Digital Social Hour - The $50K House Secret Investors Don't Want You to Know | Antoine Martel DSH #653

Episode Date: August 21, 2024

Discover the $50K House Secret Investors Don't Want You to Know! 🏠💡 Join Sean Kelly on the Digital Social Hour Podcast as he delves into the world of real estate with Antoine and Eric Martel. Learn how they flipped the market with their turnkey fix and flip model that buys houses for $50K, renovates them, and cash flows instantly! 😲✨ From the 2008 crash to navigating high interest rates, this episode is packed with valuable insights into the real estate game. Don't miss out on the secrets of cash flow success in the Midwest and how you can get started with just $15K. Tune in now and join the conversation! Watch now and subscribe for more insider secrets. 📺 Hit that subscribe button and stay tuned for more eye-opening stories on the Digital Social Hour with Sean Kelly! 🚀   #DetroitRealEstate #RealEstateTips #PassiveIncome #HomeBuyingGuide #RealEstateMarketTrends   CHAPTERS: 00:00 - Intro 00:25 - How Antoine and Eric Started in Real Estate 05:00 - LinkedIn Ads for Real Estate 06:15 - Impact of Interest Rate Spike on Martel Turnkey 10:46 - Will There Be Another Real Estate Market Crash? 11:56 - Are We In a Recession? Insights and Analysis 17:55 - Current Selling Strategies in Real Estate 18:50 - How to Find Good Real Estate Deals 22:18 - Why They Chose High Volume in Real Estate 25:19 - Learning the Real Estate Business 28:03 - Background Needed to Raise Hard Money 29:00 - Understanding Hard Money Lenders 30:05 - Profit Sharing with Clients in Real Estate 30:46 - Additional Promotions and Offers 30:50 - Contact Information for Further Inquiries   APPLY TO BE ON THE PODCAST: https://www.digitalsocialhour.com/application BUSINESS INQUIRIES/SPONSORS: [e-mail]   GUEST: Antoine Martel & Eric Martel https://www.instagram.com/martelantoine https://www.instagram.com/ericmartelofficial   SPONSORS: Linkedin: https://www.linkedin.com/social Deposyt Payment Processing: https://www.deposyt.com/seankelly   LISTEN ON: Apple Podcasts: https://podcasts.apple.com/us/podcast/digital-social-hour/id1676846015 Spotify: https://open.spotify.com/show/5Jn7LXarRlI8Hc0GtTn759 Sean Kelly Instagram: https://www.instagram.com/seanmikekelly/ Learn more about your ad choices. Visit podcastchoices.com/adchoices

right so with us we do like this turnkey fix and flip model so we'll buy the house for 50k renovated for 30k put a tenant in place we're cash flowing we're good then we can find a buyer if we sell it great we make a profit if we can't sell it it doesn't matter to us can you can get some uh better loans lower lower rent lower um interest rate. No points. Alright, guys. Got father-son combo here today. Antoine Martel and Eric Martel. You guys are killing it in real estate, right? Yep. Thanks for having us.

How long have you guys been in the real estate game? 10 years now. Right after the 08 crash then, right? Yeah, so I was in college. He was working full-time. When I was in college, I moved all my classes to the nighttime so that throughout the day I can, we went to a conference, a real estate conference. And then after that became addicted to real estate, moved my classes to the nighttime so that throughout the day I can work on the fix and flip business. And then we would chat when he was off of work, when I was done with school. And then right out of college, I started flipping, we started flipping houses, buying houses, buying rental properties, but all in the Midwest.

And actually in the beginning, we weren't, the intention was not to flip. It was to build a passive income portfolio for the family. And then it turned into a turnkey business shortly after that, because there was a lot of interest. A lot of people that we knew

were like, hey, I want to buy the property when you're done with it. Can I do that? And then we knew were like, hey, I want to buy the property when you're done with it. Like, can I do that? And then Antoine was like, hey, you know what? I think we have a business here. We can actually flip these houses. Yeah, it's not easy to do that though, right?

No, no. Yeah, I mean, we take all the risk. Basically, that was Martel Turnkey. And we basically took all the risk, the risk of the acquisitions, the risk of the construction, the rehab, the rent, all of that. And then our investors, the people that were buying the turnkey rentals, I mean, it was cash flowing from day one. There was a tenant.

