BiggerPockets Real Estate Podcast - 194: Achieving Impressive Spreads Through High-End Flips with Justin Silverio

Episode Date: September 29, 2016

Is your ultimate goal to increase the spreads of your investments to the point where you can comfortably quit your job? Tune in for a conversation withJustin Silverio, an investor who successfully made the switch to full-time real estate entrepreneur and who is now focusing on the niche of higher-end rehabs. For tips on deal evaluation, how to find contractors for your particular project, and direct mail strategies, don’t miss this inspiring episode of the BiggerPockets Podcast! In This Episode We Cover: Recap on last time Justin was a guest Why he was afraid to close that first deal Why he shifted to higher-end rehabs Market dips — and how he proactively takes advantage of them What key metrics he looks at when evaluating a deal The profit spreads Justin looks for Tips for finding contractors from lower end to higher end How many deals he does now How much he makes on each wholesale deal Tips for creating criteria for prospective properties How Justin does driving for dollars His hoarder house story What you should know about zoning restrictions that affect rebuiling a house How to track a direct mail list His experience quitting his job His most exciting deals And SO much more! Links from the Show BP Podcast 186: How to Get Your First Few Properties — Even in a Competitive Market with Dave Meyer BiggerPockets Webinar BP Podcast 058: Flipping and Wholesaling Homes While Working Full Time with Justin Silverio BiggerPockets Facebook Profile BiggerPockets Forums Dave’s Twitter Account Brandon’s Twitter Account Books Mentioned in this Show The Millionaire Real Estate Investor by Gary Keller Rich Dad Poor Dad by Robert Kiyosaki The New One Minute Manager by Ken Blanchard Tweetable Topics: “When you go to a higher price point, the ability to create a larger profit is just much greater.” (Tweet This!) “If there’s a deal, you will find the money.” (Tweet This!) “It’s really difficult when you start, but after you get through the first couple deals, it gets easier.” (Tweet This!) Connect with Justin Justin’s BiggerPockets Profile Open Letter Marketing Email Justin Learn more about your ad choices. Visit megaphone.fm/adchoices

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BiggerPockets.com slash Dominion. That's biggerpockets.com slash dominion. This is the BiggerPockets podcast show 194. I'm going to make $50,000 and I'll have five to seven hours invested. So what's the return on my time there rather than making $100,000 and spend the time? You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. What's going on, everybody?

This is Josh Dorkin. House to the Bigger Pockets podcast. Here with my co-host, Mr. Brandon. Wait a second. Who are you? No, I'm not Brandon. No, you're obviously not Brandon. Who the hell are you?

My name is Dave Meyer, and I am, I believe, the first guest host. Guest co-host. Best co-host. No, don't use best. Best guest co-host. Don't it. There we go. You are the first guest co-host of the Bigger Pockets podcast. This is pretty awesome.

Why are you here, man? Well, Brandon is off surfing and just living the high life in San Diego right now. And so I got called in as a replacement and hoping I can hold my own here. You guys, we had to go to the miners to find a co-host. This is like little league, though. You had to go lower than the minors. Nice. No, Dave is awesome.

Dave was previously on show 183. I had a great show. People loved him. Dave works for us at Bigger Pockets. And Brandon is off in San Diego at the FinCon Conference. We've actually recorded, I think, two shows from FinCon in the past. But Brandon's there. I am not. So yeah, we've got Dave filling in for him. So please do us in favor and be nice. Be gentle. He's got a softy. That's all right. I can take it. Can you? Good. All right. Let's dig in. We've got a really cool show today. We've got a return guest on top of our new guest co-host. It's going to be awesome. You guys are going to be pumped. Lots of really cool information. Before we get into that, let's take care of some business like today's quick. Quick tip. Okay, we got to harmonize. All right, ready? Ready? Quick tip. Nice. Beautiful. That was awesome. All right, do it. Let's see. All right. So my quick tip is to look at zoning maps. So you'll hear Justin talk a little

bit about this today, but I think one of the greatest ways to add value to your real estate investing is to know which lots and which properties are being underutilized. So if you're looking for a rental, you can find places where you can add an accessory dwelling or put on a renovation. Likewise, if you're flipping a house, you'll know which places you can scrap and put up two or three units instead of one. It's a really easy way to understand which parts of town are going to get you the highest return for your money. So I would highly recommend going on either your city, county, or state government's website, downloading a couple zoning maps and taking a look at the different types of zoning in your neighborhood.

It will definitely pay off for you. I love it. Great tip. Wow. Highly intelligent. I know. I mean, you got to get a... I memorized that one.

So once we get into the show, but it's going to take. It's all downhill. Nice. All right, cool. So good quick tip. If you've got questions on that, on that strategy, jump on the forums, right? Biggerpockets.com slash forums. and folks will help you out.

What do you think? Awesome. I love it. Cool. Guys, if you are a listener of the show and you have not yet taken the time to leave us a rating review, please do that.

That really, really does help us. Jump on iTunes on Stitch or on SoundCloud, anywhere else where you're listening and take a second and do let us know what you think. Those ratings and reviews really do help spread the word. They help people find us and learn about bigger pockets and obviously in so doing help themselves

become more successful, estate so please do that um today's show guys let's let's talk about it we've got justin silveryo he's back if just it was last on his show 58 so it's been about two years seriously it's quite a spread it's been a while it's been a while people really loved his show he had a great story talked about you know all his flipping he was an accountant you know kind of mundane you know everyday guy that's terrible but Justin's going to kick us when he hears that he's called him mundane he's far from mundane. That's awesome. He's a good dude. But yeah, I mean, he was, he's kind of the every man. And the coolest thing is today we find out about what happened to Justin.

