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How To Pocket Up To $33,438 A Month Flipping Houses In Your Spare Time
Without Cash Or Credit
3 Regular Guys Finally Reveal Their Simple 31-Day Plan
By Sue Reddy Silverman
3
Introduction
Now is the best time to invest in Real Estate. According to our experts, we will never have an
opportunity like this again. The market had tanked but it‟s starting to rise again now. It is going
to stabilize and turn around in the right direction. And right now, America is truly on sale.
Don‟t get left out of the game. Millions of dollars are being made in Real Estate in a variety of
ways, including buying heavily discounted HUD homes and selling them cheap; buying short
sales and flipping them and rehabbing homes. You can even make money just by connecting
buyers and sellers doing no real Real Estate work at all.
Find out how to make your millions in this new report “How To Pocket Up To $33,438 A Month
Flipping Houses In Your Spare Time Without Cash Or Credit. 3 Regular Guys Finally Reveal
Their Simple 31-Day Plan.”
We got up-close-and-personal with three „regular guys‟ who turned their interest in Real Estate
into multimillion-dollar businesses. And they told us exactly how they did it too.
These three masters reveal how they got started investing in Real Estate, what their primary
revenue pillars are, the Number 1 mistake new investors make, how they find buyers and sellers,
what their top marketing strategies are and how to make the really big bucks in Real Estate in a
very short time.
Their stories will inspire you; some will amuse you, but mostly they can lead you on a new and
faster path to prosperity.
We are pleased to share this informative report with you.
The Net Income Real Estate Team
www.NetIncomeRealEstate.com
4
Expert Real Estate Investing Professionals
Cody Sperber
Cody Sperber is considered one of the nation's leading
real estate investors by news and media sources alike,
earning him the nickname the "Clever Investor." Cody's
real estate companies have bought and sold hundreds of
millions in properties, allowing him to generate 7-figure
profits year after year.
Cody Sperber is a true transactional engineer who has
closed a wide range of creative real estate deals, including
wholesales, short sales, multi-unit, subject to, lease
options and even his own proprietary investing strategy --
the Reverse Short Sale
(http://reverseshortsalesecret.com/). Cody is probably
best known as a master marketer who can generate buyer
and seller leads at will.
Cody is the founder and CEO of Clever Investor
(http://www.cleverinvestor.com/) one of the industry‟s
premier providers of quality real estate education and
investing tools. Like his real estate businesses, Clever
Investor has quickly grown into a thriving company with
a strong reputation of integrity and customer satisfaction.
Before real estate Cody served time in the U.S. Navy. He
attended Arizona State University where he graduated
Magna Cum Laude with a degree in Finance. Cody is now
happily married to his best friend Shannon and together
they have two beautiful children, Hudson and Brynlee.
Rob Swanson
It was well over a decade ago now that I started flipping
houses full-time. I guess that makes me a veteran;
especially since I've made money on just about every
kind of deal you can think of and almost never use my
own cash or credit. Shortly after I got started as a real
estate investor, I made my first $42,000 in a single
month. I see a lot of people who could do the same thing
but they get paralyzed by fear and never put in the little
effort it takes to learn a couple little secrets that make all
the difference. Then it wasn't long before I hit my first
six-figure month, making $250,000.
My wife tells me I'm a natural born teach, which is a big
help since I hire people that I only pay when they flip
5
houses for me, so being able to teach and train my team
is pretty important. It's also handy when I show real
estate investors how I run my business because I like to
show people how you can copy my systems and use the
same tricks, tools and resources I use to make money.
I've been interviewed by CNBC, Forbes Magazine, The
Wall Street Journal, Business 2.0 and other local and
national media about real estate investing. After the most
recent crash, I put together a $10,000,000 (Ten Million
Dollar) real estate fund using none of my own money.
So yeah, if you haven't figured it out, I think right now is
a pretty darn good time to be a real estate investor.
On a personal note, I believe business should exist to
create "lifestyle" and residual passive income. That's
why I run my real estate investing business very
differently than many people. The truth is, the way I run
things is a lot more profitable than most even though I
work a lot less.
Life is good and real estate investing made it that way.
Join me for an upcoming training webinar and see for
yourself. Go here http://www.FlipCashDeals.com
Josh Cantwell
A native of Northeast Ohio, Josh Cantwell graduated
from Baldwin Wallace College in 1998 with a Major in
Business Administration and a Minor in
Communications. Although a full-time student and
college athlete, Josh was already driven to succeed in his
career. After graduation he obtained his Series 6, 63, 66
and life and health insurance licenses, and worked as a
Financial Advisor from 1999-2004.
In 2004, Josh ventured out on his own and started
investing in real estate full time. He was able to combine
his knowledge of Financial Investing with real estate to
create a very successful business, which quickly grew
and he began training and teaching apprentice partners
and students. He began Strategic Real Estate Coach in
2007, and since then has been involved in wholesale,
rehab, rental, foreclosure, pre-foreclosure and short sale
transactions, and taught thousands of investors how to
replicate his success. Josh has vast knowledge and
experience in helping coaching clients, mentor students
and apprentice partners from across the U.S. in finding,
6
structuring, negotiating and closing various types of
transactions for a profit.
He has bought and sold more than 600 properties in 30
states, and currently holds a robust rental portfolio of
cash-flowing properties. He is the founder of Sharp
Concepts Realty, a real estate brokerage based in
Cleveland, Ohio. Josh lives in Strongsville, Ohio with
his wife and three children.
7
How To Pocket Up To $33,438 A Month Flipping Houses In Your Spare Time
Without Cash Or Credit
3 Regular Guys Finally Reveal Their Simple 31-Day Plan
Cody Sperber
www.cleverinvestor.com
Interviewer: We are here with Cody Sperber, the founder and CEO of Clever Investor, talking
about real estate investing. Cody, what's your background? How did you get
started in real estate investing?
Cody: Well, I started in 2004 and I probably started like a lot of people at that time, just
seeing what was going on in the local market. I was reading books and just trying
to kind of figure out a way. I was in college at the time. I just got out of the
military, didn't really know what I wanted to be when I grew up. My major in
college was finance, and I was getting pushed by my dad to just go get a corporate
job. You know, eventually, hopefully, becoming a CFO of some company.
In 2004, I had a buddy of mine who was a good friend, amazing guy, you know,
super-nice, really just a normal guy. He had a friend who talked him into
investing into a property and he flipped the house and made over $80,000 in less
than 30 days.
I remember, we went to lunch and he was telling me this story and I was
completely floored because my friend . . . Let's just say he wasn't the sharpest tool
in the shed. You know, he was just sort of an average guy and he said he barely
did any work and barely took on any risk and he flipped this property and he
made over 80 grand, and I was thinking to myself, "$80,000 would change my
entire world." I couldn't believe what he did.
I just kind of, right then and there, made the decision that I've got figure out what
he did because if he could do it, I knew I could do it. That's how the journey
began. For the first year, I did what most people do. I went to seminars. I bought
books and tapes. I was like the book and tape collector of the year. I mean, I
probably invested more in books and tapes than anybody I knew, you know,
borrowing money from my dad just to buy courses. I felt like I was smart enough
and I had enough energy that I really didn't need anybody else. I could just do the
courses, follow what they said and it would all magically fall into place and I
would start making money and printing it out like an ATM, like they told me
when I was at the seminar.
For my first year, year and a half, I tried the business and I just did it all alone. It
was a really big struggle. I didn't have a lot of bills, and I lived in my girlfriend‟s
house at the time, who is now my wife. We had a really small little house that her
parents actually paid for. We didn't have any rent and, thank God, they were
helping us out because I wasn't making any money that first year. It was tough.
8
Interviewer: How did you turn that around?
Cody: I actually didn't turn it around. It actually got to a point where I quit and I got a
job. It was kind of a sad day at our house because, you know, you start off with
big hopes and dreams and a lot of energy and you hit roadblock after roadblock
and, all of a sudden, you start second-guessing your decisions. I got to a point
where I was so broke and there didn't seem to be any light at the end of the tunnel
that I just quit. I went and got a job as a bookkeeper for a real estate developer,
which was the closest thing I could find to staying in the business.
For the first three months, I sat behind a desk. I got carpal tunnel syndrome. I
became a hunchback that never saw the light. I became pasty white. I was a
bookkeeper nerd. You know, nothing against bookkeepers but I just was behind a
desk in a cubicle, part of the machine. You know? And he made all the money.
He drove a Mercedes and always wore thousand-dollar suits and was always
bragging about how much money he made, and I was the guy who quit and
worked for him.
Every day, I would come home and I would complain. I would find more excuses
during that time to not go to work than to go to work. I would take hour-and-a-
half-long lunch breaks when his back was turned. I kind of resented him because
he was making all this money and somewhere deep inside I felt kind of like a
quitter. That just wasn't my personality type. You know, you come home, you
complain and thank God for a good woman in your life because you get to a point
where you complain enough and she looks at you and smacks you in the back of
the head and tells you to shut up and quit being a baby and do something about it.
"Don't sit here and complain every day to me. Do something about it."
Right at that moment, I had a friend of mine named Zack. He came to me and he
said, "Hey, Cody, I know you love real estate. You've got this passion for real
estate and I know you quit, but I met this group, and I really think you should
come and check this group out. It's unlike anything I've ever seen." I at first said,
"No." He was persistent, thank God. He ended up going behind my back, talking
to my girlfriend and he said, "Look. I'm going to take Cody to San Francisco to
meet this group, and I promise you he's going to come back a different person."
Finally, I just said, "You know what? I've never been to San Francisco. I might as
well just go on a vacation. That will be fun, going out with my friend." We went
to this seminar. It was put on by a guy named Jack Miller, who has recently
passed away. But we walked into that room, and I instantly knew that this group
was different. Half the people in the room were as old as my grandpa, you know,
and I looked around the room and there were more so-called gurus sitting in the
audience frantically taking notes than I've ever seen at a seminar where the gurus
were selling stuff.
9
You could just kind of sense something was different about this group. There
were about 300 people in the room. During the breaks at a normal seminar,
everybody kind of networks really badly. You know, they trade business cards
and they talk about things that aren't really all that important. Normally, it's all
about me, me, me, me and how can you help me and my business but they were
different. They were giving. They were open. They shared hilarious stories of
their investing adventures along the way. I singled out a guy there - his name was
Lyle - who eventually became one of my first mentors. I bought Lyle a beer, and I
started talking to him, and one thing led to another.
I came back from that seminar a different person. It was the first time I really felt
I had a supporting team and system in place that I was recharged, re-energized,
and I really believed for the first time that I could do it.
Interviewer: So, then what happened?
Cody: Well, I came home and I got to work. You know, I took some of the training and
stuff that I learned at the seminar. I called up some of the people that I met at the
seminar and I started doing something that I didn't do previously. I started relying
on my power team a lot more to help me work the business and get my business
systems up and running than I would have before. Before, I was too - what's the
right word - young, naïve and hardheaded to listen to what other people who have
blazed the trail ahead of me, what their advice was. I felt like I could do it all in
my own. This time, I came in with an open heart and an open mind and I just said
to myself, you know, if they're willing to show me the steps and the system that
they use to become wealthy, then I was not going to try and do it my way
anymore. I was not going to reinvent the wheel. I was just going to listen to what
they had to say and mirror what they told me to do.