It was recently renovated. So most of the risk was taken away, and they could see what the returns were. That's smart. Yeah, because a lot of people that get wrecked in real estate, they have too much risk. Exactly. Yeah, and it's because they only have one exit right so with us we do like this turnkey fix and flip model so we'll buy the house for 50k renovated for 30k put a tenant in place we're cash flowing we're good then we can find a buyer if we sell it great we make a profit if we can't sell it it doesn't matter to us. Smart. So you're getting houses that cheap? 50K?

We still are getting houses that cheap. What? Where is this at? Detroit, St. Louis, Cleveland, Akron. I didn't know houses were that cheap. They still are that cheap. Dude, today our average deal we do is 60K purchase, 30K. Damn.

I've never heard of houses below 100K. This is crazy to me. Yeah, when we talk to people in california they're just like they can't believe it that's their monthly rent right there yeah that's a shed that's a shed in my backyard it's 50k so how can people live in that and yeah damn and those rent out for a thousand eleven hundred bucks a month and is that section eight that's just a cash paying tenant if you get section 8 you can sometimes get in some cities certain cities you can get a little bit higher rent renting it out on section 8 yeah that's a hot topic right now but i feel like social media is making it too easy like they're just saying oh you could invest in section 8 but i'm sure there's a

lot more steps to get involved there's a lot more steps to i mean section 8 definitely complicates the process it has pros and cons pro being part of the rent is guaranteed by the government. Cons of Section 8, it does slow down your process a little bit. For example, I buy a house for $60,000, renovate it for $30,000. I'm all in for $90,000 or $100,000. I can go post it online for rent and I might get cash paying tenants to apply right away that move in next week. Section 8, I now have the government involved, right? So I have to go through an inspection process, all these different processes to be approved to rent it out to the section eight tenant. If you know ahead of time that you're going to do a section eight strategy, that helps you a little bit because then you can tell your contractor the first time around that, hey, you know what, we're going to

do section eight. So I know that I'm going to have to put handrails on everything that has a step and all these things. If you wait until later, then you have to have an inspection from the Section 8, and then they would tell you, oh, you have to do handrails, you have to do this, you have to do that. So if you know ahead of time,

if you plan your strategy well, it saves you a little bit of steps. But then the tenants are Section 8 tenants, ahead of time if you plan your strategy well it saves you a little bit of steps but yeah it's but then the rent the tenants are section 8 tenants so you limit your uh your pool yeah pool yeah when the interest rate shot up a few years ago did you guys get pretty hurt from that i mean it was definitely tough because we were trying to sell a lot of stuff and we weren't planning on like refining i think we had like 250 houses at that time. Damn. Interest rates started spiking. And we were like, shit, what do we do? Because we were banking on, like for the last, for many years before that, we were selling all the inventory.

So we just became accustomed to it. We were like, if all hell breaks loose, we can always refinance these houses because they're still cash flowing. This is an ad by BetterHelp. What are your self-care non-negotiables? It's hard to make time for the things that keep you healthy. But being consistent with self-care is like working a muscle. And when life gets crazy, that muscle keeps you strong. Therapy is the ultimate self-care.

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LinkedIn, the place to be. And so when the interest rate started spiking we went to some of our investors partnered up with them and just kept a bunch of houses gave some invest gave some houses back to investors refinanced a bunch so we got like big lines of credits from some banks to pay off our private money to then hold those houses in the long run yeah that was a scary a scary time. Yeah, one thing that we did, I think, pretty well was we always, whenever we bought these properties, we're always thinking about the buyer. So what kind of loan are they going to be able to get? So we'd buy the house like six months early, and we always did the calculation for the buyer and say, well,

let's say the interest is 4% when we buy it, but we assume that it's going to be 6% or 7% when the buyer is going to buy it. So that really helped us actually not buy properties at too high a price, and we still have some good profit margin. Yeah, because now it's like, I just bought a house a couple weeks ago, dude, it was 8.5, and I had to buy it down to 7.5.

