A (1:27)

Do you have a better one? Tell me in the comments of this video, was that really that hard to understand people?

B (1:32)

I don't understand. I mean, I. I get it now, but I. The entire time I was like, oh, she didn't show up to work out.

A (1:38)

Yeah, you didn't get that? We. Our marriage is going to work out. All right, Maybe it would work better if I said my girlfriend. But that's actually the joke was I met a girl, and for our first date, we were going to go work out, or for the first date, we were going to go to the gym, but she stood me up and didn't show up. So I guess we're not going to Work out. It makes maybe a little more sense if you say, okay, girlfriend, first date, or whatever. But anyway, you got. You got a better one.

B (2:02)

Why was Helen Keller bad? No, I'm kidding. It's my go to.

A (2:07)

Have you heard. Speaking of Helen Keller, have you heard the conspiracy theory that she was not deaf or blind?

B (2:13)

No, but I'm interested.

A (2:14)

Yeah, it's wild. And when you dig into it, you find out that the lady who handled her like that, wrote the book and all this stuff was just like this, like, supposedly. Supposedly alleged. Like just charlatan who, like, was just making a ton of money and it was all scam. They did together.

B (2:30)

I actually, now that you say that, I. I haven't done any. I have heard that before. The lady that.

A (2:35)

Yeah, I was reading some article, and by article, I mean I saw a TikTok and there was a ton of data to support this dude.

B (2:43)

It's brilliant.

A (2:44)

Yeah.

B (2:44)

We're still talking about Helen Keller today.

A (2:45)

Talking about Helen.

B (2:46)

She's in school books.

A (2:47)

Yep. They made it. They made it. What else in school books is not true? Oh, wow.

B (2:53)

We could do another podcast.

A (2:54)

Another podcast? Today's podcast is about something that is true, and that is how do you go and flip a house and make 50 grand? That's what I want to talk about to you today. Now, I have flipped a dozen, ish. Two dozen probably houses in my life. You flipped two. Two dozen houses, like, yesterday. And so I don't want to give a lot of advice on how I make 50 grand. I've only made 50 grand on two flips out of mine, maybe three. Most of mine averaged around 15 to 20. Okay. But you routinely do make 50k on a flip. I.

B (3:23)

So I. I would not say routine.

A (3:25)

Okay.

B (3:26)

Yes, we. We have probably done this point, 6 to 700 flips in our life.

A (3:31)

Okay.

B (3:32)

And that. I mean, we're. We probably do 10 a year. That make 50 plus K. Okay, I'd call that.

A (3:44)

And then once a month.

B (3:45)

Yeah, yeah. And then we probably do one a year where we're over six figures. So we're not like you.

A (3:53)

You.

B (3:53)

I talk to some people and it's like every house they do, they make over a hundred thousand dollars on.

A (3:57)

Yeah, some of those people, too. We're.

B (3:59)

We're more in that 20 to $30,000 range.

A (4:01)

That's also because of your market.

B (4:02)

Yeah, yeah.

A (4:03)

We're.

B (4:03)

I mean, we're typically buying for. I mean, a perfect example one that we're flipping right now, we bought for 88. We're gonna put 80 into it, we're gonna sell it 250. But then once you account for holding costs, realtor fees, taxes, all that stuff, I, I think that'll be right around $30,000, which is, is pretty normal.

A (4:25)

That might shock people to hear that too because like when you do the math in your head real quick, I bought it for 80, I put 80 into it, it's 160. I sell it for 250. Oh, I'm going to make 90 grand. That's what everyone does in their head. Yeah, I'm going to make 90 grand. And the reality is there's a lot of expenses that come out along the way. And so maybe the, maybe the first tip here we can give people. Not that it was in our list that we kind of brainstormed ahead of time. It's if you're going to make $50,000, you have like, you have to learn that that's not the same as a $50,000 spread.

B (4:52)

Oh, it may be. It, it makes me mad sometimes because people do like they hear those numbers like, oh, you're making $90,000. Not even close to it. I mean this one, the, the one that I'm thinking of. Exactly. We bought in right now we're recording this in February. We bought this in August. We had a stop work order put on it. It sat without us doing anything on it for three and a half months. So our holding costs have stacked up. I mean let'. It'll probably be eight months by the time. So I mean just in, in holding costs alone, we'll be at 16 to $20,000. So, so right there we go from 160, you know, are all in number to 180. And then on top of that we have, I usually don't include like staging the final clean permits and like our rehab costs. So that, let's just say that's another 10 grand. So we're at 190. Then we costs involved in it, which are not huge, I mean 2,500 bucks. Then we have realtor fees, which we pay our realtor three and a half to 4%. It's usually two and a half to the buyers and one and a half to him, which. What's 4% of probably 250. 250.

A (6:13)

I don't do math. I'm a real estate guy.

