Flipping Junkie Podcast with Danny Johnson

Latest Episodes:

15: How to Get Money For Investing in Real Estate w/Jason Bible Jan 04, 2016

Show notes

Jason got his first taste of real estate investing after joining a local real estate club. In 2012, he made his first transaction and hasn’t looked back. Jason founded HoustonHouseBuyers in July of 2013, in its' first year produced $3M of gross revenue, through wholesaling, leasing, and flipping 70 houses. HoustonHouseBuyer's is expected to buy 100 houses in 2015 and produce nearly $6M in gross revenue.

Jason has more than a decade of experience in risk management in the private and public sector. He managed the risk finance program for The University Of Texas Health Science Center at Houston. During his tenure he managed the workers’ compensation program for 5,000 employees, property conservation program for $2B in insured assets, business continuity and emergency response program. He also managed the Fire and Life Safety program responsible for nearly 5MM gross square feet of laboratory, class room and office space. His program additionally reviewed plans for new biomedical research facilities, one facility built annually during his tenure at $250MM per project.

Jason has a BS in environmental Science from Sam Houston State, Masters in Security Management from The University of Houston and an MBA in finance from Houston Baptist University. He lives in Houston with his wife Sarah and two sons, Cameron and Carson.

This episode is full of great tips on getting funding from when you don’t have any experience real estate investing up until you’ve built relationships with small local banks.

It took Jason 6 weeks to buy his first house which was a rental. He worked through the tough times making 15-20 offers per week and not getting very far.

Then he decided to partner with someone and put a 40k budget to work for marketing.

That’s how you get the ball rolling!

So many people are afraid to spend money to get the deals. The fact of the matter is you can net over 40k on a rehab and do it multiple times for that 40k budget in marketing.

The numbers don’t have to be that big, but an investment will likely need to be made to get going.

Jason’s tips for finding a good hard money lender to get funding for your first deals are as follows:

* Go to local Real Estate Investor Association meetings

* Find out who does lending and how long they’ve been lending and how many deals they’re funding per month

* Narrow down your list to the ones that are doing the most and for the longest amount of time

He was paying roughly 3 points and 13% interest for his hard money loans in the beginning. Those aren’t bad numbers for hard money.

After getting some deals under your belt, put together a packet showing before and after pictures and the numbers for the deals to show to potential private lenders.

Private lenders are people that lend money to investors to fund their deals. They typical lend the money because the interest paid is much better than other forms of investing and a lot less risky.

The best thing to do when looking for private lenders and who to borrow from is to find the ones that are already lending to other investors. This way you don’t have to convince them to lend money. You don’t ever want to have to do that.

14: How to Flip Houses With Minimal Risk w/Nathan Cron Dec 28, 2015

Show notes

Nathan Cron is the broker at New Western in San Antonio and Austin. They did 370 deals last year!

Nathan is also a good friend of mine and we have done a lot of business together. He is one of my ‘go-to’ guys whenever I wholesale a deal.

In this episode, Nathan shares how he got started in this business by answering a newspaper ad after college. He credits his success to being blessed to get started with that company and getting the proper training. He now gives back by helping people get started through New Western.

He shares the stories of a couple of deals where he bought them, fixed them up and then rented them out for incredible cash flow.

Nathan shares my belief that it’s important to buy conservatively (cheap) and try to stay as debt free as possible. We talk for a while about how the market is always cyclical and if you want to be successful throughout each cycle, you have to be somewhat conservative.

Nathan’s strategy for attaining his goal of $10,000 month in passive income is just plain smart. He waits until he has the cash to buy the house without a loan. This way he gets incredible cash flow, tax benefits and security. He’s also a little different in that he rehabs these houses as if he is going to sell them. Most landlords do lesser rehabs for rentals to save money. He doesn’t want to have calls about broken toilets and clogged drains so he makes sure his rentals will be as maintenance free as possible. This also does wonders with attracting the “right” tenants. The tenants that won’t make your life miserable.

We also talk about how being resourceful is what separates those that succeed at real estate investing from those that do not

13: From Rental Houses to Apartment Complex Deals w/Joe Fairless Dec 21, 2015

Show notes

Anybody that’s followed the flipping junkie blog for any length of time knows I don’t care much for rentals (really, more specifically, managing rental properties). I really enjoy just fixing up a piece of junk house and selling it quickly for a nice profit. I’m sure I could learn to love rentals if I just knew how to do it with as little hassle as possible. That’s why I decided to have todays guest on the show. He is an expert on cash flowing houses and apartments.

This episode was packed for of information from Joe Fairless. He controls more than $21 million worth of real estate, attends more Third Eye Blind concerts than anyone else, is an author and comedian, and host of the very popular Best Real Estate Investing Advice Ever podcast.

Joe was very courteous today as I had problems with audio that delayed the recording of the interview for about 5 hours…. Luckily, he was flexible and was still able to be on the show. So, extra thanks to him for that.

In this episode Joe talks about the four single family properties he bought in Texas (he lives in New York) for cash flow (he sold one to cash out). He shares with us how he calculates the cash flow using the calculator mentioned in the links below.