Huge milestone in his real estate. Yeah, what was his milestone? He quit his job. Nice. You know, after years of being in the game and hustling, he finally, did he, is he a drug dealer? I don't know. I'm not going to say that in front of all his people. I'm going to blow up his spot. But no, he was working at it really hard for a lot of years. And finally, you know, He said it was just taking up too much of his time, and he picked real estate over the full-time job. And, you know, big kudos to him, and he'll tell you all about how he got there. Awesome, awesome. Yeah, we talk a lot in the show about marketing.

He's got some interesting techniques there. His defined niche in the flipping space is really fascinating. He's got a very specific purpose. He's going into high-end homes, and he'll tell you why. And then lastly, he's doing these wholesale deals, which will knock your socks off. I mean, what do you say? A $70,000 wholesale deal? Yeah, it's crazy.

And, like, he said he's spending a couple of hours on these. deal is total. I mean, the return on his time is out of this world. It's amazing. But, you know, keep in mind, guys, like, we're not saying like, hey, this is easy. Hey, we're a guru. It's easy. No, like, there's a lot of work required. He put a lot of timing up front for opportunities like that to happen. Anyway, we'll get to that. So let's bring him in. All right, Justin, welcome to the show, man. It's great to have you back. Hey, it's great to be here. Thanks for having me back. Yeah, no problem. So it's going to be a little different today. As you can tell, like the big hairy guy looks a little bit.

Yeah, he's a more attractive hairy guy. Oh, well, thank you. I got to ask, though, did you do something to piss off someone at bigger pockets that you have to spend the next hour talking to me instead of Brandon? That's got to be hugely disappointing for you. I must have. I must have. But, you know, he's in spirit because I have a picture of him right here.

Oh, it's beautiful. Smiley face. He is with us. So for everybody who is not watching this on YouTube, Justin is holding up a bright, shiny picture of Brandon. And I think he just smooched it, which was a little. little weird. Whatever you guys do, it's all good. Hey, man, but seriously, welcome back. It's, it's great to have you back. So you were last on the show two and a half years ago. You were on show

58. And anybody listening, you could find that at biggerpockets.com slash show 58. Get us caught up. Like really quickly. What did we talk about on show 58? I'm assuming you recall that was two and a half years ago. You had just gotten started, you know, flipped a few houses. Fill the audience in a little bit. Yeah, sure. So at that point, I was basically working a full-time job while real estate investing part-time. So my life was pretty difficult and full. I have a family, two kids, so everything together was just really difficult and challenging to work with. Since then, a lot has happened. I finally quit my job. So that's been probably the most exciting. Yeah, thank you. And wife is happy. Kids are happy. So that's probably

the biggest change that's happened that I can actually focus on real estate 100% now. And things been going great. At that point, I was basically focused on rehabs and probably lower end to mid-market rehabs. And now I've transitioned a little bit more to higher-end rehabs and new construction. And I'm also diving a lot more into wholesaling. Nice. Okay, cool. So, you know, a lot more diversified as I think you tend to see as somebody becomes more experience, pick up skill sets that you could kind of use in different forays. You said more high-end rehabs, new construction. And you said you're also doing a lot more wholesaling, right? Yeah, that's right. That's right. Awesome. All right. So let's go back really quickly to the point where, you know, give us, give us kind of like the two-minute first deal

overview for those people who didn't listen to the previous show. What was your first deal? What got you into real estate? I remember we had talked a lot about that fear. You know, you were really scared to kind of jump in the paralysis analysis. Can you just really quickly go through that and then we'll kind of get everyone caught up. And that fair was real. I'm an accountant by trade. So, I mean, crunching the numbers, looking at the deal, that kind of scared me. But my father's a contractor, so he was like, I know you're interested in doing this. You've watched me kind of create houses and I see you have an interest in it. Let's, you know, flip a house. At that time, HGTV was booming with those shows. So I was like, all right, let's try it. So he had kind of the contractor experience. I had the

number crunching. I knew the numbers and put together the budget and all that. So we found a property. It was a small ranch, and the place needed to be gutted. I mean, we had to add an addition. If this was my first project by myself, I mean, I'd be scared shi-less. It needed a ton of work. Look at you. Ouch. You get the beep from our editor.

I got the sensor. I thought that was going to be the first one for you. That's what all I've been thinking about is don't curse. Nicely done, nicely digested. But yeah, I mean, we pushed through that. Budget went over, timeline went over. We came out making about 12 grand, but hey, it was a learning experience for me and I made some money. So that was kind of the start of it.

Nice. Awesome. Awesome. All right. So let's move forward. Right. We talked about that. Again, you guys can listen to that show 58, the Bigger Pockets podcast.

What led to that transition to the higher end rehab? Let's just start with that part. You know, why go to high-end rehabs versus what you were doing previously? Yeah, there's a couple of reasons. One, I just enjoyed higher-end rehabs and new construction because there's, it's required. is more detail and more skill and kind of more preparation for it. I enjoy that stuff. I'm a detailed person. Also, the spreads are bigger. So when you get into the higher price points, the ability to create a larger profit is just much greater on that side. So with those two combined

and also the towns that I like to invest in, they were kind of the higher-end towns. And what I feel at the time, and I currently do is if the market does have a shift, I've seen that the lowest end to middle range market, it's usually dip before the higher end homes. So if I'm still doing the same renovations, just in a different market, higher end, I can actually see kind of if the market does dip when it's going to dip and then kind of proactively take advantage of that or do what I need to to exit those properties. That's an awesome idea. I never really thought about that. Definitely. So your former accountant, obviously a numbers guy, what are the key metrics that you look at when you're evaluating a deal and figuring out which properties you should be looking

at to flip by the way really quickly congratulations dave yeah first oh oh wow all right thanks guys guys it just rolled off the tongue did it did it look okay it was good it was far more intelligent than the questions we would get from my other co-hosts but you know i'll i'll be back with him you know on the next show i love this he's not even around to defend himself he doesn't need to shamelessly make fun of brand. We'll just bash them all the all. All right. Let's get back to you, Justin.

