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Funding Deals and Managing Ads with Forrest McGhee
In today's episode, Larry talked with Forrest McGhee—an Inner Circle student. Forrest shared how he applied the things he learned as a student in his business. They also talked about ways of funding deals, managing ads, and a lot more.
- How Forrest started in real estate investing
- What market he is in
- How Larry and Forrest met
- The huge part his wife plays in his business
- Leveraging connections in real estate investing to start his wife's own staging company
- About his business
- Recent deal he had
- How he is funding his deals
- Using IRA money
- Finding private money
- 2 things you need to have to make money in real estate: - Money - Deal flow
- Marketing in Craigslist
- Managing your ads in Craigslist
- How being a former contractor helped in real estate investing
- Tips to non-contractor investors
- Generating traffic organically through his website
- Advice to other investors
- "When deals are right, they are right. When they're wrong, you can do all the talking in the world but it's not going to save a bad deal."
- "You can't say the wrong thing to the right person."
- "IRA money is less emotional to people."
- Inner Circle Apprentice Program
- Forrest with CVA Homes
- Forrest's contact number: 783-786-4419
RESOURCES AND LINKS FROM THIS SHOW:
Larry: Welcome to the Brain-Pick-Pro-Show live from Lake Wylie North Carolina. I'm Larry Goins and I'm really excited to have one of my awesome Inner Circle students on. He's a mover, he's a shaker he's crushing it. And I wanted to get him on and tell you guys exactly what he's doing and how he's doing it. And I want you to hear it directly from him so please give a warm welcome to Forrest McGhee. What's going on buddy? Forrest: I'm doing great. How are you doing? Larry: Man I'm good. How about yourself? Forrest: Awesome thank you. Larry: Good. Why don't you start out and tell our listeners a little bit about yourself your background and kind of how long you've been in real estate or how you got started? Forrest: So I’ve been doing real estate for four years and I have done it the first time I was in a partnership it didn't work out very well. And then I was in another partnership and that recently ended. So now I'm on my own and just exploring all the things that I could do and learning how to delegate what I don't want to. Larry: That's awesome. Now what market are you in? Forrest: I'm in Richmond Virginia but I buy all over the state. Larry: Awesome that is good. And how did you and I meet? Do you remember that? Forrest: Yeah I do exactly. I met at one of your three-day classes in Charlotte. Larry: Right. Forrest: And how I actually found you, Steve my father found you online. Larry: Okay. Forrest: Ended up going to one of your three-day events so. Larry: That's cool. Forrest: Yeah. Larry: That's good. And I know you give me an update on a regular basis as to what you're doing. I mean that's one of the things I ask Inner Circle students to do is give me a regular update every couple of weeks, what you're doing and how you're doing it. And when I got your update recently I'm like, "Man I got to get you on the show. We got to get this going." Because I'm really proud of you man I'm proud of what you're doing, you and your wife. I mean I know she's a big part of the business as well. Forrest: Yeah she's my rock and she has the creative mind and I have the go-get-it-done mind like running through a forest with a tank or a bulldozer. Larry: You're like a bull in a China shop. Forrest: That's right. And she has her own staging business that's kind of morphed from our real estate business. It's a separate entity, but she's used all of our contacts here in town to just help them out and get their houses sell quickly because right now it [Inaudible] [02:57] is hot and anything you can do to get your houses sold fast and save some interest payments. It makes sense to some investors. Larry: That's awesome. So you kind of leveraged your connections in the real estate investing for her to start her own staging company. Forrest: That's exactly right. And to go one step further in that I've leveraged her staging business in how I market the properties. So over the last year we've staged almost 60 houses in Richmond and in Newport News and Williamsburg. So I took all of those properties and I mapped them. And I found them by zip code and then I just knew what zip codes to target by which we're the hardest areas for flipping. Larry: Right that's awesome man. That's great I love it. So tell me a little bit about your business, tell our listeners about your business. What does it look like, what kind of business so you do? Forrest: So we fix and flip, we wholesale and we buy and hold and we've done that as a seller financing model. Larry: Right. Forrest: