What type of investor are you? In today's show, Larry and Kandas discussed how you can determine the type of investor that you are. Larry also shared the story on how he lost a huge amount of money and the lessons he learned from that experience.
Welcome to BRAG Radio which is all about being rich and generous. Every week your hosts Kandas and bestselling author Larry Goins will show you how to be rich and generous by investing in real estate. Broadcasting around the world on the BRAG Radio Network from the flagship station WBT in beautiful uptown Charlotte, here are your hosts the rock stars of real estate; Larry and Kandas.
Larry: Hello, hello, hello, good afternoon. How is everybody doing?
Kandas: How are you?
Larry: I’m doing excellent, doing awesome on this fine Saturday afternoon.
Larry: Sardy. It’s South Carolina for Saturday.
Kandas: That’s Larry for Saturday. Everybody in South Carolina does not talk like that
Larry: I think I have my headphones on backwards. Yeah I have my headphones on backwards. No wonder it doesn’t feel right.
Kandas: Is this your first time?
Kandas: What’s going on with you?
Larry: It’s only my 110th episode.
Kandas: You’re late.
Larry: Thanks to Lynn. I know what episode I’m on.
Kandas: You’re late today, your headphones are on backwards.
Larry: I still made it on time though as far as you know.
Kandas: On time is for who?
Larry: Isn’t it four o’clock?
Kandas: Well still well we made it on time for the air but yeah. You were close.
Larry: Okay good.
Kandas: You had no prep time. You know this is when we plan what we’re going to do.
Larry: Yeah like while the music is playing.
Larry: I know, right.
Kandas: So y’all are in for a big treat today.
Larry: No we got some stuff planned, we got some stuff.
Kandas: Hey nobody can ever say that we don’t know how to wing it.
Larry: That is so true. Someone has tied my thing and I’m not here- oh there it goes.
Kandas: They’re trying to help you. They’re just trying to [Inaudible] [01:42] you moving around too much.
Larry: Maybe that was Chad, was that you Chad? Did you do that?
Chad: No I do not know how to tie knots.
Larry: You weren’t a boy scout, were you?
Larry: I hear you. Someone had tied a big knot in my headphone cable. Maybe someday we’ll have wireless.
Kandas: This show is about real estate. If this is your first time listening this is BRAG Radio all about investing in real estate to be rich and generous. Real estate is our tool and that’s what we’re able to teach.
Larry: Yeah follow us on Facebook, facebook.com/larryhgoins. You can follow us and get all kinds of updates, we actually post replays of the show there as well, right Kandas?
Kandas: That’s right. We do you can follow us on any kind of social media platform though. You’ve got a Facebook handle, a Twitter handle a Google Plus handle.
Larry: So you can get out there and put it all over your Facebook.
Kandas: He was picking on me- was it last week? When were we in St. Louis? It wasn’t last week.
Larry: I don’t know they all run together.
Kandas: They do.
Larry: I opened my wallet the other day and I had six hotel room keys in my wallet.
Kandas: That’s sad.
Larry: It is sad, it’s very sad.
Kandas: Anyway Chad he was giving me a hard time because I used the word handle with Facebook and other social media platforms, like the CB people used to do.
Chad: Oh yeah breaker-breaker.
Larry: And my response was, “You got [Inaudible] [03:04] on good buddy come on.”
Kandas: It fits though, I mean you got a handle?
Larry: So get out there and follow our Facebook handle at facebook.com/larryhgoins. We do teach people how to invest in real estate, we teach and coach and mentor people from all over the country even around the world. We actually have students in the US, Canada, Australia, New Zealand, Japan, China, Israel, the Philippines, Ireland, Chile and even Denmark. And I used to think that was a city in Orange County.
Kandas: You breathe in between some of those so it doesn’t sound so rehearsed like could you not say it-
Larry: It’s just I’ve said it so many times.
Kandas: I know you say it probably I don’t know, if you travel then you probably say it six times a week.
Larry: I do, maybe. Depends on how many speaking engagements you have me attend each week.
Larry: Right. So yeah I do travel around the country speaking, teaching, training at conventions and expos around the world that sort of thing. I don’t like going around the world though, it’s too far. Takes too long I like a short flight.
Kandas: It’s too tiring.
Larry: I like a short flight.
Larry: I like a short flight. So Kandas what are we going to talk about today? We did plan a show today, what are we going to talk about today? When I say we did plan a show today, normally we don’t really plan a show, right.