Yeah, so the key metrics that I look at is I want to see what it takes for a renovation or a new construction. I want to see how much work it's going to take, especially on a renovation. And then I want to make sure that renovation budget. So if it's just a clean, clean up on the house, you know, $30,000, I'm not going to require as much profit on the back end. But if it requires a full gut, I'm going to want to make sure that that return is much greater. A lot of the stuff that I'm doing is I get my financing through bank financing and all that. So I look at how much money I actually have to employ myself and what the return is going to be. And I want to make sure that it aligns with how much work I actually need to do. So there's certain

profit cutoffs and percentages depending on where I am with that. And are you still finding good deals in the Boston market right now? I am. I am. So I'm pretty heavy on direct mail. I've started doing that as soon as I started real estate investing and I actually got that from bigger pockets. Thank you. So part of my research was how can I find deals? And back in 2012, 2011, deals were easy to find, but I wanted to create a stream of leads that can continue on no matter what market we're in. So I started way back then and I feel like I've gotten pretty good at it. And that's generally where I get most of my deals, about 90%. I've also been getting some deals off some real estate agents that actually have properties that the seller for one reason or another doesn't want to

list them on the market. So they give me a call and we put together a deal. Nice. Nice. I want to jump back to the high end rehabs a little bit. Where's that differential? Are we talking half a million dollar house? Are we talking bigger? And then what are the profit spreads you're looking for specifically on those deals? Okay. So lower end to mid-market, lower end, I would say your resell price is maybe around two to three hundred thousand. That's low-end. Yeah, that's low-end. Yeah, that would be high end in... We're in Boston here.

I recognize that. I'm just trying to let the listeners know, like, because there's a lot of people out there in small markets, and two, three hundred would be, you know, a mid to high end for them. Yeah. Yeah. So mid markets, even probably three to five hundred. Nice. My high end stuff for renovations is probably between 700 to a million.

Okay. Got it. New construction high end is, I just finished up one, it was around 1.3 million. Okay. Oh, wow. Have you had to find new contractors and people to work with as you've gone from lower end flips to higher end flips? Great question. Yes.

Absolutely. You can't use the guy who shows up stone and, you know, like on a beat-a-truck now. It's actually a little bit easier to find the contractors because you know you have to look, you're not basically scraping the bottom of the barrel to get, you know, the lower-end rehabs, so you can't pay as much. Higher-end rehabs, you have more spreads. more ability to pay contractors. So you actually get some better contractors that you're fielding out to make sure that they're good. They actually have licenses. They show up when they say they're going to show up. So it's actually a license. I mean, very confused by this. Never heard of this. Well, driver's license as well as contract. That's awesome. But yeah, so it has been a bit easier

to deal with contractors on the higher end side, which I love, because that was always one of the most painful areas for me on the lower end side is to dealing with those contractors. So where are you finding them? Where do you go out and seek out the high end guys? Is it Home Depot at 6 a.m.? Or is it something else? So mostly it's a lot of it's referrals. So once I started building kind of a group of guys that contractors that were pretty good, they had other recommendations of who can help out for different areas. So it's actually much easier to kind of get referrals and trust the people that are actually giving the referrals are going to kind of come through in the end.

So what you're saying is if we all move to higher-end properties, we're going to get bigger spreads, contractors we could count on, and the process is going to be easier. What's the downside? Well, the downside is you have more risk, right? So the downside is you get more risk. If the market flops and you don't see it coming, you get a million dollars on the property instead of, you know, 200,000. So you have much higher risk. Yeah, for sure.

But still, each piece of those is still a little bit of a challenge throughout, but you just kind of work through it and I enjoy it much more. Yeah. So what kind of volume are you doing right now? How many deals are you doing at a time per year? Yeah, so what I'm doing is I've transitioned a little bit more into wholesaling this year. So I did, I'm doing some rehabs and new construction, but I've probably been doing the majority wholesaling because I'm kind of working on a marketing project.

So that's been taking up a lot of my time. So I probably wholesaled maybe eight properties so far this year. And I have a couple under contracts that should be closing in the next month or two. But that's the thing is with this market, because there is so much investor competition that I've been wholesaling because, well, one, my time's taking up somewhere else. But actually, the spreads are better. So what I mean by that is so when I get properties under contract, I'm very much invested in the investment investor community. So I know a lot of other investors around the area. So if I come up with a property that maybe it's a low-end property. And so now I have contractors that are dealing with

the higher-end stuff. I'd have to find a completely new crew to deal with the lower-end home. And it's probably going to still cost me more money to do it. So it might cost me $100,000 in a reno. When an investor that I know really well, that's kind of his bread and butter the first-time home buyer area. And he can get it done for $75,000. Now, if I just put a property under contract, that spread between my $100,000, it would cost me and there's $75,000. You can see there's a $25,000 differential. Yeah. Basically, that's my wholesale fee.

So my wholesale deals have been ranging from $20,000 to $70,000 this year. Wow. On just about all the prop. Yeah, $70,000 wholesale. And I've consistently done a couple this year, $50,000, $60,000. Wow. So it's like I look at it as I feel that I am a rehab or a new construction guy because I really love what I build and I enjoy the process. But looking at it from a business standpoint, I almost look at it as, all right, I'm going to make $50,000 and I'll have five to seven hours invested.