So I think that we will continue to do seller financing but not with such a broad stroke like we have before. So I think you used the term Homeowners in Training. Larry: Right. Forrest: So I think the rent to own might be an easier kiddiepool for them to get into. Larry: Yeah. That's good. I love the whole seller financed lease option rent to own whatever you want to call it. I love that model because you get the cash flow without the headaches of them being a straight tenant right? Forrest: That’s right. And the whole part of this business is once you get into it, you learn what don't like and then you don't do what you don't like. So if you don't like taking care of the tenants and phone calls and so I was at a Mastermind last year and one of the guy’s tenants showed up at his property because his bathtub was backed up. And I was like, “No, this is not the lifestyle I want at all". Larry: No, you don't want that to happen. Forrest: Yeah. Larry: It doesn't happen with homeowners in training does it? Forrest: No, it does not. Larry: Not at all. That's really good man. So tell us about you're doing some wholesales, some fix and flips, and a few seller financing or lease option type of deals. Tell us about a recent deal you've done. Forrest: So we're closing on a wholesale today or tomorrow in Newport News there’s a new seller and I really wanted to go to be at the property the numbers are right. This guy found my ad on Craigslist and he was in the military, he got out of the military and took a job on the other side of the country, and just left this house. And he was telling me he said, "Forrest I just can't take this anymore." He said, "Everybody is lowballing me, everybody wants to give me 20, 30c on the dollar. You're the first who have me a decent offer.” And he still had a mortgage on the property. I came close to what his payoff was. I was still able to wholesale it, I was still able to make money. But I solved his problem, he had left the power on because he wanted the alarm system to work. Larry: Right. Forrest: And somebody had stolen his meter because you know how the meters are electronic, they send a signal. Somebody took the meter out of his meter box and took it to their house and was using it as power. And then the alarm was going off so they ripped the alarm box out of the house. Larry: Oh no. Forrest: He was just beyond himself. Larry: He was over it. Forrest: He was over it. So he was like what I was telling you earlier. I could've said anything to this guy, he was just ready to sell. Larry: Right. Forrest: So when dealers are right they're right, and when they're wrong all the talking in the world is not going to save a bad deal. Larry: That's right. You have me a little one liner that you heard and you live by. What is that in this case? Forrest: You can't say the wrong thing to the right person. Larry: He was not. He was ready, right. Forrest: You could've said anything to him. Larry: So how did you structure that deal? You didn't have to come out of pocket did you on that deal. Like pay for it and resell it. How did you structure it? Forrest: I had $100 escrow deposit. So in the real world there's $100 escrow deposit and you’re going to get it back at closing right. Larry: Right. Forrest: I put $100 down on the deal, and marketed the property to people that I knew. And I didn't blast it out I just marketed it out to people that I knew from my buyers list. Larry: Right. Forrest: Found somebody that wanted to hold it as a rental that’s what happened. Larry: That's awesome. Did you make a good lick on it? Forrest: I made a standard $5,000. Larry: Yeah that’s not bad is it? Forrest: It’s better than nothing. Larry: I love it man. Now if you’re doing seller financing or fix and flips, you got to fund your deals right? Forrest: That’s it. Larry: How are you funding your deals? Forrest: So I had to use private money in the past and I use IRAs now is what I try to use all the time. And I find the reason why I do that is because they’re going to get the same return on either money. But the IRA is less emotional for people. They can’t touch it, it hasn’t come out of their account or they haven’t taken it out of stocks and bonds and savings accounts. And the times that I’ve had people that had people that actually used private money, they’re really involved emotionally in the deal. And the IRA people are less emotionally involved with the script so better deal when you just have sitting there doing what it’s supposed to do according to your agreement. Agreeing they get paid when they get paid. Larry: For a start I wrote that down, IRA money is less emotional, which makes it easier to get doesn’t it? I never even thought about that. It’s like in the back of your mind you know that because they can’t touch it, it’s not like they’re writing a cheque for it out of their bacon