← Rich Dad Radio Show: In-Your-Face Advice on Investing, Personal Finance, & Starting a Business
Rich Dad Radio Show: In-Your-Face Advice on Investing, Personal Finance, & Starting a Business
Anyone Can Turn $1,000 Into $45,000 Doing This…
00:43:32
Check this out! 👉 www.richdadandbrent.com In this episode, Brent Daniels sits down with Mark Stubler and Cody Hofhine from Joe Homebuyer to reveal the secrets behind flipping real estate and finding deals no one else knows about. Mark and Cody...
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- [00:00]
Ryan Seacrest
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- [00:31]
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- [01:01]
Brent Daniels
This is the Rich dad radio show. The good news and bad news about flipping real estate. Here's your host, Brent Daniels. Welcome back to the Rich dad radio show where we're talking about the good news and the bad news about flipping real estate. I'm your host Brent Daniels and we know here that the deal of a lifetime comes around about once a week. So let's go find it. Today's show is absolutely incredible. I've got Mark Stubler and Cody Hoffine from Joe Homebuyer. They've been in business for over 10 years. They do a hundred deals a year and they're going to show you how to go out and find deals that nobody else knows about using a interesting marketing technique. So strap in, get ready and here we go. Welcome Cody Hoffine and Mark Stubler with Joe Homebuyer. How are you guys doing?
- [01:58]
Mark Stubler
Awesome brother.
- [01:59]
Cody Hoffine
Being here, man. It's always good to see your energy, feel your energy and we're excited to be here.
- [02:04]
Mark Stubler
Hey, any chance I can hang out with you, Brent, just sign me up. I'm a part of that. So I appreciate you having us on, brother.
- [02:10]
Brent Daniels
Well, good. Well, let's dive right in. Cody, when did you get into real estate?
- [02:15]
Cody Hoffine
When I failed at insurance, my friend. Is what is the short answer but 2015. So 2015 was is probably different time. Well, definitely different times than 2024. However, it's probably the same story as many of those that are listening can probably relate to. And that is 2015. I'm five years into insurance, like just selling home and auto policies. And I come home early from work and I wanted to surprise my wife, but instead she surprises me because she's at the dinner table crying and she's wondering do we put food on the table to feed our kids or. And not in this like hate towards world, anything like that. She was just feeling it. She's like, this is stressful. Or do we put food towards the mortgage? I mean that was a reality. I had to hit the money towards the mortgage.
- [03:08]
Brent Daniels
Not the food.
- [03:10]
Cody Hoffine
Yeah, not the food. Sorry if I said food towards the mortgage. They don't take that anymore. That's a form of payment. They don't do anymore. Back in 2015 they did. No, just kidding. But yes, it was, it was, it was. That is one or the other. We were still having some rough months. And two days later I go to a local real estate investor association. I only guys. I went there for five years, Brent, five years. And I could care less to have listened to real estate. I was going there for one purpose, like I'm a one track guy, was just to listen who has rentals. So I can go up to him and say, hey, I've got an insurance product for you. Like that will, that will save you money. And that's all I heard for five years. And everyone was talking about wholesaling, rentals, flips, all this stuff, real estate. And I was just like in one ear and one out the other. But I went with a different set of ears that time. So in 2015, I go two days later after seeing my wife cry. And it was perfect timing. Cause I go in there and this guy stands up and he says, I found this deal where I put the home under contract and I whole sold it and I made $29,000 and I did it in three days. And I'm like, what? Like what is this new magic trick that you're talking about? And so I went up and talked to him and got enough knowledge and understanding and it pointed me to go find and search out a mentor. And I did that. And 39 days later I did my first deal that paid me $24,000. And it was like game over at that point. So that's kind of the starting point, 2015. And that was why I got into it.
- [04:32]
Brent Daniels
How did you find that first deal?
- [04:35]
Cody Hoffine
So that was direct mail of all things. So it was, it was hiring Like I said this mentor and he just kind of showed me lists, like get your hands on these lists. And at that time it wasn't. I think it's more automated now and there's definitely some service providers out there that get you a lot easier. I had to physically go down to the state buildings like the courthouses and pull some of these lists. And maybe that's what made it uniquely hot back then too. Like it was just, you had to go out and you had to like put your sweat into it to find these lists. And sometimes these state office buildings, they would be like, no, that list doesn't exist. And I get back on the phone with the mentor and I'm like, hey, they say this list doesn't exist. Like, no, it exists. You go in there and you find out if they like a Diet Coke, whatever it is, like that list exists, they have it. So I'd go in there and then I just over time they're like, this idiot keeps coming back. Because I wouldn't give up. I did trust the process. I'm not someone that gives up easy. But it was like, man, I had to go into some of these courthouses three or four or five times or state departments and go in there three or four times before they're like, oh yeah, we have that list. I'm like, is that the same thing I just said like four times ago? And anyways, yeah, that's how I got my hands on my first list. And it's just like there was probate list, there was tax delinquent list, there was all these different lists that you could pull.
