Latest / REL Freedom Podcast / Robert Taylor - McDonalds Crew Member To 30 Flips A Year

Transcript

Robert Taylor - McDonalds Crew Member To 30 Flips A Year · REL Freedom Podcast

• 0:00
  Speaker 1: The initial thought was always I wanted to replace my job income so I can be in a position at freedom.
• 0:06
  Speaker 1: So at that point I needed to get to five thousand dollars in what in cash flow?
• 0:10
  Speaker 1: That's sixty thousand a year.
• 0:11
  Speaker 1: That should cover my mortgage, my car payments to and so forth.
• 0:14
  Speaker 1: So I looked at what were my bills and how much would that cost, and then how could I create cash flow to pay for that?
• 0:20
  Speaker 1: In the beginning I didn't have the cash to put down 20% down payments on each rental, so that's why I used the flip as a vehicle to build up my cash flow.
• 0:27
  Speaker 1: And then, once I got to a point where I felt like I had some Dispendable cash, I started to purchase rentals.
• 0:33
  Speaker 1: So that probably took about a year and a half before I saw rentals.
• 0:42
  Speaker 2: Welcome to the real freedom show, where we inspire you to pursue your passion to gain time and financial freedom through opportunities and real estate.
• 0:48
  Speaker 2: I'm your host, mike Swenson.
• 0:50
  Speaker 2: Let's get some real freedom together.
• 0:52
  Speaker 2: Hello everybody, welcome to another episode of real freedom, talking about real estate leverage, freedom, building time and financial freedom through opportunities in real estate, and I'm super excited about today.
• 1:09
  Speaker 2: We've got an amazing guest with a really great story.
• 1:13
  Speaker 2: We've got Robert Taylor on.
• 1:14
  Speaker 2: Robert actually started out at McDonald's, worked his way up into higher management and then decided he wanted to pursue real estate and so got into Flipping.
• 1:25
  Speaker 2: We've also done some buy-and-hold and ground-up construction.
• 1:28
  Speaker 2: On average, now You're doing about 25 or 30 flips a year, currently doing nine projects, which is a lot, and so we'll talk about how you've been able to build that, going from your start all the way up to today.
• 1:38
  Speaker 2: So, robert, we're so excited to have you on the show.
• 1:40
  Speaker 1: Hey how you doing.
• 1:41
  Speaker 1: Mike, Thanks for having me on the show today.
• 1:42
  Speaker 1: Really excited.
• 1:44
  Speaker 2: So, yeah, why don't we just get started, share a little bit about your background?
• 1:47
  Speaker 2: Would love to hear your story and really to talking about you know, for people that get into real estate, there's a lot of transferable skills that you build, whether it's tangible skills, operational skills, people skills, management skills and all that.
• 2:00
  Speaker 2: So it'd love to kind of hear about your background and how you build and grew at McDonald's and then got into real estate, as you mentioned earlier.
• 2:06
  Speaker 1: I started off my career in McDonald's while I was working.
• 2:09
  Speaker 1: I'm going through high school.
• 2:11
  Speaker 1: It was kind of my part-time job.
• 2:13
  Speaker 1: When I started out in college I was working as a crew person at McDonald's, had the opportunity over the summer to go into management.
• 2:20
  Speaker 1: I never really thought it was gonna be something that I did as a career.
• 2:23
  Speaker 1: I was actually going to college to be accounting.
• 2:26
  Speaker 1: However, my process of filling out my application I was like one of the first to kind of go to college in my family, so didn't get really a lot of help on that part.
• 2:35
  Speaker 1: I took a lot of credits went back for my second semester it was like, oh, you owe like five grand and I didn't have the five grand, wasn't able to get the five grand back.
• 2:45
  Speaker 1: So I had to kind of work at McDonald's to figure out how I was going to try to pay it back and move forward.
• 2:51
  Speaker 1: But when it's a management, over that summertime became a crew leader, worked all through the ranks.
• 2:57
  Speaker 1: I ran my first store when I was 22 years old, so that was that was really exciting.
• 3:02
  Speaker 1: So at that point I had like 60 employees Everybody's older than me working for me and I just had to like learn the hard way.
• 3:10
  Speaker 1: I'm all those skills on how to manage people, manage product and build sales.
• 3:15
  Speaker 1: You know marketing, all those aspects of the business.
• 3:18
  Speaker 1: I had to learn that way, so was able to do that.
• 3:21
  Speaker 1: Over the next couple years I became a supervisor, end up doing a business consultant.
