Epic Real Estate Investing - EPREI 019 : How this Kid will Eat Your Lunch if You're Not Careful and What You Can Do About It!

Episode Date: November 9, 2011

Matt uses this episode launch his multi-part series in discussing real world real estate with real word investors. They've nothing to promote, nothing to sell and no hidden agenda. Just investors successful in today's market talking real estate investing. Today Matt is joined by 26 year old, yep! 26 years old!, Richard Haynes of Hermosa Beach, CA. He's crushing it in today's market and he'll eat your lunch if you're not careful. http://FreeRealEstateInvestingCourse.com Learn more about your ad choices. Visit megaphone.fm/adchoices

Epic Real Estate Investing Podcast, episode 19. You're about to meet a man that can show you how he took control of his life and financial future and how you can do the same. He's never been on TV. He's not a millionaire, and he does not know Donald Trump. He is a full-time real estate investor, newly discovered offer, and family man. He does not report to a boss. He creates his own schedule and takes his family on a few vacations every year.

He got started investing in real estate with almost no money in a really crummy credit score. And he's going to show you exactly how he did it and how he continues to do it. You will have to work. You will have to be responsible. However, laying by the beach sipping fruity drinks is a reasonable goal without further delay. Your guru. Uh, sorry, your guide to a better life through real estate investing. Matt Terrio.

Matt Terrio. Hello and greetings from the Epic Real Estate Investing podcast, the podcast that will show you how to build wealth through creative real estate investing, so you'll have the option to realistically retire in the next 10 years or less, and enjoy the good life while you're still young enough to do so. I mean, how does that sound? My name is Matt Terrio, author, full-time real estate investor, and family man. Now, if this is your first time listening to this show, you're going to want to do two things.

First, go back and listen to episode one for the ground rules of the show. And two, download the free real estate investing course, how to do deals, no money required. You can get that at free real estate investing course.com. It's a step-by-step course of where I unveil the mystery around doing deals with no money or credit. Okay, I am extremely excited for the next series of episodes, as I'll be interviewing some of my closest real estate investing contacts in order to share with you their perspectives, investing strategies and their secret tips. I mean, perhaps you've heard interviews like this on other shows. In fact, I'm sure that you have.

But what you might find different about the next several episodes is that the investors I will be interviewing, they don't have blogs, they don't have a podcast, they don't have an ebook to sell, they don't have a course to sell, there's no seminars to sell, there's nothing to promote. There's no alternative motives, nothing. There'll be no cliffhanger answers of which you have to go to their website or buy their book to get the complete answer. You're going to get completely transparent, uncensored, thorough answers to your most burning questions.

Now, having said that, mind you, these specific guests, they're not professional speakers. They come from all walks of life, young, old, black, white, brown, male, female. So you're going to get a ton of information from people on the court from all walks of life. And you're going to get that information from people on the court in today's market playing the game. There's no fans here. There are no sideline sitters. no Monday morning quarterbacks. There are no coaches. Just the players. Just true players out there in the real world playing their game and winning. So today, we're kicking that off. On the phone,

I have a very good friend of mine. He's probably my youngest friend, young enough to almost be my son, just 26, I believe, but a kid that's got massive wisdom beyond his years. I mean, he's a total inspiration to me. And he's accomplished so much in his first two years of real estate investing. I mean, he could essentially be retired before the age of 30. I mean, really, at the rate he's moving, it would be no problem. I doubt that he's going to just because I know he's, he likes what he does and he's going to continue to do it, I'm sure. You know what I like about him is he keeps me on my toes, and he has amazing insights to investing strategy in the overall real estate market. I mean, he's so passionate about what he does. He loves to talk about it,

and, you know, he's helped me countless times in various situations, but what's so great about him is that he's here today to help you too. So on the phone, Richard Haynes. Richard, thanks for joining us today on the Epic Real Estate Investing podcast. Thanks for having me, Matt. You bet, you bet. I'm glad you're here. So real quick, let's just kind of go into how you got started.

So kind of share with everybody how you got started investing in real estate. And what was the initial attraction? Huh, well, you know what? That's a great question. I initially kind of got my start in real estate in college while getting an internship with a loan broker who eventually, right when I graduated, hired me on with no-based salary, commission only. And I kind of jumped head first into the loan business in 2007. And so I learned a lot about real estate during that time, much more kind of the financing side of residential real estate. And as most of you know in 2007, 2008, we had the bubble burst and then the financial crisis.

