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Study Hall: Rehabbing Real Estate · Earn Your Leisure

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Speaker 2: Oh, we start rehab. It's pretty extensive. So the first
1:03
Speaker 2: thing that people have been asking for a long time
1:06
Speaker 2: is like the hardest part of and even this is
1:08
Speaker 2: what Caesar's saying, The hardest part of real estate is
1:12
Speaker 2: finding a good contractor. So you have a contracting company like,
1:16
Speaker 2: what are tips? How does somebody know you fresh just
1:19
Speaker 2: bought a house. You don't know anything about real estate.
1:21
Speaker 2: You're trying to rehab you're trying to fix up a home.
1:23
Speaker 2: How do you know like a good contractor? Like, how
1:26
Speaker 2: do you vet somebody?
1:27
Speaker 3: All right?
1:27
Speaker 4: This is the only way you can vet somebody without
1:30
Speaker 4: actually knowing what to look for. First and foremost. If
1:34
Speaker 4: you know what to look for, then you'll know for
1:36
Speaker 4: a contract that's good or not just by the conversation.
1:39
Speaker 4: But in our demographic in our community is really word
1:44
Speaker 4: of mouth. That's how you can tell. I mean, you know,
1:47
Speaker 4: if he used a contract and you ask him, like, yo,
1:49
Speaker 4: what's up the contract? He's like, nah, even know not
1:52
Speaker 4: to use it? Right, But if you're like nah, he
1:55
Speaker 4: officials and we got word of mouth spreads fast in
1:57
Speaker 4: our community. But the number one way, man, honestly, is
2:01
Speaker 4: to actually get educated. Like everybody that's in the real
2:05
Speaker 4: estate business, the contractory, they took a hip off the contractor.
2:09
Speaker 4: I did you know what I mean? Plenty of contractors
2:11
Speaker 4: got over on us.
2:12
Speaker 2: Yeah, exactly. How do you know if somebody the.
2:14
Speaker 4: Main contract is gonna get over y'alls like your uncles?
2:16
Speaker 4: You know what I mean, Like, nah, my uncle and
2:17
Speaker 4: I do everything.
2:19
Speaker 2: You know, if you get ripped off.
2:21
Speaker 4: I mean in the beginning. No, there's really no way
2:24
Speaker 4: to know. There's no way to know. Like man, when
2:26
Speaker 4: we I never forget. Me and my best friend we
2:28
Speaker 4: had a first house at the same time. He decided,
2:30
Speaker 4: by the way to fix this, I decided to sell minds.
2:34
Speaker 4: I just blew minds out and I never forget my
2:36
Speaker 4: uncles of them had did all the plumbing, so his
2:39
Speaker 4: bathroom was done in anything, right, so we couldn't we could.
2:43
Speaker 4: So I came downstairs one day, I'm like, wholl where
2:46
Speaker 4: are the pipes coming Like, this is your bathroom right again,
2:48
Speaker 4: I'm like, well, where are the pipes coming from? No water,
2:52
Speaker 4: no pipes, know nothing, the whole bathroom done.
2:55
Speaker 3: It was like a model home. You know what I'm saying.
2:57
Speaker 4: It's like a mouse like staged you know what I mean.
3:00
Speaker 4: How they was able to get over was one, he
3:02
Speaker 4: was twenty seven, I was about twenty eight. We was kids,
3:04
Speaker 4: not knowing nothing about the business. Two the water was
3:07
Speaker 4: turned off from the street at the time, so they
3:10
Speaker 4: had a Sunday the impression that they would fix the
3:12
Speaker 4: house then call the city last to come cut the
3:14
Speaker 4: water on. But it was no plumbing, nothing hooked up,
3:18
Speaker 4: and they just they just did it like that.
3:21
Speaker 5: When you realize that, I mean, it's it's bad, you
3:24
Speaker 5: knowation it's bad.
3:26
Speaker 4: It's like but I'm gonna tell you something in that era,
3:29
Speaker 4: back then, it's just what people did.
3:31
Speaker 3: Man.
3:31
Speaker 4: People chase the money. They didn't really think that we
3:33
Speaker 4: would make it to this level, you know what I mean. Like,
3:36
Speaker 4: you know, they didn't care about reputation. But one thing
3:39
Speaker 4: about that construction, you will learn it through trial and era.
3:41
Speaker 4: Everybody gonna pick something up and try some stuff on
3:44
Speaker 4: their own. They're gonna pick something up and try. Every
3:46
Speaker 4: one of us did that. It probably took me a
3:48
Speaker 4: month and a half the sheet rock this room all
3:50
Speaker 4: by myself. But I can do it, you know what
3:52
Speaker 4: I mean. But now once you learn like you don't
3:55
Speaker 4: cut the sheet right, if you watch it, once you
3:56
Speaker 4: watch a professional do something, you know what I just came.
3:59
Speaker 4: I just thought about why I'm sitting here. If you
4:01
Speaker 4: got the opportunity to be around some professionals, just go watch,
4:05
Speaker 4: because if you see how the sheet rocks supposed to
4:07
Speaker 4: be done, and you're going to hire somebody. If they're
4:09
Speaker 4: too busy, then you know instantly if they're putting it
4:12
Speaker 4: up right, if they're putting it up wrong. You understand
4:15
Speaker 4: what I'm saying. Oh, put the walls up, then it's
4:17
Speaker 4: now you put the ceiling up. Then you put the
4:19
Speaker 4: walls up. The walls holding up the ceiling. It's little
4:22
Speaker 4: minute stuff like that that you wouldn't know unless you
4:24
Speaker 4: was in there watching.