- [05:53]
Brent Daniels
And I just started Motivated seller lists.
- [05:56]
Cody Hoffine
Yes, yes. Anything that showed like a distressed home or distressed seller.
- [06:01]
Brent Daniels
Got it. Yeah. These are what you want to target as a real estate investor if you're looking for off market opportunities. These aren't sellers that have put it on the market with a real estate agent and everybody sees it. These are before they go and put it on the market or oftentimes what we have found and you, and you guys can speak to this as well, is a lot of, a lot of people don't want to list with a real estate agent. They don't want to put it on the market. They just want speed and convenience and they just want to have a private sale with a, with real estate investor that's going to come and give them a cash as is offer. They don't want to put any more money into the property nor oftentimes they don't have the money to put into these properties. And so they just want to get rid of this property as soon as possible. And that's where we come in. And so that's what you're talking about. You went to the courthouses and you were able to get these lists. And by the way, this is public data. This is public information, right? When you owe money, it's like the old school days, they would put your name up on a big post in the middle of town, right? Well, now they just put you on a list somewhere, and that's the list that Cody's talking about. There is pre foreclosure lists. There is tax delinquent, you don't pay your property taxes list. There's code violations. If you're not taking care of the outside of the property, you're going to get code violations from the city or the township or, or wherever that's coming from.
- [07:24]
Cody Hoffine
The municipalities, it doesn't matter.
- [07:27]
Brent Daniels
Municipalities, all that stuff, Right? And so these are all out there for us to be able to go. Oh, okay, well, I don't want to go after every house. Every house is not who I should be spending the majority of my time with. I should be going after these homes that have their hand raised to say, hey, I've got some, some signs of distress here. Is that right, Mark?
- [07:47]
Mark Stubler
Yeah, that's my take as well, Brent. These less probate, pre foreclosure. These are families that can benefit from your services because there's an event occurring. There's something pending event. There's. There's a need for, you know, our services to provide a solution for their property to help them transition to the next phase of their life. And so we find that, yeah, by focusing on those right list, it saves you the right time and energy and you can really focus on families that can benefit from your service.
- [08:16]
Brent Daniels
So what would you send? So everybody listening to this, that's like, oh, my gosh, I want to find the deal of a lifetime. And our saying is the deal of a lifetime comes around about once a week, right? That's an old Dolph de Roos. He wrote Rich, Rich Dad's book on real estate riches way back in the early 2000s. He would say, the deal of a lifetime comes around once a week. Right. It's on us to go and have the conversations with the property owner and make the offers. So, Mark, if you were to send out some mail and you do send out mail, what do you send and what is the process there to have people call you when they're ready to sell their house?
- [08:52]
Mark Stubler
I like Direct mail. For that reason, they do call us. Right. That increases the probability that they're ready to work with you if they're making a call to you. So that's the first thing. You have to have a mindset that, hey, if they're calling me, there's probably some value I can provide here. We like to focus on those specialty lists like you mentioned. Probate, eviction notice of default, absentee, vacant, anything where the probability is increased. Right. That they could benefit from our services. And then it's just the process of being extremely responsive and service minded to those that reach out and just standing out. When I started, you know, about the same time as Cody, in fact, Cody was the one that actually introduced the idea to me. He was having some traction. I don't think he failed real insurance, but he realized that there was a better way and he was willing to share it with me. And so, you know, 10 years ago he says, hey, you ought to consider this. So I went and did my own activities for a minute. Then we partnered up. And my only experience, Brent, was, you know, sales. I worked with lots of families selling fencing and decking products. Nothing to do with real estate, but. And that's not true, actually. About three years before that I tried and failed on a rehab. I couldn't even sell it after I put enough money to. So I had to, I had to keep it as a rental just to. So I didn't lose money because I couldn't afford to lose money. So my only option was to keep it as a rental anyway. Fast forward. Cody and I now have been doing it for several years. But what I did take with me from my fencing and decking days from the sales, is that a service mind, you know, kind of a heart for the seller type mindset of building a plan, a solution, being mindful of them, a servant mindset. It just translates well, you know, that desire to help them come up with a plan that will help them transition in their life. And it's the most enjoyable aspect of it. Providing meaningful value for the people you're working with. It's been fun. I love it.
- [10:39]
Brent Daniels
So what do we send them, Mark? Give us the, give us the nitty gritty. What? We get this list and there's a million things that we could send them. Do we send them a handwritten note that says, hey, I want to buy your house? Do we send them a postcard? Do we send them a letter? What works to get people to call us when they want to sell us these houses that need significant renovations?