• 3:26
  Speaker 1: We all would consult to Franchisee owners on how to run a business and how to build more profit and sales, because I kind of already did it as a supervisor and Then later on I became a deployment manager which was in charge of 1200 stores Baltimore, washington, eastern Shore, philadelphia, north Carolina I've all had all of them in my section every new products that deployed out.
• 3:48
  Speaker 1: I was responsible for that.
• 3:50
  Speaker 1: I actually rolled out the first kiosk that you see in the McDonald's yet in Cambridge, maryland, I've rolled out about a thousand of those projects throughout the whole East Coast essentially, and ended up winning the President Award, which is the top 1% global executives in the world, the McDonald's Corporation.
• 4:07
  Speaker 1: And then now I'm much later.
• 4:08
  Speaker 1: I quit my job to do real estate full-time.
• 4:10
  Speaker 1: One of the cool stories and why that ended up happening is that I had just been going through the ranks.
• 4:15
  Speaker 1: I got promoted to a business consultant and we were told as employees like they were gonna do budget cuts, so some people was gonna lose their jobs.
• 4:23
  Speaker 1: So they told us to go to work on Friday and they would let us know whether or not we had a job or not.
• 4:28
  Speaker 1: So nothing for sure.
• 4:31
  Speaker 1: Sitting there waiting, thinking I had a wife, two kids.
• 4:34
  Speaker 1: I'm like man, if I lose my job today, how am I gonna handle these?
• 4:37
  Speaker 1: Things had no plan being in place, so that really made me feel some type of way.
• 4:42
  Speaker 1: I ended up not losing my job and I still got promoted and moving forward.
• 4:45
  Speaker 1: But I said I need to create a plan B and that's what got me into real estate watching HGTV, meeting a wife every night talking about what we could do if we had a house, and that kicked it off right there.
• 4:57
  Speaker 1: So I attended meetup groups and just learning about real estate process and fast forward to today.
• 5:03
  Speaker 1: Like you mentioned, I do about 25 to 30 projects per year Own rentals, ground on new construction.
• 5:10
  Speaker 1: All of these things I've learned over the last six years I've been in the business.
• 5:14
  Speaker 1: So yeah, that's my story.
• 5:16
  Speaker 2: That's awesome and it's so great to hear because there's so many people in real estate full-time.
• 5:20
  Speaker 2: You know me as a real estate agent and working with investors.
• 5:24
  Speaker 2: I talk to agents that are like, oh, I don't know what to do in real estate for investing, I don't know how to get started, and they're in real estate and to have somebody.
• 5:32
  Speaker 2: You know that's why I love stories of people coming from outside of real estate and going to the meetups and learning.
• 5:37
  Speaker 2: But then at some point it's diving in and saying, yeah, I'm going to do that.
• 5:41
  Speaker 2: And for a lot of people they love the idea of now I control my own destiny.
• 5:45
  Speaker 2: I don't have to worry about somebody coming and saying, yeah, you do or you don't have a job, you're in control of that.
• 5:50
  Speaker 2: Now, that doesn't mean it's easy.
• 5:52
  Speaker 1: It's really challenging.
• 5:53
  Speaker 2: But at the same time it's cool to know that you can't have somebody come and take something away from you that you've worked so hard for.
• 5:59
  Speaker 2: But yeah, so in terms of kind of getting started in real estate, tell us a little bit more about that.
• 6:04
  Speaker 2: Maybe finding the first project, first couple of projects.
• 6:07
  Speaker 2: We'd love to hear more about that.
• 6:08
  Speaker 1: Yeah, so, like I mentioned, one thing I started doing is I started listening to Park Ads on my way to and from work.
• 6:14
  Speaker 1: Like you said, I had no background in real estate, knew nothing about it.
• 6:17
  Speaker 1: I was doing what I seen on TV, attended meetup groups and just trying to learn all about the difference from Fix and Flip, the wholesaling to buying holes a lot of different aspects that you kind of can go.
• 6:29
  Speaker 1: I started off trying to do wholesaling.
• 6:31
  Speaker 1: I remember being out in the corral by the and the McDonald's talking to sellers on the phone, but I was trying to be at work.
• 6:39
  Speaker 1: That was just too much to do.
• 6:40
  Speaker 1: I was working a full-time job.
• 6:42
  Speaker 1: So then I went off until thinking about Fix and Flip.
• 6:46
  Speaker 1: But I knew you needed a lot of capital in front to start.
• 6:49
  Speaker 1: So it actually took a loan from my 401k at the time to do my first Fix and Flip deal Got me a local realtor.
• 6:56
  Speaker 1: It actually it took me a year for me to find my first deal.