And it was just so tough to get loans done. And I was getting a little discouraged, and I had investors calling me up, you know, telling me what they wanted. And I was going, you know what, I'd rather be that investor calling up a loan broker. or saying what I wanted for my mortgage and realizing cash flow through that route. So eventually I ended up forming my own company that did a little bit of loans on the side, but my main focus was to actually get into buying and holding real estate. And from there, I just ended up taking classes, speaking with professionals, going to seminars, every book I could read, I did it.

I started driving properties in Inglewood, California, looking at deals. And one thing led to another where, you know, I got connected through searching at deals with people who had intimate knowledge of certain buy-and-hold deals throughout Los Angeles. And it was kind of to keep it short. I went from there and then just dove and head first and started getting into buying and holding and flipping real estate from those drives in England. it. Nice.

Nice. So you mentioned buying and holding as your primary strategy and just then just right there at the end you talked about flipping properties as well. What's your primary acquisition strategy? Where do you find most of your deals? You know, our primary acquisition strategy right now is at the courthouse debts or what they call in California at the trustee sales. So before a property becomes an REO or a bank owned property, it has a house.

to go to sale to steps. And there's obviously investors who bid they're all cash. So right now our main form of acquisition is at the courthouse debt as the banks are auctioning them off. And then we'll also acquire properties through your traditional means, you know, REO properties and short sales as well. Got it. So you're primarily dealing with the banks when you find your deals?

Yes, correct. And how has that been working for you so far? You know what? It's been working out pretty well. I mean, the trustee sales, you know, the banks are involved, but not directly. I mean, they set prices, and if the price is great, it's a bidding war between you and a bunch of other investors. And the great thing about bidding at the trustee sales is that when you buy a property, you buy it that day and you own it. You don't have to go through a long-term negotiation on an REO or deal with a bad agent or the, the, the, the, the, you buy it. frustrations and the struggle of a short sale that could drag on for six months, you buy a property at the trustee sales, and it's yours that day. But, you know, it does bring its risks because you do inherit all the back taxes, any other liens on the property, a distraught former homeowner or irate tenant. So there's a lot more risk that comes with it, but the great thing about it is that you do get your property that day,

and you can start getting to work on whatever your strategy is right when you get it. What are some of the steps that you take to mitigate your risk in that type of transaction? You know, the biggest risk mitigator in a trustee sale is title, in my opinion. You've got to make sure you have a great title team because if you buy a property that you think has clear title, and then all of a sudden you find out that you bought the second loan and there's, you know, a 200,000, dollar loan that was recorded in front of you, you know, not only, you know, got a bad deal, but you're going to lose a lot of money. So that, to me, is the biggest way to manage your risk.

You know, I've heard people with bad title agents that have missed recordings and they get hurt pretty badly so that you want to first and foremost make sure that you're getting something with a claim title or you are prepared and factored into your number. numbers things that you're buying that you inherit leaned on with it. And then secondly, kind of, you know, on the backside is you really got to know your values. You've got to have access to the MLS and you've got to know what the value of the property is because, as you know, you make money on the buy side.

And if you buy something for more than it's worth, even if you've got a clear title, you're going to be losing money. So definitely clear title with trustee sales and make sure you know your value to be purchasing. Got it. And the multiple listing service is your primary source of figuring values? That is. I mean, to be honest with you, Southern California is my market, and I know it pretty well,

but obviously there's micro markets and you've got to, you know, I may even live in the area, but there's areas between certain streets where you've got to highlight and look at the MLS and figure out what things are selling for, and you've got to use those comps to figure out your values because, you know, that's what the buyers are going to be looking at if they something that's, you know, selling below what you think you can sell it for, they're not going to want to buy it for higher than that. So you've got to know what the buyers and their agents are looking at, and that is how your properties are going to sell.