B (6:14)

Yeah, I was at like 8 and Ted's like 10. So you're, I mean you're already at $200,000. So I mean they just, it, it stacks up real quick. Yeah, it stacks up really, really quick. Oh, and the points on the interest because it's when we use a hard money lender instead of a private money lender. So we had to pay points on the front end. So it just, it adds up. And a lot of people don't realize that. They look at, you know, what's, what am I buying it for and what's my rehab and what can I sell it for? And yeah, if, if you do that, man, you're, you're losing money on deals all the time.

A (6:47)

Agreed. Well, let's talk about how to do it then. Let's go step by step. Somebody watching this video or listen to this podcast wants to make 50 grand this year in 2026 on their flip. Whether it's the first one, 10th one, whatever. What is the first step that you would suggest if you're gonna go make 50 grand on a flip?

B (7:03)

I think the first thing. And this determines everything else in the process. But it's something that you talk about a lot. I, you call it develop your crystal clear criteria. I call it just have a buy box. But I think that's the, when you're just starting, that is the most important thing that you can do is just say, hey, here's what I'm looking for and here's what I'm not looking for. So that way there's a filter on every deal that comes through to where you can quickly write it off or you can say, I'm going to do a little bit more research on it and this help. We'll talk about deal, about deal flow in a second. But this helps in deal flow. So just, I think it's easy for somebody to develop their crystal clear criteria as well, because all, all it takes is just spending a couple hours on Zillow and looking around at your market like, what are houses selling for? Maybe doing a little bit more research of hey, what, what price point is going fast in my areas? What price point are there houses that are sitting on the market? What I've Learned this is St. Louis, Missouri, is that houses in the 250 to $400,000 range in St. Louis fly off the market. You could be in a more expensive market where it's like the 500 to $700,000 range. But for us, our crystal clear criteria is we want three bed, two bath houses in that 250 to $400,000 range.

A (8:21)

That makes sense. So you got your criteria, nailed it down, which is just important in all areas, right? Getting specific, I preach it constantly. Get specific on what you want in that case is there a type of house? So let's go newbie for a minute. A brand newbie. What should they avoid when they're trying to pick their criteria?

B (8:37)

Yes, I think that's just as important of like, what I'm looking for, what I'm not looking for. And so we have very specific, like, this is. No matter what, we're just never going to buy this house. Even if the deal looks amazing, if it's on a main road, we're not going to buy it because one, it's hard to comp houses that are on a main road because most aren't on a main road. So it's on a main road, we're not going to buy it. Typically, if it's on septic, we would still buy it. That's usually in more rural area. But that's.

A (9:04)

We.

B (9:04)

If it's on septic in like a. A suburban area, we won't buy it. Because usually there's a law that once it exchanges hands, you have to tie into public. That can cost a ridiculous amount of money. If it's a rural area, we're okay with that. Foundation issues is another one that if I'm a newbie, I'm staying away from. You can get a foundation contingency, but if I'm a newbie, I would just stay away from it. This is big Frankenstein houses. Yeah, yeah, we see those all the time. Where somebody has owned it for 50 years and they just kept adding on and adding on and changing the layout. And you walk through, you know, you got your main house, then you walk through the kitchen to get to another hallway that's got two bedrooms in a game room, and then off of that is a shed. And like. So just stay away from Frankenstein houses because typically you're gonna have to go and redo all of the work that the prior owner has done. Most likely they haven't pulled permits on any of that stuff. I would say 99 of the time, they haven't pulled permits. And so we just. If it's a Frankenstein house, we don't touch it.

A (10:04)

Yeah, you might. You might be surprised people that like how many of these exist? Like, they're everywhere.

B (10:09)

Oh, Frankenstein houses.

A (10:11)

Yeah, yeah, they're all over. Because people just love to. To do work. Especially boomers back in the day, they love to do work on their houses. And so they just keep going out here in Hawaii, it's a real problem. Every house. Yeah, they're everywhere. They actually. And here's. They're. They're misleading because they look really good on paper. Because for rentals especially you're like, well, there's nine bedrooms.

B (10:29)

Exactly.

A (10:29)

Wow. That thing's going to rent for so much money. And then they're just a constant drain and a nightmare. And then when you get caught for not having a permit because you didn't even own the house, but they, they come and slap your wrist.

B (10:40)

Anyway, dude, I think what you just said is, and I've seen so many people mess up by this is they look good on paper. Because usually the Frankenstein house, if it's in a neighborhood, it's got more finished square foot footage than any other house.

A (10:55)

I'm buying a 4,000 square foot house

B (10:56)

and all the other houses are 2,000 square feet or it's got more beds or it's got more bathrooms where it's like, oh, this is a six bedroom house. And all the other ones are three bedrooms. But it's like those other three bedrooms, one, they're unpermitted and two, they were done by somebody who didn't know what they were doing. The wiring's messed up, the H vac is messed up. Like you almost, you're gonna have to tear it down. A lot of times. That's what I'm like underwriting for. If we are even underwriting on a Frankenstein house is like, we're just gonna get rid of this.

A (11:25)

Yeah. So, all right, so you got your, you got your criteria, your buy box, you know what you're going after. What next?