Kandas: Right. We don’t normally plan a show. And when we say plan that’s a very loose term even today because there’s not a lot that can hold his attention for very long term as you that listen to us on a weekly basis well know. So as far as the extent of planning with air quotes that are watching us on the thing, it is Four Keys to Know your Type.
Now that could be a little interesting couldn’t it.
Larry: Your type.
Kandas: Your type.
Larry: This is not a dating show.
Kandas: So let me be more specific.
Larry: What is your type?
Kandas: Let me be more specific. Four keys to know they type of investor you are.
Larry: Right. Now that makes more sense, right what type of investor are you? Is that what you’re trying to say?
Kandas: Yeah that’s what I’m trying to say.
Larry: Okay I’m glad you clarified.
Kandas: The people got it. The people understood.
Larry: I don’t know, four ways to know your type?
Kandas: Your type yeah.
Larry: Your type, what type of investor are you. Because Kandas you know this, we get a lot of question of people that ask, what should I do, what kind of investing should I do? What should I start with? And you know what, most people and I know you’ve seen this too Kandas, most people think that the first thing that they should is go do fix and flips, right.
Kandas: That’s what’s on TV.
Larry: And why is that? That’s what’s on TV.
Kandas: Yeah that’s what’s everywhere. Everybody talks about fix and flips and you can remodel this 400sqft house in 30minutes.
Chad: And make tens of thousands of dollar.
Kandas: And there you go Chad exactly. You’ve seen them haven’t you?
Chad: Oh yeah.
Larry: And have people fighting over your house at the end.
Larry: I want it, no I want it, no pick me. Now there are certain areas of the country that actually that happens where people are fighting over deals and they’re bidding, and I remember-
Kandas: We’ve even created that when we’ve been selling houses too. We have done open houses where we take bids for the house to see who gets the contract.
Larry: That is true. And then a lot in our marketing we show people how to have your house sold in a couple hours.
Larry: And you don’t have to show it, right.
Larry: You have them bidding against each other and bidding the house up and that’s one of the things that we teach in my books, right.
Larry: That’s exactly right. So we wanted to do a show today about what type of investor are you, okay? And it’s really based on what position you’re in. where are you coming from? I tell people, because a lot of people say, “Well I got to wait till I have some money, I got to wait till I have more time,” or “I’ve got to wait until my credit’s better, I got to improve my credit.” Or I’ve got to sell this or whatever it is.
And I tell people, “Start from where you are right now, because there’s people who have money and there’s people who don’t have money. I know some people in fact I remember when I was first getting started I did some of my best deals.
Kandas: Long time ago.
Chad: Back in the thirties.
Kandas: Chad that’s awesome.
Kandas: Yay Chad.
Larry: I’m going to prove something to Chad.
Kandas: He’s got nothing, he got nothing don’t worry. He don’t even have a pin.
Larry: I don’t have anything. I’m going to grab your pin. Hey there’s a sharpie I can grab that right here in just a second.
Kandas: Be careful somebody else-
Larry: I thought Chad was pushing the button to talk that was my chance to grab the sharpie.
Kandas: Be careful or somebody will tie your headset back up. So you can’t move around.
Larry: I know right. I know. So I’ve had a lot of people that have asked me and I’m sure they’ve asked you too Kandas, about well where do I start.
Kandas: All the time people ask me stuff all the time.
Larry: Yeah I know but I’m talking about real estate, right. So what we want to do in this show is go over wherever you are, give you some ideas and some resources and some things that you can think about to actually get started where you are. I mean I’ve had people that tell me, “There’s no way I could buy a property. I have bad credit, I have no money and I have no job. And I have no time or I’m taking care of a sick parent or I’m working 80 hours a week right.
Kandas: That’s right.
Larry: Yeah there’s no way that they can get started. And back before Chad interrupted me by saying in the thirties, I was going to say, where I was going with this was I did some of my best deals when I had no money. I guarantee this, I have lost more money now that I have money than I did when I had no money.
Kandas: That’s sad.
Larry: I had nothing to lose back then, right.
Kandas: That’s sad.
Larry: I’ve lost as much as $75,000 on a deal. Two separate deals I lost about $75 grand.
Kandas: No don’t look at me like I don’t know.
Larry: I know you know, you were there.
Kandas: I was there.
Larry: You were there you’ve seen it happen right.
Kandas: We went to the house.
Larry: You’ve seen me yelling and kicking and screaming and going on about it.
Kandas: I am one of the few people that have seen that side of you yes.