So what's the return on my time there rather than making $100,000 and spend the time? I will take your job. Yeah, seriously. I mean, that's awesome. I don't know that I've heard from a lot of people who've had spreads on average. that are as large as you're getting. So that's, that's amazing. And that's all from direct mail. And I know you're, you're working into that business. You've kind of established your own entity, your own business to dig in there and you've got customers. And you'll plug it at the

end of the show. But that's awesome. So what, what exactly are you doing? Like, what kind of techniques are you using to find those opportunities? Because again, I mean, those are amazing spreads. Yeah. So there's a couple of factors that play into this. And I tell people all the time is it always starts with the list, making sure you have a good list to send mailers out to. And most people, even in BP, they're asking because they hear from other people, oh, absentee owners, equity owners, they're like good lists. You can pull from list source. I highly advocate that you pull lists that are the most difficult to find. So driving for dollars, tax liens, lists like that where not too many people are getting because it requires some research.

and driving for dollars takes a lot of time. I probably spent, I have a guy that was driving for dollars for me, and he spent about six months driving. I have over 5,000 people on my driving for dollars list right now. Wow. So that's probably one of my largest lists. Yeah, it took about six months in probably two full weeks of me scrubbing the list out. Wow.

So not only do I go in and find these really difficult lists that not too many people are going after, but I also scrub them. And I scrub them a lot as far as if they're near train tracks, near highways on main roads. So I just don't blast it out to everyone. Because I don't want to waste the marketing dollars if someone calls me back. And I personally won't take a property on if it's near a highway because I just know that there's kind of health issues that could happen with kids.

So just ethics-wise, I wouldn't take those projects on. So I don't want someone to call me and say, hey, yeah, I back up right to the highway. You want to buy it? And for me to spend all that marketing dollars just for me to say, no, I'm not interested. It's smart. Yeah, creating that criteria of that framework is awesome. Yeah, so for some newer investors or people like me who haven't really gotten into the active marketing, can you just explain a bit about what driving for dollars is and walk us through the process that you go through? Yeah, sure. So basically, I outline a map of each city and I print it out. So it might be five different pages of different areas of the city.

From there, I'll take one page and then I'll literally just drive every single street on that page. and as I go through, I'll write down the addresses. You're that creepy guy who's going up and down my neighborhood. Not me. I had someone do it for me, so I wasn't. Nice. So yeah, that's basically how it is. You write down the street number, go back to, when we get back to the office, put everything

into an Excel spreadsheet, and then I can basically, I have access to the MLS. So I can basically download all the properties in the specific town, and then I can compare my list of driving for dollars. compared to that list, and it'll funnel all the information in so then I can further scrub based on square footage, number of bedrooms, location, all that stuff. And so what are you looking for, vacant lots, stuff that's run down? What are your criteria when you're driving around? Yeah, so there's a bunch of different criteria depending on the town.

Like the higher-end towns, I look for basically scrapers, houses that I can take down and build new. So in higher-end homes, my criteria is a little bit larger. For instance, like the moderate towns, I usually look for houses that are 1,100 square feet, three bedrooms, one bath, all that stuff I find through the criteria when I bring the list in. But just driving through the neighborhood, you look for, you know, grass that hasn't been cut, windows that look terrible, disrepared, siding, the roof, maybe when it's snowing out, you see that nothing's been shoveled, mail on the mailbox. I mean, there's tons of factors. But just going back to the higher-end homes, I also look for really small houses like shacks. And then I'll identify how big the lot size is when I go back to do my research.

Because if it's a conforming lot, then those houses that are really small, I can basically pay the market value for their house and still make it a good deal for me to build something new. Because this house is so small and not too many people want to buy it. Can you work us through those numbers a little bit? I don't know if you have an example of a deal that you've done, but that, you know, that's always a question I think a lot of investors have is, hey, is there a way, like, how do I go in a competitive market and find a property that I'm probably going to have to pay close to market? Can I actually make money on this by potentially scraping it and putting something new up? Yeah. I'd love to hear, you know, an example if you've got one. Absolutely.

Yes. One of the properties that I bought are just sold this year. It was a house in a higher-rent town and went by, walked through the house or tried to walk through the house. They were really bad hoarders. So literally there was a direct path to the kitchen and right back out the front door. So you literally couldn't walk around there. What was the coolest thing you found in that house, by the way? Was there like a dead body or was there anything weird?

You know, there was a boat on the property. There was some, there was a piano in like a barn. There is just, you name it. It was there. But I don't know if I would want to take it home because I'd be afraid what was attached to it. I was in a house recently that I think had, without exaggeration, 500 dolls. Like, every wall was just lined with the shell. I know.

I looked amazed and I was like, we have to get out of here immediately. I don't care what the numbers are. This place is haunted. I'm getting out of here. Creepy dolls, creepy cat lady. Yeah, you don't, like, that's the first thing you see. I don't even imagine if you started digging what you would find in that house. Yeah, that's crazy.

Yeah. All right. So we got the hoarder house. It was an old house. It was historic. Okay. So that was another factor that played into it. So there was a house in a really large barn on the property, but it was a great lot.

That property, no one would be buying unless they're an investor. And so I purchased that property for $300,000. And I had to go through the historic society and stuff like that to make sure that we can take it down. But after they looked inside the house, they said, all right, take it down. Was it the dolls? Oh no, that was his house. Yeah. So the numbers on that, bought that for $300,000.