B (11:32)

Next is deal flow. And this is part of why having a buy box and crystal clear criteria is so important is you, what you're looking for. I, I just was talking to somebody the other day who is a, a wholesaler. So he's selling deals and he said one of his biggest pet peeves is when a buyer tells him to send, send me anything that you have. And so like if you have your crystal clear criteria, like if you spend some time saying, hey, I'm going to think through what I'm looking for, and maybe it, it's just like mine where it's like, hey, we want three, two brick ranches between a 250 and $400,000 ARV. When you're talking to somebody, you can say that it's like your elevator pitch. This is what I'm looking for. And that's really important. And so I think anybody can find a deal in the next 30 days just by going to local meetups, getting on Facebook investing pages and reaching out to people that are posting deals and telling them what they're looking for reaching out to property management companies, junk removal companies, telling them, hey, if you have any houses that match this, let the offer or the, the owner know that I'd like to buy their house in cash. And if something works out, I'll pay you a referral fee. I think you can reach out to agents and try and find their off market or pocket listings that they have. But I think anybody can find a house in the next month if they just committed to that. And obviously we could talk for the next 10 hours about deal flow and really dive into it. But I mean right now, which has gone up, but it's probably 20, 20 offers to every house we buy. But if you make an offer a day, and granted, I don't want to give somebody false hope where it's like they're getting on market and just making, you know, 20 offers and like, hey, Cam said 20 offers. Like they, they have to be good deals that are off market that are somewhat exclusive to you and not to just this huge buying pool. But if you're making an offer a day, you will buy a house in the next month, I can almost guarantee it.

A (13:28)

Yeah. And when you're, when you're part of deal flow, like obviously it's lead generation, would you also put in like analysis? Is that part of this or does that come in later? Where do you, where do you put that process?

B (13:38)

Yeah, I think so. It basically in my process, it is crystal clear criteria. Then it's deal flow. So it's just like building this massive funnel of what I would call connectors to bring you deals. And there's so many pieces of that of like building relationships and being intentional around building relationships. And people are going to sell to you because they know like and trust you and people are going to sell to you if you come in with a quick close and no contingencies. And it's a cash offer. So there's so much to that. But usually it's like, hey, we get the deals, then we analyze the deal. So that's kind of the next step of the process would be deal analyzation, which I'm happy to talk about.

A (14:14)

Let's do it. Let's talk about it. Because I find, yeah, there was a book I read on flipping houses back early, early, early when I was in my real estate kind of education phase. And I remember them just talking through the numbers. And first of all, it's, it's more complicated often to do numbers, but whatever, but you run the numbers and all you do is you put in I'm curious if this is how you do it, but you just put in like, what do you want to make for profit? And then all the numbers that are there and you just basically walk into the number you can pay for a property. Like it's, it's a fairly mathematical, scientific approach to doing it. So to go back to the theme of this video is which, how do you make $50,000? Is you just underwrite for a $50,000 flip and then go after deals that make that much money?

B (14:50)

Yeah, I would, I would agree with that for sure. Um, like we're taking down deals that we're going to make $25,000 on. We'll even take down deals that we're going to make $20,000 on. And there's a little bit more to it when we're doing that in the sense that like, hey, if we're only going to make $20,000 on a deal, it's gotta be one. The ARV has to be certain and the rehab has to be certain. It has to be a really, really easy rehab for us. Cause we're not gonna go in and do a hundred thousand dollar rehab to make $20,000. We'll do a $10,000. Yeah, yeah, exactly. Oh, we've done it before. We've done a hundred thousand dollar rehab to lose 50. Believe me, we have done that before. But we have to know like, the ARV is certain and the rehab is certain to make $20,000 and it's got to be a low rehab. But you could certainly do like, hey, I'm just going to underwrite everything to make $50,000. Now I think where people mess up when they're analyzing deals is one we kind of already talked about at the beginning is they just forget of all, all the hidden costs. They don't, they don't think about the, the holding costs, they don't think about the interest on their hard money. They don't think about realtor fees on the back end. They don't think about concessions. Whenever somebody buys a house, especially in today's market, every buyer is going to ask for a laundry list of, of inspection items. And usually it's a seller credit that we offer and sometimes we'll have to fix stuff. But right now it's like creeping up to 7,500 bucks a house that we're, we're having to spend on concessions.

A (16:14)

Crazy.

B (16:14)

Yeah, I didn't think of that. Yeah, well, and, and so like going back to that house where I was talking about earlier, where it's like, we bought it 80, we put 80 into it. We're going to sell it at 250. Like, we, we're really, we're gonna sell it at 2:40, 2:500. And we're gonna have to do some work because we're probably gonna give seller concessions to it.

A (16:31)

So fun how markets change. Remember, like during COVID it was like, if you were selling a house, you'd be like, oh, I have 35 offers. Yours is the lowest at 50 grand over asking. So screw everybody. You know, like, it's like such a different market today.