Larry: Exactly. But what we’re going to do is- I can’t believe it’s almost time for a break. But when we come back from the break, here’s what we’re going to do, we’re going to talk about I don’t care if you have money or don’t have money, if you have time or don’t have time, if you have credit or don’t have credit. We’re going to show you what to do and how to do it to get started. In the meantime here’s Kandas.
Kandas: Why do you make it sound like it’s some kind of introduction like that? You guys give me a call 877-LARRY-GO or text the word BRAG to 803-897-6063 to get your digital investors’ kit. Let me know if you want to take an office tour to pick up the physical kit. You can also email me at bragradio.com give us a call at the list 877-LARRY-GO.
[10:00] [Break] [10:15]
Kandas: Welcome back to BRAG Radio, all about investing in real estate to be rich and generous. This is Kandas.
Larry: And Larry, here for your listening pleasure.
Kandas: Couldn’t get rid of him, sorry guys couldn’t get rid of him during the break so he’s back.
Larry: How do you mean?
Kandas: I kid. They love you.
Larry: That’s like the guy that came up to you at the event one time and said, “Kandas so when are you going to have somebody else on your show besides Larry?”
Kandas: I know right.
Larry: I’m like, “I’m standing right here.”
Kandas: I need more people to ask me that though so we can say that in different ways. Hasn’t happened since the one guy. But it is something to talk about.
Larry: That’s true. Now on this show today is what kind of investor are you based on where you are right now whether it be time, money, credit, whatever it is? What can you do to get started okay? Right, that make sense?
Kandas: Before you go into what to do to get started you made a comment in the last segment about how you lost $75,000.
Larry: Yes I did actually a couple of times.
Kandas: It’s actually more than that. I was going to say, because I know that the Liberty house was $70,000 as well.
Larry: That is true.
Kandas: He’s stepped away.
Larry: It is true.
Kandas: So why don’t you tell everybody about that, about those two things? I mean the Liberty house I could tell but we’ll let you tell it. You’re so much more expressive. And then the first $75,000.
Larry: Well I tell people this all the time, if you do enough real estate you will lose money on a deal. It’s going to happen.
Kandas: Yeah can’t win them all.
Larry: But I also tell people, make sure your first deal is a homerun, that’s very important. Don’t get into the mode of I got to get a deal, I got to get a deal. No you got to get a good deal.
Larry: Okay. That’s very important.
Kandas: Now with that said.
Larry: Now with that said, the one property that Kandas was talking about was in Liberty South Carolina. We bought this house, it was a HUD house. We were going to wholesale it but a person who worked with me at the time talked me into doing a fix and flip. And if you all listen to this show you know I hate fix and flips.
Kandas: It was the last one we ever did.
Larry: I hate them. It was the last one I ever did. So I hate fix and flips. So anyway we went in and we remodeled this house and put about $30,000 into it. And this was probably about what three, four years ago, something like that.
Kandas: At least three yeah.
Larry: And it was in the winter time, I think it was in January or February. And this coming weekend we were going to have an open house right.
Kandas: It was ready.
Larry: Oh yeah.
Kandas: It was done.
Larry: I mean they were just cleaning up.
Kandas: The fix was done.
Larry: Yeah it was ready. I was excited, we were having an open house baby this thing’s on sale, right.
Larry: I mean had new everything.
Kandas: In a great neighborhood it was an awesome real thing.
Larry: Yeah it was like a $300,000 house. So anyway a couple of days before the open house, this was like a Wednesday or Thursday early in the morning, we had really cold weather right.
Kandas: That winter was cold.
Larry: I started to say a cold snap.
Kandas: We had a cold winter that week.
Larry: We did and it was really cold I mean it was like record lows, right.
Kandas: For an extended period of time mind you.
Larry: I get a call from the neighbor right, that’s across the street. And listen, whenever you’re doing a fix and flip or you’ve got a property, you always want to go around and talk to all the neighbors, “Hey if you see anything going on over here, let me know. If you know anybody looking for a house let me know.”
Anyway so the neighbor across the street calls me up says, “Larry I’m not really sure if you need to know about this or what’s going on or if you know about this, but I just noticed that in your house all of the windows are fogged up and there is water running out the front door.” I’m like, “This can’t be good.”
Kandas: This is not good, none of that sounds good at all.
Larry: And this is a two-storey house, right.
Kandas: Yes it was a two storey house.
Larry: So Liberty is-
Kandas: Beautiful house, the house was beautiful.
