handle that that wasn't too bad because you're kind of forced to use these systems. But then what I started doing was I said, Okay, this bank is giving me this type of inventory, and they're slower to reimburse, or they're, they're rejecting some of our reimbursements and they're only given me Maybe, you know, two or three properties a month. So I start tracking based on which bank so maybe Bank of America, Chase, this is how much my profit and loss was with Chase profit and loss with her profit and loss with Bank of America, then I got smart and said, I don't need all of these clients, I only need the major three. Because the rest of them, I'm fronting three or 4000 on average per property, and they're holding that money is taking them, you know, a month and a half to reimburse me, it doesn't even make sense to have them as a client. So, um, audio can be lucrative, but it has to be, you either have to have a quantity or you have to have real good assets that they're giving to lists where you're making, you know, at least a minimum hundred thousand dollars and not on the listing price.
• 15:57
  Unknown Speaker: Gotcha. And it sounds like you really have to have your processes down for that, that high volume. I mean, you really have to know you've got to be nailing every single, every single step in the process. Exactly.
• 16:09
  Unknown Speaker: So, but yeah, overall our yo was, was a good run. I, you know, I have a few banks now, but a lot less inventory, they may give me one or two a year that I can you know, I can handle myself I don't have a feel of respect.
• 16:24
  Unknown Speaker: Yeah. So for people who are not familiar with Oreo, how does Oreo Oreo is basically when somebody defaults and the property goes back to the bank and the bank lists? Correct, right.
• 16:37
  Unknown Speaker: So our yo is just to turn real estate on. So the bank forecloses on the property here in Michigan, we have a six month redemption period. So technically, from the time you miss your first payment, the bank is probably going to wait a minimum of at least 45 days to even start any foreclosure proceedings. Once they foreclose, it goes to court, then a sheriff sale date is scheduled. And then the owner has six months to redeem the property, either pay it off and redeem it or they can sell it if there's enough equity. Some banks will still negotiate a short sale during that time period. And what happens, um, the bank will assign it to you within a redemption period. And they just want you to keep an eye on the property to make sure it hasn't. The occupant hasn't left and left it vacant. Because if they abandon the property to bank and file for abandonment and shorten that six month time period, okay, but most banks don't do it because there were lawsuits because someone would say, Well, I was in the hospital when you came out and posted the notice. And you guys rekey the property will arise that and my diamond ring was missing. He knows Most banks started waiting out the six month redemption period. And after that, they would they will have to do an eviction or cash for keys and things of that nature. So,
• 18:13
  Unknown Speaker: and all REO properties they all go into short sale when it goes up for listing Is that correct?
• 18:20
  Unknown Speaker: No. So um so so there's a couple things so once it goes to Sheriff sale is so it's foreclosed on an individual can attend a sheriff sale and bid on that property. Right. So let's say you owe the bank $150,000. And it goes to share sale and there's a bidding process but the winning bidder can't do anything with the property for six months because that owner still has a six month redemption period. Gotcha. All right. So the owner can still sell the property But if you're at a winning bidder once that six months is up and the bank is not going to get the property back the winning bidder is going to have ownership of that property and then they have to Vic the occupant or previous owner now in most cases what happened is the bank will go out they will bet at the sheriff sale to make sure they receive the property back unless someone bids higher than the balance go. Yeah. And and and typically are right when just before to share sale the bank will have a broker do a drive by BPO. So let's say if I'm if it's going to go to Sheriff sale, and the bank just wants an idea of market value, so you may say the house is only worth 400,000. The bank may say Okay, once it goes to share sale someone may be at 110 or 120. The bank may say, okay, we're just gonna let the highest bidder habit. All right, gotcha. Back then not many people were bidding, people were bidding, but they wasn't bidding that high. Yeah. And there's a whole different dynamic as to why the banks will let it go or why the banks would keep it and how their books work and everything like that. We won't get into that here. But, um, if you're at a listing broker, and it goes through and the share sale redemption period is up, then the banks takes ownership and possession and then they list the property with you. Gotcha, time. Now those
• 20:40
  Unknown Speaker: Oh, go ahead. So what so last note on the reo thing if somebody were interested in if an investor was interested in getting into buying REO properties, or not as a broker, how would they go about doing that?