I built a 5,500 square foot house, so I probably sunk about $650,000 into it. About $150 a square foot, give or take, some of the square foot it was in the basement, so it was a little bit cheaper. 5,500 square foot house for about $650,000. And I sold that for $1.27. Wow. Wow, that's awesome. Yeah, that's amazing. So how, all right, so you paid $300,000.

You identified the house. How would somebody find that house? I mean, what was it about the house? Like, having a hard time here. Oh, my God. I need my brand. I need my brand. I'm sorry.

Dave, you just disappointed. Throwing off your mojo. Oh, my God. It's so weird. I don't know. Step it up, man. Step it up. All right.

No, so, okay, so you paid $300,000. You spent about $6.50, so you got $9.50 in, sold it for one point. 27, what was it about that house that got you? Like, how did you know this would be a good opportunity to tear it down versus, you know, scrape the insides and just kind of rebuild from the, you know, keep the walls and save the property? You know, why, why tear it down? What exactly stood out?

And what, what was it that made you want to do that? The property, that house was in a great neighborhood. Okay. And the style of the house, just the condition that it was in, it was just unsafe. to be in. So I would have had have done a significant amount of structural work to it. And at that point, it's almost like building a new house. So the footprint of that house was maybe 2,000 square foot. So it just wasn't the best value for that lot. So I decided to take it down. And the really cool part of this was it was actually on the corner of kind of a main road, not really, not traveled as

much of like a main street, but more of a kind of cut through back road. So it was on the corner. of that sort of main road and a side street. So what I did is I actually changed the address to the side street. And when I rebuilt the house, I had the driveway coming through the side street. So that definitely helped out on the resale value. Oh, slick. Yeah. Yeah. You've done 194 shows.

That's the first thing I've heard that. Yeah, that was very clever. And that was honestly the easiest process. I sent them an email. And the next day they said, all right, property address has been changed. I couldn't believe it. It was amazing. And who did you send that to?

I believe it was the tax, the treasurer. Okay. Fair enough. Fair enough. Cool. So you got this property. It's on a great lot in a great neighborhood. The footprint just didn't necessarily make sense.

It was suboptimal, right? I mean, you didn't, if you can expand that footprint, you could put in a bigger house and thus sell for more money. So that's what you did. That's great. So any tips for people potentially finding those types of properties? Because I think that's a great opportunity. call me no i'm in alaska justin i'm not calling you dude how do i find one in my neighborhood yeah so the big thing

that's to set this off is just the condition i mean driving by the house everybody i talked to in the neighborhood was like thank god you you bought this because you drive by it and you could tell it's dilapidated yeah i mean there's only two houses at the time that were actually had the big red x in front of the house meaning that if there's a fire fire department does not go in oh well so there was only in this town and that was one of them. Nice. So that was a really easy way to figure out that it needs help. Cool. So do you have any

zoning restrictions that you have to work with? I know in Denver, like there's certain lot sizes that you have to meet to rebuild a house. So do you spend a lot of time looking through that sort of stuff? Yeah, absolutely. And going back to what I was talking about, about scrubbing that list.

So I'll go down to the nitty-gritty and I'll look at those smaller homes that are in conforming lots. So I'll find out, all right, this property, it's 800 square feet. It's zoned SRA. SRA requires 15,000 square feet to build 100 feet of frontage. So I'll get the minimum requirements and make sure it meets those minimum requirements using GIS map mapping that we have in Massachusetts.

So I'll do that research up front. And if it meets those qualifications, I'll start marketing to them. And then if they call me back, then I'll do more investigative work and go down to the building department and talk to them. That's great. It seems like that time spent up front, doing your homework, gives you a smaller, tighter list with better opportunities. I mean, I'm guessing that's the lesson here, right? Yeah.

Yeah. People either think they should scrub it up, scrub everything up front or on the back end when people call. My preference is to spend less on marketing, scrub it up front and get the properties you really want and then go from there. Nice. Yeah. So I'm curious about these lists. You said having a good list is hugely important. One of my big questions about driving for dollars and mail marketing is like, how do you track a good list and see that's effective? I've been to the post office once or twice, but I don't understand like how you can send mail and it can make you money. So can you just tell us like how you know that you are spending worthwhile dollars on the list that you're either buying or cultivating yourself? self. Yeah, good question. So congratulations, by the way, on going to the post office. I was at a thing this morning. That's exciting. I know. It was very odd. I was at a business leader

forum this morning. And they were talking about how millennials like don't even know how to use stamps. So I was saying the other day, like, I would I would pay a service to just get all my mail for me. Like, I don't ever want mail. So I guess to scrub me off any list you have because I'm not reading your mail. Get it, email it to me. Exactly. I'll read it then. I love it.

That's hilarious. Yeah, so now I track everything. I have a CRM system that I track basically what lead source they're calling from, how many times I've mailed to them, what letter they're calling off of, what color the font was, what the content was of the letter. I mean, all of this stuff I'm tracking to make sure. You're an accountant, right? Yeah. I love that. I love that.

I love it. So yeah, I'm kind of anal on that stuff because for what you said, I want to know where my money is best spent. And where it is best spent, I want to employ more money and put more money into that stream. Cool. So for anyone listening, what advice would you give them in terms of, I mean, you're tracking really, really granularly there. But like for somebody who's potentially just starting out, I'm assuming they don't necessarily need to go that hardcore. Where's that line? Like what would you recommend to somebody who's, you know, early stages?

in their investing career who wants to do mail marketing in terms of just kind of tracking. You can probably do about 90% of it just through Excel. So really easy with Excel, you can create your master lead list and how I have it created is it's really easy for me to track the lead source as well as, okay, Brandon and Josh. Did you actually hear my stomach? Wow. Sorry, everybody. I'm hungry.