account. Because that money they could spend for something else but their IRA money they must invest it right. Forrest: That’s right. Larry: Yeah. That’s really good. Man I love that. Forrest: That’s why I like the IRAs, I like that and the thing about IRAs financing is to find a big fish is not always going to happen. So you have to have a lot of relationships. So I'm funding two deals right now and I've had to go find two new lenders on these deals because all my regular sources have smaller accounts and they're lending to four or five people. And apparently there's a lot of flipping going on. Larry: It's the season right. Forrest: I guess so. It's like everybody’s money is in play right now. Larry: That's awesome. That's good. So how do you find private money? Forrest: Networking. So most of my money partners come from the local real estate groups, and the Financial Friends Network, that we both know about. Stuff like that. Larry: That's great that is really good. It’s great to be able to network with people and that's really your best source when you go to your REA group, or go to different organizations. Like there's different REA cruises, investing cruises and different events where investors hang out. You want to go where investors hang out right. Forrest: That’s right. And we were talking last night we had a real estate group in Richmond last evening. And the leader said, "The solution to everybody's problems s right here in this room." There was only 23 or 25 people. He said, "If you have money problems the solution is here, if you need a deal the deals are here. Everything is right. So just start talking to people and figure it out. And it's true I had several lenders that we're in there. Larry: That's really good. So you just let people know that you have deals. One of the things I've learned over the years is there's two things you got to have to make money in real estate. You got to have money and you got to have deal flow right. So you can provide the deal flow. There's other people out there that have the money but they don't have the time to go out and create the deal. So that's a marriage made in heaven right. Forrest: That’s correct. Larry: That's really good. Now you mentioned earlier that you found that last deal you were talking about, you found it on Craigslist. Not found it but he responded to your Craigslist ad. Tell us a little bit about how you market on Craigslist. Forrest: So I just put free ads in Craigslist and I just say, "Hey if you have a difficult situation give me a call and I'll take a look at it and I'll buy your property from you." Larry: So you're looking for distress homeowners. Forrest: Yeah I'm looking for people with a problem. Larry: Yeah okay. How often do you renew your ads? Forrest: So there’s a little game in Craigslist you can renew your ad with every 48 hours and then after 30 days your ad won't renew right. So all I do is-I hope Craigslist isn't watching but I have seven accounts. So three accounts I use for seller ads and I just renew every account every third day. So I always have ads to renew. So you can have as many Craigslist accounts as you want. And that way you're not repeating the same ad on the same account and they flag you and ghost you and all that kind of stuff. Larry: Right. Do many of your ads ever get flagged and deleted? Forrest: Once in a while but I think it's just other investors having a bad day. Larry: I'm going to tell you a little tip how to prevent that okay. Forrest: Yeah. Larry: Anytime you post a Craigslist ad, as soon as you post it you're posting your ad, when you hit submit it pulls up it says here's the link to your ad or click here to go to your account to manage your ads. That link for your ad, you need to click on that link about 20 times right. Because there's other investors that have notifications set up, keyword notifications and as soon as your ad hits, it comes up on their notification and then they click on the spam-not spam but what is it? Forrest: Spam stopper. Larry: Prohibited yeah ad and it gets a flag. but if you've clicked on it 20 times then whenever somebody in other words of an ad has been posted and there's been multiple people view the ad, right, I shouldn't say multiple people because they don't even track the IP address obviously. But if there's been multiple clicks on that ad and nobody has flagged it, and then all of a sudden somebody flags it, they won't do anything about it. But if there’s only been one or two people look at it and it gets flagged ten they'll delete the ad. It works every time. Now do you have a VA doing that for you? Forrest: I did and all VA’s are now credit equal right. So I had a VA from Pakistan and he liked to tell me how he wanted to do it. And I’m not built that way. So I think I didn’t want to use him anymore. So once you get the ads me like I run