• 7:00
  Speaker 1: Just kind of trying.
• 7:01
  Speaker 1: I was getting outbid by all the big investors.
• 7:03
  Speaker 1: It was just so hard to find a deal because I didn't really know what to do at the time, so took me a year to get my first deal, got my first deal on the contract.
• 7:12
  Speaker 1: I bought a house in Baltimore for $55,000, ended up spending about back then you could spend $65,000 on the rental.
• 7:22
  Speaker 1: That's probably double the cost now, but $65,000 on the rental and then sold it for like 180, you know, maybe like a 20.
• 7:29
  Speaker 1: It was supposed to be a $25, 30,000 profit.
• 7:32
  Speaker 1: I end up breaking even because I did everything wrong that you can think of my contract.
• 7:37
  Speaker 1: It's walked out on me and the process just didn't go well with me.
• 7:42
  Speaker 1: But I learned a lot of lessons from that.
• 7:43
  Speaker 1: I reached out and found some local mentors that could kind of help me out and give me some more guidance.
• 7:49
  Speaker 1: So in the second one and then I continued to get better and build a process from there, but, like I said, from the beginning just podcasts, meetup groups, youtube videos, anything I could find on real estate and then really got into it when I got a mentor and kind of helped me through the process.
• 8:07
  Speaker 2: So for a lot of people.
• 8:08
  Speaker 2: The advice that I give is to treat your first one like a learning expense.
• 8:12
  Speaker 2: You know, if you're gonna pay money to go to college or you're gonna pay money to take some real estate classes, it's gonna cost you money and so if you can walk out of that first deal break even, then it's good because you've learned so much, versus if I walk out of it thinking I'm gonna have a cash-in hand for $30,000 now, that would be nice to have.
• 8:29
  Speaker 2: But at the same point that the lessons that you learned are really gonna help you to be able to do more and more on your future deals, because you're gonna do more than one deal, not just one.
• 8:38
  Speaker 2: So glad that you didn't come out negative, because I know a lot of people that come out negative on the first one.
• 8:42
  Speaker 2: Yeah, definitely.
• 8:43
  Speaker 1: I think that really.
• 8:44
  Speaker 1: I mean, it was so many lessons from dealing with contractors how to manage contractors, time lines, everything that you know you don't.
• 8:53
  Speaker 1: They don't really talk about.
• 8:54
  Speaker 1: When people talking like good forms, they don't really.
• 8:57
  Speaker 1: They kind of give you high level, but getting into the weeds and the details and stuff like that, I really really improved my skills moving forward.
• 9:03
  Speaker 1: I still made more mistakes as I went through the process, but I learned a lot to move forward, so definitely.
• 9:09
  Speaker 1: But it was tough and I actually bought my second flip while I was waiting for my first one to be finished.
• 9:14
  Speaker 1: I kind of put the car before the horse.
• 9:16
  Speaker 1: So but it definitely worked out and I'm definitely happy I paying out to where I'm at all right now.
• 9:23
  Speaker 2: Now, when you were doing those first couple, was that still when you were working at McDonald's, or had you kind of cut off at that, so you were able to do both at the same time, manage the projects as well as while you were still working full-time?
• 9:36
  Speaker 1: Yeah, that was a great point.
• 9:37
  Speaker 1: I actually end up doing roughly around Four to five flips a year while I was still working full-time.
• 9:43
  Speaker 1: So my first two or three years I was still working full-time before I eventually left my job and I was able to build up enough income From doing the flips that it replaced my.
• 9:54
  Speaker 1: I had a six-figure job in McDonald's at that point so I was able to replace that income.
• 9:58
  Speaker 1: So it made me more confident to go ahead and kind of Lead the company at that point.
• 10:02
  Speaker 1: But yes, it definitely had to figure out processes on how to manage the contractors while I'm at work 60 hours a week.
• 10:09
  Speaker 1: So everything had to be very detailed on my plans.
• 10:13
  Speaker 1: I had to be more organized.
• 10:14
  Speaker 1: I had to create processes that allowed me to, you know, not had to be on a day-to-day deal with the contractors calling me or things in that nature.
• 10:22
  Speaker 1: So it really helped out.
• 10:23
  Speaker 1: But yeah, I was able to get about five or six flips per year while working and then once I quit my job, the next year I did 17 flips, so I was able to double the number up.
• 10:32
  Speaker 1: You know kind of had the pressure of taking care of family and everything like that.
• 10:37
  Speaker 1: So I really had to make sure it delivered.
• 10:39
  Speaker 2: So now, did you do any of the work yourself on the property?