4:25
Speaker 3: So like you talk a lot about the phases of rehab.
4:28
Speaker 5: So the first one is find the contract and the
4:30
Speaker 5: next one is the demolition.
4:31
Speaker 4: The constructor scene does that right? First thing is please permits.
4:36
Speaker 4: Somebody got to be licensed. ELLENI is not the cops.
4:39
Speaker 4: Everybody think Elena's the cops. Like you'll close the windows,
4:41
Speaker 4: lock the door, Yo, ELLENI coming down the street. You
4:44
Speaker 4: know what I mean?
4:44
Speaker 5: Like, Yo, the permit and I felt those are the
4:48
Speaker 5: expenses that people don't really think about, like the materials,
4:51
Speaker 5: but the.
4:52
Speaker 4: Paperwork, permits, plans, blueprints, that sounds like something extensive right now.
4:58
Speaker 4: They damn they want playing for everything in Philadelphia. If
5:01
Speaker 4: you if I just renovate your basement, they want plans.
5:04
Speaker 5: What's the pricing on those permits and get those I
5:07
Speaker 5: mean what the permits don't cost nothing, pulling permits in
5:10
Speaker 5: like fifty bucks to eighty one eighty.
5:13
Speaker 4: Now when you got to get to an architect and
5:15
Speaker 4: you need plans, it costs a little more. It might
5:17
Speaker 4: be two thousand and three thousand, depend upon the job.
5:20
Speaker 4: Now where the permits get pricey at we just I'm
5:23
Speaker 4: just gonna put it out there and talk real. Is
5:26
Speaker 4: you you doing the house and you don't really have
5:28
Speaker 4: a license, So now you want to use his license
5:31
Speaker 4: for him to get you a permit, then a permit
5:33
Speaker 4: might shoot up to fifteen hundred. This is what people
5:37
Speaker 4: do because everybody don't have the credentials.
5:39
Speaker 2: So the contractor handles all of that.
5:41
Speaker 4: The contract is supposed to handle all of that.
5:43
Speaker 2: And so what questions do you do? You ask us?
5:45
Speaker 4: Are your licensing insured? Are your licensing insurance almost first
5:48
Speaker 4: and foremost? And I'm gonna tell you why, because trying
5:50
Speaker 4: to cut corners always seem to revert back to doing
5:54
Speaker 4: it three times. You understand what I'm saying. So cutting
5:58
Speaker 4: corners always revert back to doing it three times. And
6:00
Speaker 4: you look up and you done spent twice the amount
6:02
Speaker 4: of money that you were spending, thinking you was gonna
6:05
Speaker 4: cut a corner.
6:07
Speaker 2: Another thing that I think I heard you say. I
6:10
Speaker 2: know Caesars said as well as that you paid contract
6:12
Speaker 2: contractors should be paid in phases exactly.
6:17
Speaker 3: Yeah.
6:18
Speaker 4: And you know what, in this era, people are more
6:20
Speaker 4: protected than we was in the beginning because when you
6:23
Speaker 4: get funding, they would normally say, okay. Back in the day,
6:26
Speaker 4: it's like, oh, it's seventy thousand dollars to get it done.
6:28
Speaker 4: They give you seventy thousand, Well, we know we ain't
6:29
Speaker 4: gonna get the job done. Got to get the car
6:31
Speaker 4: and to watch, you know what I mean, Maybe we
6:33
Speaker 4: get the job done later, you know what I'm saying.
6:35
Speaker 4: So now and it's like, okay, one, you gotta put
6:38
Speaker 4: your own money up. I don't know if y'all know that.
6:40
Speaker 4: So let's say let's say you get one hundred thousand
6:42
Speaker 4: dollars to do you ever rehab, right, the first phase
6:44
Speaker 4: is twenty five thousand, Well, you gotta get twenty five
6:46
Speaker 4: thousand dollars.
6:47
Speaker 3: Worth of work done.
6:48
Speaker 4: Then they come out and expect it and see it's
6:50
Speaker 4: twenty five thousands were for work done. Then they reimburse
6:53
Speaker 4: you construction loans or reimbursement loans now, which protects everybody
6:58
Speaker 4: because I watch this a contractor right, you give me
7:02
Speaker 4: twenty five thousand dollars, I don't do no work. Right,
7:06
Speaker 4: You burnt out of the twenty five thousand, but you're
7:08
Speaker 4: not burnt out of the whole hundred thousand. You understand.
7:11
Speaker 4: You gotta chat. You got an opportunity to recoup. Now
7:15
Speaker 4: the banks is not out of nothing because you paid
7:17
Speaker 4: for the first phase, gotcha, So you.
7:21
Speaker 3: Don't have to mess the loan up.
7:22
Speaker 4: So let's say if if a contract to get low
7:25
Speaker 4: on you in the first phase, well what the lender
7:28
Speaker 4: didn't give you no money on the first phase because
7:30
Speaker 4: as they come and inspect, the work is not done.
7:32
Speaker 4: That's another way. You know. Pulling permits will save you too,
7:36
Speaker 4: because you have to get city inspections and you have
7:39
Speaker 4: to get inspections.
7:39
Speaker 3: From the bank.
7:40
Speaker 5: You said something about having permits after every phase.