like 10 ads a day. So once you get them up it takes less than two minutes to actually renew your ads. So I just make it a part of my morning day of getting going in the morning. I just renew them and if I forget it I got Craigslist all the time and I just go and do it while I’m waiting for my food at lunch or something like that. It’s really not a time consumer for my day. So when I have to renew the ad, when I have to like delete the ad and repost it I’ll change the title. Larry: Right, just change it up a little bit. Forrest: So I don’t have like you go on Craigslist and you search for ‘we buy houses’ right. And you see like 20 of the same guy in a row no I don’t do that. Every ad’s got a different picture. So it’s not like they’re always looking at the same picture and they’re scrolling right through to somebody different. Larry: Exactly. And how many ads do you keep going at a time? Forrest: I have eight to 10 per account. So that’s eight to 10 a day so about 20 to 30. Larry: Wow. Now are all these ads to buy properties or some of them to build a buyers list? Forrest: Well I build a buyers list just organically through people finding the ads and saying, “Hey can you put me on your buyers list or can I put you on my buyers list?” So I don’t solicit for that. They just click on those ads saying that, “Hey I’m a wholesaler I just finished a three day class and I want you to be the very first one on my buyers list.” Larry: That’s awesome. Forrest: Yeah. So anyway, that kind of stuff. But I market for selling houses and I market for doing lease options on our houses and stuff like that. But I haven’t had any luck with that yet but I still market. I’ve had a lot of people hit but nobody that’s ever really followed through. And what I mean by that would be to go lease option a property and then sandwich the thing and wrap it into an option. So I haven’t had an experience with it yet but I do market for it because if this doesn’t work then Craigslist is free right. Larry: There you go that’s absolutely right. Now before you got really into investing you were a contractor right? Forrest: I am. Larry: How does that help you in investing? Forrest: Well I don’t need third party help with going in and analyzing a deal as far as the rehab or what’s involved with whether the property is right or not. It’s fore sighting through reason and is that really mold why is that wire sticking out of the wall looking all funny kind of stuff? So we kind of identify that without having to pull in another contractor. Because a lot of people say, “If you don’t know call a contractor you get a free estimate.” But it takes time and it takes somebody else’s time and everybody is busy. Larry: Do you ever see like some of this stuff like you go to look at a house and maybe there’s a wire hanging out or something. And there’s some stuff that might scare away the average investor but you know, hey that’s no big deal right. Forrest: That’s exactly it. Yeah that’s the best part it’s like somebody will like underneath their window some will see some mold or something and be like, “Oh my gosh this thing had mold I’m out of here.” Larry: No big deal, right. Forrest: No big deal. Or broken windows or something like that and people will be like, “Where will I get that?” so yeah certain things scare people like dry wall cracking, wires hanging out of the wall or anneal board got ripped out or something like that stuff. This scares people. Larry: So what would you say to somebody that’s a non-contractor that might help them to understand better repairs instead of having to pay for an inspection or try to find a local contractor to go out and give them an estimate or whatever? Well what are some ways that the average newbie investor or maybe even experienced investor can learn a little bit about contracting without having to go get their license, like you? Forrest: I would say use your free resources like YouTube. I mean I use YouTube all the time for things that I don’t know. So I’m looking at a house right now that’s got a stair issue. The stairs weren’t built to code. So I’m not a framing contractor so I just went on YouTube and figured out how this code is to replace those stairs and what they really need to be to meet code and everything. I use that resource all the time and just everything is on the internet. You just figure it out, you ask questions that’s one thing my father’s taught me. I really love the wisdom of my father but he always says, “Ask questions, just ask questions all the time.” And he would go to like a pre-meet meeting or something people would be like, “Oh gosh Dave’s got another question.” But he didn’t walk away with unanswered questions and doubt. So just ask questions and you talk to people long enough the truth will come out. You can weed through the sales and [Inaudible] [20:18] and find the truth if