B (16:45)

Dude, it's so different because, I mean, if you had any sort of inspection contingency in your contract during COVID I was throwing that in the trash so fast. Like, no, we, we. Yes. Just because it's so much easier to sell a house without concessions. And, and, and now like agents are getting, they, they just know that it's more of a buyer's market now. And so like, they're asking for just belligerent stuff. That makes me so mad. And a lot of times we have to do it because we only have one offer on the house that, that goes. I mean, again, I could talk so much like pricing strategy. We purposely price low so we can get a lot of showings and hopefully get multiple offers. So we can kind of help dictate like that a little bit. But if we only get one offer, like, we kind of have to do what they say.

A (17:36)

Beggars can't be choose.

B (17:37)

Exactly.

A (17:37)

Yeah. It's kind of interesting looking back at like a 20 year. I've been in this for 20 years now almost. And like you read about market cycles and buyer's markets and sellers markets and how it changes, but it, you don't, you don't notice it necessarily in the moment, but over a long period of time, like even now, you can see from COVID to today how we've just shifted so much.

B (17:54)

Oh yeah.

A (17:55)

You forget that that will come back and it just does this.

B (17:57)

I pray to God it will.

A (17:59)

But then it becomes harder to find deals and I, I feel like when

B (18:02)

it comes back, I, well, so I. What I would say right now, at least what I'm feeling. And again, this is my only cycle that I've been through. So I, I haven't been in this for 20 years. I've been in this for six. This is my sixth year. So it, right now it's still hard to find deals just because you, you don't have very many people moving.

A (18:19)

Yeah.

B (18:21)

And that goes back to like interest Rates and just people are sitting on there. So there's a lot of investors out there that are trying to find, like, a very finite amount of deals. Like, in Covid, it was a seller's market, but you also had just so many people moving because the.

A (18:38)

The.

B (18:39)

The interest rates were so low. And so I actually think it's one, it's harder to find deals right now, but two, it's harder to make money on those deals that you do find. So it's kind of a.

A (18:50)

Do you find because of that? Is there a silver lining here that there's fewer people flipping because it's hard? And so for sure, there's less competition?

B (18:57)

Yes. Yes.

A (18:57)

The.

B (18:59)

A lot of people that I know that started in 2020 or even before then, they have shut their doors. Yeah, I. I mean, I'm gonna go down the list because maybe someone listens, but there's been a lot of people that I know that have just said, hey, we're. We're out of the whole flipping game.

A (19:15)

Yeah, it's a tough time to flip.

B (19:16)

But, yeah, they've turned to education and things like, I'll teach you how I made a million dollars in 2020 when it was the easiest diamond.

A (19:23)

Yeah. So a lot of practice practitioners and performers, you know. Yeah. Like. Like, obviously both of us have done education products and stuff. And, like, that's one of the reasons I keep investing, because I never want to be the guy that's teaching what I'm not doing, because it's just, like, that has always driven me nuts. I'm like, even though I don't have to buy real estate anymore, I will. Oh. As long as I'm selling anything related to education, I'm gonna always do the thing. Yeah. And, like, that's. That's not a normal thing, dude. That's not a. That's how I pat myself on the back. But it's shocking how few of the influencers out there that are selling this stuff actually are doing.

B (19:54)

Actually, dude, it.

A (19:55)

It.

B (19:55)

It pisses me off.

A (19:56)

Yeah.

B (19:56)

I'll say that because I, like, dude, I could have quit real estate after 2021, and I would have been the best investor ever. Like, come in. In two years, I've made millions of dollars, increased our net worth by millions of dollars, and would have. Would have been the best educator. And on those two years, and I would know nothing about how to navigate a market like today, and would do people a huge disservice if I were to do that. Like, now anybody that's asking me about investing in Real estate, I'm very, I'm cautious with them of like, hey, it's a lot harder than it's like you have to underwrite for all of this. You're not going to get. I mean one of the things when we're talking like talking about deal analysis, one of the things that I did in 2020 was like I had my ARV of like hey, here's what the comps are telling me that it's worth. But in the back of my mind I always knew like it's going to go for 50 over that and so I can go up in value and like if I'm still teaching that people are losing tens of thousands of dollars where it's like, hey, honestly you've got your ARV and it might go around there if you're good at running comps, but it very well could go under that as well. And so it's just different, different market. When you're analyzing deals, which also leads

A (21:14)

to, you know, you mentioned a minute ago, but I'll just double click on it real quick is like if you're doing a profit, if you have a smaller profit margin, you're going to make 10 or 15, $20,000 on a flip. The time you hold it matters immensely because markets shift, they don't shift that much over a one month period. Like I don't know any example where markets drop 20% in a month, but it could drop 20% over the course of a year. So if you're holding the property for a year, you need to know that there is a real chance your property will drop by 20% over a year. Like it could happen.

B (21:43)

Oh dude. If you're flipping a million dollar house like in the market shifts, which I've got friends in Florida that that's happened to and they lost hundreds of thousands of dollars because of that. And that's why I said like we will underwrite and we will do deals that we're only going to make $20,000 on but we have to be sure of the ARV and the rehab has to be very, very minimal. So like literally those are the ones where we can close on it. We can get a crew in there for two weeks, maybe paint, do some flooring and relist. That's not something that we're going to hold on for four months and we're underwriting for $20,000 because we just don't know. But also in our price range it is a little bit. I mean 20% is still would be devastating. But if, let's say 5%, like 5% shift on a $300,000 house. We're still, we're probably not gonna lose money on 5% shift on a million dollar house. Like, that's, that's a lot more money.