• 20:53
  Unknown Speaker: So acid so there's a couple sites. A lot of bank of america inventory is actually On auction calm, but they still list their properties with brokers. If you're looking for HUD homes, you can go on HUD home store.com, at least here in our state, those properties are still listed with brokers as well. Most banks are just posting their properties online, but they are still listing most of their properties with brokers as well. So you can just contact any real estate broker and say, Hey, in MLS, there's a specific search, you can use to says bank or government on properties. Got a few of the smaller banks, they may have like their own platform, so you can just go onto their website and see if they have our yo or bank foreclosures listing on your site, because you still have like your smart credit unions and things of that nature as well.
• 21:51
  Unknown Speaker: All right, sounds good. All right. I'm gonna shift a shift and get us to shift gears here a little bit. We just talked about your business. What you did. Now I want to hear a little bit about your stories. So kind of take us back what you know you've had, you've had a lot of experience over 20 years, what has been the hardest thing that you've experienced so far in real estate, the biggest obstacle that you kind of had to overcome?
• 22:14
  Unknown Speaker: So the biggest obstacle in all honesty, and I think a lot of investors and brokers can understand is early on, I just didn't understand the taxes. I understood them. But I mean at 19 coming from working at Wendy's or or Meyers, Indian, you know, all of a sudden you got this, you know, $7,000 tax bill, and I didn't have a lot of mentors around me to say, hey, when you're making these Commission's, this is what you need to do with the money and set up separate bank accounts and all this good stuff, pay estimated taxes. And that wasn't too bad early on, because maybe like my first three or four years, I didn't make over $30,000 assets. Agent, right? So that's easy to rebound from. But once I started, like flipping properties and things of that nature, me and my partner, we were buying like 30 and $40,000 homes and fixing them and flipping them. And like within like four months, we made $180,000 profit. And we still have other properties. But we were taking a profit and we use that money to buy a commercial building. And we didn't understand how to structure it as far as tax advantages and things of that nature. So that was my first year owing more than $20,000 and income taxes. And, and this was in addition to my regular commission income as an agent. So I think that was my biggest challenge over the years. And then of course, you know, balancing trying to run and grow a brokerage with your family life. So I would say taxes and the balancing act of personal relationships and being successful in business. And eventually you learn ways and you learn, and you grow from it. But those were my biggest challenges.
• 24:47
  Unknown Speaker: Yeah, I like that I taxes I would have said that. That's a good one. But bouncing for sure. I mean, yeah, I don't think it's a hard one to nail down. That's a definitely it's a learning learning experience. The long The longer you live, the more you figure out how to balance. Right, right. Okay, so that's the that's the hardest thing you've experienced. How about what is the aspect of real estate that you absolutely enjoyed the most gives you the most energy? Take us back to that. What is that?
• 25:13
  Unknown Speaker: I'm actually right now, I think what I love the most is actually training and coaching other agents. Oh, nice. Yeah, especially when, if they're like new and they're young, like let's say they're 18 to 25. And this is maybe like First career, I really just like seeing them, you know, just go out and explode and avoid some of the pitfalls that I, you know, I had early on, and just helping agents in general. And, and first time homebuyers. I don't really show homes, I have a team. But I still like the process of seeing someone that has. They were winners and their parents were renting homes and they're like, second and third generation tenants. And they're just changing that whole dynamic for their family. So I really enjoy seeing that and being a part of that as well.
• 26:11
  Unknown Speaker: That's awesome. That's awesome. So do you have I mean, out of you know, the whole 20 year experience, do you have just one single either flip that you did or client that you had or one deal one transaction that kind of stands out as your absolute favorite and kinda like why was that I was so good.
• 26:29
  Unknown Speaker: I'm actually one of my favorite deals. just happened in December. Nice. It was, it was almost like I couldn't I think over the years. So there's there's two things well, this particular flip was more than just the profit and it was a good profit. So, um, last year, I started really marketing to probate. You know, adding probate leads to my repertoire because I, I've always done probate deals with people, but I never really marketed to that niche. And, again, I went met with a seller. And he was like, I told him I said, you know, as this this thing is, you know, worth about 135 or so, if you fix it up, we can get you anywhere between like 190 to 200 for it. And he was just like, well, we got several properties. We just let this go. I said, I'll give you one tip for today. Nope. fees, I'll pay all the fees. And he said, Yeah, I'll take it. And, and at the time, I didn't have all the cash for it, and I wasn't about to finance it. I caught one of my agents that I know that used to be one of my agents at my brokerage. She came over to kW with me and she went and started her own team. We partnered up on this deal, we fixed it and flipped and we made like a $52,000 profit off the deal. And it closed December 31 2019. And I just like that deal so much because this was someone that was brand new to the business. She started with me as an agent. Now she's a broker, you know, Associate Broker and she has our own team and she's invested as well and we were able to partner up and do that deal. So it's like, you know, I don't know what else to compare it to maybe, you know, it's like it Mr. Miyagi, partner with Daniel's son and winning kick butt together. That's,
• 28:49
  Unknown Speaker: that's a great comparison. I love it.