you just talk to someone along the way. So if you’re doing that that’s one thing or just write them down and go home and go on YouTube or go on your Google and find your answers, because it’s all there. And you can just leverage yourself for that and it doesn’t cost an appraisal cost. But sometimes you have to do an appraisal I mean I’ve done it. Like our first flip we paid for an appraisal because we wanted to know exactly what the property would sell for and what not to do. So for example we had this property that they had changed their garage into a living space. So the appraiser came out and said, “Listen if you keep it as a living space, your square footage isn’t going to match the neighborhood, your finished square footage. So the best thing to do would be to say you wanted to spend $1000 on the garage door and put the garage door back and have a garage for somebody to pull into because then your square footage will match everybody else same house and property. So you’ve saved yourself five or $6000 not having to finish up this space.” Larry: Right. Forrest: And we did and it worked out perfectly. Larry: That’s great. Forrest: Local area experts for information. Larry: Good how do you figure the ARV without getting an appraisal? What do you do to pull comps? Forrest: I go on Zillow, that’s where I go. So I go on Zillow, Realtor, Trulia and they all have basically the same numbers but I’ll average them out. So I start with the Zestimate, I start with the real estate assessment and if the house is not on the market, Realtor will give you an estimated value. And then Trulia will be close to Zestimate because they’re owned by the same company I believe. And then you check the crime rating and then I go back to Zillow and I start counting around the little yellow dots for sold comps within the last year. I go out about a year and that will give me an idea. That gives me an average of what I can sell it for. Larry: Right, that’s good. That’s really good. I wanted to ask you about, I know you’ve got one of the website templates that we have as an Inner Circle student and you’ve done a lot with that website. I mean you got your FDO really jacked up and you’re getting leads from that. Tell us a little bit about your website and what you’ve done and how you’re generating traffic organically which basically means if you guys don’t understand, it means without paying for it, right? Forrest: Care I got it when we did your Inner Circle when you got a Care site you were just launching that. Larry: Right. Forrest: So you said we were the first group that has access to that. So we took that site and didn’t do much with it so it just kind of sat there. And I did a couple little things personal customizations like a couple of pictures and changed our name and stuff like that. And then December last year I got on to Trevor who is the co-owner of Care. I got on to his podcast and if you’re not on his podcasts I mean you’re really missing out because- Larry: It is great info, it really is. I watched one just yesterday. Forrest: He’s an inspiration I mean just his life he’s just an inspiration. And he’s one of those guys that didn’t take life for what it was giving him at the time. And decided he wanted to make life what he wanted it to be. So I really just resonated with him as a mentor on the podcasts. So then late last year he kept talking about if you’re not on page one Google, it’s basically you’re in foul. It’s kind of what he said, used that general word. So I took his three lead per day training like I spent in the Christmas time taking this Three Lead Per Day Training. And then I got through the training and it just got to where it was consuming too much of my time. So I got a bone thrown at me for a VA that does SEO, White hat SEO. Larry: Yeah. Forrest: The right kind of SEO. Larry: That basically means with no bad ways of doing it right. Forrest: Not tricks and schemes what Google is going to flag and you going to compromise very bad down the line. So I paid for him to take the Three Lead per Day training and he was already experienced SEO guy. But Care has its own way and there are proven results. I mean if you Google search any investor phrase, like ‘we buy houses’ or summer house [Inaudible] [25:05] in any market in America, Care sites are the top sites. And it’s just the way it is for a national franchise. So they know what they’re talking. So I paid the SEO guy to take the course and just paid him hourly and I gave him his own log in through Care, they do their own log in. and then he learned a few things and then he said, “Yeah I picked up some tips, out of [Inaudible] [25:31]. So for the last three months he’s been working for me doing it. And when I started I was at the bottom of page one and now I’m in the top half of page one. Larry: That’s awesome. Forrest: And he helped me with some