Slightly embarrassing. So with the Excel spreadsheet, I mean, I can track what lead sources. It's coming off of how many times I've mailed to them, that sort of stuff. So you can easily do that through Excel. Nice. All right. I want to shift a little bit and we're starting to get through to the end of this thing here. But I want to talk about cooperation versus competition.

You had mentioned, you know, you're really building this wholesale side of your business. this. By the way, we could talk for hours. I mean, your business, there's so many different things going on. It's awesome. And, you know, this is show two. So maybe we'll have you back for third. But cooperation versus competition. When I started bigger pockets, one of the big things that I noticed in the industry was like there was, it was all competition. Like everybody's, you know, cutthroat. Nobody wants to share anything. And I'm like, that's crazy. Like, we have to work together. We have to collaborate. The more we do that, the more value we're all going to get. You're a prime example by what, you know, you demonstrate with your wholesale deals.

But what would you tell somebody who says, you know, I'm worried. You know, there's all these other investors in my area. I'm afraid, you know, if they know a lot about what I'm doing, you know, they're going to steal business for me. How do you get to these guys? How do you tell somebody, hey, it is okay to work with other people. And how precisely would you recommend they do that? Yeah.

No, that's a good question. And starting out, I was looking to start going to the networking event. and I was saying, why do I want to go to these networking events to meet other investors because they're going to be my competition. But after you've been in the business for a while, you realize that it's actually cooperated. You work together on a lot of different things. So either for the great point of I don't really focus on the lower to middle end homes.

So I know there's three really good investors in my area that do work in that area. So I'll give them a call and say, hey, are you interested in this deal? I can make a wholesale fee, they can make profit on the back end. Conversely, if they have a property that they get in a higher end town, they give me a call. So it's all about cooperation and working together. And that is huge. It really is because when other investors talk positively about you, that you're doing the right thing and you're working with them, stuff like that, that's how you kind of build a larger network

and you can actually do more deals by getting your name around the area. So I think it's huge. That's great. Yeah, and not only that, but you know, you're, you're only limited with the resources and your own capacity, right? So, Justin, I don't know how big your team is. Actually, do you have other people on your team on your real estate team? No, so it's just me right now. It's just me right now on the real estate side. Right. So take a guy like Justin. I mean, he's he's got all these wholesale. He's doing development. He's flipping. You know, he can't do 30, 40, 50 houses at a time by himself impossible. It doesn't, it's just you can't do that. So when he comes across opportunities, he's going to need to dispose of them and do it in a way where he's going to make money. So, you know, for those of you listening, I mean, you can't stress out about this stuff. You got to really get in there and start working with other people and like, stop worrying about the competition. Maybe you'll get screwed once, you know, from some bad dude. But, you know, odds are that's probably not going to happen.

And if that, the second that guy does that, this is a really small community. Word's going to get around and nobody's going to want to work with the guy. nobody's going to talk to that guy. Yeah, so true. I wouldn't stress it too much. And just to add to your point, so other investors, they have, everybody has kind of a different philosophy and different business process. Nobody's ever going to be the same.

So for guys that are doing a ton of deals, like there's some guys in my era that are doing 40, 50, 60 deals a year. I never want to get to that point. I'm always, I don't want to do quantity. I just want to do, you know, big spreads and smaller. number of projects. So for them, making $20,000, $25,000, $30,000 is fine for them. I mean, I want to make a minimum of 50, even a step in the door. So if that doesn't meet my criteria, then I can wholesale it off to them. They can make their spread. I'll make my spread. So it works. It just

all depends on your business process, and everybody's is going to be different. Nice. Awesome. So let's just switch gears now to what I think is a lot of people's goals in real estate investing, which is quitting your job. So it's sounds like you've been crushing it for quite some time. How did you know it was actually time to walk away from your full-time job and go for real estate full-time? I was going to explode. Don't make me angry. So that's my follow-up question, actually, is like how incredible was it to quit your job?

And did you make a huge scene like Jerry McGuire and actually just take the fish bowl, curse everyone off and run out of your office? I could totally see that. Yeah. Yeah, I tried, but I did now. So, yeah, I realized it was time because I just didn't have any time for anything other than my day job in real estate. So family kind of took kind of the back burner, which is not good and not one that I wanted to do. But it started to do that.

And I just couldn't keep up with everything. And I started to do some, you know, at lunchtime I'd be doing my real estate stuff. and it was getting spread too thin that all my focus was on real estate. So I really didn't think it was fair for myself, my family, and the company I was working for to continue to work there if everything I'm thinking about is about real estate and not my day job. So at that point, I just said, you know what, I'm just going to go out, do real estate thing. I know I've been doing it for the last four and a half years and it's been working well. So I gave my notice and it was, I mean, it was amazing.

Can I tell you something? What? You're no longer an accountant. I know. That's awesome. You're no longer going to put in that box. We're recovering accountant. Yes.

You've just climbed in the social sphere of the world by like 17 steps. It's got much more interesting. Yes. That's awesome. Hey man, before we move on to the fire round, just wanted to ask. I mean, you've done a bunch. You've, you know, you're wholesale, you flipped. You've been in the game for, you know, a number of years now.

You're a successful real estate investor. Congratulations. That's pretty cool. What's the best deal that you've done so far? Like the one thing that, you know, if somebody comes up to you in the street and's like, hey, you know, hey, you know, tell what gets you the most excited when you tell them the story? Most excited and best, I would say, are too different. Most excited, I'd say the new construction that I just built for 1.3. There was just so much involvement and so much detail into that that I loved the process. It was actually, it was awesome. So that was the most exciting project. that I worked on, I guess the best deal, profitability-wise, it was one of my wholesales that I did for 70,000. I literally put five hours into it. That was probably the best. Oh, that's awesome, man. That's awesome. Cool. What do you think? Is it time? I think it's time. It's time. Let's do this thing. All right. We're going to move to the fire round.