Larry: I know right. So Liberty is- it had a pool in the backyard.
Kandas: Had a pool yeah.
Kandas: Deck, everything it was nice.
Larry: Yeah sunroom all that good stuff. Anyway so and that house is about an hour and 45 minutes away from us right. So I call up a contractor and that contractor is probably an hour away. So anyway they get down there, and what happened was because it was so cold, one of the pipes in the upstairs hall bathroom bursted.
Kandas: Bursted, it bursted Chad.
Larry: It bursted. It froze, right.
Kandas: And bursted.
Larry: And bursted. So anyway, how are you supposed to say that?
Kandas: I don’t know.
Chad: It burst.
Larry: It bursts.
Chad: Just burst, it burst.
Larry: It burst.
Kandas: See now if I’d said bursted all that’s a Kandasism right there and that’ going in the notes. But him saying it is fun.
Chad: You can say it leaked.
Kandas: A leak is an understatement though, like bursted is-
Larry: It quit working-
Kandas: I kind of get you the dramatic effect of what really happened.
Chad: It flooded.
Kandas: Yeah I mean you got to know though if you think about it, this is an upstairs floor pipe, right. So for there to be enough water to come downstairs to the point of it coming out the front door and windows fogged up.
Larry: That’s a lot of water.
Kandas: On both floors, that’s a lot of water.
Larry: So we finally got there right, and the guys got in the house and found out where the leak was. It was upstairs hall bathroom on an outside wall.
Kandas: Oh my God, it was awful.
Larry: And the problem is it had already done so much damage that on the upper level they had to take all the flooring up, they had to take the sheetrock out from about three feet down. You’ve seen houses that have been in a flood before, right. About three feet up, they have to replace the sheetrock. But now on the bottom floor it was a whole different story. They had to take up the sheetrock on the walls and the ceiling.
Kandas: And the floor.
Larry: And they had to take up the floor and the subfloor all the way down to the fore joist and replace everything. And we had ceramic tile, we had hardwood floors down there. We had to take all that up.
Kandas: It was ridiculous it makes me sick to think about it.
Larry: Now here’s the worst part of this, okay, this was a learning experience for me okay. This was a very expensive seminar because-
Kandas: This is why you allow somebody else to make the mistakes and you just follow their lead without falling into the same-
Larry: Learn from my mistakes right.
Kandas: Yeah without falling into the same pitfalls.
Larry: So what happened was, what it was, was-
Kandas: Say what had happened is.
Larry: So what happened was the contractor, he left the water on and the heat off.
Kandas: It was a bad combo.
Larry: Now I call the insurance company okay, and here is what the insurance company said, they said, “Our policy does not cover any damage if a pipe bursts,” which is what she said I’m guessing. But insurance company does not cover any damage to a house because of flood if the water is on but the heat is not.
So and think about it, this is the contractor that did this. Now what does he have? He’s got a $50,000 truck and about $5,000 worth of tools that he owes probably $60,000 on right.
Larry: So what can I get out of him? Nothing.
Larry: Zero, zip, nada, right. So that was a very good learning experience. I had several other houses right then that I had under rehab and I made sure that during the winter, somebody went there. And if the temperatures were supposed to be very cold I would send a realtor by or somebody by to look at the property and take a picture of the thermostat and show me what the temperature was in the house before that night. Is that crazy or what?
Kandas: No it’s not crazy.
Larry: I know.
Kandas: It’s realistic, it’s like what has to happen.
Larry: The second one and we’ve got to get into this because we’re already running out of time, we got a couple minutes left. But the second one was I owned the Shoney’s Restaurant in Greensboro, the one right off the interstate I used to own that Shoney’s restaurant. And I had it under contract to sell and I was going to make I don’t know maybe $100,000 or so something like that.
But right before closing Shoney’s sent a professional lease negotiator, they had them contact me. And told me that Shoney’s was in financial trouble and they were shutting down a lot of restaurants and renegotiating leases. So naturally I had to disclose that to my buyer. So when I disclosed it to my buyer I thought they were going to walk.
But they said, “No, I tell you what, we’ll still close but you’re going to have to give us like 150 or $200,000 discount.” Whatever it was I went from make about 100 to 150 to losing 75 right.
Kandas: Right yeah.
Larry: So I really lost a lot more than that, right.
Kandas: Right yeah.
Larry: But we got one minute left to this segment can you believe it?
Kandas: I do believe it, I know how much you talk. You think you have all this time but you don’t.