7:43
Speaker 4: After every phase, so you got to get permits and
7:45
Speaker 4: plans to go in right, demo alterations. After you demo,
7:49
Speaker 4: they got to come out and inspect it. And you
7:51
Speaker 4: want to frame it, frame the alterations, permit boom. After
7:54
Speaker 4: you frame it, you get inspections. Then you got mechanicals,
7:57
Speaker 4: electric plumbing, h BAG. After each McCay, you gotta get
8:01
Speaker 4: electrical inspected to come and inspect electrical. They can put
8:03
Speaker 4: a sticker on your window this hours in Philly to
8:05
Speaker 4: give you a stick that's saying you pass electrical. Then
8:07
Speaker 4: a regular city inspector comes back out and inspects the
8:10
Speaker 4: plumbing and the hvact boom. You get clear to do that.
8:14
Speaker 4: Now you can close the walls. You don't need a
8:16
Speaker 4: permit to close the walls. You just need to inspect.
8:19
Speaker 4: You didn't need to permit for the beginning to start
8:22
Speaker 4: the demo, the framing and the mechanicals. After that, once
8:26
Speaker 4: you close the walls up and everything is done, they
8:28
Speaker 4: do it's called the final inspection, signed off on it,
8:31
Speaker 4: and that's it and you ready to go.
8:32
Speaker 2: So like the two O three K loan, which is
8:35
Speaker 2: a renovation loan from a bank, the.
8:36
Speaker 4: Card is loan in the world. No contract don wants
8:38
Speaker 4: to deal with that. It's too extensive and it's too
8:43
Speaker 4: tight the government. It's not like the government. It's a
8:48
Speaker 4: lot to get your money for a contractor. Yeah, it's
8:50
Speaker 4: a lot for a contractor, a lot of contracts on
8:52
Speaker 4: Like you got some contractors that are just specializing that.
8:55
Speaker 4: Then you got some contractors down they don't want to
8:57
Speaker 4: deal with that. So it's because it's too much easy money.
8:59
Speaker 4: That's I'm thinking to myself.
9:00
Speaker 5: It's great for the person who's trying to get the home,
9:02
Speaker 5: not so great for the guy who's trying to say
9:04
Speaker 5: exactly exactly.
9:05
Speaker 2: So what kind of financing do most contractors? Obviously cash,
9:09
Speaker 2: but the majority of people don't have enough cash to
9:11
Speaker 2: pay somebody.
9:12
Speaker 4: So right now, people staying away from banks like the
9:15
Speaker 4: reason that the market is not really gonna tank. It
9:18
Speaker 4: might slow up and shift, but it's not gonna tank
9:20
Speaker 4: because people are not over exposed with these banks. People
9:22
Speaker 4: are dealing with private lenders. Hard money hard money, not
9:26
Speaker 4: really hard money, and private lending is two different things.
9:28
Speaker 4: What's the probably a private private lend is just a
9:30
Speaker 4: group of people like us, you know what I mean.
9:32
Speaker 4: We might got twenty million dollars, we're gonna lend on
9:35
Speaker 4: it with eight percent interests on it, and we're gonna
9:37
Speaker 4: make some money right together collectively a group of us
9:39
Speaker 4: friends heard money lens is different. They're kind of the same,
9:43
Speaker 4: but they are a little more extensive on the requirements
9:46
Speaker 4: in the criteria, you know what I mean. Hard money
9:48
Speaker 4: lenders come a little they come a little harder, you
9:49
Speaker 4: know what I mean. Like, you know one false moved,
9:52
Speaker 4: we own that, you know what I mean?
9:55
Speaker 3: Yeah? What about the job, like the materials for the job.
9:58
Speaker 3: Is there a strategy that you.
9:59
Speaker 4: Use or you buying in bulk or this is what
10:01
Speaker 4: I do? Build a relationship. I don't care. Don't think
10:04
Speaker 4: you can't build a relationship with a corporation. I spent.
10:06
Speaker 4: I spend over a million dollars a year in home depot,
10:10
Speaker 4: so I got a great relationship with them. I'm getting
10:12
Speaker 4: everything with like a three percent markup on some things.
10:15
Speaker 4: So where let's say sheet, where I costs eleven dollars
10:17
Speaker 4: a sheet, I'm paying like seven dollars and thirty cent,
10:21
Speaker 4: you know what I mean. So I get discounts because
10:23
Speaker 4: the more money I spend there, the more discounts I get.
10:25
Speaker 2: How did you establish that?
10:27
Speaker 4: I went through what's called a pro rewards account, and
10:30
Speaker 4: I get two percent off of everything I spend every
10:33
Speaker 4: six months. So if I spend five hundred thousand dollars,
10:37
Speaker 4: I get two percent of that and six months and
10:39
Speaker 4: I spend another five hundred thousand. I get two percent
10:41
Speaker 4: of that, So I get that, I get discount on pain.
10:44
Speaker 4: But it's just for everybody, Like, these are just programs
10:46
Speaker 4: that they offer. When you're a contractor, you got to
10:48
Speaker 4: get into You can't just go in there and spend money
10:50
Speaker 4: like every day person. Because you spending a lot of money,
10:52
Speaker 4: you want to get the discount. So you want to
10:53
Speaker 4: find out what programs available.
10:55
Speaker 2: So what is the most important part of rehabbing house? Like,
11:00
Speaker 2: is it the walls? Is the floor? Like, what's gonna
11:02
Speaker 2: make the house the most valuable?