I got to work and started building my power team, started putting out marketing
the way that Lyle was showing me how to put out marketing. I started getting
seller leads in the door and using my power team to help me convert those leads
into deals. I was starting to do a deal here, a deal there, nothing super consistent.
One day, I met a guy who sat me down. He was somebody here locally in
Arizona. His name was Matt. He sat me down. I met him at a networking event.
We were sitting there and he pulled out a napkin and he penciled out the
wholesaling model on a napkin. I remember thinking to myself, "Wow, you really
don't need any money to flip a house, like zero dollars." And I thought to myself,
"That's where I am. I have zero dollars. That's what I need." For the first time, I
understood the wholesaling model, and that's when I really hit the ground
running. I started focusing 100%, because of Lyle's help, on my marketing and I
started using the wholesaling strategy to lock deals up and sell them without any
risk involved.
So, pretty much, I became a full-time wholesaler at that point but I was still
working my 9-to-5 job. So, I was doing this on the side as much as I could. If I
10
made $2,000, $3,000 or $4,000 on a deal, that was almost as much is I would
make at my other job working 9-to-5, 50, 60 hours a week. I always told myself,
if I ever got to a point where I made more money on my part-time wholesaling gig
as I did in my full-time job, I would quit my full-time job, but it had to be
consistent for three months. I wanted 90 days of consistency.
Well, I pretty much got to that point about 3 to 4 months after I got back from that
seminar and, one day, I did something that I had no idea what it even was. It was
called "a short sale." The market was just starting to turn here in Arizona, and I
decided that I was going to try this thing called "a short sale." I didn't even know
what it was, but there was a property that was overleveraged, even though the
market was still good at the time. It was overleveraged and I was able to flip the
short sale to an all-cash buyer, almost just like a wholesaling deal, and I made
$40,000 on the deal and I quit my job that day and I never looked back.
Interviewer: Were those the two areas that you focus on now, wholesaling and short sales?
Cody: Not anymore, but I still do a lot of different investing techniques, depending on
the seller's motivation and the type of property I'm buying and what my current
financial goals are.
After I did my first short sale and I quit my job, I basically didn't do another short
sale again for a few years because the market wasn't ready for it. It was kind of
just a random short sale fluke that I got into and, to be honest, I didn't even know
I was doing a short sale at the time or that it was called "a short sale." I just knew
that the homeowners were upside down and I called the bank and the bank told
me that if I offered this amount, they would sell me the property.
I just started wholesaling pretty much full time, and I got better and better and
better at it. I would wholesale other wholesalers' properties. I would wholesale
condo conversions. I would go and network with local area developers who were
buying apartments and converting them to condos, and I would get their inventory
and I would wholesale that out from my cash buyer list, and I became an
extremely good marketer. Almost 95% of my day was spent on becoming a good
marketer. So, I taught myself online marketing. I taught myself search engine
optimization. I taught myself about marketing funnels and online networking in
its, back then, prehistoric phases, you know, before LinkedIn, Facebook and all
that stuff. We were on message boards. I just got really good on branding myself
online.
Even though I wasn't the biggest wholesaler in Arizona, it looked, from an online
perspective, that I was doing the most business because no matter what keyword
phrase you put in, no matter what you searched for online, I was everywhere. I
would spend three, four, five hours a day just pumping out content online. After
about six months of doing that every day, I became the biggest online presence in
Arizona. So, I kind of faked it till I made it online and then, all of a sudden, I
11
ended up, like a self-fulfilling prophecy, becoming that person that I always said I
was online.
I would start going to networking events and people would say, "Oh, Cody!
You're that guy that I see everywhere online. You must be doing a ton of
business. I want to take you to lunch." All of a sudden, the roles were reversed.
Instead of me begging people to go to lunch and do business with me, people
were begging me to do business with them. All of a sudden, everybody started
bringing me their deals to sell for them, and the reputation grew, and the amount
of deals I did grew.
Then, the market tanked in Arizona. It got hit hard. It got hit so hard that I
remember the day I had about nine deals in escrow and all nine of them fell out in
a one-day period.
It's like the headline hit the newspaper and all the cash buyers instantly backed
out of all my deals and said, "I'm not doing anything until I figure out what's
going on." Well, that period lasted about six months, and I could barely do a deal
to save my life during those six months. That's when I kind of went back in time
to that very first short sale deal I ever did and I remember the bank telling me,
"Well, we're doing this because they're upside down." Well, all of a sudden, in
Arizona, kind of the writing was on the wall that everybody was going to be
upside down.
That's when Cody Sperber the short sale investor was born and I did the same
online branding and marketing that I did before.
I used my skill set and I became the Short Sale King. So, even to this day, if you
Google "Arizona short sale" or "Arizona short sale realtor," because I am licensed
even though I'm not an active agent, in the sense of a traditional real estate agent,
I'm an agent investor, if you will. If you went online and put in "Arizona short
sale," or "stock foreclosure Arizona" or anything that had to do with distressed
real estate, I was everywhere. I was the first out of the gate to do it, and it was the
reason I was able to get such high rankings that stayed there because of my online
marketing.
One day I got a couple of short sale leads in, and the next week I got a couple
more. Then, the next week, I got like two dozen. Then, the following week, I got
100. Then, the next month, I got 1,000. Then, all of a sudden, the third month, I
got 5,000. I mean, it was so many leads, I had no idea even what to do with them.
There were so many leads pouring in because I was the only online source in
Arizona with tons of information about how a short sale works and what
homeowners can do to short sale the property.
This was like '08-ish, '09, and the short sale investing business was born. All of a
sudden, I had a team of negotiators and a team of real estate agents, and I was
12
making offers on short sales, and I basically just looked at short sale investing like
another source of wholesale inventory.
Then, one day, I learned about flipping short sales, using option agreements and
land trusts, and all of a sudden the model started to shift. That was fine for a while
until about the beginning of 2009, when I had a lot of money, because were
making a lot of money from flipping short sales. A buddy of mine told me that he
just bought a house down at the foreclosure auction for $19,000 and it was built in
2006. I went, "Wait, you bought a four-bedroom house that's only a couple of
years old for $19,000? That's infinitely better than what I could even get on a
short sale because, let's face it, short sales suck. They're a pain in the butt." I had
to have tons of negotiators banging their head against the wall each and every day
just to get an approval, let alone the 50 million other moving pieces that are
involved in investing in a short sale and flipping it for profit.
I went and I stood down at the foreclosure auction for about a week, every single
day, for a couple of hours a day, networking, asking questions, trying to figure out
the foreclosure auction game. Then, I used some of my resources and my
networking capabilities to network with some of the bigger auction buyers, and
me and another guy went down there. I finally pulled the trigger, and I started
bidding on my first auction property through a bidding service and we bought our
first house at auction, and 12 months later, we bought our hundredth house at
auction.
Interviewer: What did you pay for the first house?
Cody: You know, I wish I could remember. I do remember, we made about $10,000 on
the flip. We bought it at auction, and within three days, we made the $10 grand. It
was just another source of wholesale deals, you know, but we were paying cash
for them. So, there was more risk than a traditional wholesale deal but we were
still selling to cash back-end buyers. We were buying it for one price, marking it
up $5,000, $10 grand and sending it out to our cash buyer database and they
would buy it from us and we would get back all our money and go the next day
and do it all over again.
Then we started cherry picking the best deals to rehab. We got some rehab crews
together and I know nothing about rehabbing. I'm the last guy in the world you
want in control of a hammer. We got some guys who really knew construction,
and they were all out of work because the market imploded and everybody lost
their jobs. All the builders fired everybody. So, there were a lot of available
construction guys.
They were really smart at construction. So, I hired a couple and I said, "Look.
You've got to be my project manager. I want to run four or five projects at one
time. I'm going to retail these houses. So, let's get a standard package together,
you know, standard cabinets, standard countertops, standard paint color, and line
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item it all out, so I understand what my cost per unit is. That way, I could do my
estimates very quickly. But, to be honest, I want you to do like 99% of the work. I
just want to know that these are getting done on or under budget and on or under a
certain timeframe that we put on the project when we do our initial walk-through.
So, our flipping business was born.
Now I'm doing two or three different strategies, doing short sale investing, which
is pretty much an acquisition strategy, potentially a flipping strategy. I'm buying
houses at a foreclosure auction and wholesaling them and I'm also cherry picking
out the best deals and I'm fixing and flipping them and reselling them.
Then, somewhere around the end of 2009, the beginning of 2010, the writing was
on the wall that the foreclosure auctions were getting crazy. There were more and
more people showing up down there. In the beginning, there was a group of
maybe 20 of us down at the auctions, 30 of us. By the middle of 2010, there were
150 people, sometimes 300 people. I mean, it became the new fad for investors. I
was doing short sales. I was doing the foreclosure auction strategy. One day, I had
one of my personal short sales that I was trying to invest in. It failed and it went to
auction, and I ended up working for over six months and I ended up losing the
deal. Everybody, and I mean everybody involved in that transaction, ended up
being a loser. The homeowner ended up with a foreclosure on their credit record.
The buyer and listing agent . . . The buying agent and the listing agent both work
really hard and they never got paid a commission, and I was never able to buy a
short sale and make any profits. So, it was just a lose, lose, lose, lose situation.
I think this is the reason so many investors hate the short sale business. You
know, we all know that there's big profit potential in it, but it's so difficult to pull
all the moving pieces together and make money.
It's just the way the short sale business is. I had anywhere between 70 to 100 short
sales going at one time. Probably 30%-35% of them would fail, and they would
fail for a number of reasons. Sometimes there was more than one lienholder on
the property and they wouldn't approve the short sale. Sometimes there were
insurance companies somewhere in the background that had mortgage insurance
on the property that didn't want the short sale to go through. Maybe because of the
way the bank's accounting methods were being done, they wouldn't approve the
short sale because it was better for their accounting records to take the losses.
There's probably, you know, a couple of dozen reasons, behind the scenes, why a
short sale fails, but the end result is the homeowner loses, the listing and buying
agent loses, the investor loses, the end buyer who wants to buy the short sale
loses. Everybody loses when a short sale fails.
What's funny is, according to Realty Trac, which is, you know, the nation's
leading tracker of foreclosures and distressed sales, 65% of county housing
markets are worse off than four years ago, and that's a recent statistic. In 2012,
there were over 1.8 million foreclosure filings and, while some markets are
14
heating up, shadow inventory, in my opinion, is continuing to build. So, I think
the short sale investing strategy is still viable. I still think that the foreclosure
auction buying strategy is still viable. They're just, now, more competitive, and
the market is being artificially controlled right now and it cannot last forever.
There will be huge waves of foreclosures coming.
Interviewer: Who is it being artificially controlled by?
Cody: Our Fed. Our Federal Reserve System. Wall Street is keeping interest rates
artificially low, trying to keep the housing market moving forward. That's fine,
but they've eventually got to ease up on all this. When they do, and they stop
incentivizing the banks to do short sales and do loan modifications and hold
shadow inventory, it will start getting released to the public. It has to clear out.