other keyword phrases. Larry: That’s really good man, that’s good. In fact whenever I do a presentation to sell those website templates which are through OnCare, but we offer our own templates to our students it’s based on our strategies. Whenever I do that I give a screenshot of your website and your testimonial about it. Forrest: Wow, thank you. Larry: To show people because man you can do it and you had somebody else do it for you. Forrest: Well I started it and then it just got way beyond my level of competence and actually to be honest my level of desire. I had no desire to be that into the computer world. Larry: Right I get that. That makes sense. Well man you’ve shared a lot of really good information and I really appreciate I’m really proud of what you’re doing. I’m excited for you. Let me ask you a question, what would you say to somebody out there that’s just thinking about maybe getting started in real estate or maybe they’re not really sure what direction they want to go? Or there’s so much stuff out there like you mentioned YouTube a minute ago. Man there’s so much training and education on YouTube there’s so much everywhere, webinars this or that. It’s tough because you got to get some clarity and you got to put the blinders on and figure out here’s what I’m going to do and I’m going to focus on this to move forward. So what would you say to somebody out there that’s just maybe they’re even overwhelmed with everything but they just need to do that deal? Forrest: Well needing to do a deal and needing to do it right are two different things. So first thing that I say is find a mentor and find a good mentor that you can trust. And I said that last night I was at the real estate group. And there was a new husband and wife there that were just getting in and they were just figuring out what they wanted to do to start. And my first question to them was, “Who’s your mentor?” and they said, “We don’t have one.” And I said, “Well give me a call and I will go through some names of people that you can research and find the ones you trust.” Larry: Right. Forrest: That’s it. Anybody can learn how to do something right, but there’s no shortcuts to success. If you go like me in the beginning you make some bad habits and you have to start over and you have to unlearn and unlearning sometimes is more difficult than just learning in the beginning. Larry: That’s true. Forrest: So yeah. So if you can just learn it ethically, morally and not get greedy but definitely be persistent in your goals, I think you can find a good mentor and that’s what I tell people. Larry: That is good man that is good. Well I hope I’m on that shortlist. Forrest: You are on that on that shortlist. [Inaudible] [28:28] don’t worry. Larry: I love it man. So if somebody wanted to reach out to you, whether it be maybe help you with some deals, partner with some deals, give you some deals or fund some deals or whatever, how would somebody reach out to you? Forrest: They can call me, my cellphone number is 783-786-4419 or they can reach me on my website is forrestbuyshouses.com and that’s with two ‘r’s. So forrestbuyshouses.com. Larry: Good, that’s your website. Forrest: That’s my website. Larry: Awesome so they would be able to go and see your website in action right? Forrest: In action and right at the top so phone number and then you got contact forms, that kind of stuff. Larry: That’s awesome man, that’s really good. Well I really appreciate you taking the time to do this. I know it was kind of short notice but when I got your email earlier I’m like, “Man I got to get you on here.” I got to get you on here because I’m just so proud of what you’re doing I’m excited for you. And I wish you continued success. Forrest: Thank you. And to further back to what you said earlier about those emails is I paid for it right. Trying to get my money’s worth. Some people you pay for something you want to get all your money’s value. That’s what the money is about, is having somebody you can reach out to. Larry: That’s true. And I don’t think I’ve never not answered a question you’ve had or responded to an email. Forrest: Well sometimes it’s a little pat of the back like you’ll be fine, go ahead. Larry: Well a good mentor knows when to give you a pat on the back or a kick in the butt right. Forrest: Sure, that’s right. Larry: That’s good man. Well good be sure to log in to that members areas like I told you, you told me you hadn’t done that yet. Forrest: Alright yeah. Larry: So I want you to get in that members area there’s a lot of good information in there that’s what we’re doing right now in today’s market. I’ve added a bunch of stuff to it okay. So make sure you get in there and check that out. And thanks a lot man, I really appreciate you being on okay. Forrest: Thank you. Take care. Larry: Alright buddy you too. Talk to you later.