Larry: But here’s what we’re going to do, when we come back first thing we’re going to talk about is how to do deals if you have no money right. Because I know a lot of people getting started have no money and you need to get started right away and I want you to get started right away. But there are certain things you can do to get started in real estate even if you have no money, right.
Kandas: Okay. That’s what you want to talk about, no money when we come back.
Larry: That’s what we’re going to talk about when we come back.
Kandas: Alright. Well right now you guys give me a call, 877-LARRY-GO, 877-LARRY-GO or text the word BRAG to 803-897-6063 to get a copy of Larry’s latest book HUD Homes Half Off which goes through our process with working with HUD homes. And also the Real Estate Day Trading book that goes into how to buy and sell a house same day using the internet. We’ll be right back.
[20:04] [Break] [20:23]
Kandas: Welcome back to BRAG radio.
Larry: What’s happening?
Kandas: How are you doing?
Larry: I’m doing good. So we’re talking about what type of investor are you based on your situation okay.
Kandas: Well that’s what we’re supposed to be talking about we haven’t gotten into it yet. So
Larry: I preempted the last time we were rolling.
Kandas: But those of you that are just coming in or tuning in, if you haven’t heard the first two segments of the show today, make sure you go to bragradio.com and pull the whole show. Because we did go through some challenges that we’ve had on two different properties, where the two properties where Larry’s lost the most money. So go back and make sure you listen to what him the biggest loser.
Larry: Thank you, thank you very much.
Kandas: I’ve been thinking about that since the whole segment trying to figure out how to work that in.
Larry: How’s that working out for you?
Kandas: It worked, I got it in. third segment but I got it in.
Larry: But the good news is, listen, I’ve done enough deals to where losing $75,000 on one deal didn’t put me out of business right.
Kandas: And that’s what’s important, is being able to recover from something like that or to have that happen because like you said in the last segment, if you do this long enough you’re going to lose money.
Larry: That’s so true.
Kandas: But being able to recoup and recover and not have like a jaded attitude toward real estate in general is important.
Larry: That is so true.
Kandas: So are you going to be able to tell them?
Larry: Yeah I want to jump into this.
Kandas: Four keys to know your type.
Larry: so guys listen to this, there’s a lot of different types of investing out there, there’s wholesaling, there’s fix and flip, there’s lease options or landlording, there’s seller financing. And what I want to kind of go through is talk about based on your own situation, what type of investing could you or should you do right.
What could you or should you do right? So if you are starting out, let’s just take wholesaling for example okay.
Larry: With wholesaling, now you can do wholesaling if you have money, right. Now if you have money, it just means that you could broaden your source of deals. In other words, if you have no money and you want to wholesale, well you can do assignments. Which basically means you go out and you find off market properties right. Bandit signs, craigslist, whatever.
You find off market properties and then you get them under contracting and then you assign the contract. You can get started with as little as $100 right. So assignments you can do that with no money and you can do wholesaling. Now if you have money, right then you could buy HUD properties or you could buy MLS properties and wholesale those. And if you had to close on it, you have the money to close on it, right Kandas.
Kandas: That’s right. You got it right there available.
Larry: Exactly. Now what if you have no money but you have credit right? If you have no money but you have credit, well you can get lines of credit either at your bank or a home equity line of credit or unsecured business lines of credit.
We can help you with that just give Kandas a call. And we’ve got sources for that. So if you have no money but you have good credit you can get lines of credit or get sources of credit, and then what you can do is use that to go out and buy HUD houses or MLS properties in addition to assignments right.
Larry: But if you have no money and you no credit right and you still want to do HUD and MLS then what you’re going to have to do is find private money right. You’re going to have to find private money which means just find people who have money, right and they’re willing to lend it to you short term so you can buy a property and turn around and resell it.
Even if you’re buying a property for say $40,000 and you want to turn around and wholesale it for $50,000 right. Now you’ve got a buyer lined up, you’ve got the property under contract for 40 you got your buyer lined up for 50. But you have no money and you have no credit, go find somebody that has money.
And say, “Hey look, I’ve got this deal under contract for 40 and I’ve got it sold for 50. I’m getting ready to make 10 grand, how about I give you $2,000 to use your money for a couple of days? Right until I close.”
Kandas: Now how long-you say a couple of days, what depicts the difference then? That sounds like it would be transactional funding instead of like private money.
Larry: Well it could be private money, it could also be transactional funding. Now transactional funding is money loaned to the actual transaction when you’re buying it and selling it the same day.
Kandas: They’re very short term yeah.