• 28:53
  Unknown Speaker: Alright, so changing gears one last time, I want to talk a little bit about, you know, what gets you going. So, if there's one habit that you do every day, that contributes the most to your success as in real estate, what would that have it the
• 29:08
  Unknown Speaker: prospect, you have to go after the business. I mean,
• 29:13
  Unknown Speaker: even you know, I'm not the biggest broker in the area or team, but just hitting the phones man every day, whether you're calling cold calling, or you just calling past clients. I'm just talking to people. I mean, you have to talk to at least 30 people a day. New Business it and investors and I will say this wholesalers out hustle real estate agents like 10 or one. Dude, how many letters did you send out? And I send out tons of letters and mailers and cold call but these guys are hustling. So I would say just prospecting, especially for homeowner leads and seller leads. Best thing you can do.
• 30:01
  Unknown Speaker: All right. So that kind of goes into our next question. You know, you yourself you started at 19 if you could go back to that time, your 19 year old self, and you tell him one piece of advice, what would that be? Hit the phones man hit there
• 30:14
  Unknown Speaker: you go. I like phones. So you know, like I said, my first few years was, I mean out. I didn't have any bills out of having kids and car notes and things of that nature. And I remember one year I was I was broke. I had I was going to rent my house out, I had someone in line to rent my property and I was going to move to Atlanta. And when I say broke, I had $80 in my pocket. Huntington bank, and I remember his name, Mr. Khan was calling me weekly asking me to catch up on my car note. And this was in November, and you know, here in Michigan, it gets cold. So you have to have money to pay your gas bill, for sure. And, and it was rough. And I mean, I'm my broker came to me and said, Would you like to go to sweat hearts, which was a Floyd Whitman course, they call this sweat hearts at the time. And this was the course it was, um, it was a course that lasted from November to February. And it just taught you about getting listings. And I said, of course, so I signed up for it, but I didn't realize it called $600 I didn't have $600 he paid for the cost of and instead just reimbursed me after your first deal. From November through February, I was the top listing agent for units I had got 17 listings. By March of that following year I was closing like four or five deals a month, which was way more than I've done before and net started me too. You know, that changed my life pretty much at that point. Now remember calling Mr. Khan at Huntington bank saying this is my last time speaking to you on the phone.
• 32:15
  Unknown Speaker: I love it. So hit hit the phone. Yeah, that's piece of advice. I like it. Alright, so we're at the end here. For everybody listening and watching. If you'd like to share this information, how can people get get a hold of you and what is it you're interested in real estate. If somebody to kind of help you out and give you a mutual benefit there,
• 32:36
  Unknown Speaker: so I'm on all social platforms. Reggie is real estate.com is my website and you can find me on YouTube. Just look up Reginald, Theremin and Instagram and Facebook Reginald pyramid or Reggie pyramid Realty Group on Facebook is my business page. I'm on Twitter Reggie is our E for Reggie's real estate. I'm on LinkedIn as well.
• 33:06
  Unknown Speaker: Yeah, I'm everywhere everywhere.
• 33:09
  Unknown Speaker: Um, and just you know, wanted just wanted to point this out one of my favorite investing tools and I've been doing this since the beginning is seller financing. here in Michigan, we call them land contracts. So I'm known for doing quite a few of those as well. perfect opportunity for someone who wants to Buy and sale but doesn't want the responsibility of being a landlord. It's helped me out because I'm not paying the same capital gains taxes i would pay on the flip. And I still have some mailbox. mailbox money. In other words
• 33:49
  Unknown Speaker: well, dang, I you know, we're at the end of our time, but I wish I could have talked we could have talked about that. I might have to have you back on at some point.
• 33:57
  Unknown Speaker: It's great.
• 33:58
  Unknown Speaker: All right, Reggie, will thank you for joining us. Just stay on after this. But this is the end. So thank you and everybody, you he's on all platforms. So if you want to get a hold of them, rewind and grab one of those one of those handles.
• 34:15
  Unknown Speaker: Thank you for joining us on another episode of The Real Estate Investing club. More information on how to work with a Peterson go to WWW dot real estate investing club calm. Otherwise, we will see you guys in the next steps.