Epic Real Estate Investing - After You're In Contract... Should I Flip or Hold? | Episode 153

Episode Date: April 13, 2015

Which is the best real estate investment strategy?  Buy and hold?  Fix and flip?  Wholesale?  Interestingly, a lot of business takes place before you ever need to decide.  No matter what your exit strategy, the lead generation, seller contact, and offer presentation are going to look exactly the same.  It’s not until you get an offer accepted that you actually reach a fork in the road.    On this episode Matt reminds listeners why the best way to grow their portfolios quickly and efficiently is not to get stuck on any particular exit strategy, but rather to be flexible and nimble investors. ------- The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? E ducation P roperties I ncome C oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Podcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Oh, yeah. Hello. And welcome. Welcome to Epic Real Estate Investing Podcast, the place where I show people how to escape the rat race using real estate. You just got to shift your focus from making piles of money to making streams of money. change that one thing just one time and you're on your way to financial freedom it's not the most

exciting path but it is the fastest and once you get there life then becomes exciting this in this business can be exciting in of itself also you know eric feeder feeder feeder or fighter forgive me eric if i didn't pronounce your name correctly he's an epic pro academy member he just posted in the private facebook community group for the epic pro academy members that he just closed on his third and hold property on Friday. Eric picked up a seller finance duplex that will gross $1,000 per month with only a $5,000 down payment. You know what they call that, right? They call that cash flow.

They call that ROI. They call that return on investment. They call that the fast track to financial freedom. I mean, where else can you get 144% cash on cash return? and that return being hedged against inflation, and you get the tax deductions to boot. Where else can you get that? Investment-grade real estate.

Doing it the right way? That's where. Nice work, Eric. Awesome. Thank you for sharing that with everybody. Now, I haven't spoken to Eric, and I know nothing else about his deal other than what I just shared with you,

but let's pretend that I do. meaning Eric, he generated a lead. He contacted that lead and he presented an offer to that lead. There's no way that he could have got it under contract unless he followed those three steps, the three steps or systems, if you will, that you must have in place before anything else even matters. This has very much been the essence of my coaching as of late, as well as what I discussed in great detail on episodes 149, 150, and 151. If you miss those, go back and listen.

So once you have those three systems in place and you get an offer accepted, then what? What do you do next? Do you hold it like Eric did? Or do you fix it up and put it on the multiple listing service and wait for the perfect buyer to come along so you can get maximum value? for the property? Or do you flip it or wholesale it really quickly for a fast profit? The answer to what you should do next is coming up in 30 seconds right after this. Sales pitch? Sales pitch? We don't need no stinking sales pitch.

Here's the ball busting truth. You can make excuses or you can make money, but you can't do both. Get the new free book, Epic Freedom, the two easiest and fastest strategies to a paycheck in real estate. You heard right. sales pitch, it's free. Go to free epicbook.com. No more excuses, just real world strategies to making real money in real estate. Free epicbook.com. Free epicbook.com.

From the first thing that you do, generating a lead, to contacting the lead, to submitting an offer to that lead, to getting the offer accepted, regardless, if you're going to hold, fix and flip, or wholesale, doesn't matter what your intention is, all of those approaches, they look exactly the same up to that point. regardless of whatever your desired exit strategy is, the first three steps look exactly the same. And not until you get the offer accepted, do you start to see a difference in real estate investing strategy? I mean, it's a nice straight road, a single straight road from generating a lead to getting an offer accepted. And once the offer is accepted, now you've reached a fork in the road,

so to speak. Now is where it starts to look different. You're this fork in the road, a three-pronged fork, actually, and you have the decision to make. Which prong do you take? Do you take the buy and hold prong, the fix and flip prong, or the wholesale prong? Well, the answer. It's always the same. You know the answer, right? It depends.

But what does it depend on? Well, the first thing it depends on is your personal real estate investing goal. is your goal to create a pile of cash or is your goal to create a stream of cash? And keep in mind that that goal, that can change. It can change daily even, meaning you may need a pile of cash today in order to create your next stream of cash. And specifically, I mean, you should be doing both, flipping and holding. I mean, let the flipping engine or the wholesaling engine do its thing to create piles of

cash for you of which you will use to acquire your streams of cash. So first, it depends on your real estate investing goal that day. Do you need cash to acquire the next stream of cash? Let me see the next stream of cash. Yeah. Do you need cash to acquire the next stream of cash? Or are you already sitting on some cash and you're ready to acquire that next stream of cash?

That's number one. Your goal of the day. Second, it depends on the deal. With that particular deal, what prong of the fork should you take that deal that will move you closer to your real estate investing goal? Okay? How is that, which, that deal, which, I guess, which prong is going to bring you? Yeah, which path do you go down? I'm getting confused with my metaphor here.