A (22:40)

Yeah. That's your whole. If you're trying to make 50. Yeah. That's your whole profit. That's everything. Yeah.

B (22:43)

But I would also suggest if you're doing a million dollar house underwrite to make well into the six figures. Yeah, I think that's kind of a rule of thumb for us is whatever we have into it, we at least want to make a we underwrite for probably 15. I will do 10%. But like, what I mean by that is, hey, if we're buying a house for $150,000 and we're putting $50,000 into it, we're going to be on for $200,000. I want to make a 15% return on that $200,000 that we're putting into it. So that means that I'm underwriting to make $30,000 on that. And so that way it mitigates your risk because on a $50,000 or a house that you're going to be all into for, let's say 400 and you're going to put a hundred into it, you're all in for 500. If you're underwriting for 15 return, you'd want to make $75,000. And so that mitigates your risk a little bit.

A (23:39)

Yeah, it makes sense. Yeah. When you've, you said the 15 number before and I, I thought what you meant. And now it makes way more sense. I thought you meant the amount of money that cash out of your pocket. You want to make a 15, like IRR on it, you know? No. Yeah.

B (23:52)

Yes. Because that, that's way more.

A (23:54)

Yeah. You want your profit. Yeah. Your profit percentage on the all in is 15%. That makes perfect.

B (24:01)

Yes. So I have said that like 15% cash on cash return. And I'm, I. But you were using a hard money lender or private money lender and I might be putting zero dollars in the deal. So it's an infinite cash on cash return. What I really mean by that is like, hey, if we're going to be all into this for $200,000, I want to make $30,000. If we're going to be into this for $400,000, I want to make, you

A (24:23)

should call that like the 15 rule, $6,000. When you add like rules to things like the 1% rule, 2% rule, burr house hacking, like phrases, like frameworks. Yeah. We should just call it the 15 rule.

B (24:32)

The 15 rule from Cam Cathcart. It's gonna be the new Burr.

A (24:35)

Yeah. You could write a book called the 15 rule.

B (24:37)

So.

A (24:37)

And it's a book on flipping houses. On how to make 15%. Yeah. Of your sale price or of your,

B (24:42)

of your all in price. Yeah, essentially. Yeah. All in price. So, hey, who knows?

A (24:48)

All right, so you got your. So if you wanted to make $50,000 and you were doing the 15% rule

B (24:54)

from Cam Cathcart, so your house would have to be. You'd have to be all in on the house for probably 350.

A (25:00)

Ish.

B (25:00)

I would guess my numbers right on that. I think that's exactly right. And I'm a genius. Which means what? It's not exactly.

A (25:07)

Well, 10% of 350, because 10 would be 35. And then you're at 17 more.

B (25:13)

No, 5% of 35 is 17.

A (25:18)

What. So, yeah, 15 of 30 plus 17. 52. 52. It's not exactly. Dang it. Not exactly. We're math. We're not math people. We're real estate people. But it's, it's about that. Yes. You're within a thousand.

B (25:34)

Yeah.

A (25:34)

So.

B (25:34)

And I, I, I don't have a calculator in front of me or my spreadsheet, but if you're. That's what you're on at, 350, you probably are going to want to sell in the High Force.

A (25:42)

Yep. Unless you want to do the 20 rule from Brandon Turner, which says you get 20% of your solid. In that case, you're at probably a 200,000 now. 250,000.

B (25:52)

$250,000 home.

A (25:53)

Because 20% of $250,000 all in, puts you at 5.

B (25:57)

Yes. And you can, I mean, some of our best deals have been like that, where it's just a lot harder to find.

A (26:04)

Yeah.

B (26:06)

But like, we're doing a deal right now. I was telling you this before we started this, but we bought it at 127. We closed on it, we put $10,000 into it, and we're gonna sell it at 2:40. Yeah. And so, like, that was this out in the middle of nowhere, like, pretty rare deal, but you can do that for sure. It's just not as normal. It's a lot harder to.

A (26:30)

Well, what's the next step on our goal to make 50 grand here? We started with getting very clear on what we wanted to buy. We got our deal flow going. We got our. We talked a Little bit about underwriting.

B (26:40)

Yes.

A (26:41)

We talked about.

B (26:43)

It's pretty much it.

A (26:43)

That's it. Yeah. So.