11:03
Speaker 4: Kitchen, the kitchen, the bathrooms, the x steria, curb of
11:10
Speaker 4: pill the extra amenities, finished basement, hardwood floors throughout. What
11:15
Speaker 4: kind of towel you use, what kind of light fixtures
11:18
Speaker 4: you use, Just just the little stuff that catch people
11:22
Speaker 4: at Because I'm gonna be honest with you, I could
11:23
Speaker 4: strip a house down to the bare bone, right, strip
11:25
Speaker 4: it all the way down. That's what we do. We
11:26
Speaker 4: strip it all the way down to the brick and
11:28
Speaker 4: frame it up and do all new electric, plumbing, hpect, everything,
11:31
Speaker 4: sheet rock, everything brand new. And people noticed one little
11:34
Speaker 4: nick on that wall, Oh what's a little paints right here?
11:38
Speaker 2: You know?
11:38
Speaker 1: What I mean.
11:38
Speaker 4: I just we built this whole house. Like I had
11:40
Speaker 4: a guy. We had built the deck one time and
11:43
Speaker 4: the deck, the back of the deck had leaked, and
11:45
Speaker 4: he said he caught me, like you know, he was like, Yo,
11:48
Speaker 4: you gotta get down there real quick. I'm like, what's
11:49
Speaker 4: the matter. I got this man's leaking in here. So
11:51
Speaker 4: I come, I look at the back of the deck
11:53
Speaker 4: is leaking. I mean, he irate, what are we gonna do?
11:55
Speaker 3: What we gonna do?
11:56
Speaker 4: So said, he said, man, what are you laughing at?
11:59
Speaker 4: I said, you watch me build this whole house from ship,
12:02
Speaker 4: excuse me, from nothing, and you complaining about that little
12:05
Speaker 4: teeny leak. And that's how I was able to calm
12:07
Speaker 4: me down. I'm like, bro, you watched me build this
12:08
Speaker 4: whole house like this was a bandominium, you know what
12:11
Speaker 4: I mean. Like you know what I mean. You watch
12:14
Speaker 4: me put it back together, you know what I mean?
12:16
Speaker 4: But people, like I said, people only see the small things.
12:19
Speaker 4: They could see, Oh it's a nick in the walld,
12:21
Speaker 4: this is crooked, And we just built this whole entire house,
12:24
Speaker 4: you know what I mean.
12:25
Speaker 2: So so from a contractor standpoint, because you're you're interesting,
12:30
Speaker 2: because you're an investor and you're a contractor, right, right,
12:32
Speaker 2: So we talk about a lot. I realized we've never
12:35
Speaker 2: really looked at it from that standpoint, like from a contractor, like,
12:40
Speaker 2: how how do they go about as far as structuring
12:43
Speaker 2: their business model like you have a like how do
12:46
Speaker 2: they find clients? How do they like a.
12:49
Speaker 4: Lot of time clients? Let me let me just real
12:52
Speaker 4: quick because I'm gonna tell you something about contractors, just
12:55
Speaker 4: how we lose big with contractors. A contract to give assessment.
13:00
Speaker 4: I want one hundred thousand dollars to fix your house, and.
13:03
Speaker 3: You beat them up.
13:04
Speaker 4: No, I can't do one hundred. I could do sixty two,
13:06
Speaker 4: sixty two. I can't do it for sixty two. I
13:08
Speaker 4: could do it for ninety five. Man, I can't. I
13:10
Speaker 4: could do it for sixty two.
13:11
Speaker 3: That's it.
13:12
Speaker 4: The man commit to sixty two thousand, You get him
13:15
Speaker 4: a deposit?
13:15
Speaker 3: What do you do?
13:16
Speaker 4: Never come back? Right? You know why, because there's no
13:21
Speaker 4: way he's gonna get the job number sixty two thousand.
13:23
Speaker 4: He told you how much the job costs, but he
13:26
Speaker 4: took the money. A lot of times you get contracts
13:29
Speaker 4: that take a deposit and just use jobs like that
13:32
Speaker 4: as cash for like, you know what, I'll make the
13:34
Speaker 4: difference up somewhere else. I just need this money right now,
13:36
Speaker 4: so far and so on. But if you get a
13:39
Speaker 4: GC that come through and give you the number, instead
13:42
Speaker 4: of beating up on him, just get a couple of estimates.
13:44
Speaker 4: If it's in the same ballpark, do not try to
13:48
Speaker 4: knock that man down. So you go home and say, yo,
13:50
Speaker 4: I got hiven do it for sixty two, and then
13:51
Speaker 4: next week you ain't hear it from him.
13:53
Speaker 3: No, they go, you're sixty two exactly.
13:55
Speaker 5: So when you do these full gut rehabs right and
13:58
Speaker 5: you walk in, I mean you're seeing how the land
14:02
Speaker 5: you're gonna landscape this thing out?
14:03
Speaker 3: Is there an architect that works with you?
14:05
Speaker 4: Like, are not me? Who's doing me?
14:07
Speaker 3: Me?
14:08
Speaker 4: Everything you see in my house is me when I
14:11
Speaker 4: got a house out, Like if I ripped this house
14:12
Speaker 4: out right now, if I ripped the building out, we like,
14:15
Speaker 4: I can visualize whatever.
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17:08
Speaker 4: We room where I wanted that. I've been doing it
17:10
Speaker 4: that once you walk in. Yeah, like I would love
17:12
Speaker 4: for y'all come down one day and see me do it.