So, basically, what ended up happening is, I knew there had to be a better way to
do this. At the time, there were over 6,000 properties per day going to foreclosure
auctions all over the country, and well over half of them were upside down. So,
we were seeing properties that were short sales. Right? They were pending short
sales on the MLS, and they would not get approved. They would go to foreclosure
auction, and they would sell for less than what the offer was when it was a short
sale. So, somebody was willing, on the open market, to buy it for more money,
but the bank decided instead to let it go to auction and they would sell it for
cheaper at auction, to an investor like me. And, when you buy it at auction, it
takes maybe an hour's worth of your time and work to process and do your due
diligence and see if this property has equity and see if it's a good deal, whereas as
a short sale you might work six, seven, eight, nine months talking to 100
negotiators, you know, three or four real estate agents. It's brain damage as a short
sale. So, I knew there had to be a better way to do this.
Then it hit me. It was like a light bulb went off in my head. Why was I working so
hard doing short sales the old-fashioned way? I was constantly having to fight
with the banks, compete with a million other real estate agents and investors, and
I was still having all my deals fall through. Why not, instead, go after the bajillion
properties that were short sales but they were already going south? So, I flipped
the model. Instead of doing all the dirty work, why not just work deals backwards
and save the day and make even more profit? That was the day the reverse short
sale was born. And this is a strategy I've been credited with inventing. I don't
necessarily know if I was the first investor in the country to do this strategy, but I
was probably the first to systematize it and do it as a business model.
The next time one of my short sales began to fail, I ended up going down to the
foreclosure auction and I bought it, and I quickly flipped it for a profit.
Eventually, that model evolved into me looking onto the MLS for property
listings that were pending short sales. I figured if I could buy by-owner failed
short sales, then why couldn't I buy somebody else's failed short sales and
somehow insert myself into their deal and get paid big time?
15
One of the first things that I did, since I'm licensed, I immediately started looking
on the MLS for pending short sales. Within minutes, I found a deal that was
marked as a short sale. It was pending. It already had a buyer on it, and it already
had a foreclosure date set. So, I just picked up the phone and I called the listing
agent. It turns out that the buyer was already sitting there. They were a very
strong buyer. They just weren't able to get the short sale accepted for whatever
reason under the sun. This is a very common scenario. Since that deal was already
going to auction, I thought to myself, "I'm just going to go down to the
foreclosure auction, secure the property," and I wanted to do it not using my own
money. I wanted to use somebody else's money, use some leverage, and then sell
it to the same buyer that was trying to buy it as a short sale. That's what I did. Six
days later I picked up a check for $23,707. It was like I knew, right then and
there, that this was a new investing model that nobody was really doing on a big
basis or a full-time basis, and I didn't have any of my own money involved in the
deal. I didn't have to find the buyer and, probably more importantly, everybody in
the deal loved me.
I was like Superman. You know, I came in and I saved the day. The buyer won
because they sat around for months and months and months trying to buy the
short sale, and they got denied and their hopes and dreams were crushed. Then, I
show up and buy the deal and sell it to them. They were using conventional
financing, so they couldn't go down to the auction themselves and just buy it.
They needed somebody like me, with auction experience, to go down and buy it.
The realtors both won because I paid the listing agent and the buying agent
commissions.
Interviewer: And the owner? The distressed property owner?
Cody: Well, the distressed owner, they were the only person in the transaction who
ended up not becoming a winner, if you will, because their property did go to
foreclosure auction, unfortunately, but it wasn't the real estate agent's fall, it
wasn't the end buyer's fault, and we weren't involved in that transaction until the
deal already went south. And, like I said, the banks ended up opening that bid for
less than what they were willing to sell it or less than what the offer was as a short
sale.
Interviewer: Right, which makes no sense.
Cody: Well, that's where the spread came in. I won because I was able to pocket the
difference between the sale price and what we secured the property for, using
none of my own money. You know, and the great thing is, you don't need any of
your own money, you don't need good credit, you don't need to take on any risk,
you don't need to negotiate with the bank, you don't need to spend any money on
marketing, you don't even need to find a buyer for the property. Actually, you
don't even need to know anything about sucky short sales. So, it was just a
16
winning strategy at the right time and I think, right now, the market is ripe for
reverse short sales. In my opinion.
Interviewer: When did Clever Investor become a company? Were you doing this is as part of
the Clever Investor?
Cody: No. I didn't start selling education or getting into the teaching business until 2010,
the end of 2010. It was a byproduct of people begging me to teach them what I
was doing.
I was making an ungodly amount of money. Everybody, all my friends looked at
me and went, "How are you able to afford all this great stuff, live this amazing
lifestyle?" and they finally just said, "Hey, look, I'll pay you to just teach me what
to do." At first, I was super hesitant to do it because I never wanted to be a guru. I
always wanted to be a ninth grade history teacher as a kid. That was my initial
dream until I realized what ninth grade history teachers make. So, I always had
the teaching bug. I just didn't ever think that I would become a real estate
educator, and investing educator. But I have a degree in finance and a degree in
accounting, and I know real estate like the back of my hand, so it just made sense.
Interviewer: You teach people how to do what you did and made so much money doing.
Cody: Yes and we have the best education [in the industry].
I make more money in real estate than I do from selling education, and I think
that's really important for people to know. I'm a very active investor, even to this
day. I buy anywhere between 5 to 10 properties a month.
I decided that I was going to name my company Clever Investor and the reason
I'm going to do that is because my marketing strategies, my investing techniques,
just about everything that I do and every way I process information and do
business is a little bit different than most people. I credit it to my dad for always
pushing me to be creative. So, people naturally gravitate towards me and my
education because it's different than what they can find anywhere else out there.
It's fun. It's engaging. It's entertaining and it teaches you in a logical process that a
lot of people enjoy.
I want to ask people reading this if they could tell me the names of all their
teachers when they were growing up. Just tell me their names, of all the teachers
they ever had growing up. I would bet money that they can't do it. They could
probably name three teachers because those are the three that impacted their lives.
Those are the three educators who did something different, who became
memorable, who affected their future because of what they did in the second
grade or the fifth grade or the 10th grade. You know? So, I feel like it's really
difficult to be a good educator, and I put just as much effort into being a good
educator as I did into being a good investor, as I do into being a good husband, a
17
good father. I have two kids. I have a son named Hudson and a daughter named
Brinley, and it takes a lot of effort and work to be good at anything. So, Clever
Investor's whole goal is not to put out a ton of education but instead put out a
limited amount of the best education.
Interviewer: Now you have two different components to your business. You have the real
estate and investing part, and then you have the education component that came
subsequent to your experience. If you're starting out today as a new real estate
investor in today's market, what would be the one thing that you would focus on?
Cody: As an investing strategy?
Interviewer: Yes.
Cody: I think the natural first step most investors gravitate towards is no-money-down
investing. That's just naturally because most people don't have enough money to
go pay cash for houses and it's really difficult to go to a bank, even nowadays that
the lending institutions are letting up. It's still difficult to go to a bank and get a
loan in a quick period of time and, let's face it, the best deals out there are sold to
cash buyers because they can move quickly. Sellers like the fact that they can just
get paid and get their money and they get to move on. So, I think wholesaling as a
strategy is probably the natural first step. I would also urge people to understand
and learn more about the reverse short sales strategy because I think that's a very
viable strategy when you're just getting going because you could do it with no
money. You don't need a lot of education. You could learn it within a couple of
days and be up and running.
Interviewer: Is there a product in Clever Investor that can teach them that?
Cody: Yes. I've actually recorded myself doing a reverse short sale, front to back.
It's the "Reverse Short Sale System," and, you know, it's cheap, $97. You know,
it's a one-time fee at $97 bucks. It's cheap. The reason I share that with people is I
like empowering people, not based on the cost of the education, but based on the
value of the education and what it's going to do to their lives. So, I like to
empower people to go out there and try something that's super creative and
different than what all their competition is doing. The reverse short sale system,
it's short, it's sweet, got all the paperwork, got everything that they need to really
learn how to do a reverse short sale in their market. The best thing is, if you don't
have a lot of short sales going on in your market, you could do it virtually, no
problem. In fact, probably half of the reverse short sales I've ever done, I never
even see the property.
Interviewer: What's the biggest mistake new investors make?
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Cody: Oh, that's easy. Going at it alone. Same mistake I made. You think you're smart.
You think you'll just figure it all out, you got what it takes right out of the gate.
To be honest, if real estate investing was easy, everybody would be rich. What's
funny is real estate investing is not easy but it's simple. It's a simple business. It's
simple to learn. It's simple to duplicate what other people's systems are, their
marketing strategies, how they convert leads into deals. Mirroring what somebody
else has already done is simple, but it's not easy to go out there and blaze a trail on
your own. So, don't think that you are just going to step into this game and, right
out of the gate, become a gazillionaire. You really do need mentors and power
team members to help support your business.
Interviewer: Where do you suggest people go?
Cody: Well, I think the natural first step is, they're going to go online and do as much
online research as they can, but I would give a fair warning with that. There's a lot
of opinions out there on message boards and forums and what you're going to find
online on social networking sites, or whatever, and there are opinions that broke
people. You know, they can give you an opinion but they can't do any of this stuff
themselves. So, just like when I found the Jack Miller group, I would urge
anybody reading this to find a group like Clever Investor and, if it feels right to
you, if it fits your core values and the way you think and you like the idea that we
do things differently, or whatever, get involved. Don't just sit on the sidelines and
be a bystander or watch other people get wealthy. Get involved. Put yourself way
outside of your normal comfort zone and insert yourself into the group. Before
you know it, you'll become one of us. You'll start making lots of money, having a
ton of fun, and next thing you know, you're inviting the next person that comes
along into the group, and the group grows and the culture grows, and that's how
you replicate what Jack Miller did. It didn't happen on day one. It took him 20
years of building a culture around himself of like-minded people. So, I invite
people to come check out Clever Investor. It might not be right for everybody but,
if it is, get involved.
Interviewer: Do you hold seminars?
Cody: We do, a few times a year. It's not our core business model. I'm not a seminar
company. We hold masterminds. I believe that people learn better in smaller
groups, rather than a huge, large seminar, and never at any of my masterminds is
it a pitch fest. We don't sell product. We don't have outside speakers come and
sell product. It's training, hard-core training for a few days. We lock ourselves
into a room. We have fun. We know each other outside of the real estate business.
We know about each other's families and goals and hopes and dreams and we do
things outside of just real estate.
The main thing that we do is, I'm constantly pumping out really hard-core tactical
training sessions via webinar or audio calls. So, my students, they get a lot of
value right out of the gate.
19
Interviewer: Why is now the best time to get into real estate for revenue generation?
Cody: Oh my gosh. I am like a kid in Candyland right now. This is the best market I've
seen in the nine years I've been doing this. I do more deals today, probably, than I
did back then. Well, I do less deals but I do more deals easier than I did back then.
I think there are two main investing strategies, right now, that are just crushing it.
One is direct-to-seller marketing, that is where you are going directly to the seller,
whether they find you online or through a direct mail piece or through a bandit
sign, or whatever, and you pony up at the kitchen table. You negotiate a deal and
you buy their house directly from them. That's direct-to-seller marketing.
The other investing strategy I think is super hot right now is the reverse short sale
because you can easily, either using your real estate agent or getting access to the
MLS yourself, sit at home on your computer and search through pending short
sales and find ones that are pending and, through my system, reach out to them
and let them know that you're available if the short sale fails and you want them
to call you. Then, just follow my steps and my system to put that deal together,
using none of your own money, all from the comfort of your home. So, you don't
need to be a foreclosure auction expert. You don't need any of your own money,
any of that stuff.