B (26:45)

And I'm not going to talk about this. We can do another podcast on this at some point. But negotiating the deal, that's really important. I think that's a part that people miss where it's like, hey, here's my number. And they just, like, walk away. There is an aspect of when you're making your offers, how to negotiate the right way. I mean, you're kind of a salesperson in a way, and building relationships with those people over time. And so it's not as easy as just, hey, I'm going to analyze a ton of deals and I'm going to throw out a ton of offers. Because for us, what we found out is that most of the time when we're working with connectors, they are going to sell to you because they know, like, and trust you. And so it's not just as easy as I'm just going to throw out an offer. They have to know who you are. They have to trust who you are. They have to trust that you're going to perform on the offer that you've thrown out, and they have to like you. So there's an aspect of that that is really important.

A (27:40)

What. Unrelated to that. I mean, what percentage of deals do you buy are from connectors versus your own marketing right now?

B (27:47)

100% all.

A (27:48)

They're all connected.

B (27:49)

Yeah. We stopped marketing back in October.

A (27:51)

Yeah.

B (27:51)

Because we were spending 10,000 bucks per. Per buy. But if we're only making $25,000, like, the margins aren't there.

A (27:59)

We're.

B (27:59)

And just even looking at our marketing, we were. We're not our marketing, but just our deal flow. We were buying so many more houses from connectors because we were spending 15, $20,000 a month in marketing, and I was getting us a house or two a month versus we were getting three, four houses a month from connectors. And I was like, it just doesn't make sense right now for our team to. To market. And there. There's way more to that, too, where it's. We were marketing to the same houses that wholesalers that I honestly hate are marketing to, where their offer is substantially higher than ours because they're never going to actually close on the deal. They're going to put it under contract. They're going to shop it. And so we were running into that situation a lot where a homeowner doesn't know the game. And so they hear so and so say, hey, I'm at $200,000 and they hear us say we're at $160,000 and they take the $200,000 offer all the time, even though that $200,000 offer has a 90 day close and a 90 day contingency period. And they're going to cloud title if the owner tries to back out and they're gonna renegotiate the price. It's podcast in and of itself. But all that to say we just deal with connectors right now.

A (29:16)

Very cool. How does somebody know a connector is a good one to work with or a bad one?

B (29:21)

Oh, that's a great question.

A (29:22)

Thank you.

B (29:23)

That is a great question. Because that, I mean that, that is so important.

A (29:28)

There's a lot of bad.

B (29:29)

There's wholesalers out there. There's a lot of bad wholesalers out there and then there's a lot of good wholesalers that just have a phenomenal buyer's list. And if you are running numbers the right way, they're probably not going to

A (29:39)

sell it to you.

B (29:40)

And so I think what I look for is one, somebody I like is somebody that I'm going to buy a house from, somebody that I like that I have a good relationship with, somebody that does things the right way. I think that's important. They're not taking advantage of homeowners. But I think when you're looking for deals, and don't hate me for saying this, if somebody is a part of the company that's listening to this, but like, you're not looking for the big wholesaling companies like the, the new Westerns of the world. You're not looking. There's some amazing companies in St. Louis. Faster House being one, Core Properties being another one. Like there's some really good companies in St. Louis. I'm not going to buy from them for the most part because they just have a buyer's list of 5,000 cash buyers. And we're competing against people that are able to shrink their rehab budget in half because they're going to do their own labor.

A (30:37)

Yes.

B (30:38)

Or they've got mom and dad that is lending them their money. And so they don't have to pay 12% on their money. And so they have buyers like that. Does that make sense at all? Yeah. And so, like, I don't think it's. Unless you are going to be the person that's swinging your own hammer, unless you are going to be, you have, you know, a ton of money with really low interest that you have to pay on it is going to be hard for you to be competitive if you're running numbers the right way from one of those bigger wholesaling companies. So I like the smaller wholesaling companies or the single wholesaling company or operation where it's like the dudes doing their own acquisitions, they're doing their own dispo, they're analyzing the deals themselves because they just don't have time to go out and build a 5,000 person cash buyers list. They're looking for somebody, hey, they might be taking less money, but I can sell this house to Cam really fast. And I know that he's good for it. I know that he can close quick. I know that he's not going to have any problems because they don't have the time to have like an entire dispo wing of their company. Does that make sense at all?

A (31:35)

It does, yeah.

B (31:36)

So, so I'm, I'm looking for people like that. And then agents. Agents are just kind of the same way where agents, their job is an agent. Usually it's on the retail market. They don't have a huge cash buyers list. They're again just looking for who, somebody that I can trust who's going to close and be able to do it quick, who's going to come with a cash offer and who's not going to give me problems from getting it under contract to the closing table.

A (32:00)

Why would an agent sell to you? Not just go put on the MLS or it's on the MLS and they just are desperate or what?

B (32:06)

No, typically we never buy if it's listed on the mls. We lost all exclusivity to that deal. There's millions of people in the St. Louis market that can see that. But an agent would sell to us because I mean, great example agent called me. House was in perfect shape. It was ARV was $300,000. And honestly it probably would have sold at $300,000. They had 14 dogs. Dogs. They took great care of their dogs. They had 14 dogs. And she was like, they don't really care about the money. They just don't want a bunch of people in and out of their house. They don't want to have to set up showings and get all the dogs out of the house and back into the house. So just make money, make, make, make them an offer to where they never have to show it again. And our offer was at 240 on it. And they came back, encountered it, I think 250. And I think we bought it for 2:47 on it. And I told the Agent on this one, I was like, we're literally going to buy it because it was a beautiful house. Like, we literally bought it and we. They got out, we deep cleaned it, we staged it, we took pictures and we relisted it. And granted, on that one, we only made. I mean, only made. We still made over $20,000.