17:15
Speaker 4: I come down and run with me and see me
17:16
Speaker 4: do it. But I could rip this whole house out
17:19
Speaker 4: and just be As a matter of fact, if you
17:21
Speaker 4: look at my Instagram, you'll see me laying out. Yeah,
17:24
Speaker 4: that's what I do. I'll visual when you.
17:25
Speaker 5: Walk in, you're visually seeing like you know what, I
17:27
Speaker 5: can see an open floor space.
17:28
Speaker 3: That's gonna be two bedrooms up here. We're gonna put
17:30
Speaker 3: the basement. We're gonna add a wall. Yeah.
17:33
Speaker 4: Well, when you do so many of them, most of
17:34
Speaker 4: them become a cookie cutter. It's four or five different styles.
17:37
Speaker 4: When you do so many of them, you know what
17:39
Speaker 4: I mean. I'm doing hundreds of houses yearly, you know
17:42
Speaker 4: what I mean. So I got stuff going on in
17:43
Speaker 4: different cities that in Cleveland, I don't I don't knock
17:46
Speaker 4: no walls down. I keep the structure structures sound. I
17:49
Speaker 4: keep in Philly they call an open floor plan. When
17:51
Speaker 4: they walking in front door, they want to see the
17:53
Speaker 4: back door, which is easy because we don't have to
17:55
Speaker 4: spend all the money on these partition walls. We knock
17:58
Speaker 4: every wall down. On the first floor, you're that front door.
18:00
Speaker 4: You can see out the back. You put the kitchen
18:02
Speaker 4: in the back, put a half bath on the side,
18:04
Speaker 4: and that's it and you come out there.
18:05
Speaker 5: When we spoke to a season heavy, they were like,
18:07
Speaker 5: they have a standard, right they don't. When they do
18:09
Speaker 5: something rehab, they keep the same paint. So everything is
18:12
Speaker 5: very easy feeling. It's a strategy you use. You try
18:15
Speaker 5: to make it.
18:15
Speaker 2: Yeah.
18:15
Speaker 4: I got my own paint too, big business gray, in
18:17
Speaker 4: the same home depot word. Yeah, big business gray. So
18:21
Speaker 4: it's a great I use called big Business gray. It's
18:23
Speaker 4: made by PPG Paint and you can get it. And
18:27
Speaker 4: it's the ceiling white. It's called Sky's the Limit white.
18:30
Speaker 4: And I paint all my doors a signature red. It's
18:33
Speaker 4: called Paris Apple reds named after my granddaughter and my daughter.
18:36
Speaker 4: And these legit paints, these legit paints that sell the
18:38
Speaker 4: home depot.
18:40
Speaker 2: So yeah, you're you're like I said you you're like
18:43
Speaker 2: on a chessboard, You're the red and black, You're both.
18:45
Speaker 2: You're investor in your COTO gives you an advantage because
18:48
Speaker 2: you could look at the house and say, Okay, I
18:49
Speaker 2: know this is how much it needs to be fixed
18:52
Speaker 2: up because you're the want that's fixing it up. But
18:53
Speaker 2: for the average person that doesn't have any knowledge or
18:55
Speaker 2: that budgeting, like, how do they how do you see
18:58
Speaker 2: a property and say okay, this is a good buye
19:01
Speaker 2: or this isn't a good buy because you don't really know.
19:03
Speaker 4: All right, let me tell you anything that you could
19:06
Speaker 4: turn the profit onw is a good BUYE. Remember I
19:08
Speaker 4: told you this, and it has nothing to do with
19:10
Speaker 4: the structure of it or nothing. Let's say you and
19:12
Speaker 4: I buy a house today for twenty thousand, and we
19:15
Speaker 4: don't know nothing about it. How much is gonna cost?
19:17
Speaker 4: We got one hundred thousand to fix it? We find
19:19
Speaker 4: out tomorrow he come through as a construct contract and
19:21
Speaker 4: say it's gonna be two hundred thousand to fix it. Well,
19:23
Speaker 4: that's one hundred thousand doll our budget, right, But we
19:26
Speaker 4: paid what I say, we paid for twenty thousand I mean, listen,
19:29
Speaker 4: for fifty, if somebody gives us forty, we make one
19:32
Speaker 4: hundred percent interest for my money. There are weighs. It's
19:34
Speaker 4: a thousand ways to skin this cat. The biggest part
19:37
Speaker 4: about real estate is ownership. The second you own it,
19:40
Speaker 4: you got so many angles to ping golf up. Prime example,
19:43
Speaker 4: if you and I buy something for twenty we know
19:46
Speaker 4: it costs two hundred to fix it, but it's gonna
19:48
Speaker 4: be worth four hundred and we stand to make two
19:51
Speaker 4: hundred thousand profit. Or guess what I could tell somebody, Hey,
19:54
Speaker 4: give me two hundred thousand and fix this house. I'm
19:56
Speaker 4: gonna give you back three. I'm still making one hundred
19:58
Speaker 4: grand minus a twenty yet paid for it. I made
20:01
Speaker 4: eighty grand and I ain't spend none of my money
20:04
Speaker 4: but twenty grand. But I gave somebody fifty percent interest
20:07
Speaker 4: on their Money's so many ways with this game. You
20:10
Speaker 4: can sell it as is, or you and I can
20:13
Speaker 4: get a loan to fix it, put the two hundred
20:15
Speaker 4: grand into it and it's worth four hundred grand, and
20:17
Speaker 4: make the two hundred and one eighty profit. So it's
20:21
Speaker 4: so many ways. The main thing is ownership. You gotta
20:24
Speaker 4: buy it. You buy it. You good. You buy this
20:27
Speaker 4: building right now. Guess what if we go belly up,
20:29
Speaker 4: we can refinance it. We don't want to sell it.