Isn't that high? Yeah, that's high for a house that you're going to live in. The houses in the Midwest, even if a loan's below $100,000, typically the interest rate goes up by a point. And then in a rough city, it'll go up by another point. So we're seeing houses in the Midwest,

if you're buying it as an investment property, you'll be at 7% all the way to 9%. But that's super high for a house you're going house you're gonna and here's my problem with it because as entrepreneurs we try to write off everything so on paper my income was 50k or something stupid right yeah so i had to do a bank statement loan so the interest is already automatically what a point higher yeah um so it kind of sucks as an entrepreneur to buy a house yeah that was his big oh yeah big problem as well. Yeah.

You write off everything. Your income's low. And then when you go to buy a million dollar house, they're like, you can't afford it unless you pay this interest. We, with Martel Turkey, we're flipping like 20 houses,

30 houses a month. We tried to refinance one of our houses with like a very similar loan. We did not get approved. Damn. Yeah. Because you have all this asset. Because the same thing, we were like making no money on paper. were flipping 20 30 houses a month with the business

and it's like okay now i'm gonna buy one of my houses in inventory and just get like a loan yeah a bank rate loan dude it was mind-blowing yeah and it's like oh you have no income you can't get on i'm like i'm literally doing this 20 times a month and i can't get a loan to like hold it for longer than six months it's such a broken system dude because with the bank statement loan i qualified for a five million dollar house but with the traditional route i couldn't even buy a million dollar house wow isn't that crazy yeah that's crazy yeah so i don't know if there's a i i get it from their point of view but there should be a new system i think yeah i mean even for like finding a place to live like some cities that we like in LA and in

Miami, like a lot of the apartment buildings will take like your stated income or just like your bank statements would be like, yeah, but I'm, my W2 is showing no money. Like my business is like breaking even, but I'm making 30 grand a month coming in on my, my PNL or my personal bank account. And so we'll take that to even like find a place to live for example is tough that's what i'm saying though if you have a million in a bank account you should be getting a good interest rate you know what i mean like if you could show that yeah yeah but money is easy to move around so right yeah maybe they they would assume you just had your family

send you money and then you had a million so i get it from a risk point of view right and then a bank perspective too if you just have money sitting in account too they're like we don't know where this money came from we need to verify so sometimes if you go buy like if you go buy like an apartment building they want to verify where all that money is coming from it can't just be yeah they actually look at the last six months of your bank statements or three months and they'll be like why is did you just get 250k here what's that for so they want letters of explanation i just went through all that yeah yeah yeah i had to cash out some crypto and they were like what's this yeah exactly i didn't know it was that intense on every deposit yeah anything above 10k they were like holy crap yeah yeah exactly like i had some invoices

or like explain exactly what that is all these transactions all these transactions, right? We're selling money 60K out or 50K. Yeah, that's common for you guys. 50K coming in, 100. Explain this, explain that. Wow, this is going to be a wow if I have to explain everything that goes in and out. For real. It was to buy a house.

It was crazy. I mean, we bought an apartment building and then we used that same bank account and they were like, what are all these transactions? It's like, dude, it's literally a business. Because all these banks are scared from 08 crash because they were just handing money out.

Yeah, it was their fault. Don't blame me. For real. You think something like that will ever happen again, that crash? Well, I hope not. But I think that right now we're seeing some, around the DSCR alone, that could be a little bit of challenges in there

for people that are doing Airbnb kind of thing. I think there might be a little bit of risk there. Commercial, I think there's some risk there in terms of lending. What's DSCR loan? DSCR is kind of like asset-based lending. So it's basically, they want to make sure that whatever the property that you're buying with that, they're not looking at your income. They're looking at the amount of money that the property is making. Oh, interesting.

If you have a long-term rental, it's not so much a problem. I see it as a problem with Airbnb or short-term rental where your income could be very high for a couple of months and then all of a sudden it dries to zero. So that's where I see a little bit of risk on the residential space. Commercial, like office space, I think there's some risk there. Yeah, that Airbnb game was hot for a while,

but I feel like it's died down pretty heavily, right? It's died down a lot. Yeah, well, if we're heading into a recession as well, I mean, I don't want to be doom and gloom here, but if it's, or even if it just slows down, then yeah, so these short-term rentals would be in trouble. Yeah, the recession thing, I feel like we've been in one for years personally, but what do you guys think?