I think those two strategies are really viable in today's market. I think trying to
make normal offers on the MLS is near impossible. You're getting multiple bids
on properties. REO agents are horrible to work with in most cases. REO's are
declining quickly. Short sales are still around but those are getting multiple offers
and they take six, seven, eight months to get approved. Going down to foreclosure
auctions on your own is very competitive. You need to have cash. You need to
know what you're doing and there's a lot of risk. So, I would say direct-to-seller
marketing, reverse short sales are the two best strategies, in my opinion, in today's
market.
Interviewer: I'm assuming that you have success stories regarding students of yours or
associates who have done what you've done and followed in your footsteps and
obviously left their day job and do real estate investing full time?
Cody: I've got dozens and dozens of them. I could tell you about Laura, from Texas,
who is a stay-at-home mom, whom I taught the business and is doing deal after
deal right now. Never was able to do it on her own before and then met me and
now, on her very first deal, within the first 30 days, she made $15,000 and then,
immediately, right behind it, did another deal and made a lot more than that. Now,
she's just doing deal after deal after deal. I could tell you about a guy named Don
in Massachusetts, in some little tiny town in Massachusetts, who bought coaching
program after coaching program and did bus tours with all the big gurus and did
everything, could never do a deal to save his life and then met me and I taught
him the business, and now he's a professional wholesaler in his little town. He
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went from being a nobody to the biggest investor in his town within a few
months.
But, to be honest, I hate when people make income claims. I like people to look at
our systems, look at our marketing strategies, look at our company culture and our
group culture of our students and decide if it's for them, not based on the fact that
we're going to trade money, their money, for a guaranteed result, if you know
what I mean. I feel like investing isn't for everybody. I feel like each group has its
own things they bring to the table. Clever Investor isn't for everybody; but the
people who do gravitate towards us and they get involved, they see their lives
change and they profit big time because our systems and our training is different
than what all their competition is teaching and doing, and that's what we pride
ourselves on.
Interviewer: The top three ways that you different.
Cody: Our marketing strategies always have a twist in them. They're always a little bit
different. The way I brand myself online, how fast I can teach somebody who
knows nothing about technology, nothing about using a computer except for
doing some basic email and basic computer functions, I could show them how to
get up, ranking and generating leads online in a very short period of time.
Our video marketing is ridiculously good. We have in-house systems that we built
from the ground up. I have some software technology, mobile marketing
platforms, email marketing platforms, website builders, funnel creators. All the
things that I had to teach myself to do, we have technology that outdoes it in a
matter of seconds. So, when a new student comes into Clever Investor and they
get set up with some of our technology, within minutes, their whole entire
business system, all their tech, is set up for them. They have multiple websites up
and running. They have mobile marketing campaigns going. They have email
marketing campaigns going. They're learning how to do video marketing. They're
getting their websites to rank in a very short period of time. Our software and our
technology, it's all proprietary. Nobody else has it. I built it from the ground up. I
would say that's different.
I think the way I teach people to generate leads and then we have four main
investing strategies we teach, wholesaling, buy-and-hold, fixing and flipping and
creative real estate investing and we call it our "Foursquare Strategy Matrix."
Each deal takes on a life of its own. I don't predetermine what a lead is going to
be. In other words, I generate leads. That's what I do. When the leads come in,
they take on a life of their own and they're going to fit into one of my four boxes.
They're either going to end up being a wholesale deal or a fix-and-flip deal or a
creative real estate deal, like a subject to or a wraparound mortgage or a sandwich
lease option, or it's going to end up being a buy-and-hold deal. So, eventually, you
change as you grow as an investor. You start off maybe being a wholesaler. Every
once in a while you'll do a fix and flip. Eventually, you buy your first rental.
21
Then, you realize that owning real estate could be a lot of work. So, then you
transition up, as you make more and more money, to owning notes and becoming
the bank and creating paper and creating income streams and caring more about
yield, and eventually maybe you become a private lender yourself. So, as you
evolve over the years, you change a little bit, but we teach everybody four main
strategies, and I think that's what makes us different.
Interviewer: I know you've mentioned that you don't like setting revenue goals, but what
would you consider a reasonable expectation for someone setting out to do the
real estate investing for the first year and then subsequent years thereafter?
Cody: I think making six figures in your first year is extremely doable. Last month
alone, and I'm almost hesitant to say this, but this last month alone, I made over
$200K flipping houses in one month. It's totally doable. You just need to go
through this learning curve, probably for the first month or two, to understand the
terminology, to build your network and your power team and, if the person is
aggressive and they deal with fear a certain way . . . One of the first things I teach
out of the gate is how to mentally become wealthy because it's really a different
mindset than what you're probably used to. Depending on how you deal with
challenges and opportunities and fear, whatever that is to you, it is going to
determine your future success. So, if you can deal with that in the first month or
two, get your business systems up and running, get all your tech up and running
and start focusing on lead generation right out of the gate, like within the first
month, month and a half, you're going to see results much faster than somebody
who is all over the place.
In reality, you should have your business set up within the first couple of weeks.
Right after that, you should be focusing full-time on lead generation. You've got
to have phone calls coming in. You've got to be talking to sellers, making offers
consistently and going on appointments consistently. If you don't set
appointments, you're not going to do any deals. You're not going to make any
money. If your real estate agents aren't making offers for you on distressed
properties on the MLS, you're not going to make any money. So, it really just
comes down to how aggressive the person is going to be and how bad do they
want it because if they want it more than what their fears are holding them back,
then they're going to do really well in a very short period of time.
Interviewer: Are there any better areas in the United States now than others?
Cody: Oh, yes. Oh, yes. There are probably hotter markets than others, but that depends
on who you're talking to. Like I said, my guy in Massachusetts is in a little
Podunk town in Massachusetts, you know? I would never have thought that that
was a hot market, but every time I talk to him he's got a couple of deals in escrow.
You know? I'm in Phoenix, the hottest market, probably, in the entire country, the
most competitive market in the entire country. I bet if you talk to 10 investors,
half of them would say, "Oh. It's too competitive, too difficult." And the other half
22
of us is saying, "I'm like a kid in Candyland. This is the best thing I've ever seen
in my entire life." It's just the mindset shift. It all depends on your training and
your systems and how good of a marketer you are.
Interviewer: It's about training, systems and mindset. So, what's next? What's on the horizon
for you?
Cody: Disneyland. I'm going to take my kids to Disneyland and I can't wait. It's their
first time going to Disneyland. I‟m super excited because I remember going to
Disneyland and riding the submarine.
Interviewer: “20,000 Leagues under the Sea."
Cody: Yes. I remember going through that over and over and I made my parents ride that
submarine a million times. So, I'm really excited for my kids to be able to
experience that. To take a $6,000 vacation on the fly, $10,000 vacation, when
you're doing deals that profit you $20, $30, $40, $50 grand, is not a big deal. You
know, you don't trade experiences and family time for work anymore.
Interviewer: And are you still generating income while you're at Disneyland?
Cody: Absolutely. I've worked really hard to build Clever Investor up, so I have an
educational business running, and I work really hard to get my business systems
and my real estate business working without me. So, for instance, I have a couple
of fix-and-flips I'm doing right now. When I go to Disneyland, my crews are still
working, my agents are still lifting the properties when they're done. They just
eFax me over stuff. I digitally sign that, send it back. Nothing changes for me. I
could probably, theoretically, take a whole year off and barely work maybe an
hour a week, just, you know, get on my computer and do some stuff, and my
teams would just be moving ahead.
Interviewer: How long did it take you to get all this set up?
Cody: Well, for the real estate investing business, it took me a couple of years. Probably
by my third year I was in full swing. Like I said, I wasted my first year banging
my head against the wall. But, by my third year, after I got my mentors, after I got
my system up and running, after I really mentally shifted that I could do this if I
had the right team, it took off. If you were to ask me around year three, I would've
said, "I know exactly way people fail. It's because they're not willing to do what
others aren't. They're not willing to fight through it. They don't want it bad
enough." It took a lot of work to get to year three but, once I got there, it was like
heavenly. I knew that I'd rounded the corner and all that pain and all that stress
and all that trial and error, finally, was behind me and things started to click.
Business that used to seem hard became easy for me. Marketing systems that I
thought were difficult and time consuming became real simple, and the business
took off. So, I would urge anybody reading this to not be afraid to put in work for
23
the first couple of years. It will pay off big time because now I get to do whatever
I want, whenever I want. I know that's cliché but it's the truth, and it's a really
great feeling.
Interviewer: How do people find you?
Cody: www.CleverInvestor.com is our corporate website. There's a lot of information on
there. I would tell them, check out my blog. I'm constantly blogging. It's very
tactical and technical. It's not fluffy stuff. So, if they want to check out my blog,
get involved, that's awesome. They can find me on Facebook under Cody Sperber
or go to www.Facebook.com/CleverInvestor and get involved there as well.
24
How To Pocket Up To $33,438 A Month Flipping Houses In Your Spare Time
Without Cash Or Credit
3 Regular Guys Finally Reveal Their Simple 31-Day Plan
Rob Swanson
www.FlipCashDeals.com
Interviewer: We're talking to Rob Swanson with www.FlipCashDeals.com. What's your
background and how did you get started in real estate investing?
Rob: It's an interesting question because ten years ago, probably 12 years ago now, I
was probably like most people. I was working a job that I half enjoyed and I half
didn't enjoy. The part that I didn't enjoy was I didn't like working for somebody
else.
I knew that I wanted to be my own boss and I wanted to quit the job at some point
and basically do my own thing, so I was looking for anything. I was looking for
businesses, stock market, commodities, franchises, real estate. You name it. I was
on this massive search. It ended up that one evening at a local real estate investor
club here in the Denver area and what the guy was saying from the stage made so
much sense.
I'm like, "I can wrap my head around that. Find a property that needs work, figure
out how to get it at a low price and then make a profit on it." It made a ton of
sense to me.
I dove all in to figure out how this real estate investing thing worked. My biggest
challenge at the time was I didn't have cash. I didn't have a bunch of credit that I
was going to go out and use, so I had to figure out how to do this business without
the traditional things that most people think about.
I was working a job in a construction company, at the time. I was a project
manager and I thought, "This transition makes sense into real estate investing," so
I was on this pursuit of trying to figure out how this whole real estate thing was
going to work and one thing just led to another.
I just started to consume all of the information that I could and learn and learn and
learn how real estate investing worked.
I started to connect with different people. Buy a cup of coffee, go out for lunch
and one thing led to another and eventually I got into my first deal. I did my first
deal, and we might talk about this a little bit later, but my first deal I bought with
100%, no money down.
25
I made over $40,000 on that little brick ranch house in Lakewood, Colorado.
From that point in time, I was hooked long term on this business. It was about six
months after that that I ended up quitting my job and going full time.
Interviewer: How did you buy that house and make $40 grand with no money down?
Rob: This is the interesting part about it. I heard that here's what I needed. I needed a
seller that was motivated to sell so that I could go in and solve their problems. I
think part of the thing that people need to realize is that they need to reframe how
they think.
It isn't how much money can I make from real estate investing, the money comes
if you figure out and you learn how to solve problems and take advantage of
opportunities that present themselves.
I was working my job. I was driving down 6th Avenue in Denver, Colorado and I
saw this big sign up off the highway and it said, "For Sale by Owner." I thought,
"That's the kind of person that I need to go and talk to." I knew nothing.