And I've found, you know, the MLS is the best way to get that type of information. Got it. Are there any other online resources that you use to do your due diligence? A great, great resource that we use, and it's expanding rapidly. I believe they're in California, Arizona, Oregon, potentially Washington is a company called Foreclosure Radar. And they're www.forclosureradar.com. And they're just an incredible resource because they allow you to search properties that have

gone into notice of default in certain zip codes and areas along with properties that are going to be going to sale at trustee sales. So you can not only track properties that are in default that you may want to hit up a buy or a distressed home seller where you can negotiate a great short sale deal, but you can also track properties to see when they go to sale. So if you want to buy at the courthouse steps, you can see the day they're going to sell the steps. And then secondly, you can also see if it's sold or didn't sell up the step that day and whether it went back to a bank or a third party investor because if it then gets, if it goes back to the bank that day, you know, that's a property that you know that's a property that you. you can start watching to try and purchase from the bank as an REO, either get in touch with it directly or wait to have it listed by an REO agent. So it's a really valuable tool.

It gives you all sorts of information on the property, and it's just something that I use every day. So it's an awesome tool. I highly recommend it. Yeah, no, I didn't know you use that. I use that as well. It's where I probably get 90% of my lead lists. It's an awesome tool.

It's unfortunate that's only in four states, though. I know. And to be honest with you, I think they're so good and they're growing so rapidly. I wouldn't be surprised if they start expanding more states shortly. I hope they do. I mean, it's a really intuitive tool. I mean, you can pretty much just go in there and figure it out and get exactly what you're looking for. Awesome. It is. So you're playing this game at the courthouse steps.

You need deep pockets to play that game. Where do you find the money for your deals? That's another great question, too. I think a lot of people kind of get stopped in their tracks because of money. And, you know, I'm a guy who graduated from college about four years ago. I wouldn't say that, you know, I have those deep pockets yet by any means to do what we're doing at the courthouse theft. But that shouldn't stop you. It hasn't stopped me.

What I've gone and done is I've gone out to networking events. I've worked my network from school with professors, other people that I've met through certain business events, and I'm raising money. So we put together pools of money from different investors. We tell them what the returns they can expect, what the splits that we take and what they're going to get or the fees that we charge.

And if it's an investment or someone says, hey, you know what, I'm getting a great return for the risk I'm taking on, they invest with us. And we've been able to get that cash to make it work. And we've, you know, we've done millions of dollars worth of property flips based on just raising money from investors. And we take part of the profits. And they take part of the profits as well.

And we've been happy and so are our investors. So we're really, you know, at the moment, after we've kind of proved the model, we've made a lot of investors happy. We're looking to start a fund and raise a large, large amount of money so that we can do this on an even bigger scale than we're already doing it. So really, it's, you know, it's getting that first investor or two to believe in you, deliver for them, and then, you know, it just gets easier from there because investors start telling other investors, and then all of a sudden you've got more money than you know what

to do with. So it shouldn't be a limiting factor at all. Right, right. No, this is a very similar experience. I mean, once you perform for one investor, then they do start talking. And if you perform correctly and per your agreement, you're a group. that you have in place with them. You know, they're sitting there.

Once you give them their return, they're looking, okay, what's next? You get the same experience? It's exactly that. Once you make one investor happy, they start telling everyone, and you know what, as a lot of people are in this business to make money and profits and flips, I found the ones that put their investors first before anyone, that's where you get the referral. So even though I want to make a lot of money on a particular flip, you know, we had one circumstance where the deal didn't work out as planned.

It took eight months longer than we thought. The former homeowners sued us, and we had frivolous legal fees that we had to deal with that we eventually won, but we had to eat those lawyer costs. And it made the deal where if I had taken my split of the profit, the investor would have made virtually no money on his return. So what I did was I called up the investor and said, hey, we got unlucky on this deal. It's your first deal. and I ate those legal fees through my company.

I took a loss. And you really appreciated that. And I think when you work on the relationship of keeping your investor happy first, you're eventually going to do enough deals where you're profitable and you're going to be taking home a lot more money than you ever could expect. So, yeah, put your investors first, make sure they're getting their money. And once you make them happy, then, yeah, those referrals start pouring. Right.

For someone that has never raised private money for, and I've talked about it, frequently on this show that, you know, you just got to get out there and meet people. You've got to, you know, rub bellies and meet people face-to-face shake hands. And I talk about networking events and seminars and real estate investor clubs all the time. So for someone that's never raised money before, I mean, what does that initial, what did that initial conversation look like for you? How did you ask for the money? How did you present your opportunities? I mean, just what does it start to look like in the beginning for someone that's never done it before? What did it look for you specifically?