20:32
Speaker 4: We need to stay here. We're gonna refinance it, pull
20:34
Speaker 4: that money out, make a move.
20:35
Speaker 3: You know what.
20:35
Speaker 4: We don't want to refinance it. We're gonna sell it.
20:37
Speaker 4: We're gonna do whatever with it. We can get an
20:39
Speaker 4: investor coming. Hey, listen, I want to airbnb this house.
20:41
Speaker 4: Give me fifty thousand, and we're gonna be partners on it.
20:43
Speaker 4: It's so many ways that you can flip it once
20:46
Speaker 4: we have ownership. Once you own it, you in a game.
20:49
Speaker 3: That's okay.
20:50
Speaker 2: So how do you know of something because you say
20:52
Speaker 2: you fully demolish everything. How you know something doesn't really
20:54
Speaker 2: need to be fully demolished or it just needs a
20:56
Speaker 2: little bit of.
20:56
Speaker 3: Work, like when you do a partial reheab man, is.
20:58
Speaker 2: There any partial rehab al?
21:00
Speaker 4: All right, listen, listen, I'm gonna be honest with you.
21:03
Speaker 4: So and slower in markets that's jumping, like in Jersey
21:08
Speaker 4: and stuff, I would definitely demo everything out. If they
21:11
Speaker 4: think they got a great comp now and they just
21:14
Speaker 4: doing light rehab, they could set the market. If they
21:17
Speaker 4: rip everything out to the brick. If they rip it
21:19
Speaker 4: out to the brick and do everything crazy over, they
21:21
Speaker 4: could set the market. They'd be super rich.
21:23
Speaker 2: Set the market. That's like set the market. Comps.
21:26
Speaker 4: I set the comps. I don't care. Nobody can't tell me, Oh,
21:29
Speaker 4: the comps is only listening this neighborhood.
21:30
Speaker 3: Just listen.
21:32
Speaker 4: I make the comps everywhere I go. I make the comps.
21:34
Speaker 2: How does it all right? So you make the comps
21:37
Speaker 2: by how many houses does it take in the neighborhood
21:40
Speaker 2: to make a comp like one? Really?
21:42
Speaker 4: One house? Prime example. If I went to Cleveland and
21:47
Speaker 4: I'm buying houses for fifteen, I'm selling them for I'm
21:51
Speaker 4: buying shelves for fifteen. Well, housing need work for fifteen.
21:54
Speaker 4: I'm selling them for eighty five or twenty down. People
21:56
Speaker 4: asking me who am I selling them to. What happens
21:59
Speaker 4: is sell them for twenty down. I do the construction
22:03
Speaker 4: for him, and I'm the mortgage company, so I might
22:06
Speaker 4: put Let's say, if I put twenty into them, I'm
22:09
Speaker 4: all in them. Thirty five people get me twenty down,
22:11
Speaker 4: I'm fifteen out of pocket. They still owe me sixty
22:15
Speaker 4: thousand dollars. They pay me five hundred, seven hundred a
22:17
Speaker 4: month mortgage.
22:19
Speaker 5: So once you sell the first one, Once I sell
22:20
Speaker 5: the first one for eighty five, it sets the trend.
22:24
Speaker 4: It seys it so.
22:25
Speaker 3: Normally you might even own the next three on the block.
22:28
Speaker 4: I own the whole block. But I'm gonna tell you
22:31
Speaker 4: how it goes. That's because people are following. And the
22:35
Speaker 4: thing is this, I'm not really looking to really flip.
22:39
Speaker 4: I don't want my clients to flip. When I sell them.
22:41
Speaker 4: My clients, it's a buying hole because I might sell
22:46
Speaker 4: you yours. Like in the beginning, I was selling for fifty,
22:48
Speaker 4: then it was sixty five, then it's eighty five. So
22:51
Speaker 4: now my people that was in for fifty are trying
22:53
Speaker 4: to sell to make their thirty five thousand profit next month.
22:56
Speaker 4: When I feel like changing the cop to one twenty five,
22:58
Speaker 4: my sixty five people want to be to sell, and
23:01
Speaker 4: then so forth and so on. I just keep elevating.
23:03
Speaker 4: And the thing is ownership is how I did it.
23:06
Speaker 4: If I buy enough, if I own I own over
23:09
Speaker 4: like five hundred doors in Cleveland, no exaggeration, we own
23:12
Speaker 4: almost five hundred doors, right, So if I listen, if
23:16
Speaker 4: I put everything on the market, for sale that I
23:18
Speaker 4: own right now for one hundred thousand. Anybody else that
23:22
Speaker 4: bought something for ten don't think they're entitled to one hundred.
23:24
Speaker 4: So we all put them up four hundred. That's what
23:26
Speaker 4: the number is. One hundred.
23:28
Speaker 3: That's the new number.
23:29
Speaker 2: So that's interesting, is that controlling the comps or manipulating
23:34
Speaker 2: the comps.
23:35
Speaker 4: That's not manipulating the comps. Is if you, my man,
23:40
Speaker 4: and I buy a house for twenty and I sell
23:42
Speaker 4: to you for eighty five, that's manipulating. There's people from
23:45
Speaker 4: all over the world calling me to buy these properties.