This is the thing that you have to understand. I was just completely shooting
blind. I was making things up along the way, but I was taking action. I end up
pulling up to this little house, walked up to the door, knocked. An older lady came
to the door and I said, 'Hi. My name is Rob and I buy houses in your
neighborhood. I was wondering, obviously, you'd like to sell, I was wondering if
you'd be interested in selling me your home?" A conversation ensued from there.
She told me a certain price that she wanted that she was selling the house for and I
said, "You know, I'm not sure that I can pay the price you're asking unless we
could work out some terms." We just started to have a conversation and I really
didn't know where I was going, so I asked her a question.
I said, "Would it be OK if I went and put the numbers together and brought you
back an offer in the next day? Tomorrow?" She said, that would be perfectly fine.
I didn't know what to do as soon as she said, "I'm really willing to sell and I'd like
to do a deal with you."
I just asked for permission to go get my head straight, get my numbers together
and come back the next day. That's exactly what I did. I came back the next day. I
offered her a no-money-down deal where she basically carried all of the financing
and I bought the house, she became the bank basically.
I didn't go and get a bank loan. I didn't go qualify for a loan. I didn't use any of
my own cash or any of my own credit. When we showed up at the closing table,
she became the bank and I just started making payments to her over the course of
the next five years until I ultimately then resold the house.
26
This is what's great about it. The price I got was about 40% of the value of the
actual property. The reason for that was I was able to show her that if she took a
lower price but payments over time, she would make as much money as if she
took all of that cash up front.
She didn't' need the cash up front; it was a win-win situation for everybody. I got
a great deal that I could make money on. She got a great price because she was
willing to take that price over time and ultimately, the deal came together and
everybody was happy and she made money and I made money.
Interviewer: You sold the house five years later?
Rob: I did. What I did is when I initially bought the house, I turned right back
around and I advertised the house for sale with a rent to own, so a lease option.
Actually, this is what's pretty neat about this deal. Before I even closed on the
property, I already had a tenant buyer lined up that wanted to buy the house from
me, but they didn't have great credit.
They had a good income, a good job and then had a stable life, but they didn't
have credit so they couldn't qualify for a new bank loan. What I was able to do
was structure a deal with them and sell the house to them on a lease with an
option to buy over the next five years.
Before I even closed on the house with the seller, they had already given me a
$7,000 deposit as a deposit towards this option to buy that, as soon as I closed, the
next day they moved in and they lived there for five years until they ultimately
purchased the home.
Interviewer: That's a very cool story.
Rob: And profitable too. Everybody won. I, the investor, won. The seller won and the
family that ultimately lived in the house and bought it won.
Interviewer: Where'd you go from there?
Rob: What I started to do from there is realize, "This is great, but I can't really
build a business around hoping that I run across a motivated seller by randomly
driving down the freeway." I realized that I needed to figure out how to build a
system around getting motivated sellers calling me on a more regular basis.
I have a saying in my office and I run an active real estate investing business to
this day, if we're not making offers we're not making money. That was one of the
themes that hit me early on. I needed to be constantly in connection with a
motivated seller. That means I needed to be making offers.
27
One of the things that I do today is I buy a lot of bank owned and a lot of HUD
properties and those are two types of properties that are motivated sellers. I buy,
literally, HUD and REO or bank-owned properties at $0.30, $0.40, $0.50 on the
dollar every single week. I really put a lot of focus into building systems around
buying those HUD and bank-owned properties because they're publicly available.
As long as people know where and how to get access to them, you can make
offers on a regular basis. We've built a lot of systems in our business to do that
automatically and they're great deals. They're super cheap and most of the general
public doesn't know how to approach banks and approach the government in the
right way to buy that cheap.
That's what we've done to transition a lot of our business to make sure that we
have deals coming in every single week.
Interviewer: Your two revenue leaders are bank-owned REOs and HUD homes?
Rob: Yes. That's correct.
Interviewer: If you were starting out as a new real estate investor today, what would be the one
thing you'd focus on? Same?
Rob: Absolutely. Wholesaling,bank-owned and HUD properties. That would be the
thing that I would do the most. When I say wholesaling, what I mean is building a
process or having a process that you can follow to make offers on dirt cheap
properties, put them under contract and then find guys like me that have cash and
are interested in buying those properties.
When a wholesaler finds a great deal and can put it under contract and then brings
me that contract, I'll actually pay that person $3,000, $5000, $7,000, $10,000,
depending on how cheap they have the property under contract for, I'll pay them
to basically buy their position in the deal.
That's what a wholesaler does. It's the easiest way to make thousands of dollars as
a new real estate investor, jump in and really start to learn how the business
works.
Interviewer: What's the biggest mistake new investors make?
Rob: Thinking that they need to have everything figured out at the very beginning
before they start taking action. That's number one. That's, I think, the biggie.
People over analyze because they're fearful rather than just jumping in and taking
action. I think that the second thing is not having a plan.
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Number one they're fearful because they don't have it all figured out. Second is
they don't have a plan and the third is too many real estate investors, I see this all
the time, try to stick a square peg through a round hole.
What I mean by that is they figure out from some guru or some guy out there, or
gal out there, that, "Here's some real estate investing strategy that they can do."
They take that investing strategy, which by the way, probably works great. It just
might not work great where they live.
This big problem that I see people run into, this roadblock is they're trying to do
the wrong kind of deal in the wrong kind of market and as a new investor it's very
hard to know what to think, who to believe, how to know how this stuff all works.
I see that happen a lot; people sort of beating their head against the wall doing the
wrong things in the wrong places when a little strategy shift in how they approach
their business could be very, very big.
Interviewer: Take me back now. You've got this one house. You've got a system. You're trying
to figure out how it works. What did you do next? You're still working for the
construction company.
Rob: What I did is I started making a massive amount of offers and I basically
went into the multiple listing service, the MLS. That's where all bank-owned
properties get listed, the MLS. I got access to that by contacting a local real estate
agent.
I said, "Hey, Mr. or Miss Real Estate Agent. Log in to the MLS and do a search
for all bank-owned properties that have been on the market for 30 days or longer.
When you do that search, go ahead and then send me all of the information." I
didn't really know the market that well at the time, so I got all of this information.
When I first did this, I probably got 60 or 70 properties that they sent me right out
of the gate. I just went down the line. If the house was listed for $60,000, I
submitted an offer for probably $35,000.
If it was listed for $50,000, I submitted an offer for $30,000. About 60%, roughly,
of the list price, I just made offers. Just blind, random offers. That might scare
some people thinking, "How do I know if I'm right?" You might not, but you'll
figure it out very quickly.
Here's the thing that people have to realize. Just because you made an offer,
doesn't mean that you actually ever have go close. One of the things that I learned
very early on is that I got a lot of information very quickly. I learned the market
super fast by making offers and getting probably 99% of them rejected.
29
They would counter back to me and I would be able to start to figure out the
values and the prices and what was going to work in a particular city. My advice
to people is just start making offers. Sooner versus later that's the fastest and
easiest way to start learning what's going to make you money.
Interviewer: You started making offers and then you got rejected, but some took your
offer and then some countered, so now you're starting to get inventory.
Rob: Correct. Once I had inventory as a wholesaler, because remember I didn't have
cash to close on these houses. I didn't want to go qualify for a bank loan. What I
did is, and you've got to go back, this was a decade ago before the Internet and
back in the day what I used to do is I used to run a classified ad in the local
newspaper in the Real Estate Wanted section and the Real Estate For Sale section.
Something to the effect of, "House for sale. Cash only. $38K. Call Rob" and then
my phone number. I would get local real estate investors that would call me off of
that ad saying, 'I'm a real estate investor. I have cash. I saw your ad in the
newspaper. What do you have for sale?' Then I would tell them the house.
I'd give them, "I've got 123 Main Street. It's a three-bedroom, one-bath house. It's
beat up and distressed really bad and I'm selling it for $38,000." I probably had it
under contract at that time for 30,000.
If they looked at the deal and evaluated it and determined that $38,000 was a great
price, then they would make me an offer for $38,000. I would be able to use their
$38,000 that they paid me to actually go pay cash for the $30,000 that I had it
under contract for.
That next step was finding my cash buyers. Today we have the Internet, so today I
use Google and I use Craigslist a lot to find my cash buyers. Just like in the olden
days a decade ago I had to run ads in the newspaper.
Today I run free ads on Craigslist and I get phone calls on a regular basis of cash
investors looking to buy wholesale properties from me. Every one that I sell, we
make an average of $5,000 to $6,000 profit on most of our wholesale deals.
Interviewer: Then what do you do? You pay the seller in cash with what you got from the
buyer. You made $8,000 and then the buyer just has the house and does whatever
he or she wants with it?
Rob: That's exactly right and that's the beautiful part about it. I don't have to be a
landlord. I don't have to fix and flip. I don't have to have any private money. I
don't have to worry about toilets or tenants or trash or any of that stuff. I'm just
the middle man and I pocket $5,000, $6,000, $8,000 bucks.
Interviewer: Now you've got this whole system going?
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Rob: Exactly. Then the key there is one of the big things that I learned early in
my business that real estate investors always try to do is, so now I'm doing a deal.
Now I'm making $8,000. How do I make $16,000? I have to do two deals. How
do I make $24,000? I have to do three deals.
How do I make $32,000? I have to do four deals on a monthly basis. Let's face it.
Most of the time the reason we get into this business is because we want to go
make a lot of money. We want to create a good lifestyle and make a lot of money.
What I see a lot of real estate investors get stuck with is what I call 'going deep
versus going wide.' I'll explain that for you.
Most real estate investors, to make more money, try to go deep in their local city
and just find more deals, but that can be pretty tough to do. The reason it can be
tough to do is you have to realize how inventory gets basically added into a
market.
The government and banks have a certain number distressed properties that
they've taken back and not every city gets the same number of properties, so you
might be in a city that gets a whole bunch of distressed properties. You might be
in a city that gets very few distressed properties.
If you want to make more money in a city that gets very few distressed properties,
how easy do you think that is? It's not very easy because you end up competing
against so many other real estate investors and you just can't.
You might be able to get a deal a month, maybe two, but to start to get three
deals, four deals, five, ten deals a month to go deep into your market and get that
many deals to make more money gets pretty hard.
What I do in my business is I go wide, focusing on trying to do five deals a month
in my local city, what I do is go wide and I expand into other markets.
Remember, as a wholesaler you don't ever have to look at properties, you don't
ever have to estimate their values accurately; you don't have to ever estimate
repairs because who's going to do that for you? Your buyers are going to do all
that hard work.
If you go wide and expand your wholesaling business into multiple different
cities, you can then pick the cities that have the most distressed property and
inventory available. You can pick the cities that have the most cash buyers
available, this is exactly what I do in my business.
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Now I go into maybe two or three or four different cities and I do two or three
deals a month in each city and pretty soon I'm doing seven, ten, 12, 15 deals a
month very easily and regularly.
The key to this is I've figured out how to build a team that does 93%t of that work
for me, so while you might hear this and think, "That sounds like a lot of work,"
the reality is I spend a lot of time skiing up in the mountains.
I spend a lot of time going fly fishing. I spend a lot of time going to my kids'
soccer, dances and ballet recitals, so I've figured out how to get a team that I only
pay when they perform or when they sell one of our properties.