You know, it's funny, like you said, it's really just talking and it's hard to put a finger on how it happens, but as you asked for me specifically, you know, I was doing, I started off my career doing buy and hold, and I got a call from an investor who wanted to do a distressed buy and hold over in Santa Monica, and we ended up meeting agreeing on doing some buy and holds and one thing led to another where he didn't want to do, you know, it didn't sit well with him. And I said, well, hey, you know, I've got this plan to do a flip. And he's like, well, that's what I want more.

He likes the risk a little bit more. He likes the higher returns. And we started doing these flips. And it just goes from there. So, I mean, it's hard to put a thumb on it and starting the conversation. Just, you know, it's really like, hey, I'm in a little. the real estate business, I do buy and hold, I do flips, you tell people what you've been doing, what you've been up to, and really people start asking because they're interested in it.

They've always, you know, most people want to be a part of the real estate business in some way. They just don't want to put their time in. And, you know, the conversation opens up that way, and one thing leads to another where they want to do a buy and hold deal with you or they want to do a flip, and you just have no idea how it's going to happen without, you know, just telling someone what you do. and you say, hey, we're looking for investors. And they go, man, that's something I'd be interested in potentially. You go, great, you know, let's set up a meeting.

I'd love to give you more detail about what we're doing. I don't know if that answers your question exactly. No, totally. It's very much the answer that I typically get. No one has an exact science or an exact approach of how to approach an investor, how to present an opportunity. I mean, I've, on the past few episodes, I've given actual structure, I've given actual scripts.

but every time I ask somebody, everyone's got a different answer. But it really just comes down to being out there talking to the people and creating that conversation. And when you create enough conversation, then the opportunities come your way. It just does happen. It really does happen that way. Exactly. And like you said, creating that conversation so that people know what you do. I mean, tell people that you're in the real estate business, that you do buy and hold, that you do flips.

and people will talk about you to other people because someone else will be looking for that opportunity and they'll be like, oh, well, hey, this is what Richard does, is what Matt does, and people come in that way. So it's really just letting the world know that this is your business. And when you treat it that way, you know, people will start coming. Right, right. And Richard, how old are you right now?

I am 26 years old right now. 26 years old. So you being so young, and, you know, being so successful already in this business in just a very short period of time, when you're talking about your deals, when you're talking about people, do you come up against any challenges or obstacles because of your youth? And if you do, how do you overcome those? I did come with some challenging obstacles and youth is always a big issue that comes up.

I think the hardest part about, you know, doing this when we're, younger is the startup. I mean, I started my own company and started getting into real estate deals at 23. And some of the things just on the outside that helped me kind of get over that hump is I created a company that our logo was kind of based off of the Franklin Templeton Investment logo, or they have that old Benjamin Franklin picture, and it looks like it's a company that's been around for a while. I kind of took the same model, but I used, you know,

my great-grandfather's picture who was an inventor that I, you know, looked up to very much, and we kind of formulated a logo to give us kind of an older look, a sophisticated look. So if you sound professional over the phone,

you've got a logo like that, you know, people are going to treat you like an everyday business person, which is your first step of getting in the door for those meetings, and then they see you, and they go, wow, you're younger,

and they say, wow, I was really surprised you carry your stuff. and you run your business like someone who's been in the industry for a while. So you know, you want to portray yourself in that I've been around the block type issue and do things with your company on that sort. Secondly, like I said, the biggest thing is you've got to find that first investor who's willing to take a shot at you.

And at my school, when I took the entrepreneur program, they always said your first investors are going to be friends, family, and pools. And so you're going to have friends and family that believe in you know that you're smart and can do it. And then you're going to have one or two people who you meet who are just so eager to get into it, don't know anyone else. And they're like, well, hey, let's take a shot at this young kid and see how he does. So you really want to work your network of the people close to you. Or, you know, if you don't have that type of friends and family network, you know, there are the quote-unquote fools. I don't want to call him fools.