Let me just talk specifically. I'll just tell you, here's how I look at each deal, all right? I was trying to get fancy with you there. But I'll just tell you exactly how I do it. And then you can extract from that of what you want and what works for you, what makes sense for you. So here's how I look at each deal. It's my intent to hold every deal that I come across. That's my intent.

I want to keep everything. That's also why I'm really big on the three option letter of intent as two of those options present the potential for me to hold. So for the most part, if the same thing, seller should accept option number two or three, my seller financed options, then I'm most likely holding that property. Now, if the seller should accept option number one, my low ball all cash offer, I'll then do an analysis in this manner. You see, I'm initially thinking, would this make a good hold? Is this the type of property I'd like to hold? Is this an area that I'd like to hold?

Like is this neighborhood where I want to be or the city or the state? Is this where I want to hold property? Will this create an acceptable ROI if I pay for this low ball deal with all cash? You know, is the all cash going to create an acceptable ROI for me? If so, I'm then going to look at my reserves to see if I have the cash to pay for it. And if I do, then I will hold the property under these conditions also. also, even if they accept you a low cash, if it passes all that criteria, then I'm going to go ahead and probably hold it. If I'm low on cash reserves, I then look to see if it's worth finding a

money partner or a private lender. If I hold this property and I bring in a partner, is there going to be enough for both of us? Is there going to be enough cash flow there to support both of us, to satisfy both of us. Now, should this property fail any of my minimum standards, my minimum deal standards, meaning it's not an acceptable property that I want to hold, or if it's not in an acceptable area where I'd like to hold it, or if it's not going to create an acceptable ROI, then I'm likely going to flip it. Yeah, I'm going to flip it.

I'm not going to just throw it away. I'm not going to walk away from it. I'm going to flip it and add some more cash. to my pile of cash, so I'm better prepared to take advantage of the next stream of cash that comes along my way. Okay? So if I'm going to flip it, my next filter that I run it through is do I flip it fast and get out of it with a quick profit? Or is there other potential here? If I were to buy it, fix it up, and sell it at a retail price, would that additional profit be worth the effort of the fixing?

would it be worth the time it's going to take to fix it? So I'll run a quick dual analysis. If I wholesale this, I make X. If I fix and flip, I make Y. And if Y is big enough to where it's worth my time to do the fixing, then I'll do Y. If not, I'll do X. I'll wholesale it. That's my process.

My process on what there is to do once I have a property under contract. I don't go in with the intent. I mean, my intent is to hold, but I'm not commonsense. committed to any exit strategy, I'm going to go for the exit strategy that's going to move me closer to my goal. So my first thought is, do I want to hold it? If yes, it's then how can I hold it? If I don't want to hold it, it's then where will I make more money for my time? A quick wholesale or an all-out fix and flip to retail. That's how I do it. How do you do it? That's entirely up to you. But you should have a process like this, a process that takes the guessing and the

confusion out of your business. This process should be as streamlined as the process you have for generating the lead, as streamlined as the process you have for contacting the lead and presenting the offer to that lead. I mean, borrow my process. Steal it. It's yours. You can have it. Or, you know, modify it and create your own or start from scratch and create your own altogether. Just knowing that, knowing that some properties you'll hold and some properties you'll sell. because when marketing directly to private owners, you never know what you're going to get. I mean, you'll do your best to create the type of calls you want to receive based off the area, based off the type of property, based off the different categories of distress.

But this type of marketing is far from an exact science. Any of you that have done this for even just a month or two, you already know that. This is not an exact science, meaning you may market for, single family houses in Boston, Massachusetts, owned by people that recently inherited that property, and you come across someone that owns four duplexes in Helena, Montana. That happens all the time. This type of thing happens often enough that you should be prepared for it. And you should have a defined process on how to profit from that situation on whether to hold it or whether to sell it. That's going to streamline your path to your pile or your stream of cash.

Now, Eric, whether you had a process or not, I'd have to say nice work. If you didn't have a process in place for that, you might want to create one so you can duplicate your results. You know, churning out 144% cash on cash returns on a consistent basis, that's going to deliver you to financial freedoms doorstep in an unbelievable time. So that is a process that you do want to attempt to duplicate. Please stand by. We've got overhead to pay. We'll be right back. Contrary to popular belief, a lack of funding is not the biggest barrier to starting a business.

It's excuses. But don't let a lack of funding be your excuse. We are Epic Fast Funding, and we'd like to fund your business with up to $150,000 in revolving credit lines. If you've got 60 seconds on a solid credit score, you could have access to your funds in as little as seven days. Go to Epicfastfunding.com to fill out our 60-second application. It's fast, it's simple, up to $150,000 in as little as seven days. Go to epicfastfunding.com. That's it for today. I'll see you next week.

Or catch me tomorrow on Turnkey Real Estate Investing. I'm Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the BS in real estate investing education. If you enjoyed this show, please take a minute to visit iTunes and share your thoughts. Thanks for listening. We'll see you next time here at Epic Real Estate Investing with Matt Terry O. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.