They do 93% of the work and I basically sit back and pull the strings and oversee
the rest of the business.
Interviewer: How is it that you don't have to see the properties?
Rob: That's what's great about it. You don't have to see the properties because,
let me give you a little hint and a little tip. Most of the types of houses that we buy
are on the lower end of most cities; the lower-priced end of most cities, so we're
not typically buying the upper-end houses.
We're buying lower priced houses. That way if I buy it cheap on the lower end
and I rent it out, I can make a good return on my cash or if I fix it up and flip it, I
can make a good quick cash profit.
There's a lot more people that can afford lower priced properties than higher
priced properties. If you start to look from city to city, and I've successfully and
profitably flipped houses in about 14 different states and 26 different cities across
the country, what I've come to realize is this, most houses on the lower price side
of the market are about the same size and they generally range anywhere between
1,000 and 2000 square feet, depending on if there's a basement or not.
I can go in and almost completely gut and rebuild a house for between $25,000
and $35,000 anywhere in the country. I know that if I just guess, if I clearly guess
a $30,000 rehab budget, I'm going to be pretty darn close most of the time.
Remember, as a wholesaler, all I'm trying to do is get close so that I can make an
intelligent, really low offer so that when my rehabbers and landlords, my buyers
start to run their actual numbers, they're pretty close to the numbers that I guess.
That's why you don't have to look at houses. You don't have to estimate repairs
because at the end of the day your cash buyers are going to be doing all of that
detailed work. It's like I get to sit back and throw hand grenades and then they
have to shoot the rifle. I don't have to be very accurate with a hand grenade.
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They've got to be pretty accurate with the rifle, so I toss in all of this inventory
and tie up these properties and then just bring them to my cash buyers who
ultimately pay me $5,000, $4,000, $8,000. They do the hard work. They take on
all the risk. They bring the cash to the table. They do all of that work and I'm just
delivering inventory.
Interviewer: Bring it home now. You figured all this out and now you start to systematize it
and then do you go into your own business? You leave your day job?
Rob: That's exactly right. What I've been able to do is, because of my background, I
was in the construction industry. I was in engineering. I did go to college. I got an
engineering degree. Here's what's funny about it, I've never been accused of being
the traditional engineer.
I can always make jokes about engineers because I am one, but people look at the
way that I run my business and they say, "You must be an engineer because it's
step by step by step." We just follow the simple steps in order to get the results we
want.
That's what engineering is all about: Making things brutally simple so that we can
build a system around it and then scale the business as big as possible.
A little over ten years ago I ultimately did, I quit my job. I went into business for
myself full-time as a real estate investor. I've been doing that ever since. I've been
through the upside of the market and the downside of the market and I'm still here
successfully.
The reason for that is I know some things that most real estate investors don't
know and that is how to pick the right markets across the country to drop this little
system into to get other people to do all of this work and get paid on easy, what I
call, low-hanging fruit deals that most investors out there just completely miss.
What I do is I do regular training webinars where I teach people exactly how I do
this. In fact, I've been invited into very high level real estate investor master
minds where I teach a lot of my strategies on picking the right markets and how to
run your business living wherever you want to live and doing business where it
makes the most sense.
That's one of the key things that I run and live my business and life by. I do
regular real estate investor trainings that people can just jump on and sit in for an
hour or so with me and learn how I run my business and do that stuff and for the
people reading this right now, that's available to them as well too.
Interviewer: We talked about someone being involved in real estate while still having
a job. Why is now the best time to get into real estate for revenue generation?
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Rob: Why is now the best time? It seems like that question gets thrown around a lot and
I hear a lot of, sort of, cheeky interesting answers. A lot of them are really corny,
but let me tell you this. I've been a full time real estate investor through the peak
of the market, through the crash of the market and now after the crash of the
market.
I can flat look you in the eye and tell you that I have made more money in the
years after the crash of the market than I made before the crash when prices were
skyrocketing and all the appreciation was there. When the market crashed it was
the perfect time for a real estate investor that knows what they're doing.
Prices drop by 50%, 60%, in some cases 70%. Many people lost their houses for a
variety of reasons, oftentimes through no fault of their own and became a renter.
There are just huge residual cashflow opportunities today for real estate investors.
There are huge opportunities to buy really cheap and especially as a wholesaler
there's never been more distressed inventory available to turnover and wholesale
quickly for $6,000, $8,000, $10,000 profits than right now in today's real estate
market. It's a great time to jump in.
Interviewer: You also talked about certain geographical areas. Which geographical areas are
more effective when applying your methodology of real estate investing? You
like the lower-end markets?
Rob: Yes. I go into a lot of detail on that in my live trainings that I do. I basically have
seven market criteria selectors and let me just talk about a couple of them, just so
that people can kind of get an idea of how we approach things because the key is
to realize that you can run your real estate investing business like I do from
behind my laptop.
I literally run my business from my laptop and from my cell phone, so if I'm on
vacation and look, I've been on vacation for the last four days. We've been up in
the mountains with my family skiing.
I've made over $40,000 over the last four days while I've been on vacation. The
key is to understand you can run your real estate investing business from
wherever you want to be and wherever you are, wherever you want to live.
Geographically, here's what I look for. I look for, these are my two, of the seven
market selectors that I go through on my live training, these are the top two that I
look at. Number one is inventory. I look at the number of distressed properties
available in a local market because if I want to make quick, easy cash, I want to
know that I'm putting my effort in where I know there are distressed deals. I know
there are profitable deals. That's the key.
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The first thing I look at is the amount of inventory. The second thing I look at,
and this is key to actually making a profit is the number of cash buyers. Are there
a lot of real estate investors in that local city that are paying cash for properties?
If those two criteria hit, then I start looking at the next five criteria to basically
rank the cities and pick the best city to drop my wholesaling operation into.
My goal, when I open a new wholesaling market is to drop into that market, get it
up and running and be profitable, meaning I'm closing one or two deals a month
in the first 30 to 60 days.
That's totally possible when you pick a market that's got a lot of inventory, a lot of
cash investors buying properties and then you drop your system into that market
that just starts to turn over that inventory and put yourself in the middle of it.
Interviewer: Obviously you've had some success stories. What got you into teaching your
system?
Rob: I was a local real estate investor here in the Denver area. I used to attend
a lot of local real estate investor meetings. I used to get invited to come in and talk
about what I was doing. I used to get hit up by real estate investors all the time
looking for cash.
They wanted me to fund their deal or partner their deal with them, and this was
just on a local basis. What ended up happening is more and more people started
coming to me asking me, "Would you teach us what you do? We're just trying to
break into this business of being a real estate investor."
Or, "We're already a real estate investor but we're trying to go to the next level
and we see that your business scales. We see that your business isn't limited by
the amount of cash or the construction crews or your own time. Your business
scales and we see you out on vacation a lot. What's the deal with that?"
More and more people started to come to me and ask me for advice, for training,
teaching and that sort of thing, so I started to organize some training and some
teaching and opportunities here locally and then one thing led to another.
All of a sudden I was referred from one real estate investor in Denver to
somebody in Chicago and in Florida and then California and pretty soon I had a
following of people all over the country that were coming in and wanting to learn
my systems. Then, I got invited to teach at certain masterminds and high level
things.
It's pretty interesting, the level of students that I have, I had a guy, and I'll tell you
this story. I won't make it long because I know we don't have a ton of time, but
you'll find this very interesting. I had a gentleman, Matt, who came to me and
35
said, "I'm working a job and I really don't like what I'm doing. I've been doing it
for ten years. I make good money but I'm working 90 hours a week. I want to do
something different."
He ended up working with me over the course of the next six months and quitting
his job, going into real estate full time and over the course of the next year, this
certainly isn't typical, not everybody does this, but over the next year, Matt made
over $200,000 because he just jumped in.
He said, "I don't have a safety net anymore. I got to make this work for my
family," and he started following the steps, taking action, even when it was
uncomfortable. He made a ton of money. He's a full-time investor to this day.
That's a guy that was brand new, knew nothing about real estate investing.
Jumped in and was able to make pretty darn good money.
The other side of the spectrum is I've worked with a lot of guys and gals that are
very successful. In fact, one of my students runs one of the largest national REO
asset management companies in the country.
He's got 130 employees. He has over 15,000 graded REO agents all over the
country. All they do, their clients, my student's clients are Chase Bank and Bank
of America and Fannie Mae and Freddie Mac. That's who this guy's clients are.
He ended up finding me.
He sat in on my live presentation that I do regularly for people online and after
going through that he reached out to me by email and ended up calling my office.
We chatted and he ended up joining my coaching program and then paying for his
operations manager and his head of distressed assets to join my program as well.
Here's a guy that said to me, "I learned more about how investors approach the
distressed property business from what you've taught me than I have as 20 years
in this business." This guy is a high level, he's the keynote speaker at some of the
largest bank, REO, asset management conferences in the country.
That's the kind of difference in level of folks that I've worked with and watched
be successful with these systems.
Interviewer: What's a reasonable expectation someone should set, let's say as a first-year goal,
if they follow your method?
Rob: What's a reasonable expectation? That's a hard one to answer. Here's why it's
hard, I don't know the person. I don't know how hard they want to work. I don't
know how bad they want it. I don't know how much they're going to let life get in
their way. I don't know how many excuses they're going to make.
36
That's my disclaimer. Here's the deal. I want people to jump in, follow the things
that I teach, even if they beat their head against the wall trying to make it happen
and they haven't had success yet, there's a reason they haven't had success.
It's probably because they're trying to push the square peg through the round hole
and if people will figure out how to make a little bit of a strategy shift, I want
people to make their first $5,000 in the first 30 to 60 days.
I want people to get their business where they're doing what I call "Make $15K
Program." I want people to be doing $15,000 a month by 60 to 90 days. We want
them to make their first deal in the first 30 to 60, then we want them to get and
start to scale their business to $15,000 a month in the first 60 to 90 days. That is a
very reasonable expectation, very doable. I've watched many students do it.
If the student is at that level where they say, "You know what, Rob? I'm already
making $15,000 to $25,000 to $30,000 a month in my real estate investing
business, then the expectation goes to the next level.
Now what we want to do is we want to reduce the amount of work that you're
doing in your business. We want your business to scale and we want your
business to double in the first 90 days.
Wherever you're at, it's getting either that first $15,000 a month or it's doubling
your business by teaching you how to build a team and scaling the business where
it doesn't put anymore work onto your shoulders.
Interviewer: What's next for you? What's coming up? What are you looking to accomplish?
Rob: I am just continuing to take advantage of the real estate market that's out
there. I know that the real estate markets that have crashed over the decades in the
past, it crashed back in 1973, '74. It crashed in 1990, 1991, then it crashed again
in 2008. We're still on the tail end of this last crash and it only happens every 20
or 30 years or so.
Right now, is the time to just scale your business, take as much advantage of it as
you humanly, possibly can and just get in right now because if people wait too
long, they're going to find that we're riding up that next swing of the cycle.
It's going to be too late. My advice to people is jump in. Learn what's happening
right now and then three things. Keep it really simple because you don't have to
make this business complicated.
Build a system around it so that you don't have to work your tail off and you can
still make a lot of money and then scale the business so that you take as much
advantage of the market currently right now as you possibly can. That's my advice
to people and that's exactly what I'm doing.
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Interviewer: Is there anything else you want to add?