You think we're in one yet? I think, well, that's tough to say. There's a lot of things going on right now where you're just like, yeah, everything is fine. There's some companies that are laying off employees and inflation is more stable and stuff, but when the Federal Reserve says they're going to cut rate, this is not a good sign.

So they're seeing something that is not good. Oh, it's not a good sign when they cut interest rate. What do you mean? Because they're trying to stimulate the economy. And I think the economy is going okay. So why is the Fed thinking of cutting the rates? Oh, so you like the rates right now at this point? I like the rate.

I think the rate is a normal rate. 8.5, normal? Yeah, yeah. Really? Yeah, so the average for the last 50 years was like 7.75. Oh, wow, really? So we just got so used to the low rates.

Yeah, especially you guys. You never saw like... I never saw this because I was never shopping for houses years ago. So this was my first experience. When we bought our first house, my wife and I, his mother, it was like 13%. Holy crap. We were fine with that.

In 2001? Damn. No, it was before 2001. It was like 1995 or something like that. Holy shit. Dude. 13%. I'd be crying to sleep.

That's insane. But we thought it was fine. We thought, that's okay. It's going to appreciate and we don't have to pay rent and all that kind of stuff. Did it end up appreciating?

It ended up appreciating a little bit. But now, I mean, I don't own a house. I actually sold my house to invest in real estate. I know it sounds kind of weird.

But yeah, I mean, I kind of like Grant Cardone. I rent my house to invest in real estate i know it sounds kind of weird but uh but yeah i mean i i kind of like grand cardone like i rent my house really rent where i live wow i don't i don't want doesn't make sense to buy a house yeah because he has that controversial take that a house is a terrible investment it is a terrible investment absolutely yeah wow yeah i bought mine more for safety like if i end up making money on it that's. But I didn't see it as like an investment. You know what I mean? Yeah, I feel like that.

As long as you don't see it as an investment, that's fine. But a lot of people do. A lot of people put their net worth in their house. Yeah, exactly. And that's the situation I was in before I sold the house. I had absolutely everything running on that house. I had no 401k almost. Oh, that's stressful.

Then everything was there. And there was a lot of money, a lot of equity. And yeah, every day I would come from work and I would be stressed out and tired. And then I would look at the equity on the couch, watching TV and, you know. Yeah, because he bought that house. We immigrated from Toronto to the Bay Area.

That's a big change in 2001 they bought that house for like 700k or something like that's unheard of now and then what did you sell it 2.1 holy crap one of three x dude yeah san fran's popping off right now yeah it's adjusting down now oh is it yeah oh yeah i was just there and i was like zillowing houses that i passed by some of them were 15 million for like 3 000 square feet yeah yeah it's like not even a mansion yeah it's still expensive but you know it's it's coming down like i have a lot of people that invested in in real estate in the bay area and yeah they're having a hard time selling their house and which cities get hit first in America, usually? I think all these ones where you see some kind of,

it's a little bit different, because I think the big one, every one where it's expensive, that's kind of like bubble territory. So San Francisco had been kind of like in bubble territory for the longest time. Then they moved out, and then a lot of people from the Bay Area moved out time uh then they moved out and then they create a lot

of people from the bay area moved out and then they went and created other bubbles right uh in austin in las vegas yeah vegas got hit right and then so the prices went up in miami too yeah miami oh yeah miami was still in it so um yeah so that's uh that's what i'm seeing is that these big cities that are kind of in bubble territories and you look at the migration where people are going. I mean, the pandemic really accelerated the migration out of California. Oh, yeah. Cali and New York, everyone left those too. Yeah.

Miami, I heard, is really hard to get a good house out here for a good price. Yeah, for a good price. The prices have gone crazy in Miami. It's been insane. I mean mean the rents have like doubled i i met a bunch of people since i since we moved here that like they were like yeah the condo in these buildings used to sell for 100k five years ago now they're like 600 grand holy crap just in the last couple years so a lot of real estate is just timing then a lot of it's timing and i think there there's just so much that happened in California. COVID just really put its damper on a lot of New York City

or New York in general, California. And I think it's just the spreading out of all these people to Texas, to Florida, Tennessee a little bit, Nashville. That's just affected the home prices so much in these places. But we don't play the timing game. Oh, you don't? No. So that's why we're home prices so much in these places. But we don't play the timing game. Oh, you don't? No. So that's why we're in these boring markets,

Cleveland, St. Louis, Detroit. We were in Memphis as well. Not the appreciation, but the business. The cities were growing at about 1%, population growth about 1% or half a percent, very slow, sustainable growth. And that's where we invested. And so that makes it a lot more stable, more predictable.