A (33:13)

But it was.

B (33:14)

That was the reason why they sold it to us was just because they didn't want anybody else in their house. There's times where the house is destroyed and the agent doesn't want to list it and the owner's embarrassed and doesn't want people through there.

A (33:26)

And so.

B (33:27)

Yeah.

A (33:27)

All right, what comes next?

B (33:30)

Funding. So funding is that. Yeah, I agree. I wish. Funding is really important. And so there's two types of funding. There is hard money lenders, and they're private money lenders. And that's not true. There's a lot of different types of funding. Those are the two that we primarily use. We also have a line of credit, a bank that we use, but. And then we have our personal funds. So those, those are the four ways that we fund deals is hard money lenders, private money lenders, bank personal funds, and kind of the order of that is personal funds. We always want to have some liquidity, but we use our personal funds because it's the cheapest. There's no interest on that. Then we use our line of credit at the bank because we're prime on that, which is a lot less than what hard money and private money lenders. Then we use private money lenders, and that is pretty much where we stop. But like right now we have 15, I think 15 houses going on, and I've used up all of my private money lenders. And so then we've moved on to hard money lenders. And the difference between a hard money lender and a private money lender is usually like just points and kind of junk fees. But they're both 12% a month.

A (34:39)

Yeah, most you go with Better Life ref.

B (34:42)

Oh, yeah, yeah, yeah, yeah. Yes, yes.

A (34:43)

I don't know if you know what.

B (34:45)

No, I think yours are pretty good right now.

A (34:47)

They are pretty good. Yeah.

B (34:47)

I think yours are really.

A (34:48)

Our DSCR rates are stupid good. They're like in the fives, but yeah, like, it's incredible. And they got to be the right property in the right location, the right credit and all that. But like betterlife ref.com ref stands for real estate funding. Better Life real estate funding. I'll probably change the name at some point, just Better Life Funding. Oh, yeah, because it's, people are always like ref. And I'm like ref. Real estate funding.

B (35:06)

I just, I like, I like ref.

A (35:08)

But Red Ale fund will probably make more sense.

B (35:10)

Yes, it would, it would.

A (35:12)

So go to betterliferef.com and check it out. Like I said, we got cheap rates on DSCR loans which are great for long term rentals and we do flips and I'm pretty sure we're going to be less than 12% in most markets. So check us out. Yeah.

B (35:25)

What I would say with funding though because I think most people that are listening to this, they probably don't have the reputation with the bank build up yet to be able to get a line of credit and they probably don't have, potentially don't have the personal funds to be able to do it. And so like with private money lenders, I think that one, we've talked about this before but if you have a good enough deal and AI has made it so easy to. In today's world where it's like just go sit down with Chad GPT, tell them about the deal, say hey, I'm pitching this to some private money lenders. What would you say? How would you push it? Put in the information in the deal. ChatGPT is going to give you a phenomenal pitch. Then take that, go to Gamma or whatever, download that, put into a pitch deck and go sit down with friends and family that you think might have money and tell them, hey, I'm going to give you 12% on your money if you fund this entire deal, purchase price and rehab.

A (36:15)

Yeah. Next week's podcast is a YouTube video script. I guess sometimes as you guys know, it feels in the podcast or if you don't know because you don't listen much. Some of the podcasts are Cameron, I talk in, some are just me talking to the camera. But I'm working on one right now that I'll probably put out next week and it's all, it's like it's probably gonna be an hour long on just how to raise private money specifically like partnerships like how to do no money down. It's called I think I'm working title is like how to do the the best way to do no Money Down. Real estate is what I'm titled and it really is partnerships which is the same as raising capital. Private money, it's the same thing. Just I give equity versus just a debt.

B (36:50)

But yeah, we just do debt and with our private money lenders worth 12%. So it's not, I mean but what I love about private money lenders is for us, they cover the purchase price and the rehab and it's not a draw. That's one thing that I, I don't want to do a draw just because it. It's a headache. And so they'll fund the entire thing and then we don't have to bring money to the table. Where a lot of times with hard money lenders, they want, you want to have skin in the game. And so for us, like I, I just would rather not do that now shout out to the hard money lending company that I do use. It's in St. Louis. It's called faster funds. They only lend in St. Louis. But they have been amazing since day one because they never had made. You made me put money into a deal if I was buying it deep enough. So that's kind of their. Like if you're buying it deep enough, if you're good at finding deals, you don't have to bring money to the table. They could change those rules, just maybe not for me. So if they have, I'm very sorry. But they, but they also do a good job because they send somebody to go walk the property and they do their own analysis. It's not a national company that has to. They have a little bit more like risk tolerance because they know the market.