- [11:01]
Mark Stubler
The answer to that question, Brent, is yes, because you do it all. We've done it all. In fact, in the early days, we actually printed them ourselves, put a stamp on them ourselves, and even occasionally would hand write it. But now you streamlined it as best you can. Yeah. Postcards at a default is the simplest action that one can take. And it's just a simple message. We like to have it as a. Handwritten, as you're looking for a tactical response to your question. We like it because it captures the eye when somebody sees. Even though it's computer generated, handwritten, it just captures the eye, and it's just a simple message. Hey, would you consider an offer on your property at 123 Main street, type? I did. And it's just the idea that you're getting something in their hands to really just reach out to the people that raise their hand and say, yes, I'd consider something. I'd like to learn more about this opportunity, this process. Letters, even very frequently, an offer, an actual check that you can send out to them. So there's a lot of different activities you can do, but at a minimum, the answer is yes, because I had written a sticky note on their door. A postcard, a letter. They all work. You just have to be consistent with them.
- [12:07]
Brent Daniels
Awesome. Cody, when you close that deal, what'd you make on Your first deal?
- [12:11]
Cody Hoffine
$24,000. I remember it like it was yesterday as a big day.
- [12:15]
Brent Daniels
How. How did that. How did that feel? How did it. How did your wife feel? How did the family feel? I mean, was that the turning point? I mean, did you just go, you know what? This is my life now. I mean, this. This is the path that I want to go on? I finally found it because it took me a long time to figure this out. Right? Do I be a real estate agent? Do I flip houses? Do I just start building a rental portfolio? You know, do I? And then I found. Then I discovered what wholesaling is, which is essentially assigning a contract. You're. You're not flipping a house. You're flipping the purchase agreement, which we can get into in just a bit, because this audience here may not know exactly what that is, but once you discovered that you could go and flip a house that you don't own and make 24,000, what happens in your brain?
- [13:06]
Cody Hoffine
No. Well, first and foremost, you. You pinch yourself. Like, you genuinely pinch yourself. You're like, this is real. Not only did it happen, it happened for Cody Hoffine. Right? You say this a lot, Brent. And I've always Loved it. And I've used it often. You always say it turns from faith to fact right at that moment when it turns into fact, it's game over at that point, at least for me. Maybe it's not everyone's mindset. My mindset was when it works for me, oh, let's double down. It's not let up. It's not like, go celebrate. It was, let's double down. Like, let's have faith in the process. Like, the process works. No more faith. The fact is the process works. Now I'm just going to double down my efforts. So I didn't hesitate. I took probably 15 of that 24,000 and I threw it right back into marketing because I was like, I just want more deals. Like, I don't want to just slow roll this and do like two or three grand a or a month. Like, let's, let's really ramp this baby up. And I went to like 15 grand, like instantly and just started doing that over the first month. And so I ramped up marketing really quick because I believe the process. I think that's the first thing. Second of all is just, I was still imperfect taking this action. I wasn't an expert at this point. I mean, I've done my first deal. I was far from it. But if there's anything I say I'm an expert at, it's failing my way forward. I'm willing to go out there and stumble my way forward. And we've talked about this our whole entire careers together, is how important that actually plays a role. There's a point in time where when you want to turn it into a business, how you need some processes and systems in place. But at the beginning, imperfect action trumps like Trump's systems and processes. It eats it for. It eats it for lunch. So it's just getting out there and getting out of your own way. And I think for many listening, if you're listening to this, you're like, what's my next move? It's just have enough information to take your next step and don't attach yourself to the how. The more we attach ourselves to the how, the more we're trying to build out a perfect plans. And perfect plans don't exist. You just need enough information to take the next step and go take that step. Are you going to do it perfectly? Are you going to make mistakes? Absolutely. I sounded like an absolute idiot on many, many appointments, but that was my best coach. Even my mentor couldn't have taught me what I taught myself by just stumbling through A bad appointment. So I. That's one thing I've committed to that I. If I say I'm an expert at, I'm an expert at committing to making a lot of mistakes because those mistakes add up to be my best coach, which ends up being my. My. My way of becoming the better version of myself.
- [15:33]
Brent Daniels
Yeah. Our really, really good friend, Tom Kroll. Good old time. That it's not education plus action equals results. That's the wrong equation. It is the action plus the results is your education equals the education. And that's really the biggest difference I see in real estate. Being a real estate entrepreneur, finding the absolute best deals that nobody else knows about. It is all that massive, imperfect action and going out there and letting that educate you, because you could read every book, you could go listen to every podcast, you can watch every YouTube, but until you're face to face, knee to knee, belly to belly with that seller and they're telling you what they're looking for, they're telling you the perfect way for them to get out of their situation. There's nothing like it. There's nothing like. You can't. You can't build a business based on theory. You can't build a business based on hallucinations. You got to build a business based on actually being in front and having those conversations with property owners. And I'm telling you, we have. We have been around people and we have coached people for the last 10 years, you and I both, Cody, that started with no money, no education, no real estate background, and just started going out and knocking on doors, sending out little letters, reaching out to people. They would just literally go out into the streets. In any street. Anybody could do this. You could go out in any street and go find. In any neighborhood and go find the properties that need some love. They need renovation. They've been vacant. The owners can't take care of them anymore. Whatever it is, you can find those houses that are, just to put it bluntly, ugly, ugly houses, and you can go and you can reach out to that property owner, have a conversation, make offers, and if they're ready to sell that property, you're going to find some unbelievable opportunities. So, Mark, circling back real quick, and then we'll move on direct mail. Who do you like? Is there a company that you like to work with, with that, that sends it out, that has good templates? Because you're like, yeah, just do a handwritten postcard. It's great. Well, okay, what does that mean? You know what I mean?