And when you look at these bubble markets like Austin and all that, and Phoenix, like up and down, it was very difficult to get any deals there. Yeah, like to say, we choose our market. If one of the cities we're investing in hits like top 10 places to invest, it's too late. Right. So like,

we like to find the places that are just super stable, reliable. We can count on every deal. We're all in for around a hundred thousand bucks, one 50. We have multiple exit strategies. Cause you're right. Like timing would be great if you had a crystal ball,

but there's no way to fucking know what's going to pop off next. Yeah. So for us, it's choosing those reliable markets that haven't had that hockey stick growth. great if you had a crystal ball but there's no way to fucking know what's gonna pop off next yeah so for us it's choosing those reliable markets that haven't had that hockey stick growth where can we buy and place our chips so that when it does hockey stick if ever we already have a ton of chips in that place got it are you guys selling right now or buying and selling a little bit of both um yeah a little bit of both we're buying a couple per month and then selling a couple per month. Damn, a couple per month. That's crazy.

So you guys are just cash flowing heavy like that. That's nothing for us. We did at one point like 50 houses a month. Holy crap. And we were like cruising at 20 houses a month. 50 was a little bit of a peak. 50 was our biggest month we ever did was we flipped 50 houses in a month. Jeez.

20 a month is like almost every day. We had a whole team doing that. Damn. 20 per month was around our target normal. Okay. But now with interest rates, you've toned back? We've toned back and we moved over, took a lot of that cash and sold a lot of the houses we had and went more into the technology software space.

So we made an app now that helps other people find deals in the midwest analyzes them we have mls access oh nice and then connects them to local like vendors on the ground that's cool do the same what's that app called flip system flip system that's cool so it's just an app on your phone you look up the city and it tells you good deals yeah it's so we have bought mls access So MLS is like Zillow and Redfin and stuff where they get all their data. So the software, we bought MLS Access in a bunch of cities that we like. We have our team go through all those deals, which is like 400 deals a week. They whittle that down to 200 good deals per week.

Those get posted on the marketplace. And then our clients can go in on their phone. The numbers are already there for them with the arv purchase price repair costs so the numbers are done and then the next thing they need is just a local realtor property manager contract and we connect them to all those people wow you make it easy because a lot of people are scared to get in real estate because it's pretty complex at first right and they don't want to invest out of state they want to like i talked to so many people here in miami florida and they're like yeah i just want to go and see the house touch the house so they have

all these fears about like buying something completely virtually but my question to them is okay cool let's buy the house next door then what like you're still gonna have to hire a realtor property manager contract like what value are you gonna add are you a certified inspector are you an appraiser are you a contractor no no no okay a certified inspector? Are you an appraiser? Are you a contractor? No, no, no. Okay. Does it matter then? It's just this irrational fear thing.

They also fear squatters probably. And there's a lot of emotion. I think they watch things on TV and they think it's fun to be throwing a hammer through a wall and stuff like that, doing the demo and stuff like that. Yeah.

That lasts five minutes. Then after that, it's kind of like, go back to my spreadsheet oh yeah it is fun yeah it is fun to be like when you get like into the dirt and you can like go see your house being renovated it is kind of cool the first three times and then after that it's like all right i'm just doing like it's the same bloody thing every single time you know i'm already over it i'm dropping like 5k a week right now on contractors i'm like damn this is the part they

don't talk about with buying a house yeah all the repairs and shit yeah yeah all the repair well especially if you're buying it to like renovate it to your standards and then on top of that the ongoing like maintenance i didn't even know you had to trim palm trees so that's 3k year that i didn't know about did you guys know that no no we don't have palm tree cities oh yeah there's a lot of those in vegas yeah you guys ever invest in vegas or no well almost did but uh no we didn't we ended up not not investing there too too price pricey pricey and then too competitive as well yeah vegas is super dude when i first moved there three years ago you had to offer 100k over ass just to even talk to the

seller yeah and so for us we prefer to be in a market that has a ton of deals where we don't have to like worry about getting a next deal right or like a buyer's market yeah and you can go to like detroit michigan there's 3500 active houses for sale below 150k damn so it's like and all the houses are the same so i want an assembly line of projects you know like i'm looking at some investors in California, and they say, well, this house, we're going to do this. We're going to do an ADU, and we're going to do this. And this one, we have to do something different.