23:47
Speaker 4: But this is why they calling to buy them. So
23:50
Speaker 4: even though I'm charging eighty five, they give me twenty
23:52
Speaker 4: thousand down and their mortgage payment is five hundred a month. Right,
23:56
Speaker 4: but I want you to understand that their rental income
23:58
Speaker 4: is sixteen hundred a month. So if they getting eight
24:01
Speaker 4: hundred for each, because these are two families I'm selling,
24:04
Speaker 4: they're getting eight hundred for the upstairs, eight hundred for
24:06
Speaker 4: the downstairs, they getting sixteen hundred a month. They paid
24:09
Speaker 4: me five, let's say me five and property management of
24:12
Speaker 4: one fifty. Let's say they walking with a positive of
24:14
Speaker 4: eight hundred dollars. This is we're talking like that said Cleveland,
24:17
Speaker 4: what's attaches like a couple hundred dollars a year?
24:19
Speaker 3: I'm crazy.
24:20
Speaker 4: Yeah, So let's say they make an eight hundred dollars
24:23
Speaker 4: positive cash flow right off of a twenty thousand dollars investment.
24:28
Speaker 4: Like that's ninety six hundred dollars a year. In two years,
24:31
Speaker 4: they make all their money back. What happened to the
24:34
Speaker 4: thirty year mortgage? We just shrunk that up, owner ship
24:37
Speaker 4: three years. You own it, You got all your money back.
24:42
Speaker 4: At least you got all your money.
24:43
Speaker 3: Back used to get it in, so you said, and
24:47
Speaker 3: we ain't even.
24:47
Speaker 4: Talking about the refile. I ain't even lay the refied
24:50
Speaker 4: game down. That's that's just me saying, you in something
24:53
Speaker 4: free and clear, you own it, or you in something
24:55
Speaker 4: not no necessarily free and clear, because they still owe
24:57
Speaker 4: me a balance, but they got all of their money
25:00
Speaker 4: back out of it.
25:01
Speaker 2: So I used to that say, that's why you say
25:03
Speaker 2: comp should be your starting point, not your bottom.
25:06
Speaker 4: Exact exactly sow me say that said, I'm talking about
25:11
Speaker 4: the homework, and we do a lot.
25:13
Speaker 2: So I one other questions. I wanted to another video.
25:15
Speaker 2: I thought that was really dope a while ago that
25:17
Speaker 2: you did. You said, the process is you buy it,
25:19
Speaker 2: you flip it, you fight, you buy it, you fix
25:21
Speaker 2: it up, you refine, then the scrow, then you sell.
25:25
Speaker 2: Can you explain that?
25:26
Speaker 4: Say it again with that?
25:26
Speaker 2: So you buy it, we buy a proper, you fix
25:29
Speaker 2: it up, and then you REFI the money you put
25:31
Speaker 2: that the refile. Okay, okay, okay, I got saved your time.
25:35
Speaker 4: This is how you do it. This is what I
25:36
Speaker 4: meant by that. So you buy a house. This is basic.
25:39
Speaker 4: Buy it, fix it, refinance it, rent it. So let
25:43
Speaker 4: me give it. I got to give you everything in numbers.
25:46
Speaker 4: We buy for one hundred, we fix four hundred, we
25:50
Speaker 4: in it two hundred. It it praises that four hundred,
25:54
Speaker 4: we pull out seventy percent, which is too eighty, right,
25:59
Speaker 4: so we pull out too eight We was in it
26:00
Speaker 4: two hundred. We got eighty thousand dollars that we up
26:03
Speaker 4: on the refile, right, I payment it's twenty eight hundred
26:06
Speaker 4: one percent. So I payment it's twenty eight hundred dollars
26:09
Speaker 4: a month. We take twenty eight thousand of that eighty
26:13
Speaker 4: thousand and put an escrow. So you know you're good
26:16
Speaker 4: for ten months. Right, the second money in you rent
26:20
Speaker 4: it out, you probably ain't gonna get twenty eight hundred
26:22
Speaker 4: dollars a month rent due to this market. But we're
26:24
Speaker 4: gonna pull that eighty out anyway, because that's what we do, right,
26:27
Speaker 4: that's truth. So but what you want to do is
26:30
Speaker 4: if you put that twenty eight thousand, you up ten months.
26:32
Speaker 4: So even if you rent it out for fifteen hundred,
26:34
Speaker 4: that'll overlap, you understand, and that'll give you some buying
26:37
Speaker 4: time while you're taking the other sixty whatever thousand dollars
26:40
Speaker 4: left and you turning it. That's what I meant by escort,
26:43
Speaker 4: because what happens is people refie take that money out
26:47
Speaker 4: and think they're gonna put all the money in one
26:49
Speaker 4: bank account and every month they gonna take their money
26:51
Speaker 4: from that bank acount and pay that mortgage. What they
26:52
Speaker 4: get to spending that money and reinvest in that money.
26:56
Speaker 4: Every day life happens and you look up, they don't
26:58
Speaker 4: have that money or the mortgage money. So I would
27:00
Speaker 4: esco at least ten months, so I know, I'm good
27:02
Speaker 4: for ten months for God to give yourself a cushion.
27:06
Speaker 4: Every day life happened. So do you believe in buying
27:10
Speaker 4: holding or I'm all buying holding now that I'm older.
27:14
Speaker 4: My kid probably he probably came wake to flip all
27:16
Speaker 4: his house.