- [17:41]
Mark Stubler
Yeah. And the truth is, Brent, we work with a couple, I mean We've worked with 3D mail, yellow letters and a couple others. And I think at the end of the day you're looking for somebody that has some good templates and is easy to work with. Justin Silverio has a great product, you know, as well. And so really, what's this company name?
- [18:03]
Cody Hoffine
It's Invelo.
- [18:04]
Brent Daniels
Yeah, yeah, Envelop. Awesome.
- [18:07]
Mark Stubler
So they offer a great product as well. So hopefully our friends at each of those places will receive a little business now. But at the end of the day it just, it is, it's just taking that action. One thing, if I could just compliment your guys message there. John Maxwell talked Cody and I at an event we were recently at. John Maxwell's written 80 leadership books. Just an inspiring guy, just lives a great life and just really tries to bless people's lives with leadership principles. But he says, hey, I'm going to do. He just talks about the value of failure and how he's going to do better than most people because he's going to fail more than most. But he says it's this concept of that you shared with Tom Crow. Action plus results equals your education. He says a little different, but along the same lines. It's test, fail, learn, improve and re enter. So it's just how quickly can you effectively mess up, get the result and then make the improvement and do it again. That's the valuable of education. Value of education. But that's a guy. Mark, I'm making a plug. Yeah, please.
- [19:05]
Cody Hoffine
Cody, I would say just to like roll on what you're saying because it's even more powerful. Do people watch this or is this just going to be like an audio?
- [19:11]
Brent Daniels
Both.
- [19:12]
Cody Hoffine
Like, is it on video format too?
- [19:14]
Brent Daniels
Yep.
- [19:15]
Cody Hoffine
Because people see this. What Mark just said is valuable because it was like eye opener. When John did, he says like, think of it as a circle. You test, you learn or you test, you fail. You learn, you improve and you re enter. You test, you fail, you learn, you improve and you re enter. So each time for those that can't see what I'm doing, as you reenter, you're gaining traction, you're building up, you're improving, you're becoming 1% better. And so that was the big visual that he wanted. He even made it so clear. He's like, no, no, no, put down your pencils, look at me when I do this. And he did that whole thing, then re enter. Did the whole thing and then re enter. He's like, this is why I'm better than Most because I reenter at a faster pace than everyone else.
- [20:02]
Brent Daniels
Love it. As the, at the time of this recording, we're approaching the new year. Everybody's putting together their goals for the next year. Everybody's got those stars in their eyes and electricity coming out of their, their fingers and the fire in their belly. How do we make sure that the next 12 months is the best financial 12 months that we've ever had?
- [20:28]
Mark Stubler
Best. So a financial plan for the, for the next 12 months to just knock it out the park. Well, do you want me to take a stab out of first year, Cody?
- [20:38]
Ryan Seacrest
Sure.
- [20:39]
Cody Hoffine
Here's what we do with our own company and we just got off a call doing this and it was like, it was a heated call, like we're trying to figure out our own goals, right? I got heated up like, oh my gosh, here's what I'm trying to do, but I'm trying to figure this out, right? So it's not a perfect. Well, there's a perfect science behind it. But what's beautiful is the conflict is a great thing. So it is coming up with a year and most people really overshoot what they can do in a year, but undershoot what they can do in like three to five. We hear that all the time. And so it's getting something that is smart and that would be specific, measurable, attainable and then relevant and then time bound. Right. So it's a smart goal. And we make sure that you do something that pushes you, that stretches you. Right. The law of the rubber band. Like John Maxwell says, the rubber band is only useful when it's stretched. And that's the same thing with us. We're only useful when we're stretched. So push some goals that stretch you and then break it down quarterly. And so we like to break ours down. And you can find this in a format called EOS Entrepreneurs Operating System. And that is you break them down in 90 in quarterlies, right? So you break them down in your quarters and then you set your goals. They would call them rocks. You set your goals on what's going to happen as a company and then with those goals, the company goals, you're going to break it down to individual goals, who's going to hold what and to be able to what everyone needs to do so that these company goals get hit for the 90 days. So we were just on a call, literally right before we pushed play here we were getting off our hour and a half meeting, our 90 minute meeting with our level 10 going over specifically this to End the quarter strong, but then start next year. And it's just making sure you're always moving the needle and it's making sure that you're always they call ids, identify, discuss and the solutions, it's identifying the right problems to even have a goal set around. So sometimes if you're like, you might set some wrong goals, you might say, hey you know what, we need more deals so we just need more marketing. Well, if you don't really spend some time really in that idea like going through that, you may be solving the wrong problem. So it's making sure we're always solving the right problem and not just because it may not be that you don't need marketing, it may be that how you manage your lead. And we may want to talk about this on the show. It's when those leads come in that we're managing those leads well that can also increase our income. And more times we think more, just more marketing, more marketing that's going to make all the difference and it's going to make us more money. And it's usually less about adding more as much as measuring your current, your current data and just finding ways within your management of your lead that can increase that. So I don't, I hope I gave something that made sense there. But the whole point is break it down in 90 days. Give every give your company rocks what you're going to accomplish over the 90 days, have individual rocks or individual goals that each of you are going to attack and then make sure you're always solving the right problem and not just creating or making solutions for problems that don't even exist. It may not be a marketing problem. It's probably management of a lead problem.