Or the decorator is coming in, and, you know. I don't want to do that. I want to have, like, cookie cutter, and every cookie is the same. The contractors know exactly what to do. They know what paint color. I don't have to talk to them. And an assembly line. You get way more efficiency.

Why do you guys decide? You know your numbers. Yeah, you got to know your numbers. Why do you guys decide to go the volume route rather than just buy like a million dollar house, get a couple of those? So we did the, there's a couple of things.

Well, we went to commercial space. We'd actually bought like a couple of apartment buildings. And so we have one still left, but we sold four. We had five at one point, so we sold like four. And I really liked that. I really liked the game, the returns on that. But it takes so long to find an apartment building. And then you have to go there.

The due diligence takes forever the loan takes forever and you know so this it takes a just a very long time and again it doesn't give me that assembly line kind of thing every apartment building is different and you know and you have to good multi city to city so it's just very complicated very difficult returns are great once you get there, but you know, yeah, it takes a year at least to get into one of one of those properties. Then you do the renovations. You have to disturb every single tenant to do the renovations.

I didn't know it took a year to get one of those. Yeah. And then the other thing is like, even if it was like just a single family home house flip, like if I want to flip houses in Vegas for a million or LA, it's like those houses don't have exit strategies. There's one option, which is buy it, renovate it, and sell it. I can't buy it, renovate it, rent it out. I mean, you could probably Airbnb it.

Vegas banned it, I think. Oh, really? I think they banned Airbnb. So literally your only exit now is to buy it, rehab it, and sell it. Cool. What if after renovation, whatever whatever the market gets a little soft or like interest rates go up instead of going down it's like cool now you're like two million dollar sale price goes down to 1.7 1.6 1. and you have like your hands your hands are tied you're kind of locked into one exit. So that's why we prefer doing the cookie cutter,

$100,000, $200,000 house, splitting up our chips across 100 deals versus just one because we have multiple exits. And then we're spread out. We can afford to lose money out of 100 deals, 2%. Whereas the average person probably couldn't. Definitely not. Because one deal could just wipe them out because they're putting all their chips in.

Yeah, one bad deal could be a huge loss. But your houses are 100K, so if you lose two of those, it's manageable, right? Yeah, and the profit margins on them are $10,000 to $30,000. So it's like, okay. 10% to 30%, that's pretty good. Is that a year or is that over? No, just project length. Okay.

How long is the average project length usually? Average project length, four to is average project length usually average project length four to six months oh it's quick yeah damn yeah so 10 to 30 percent in four to six months yeah that's the buy it rehab it rent it out and then sell it holy crap those are like the best returns i've ever heard in real estate because people think real estate's slow yeah that's just cash if you finance it doubles and triples that return damn and you guys are financing all these yeah we are so we'll buy the house get a hard money loan on it hard money funds like 80 of the purchase 100 of the rehab so

you can like flip a house today in the city in the midwest for 15k at a pocket dude see that's like awesome because people don't have 100k lying around for exactly so you start with 15k in four to six months you flip the house you buy it rehab it, rehab it, rent it out, and sell it. And you make 15K profit. So it's 100% return in four to six months. Incredible. And you guys learned all this at a conference 10 years ago? You said no.

The conference really helped us kind of like get together and think about real estate together. And then we did a lot of exploration after that. We tried to do wholesaling. We did probate. We did commercial. We tried to do wholesaling. We did probate. We did commercial. We tried to do things in the Bay Area, flip retail, rentals, apartment buildings. LA must have been a tough one. Oh, my God.

It was like, no. Nothing worked. Nothing worked. And we were like small fish in a big pond. So it was a conference. Two years you didn't make money? Two years just like testing a bunch of shit. I love how open you guys are about that

because some people think it's easy. Oh, no. And then we went back to the drawing board and said, okay, well, this is when we need to be like a passive income. We are interested in passive income. We want to build a portfolio of rental properties. It can't happen. We can't do this here.