• 10:42
  Speaker 2: Did you end up hiring anybody in-house, or were you just working through other contractors?
• 10:47
  Speaker 1: Yeah.
• 10:48
  Speaker 1: So I definitely had contractors on the first one.
• 10:50
  Speaker 1: The second one I kind of got burnt a little bit.
• 10:52
  Speaker 1: I was like, well, maybe I should try to G-C this.
• 10:55
  Speaker 1: And I remember having my like my uncle, my cousins and my brothers in there doing demo and we, I mean, probably didn't have them set up straight, we didn't have masks on and stuff.
• 11:05
  Speaker 1: We did have hard hats, but then people told me about it.
• 11:08
  Speaker 1: That's probably not the best idea from a safety standpoint and health standpoint.
• 11:12
  Speaker 1: So I never did that again.
• 11:13
  Speaker 1: But yeah, after that I just used contractors and was able to I kind of do a different model.
• 11:20
  Speaker 1: Now I call it the labor only model.
• 11:22
  Speaker 1: But in the beginning I started off with contractors.
• 11:23
  Speaker 1: I would get kind of burnt with the contractors.
• 11:25
  Speaker 1: It would take them too long to get the jobs completed.
• 11:28
  Speaker 1: You wouldn't give them a lot of money up front.
• 11:30
  Speaker 1: Then when it gets towards the back of the job they don't have any money to finish out the construction.
• 11:35
  Speaker 1: So I went away from the contractor model to a labor only model where I essentially paid for the service due, for example, like framing.
• 11:43
  Speaker 1: If they frame the house out, I'll buy the materials on my account so I can get the discount and then, after they finished the framing, I would pay them for the job finished.
• 11:52
  Speaker 1: So that way, if something happens, if they need to walk away from the job or they don't finish your own, like this service, I still have the money in my pocket to pay the next person if I had to bring somebody else in and it's almost like dangling that carrot in front of them to keep them moving quickly due out the process to finish the house.
• 12:07
  Speaker 1: So that really helped me accelerate the speed of finishing projects from like four months to your row house to finishing in two months.
• 12:16
  Speaker 1: So that really was an eye-opening point for me.
• 12:19
  Speaker 2: Let's talk about the financing and how that worked.
• 12:22
  Speaker 2: Just as you were building and scaling a lot of people that's what scares them to start is I don't have the money, I don't know how to go find the money.
• 12:29
  Speaker 2: What did you do to kind of build that momentum at the beginning?
• 12:32
  Speaker 1: So, as I mentioned before on my first flip Just the 401K.
• 12:35
  Speaker 1: Yeah well, no, that was only on the first flip.
• 12:38
  Speaker 1: So the first flip I took a.
• 12:39
  Speaker 1: Typically I say to people you need somewhere between 30,000 and 40,000 dollars to do a flip.
• 12:45
  Speaker 1: Now it doesn't have to be your money, but that's what you're gonna need to kind of your closing costs, the money you gotta put down as a down payment, your floating costs to carry all those things you're gonna need about that amount of money.
• 12:56
  Speaker 1: So I was able to get a 30,000 dollar loan for my 401K and that's what I used as my float for my first deal.
• 13:01
  Speaker 1: Of course, when I got to the second deal, I didn't have another 30,000 to do the second house.
• 13:06
  Speaker 1: So when I ended up doing this, talking to friends and family, was able to get a loan from a family member for another 30K, which allowed me to do my second deal.
• 13:15
  Speaker 1: And then from there it was just kind of like creating a snowball effect.
• 13:19
  Speaker 1: So my first maybe seven or eight deals I never touched any of the money that I made on the flips.
• 13:24
  Speaker 1: So if I was making 20 to $30,000 per flip, I would just take the money reinvested back into the business.
• 13:29
  Speaker 1: So I went from two flips at a time to three at a time, to four at a time and if I had took the profit out the business I wouldn't be able to scale like that.
• 13:38
  Speaker 1: So by the time I got to the fourth flip I was doing four at a time, that's 30, 30, 30, 30,.
• 13:43
  Speaker 1: I needed $120,000.
• 13:45
  Speaker 1: But I was just taking the profit.
• 13:46
  Speaker 1: I was making out the first two to reinvest and kind of starting that snowball effect and that's how I was able to scale up pretty quickly with using I mean I still use for the main loan in terms of like.
• 13:58
  Speaker 1: For example, if I needed 180,000, I still was using hard money loans for the main loan, but I did.
• 14:05
  Speaker 1: I would get private funding for the carrying costs and the down payment and stuff like that.