- [23:54]
Mark Stubler
I would only add to that, Cody, when you do reverse engineered in that way to identify the daily tasks that you have to do that are going to effectively get you to the monthly, the quarterly, the yearly target that you're trying to hit and you re engineer it that way or reverse engineer it that way so that your daily tasks are the leading activities that if they're done consistently will give you the results that you want at the end. And so the five non, you know, like the non, the daily non negotiables that you have to execute on religiously. For us, we really push hard with our franchisees that they're talking to new sellers every single day. So depending on the market, whatever. But is it five, is it 10 new sellers? So if you're coming through your pipeline, that's not a new seller talking with Buyers. So adding to your relationships with your buyers. All right, is that 5, is that 10, is that 50 that you have to call a day. But the non negotiables are I'm talking to sellers every day, I'm talking to buyers every day. Am I going on five at a minimum, five appointments a week. So those first two activities should get you on more appointments, right? How many pages of personal development? Because listen, if you're not invested in personal development, which includes, you know, all aspects of people, you surround yourself, what you ingest, what, what you know is rubbing off on you type activities, and then intentionally what you're bringing in to get your mind right. So is it your daily non negotiable of five pages of personal development reading or, you know, five minutes of meditation.
- [25:22]
Cody Hoffine
In the morning and evening?
- [25:23]
Mark Stubler
You've got to establish your non negotiables every day because those are the leading activities that will afford you the landing results, which are, you know, the contracts, the revenue, the success.
- [25:35]
Cody Hoffine
Break that down a lot better, my friend.
- [25:38]
Mark Stubler
Well, it's compliment.
- [25:40]
Cody Hoffine
I would have just said my answer.
- [25:43]
Mark Stubler
It actually complemented the big picture that you started with 12 months reverse engineering and then it's those daily habits. It really is.
- [25:49]
Brent Daniels
So, so let's look at this past year for you guys. How, how, how Was business in 2024? Did you guys hit your goals? Did you guys, when, when you look back and reflect back, right? Because we can do this now. When you're looking back, did you hit them and what were those goals and what really surprised you this year? Because you guys do multiple millions in income every year. That's. I probably should have opened with that. That probably would have grabbed more people to really listen to this because you guys really are doing amazing things in a couple different markets, but mostly you're based out of Salt Lake and very competitive market. There's a lot of regulations in real estate there. They're very tight with the ways that you have to do things. So you have to. Everything is very specific and ordered and it's not like the Wild west like in some other areas. So it's one of the toughest markets. And you guys are really, you guys have risen to the top over the last few years. So what did this year shake out income wise?
- [26:52]
Mark Stubler
Yeah, great question. So actually, let me rewind to the. We came up with a plan about this time, right? The fall, the winter of 2023. We're looking. What do we want to accomplish in 24? We actually determined, Brent, that we wanted to. We weren't so much worried about top line revenue. As we were determined this year, more than any other year, we wanted to improve our profitability. So we actually dissected the entire 2023 and all the results, and we determined that there was really two major functions that produced most of the revenue for us. Our marketing channels, which was PPC and very targeted direct mail. So those were the two biggest. But we understood that we also want to have a proactive outreach. So we kept the cold calling going, but again, just a targeted list at a lower volume. And our whole focus was we want to create more with less as it relates to market. So very specifically, are we on target to hit our goal? We've got to finish this month strong. But what's most impressive is it's not our biggest top line revenue year. Yes, our target is several million every year, but our profitability is very healthy. So we're encouraged by what we're bringing in relative to what we're spending. We realize we want to do it with less personnel, we want our labor efficiency to be super attractive, and we want our ratio of return relative to our expenses to be attractive as well. And that's what we focused on this year so that we're actually doing less activities. And it's been rewarding. Yes, we've got a heavy lift the next two and a half weeks here, but we're encouraged by the results we've had this year.
- [28:18]
Brent Daniels
So what's top line?
- [28:20]
Mark Stubler
So we'll do over two just in Utah.
- [28:22]
Brent Daniels
And then we'll do.
- [28:23]
Mark Stubler
Yeah, yeah.