Larry: With the same day.
Kandas: 24 hour term.
Larry: Yeah. But if you needed the money more than that maybe a few days or a week, then you could use private money right.
Kandas: Got you, okay.
Larry: And wholesaling is something you can start with very little experience okay, very little experience right.
Larry: So you can do wholesaling if you have no money, if you have money also. You can also do wholesaling if you have no credit or if you do have credit right. And you can do wholesaling if you have experience or if you don’t have experience. A lot of people think that wholesaling is just the way to get into the business and then you don’t do that anymore.
Kandas: That’s not true I mean we have a whole model of ground wholesaling, nothing but wholesaling.
Larry: We call it real estate day trading, I wrote the book about it.
Kandas: That’s right yeah.
Larry: So wholesaling is not just a way to get started, it is a business right. It’s a business buying and selling houses and we’ve done as many as I think 23 deals in one month before right.
Kandas: I think that’s about right yeah.
Larry: Yeah so in fact most of those were HUD couple of years ago. anyway depending on whether or not you have money you can do wholesaling, whether or not you have good credit or bad credit, doesn’t matter you can do wholesaling even with experience. Now the other thing that does require is it does require some time right.
Because you’re going to have to make offers, you’re going to have to market, you’re going to have to find properties whether it be if it’s HUD and you got to line up your money or if it’s MLS and you got to line up your money, that’s fine but you also got to make offers on those. Now if you go into off market properties you got to market for those.
Larry: You got to run Craigslist ads and say I buy houses any condition anywhere, cash. You’ve got to search other Craigslist ads, you can put up signs for birddogs or recruit birddogs on craigslist. We recruit them on our website as well at investorsrehab.com. Also you could do direct mail, there’s a lot of people that mail absentee owners, vacant properties, out of state owners, people who own a property in one state but live in another state.
A lot of time times they’re motivated sellers, they don’t want to keep the properties. You can mail to pre-foreclosures, to probate people who have recently passed away, you mail it to the executor of the estate or whatever that the term is, the person in charge.
Larry: Personal representative or something. So those are all different ways you can do direct mail. Also a really good source now is Facebook, Facebook Market and running ads on Facebook and joining Facebook groups. Those are all great ways to do deals when you have no money, no cash and all that stuff.
Kandas: Do you think anything that’s happening on Facebook now is going to change the way that the marketplace or the way the ads and things work?
Larry: Well I think one of the things that Facebook has already put into place is they have a thing called Custom Audience where you can upload a list and then like if you have a list of customers, you can upload that list and they’ll find all their contact information on Facebook and then they’ll start marketing to them on Facebook.
And the thing that they’re going to start doing that they’ve just started implementing is you have to prove that you already have a relationship with those people and they’ve opted into your website or given you permission. So that is something.
Kandas: Before you can go to the list.
Larry: Before you can do that, you’ve got to check a little box and say that. Now let’s talk about the next model other than wholesaling. The next model would be fix and flip okay. That’s what you see a lot on the TV shows right is about fix and flip investing. Now fix and flip investing means you’ve got to find a good deal right.
You have to close on it when means you got to have the money right. And then you got to be able to keep that property for 60, 90, 120, 180 maybe a year before it sells right.
Kandas: Depending on how long your rehab is yeah.
Larry: Right. So having said that. You’ve just about got to either have money or have access to money, does that make sense?
Kandas: Yeah it does. Because these holding costs are going to cost money, the rehab is going to cost money.
Larry: That’s true and there’s always going to be surprises in the rehab right.
Kandas: Always going to be surprises.
Larry: Always. So let’s just start out if you have no money and no credit okay. If you have no money and no credit, then you’re obviously going to have to go get a lone with somebody or get private money. Now if you have no credit or bad credit, you can’t go to a bank and get a loan right. And most hard money lenders now they do require you to have at least decent credit right.
Kandas: Right, the ones on there.
Larry: Right so then what you’re going to have to do is either bring in a partner or you’re going to have to get a private money lender. And there’s a lot of different source for that, and I’m going to share with you when we come back from the break some different things that you can do to be able to do fix and flips whether you have credit or no credit or whatever, right Kandas?
Kandas: Okay. So all of that sounds great we’ll be right back to talk about all of that. In the meantime give me a call 877-LARRY-GO, 877-LARRY-GO or text the word BRAG to 803-897-6063 to get our digital and investors’ kits into your email with Larry’s latest book, copies of HUD Homes Half Off and Real Estate Day Training. We’ll be right back.