He also shares insight into his first big apartment complex deal….168 units that he had to raise over a million dollars for!!!!

Do you know the difference between economic occupancy and physical occupancy? I didn’t. Joe breaks it down for us and why it’s so important to find out about economic occupancy when evaluating an apartment deal.

Joe also shares his ingenious strategy for determining if an area is improving or decaying by checking out two local restaurant chains that are in almost every city.

There are some great rules of thumb also mentioned throughout the show. Some are:

* 1 manager for every 100 tenants

* $250 per unit per year should be set aside for cap ex (capital expenses like roof replacement, exterior maintenance etc)

Enjoy the episode!

12: Forget About Rentals, Owner Financing Rocks w/Mitch Stephen Dec 14, 2015

Show notes

Mitch Stephen has been flipping houses in San Antonio for over 20 years. Over that time, he’s managed to purchase over 1000 houses!

He specializes in owner financing properties.

He is also the author of several books. One is My Life and 1000 Houses: Failing Forward to Financial Freedom, which details his journey in real estate investing and My Life and 1000 Houses: 200+ Ways to Find Bargain Properties.

And just to show you what kind of guy Mitch is, I want to share the story of how I got his first book.

I found out about it when it first came out and ordered it right away. I didn’t receive it within a day or 2 and, honestly just wanted to say hello to Mitch so I called him. He promptly drove 45 minutes to my houses and personally delivered the book to me. That’s incredible service!

In this episode Mitch talked us through a typical owner finance deal where he can buy a house cheap and owner finance it to a buyer as-is. There are a ton of benefits to doing this instead of renting.

First, he makes money on the sell with a down payment from the buyer. The buyer does the fix up so that Mitch doesn’t have to. The collateral for the loan is improved by the buyer making the loan even more secure. Mitch doesn’t have to pay the property taxes and insurance as he’s sold the house to the buyer. He also is not the landlord so he doesn’t have to fix toilets or anything else.

There was a lot more detail shared within the episode, so be sure to listen and be ready to take notes.

If you are planning on owner financing properties, you really need to be aware of Dodd-Frank. Mitch discusses how to make sure you are in compliance using a cool short-cut.

Mitch also discusses why he likes driving for dollars so much and some tips to make it even more profitable. He also discusses why he doesn’t feel bandit signs work as well as they used to.

You will also find out about his system for knowing which marketing he is doing is producing the calls he receives

11: Transitioning from Rehabs to New Builds W/ Tucker Merrihew Dec 07, 2015

Show notes

Tucker owned a mortgage company and switched to investing around 2008-2009.

He wholesales, rehabs and does new construction.

Tucker talks about the transition from rehabbing to adding additions and moving into knock down and new build.

Learn how he determines which strategy he is going to pursue with the deals he gets.

He also tells us how he uses driving for dollars and direct mail to get his deals.

Tucker shares how he deals with the high levels of competition with key tips on how to talk to sellers to improve your chances of getting them to sell to you because they like you more.

Motivated sellers sell at a discount because they want the ease of disposing of a property. They know they are giving up equity in exchange for a quick, hassle-free sale.

“We’re in the business of getting people to exchange equity for ease of transaction.”

10: Competition, Smompetition. Buy Houses on the MLS Anyway w/Mark Ferguson Nov 30, 2015

Show notes

Mark Ferguson fixes and flips 10 to 15 houses a year and owns 15 long-term rentals. His grand plan is to purchase 100 rental properties by January 2023.

Mark tells us about how he got started working with his dad, who is a Realtor and house flipper.

In this episode, Mark shares his strategies for competing for properties on the MLS. Key points include:

checking for new listings multiple times a day
getting out to see each house and make an offer within hours
have assistant in his office draw up the offer contract and send it to him to docusign and then forward to the listing agent

He was also gracious enough to share his strategies on making his offers stand out by making them stronger. Some of them include, increasing the amount of earnest money, remove any contingencies (including the inspection contingency) and offering to close quickly.

Mark is smart because, even though his market is crazy hot right now as it is in many other places around the country, he has kept to his buying criteria. Others stray from their buying criteria and start to offer more for houses in order to get more deals. These are the same people that end up going broke when the market changes.

9: How to Flip Vacant Lots w/Seth Williams Nov 24, 2015

Show notes

Seth Williams is an experienced land investor, residential income property owner and commercial real estate banker. He is also the Founder of REtipster.com - a real estate investing blog providing real world guidance for part time real estate investors.

This interview is packed full of interesting information about buying and selling vacant lots….and the really cool thing is that most of it relates to buying and selling houses.

Find out how he builds a mailing list that typically gets better than a 10% response rate along with the exact message he puts on his postcards.

Learn how he analyzes these deals so that he knows what he can offer and still make a great profit.

Seth also shares how he is able to sell these lots for passive income and make even more money.

There were several things that surprised me during the interview, like when he informed me that most people that buy lots from him aren’t going to build houses on them. Find out why, in today’s episode.