- [28:25]
Brent Daniels
And so how many deal. How many deals is that, guys?
- [28:30]
Cody Hoffine
Probably the least amount we've ever done. They're just more profitable deals. So I think we're now under a hundred. We used to do over a hundred to do the same revenue. We're now doing under a hundred deals to get over 2 million just in Salt Lake City.
- [28:45]
Brent Daniels
Love it. And that's because you guys are doing more flips than wholesales.
- [28:49]
Mark Stubler
Great question.
- [28:50]
Cody Hoffine
Yes, yes, Go for it. Go for it, Mark.
- [28:54]
Mark Stubler
And chime in anytime, Cody. But yes, we just are really sensitive to how do we extract as much revenue from every deal. So wholesaling is still a practice that we do virtually on every. Or we go through the motions of wholesale virtually on every transaction. So we'll send it out to our buyers because for the right offer, we're going to assign anything. Right. If we can get about 80, 75 to 80% of what we'd make otherwise, we're going to assign it, which sometimes the market affords. That when buyers are buying, sometimes you just get crazy offers from the buyer pool. And it just doesn't make sense to rehab it because you're making 75, 80% of what you'd make after you rehab it yourself. Today's market's a little different, so it ebbs and flows. To answer your question, there's times where it's heavier flip and there's times it's heavier wholesale. And we're just sensitive to how much, what can we methodically do on the exit strategy to be very calculated in our exit. So we're optimizing revenue on every single transaction.
- [29:46]
Brent Daniels
Love it. So just, just for anybody that doesn't know, whenever you're looking at an opportunity, there's really three buckets. There's really three exit strategies that we talk about. There's a buy and hold. This is where you buy it and you put it into your portfolio and you keep it as a rental. There's the buy and flip, which is like HGTV shows. You take a, a house that's run down and ugly and you have demo day and then you have the design and then it looks beautiful and then you just sell it on the open market. And then you have the ability to assign your interest in a purchase agreement. Essentially when you put together a purchase agreement between a homeowner and yourself, they're the seller, you're the buyer. You can then reach out to other investors in your area and see if they want to buy that opportunity from you. Which means that you would scratch out your name as the buyer put their name in. And they typically pay you a fee anywhere from 10 to 20, 25 to $50,000 depending on the deal, for the right to be able to buy that property to either keep in their portfolio or to flip. And that's what Mark's talking about when he's talking about reaching out to the buyers and taking every single deal that comes across their desk and putting it out to the buyers to see what they'll be willing to pay for them not to have to do the remodel themselves. But when you do the remodel yourselves and the market's not crashing and you can get in and get out of that property within, you know, three to six month window. The, the spreads on those are what, 50K, 75,000, a hundred thousand? What's your guys average deal size for your flips?
- [31:28]
Mark Stubler
Yeah, they have to be, you have to target. In my mind, you've got to make no less than about three times what you. Well, a simpler way to Say it. Let me tie back into marketing. Actually, Brent, you really should be targeting a 3 to 4 to 5x on your marketing dollar. Well, in Utah, it's crazy competitive. So if I'm spending, you know, eight to $10,000 just to get one deal, I've got to make 40,000 on average on my revenue. So if I'm assigning things for less than that, I've got to bring the average up by doing rehabs. Right. So that I'm settling on that number. But we've been fortunate at times where we're, we're approaching six figures as an average on our flips. You know, I can't really promote that because there's a lot that goes into that. We're very seasoned and we do exceptional. Well, here's the fact. Let's talk about all the factors that go into getting a six figure flip. It's not just being lucky. I mean, you got to manage your leads exceptionally well first off. But I even skipped this step already. You have to be good and consistent at your marketing. Then you have to manage your leads exceptionally well. Then there's the acquisition process. It's building a strong enough plan for sellers that when you're negotiating a price, they sense the value that you're offering them, that you get the property at a great price and then you're not done. Now you have to execute at eye level. You have to see the vision for the property. Sure, some of them you're going to sign. Others in order to get anywhere near a six figure on a flip, you just have to execute at a very high level. And sometimes one of the things we're doing right now, this, take a note on this if you're listening. We're adding a walkout and a kitchen in virtually every home now because with interest rates high and purchase price highs, particularly in a very competitive market like Utah, and not everybody has basements, but that's the model in our market because now I've got a bigger buyer pool and they can afford to pay a little bit more because like, well, I'll put mom in the basement or I'll put a renter in the basement and they can afford the interest rate and the payment because of the higher price. So there's these subtleties and that you learn over time and that is what it affords us to really stretch the value on a rehab. But it's all those components that equal the six figure. It's not just you luck into a deal, it's all the activities that compound to help you Execute and optimize revenue.
- [33:33]
Brent Daniels
Well, we make our money when we buy.
- [33:36]
Mark Stubler
Yes.
- [33:37]
Brent Daniels
Right.
- [33:37]
Mark Stubler
You gotta buy. Right.