Rob: No. I think we really covered a high level of my business, what I do, why I do it
and how I tackle it. If people want to go deeper and really learn what I do and
how I do it, see my seven-market criteria breakdowns, and really dive deeper into
how I run my business on a day to day basis, I just invite people to join me on the
live training webinars that I'm going to be doing. I really look forward to
interacting and meeting some folks online. Visit www.FlipCashDeals.com.
38
How To Pocket Up To $33,438 A Month Flipping Houses In Your Spare Time
Without Cash Or Credit
3 Regular Guys Finally Reveal Their Simple 31-Day Plan
Josh Cantwell
http://www.strategicrealestatecoach.com/
Interviewer: How did you get started in real estate investing? What's your background?
Josh Cantwell: I actually got started in real estate investing, because as a financial planner
and as a financial advisor, I saw that a lot of my wealthiest clients didn't
have their money in the stock market, didn't have their money in
investments, like mutual funds and stocks and bonds. They owned real
estate. So back in 1997, I graduated from college, became a financial
planner at 21 years old, got my insurance licenses, series 6, series 7. And
over the next three, four, five years, I became really good at advising
people about money, but I quickly realized that my most successful and
wealthiest clients owned real estate. I took notice. They owned restaurants.
They owned not the restaurant, the business, but the restaurant building.
They owned rental properties. They owned commercial properties. They
owned single-family homes. They owned apartment houses. I took notice.
In 2003, I basically quit as a financial adviser. I was sick of that business,
because it's very constricting. It's very buttoned up, if you will. And I
decided to venture out into real estate. I just wanted to focus on pursuing
my dreams of becoming financially free and wealthy with real estate in a
business that was much more open to creative marketing ideas, creative
wealth-building strategies. I jumped right in and started focusing on pre-
foreclosures and short sales and foreclosure properties, because in my
area, northeast Ohio and Cleveland, we had already been hit by a
foreclosure crisis. The foreclosure crisis in Cleveland started in 1999,
because we had a bunch of Fortune 500 companies that moved out of the
area. So there became a lot of inventory, a lot of foreclosures, a lot of short
sales, a lot of bank-owned properties. So I immediately jumped into
foreclosures in the spring of 2004, and I've been a full-time real estate
investor ever since.
Interviewer: What are your top two primary revenue pillars; the ways you make money
with real estate?
Josh: I actually focus on seven revenue pillars. I don't recommend that investors
focus on seven, but I've been a full-time real estate investor for almost
nine years now, since 2004, so I focus on seven. My seven revenue pillars
are bank and government foreclosures, that's number one, short sales are
number two, lease options are number three, buyers that want them is
number four, raising capital is number five, marketing, especially Internet
marketing is number six, and number seven is passive income, passive
39
cash flow. If I was a brand new investor today, based on what's going on
in the market right now, I would focus on bank and government
foreclosures, and I would focus on rent-to-own properties, or lease
options. Those would be my two revenue pillars as ways to make money
with real estate.
The reason why is, first of all, because the banks have tightened up their
lending criteria, and they're not lending money to even qualified buyers,
qualified applicants. There are a lot of people who, under normal
circumstances, would be able to buy a home but can't. They can't get a
bank loan. So that lends itself to an opportunity where you can take over a
property on a rent-to-own basis and then wholesale that property for a fee.
I use what I call the magic document, which is also a letter of intent. My
number one revenue pillar would be wholesaling lease options. My second
quick cash revenue pillar is wholesaling and renovating government and
bank foreclosures. The reason why is, number one, there's a lot of
inventory. Number two, there's a lot more inventory to come. There's a lot
of government and bank foreclosures that are going to hit the market over
the next two to five years.
Interviewer: What's the biggest mistake new investors make?
Josh: The biggest mistake that new investors make is not raising capital. They
don't have capital. The reason they focus on wholesaling or they focus on
quick cash strategies is because they don't have money. So they say, if I
don't have money to fund transactions, I've got to wholesale. I've got to get
properties, I've got to get them under contract, and I've got to wholesale
them to somebody else. The hope is that they will wholesale enough
properties and stuff enough money into the bank that they will eventually
be able to use that money in their savings account to buy up properties, fix
it and sell it and do a big deal. Do a big rehab with a big profit. So the
biggest mistake they make is believing out of the gate that they don't have
credibility, that they don't have experience, that they don't know how to
raise money, so they don't raise capital.
If I could go back and do it all over again, the first thing I would do is I
would become a student of money. I would become a student of rate of
return. I would become a student of raising capital, because if you have
money, you can fund almost any transaction, you can do almost any deal,
and your competition will actually bring you deals. If you have money,
you become the go-to guy, and you can get a piece of a lot of different
transactions. And you can become the centerpiece of your community,
because people will lend you money or partner with you and bring you
money, and other investors will bring you deals. So you're the centerpiece,
you're the hub of all that activity. If you don't raise money, you'll be stuck
being a wholesaler, and you'll never be able to do the really big deals.
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Interviewer: What's the top marketing strategy to generate seller leads or buying
opportunities for this revenue pillar?
Josh: There are two revenue pillars. The one is rent-to-owns and lease options.
What's funny about that is that we find all of our seller leads on Craigslist,
and we find all of our buyer leads on Craigslist. So we actually are able to
use some specific emails and some different ways that we contact
landlords and homeowners on Craigslist. We basically work with them,
we meet with them, we take over their property using a letter of intent.
Then we wholesale the properties to buyers who are also coming from
Craigslist. It's almost funny, because you're just the middleman. You're
just connecting people that are already on Craigslist who don't know that
the other exists. We're just connecting the two. That's for the rent-to-own.
Our best way is simply through Craigslist. It sounds very basic, but it's
absolutely true. That's where we get our entire seller and buyer leads.
When it comes to wholesaling government and bank foreclosures, one of
the best ways to find seller deals for government foreclosures is a website
called www.hudhomestore.com. That's where all the HUD properties are
at. That's where all the government foreclosures are at. For a lot of the
bank-owned properties, those are on two websites. One is called
HomePath, and the other one is called HomeSteps. That's Fannie Mae and
Freddie Mac's websites where they list their inventory of bank
foreclosures. So that's the best place to find those seller properties. Of
course, the other way is through the multiple listing services in your local
area, where you can use the MLS to find these government and bank
foreclosures as well. But all the buyers‟ leads we get off of Craigslist for
the most part.
Interviewer: Walk me through the A to Z process of doing a deal.
Josh: Okay. So let's talk about rent-to-owns or lease options for a minute. What
we have to do is, if a seller has a lot of equity, they're not going to be a
candidate for a rent-to-own deal. So take an example. Somebody who has
a house that's worth $150,000 and they only owe $100,000. That seller is
not going to be very motivated, so they're not a candidate. People who are
overleveraged, so you take a property again that's worth $100,000 and
they owe $200,000, that's really a short sale, they're not going to be
motivated, or they're not really able to do a lease option either. So what
we're really looking for is the people who have little or no equity.
The good thing is, for this investment strategy, there are 26 million people,
according to CoreLogic - which is a big marketing and analytics company
for the real estate industry - according to CoreLogic, there are 26 million
people who have no equity, who are overleveraged, or have less than 10%
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equity. Those people are ideal candidates who have been trying to sell
their house but can't sell it because they don't have any equity to pay a
realtor, or they don't have any equity to unload the property. So those
people oftentimes are at the end of their rope. They don't know what to do,
and they just want to stop paying the mortgage. We can take over those
properties.
What we do is we find those people on Craigslist. We use specific ads to
market to those properties. When people call us back, we go through a
specific sales script that we use. We find out how much equity they have
over the phone, and then we set an appointment with them and we go meet
with them. When we meet with them, if it's fit, we use what's called a
letter of intent to lock up that property. The seller signs it and the investor
signs it. It basically lays out the terms of the deal. What are we going to
pay for it, how long are we going to be able to rent it before we buy it,
how much money are we going to put down.
The most important part is how long is your option period. An option
period is how long can I have to market the property before I have to
either back out of the deal or before I have to move into it. So the option
period is 90 days. So what we do is we get the letter of intent signed. Then
we pass the letter of intent off to our attorney, and the attorney actually
structures the final agreements. The attorney structures the purchase and
sales agreement, the option to purchase agreement, the rental agreement,
and the assignment agreement as well as all the disclosures.
Then we have 90 days to market and wholesale and sell that property to a
buyer. So then what we're going to do is we're going to market that house
all over Craigslist, and we're going to market the property through other
tools like SellPoint and Postlets and other different ways that we can
market the property on the Internet, and we're going to try to get as many
buyers in as we can. Once we find a buyer who wants to basically take
over the property, we then lock up that buyer with a new purchase
agreement, and we get that to our attorney, and then our attorney basically
has us step out of the transaction, and he matches up the seller and the new
buyer, and the new buyer pays us an assignment fee to take over our
transaction. So that's exactly how you put together a lease option
assignment.
In a wholesale, like a bank or government foreclosure, you have the option
with those to do one of two things. You can either wholesale those
properties to another investor, or you can keep them and rehab them. So,
let's talk about the ability to wholesale them. Well, a HUD property, or a
government foreclosure, what you do is you bid on these properties
through the HUD home store. And then once you get your offer accepted,
then you're going to have about 45 days or so until you have to buy the
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property. During that 45 days, you're going to market that property on
Craigslist to find someone to take it off of your hands. And then when you
do, you're going to buy the property and then sell it in the same day. It's
usually what's called a back-to-back transaction. You buy the property,
let's say today, for $50,000, and you sell it today for $57,000, for example.
After your closing costs and things like that, you might get a $4,000
wholesale fee. So that's HUD wholesaling. That's wholesaling government
foreclosures.
The last option is to buy a property, fix it and sell it. That process is a
great way to make big money, meaning we wholesale properties for quick
cash, and we rehab properties for big profits. When we rehab a property,
we might buy that same property for $50,000, but we're going to put
$20,000 or $25,000 worth of renovations and repairs into it. Now we're
into it for, let's say $75,000, and we're going to put it on the market for
$140,000 and it's going to sell for $140,000. We have the ability then to
make... my target number when we do a buy, fix, and sell or a fix and flip,
as we call it, is to make no less than $40,000. Of course, in that
transaction, you need capital to fund the purchase, you need a reliable
contractor who's going to fix the property up, and you need a reliable real
estate agent who's going to help you unload and sell the property once it's
repaired and back on the market.
Interviewer: How do people do real estate investing with no credit, cash, or experience?
Josh: Great question. So, the way you do real estate with no credit and no cash
is by raising capital. You have one of two options. You can either raise
capital from private money partners who are people who have money on
the sidelines. They have money in their IRAs, they have money in a
savings account, they have money in a CD, they have money in annuity or
a bond or the stock market, and they're not happy with the return that
they're getting. There is so much of that money right now available it's
almost ridiculous. There's really nowhere to run to get a good, reliable rate
of return. What I mean is CD rates are extremely low, bond rates are
extremely low, fixed annuity rates are extremely low. They're all below
3%. The stock market is very volatile, up and down, up and down. On
average, the stock market is only going to yield, over a long period of
time, let's call it 30 years, the stock market is only going to yield about 9%
return.