But the people are saying, you know what, I really like this young kid. He's got a lot of fire and energy and he's willing to learn. And for a lot of investors, that's all they need to know because if they think they've got an A person who refuses to fail, they'll invest in you all day. And once you do that first person right, and if they have a reputation, they tell their friends or you can say, hey, you know, after you've done great things for them, say, I've got this investor, he's adding more money. Now all of a sudden you're doing it. You have a resume. You can show deals that you've done. And now all of a sudden, you're just as good as the guy to have been in the business for 10 years.

it was 10 years plus. So that's the best way to do it if you're a younger person trying to try to break into business. Right. I mean, that was exactly how an older person did it. Myself, I'm speaking of. And you know that first investor, they definitely are looking at you more than they're looking at the deal. I mean, they're not buying the deal. They're buying you. So it's very important the way that you mentioned to, you know, carry yourself appropriately. You know, you're playing a big game. You're talking about a lot of money. For some people, it could be their entire life savings or a significant portion of it. So definitely. Exactly.

Yeah. Richard, what does your typical day look like? I mean, this is full time for you. When does your day start and what happens in the middle and how does it end? Okay. Well, that's a good question. You know, it can vary depending on what we're doing that day if we sold a property and have money to go back and reinvest. But let me give you a typical day of where we've got cash to invest and we're going to the courthouse steps. So normally I am at my desk by about 7 a.m. I get, you know, all my emails out in about 30 minutes of pertinent things that were either sent to me late night or early in the morning that need to be addressed right then and there.

And then normally around 7.30 a.m., I start looking for property that's going for sale at the quote house steps. So I start analyzing certain deals that are going to be going. I start finding out the value. And if it's a deal that has enough equity into it, I'll start compiling a list of properties that I like. And so by about 8, 830, you know, I'll have a list of, you know, 5, 6, 7 properties.

Some days it's 15, some days it's due depending on the day and how many deals are out there. Sometimes there's zero. And by 830, I'll have a list of properties that I like. I've got a whole team set up with my company where I have drivers that go out and then drive the properties in the morning. They get me all the details on the condition of the property, how much fixed up needs to be. Is it vacant? Does it have tenants?

Is it a former owner? And they send me back all that information. If that type of stuff comes back where it works with the equity spread, you know, then I'll go and I'll be checking title with our title company to make sure title's clear. And then I'll really, so that the properties that get skimmed down that still have a good room for us and the returns that we want, I'll really skim those down and really get into detailed comps to make sure I'm getting an exact price. But I think I can sell that with all the costs that I'm going to have. And I've got a partner down on the courthouse debts with all of our cash, and I give him a max bid, and he's down there bidding with all the other investors to take down a property. So that normally goes for me from about 7.30 until about 1130 or at noon. And then the second half of my day, you know, I eat lunch and while I'm eating lunch,

I try and get, you know, done a lot of administrative work. I'm responding to my accountant and legal team on properties that we have going on. I'm working the books. We're cutting checks. We're paying our vendors. And then about, you know, 132 o'clock, I'm looking at Oreo deals, short seal deals that are sent to me by some of our bird dogs out there. have connections with other agents. I'm looking at those, finding values, we're making offers on those. And then, you know, from about during that time as well,

I'm also the properties that we take over when they're vacant or we do a cash for keys. I'm driving those. If one of my team members can't make out, we're taking a look inside, in person, and getting the exact fixed up value. And then we're setting, you know, times around 4 or 5 p.m. We're reaching out to our contractors to go and take a look at these properties

that we're going to be fixing up to flip or hold. And then coordinating the fix-up of that. And then, you know, in the evening, you know, five o'clock on, I speak with my realtors about listings, prices, you know, properties that we're about to list, what price we're going to list them at, our strategy. And then they bring to me all the offers either that day or throughout the week on a particular property.

And we're, you know, signing counteroffers and, and, and, you know, open enough escrows with them to be opened in the morning. And, you know, basically that's it in a nutshell. And then obviously in between we're managing escrows, you know, on certain issues we're putting out fires when things come up. So that's kind of a general idea of the day. And, you know, we're pressed for time, but you get it done. When you got great deals, you know, you want to get it all done,

and it's fun doing it throughout the day. Yeah, sounds like a very full day. It is one, definitely. Yeah, I was like, is he going to end anytime soon? That's a lot that you're doing. Feel free to cut me off and say we've had enough, you know. No, it's perfect. I mean, I asked that question because I wanted to know the answer,

and if there's a lot to know, then there's a lot to know. So thanks for sharing that part of your day. How is your approach to investing changed since you got started? That is a great question, and I think people, you know, definitely need to listen to this. aspect, but, you know, my approach has changed in the fact that I just know what I'm doing and I get better deals than I did three years ago, four years ago when I started. And it's really experienced.