It's time for the fire round. Nice, nice. Before we do... Yeah. That's what are we talking about. All right, guys, the fire round. Fire round is made up of questions from the audience, the Bigger Pockets audience. These are questions posted on the Bigger Pockets forums. And you can ask your own questions there at biggerpockets.com slash forums. We've got thousands of posts that go up every day. And the vast, vast, vast majority of them get amazing answers.

So if you're not asking your questions, definitely jump on there and ask them. So let's get into this first question in the fire round. Dave, take it away. All right. This is a perfect one for you, Justin. what would be the top focus for someone who is transitioning from a day job to real estate investing full time? The main focus is building that lead funnel. Ramp up your marketing, make connections, network, make sure you have consistent leads because ultimately that's what's going to drive your business.

And if you don't have a constant stream of leads coming in and doing deals, you're not going to have a business for very long. You know, when you usually leave, when I left a company, my company, my day job, I had a couple projects going on, but I was more concerned about what's going to, what's going to happen after those projects once I'm done. So definitely work on, work on that lead funnel. Deal flow. Deal flow. Got it.

All right. Next question. What is the key to creating a highly effective direct mail campaign? By the way, this is the fire round. So we're supposed to answer in like a second or two. Oh, really? Yeah. Yeah.

Obviously, there's questions that are going to take lots of time. Okay. So I'll just give you my components of effective marketing campaign. Excellent lead list, creative and creative mailer. So it gets opened, gets noticed, good content, follow up, follow up, follow up on the lead and consistency throughout. Nice. I love it.

That's great. What should someone's main upgrade be on a high-end flip? That's good. That is a good question. I focus a lot on kitchens and bathrooms. And if you're going real high end, you can do some more trim work. So we did coffered ceilings, higher end appliances, upgrade bathroom, larger showers, things like that. Nice. Cool. All right. Last question in the fire round. In a competitive market, what should a newbie investor look for when making their first purchase? They should look for good, I guess, good spreads because it's really easy for a newbie to get into. a property that has very thin spreads depending on where they get it. They go on the MLS. You're not going to find a great deal in my area. So I see a lot of newbies getting into a deal and it's just

such a small margin. If there is any issue, which we all know there is going to be one, they lose that profit. Awesome. Awesome. Great, great, great. Excellent. So we're going to try something new today. We've got Dave. This is obviously not Brandon. Clearly he's smarter and better looking. Thank you. But, yeah, so we tried something today. Before we started the show, we went to our audience. We told them who we were talking to, what their background was, and we hit them up on Facebook Live. By the way, you can get to the BiggerPockets Facebook.com slash BiggerPockets or BiggerPockets.

com slash Facebook. They both take you there. Anyway, so we asked some questions on Facebook Live, and we got feedback from our users. So we're going to ask those questions right now to you, Justin. So Dave, take it away. All right. Our first question comes from John Widlacky, and the question is, how do you find a good area in your location to invest in? I guess it depends on what you're looking to do, either wholesale or rehab. If you're going to do a rehab, go in the area that you're comfortable rehabbing and you know what the market values are going to be. If you're going to wholesale, talk to other investors that you're actually going to be selling the deals to and find out where there's a large majority of investors that are actually investing.

So you're not in the area that nobody wants a deal. That's a great tip. I really like that. Yeah, that's awesome. That's awesome. All right, cool. Next question. This question is from Scott Winnie.

I don't know if it's Scott N. Winnie or Scott Winnie, but either way, great question. I think mindset is a huge part of real estate investing. It's the thing I struggle with the most. How do you stay positive and keep pushing forward? Yeah, that's huge. Connect with other real estate investors going on bigger pockets, talking to other people in the community, going in networking events.

That is going to keep you definitely. Whenever I went to a networking event, I'd come home all excited and ready to go, and I didn't even want to sleep. I just wanted to kind of push through and find more deals. So definitely all of those things will help you. Awesome. All right. Question number three from Danny Thomas. The best way to finance a flip without a bunch of capital.

Hard money, private money, depending on your credit. You can go to a bank potentially, but banks are 25% down. So hard money, private money, or partner with someone. Right. So, right. Yeah, those are those are the couple options. There's this. Yeah.

If there's a deal, you will find money. That's the big thing. Yes. Yeah. So many people obsessed with like, let me build a list. Let me build some huge list of buyers. Like, and some people still push that. But I mean, if you go and find an amazing deal, there's going to be a line of buyers.

Absolutely. Yeah. Without a doubt. I absolutely agree. Yeah. Yeah. Sure. All right.

Here's the last Facebook live question. I don't know how appropriate it is. but I'll ask it, how many doors did you have when you quit your job? So rentals, do you? One. I have one rental. That's it. Yeah.

Got it. So you replaced, I mean, what you did was you replaced a job with job, right? I mean, you've got another job flipping and wholesaling. That's your, it's more active endeavor and your company. Yeah. I would say this job is definitely much more around my lifestyle than actually having to go to work every day. Yeah.