27:18
Speaker 3: But when you get to when you get to.
27:19
Speaker 4: A point like me, Man, I'm forty four years old.
27:21
Speaker 4: I've been in the game since I've been twenty eight
27:24
Speaker 4: years old, and I sleep four hours a day, Like
27:27
Speaker 4: I barely sleep with my wife. I see my wife
27:29
Speaker 4: like one week out of the month, you know what
27:30
Speaker 4: I mean.
27:31
Speaker 3: Like, b.
27:35
Speaker 4: That's my boy. Yeah, that's my boy. That's all he
27:40
Speaker 4: wanted to do was dance.
27:42
Speaker 3: He's like he sat this here a few weeks ago.
27:43
Speaker 4: Yeah, that's my boy. So when you get to that point, man,
27:46
Speaker 4: you gotta kind of sort of figure out one day,
27:48
Speaker 4: you know, I won't be able to go out and
27:50
Speaker 4: kill my food to bring it home for the tribe.
27:52
Speaker 4: You understand what I'm saying. So I got a cord
27:54
Speaker 4: of sort of have a machine set up in place.
27:56
Speaker 3: And the thing.
27:57
Speaker 4: Is, my kids love me and they they follow me.
28:00
Speaker 4: But my son, you know what I mean, I don't
28:02
Speaker 4: want to leave this earth and I leave my children
28:05
Speaker 4: in debt. You know, if you got an extensive portfolio,
28:08
Speaker 4: but you but you refined everything and you bringing in
28:11
Speaker 4: thirty grand a month, but your mortgages is twenty two. Man,
28:13
Speaker 4: you work for the bank. Man, you know what I mean?
28:15
Speaker 4: You work for the bank. My kids walk with eight
28:17
Speaker 4: thousand dollars a month. Now when I leave here, whatever
28:20
Speaker 4: I leave them, I want them to if they don't
28:21
Speaker 4: feel like working, they don't owe nobody nothing, you know
28:24
Speaker 4: what I mean. And that's that's what we got to
28:26
Speaker 4: get into. Like, if you want to be in this business,
28:30
Speaker 4: you cannot get into becoming an entrepreneur to be in debt. Entrepreneurs,
28:34
Speaker 4: you know, we don't. We're not supposed to work for
28:36
Speaker 4: each other. I mean, work for anybody. That's why we
28:38
Speaker 4: become entrepreneurs. But I mean, if, like I said, if
28:42
Speaker 4: you bringing in thirty thousand dollars rent roll and you're
28:44
Speaker 4: paying twenty two thousand out because you got four million loans,
28:48
Speaker 4: you know what I mean, you work for the bank.
28:50
Speaker 4: Cause if you don't, if you don't believe me, don't
28:52
Speaker 4: go out there and pay it and see what happens.
28:54
Speaker 3: See how much?
28:54
Speaker 4: See how much of an empire you really own? I
28:56
Speaker 4: know people that's man, listen, man, I know I know
28:59
Speaker 4: groups that's buying and building crazy fifty million dollar lines.
29:04
Speaker 4: What happens if something happened to them, their kids got
29:06
Speaker 4: to step up and what and be liable for the
29:08
Speaker 4: Their next to kin is liable for that stuff or
29:11
Speaker 4: they're gonna lose everything. So everything they built, you know,
29:14
Speaker 4: when you weren't teaching your kids, you know, to go
29:16
Speaker 4: to college and do this because you thought you had
29:18
Speaker 4: them and then you look up one day something happened
29:21
Speaker 4: to you. How many of us know our friends that
29:22
Speaker 4: parents left them stuff and they messed it up. They
29:24
Speaker 4: blew it because you know why, the parents never taught
29:27
Speaker 4: them the business.
29:28
Speaker 3: They don't.
29:28
Speaker 4: They didn't care about the business. The parents thought they
29:30
Speaker 4: had it to the point where they could just leave
29:32
Speaker 4: them the money. We were never taught maintenance. You gotta
29:34
Speaker 4: be ta a maintenance.
29:36
Speaker 3: Yeah we don't. I mean I don't even know people
29:37
Speaker 3: who parents left them anything. So that's dead. Right.
29:43
Speaker 4: We're breaking this cyphle right there. We're gonna be the parents.
29:47
Speaker 4: I was in a meeting with somebody not to get along.
29:48
Speaker 4: When I was in a meeting with somebody last week,
29:50
Speaker 4: and he would say, yeah, I just want to you know,
29:52
Speaker 4: I'm not gonna leave man. Listen, if I get one
29:55
Speaker 4: hundred million. I'm just gonna leave my kids this percentage,
29:58
Speaker 4: and I'm not gonna leave my kids all this money.
29:59
Speaker 4: I want to be not just straight up looked at
30:01
Speaker 4: him and asking, like, then quit what your works are
30:03
Speaker 4: for You got enough for you, right, If you got
30:06
Speaker 4: enough for you and you feel that way, take two
30:08
Speaker 4: million dollars. Put it in some kind of iry or
30:11
Speaker 4: something untilay you do have kids and they do get older,
30:14
Speaker 4: and quit, Like, what's the use you making fifty one
30:17
Speaker 4: hundred million dollar? You say you're gonna leave your kids
30:18
Speaker 4: two million apiece? Or they can struggle puzzle for your
30:21
Speaker 4: last name? Man, You know what I mean. It's crazy,
30:24
Speaker 4: that's the.
30:24
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