[30:16] [Break] [30:29]
Kandas: Welcome back to BRAG Radio, Chad’s so encouraging during the breaks.
Larry: Leading the world to be rich and generous.
Kandas: Leading the world to be rich and generous.
Larry: There you go, that’s what we’re all about, teach you how to invest in real estate and go out and be generous with your blessings to others. We’re talking about-
Kandas: We are talking about what type of investor are you?
Larry: Right, based on your current situation whether you have money or don’t have money, you have credit or don’t have credit, you have time don’t have time right.
Kandas: Would any kind of mix much of the credit and/or no credit money?
Larry: I have credit but no time, I have time but no money, I have credit but no time right.
Kandas: All of those things.
Larry: So there you have it.
Kandas: We were only speaking for it this-
Larry: Wholesaling it the broadest one right.
Kandas: Broadest one.
Larry: If you have no credit, no money not much time you can do wholesaling. Now it does require some time. Now we were talking last segment about fix and flip right. Fix and flip you are going to have to have some money, it doesn’t necessarily have to be your money.
Kandas: Your money.
Larry: You could bring in a partner, you could bring in a cash partner, a credit partner, you could use a credit card, you could use an unsecured line of credit, you could use a home equity line, am I in your way.
Kandas: No you’re not.
Kandas: Just trying to find my shoe. You know it’s flip flop weather around the Carolinas now.
Larry: I know right.
Kandas: So we come in here and my flops fall off.
Larry: There you go.
Kandas: That sounds bad.
Kandas: No I can’t reach it.
Kandas: I don’t have anything though here I got it.
Larry: Kandas can you go barefooted for a few minutes?
Kandas: I got it.
Larry: Instead of trying to stretch away under the table?
Kandas: I got it. You better have rope, you’ve got the rest of this one and two more models.
Larry: I know right. So we’re talking about fix and flips this segment. And with fix and flips you are going to need some money but like I said it doesn’t have to be your money right.
Larry: So what you need to do is find some sources out there, and there’s a lot of source in my book. If you call Kandas, if you call during one of the breaks 877-LARRY-GO you get a free copy of getting started in real estate day trading.
Kandas: I’m not going to be able to answer you but I will call you back.
Larry: There’s a lot more of them right, in the book and we’ll give it to you absolutely free okay. You can buy it in the bookstores but just grab it for free. But anyway, with fix and flips you are going to need some money right. So you’ve got wholesaling, you’ve got fix and flips. Let’s talk about landlording okay.
Now if you’re going to be a landlord, alright, that means buying a property, fixing it up, renting it out and keeping it long term. So just like fix and flips you’re going to have to have some money right.
Kandas: Yeah you will.
Larry: Now does is have to be your money?
Larry: No, doesn’t have to be your money. Now if you have good credit, you can go to the bank you can get a loan up to 70 sometime 80% of the value. What I used to do years and years ago is I would buy a property for maybe around 30 okay. And then I would fix it up maybe put five or 10,000 in it, let’s say I had 40 in it right.
And I had 40 in it then I would rent it out for say $800 a month, I would go get an appraisal on it for $80,000. And then I would borrow 80% of that right. Or let’s just say 70%.
Kandas: Yeah that’s more likely for what they’re going to learn now.
Larry: Or even back then 70%, so seven eights are 56 I would borrow $56,000 right. So after closing costs let’s say closing costs and everything was $6,000, so I netted 50, I had 40 in it I put $10,000 in my pocket. And guess what, that’s tax free money right. Now with tax reforms, some of that is going to change.
Larry: But I was able to put tax free money in my pocket and I still had a positive cash flow. The payment might be 400 a month and I’m renting it out 800 a month.
Larry: Right minus taxes and insurance, I was still making two or $300 a month.
Kandas: Which is not bad.
Larry: No. but that’s a long term type deal and I did have to have financing. Now if you don’t have good credit right, then what you’re going to need to do is find a private money lender right. And there’s a lot of private money lenders out there that are just looking for places to loan their money. Somebody came by our office just last week. And they said, “Hey I got $500,000 I want to invest.
Kandas: Yeah this guy came by and-
Larry: And he listens to the show.
Kandas: He does listen to the show. And he came by and was like, “Yeah I’ve got $500,000 I sold my plane. I’m getting ready to buy a jet.” Isn’t that awesome?
Larry: That’s pretty cool he’s my new private pilot.
Kandas: Oh not just you buddy. He doesn’t know that part yet.