- [33:39]
Brent Daniels
So understanding the numbers, understanding the cost per square foot, I mean, whenever I look at a deal that is under, I would say 450, 500,000, once it's fixed up, I'm anywhere from $35 to $40 a square foot is the estimate that I have for cosmetic. Right. Countertops, cabinets, fixtures, flooring, paint, the baseboards, all that stuff, appliances, typically it's 35 to 40,000. And then I'll add 10,000 on top for any major items. Right. The plumbing, maybe it has mold issues. Maybe the roof needs to be done, maybe the pool needs resurfacing, these type of things. It needs a new boiler, whatever it is, depending on what part of the country you're in. And so you don't have to really, when you're looking at an opportunity, you can use those numbers, 35 to $40 a square foot, plus 10,000 for major items, to put together an estimate on how much it'll cost to rehab that property. Do you guys agree with that?
- [34:41]
Mark Stubler
Yes.
- [34:41]
Brent Daniels
Great.
- [34:42]
Mark Stubler
Yeah, that's the model that works. And when you get really good, you find contractors and things, you can keep that cost down and you start to assess it. But you're right, if you want to be. That's a very strategic way to assess a rehab to keep yourself out of trouble. The problem is people say, I should be able to get this done for 20, $25 a square foot. They don't account the extra 10,000. And then they're disappointed in the end, or they break even or they're bringing money to the close table.
- [35:06]
Brent Daniels
Yeah. What, what do you think going forward, the next couple years, or at least the next year, as we're going forward here, are. Are we going up? Are we flat? Are we going down? What do you think? Because this really affects whether or not to flip properties. In my opinion. My opinion, if the market's flat or going up, go bananas, raise the funds, get the contractors, do it right. It's when, like in 2022, when interest rates skyrocketed from what they were for like a decade, that we saw some really big problems with the flippers. I mean, a lot of flippers lost a lot of money. And that happens. Anytime that you've got inflation, anytime that you've got interest rates that have really, you know, get. Get hiked up. Are you seeing any of that, or you think it's going to be flat up, down?
- [35:54]
Cody Hoffine
What do you think this is a Phenomenal question. I want to attack because I feel no different than when I go into a home. Let me give you the chocolate covered broccoli real quick. That is, no one wants the broccoli. They want the chocolate. So we got to give them both, right? You got to give them the chocolate broccoli. Because sometimes you got to give people what they need. Why is it that you're able to go into an appointment and get a contract? Why is it that we're able to go on an appointment and get a contract? It's because there is this confidence level. People aren't looking for just the best offer now. I think so many times we think, oh, we've got to be the best offer and people are going to go with you. If that's all you have to offer, that's all you have to offer. But there's many times we're not the highest offer and we are getting contracts because we provide the most confidence. We're going to actually fulfill what we said we're going to do. I think now to tie us back into your question, what's going on? Is it rising? Is it flat? There's a new confidence. This is not a right or a left conversation right now. This is just going off of the feeling that I'm feeling right now. And there is a higher level of confidence going on right now in the economy that makes me say it's going up now. There's things that can change always. I've always been the guy that's like, marry the home and date the rate, meaning rates always change. But people that have been sitting on the sidelines right now saying, I can't buy. We got 7% interest rates. No, now's the time for me in my mind. No, you buy. Because if those interest rates go down, these prices actually go up. And so let's buy it. Why it's low and then date the rate because the rate's going to change and just refinance. And now you got the home at a low price and you get to refinance at a lower interest rate. Come here. In the future. There is a confidence going on. So again, not going political, but there is an absolute confidence going on in the economy right now. What's going to happen over the next few years, or at least this next year. And I'm seeing a lot of things happening. I'm seeing a lot of interested parties getting back into real estate. I'm seeing a lot of cash buyers get back in the game saying, hey, it's our time to Go because they know what's going to happen over these next few years. I think it's going to be nothing but powerful going on, nothing but great.
- [37:57]
Mark Stubler
I anticipate in the spring, beginning of the year, it's going to have an, it's going to bump up and things are going to be good. There's a couple of things I look at. I almost go to this, to the definitive statement of Brent. I actually don't care. And here's what I mean by that. If I just do what I do well and I'm consistent at it, I almost don't care because in our space there's always people that can benefit from the services we provide. I, in fact, I don't do this often. I just happened to go on appointment this last Saturday, just, just two days ago. Let's go. Hey. I had to shake off the dust. I had to meet with a great family. They ultimately needed a solution because their home, they just don't have the surplus they need to get it fixed up. But they're excited to make a transition, move to another home. They're coming together as a family, a mom and daughter and son. They're building or buying another home together. But their home is, is, you know, 40, 40 years and a lot of work from being, you know, able to sell type thing, mold and some issues like that. So anyway, if I'm positioning myself to provide meaningful value and service to families, I'm in a home like that whether the market's going up or down. Okay, so now how is it relevant if there's higher interest rates in market? Well, yeah, I have to buy, right? I have to be conservative as to the numbers I put in contract. But at the end of the day, I can't control those things. And so I almost put zero energy towards what the market's doing and I just provide meaningful value and service. I go find families that can benefit from the service I'm providing. I'm consistent with my marketing. I manage my leads well and at the end of the day I'm going to execute regardless of what the market's doing. And I focus on homes. Here's maybe the other rule. I focus on homes that are medium price range and below. And if I stick with that and I get buy right, and I'm conservative with my, my purchase price, I'm going to be okay and I'm going to provide meaningful value and service and the market's going to do what's going to do. And sometimes, yes, I'll kill it because the market does better than I anticipate, but other times it won't. But I'm not going to lose money because I bought right and I executed and I provided service and value to the families.