A (38:03)

Yeah. Almost all my flips were done with hard money. A few with private money. Yeah. When I first got started again, I remember hearing about hard money and be like 12% or whatever. I was like, how could people pay that? That's crazy. But like it's just part of the cost of doing business. And you're not holding it for a year. Hopefully.

B (38:18)

Yeah.

A (38:18)

Cause you're holding like if you pay 12% for six months, you're really just paying 6% on that. You know what I mean? Like so like out of your money, if you go up for three months, you're really only. It's like the equivalent of you're basically. It ends up being about a point or a percentage month that you hold it. So it's a lot. But it like so is changing a toilet and so is putting on a new roof. Like it's just an expense on a house run. Your numbers assume you're going to pay that. Assume you're going to hold it longer than you think you will. And if the numbers work out, make an offer. Yeah.

B (38:46)

I mean what you said, it's just the cost of doing business. We just underwrite every deal with a. Our hard money or private money fee included into It. And that's just how we do it and how we have to do it, because at any given time, we have $4 million out on. On flips that we're doing. I don't have $4 million in cash. I wish me to be dope.

A (39:08)

All right, what comes next? You got the funding, you got the deal. You finally get one accepted. You know you're going to make 50 grand.

B (39:13)

Now you gotta flip.

A (39:14)

Now you gotta.

B (39:14)

You actually have to.

A (39:15)

Now the game starts.

B (39:16)

Yes, exactly.

A (39:17)

Now.

B (39:18)

Now the game starts.

A (39:19)

Warming up.

B (39:19)

Yes. Is you have to manage the project. And I think for. For us, like my wife and I, when we first started, she was our project manager, and granted, she was hiring out crews to do everything, but she was managing. These are the things that need to be done. Staying on top of the crews to make sure that it gets done. And so I. I think that's a route that you can go. Like, you can kind of GC it yourself, or if you just underwrite for this, you can hire a GC and kind of pass it off to them. I think where I see a lot of people personally fail is they are on this roller coaster of, hey, I'm gonna work really hard, make a lot of connections, find deals, and then, oh, we got those accepted. Now I have to put on my, you know, construction hat, and I've gotta hop in and I've gotta. I've got to flip these deals. And then they get done with that, and it's like, oh, no, now I got to go build all these connections that I forgot about for the last six months to go find more deals where I think you. You kind of have to pick, like, what is it that you want to do? And maybe you are. Maybe that's like, you love swinging your own hammer and you can pay higher for properties because that's. You're just going to swing your own hammer. So then it's kind of easier to find deals because you're. You're able to offer a lot higher than I am because I'm not swinging my own hammer. And you can keep the. The wheels turning, or you're finding deals, and you're getting really good at finding deals, analyzing deals, negotiating deals, and you're hiring out a crew to do it. And so you're just kind of always keep the wheels turning. But I think I see a lot of people fail not. I think I do see a lot of people fail by. They try and do both. And there's just. You can't. There's zero consistency in that.

A (41:01)

This is why I never scaled my flipping operation up is because one, I lived in a small town, but I could have moved to the other town, 45 minutes away and deals. But it was, I was swinging the hammer and I was trying to find the deals and I was raising the money and I was, I mean, I was doing everything. So you said I'd put on one hat. I worked for four months, but then I don't have the connections. I wasn't doing the stuff, I wasn't doing the work needed to do to maintain the machine.

B (41:22)

Yeah. During the construction process, you're not going to meet ups, meeting with wholesalers or connectors or agents and keeping your name out there. And so it's like you're restarting the business every time. Months, like, versus like a flywheel.

A (41:35)

It's really hard to move when you first started. Like if you had a giant wheel. It's really hard to move when you first start. But once you get it going, it's easy. But if you have to restart it every six months.

B (41:42)

Exactly. And so the, our, the way that we scaled was the exact opposite where it was like I knew I still know nothing about rehabbing properties. It's embarrassing. But I was really good at buying houses and so that's all I did. I did not think about rehabbing a property once. Still to this day, I, I, I've learned way more about it because I'm analyzing the, the rehab budgets on every deal. But in terms of like working at a house out of 6, 700 flips, I did help Lexi hang cabinets once and I think I've power washed a couple fences back in in our first couple deals. But outside that, I've, I've never done a thing at a house. That's great.

A (42:28)

Yeah.

B (42:28)

So, and it's worked.

A (42:29)

And that's how you flip 50 plus houses a year, which the topic for a future podcast. Yes, we'll do.

B (42:35)

Yes. So but if you do, I mean, if you do all of those things, and I'm sure there's YouTube, we have YouTube videos that are diving into each one of those things. If you do all of those things, I can almost guarantee you that you will have a flip that you make $50,000 on in the next year.

A (42:53)

Yeah, agreed. Hey everybody, if you enjoy this today, do me a favor, leave a comment down below. What was your favorite part? And get the little like, thumbs up, whatever. Smash that with your left thumb on the screen and yeah. Look back next week for another episode of the Better Life podcast. Brandon Turner and Cameron Gavkart.