Real Estate Investing School Podcast

Episode 180: REAL DEAL: The Path to a $100k+ Pay Day with Morgan Broderick

Date: August 1, 2024
Host: Brody Fawcett
Guest: Morgan Broderick

Overview

In this "Real Deal" episode, host Brody Fawcett talks to new investor Morgan Broderick about her first major real estate deal—a house flip in Carbon County, Utah with the potential to net over $100,000 in profit. The episode explores Morgan & her husband Darren's journey into real estate after starting only in December, the details of the deal, overcoming hurdles with financing, and advice for new investors. The conversation highlights the value of persistence, networking, creative deal structuring, and the emotional experience of a potentially life-changing payday.

Key Discussion Points & Insights

1. The Real Estate Journey

[01:42]

• Morgan and Darren started their real estate journey just seven months ago (December).
• They looked for months for a good deal, working with their coach and their real estate agent.
• The deal discussed was initially out of their price range, but Morgan followed it closely on Zillow until it went into short sale.

"We just followed it on Zillow and… it came up that the house actually went into short sale. We had our real estate agent keeping an eye on it too. So that's kind of how we found it." — Morgan Broderick [02:14]

2. Deal Breakdown: Price & Negotiation

[03:19] – [05:01]

• The house is a four bedroom, two bath in Price, Utah.
• Listed at $210k in October, reduced to $190k, then to $170k. Their offer at $165k was initially rejected.
• Eventually, the property price dropped to $165k, their offer was accepted, then further negotiated after the inspection to $159k due to required repairs.

"We did an inspection on it. We noticed that there's a lot of work on it. So we put in a counter offer after our offer had already been accepted and it was accepted at $159k. Since it's a short sale, that's the lowest they could go." — Morgan Broderick [04:17]

• Brody interjects with a candid reflection on ego and negotiation in deals, highlighting not letting pride lose you an opportunity.

"It's easy to be like, 'Oh I put an offer in at this...' and we almost get this ego. [...] But at the end of the day, like, yeah, they probably should have done that if they're going to be a good seller... if you don't do your job and go above and beyond... it hurts you because you don't get the deal done." — Brody Fawcett [05:12]

3. Rehab Costs and Projected Profit

[07:38]

• Planned rehab budget: $20,000.
• After repair value (ARV): Low end $280k, high end $350k.
• Expected profit: Close to $100,000 after paying back all loans.

"The ARV for the home is at minimum, $280k. At maximum, $350k. So, like almost $100,000 in profit once we take out all of our loans that we have to repay." — Morgan Broderick [07:52]

4. Mindset: The Emotional Impact

[08:18] – [09:11]

• For Morgan and Darren, the flip’s profit could equal both their combined annual W2 incomes.

"No, that's like everything both Darren and I make from both of our jobs in one transaction." — Morgan Broderick [08:59]

• Starting with only a spark of inspiration from Instagram, real estate now feels life-changing only six months later.

"It's crazy to think that something that we found on Instagram… we have a house that can support our W2 yearly salary in one transaction. Like, it's huge. It's crazy… it didn't just come overnight. We definitely had to work for it… we've learned a lot about it, too, about the real estate process. So it's been awesome. Stressful, but awesome." — Morgan Broderick [09:11]

5. Funding the Deal: Creativity and Hustle

[10:41] – [13:36]

• Used a conventional mortgage for the bulk purchase.
• Planned a second mortgage on their personal home for rehab/down payment, but delays forced them to find alternatives.
• Ultimately, they called everyone they knew—family, neighbors, friends—for support, and secured funds from Darren’s parents.
• Structured the family loan: repay within a year, or else 1% interest starts accruing—Morgan calls this a partnership more than traditional debt.

"We called family members, we called neighbors, we called anyone that we could think of who would be willing to support us... and we found someone, just one. It was actually Darren's parents. [...] they're giving us that money for the year, once the year is up... it will start accumulating interest at a 1% interest rate, which is kind of silly. 1% is like nothing, right? But I mean, we'll take it." — Morgan Broderick [12:07]

• Brody highlights the importance of hustle: “It’s cool to like leverage that from the standpoint of, like, hey, we're doing this thing. This is part of our vision... And I liked how you even almost said, like, fundraising...” — Brody Fawcett [13:36]

6. Success Principles for New Investors

[14:46] – [16:59]

• Networking: The deal came together through information from friends, word-of-mouth, and a helpful agent.
• Meeting People: More people in your corner equals more opportunities for off-market deals, funding, and support.

"I think the biggest thing for us would be, like, you gotta meet people... it was all just because we knew people and we had a great real estate agent. It wasn't just us. It was lots of other people that we had talked to and created relationships with that got us the deal and who will help us during the renovation, during the selling process and everything else. So it's all about people." — Morgan Broderick [15:25]

• “Fake It Till You Make It”: Morgan emphasizes acting confident even when you’re new—many people will help.

"Pretend like you know what you're doing. Even if you don't… Like, if you come up to someone and you're like, I'm a real estate investor. I want to find a deal, they're going to be willing to help you. Well, most people are, right." — Morgan Broderick [16:29]

• Brody sums up with the idea of “humble swagger.”

"I like the combination, like, humble swagger... I have humility, I'm willing to learn. But, like, also, like, I got this swagger... I'm going to go make it happen, even though I don't have all the answers." — Brody Fawcett [16:59]

Notable Quotes & Memorable Moments

• "We have a house that can support our W2 yearly salary in one transaction. Like, it's huge." — Morgan Broderick [09:12]
• "It wasn't just us. It was lots of other people that we had talked to and created relationships with that got us the deal." — Morgan Broderick [15:39]
• "Fake it till you make it almost… if you come up to someone and you're like, I'm a real estate investor, I want to find a deal, they're going to be willing to help you." — Morgan Broderick [16:29]
• "I like the combination, like, humble swagger… I know what I want out of life, out of real estate, and I’m going to go make it happen, even though I don’t have all the answers." — Brody Fawcett [16:59]

Timestamps for Important Segments

• [01:42] – Morgan introduces the deal and her real estate journey
• [03:19] – Numbers: Listing price history, offers, accepted price
• [07:38] – Rehab budget and projected after-repair value (ARV)
• [08:59] – Significance of the profit, emotions as a new investor
• [10:41] – How the deal was funded; pivoting when obstacles arose
• [15:25] – The power and importance of networking
• [16:29] – Advice for new investors: Confidence and attitude

Themes & Takeaways

• Persistence pays off: Tracking deals over months and returning after initial setbacks is crucial.
• Network relentlessly: Relationships generate deal flow, funding, advice, and support.
• Creative funding is possible: You don’t necessarily need all the cash upfront—explore friends, family, private lenders, and partnerships.
• Mindset matters: Stress is normal, but seeing yourself as an investor (even if new) encourages opportunities.
• Invest in education: Their willingness to get a coach and learn gave them confidence and resources.

This summary captures the spirit and main teachings of the episode, offering both the practical deal breakdown and the emotional and strategic insights for aspiring investors.