So the way you do deals with no cash and no credit is by going and talking
to what I call private money partners. These are people who have maybe
an old 401K or an old IRA or they have money in a savings account, they
have money in a CD, and the money is just sitting there earning no
interest, or they're not paying attention to it. These people will happily
partner with real estate investors, or loan money to real estate investors to
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fund these transactions, provided that the investor with the capital can get,
I feel, a good double-digit rate of return is somewhere between 10 to 25%
return on their money. My target number is 15 to 18%. If I can provide
somebody an investment opportunity where I do the deal and they give me
the funding and I could pay them 15 to 18% on their money, I can raise a
lot of capital.
Anybody reading this report can raise a lot of capital, because there's just
no other place that somebody can go to get a 15 to 18% rate of return. So
the first way that they do deals with no cash or credit is to raise money.
The second way is to become a wholesaler, to wholesale lease options, and
to wholesale HUD properties, because you don't need any money when
you wholesale a property. You don't need any cash to fund those
transactions.
The experience is going to come from knowledge. Of course, reading
eBooks, reading courses, investing into someone's education is going to
give them the knowledge that they need, and eventually, they're going to
go out and do a deal or two or five or ten. So, the funny thing about
anybody who's been successful with real estate, they all started with no
experience. It's just about going out there and taking the knowledge that
you have and going out there and trying it, just doing it, taking your first
step. Even if you make a mistake, you're one step closer to knowing more
and doing more. The thing that I think most people make the mistake of is
they buy lots of books and tapes and courses and they never do anything
with it. So the experience is going to come over time, and confidence
comes from experience and knowledge, and that's how you make up for it.
Interviewer: Why is now the best time to get into real estate for revenue generation?
Josh: Right now is the best time for a couple reasons. Number one, there are a
ton of home owners who would like to sell who can't. So there's a ton of
lease option wholesaling opportunities. Number two, there's a ton of
government and bank foreclosures that are available right now all across
the United States. Number three, capital is very available, meaning private
money partners. Not banks, not mortgage companies, not hard money
lenders, but private money partners are everywhere. You just have to open
your mouth and talk to people and ask for the money, because there's just
nowhere else for people to get a good rate of return on their IRAs and their
CDs and stuff like that.
Number four is that the market is at its bottom. The market is going to
rebound. The market is going to get better. You're seeing a lot of the
hedge funds and a lot of international investors investing in United States
real estate. The market really can't go any lower, so the market is going to
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go up. So now is the time to get in and buy while it's low, and over time,
we'll see more normal appreciation in real estate.
Interviewer: Can someone be involved in real estate the way you approach real estate
while still having a job, or does it need to be a full-time commitment?
Josh: Great question. Absolutely, somebody can do this part-time. Matter of
fact, a lot of our successful members and students started doing this part-
time. I have a coaching student that I've had for a long time, her name is
Sabrina, and she lives in New York City. She invests in properties in the
city of New York. I've worked with her. She had a full-time job, and she
started investing in real estate part-time. Basically, I was with her the day
she quit her job, and she went full-time into real estate and has never
turned back.
At the beginning, it's just like working out. This is how I like to phrase it.
It's just like working out. Let's say somebody has never been in the gym.
Maybe they're a little bit overweight, and they want to get in shape. If they
want to get in shape and they go to the gym for the first three days in a
row, and they work out for two and a half hours, and they're going
absolutely crazy, eventually by day four, they're going to be pretty beat
down. They're going to be tired, and they're probably never going to go
back to the gym.
So investing in real estate part-time is very similar in that I'd rather see
people ease into it and start to do just one deal a month. They can do that
with two to four hours. They can do that in their spare time. Sending out
emails to people on Craigslist, putting ads on Craigslist. That can all be
done at night, on the weekends. So, not only can people do it part-time,
I've personally worked with people who did it part-time and eventually
went full-time. Matter of fact, I bought my first two investment properties
while I had a full-time job, and I did it part-time before I went full-time.
Interviewer: Do you have any success stories you can relay of students of yours who
went from having a job and transitioned into doing real estate full-time,
which you pretty much just did?
Josh: Sure. I have countless number of students who had a job and were doing
different things. Another student of mine is a guy named Kyle from
Chicago. He was a therapist. He worked with people as a therapist during
the day and started doing real estate part-time in the evenings. He was
doing some pre-foreclosures and short sales and eventually was so
successful at it in the evening he went and closed a couple of really huge
transactions, bought houses and fixed them up and sold them for a big
profit, and he went full-time. I am one of those people. I was a full-time
financial planner, bought my first investment property while I was a full-
45
time financial planner. It was a two-family rental property. Then I bought
another property that I bought, fixed, and sold while I was still a financial
planner, and then I went full-time into real estate. I mentioned Sabrina,
who was doing deals part-time and then went full-time.
Interviewer: Is there a specific personality that better lends itself to doing what you do?
Josh: No. There are two types of, not necessarily personalities, but two types of
characteristics, I think, or instincts, that work well in our industry. One is
somebody who's a really good researcher, somebody who's really good at
data and analytics and looking stuff up, because a lot of real estate is just
numbers. It's, I can buy a property for $50,000, I can fix it up for $20,000
I'm into it for $70,000, and I can sell it for $140,000. Well, that sounds
like a pretty good deal to me. There's $70,000 of profit there. So the first
person is somebody who likes data, likes to research, likes numbers, and
likes spreadsheets and putting those things together. That's number one.
The second person is somebody who is a quick state, someone who if they
get an idea, they're just going to go for it. They don't care about the data.
They don't care about the research. They're just a mover and shaker. I'm a
student of a program called the Kolbe Profile, kolbe.com, the Kolbe
Profile. The Kolbe Profile has four different modes or four different types
of instincts. I find that most people in my industry are either what's called
an initiating fact finder, or a high red, meaning that they like data, they
like research, they like the past, they like numbers, they like to research
things. The other mode that I find is successful in my industry is
somebody who's a quick state, which is me. Somebody who sees
something, sees an opportunity, and just goes for it, regardless of what the
repercussions might be. But those aren't really personality traits. Those are
instincts.
Interviewer: Are there any geographical areas that are more effective for applying your
methodology than others?
Josh: Definitely. The two or three strategies that I've talked about, which is the
lease option assignments and the wholesaling government and bank
foreclosures and rehabbing government and bank foreclosures. The middle
of the country. Get rid of the coastlines near the beach. Get rid of those,
and anything in the middle of the country is a great place to do what I do.
The reason why is that property values are a little bit lower than they are
on the coastlines. Coastline properties tend to be a little bit more
expensive. And number two is that we're able to get a lot of big discounts.
When you're in tropical areas or coastline type of areas, you're going to
find a lot of big demand in those areas, and prices are going to be a little
bit higher, and properties are going to be a little bit tougher to find. So
geographically, I would say anything from Nevada over to on the east
46
coast, Pennsylvania, and then down into Atlanta, Texas, the industrial
Midwest, the heartland. Texas, those kinds of areas are all great for what I
do.
Interviewer: What's a reasonable expectation someone should set for the first year
revenue goals if they follow your method?
Josh: There's no reason why somebody can't make six figures in their first year
doing what I do. Six figures is only about $8,000 a month in revenue. So
that's about two deals a month, and that's two wholesale deals. $4,000 on
one, $4,000 on the other. $8,000 a month, 12 months, that's about
$100,000 a year. Also, if somebody does one rehab project, two
renovation projects a year - we don't do a renovation project unless we can
make $40,000. So if you do two of those a year, that's $80,000 in one year.
There's no reason why, based on the current circumstances - there's so
much inventory, there's so much capital available - there's no reason why
somebody can't make $100,000 a year.
Now, reasonable? There's no reason why somebody can't... if their goal is
to make an extra $20,000 a year, there's no reason why somebody can't do
one wholesale deal a quarter and make an extra $5,000 every quarter and
make $20,000. But it just depends on how hard somebody wants to work,
how quickly they are to implement. You see, I learned a long time ago that
ideas mean nothing without implementation. There's lots of great ideas,
everyone's got new ideas, but it's often we don't need new ideas. What we
do need to do is just implement the ideas that we already know. It depends
how hard somebody wants to work or how long they want to work. If
somebody is looking for a get rich quick scheme, that's not real estate.
Real estate does take some effort, some knowledge, and some research,
and some time. It's not like you can flip a house today without doing any
work. It doesn't take a lot of work though. It only takes maybe one to four
hours to put together a deal.
Interviewer: What about for the second year and beyond? What should be a realistic
goal that someone could set for themselves?
Josh: Again, it depends how much work they want to put in, but if somebody is
a full-time investor, there's no reason why after the first year they can't
consistently make $100,000 a year or more. I know lots of my students,
friends, myself included, we're in this business to have money, to have
freedom, and to be wealthy. So to get to the point where somebody is
making $200,000 a year, $300,000 a year or more is the goal. Also, to
create long-term passive income, to own properties that will eventually be
paid off from a tenant buyer or a renter who pays the property off, and that
property is now free and clear. It's spitting off income, it's spitting off cash
flow, and it's worth more and more and more every year. So, it should be
47
very realistic for someone to set their expectations to not make any less
than $100,000 a year or more and then to leapfrog into year two, year
three, to double that and triple that every year thereafter.
Interviewer: Is there anything else that you'd like to add?
Josh: The only thing I would like to add is anything worthwhile is going to take
some work. When people think, I can do this part-time, and I don't need to
focus on it. Hopefully something will fall in my lap. There's always
somebody out there who's working really hard pursuing their goals, so
those people who are just kind of floating through the wind and hoping
something lucky happens to them, that's probably never going to happen.
Success is a combination of hard work, knowledge, and being in a place
where deals fall in their lap because of the hard work they put in. It's not
luck. It's just opportunity meeting hard work, and all that kind of comes
together. So I would say anything worth pursuing is going to take some
hard work.
Finally, you need to be daring. To chase any kind of dream, goal, some
big, hairy, audacious goal - my friend calls it a B-HAG - big, hairy,
audacious goal, you have to be daring. You have to be willing to try things
you've never tried, do things you've never done, and expand your horizons
and expect more, and go out and try stuff that other people would never
try. You have to be daring, and you have to try new things, and you have
to have some big, hairy, audacious goal that you're trying to pursue.
Because if you're just hoping to do a little bit more, you're probably going
to get a little bit more. But if you pursue some big, hairy, audacious goal
and you end up halfway there, you're probably better off than 90% of the
people out there.
Interviewer: For people interested in finding out more, where do they need to go?
Josh: My main website is www.strategicrealestatecoach.com. They can find all
kinds of tools and resources there and my personal story. I'm a father, I'm
a husband, I have three little kids, but I'm also a pancreatic cancer
survivor. I have a pretty amazing story about how I was diagnosed. My
son was actually just born. My wife had an emergency C-section. My son
was born with a cyst in his neck and was having trouble breathing. My son
had surgery when he was two and a half weeks old, and while my son was
in the hospital, after his surgery, I was 35 years old, and I was diagnosed
with pancreatic cancer. Two months later, I had a surgery. I had a surgery
that saved my life. The surgeon pulled off a surgery that most surgeons
would never even dare to try. So my story of loss and overcome and
challenge and achievement and success and coming back from that is at
www.middlemanincome.com. That's my story, and that's where people
48
can watch the video of everything that's happened to me in the past year or
so.
49
Conclusion
Thank you for your interest in making money with Real Estate and the opportunity to present
you with three unique points of view on approaching the housing market as a way toward
financial freedom.
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