• 14:10
  Speaker 1: So really was able to leverage the money very well.
• 14:13
  Speaker 2: How did you?
• 14:14
  Speaker 2: Because I'm just thinking about what objections are, kind of what issues people on the outside listening to this might have.
• 14:19
  Speaker 2: But how did you know how to run your numbers in that case and then even to build relationships with lender?
• 14:25
  Speaker 2: So it's one to kind of know I'm getting the money, I'm able to pay off the loans.
• 14:28
  Speaker 2: But talk about how you're able to run the numbers.
• 14:31
  Speaker 2: Did you do like deal calculators and then you kind of figured out okay, if I'm getting this money back, then I can use it into the next one, or how did that process work?
• 14:38
  Speaker 1: So I think it's to the point you kind of made early One of the benefits I had from like working in McDonald's and dealing with people, products sales, p&l's profit business aspect.
• 14:48
  Speaker 1: I still understood business numbers, so that was the benefit I had.
• 14:52
  Speaker 1: But one of the resources that I use is rehabvaluatorcom.
• 14:56
  Speaker 1: So rehabvaluatorcom has a really good calculator.
• 15:00
  Speaker 1: You know that you can go in and you put in your numbers, which your purchase price is, how much your renovation cost is, how much your payment interest, and it just would calculate and tell you like okay, you would make this amount in profit, and then it also has an option on it.
• 15:13
  Speaker 1: You can use it as for rental properties, so it'll give you a choice to see if this property would be a flip or be a rental, what the numbers would look like.
• 15:21
  Speaker 1: So you just enter it in and calculate it out.
• 15:24
  Speaker 1: Everybody pretty much used the same analysis 65% of the ARV or 70% in some cases.
• 15:32
  Speaker 1: A lot of people probably used 70%.
• 15:34
  Speaker 1: So I was able to go to the different website.
• 15:37
  Speaker 1: I literally went online and search hard money lenders because I heard everybody was getting hard money loans and the first one popped up for me when I'm as lemawinecom, and so I went on there, filled out the information and they approved me and they funded my first deal.
• 15:52
  Speaker 1: In terms of the bulk capital, I was out of the 30 thousand for the floating, so I was able to do that.
• 15:58
  Speaker 1: Then I started attending meetup groups and then I ran into some other lenders there that lended.
• 16:03
  Speaker 1: They gave the terms.
• 16:04
  Speaker 1: I wouldn't put it into the calculator online and you know, kind of went from there.
• 16:08
  Speaker 1: That was kind of how I figured out the analysis on that.
• 16:12
  Speaker 1: But that's very important that you understand that, because a lot of people make mistakes on not analyzing the deal property and that's where you really can get hurt.
• 16:20
  Speaker 1: If you don't make your money on the buy.
• 16:21
  Speaker 1: That's what we like to say.
• 16:23
  Speaker 1: You should make your money on the buy and don't get emotional with it.
• 16:26
  Speaker 1: Don't think that you're going to just improve a house way beyond what the neighborhood says the value is.
• 16:31
  Speaker 1: So some people think that like I'm going to go in and I'm going to put gold toilets in and it's going to shoot up the price.
• 16:37
  Speaker 1: It doesn't work like that.
• 16:38
  Speaker 2: Now, at what point did you decide that you were going to start holding these?
• 16:41
  Speaker 2: Because I know you mentioned you've got 22.
• 16:43
  Speaker 2: So how early in that journey did you decide to hold?
• 16:46
  Speaker 2: And then now, what's the decision criteria used and whether or not you're just going to flip it or whether you're going to hold it then we'd love to hear more about that.
• 16:52
  Speaker 1: So a couple things.
• 16:53
  Speaker 1: The initial thought was always I wanted to replace my job income so I can be at a position that have freedom, time freedom.
• 17:01
  Speaker 1: If I want to go to work, I can, if I can.
• 17:03
  Speaker 1: So at that point I needed to get to originally $5,000 a month in cash flow.
• 17:09
  Speaker 1: So I was like, okay, that's $60,000 a year.
• 17:11
  Speaker 1: If I can get $5,000, that should cover my mortgage, my car payment, so on and so forth.
• 17:16
  Speaker 1: So I looked at what were my bills and how much would that cost, and then how could I create cash flow to kind of pay for that?
• 17:21
  Speaker 1: So it was my first thought.
• 17:23
  Speaker 1: In the beginning I didn't have the cash to put down 20% down payments on each rental.
• 17:28
  Speaker 1: So that's why I used to flip as a vehicle to build up my cash flow, my cash.