- [39:46]
Brent Daniels
I mean, I love it. Guys, I am a Joe Homebuyer franchisee. Joe Homebuyer has been phenomenal. When did I start? 2019. It's been five years. Do we get a five year anniversary for that? I hope so.
- [40:02]
Cody Hoffine
One of the, you were one of.
- [40:04]
Mark Stubler
The first, early adopters maybe.
- [40:06]
Brent Daniels
Well, first of all, I think, I think brand, local brand is really important. And this is for anybody that, you know, once you're, once you're starting to build your business and you're bringing people onto your team and you cross that million dollar threshold, you cross that $750,000 threshold, I think it's really important to have an asset. And most people won't buy your real estate business. They just won't. But if you buy a franchise and there's only a certain amount of franchises that can happen in each market, that's something that over time is a real asset. So that's what, that's what I saw going into it. And also just the training. I mean, I send all my acquisition managers to Utah. You guys train them all. We have weekly meetings with you guys. You guys do phenomenal with, you know, testing out all the different marketing channels. And so for anybody that's around the country that's interested in having a business in a box but, but also having the support of real operators that are doing it and it's not this big corporate weird thing like some of these other franchises. I would, I would highly suggest you look into Joe Homebuyer. It is, it has been an unbelievable, I mean my business has absolutely, I think, tripled at this point as of this year since joining. And so it's, it's been a huge advantage for us. We all my guys wear these polos when they go out on there. My, my commercials on TV that we spend whatever 40, $50,000 a month on right now and will continue to, are all Joe Homebuyer. And it's funny, people think my name is Joe right when they see me or whatever else out in the streets. I'm recognized because of the, the TV commercials. And they're like, Joe. It's really interesting guys. And so if you, if you've ever thought about that, make sure you go, where do they go? Just to joe homebuyer.com yeah, joebuyer franchising.com.
- [41:55]
Mark Stubler
You can also follow us on Instagram and yeah, we'd love to same handle Joe Homebuyer franchising.
- [42:02]
Brent Daniels
Hey, guys, the, the, the, the, the meetups are fantastic. Getting together and collaborating, it's not something that, you know, listen, some of these Masterminds, you spend 10, 20, 30, $50,000 to be a part of this is way more value than anything like that. So if, if you're in a position and you're interested in buying an actual incredible brand that is really just, just growing up, only five, six years old and really building some momentum, I highly suggest you guys look into Joe Homebuyer franchise. Just Google it and check that out. Cody, Mark, thanks for being on here.
- [42:40]
Cody Hoffine
Always an honor. And thank you for those kind words. That means the world. But you are, your crew is a fantastic crew to work with. They are the most coachable, humble people, which is why they're tripling the revenue. Because they, they don't just listen. They listen. They go fly and they go do it.
- [42:56]
Mark Stubler
Listen.
- [42:56]
Brent Daniels
We're going to do 2, 2.5 million here in Phoenix. You know, we're, we're pushing ahead 2.5.
- [43:01]
Cody Hoffine
The hardest markets in the, in, in.
- [43:03]
Brent Daniels
The country, in, in the gross income. And then, you know, obviously the net is around 30, 40% there. Just depends on how this shakes out. But it's been fantastic. And you know, you guys, you guys put together all the systems. I just pick the people and make sure that we have enough marketing going out and life's good. So definitely check it out, guys. Joe homebuyer franchising. And that is it for our show. We talked a lot of stuff. We talked about direct mail. We talked about flipping version versus wholesaling. If you're really interested in deep diving, what wholesaling is, go to richdadandbrent.com richdadandbrent.com we have a presentation that's 45 minutes an hour and that'll really open your eyes to what that means and the potential there. And it's actually something that Robert Kiyosaki talks about in chapter five of Rich Dad Poor dad, which I didn't see the first 10 times I read the book, but then finally didn't. It changed my life forever. So definitely check that out at rich dad and brent.com and that's it, guys. I love you guys. I want you to go out there and have conversations, make offers and talk to people. Till next time. See you guys. Thanks for listening to Rich Dad Radio, the good news and bad news about flipping real estate, hosted by Brent Daniels. To learn more, go to richdad.com don't forget to like and subscribe wherever you get your podcasts.
- [44:31]
Ryan Seacrest
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