Larry: That’s funny.
Kandas: It’s not just you. That jet will fit more than two people.
Larry: That is funny. So yeah if you are a landlord then what you need to do is you’ve got to have money but it doesn’t have to be your money if you have credit. Use home equity line of credit, there’s a lot of lenders out there in fact we have a lenders directory that has a lot of different lending sources in it.
And you can use private money and then refinance the property and pay off the private money or pay off the hard money loan. It’s just a lot of different ways you can partner with people. There’s a lot of people that even have a self-directed retirement account right.
Larry: So they can use that self-directed retirement account to fund your deal either short term or even long term right. And they might even be making 1% on their money if it’s just sitting in the bank right.
Kandas: Maybe 1%.
Larry: Maybe. And you know how long it takes to double your money at 1%?
Kandas: Longer than what I’ve got.
Larry: 72 years.
Larry: That’s called the rule of 72. We’ll talk about that on another show. But anyway so you can get private money, you can pay then four, five, six, seven 8% return right. It’s a good yield for them and it’s a good deal for you as well. Now the last thing I’m going to talk about is doing lease options or seller financing okay. Because this is the last segment right.
Kandas: It’s all we got, it’s all to go for the day.
Larry: Today. So let’s talk about if you’re going to do seller financing or lease options. I call these buyers HITs, Homeowners in Training right.
Larry: This is where I’m going to buy a house for maybe 20 or $30,000 and then I’m going to turn around and seller finance it or do a lease option. It maybe $69900 or $79900 and I’m going to get them to put about three to $5000 down okay. Once they put the money down, then they’re making payments to me okay.
So with this model right you do need money but once again just like a landlord, it doesn’t have to be your money okay. Also if you have good credit, you can go get a home equity line of credit, you can go get a bank line of credit, you can borrow money from an investment loan lender, you can borrow money from a hard money lender to rehab the property or like I said you can use private money of any of the other sources right.
Larry: Credit partners, cash partners, private money partners whatever it is. Right you can split the income, you find the deal, you bought it for 30, they put up the money and then you split the $800 coming in right. It’s a win-win for everybody.
Kandas: It’s good deal for both sides yeah.
Larry: Right, all of these types of investing do require some time upfront like with the wholesaling, that probably requires probably just about most of the time, because every month you go from hero to zero. You have to start over right.
Kandas: That’s true yeah.
Larry: And if you do two deals last month, next month you got to do two more right.
Kandas: Same thing with fix and flip you’ve got a lot of time invested in that as well with rehab and the holding.
Larry: That’s so true. And then also now with the rentals you buy, you might have a contractor or something fix it up but then it’s more passive.
Larry: And then on the HITs, the Homeowners in Training, the lease options or the seller financing, in my opinion that’s the most passive one there is because we don’t fix up the properties. We buy them that are already livable or close to livable and then seller finance them to people, that are going to fix them up and live in them, fix them up and rent them out or fix them up and flip them right.
Kandas: Right, that’s right.
Larry: Whatever it is. And with seller financing you do need private money cash partner, credit partner or a lender. But it’s going to actually require probably the least amount of your time as anything. Does that make sense?
Kandas: It definitely does.
Larry: That’s awesome.
Kandas: And this stuff is all talked about in our real estate day trading book as well the different models. Well as far as being able to buy and sell properties same day using the internet, that’s what the real estate day trading book is about. And then with HUD Homes Half Off it’s just on working our HUD model. Both of these books are available in the investors’ kit that I can send out to your email digitally.
Or if you can schedule an office tour to come by we’ll have a physical kit ready for you. If you guys didn’t understand any of the terms that we kind of threw around today you can send me an email to firstname.lastname@example.org. We can also chat when you call 877-LARRY-GO about registering for one of our upcoming three-day events, finding more about those and where they’re going to be in the country, as well as our mentoring options.
Because everything that Larry talked here today goes a lot deeper. And being able to attach yourself to somebody that’s already been where you want to go is one of the best strategies that we can give you. Call 877-LARRY-GO or text the word BRAG to 8038-897-6063.
Thank you Kandas and tune in again next Saturday for BRAG Radio as bestselling real estate investing author Larry Goins and co-host Kandas teach you the latest techniques the pros use to make money in real estate. If you’d like more information about what Larry and Kandas talked about on today’s show or like a free investor’s kit or to schedule a tour of the office, call 877-LARRY-GO that’s 877-527-7946.
It’s Brag Radio be rich and generous on News Talk 1110993WBT.