• 17:32
  Speaker 1: And then, once I got to a point where I felt like I had some expendable cash, I started to purchase rentals.
• 17:37
  Speaker 1: So that probably took about a year and a half before I started buying rentals.
• 17:41
  Speaker 1: And then, once I learned the borough strategy by renovate, rent, refinance, you know, once I learned that strategy I was like, wow, I can do these over and over again and not really have a lot of money out of pocket.
• 17:54
  Speaker 1: That was a game changer right there.
• 17:56
  Speaker 1: So I just continue to do that process to build up to that.
• 17:59
  Speaker 1: So I was able to achieve past the five thousand cash flow per month and I really like changed things Now I can use I didn't have to be as desperate on the flips If they didn't work or take deals.
• 18:10
  Speaker 1: That I really didn't want to do because I just need to do something I could focus in and get, find great deals because that was added income to.
• 18:17
  Speaker 1: With the cash flows I'll repay my main bills.
• 18:19
  Speaker 1: So that was a good point.
• 18:21
  Speaker 1: It was a second part of your question and I forgot it.
• 18:23
  Speaker 2: Oh no, yeah, I just.
• 18:24
  Speaker 2: I just curious kind of when you decided to get started, but I do have a follow-up question.
• 18:28
  Speaker 2: So then I'm assuming, from a tax perspective, having those rentals has the depreciation that's going to help offset some of your flipping income, cause I know a lot of times people that are just straight flippers it gets to be very taxing literally to be, just a flipper.
• 18:43
  Speaker 1: Absolutely so it definitely helps with that.
• 18:46
  Speaker 1: It's funny I just did a cost segregation amongst my rental properties and saved significantly on that.
• 18:51
  Speaker 1: So as you build that rental portfolio, it definitely gives you the tax write-offs.
• 18:55
  Speaker 1: You have maintenance things, you have reinvestment costs, all those things kind of go into that and it's going to help you with the taxes.
• 19:01
  Speaker 1: So that was a good point.
• 19:02
  Speaker 1: Flipping can get expensive with, you know, 40 to 45% off the cost of what you make, but there's a lot of other things that you can do within that.
• 19:12
  Speaker 1: That kind of can help you in all the write-offs.
• 19:14
  Speaker 1: I mean your vehicle, your insurance, different things like that, your employees.
• 19:19
  Speaker 1: You can find different things to write off to help you there when it comes out.
• 19:23
  Speaker 1: But the rentals do help significantly.
• 19:25
  Speaker 2: Now, in terms of keeping the lights on with your 25 to 30 flips a year.
• 19:29
  Speaker 2: How are you sourcing these?
• 19:30
  Speaker 2: I'm sure you've built up relationships over time, but how are you able to find those deals and keep that pipeline strong?
• 19:36
  Speaker 1: So I do do some off-market stuff myself, like cold calling.
• 19:40
  Speaker 1: I have cold callers that work for me in-house, but 80% of my deals really come from wholesalers.
• 19:46
  Speaker 1: They go out and find the deals, they work in the area and once you kind of build a reputation that you're going to buy or they know that you're going to deliver on closing on the projects that you get on the contract, they tend to bring more deals to me.
• 19:57
  Speaker 1: And so of course, six, seven years later I have several relationships with wholesalers realtors as well that bring me deals and they understand, always explain to my relatives that if you bring me a deal on the front end, when I buy it, when it's kind of cheap, when I sell it on the back, and I'll bring that deal right back through them so they end up getting two commissions.
• 20:14
  Speaker 1: So that's a secret to kind of keep them wanting to work with me, because they know they're going to get two commissions off of one, pretty much off of one house.
• 20:22
  Speaker 1: And then part of the wholesalers is just relationships Facebook.
• 20:26
  Speaker 1: Facebook is a good place to go looking for wholesalers.
• 20:28
  Speaker 1: You can put in real estate Baltimore, real estate New York, wherever you are, and search it, or wholesalers New York or Baltimore et cetera, and in those groups you can join those groups.
• 20:39
  Speaker 1: They typically post in deals in there.
• 20:41
  Speaker 1: A lot of them might not be the greatest, but if you get relationship DM directly to the wholesaler, get them to that buyers list.
• 20:48
  Speaker 1: I try to get on as many as I can and I set up my email separately just for those deals to come through and I just kind of go through and run it through the analysis and see if something makes sense.
• 20:59
  Speaker 1: So you got to be patient.
• 21:00
  Speaker 1: You don't want to just take anything.
• 21:02
  Speaker 1: But at the same time wholesalers is a good resource Real estate as well for on market deals and then auctions.