I've been able to take more vacations and spend more time with the family. So it's been a good. job. Yeah, and March and April are a little better for you, right? Yeah. Yeah. Cool. All right, cool. Hopefully you guys liked that segment. We'll try and do it again. If you did, please leave us comments in the show notes at biggerpockets.com slash show 194. And of course, you can go there and ask Justin any questions that you have or leave any feedback for the show as well. Before we let you go, man, we're going to jump. I know we did it once before in the last show. We're going to do it again. catch up see if anything's changed we're going to do the famous four famous four i don't know i

sound british when i do that i think good good false i'm impressed dave you i was a little worried about you replacing brandon i i was too and i'm still worried but uh there's still time for me to take this whole show all right let's let's get to the famous four dave first question all right What's your favorite real estate book? I just reread the millionaire real estate investor, and I really like that. There's a lot of key information that they provide. Next question. Favorite business book?

So there are two good business books. One of them is Rich Dad Series. It's like what the rich tell their kids that the middle class and lower class don't. I'm reading that because I have kids, and I found that pretty interesting. And the other one was the new one-minute manager. so hiring some other people in another business. So that's provided a lot of great information. Cool.

And what precisely do the rich to other kids that other people don't? I can't tell you that. I don't read the book. I haven't found out yet. Yeah, nice. All right, what do you do for fun? Now spend time with the family. I mean, there's been so much time that I haven't been able to, so much time I haven't

spent with them because I've been doing two jobs that we've been doing more vacations, just hanging out on the weekends. not having to work. That's been awesome. That's been definitely on the forefront. I love it. Good for you, man. That's awesome.

Yeah, great. Thanks. All right. What sets apart successful investors from those who give up, fail, or just never wind up getting started? Yeah, I love this question. I personally feel that it's the unrealistic expectations that people have getting into it. With the shows now, HDTV shows, gurus, seminars that you can go into,

Everybody makes it look easy. Yeah. And people that get into this business think it's easy. Yep. And it's not when you start. So once they figure out, oh, it's not as easy as I thought, they just quit. So having realistic expectations is key. I love that.

That's awesome. Yeah. And, you know, it may end up being easier than you thought, but it's not necessarily easy. And if you go in, you know, with some fantasy of, oh, well, if that guy can do it, look how easy it is on TV. Like, wait, don't. forget they left a whole lot of work out on that 30 minute thing. Yeah. And the one big thing, the one big thing is most people say, I want to start a wholesaling because I heard it's the easiest. It's probably one of the, it's really difficult to do because you have to get a deal better than another real estate investor like a rehabber to make your spread.

So you have to get a deal better and still know all the rehab costs and ARV, which most people mess up. So it's really difficult when you start. But, I mean, after you get through the first couple, it starts to get easier. Nice. Like anything else. All right, man. Well, before we let you go, where can people find out more about you? I know you've got this marketing company.

Let us know how we can get in touch and find out. Yeah, sure. So obviously, the easiest way to get in touch with me is through bigger pockets. I'm pretty much there every morning. At least spend a half an hour or so you can check me out of bigger pockets. You can also check me out on Open Letter Market. or shoot me an email at Justin at open lettermarketing.com. Awesome. Awesome. Justin, well, thank you so much for coming back on the show.

Thank you. Really, really do appreciate it. Yeah, congratulations, man. Sounds like, yeah, thank you. Really kicking a bit. Job well done, Dave. Thank you. I think he handled it. I think he handled it. All right, man. We'll see around. We'll catch you up on the forums and lots of luck on the new

ventures and on the new marketing company. And keep going, man. Keep rocking it. We'll see you for round three. Yeah. Bye. All right, guys, that was Justin Silvio. Big thanks to Justin for coming on the show. That was pretty good, man. What did you think?

It was awesome, man. It was a lot of fun. I appreciate the opportunity to come in and ask them the questions. You know, usually I'm sitting at home listening to the podcast, wondering some things. And now I got to ask it to the man himself. That's awesome. That's awesome. All right.

So I'm going to call you out here. What is your Twitter handle? It is Dave at BP. So at Dave at BP. So at DAV-E-A-T-B-P. Exactly. Got it. All right.

So if you guys are listening, please jump on Twitter and let Dave know what you thought. You know, give him, give him some applause, make him feel good, you know, blow him up. Yeah, let us know what you thought of this whole guest hosting thing. Yeah. If you have any other ideas or just want to make fun of Josh with me, I would love to do that. Yeah. Yeah, that's great. Yeah.

Don't do that. Make fun of Dave. Make fun of Dave. Below Brandon, he's not even here to defendants. Ah, yeah, at Brandon, at BP. Make fun of Brandon on Twitter. I'd be like, Brandon, where the hell were you? Dave was so much better.

Actually, that's what you should be doing. Please do that. Even if it's not true, just do it. Yeah, at Brandon, ATBP is Brandon's Twitter handle. Definitely got to ride him. You definitely got to give him a hard time. All right, guys. Otherwise, Dave, no, that was awesome.

Awesome. Really great job. Congratulations. Thank you. Nice job filling in on the big guy. And, you know, who knows, maybe we'll have you back again. And again, looking forward to it. That's awesome. All right. All right, guys. So really quickly, if you have not yet left us a rating review on all those different channels where you are potentially listening, please do that. If you have not yet created an account on BiggerPockets. Please jump on. Go to BiggerPockets.com, create a free account today. And you can link up with guys like Justin. You can ask all the questions you want. Get access to all of our tools and all the content. Our newsletter. You can't get our newsletter unless you are a free user of Bigger Pockets. That thing goes out three days a week.

with like unbelievable, unbelievable content. There's absolutely no reason not to join. Yeah. So do it, make it happen. And with that, let me get out of here. I'm Josh Dorkin. Signed it off. You're listening to Bigger Pockets Radio,

simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Be sure to join the millions of others who have benefited from BiggerPockets. Your home for real estate investing online. Caca! Excellent.

It's getting weird already. I like it. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico Content.

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