So where can we do this? And so just started looking at statistics across the U.S. and looked at census bureau bureau of labor statistics combine all these spreadsheets we love spreadsheets uh and uh and then yeah so we looked at uh memphis cleveland st louis these were the three cities we looked at initially and um yeah antoine went on the phone calling every realtor in town, and it was only one of them really made sense. And that's where we bought our first house in Memphis.

And you didn't even see it. You were buying it from here? That's right. In Florida? Wow. From LA. From LA. Damn.

So you guys really believed in the model. We did. Yeah, well, there was nobody else really. Like, I remember going to, like, conferences or, like, networking events in in and around la i was right out of college 22 23 or whatever and i was going to these conferences youngest person in the networking event and i was they're like we're trying to find deals in la we're trying to find deals in l and i'm like i just bought my first house in memphis and it's like they had been trying for five six years to flip their first house in la going to all these meetups and i was like oh i've been trying well i've been trying for five, six years to flip their first house in LA, going to all these meetups.

And I was like, oh, I've been trying. Well, I've been trying for two years, but I started looking at out of state a couple months before, and I bought my first house already, built the team. And so people's brains started exploding. And then I think that's when a lot of people in California and New York started opening up to the fact that they can buy stuff out of state. And they could buy it all done up with the tenant in place, with a bow on it for $150K.

In their local market, that would be $2 million or something crazy. And they win cash flow. What kind of background do you need to raise hard money? Do you need deals under your belt to get to that level? Hard money, normally, if you have a good credit score, if you have some money, you're going to put some money skin in the game and stuff like that. So that'd be great to do that.

So that's basically the requirements for that. But we really like also private money lending. So if you have a rich uncle and stuff like that, so really kind of go and tap to those resources. The people that know you already, then you let them know that this is your coworkers and all that and say, hey, I want to do this. And then that helps you. You can get some better loans, lower interest rate,

no points, and then they're happy to help you. And especially if these people live in California, lending like 50 to 60K is not a big deal. Yeah, if you live in LA, yeah. Yeah, hard money is great because there's no income. So just like the thing we were talking about, like for you to go buy your house, you have to show all that stuff for your income.

But for this, these loans, they're used to working with fix and flippers. So it's like, all right, we don't care about your income anymore. It's just taxes. And then we're going to analyze the deal side by side with you so we're going to get an appraisal on the property they do all this kind of stuff rehab repair cost estimator all this kind of stuff to verify that they think it's a good deal and then

do you have the credit score to back it and then like he mentioned do you have the cash to actually put some skin in the game yeah i know a few hard money lenders they live a good life man yeah just sit there and collect a check. And a lot of them are not even lending their own money. They'd like have like, they have like a rich uncle. Oh, that's even crazier.

Yeah. Or they have like family office. They go to the family office. And they're happy with 10% a year. Yeah. It's hard money guys. Yeah. Like 10,

12% a year. Yeah. And so what they'll do is they'll charge these points as kind of like their fee for getting the loan together. And then the 10% is like, cool family office. Here office here you go yeah like here's your 10 percent because then the family office making 10 they'll be pumped with that because they're managing so much that 10 is actually good to them at that level yeah exactly yeah but with this model it's cool to see it works at scale with these returns yeah yeah it's also very nice when you see that the flip system

clients are actually you know they follow up if they follow the program, they do the training, they get together with our coaches. And so it's so, to me, I find it so exciting that these people are actually getting into their first deals and then the renovations and all of that. And then they sell their first property at a profit. Love it. It's just like unbelievable. Yeah. Do you get a percent of their profit? No, no. Oh, really? It's all theirs. I mean, we it. It's just like unbelievable. Yeah. Do you get a percent of their profit? No, no, no.

Oh, really? It's all theirs. I mean, we're just coaching them along the way. Okay. And yeah, I mean, this is great. So this is entirely their business, their thing we don't get involved in. Nice.

Yeah, we'll definitely link that up below. Anything else you guys want to promote or close off with? Nope. No, that's it? Just the app? Nothing. We'll link your social media below as well. We want to message you guys and maybe a contact contact email but that was awesome thanks for coming on awesome

yeah thanks for having us yeah thanks for watching guys see you next time