• 21:10
  Speaker 1: So auctions is another one, so you can search local auction, whatever your state or city is.
• 21:14
  Speaker 1: Look at those sites and you'll find a lot of great deals on there where you can save on costs.
• 21:19
  Speaker 1: So that's how I find a lot of deals.
• 21:22
  Speaker 2: I've had great relationships with wholesalers.
• 21:24
  Speaker 2: Some people say, well, why would I use a wholesaler?
• 21:26
  Speaker 2: Well, they're deal finders.
• 21:27
  Speaker 2: It saves you a lot of time.
• 21:29
  Speaker 2: There's a lot of hustle that's involved in that, and once you show that you can close on deals, they want to bring them to you because you're the one that's helping them close and helping them get paid.
• 21:38
  Speaker 2: And so, that being said, just like real estate agents or investors, there's also bad ones out there too, and so you've got to kind of find the good ones.
• 21:45
  Speaker 2: But that's where the relationship piece comes in, that over time you're earning their trust.
• 21:48
  Speaker 2: It's not hey, got this deal for a hundred, I'm going to sell it for a hundred and put in $20,000, and it's going to be worth $400,000.
• 21:56
  Speaker 2: Like, I see a lot of wholesalers that post that you've got to vet it out and they're still learning too right, so they might be newer, they might be still trying to get strong in their numbers, but yeah, we've had great deals come from wholesalers.
• 22:07
  Speaker 1: Yeah, some people get emotional because they're making a fee.
• 22:10
  Speaker 1: Like you said.
• 22:11
  Speaker 1: They got there doing the work.
• 22:12
  Speaker 1: I know what it costs to do marketing and stuff myself, so I definitely know that they spend some money to find these deals.
• 22:18
  Speaker 1: But if it still makes sense for what I want from a profit standpoint, then hey, I'm all good with that.
• 22:24
  Speaker 2: We were just talking about that with somebody else the other day, about when the deal comes to me.
• 22:28
  Speaker 2: What do I care what the wholesaler makes.
• 22:30
  Speaker 2: If the deal makes sense when it comes to me, well great, because then I can send it to my investors.
• 22:34
  Speaker 2: And sometimes, if it doesn't make sense, we go back a little bit and say, hey, can you carve anything out?
• 22:39
  Speaker 2: But if you're asking a wholesaler to take a discount every time they're going to go somewhere else and find the person that will pay them all the way.
• 22:45
  Speaker 2: So it's a relationship business and that's great.
• 22:47
  Speaker 2: So, in terms of the future here, what are you looking to continue to do?
• 22:51
  Speaker 2: You mentioned some of the ground up, new construction, but curious to see in the next couple of years where you're thinking you're going to go Right now in terms of pace of flips.
• 23:00
  Speaker 1: I've been doing the ground up new construction.
• 23:01
  Speaker 1: The reason why I like ground up new construction is because it's more predictable, a little bit more than the flips, because you can look at the cost.
• 23:08
  Speaker 1: I mean, of course you got the cost of the land and then the cost of the bill, but that kind of stays in line.
• 23:12
  Speaker 1: More when you do a flip or rehab you might have a budget thinking you're gonna do it for $90,000.
• 23:18
  Speaker 1: Of course you put a 10% buffer in there.
• 23:21
  Speaker 1: However, once you open up the walls and you can get into other things, that cost can kind of go up a little bit, which becomes unpredictable.
• 23:28
  Speaker 1: With the ground up new construction I like the fact that it's just kind of locked into with.
• 23:33
  Speaker 1: The cost is the cost You're building the same house.
• 23:35
  Speaker 1: So if I go to another land site I could build that same property over again and kind of dial in where my cost are.
• 23:42
  Speaker 1: So that's good and the other piece to it is the profit potential.
• 23:46
  Speaker 1: So when I look at for me currently and I didn't start like this, but currently for a fix and flip it has to make at least 50K for me to do it.
• 23:52
  Speaker 1: If it doesn't, I'm not saying that you have to start off like that.
• 23:56
  Speaker 1: I started off with 20, 25k.
• 23:58
  Speaker 1: So I'm not saying that.
• 23:59
  Speaker 1: But for me to make it make sense and I can be a little bit more choosy at this point 50K is the threshold for flip.
• 24:05
  Speaker 1: But on a new construction, ground up, 100k is the profit that I can make on that.
• 24:10
  Speaker 1: So for every two flips I can do one new construction.