Top 3 Things We Love (and Hate) About Our Businesses

Love

1. Freedom to do what I want, when I want

2. Large pay days (and thrill of the chase getting deals)

3. Working the business with my wife

Hate - strong word, dislike is more accurate

1. Fleas

2. Bad contractors

3. Dishonest investors

Never a dull moment…ups and downs…

Seth’s Loves and Dislikes

Love

1. Thrill of getting accepted offers - that it’s possible to get great deals

2. Passive Income

3. Large Paydays

Dislikes

1. Times when properties don’t sell immediately

2. Uncertainty of whether deals will be consistent in his pipeline

3. Cumbersome and time-consuming processes for buying and selling

He got started investing in real estate during college around 2005 and 2006. The real estate market then was white hot and that made it difficult to get good deals.

Seth decided to start buying and selling land.

Seth finds his deals by tracking down people that own vacant lots that are delinquent on their property taxes. He does this by contacting the tax assessors and treasures for the counties where the properties are and asks for a spreadsheet with the addresses and owner’s information.

Some will give out this information quickly and without hesitation and then some counties will make it very difficult, if not impossible.

He gets these records anywhere from free to up to 25 cents per record.

With records in hand, he then sends out post cards to the people that are delinquent on their property taxes. He says he typically gets better than a 10% response rate (which is pretty damn good) with these postcards!

8: How a 19 Year Old Got Funding For His First Deals w/Kevin Ramirez Nov 16, 2015

Show notes

Kevin Ramirez is from Venezuela living and is doing business in Raleigh, North Carolina.

He started in Real Estate at 19 years old with a flip, found a JV partner to fund the whole deal and after that fell in love with the business. He currently focuses on rehabbing and wholesaling. Every deal he has done has been without his own money.

Currently 21 years old, still a one man operation, he is working on building systems to automate his business. With 19 deals to date in 2015 he is looking to close the year with 25.

He doesn’t yet consider himself an expert and stays open to learning more and more every day.

What you will learn in this episode:

How Kevin Ramirez was able to get funding for his first deals even though he was 19 years and new to the business
Find out how his first flip made a total profit of $65,000
Where he found his money partners and how he got them on board with him
What key points need to be covered in a Joint Venture agreement when flipping

Kevin’s first deal generated a total profit of about $65,000! Not bad for any deal, let alone a first rehab deal.

7: Wholesaling Houses the Right Way w/Sharon Vornholt Nov 13, 2015

Show notes

Sharon Vornholt is the owner of Innovative Property Solutions in Louisville, KY. She has been investing in real estate since 1998 and has been a full time wholesaler since 2008.

Sharon is the creator of the Louisville Gals Real Estate Blog and the popular podcast “Let’s Talk Real Estate Investing”. She is also a mentor and a coach who loves teaching others how to succeed in this business.

How she got her start

Sharon’s dad was a contractor that used to drag her to a lot of different job sites. She owned and operated a house inspection company for 17 years.

She then attended a Real Estate Investor Association meeting and learned about flipping houses. She then started rehabbing. Her initial plan was to rehab and get big chunks of money to buy rental properties with. That worked for a while, but then the market changed….big time.

Wholesaling houses

In 2008, she found it difficult to sell houses (as did everybody across the country). This is when she found out how awesome wholesaling was. She decided to try and sell a house she was going to rehab to another investor and see if she could make money quickly, without doing any fix up.

She’s been wholesaling ever since.

In this episode, Sharon talks about the differences between an assignment of contract and a double-close. The gist is that assigning a contract involves getting a house under contract and then selling the contract (as well as the obligation to close on the contract) to another investor for a fee.

Double-closing involves a little more complexity. Not much though. There are two transactions with a double-close. You have a A B transaction where the seller of the house sells the house to you as the buyer. Then you have a B C transaction where you are the seller and the investor that is buying the house ‘as-is’ from you is the buyer. he funding from the sale from you to the end buyer goes to fund the first transaction between you and the seller of the house.

For many people considering wholesaling houses, the fear of not being to find a buyer and not be able to close the deal if they can’t find a buyer scares them from ever getting started. Sharon shares how she allows for an ‘out’ by using escape clauses. During the show, we went over three good escape clauses that included: ‘subject to accepted inspected’, ‘subject to partner approval’, and ‘subject to funding approval’.

6: Keys to Finding a Mentor for Flipping Houses w/Mike Simmons Nov 02, 2015

Show notes

In this episode, Mike Simmons shares awesome information about his house flipping business.

Having an accountability partner in this business can make all the difference in the world. Mike’s wife was his main accountability partner that kept him in line and working to make his business a success.

Keys to finding and approaching a mentor:

Go to REIAs and Network
Provide value - If don’t have much money, donate your time
Ask around for who is doing the most deals and approach them to be your mentor
Get started by educating yourself and start taking action by doing some marketing to find some leads - when you have a lead you can take to a potential mentor, they will for sure listen to you and be more inclined to work with you

Mike shares how he found a great real estate agent to find him deals.

He also reads the copy of the post card that he uses to generate lots of leads and the criteria he uses for generating his mailing list.

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