• 24:14
  Speaker 1: So when I look at economies of scale and look at it in my business and say, okay, how can I do a little less but at the same time still make my dollar amount that I want to make in terms of profit, the ground up new construction is very appealing to me.
• 24:26
  Speaker 1: So because of the double in cost that you can make it at and profit.
• 24:31
  Speaker 2: And I think that's something that I hear from people that are on the show a lot is.
• 24:35
  Speaker 2: This is an evolution.
• 24:36
  Speaker 2: So somebody might look up and say, well, robert's choosing these high dollar things.
• 24:40
  Speaker 2: Well, that's cause you've gotten a little bit better, a little bit better, a little bit better.
• 24:44
  Speaker 2: It's evolved and now your value of your time has gone up and so you get to choose the stuff that you get to work on, and so it takes a few years to get to that point.
• 24:53
  Speaker 2: But now you're in the spot where you can choose the projects and choose the type of thing you want to work on that's going to produce the highest dollar return for you.
• 25:00
  Speaker 1: Yeah, and that's the same thing.
• 25:01
  Speaker 1: I do some coaching for people that's getting into real estate and stuff like that, and I always tell them like they look at where you are now and say, okay, like you said, it's just, oh, how can I do that?
• 25:11
  Speaker 1: But I started off at the first flip and not really making money on the first flip and just do whatever you need to do to make it make sense for you.
• 25:18
  Speaker 1: Cause one thing about this real estate of course, made the most millionaires in the world in the United States is my understanding of it.
• 25:24
  Speaker 1: So it's definitely a reason why people invest in real estate.
• 25:27
  Speaker 1: But you got to decide what's the nuts for you.
• 25:30
  Speaker 1: If you're making $100,000 a year or you making $50,000 a year, well, how many flips would that take to replace that income?
• 25:36
  Speaker 1: You don't have to make $500, $600,000.
• 25:39
  Speaker 1: If you want to, it's an opportunity to do that.
• 25:41
  Speaker 1: But level off the way you want to go.
• 25:43
  Speaker 1: If you want to make $100,000 a year, you need to do let's say you're making $30,000 a flip you might have to do three to four flips a year.
• 25:50
  Speaker 1: You can build up to that Start one while you're still working full time and then go to two and then, once you get to three or four, maybe you can start deciding if you want to stay or go that's your choice or just continue to work and make an extra $90,000 on the side for you.
• 26:04
  Speaker 1: I'm sure people can use that.
• 26:06
  Speaker 1: That would be great.
• 26:06
  Speaker 1: So I think it's all your balance.
• 26:08
  Speaker 1: One thing I found in this business I'm very competitive, so you get around a bunch of investors and they're doing this at the 30 and you're natural.
• 26:15
  Speaker 1: My natural state is like okay, if they can do it, I can do it.
• 26:19
  Speaker 1: But I'm learning that you got to find balance and find a way to cut off point so you can stop and just make it comfortable for you.
• 26:27
  Speaker 1: Run your own race, as I like to say.
• 26:30
  Speaker 2: Have you ever heard the phrase?
• 26:31
  Speaker 2: You're the average of the top five people that you hang around.
• 26:33
  Speaker 2: Well, real estate agents, I'm excited to increase your five with you.
• 26:38
  Speaker 2: We're launching the real freedom investor agent tribe to help you get educated and connect with others to build your real estate investing journey and also to help you along the way as you're working with real estate investors.
• 26:51
  Speaker 2: So come, check it out on our website, realfreedomcom.
• 26:54
  Speaker 2: Go to the store.
• 26:55
  Speaker 2: We have a membership.
• 26:56
  Speaker 2: We have a mastermind group and private coaching to help you stay accountable to your real estate investing goals and to make sure that you connect with like-minded people to accelerate your progress and to cheer you on along the way.
• 27:08
  Speaker 2: Check it out realfreedomcom.
• 27:10
  Speaker 2: Click on the store.
• 27:11
  Speaker 2: Awesome, well, robert, thank you so much for coming on and sharing.
• 27:14
  Speaker 2: There's a lot of great nuggets in here For people that want to reach out to you and learn more about you, or perhaps maybe consider coaching or something like that.
• 27:21
  Speaker 2: How can they do that?
• 27:22
  Speaker 2: You can follow me on Instagram at wrongcliffhouses.
• 27:26
  Speaker 2: Thank you so much for coming on and sharing your story.
• 27:27
  Speaker 2: It's really exciting.
• 27:28
  Speaker 2: It's awesome to hear where you're at and how it's evolved over time and best elect you in the future.
• 27:32
  Speaker 2: Après speaking with first Gear Jeju tripers.