I mean, so my approach has been, you know, I went from saying, hey, I want to do buying holds and become a huge apartment investor owner to go, and you know what? there's a ton of deals coming down the pipeline for me to flip and make quick money, and we're not going to bottom any time soon, at least here in my Southern California market. I feel like, you know, we're going to bounce along the bottom and keep going down for the next two, three, four years as we clear out this foreclosure inventory. So my strategy is changed to being like, hey, I want to be a flipper, and then when I start seeing the inventory dry up, then I'm going to buy and hold.

So really my strategy has changed as I've gotten more and more knowledge. Now, granted, I bought property to hold in 2008 and 2009, just as it was starting to go down. And there's still great deals that cash flow us great returns on our money that we're extremely happy with, and you can get better in the stock market. But those properties right now, if we tried to sell them, they'd be underwater. But the fact of the matter is we bought them on cash flow on a long-term basis. now with my experience, I know when to buy a deal where I'm going to have equity in it. And if it's slow enough, I'm like, no what, if the market goes down another 15, 20%,

this property is still in the black. So my strategy is changing that I just know a lot. But here's the thing is that even though I've got a property, too, that cash flow is fantastic, but it's, you know, it's slightly underwater. I would have never gotten into the industry if I hadn't done those deals. I wouldn't be where I'm at if I hadn't done those. So those deals were kind of like, all right, this is my first deal. It's your starting point.

And everything now from there on basically compares to your first deal. And you try and get better and better and you will. So even though my strategy's changed, I wouldn't change it for one second saying, man, I wish I'd use this money to do flips or bought certain different asset classes as opposed to what I bought because you've got to get started. somewhere and and yes my strategy's changed but but if you don't start you're never going to have an idea of how to change your strategy without employing a strategy first and actually acting on it so i hope that answers your question a little yeah i mean absolutely i mean you and i were

discussing this almost a very thing last night at that the uh the USC networking event that you know personally we both got started about the same time we've moved along and grown it at different rates and at different speeds and we both had very unique experiences. And we were discussing how you're chugging along, chugging along and you're getting all this experience under your belt and you might not think you're making any progress or at least not the progress that you intended to make. And then all of a sudden, you know, we were discussing just how the last six months for myself and, you know, you kind of confirm this and put it in a way that I had never thought of it before. But just in the last six months, my cash flow has

jumped considerably and I was like it was so easy in this last six months like where was that in the beginning why wasn't that happening right when I got started when I thought that's exactly what I was pursuing and it sounds like you know it's what you're saying is just and I agree 100 percent by the way you just got to get started you know with you're never going to know it all you don't need to know it all to get started and there's a lesson within each transaction that you do that you'll probably never ever read in a book you'll never hear it at a seminar it's experience that you just don't get unless you're actually out on the court playing the game like you are. 100%. And, you know, you hit it right on the head because, you know, you've got to develop contact to find good deals.

You've got to have the right contractors. You've got to develop an investor network. And when you first start, you know, things are going to be choppy. But like you said, until you get on the court and do it and learn it and put your heart and soul into it, all of a sudden one day, you know, you've been doing it for three years. four years and all of a sudden everything clicks and you're like wow someone sends me a deal i know exactly what the value is i've got an investor who wants it i have the tool to close it and and we we take it down and it's a great deal and everyone's happy and you're like oh my gosh i can do this over and over and over

again and uh and i can do this for the rest of my life so you're 100% on it's really just getting on the court doing your first deal and then you have you have a place to start from and just go for it Right. You know, when you were describing how your strategy has changed or your approach to investing has changed, you'd mention something about the California market and how you see it, you know, bouncing along the bottom for the next two, three, maybe four or five years. And what are some of the ways that you stay up to date with the market? And, you know, how do you make your predictions? How do you come to your conclusions? How do you stay up to date with the market? You know what? A big tool that we use are the trustees' websites. And what they do are is there's actually a large trustees' website that they do a lot of the courthouse steps sales for the banks across the country.

And they measure the properties that have been given notice of default, notice to trustee sales, and those are the types of properties that I follow, or those are the statistics. And I think the biggest one tried to compile theirs and everything else. And I think they said, and this was a few months ago, so it couldn't have changed. But there were either in notice of defaults or notice of trustees sale properties, I think four million across the country. And if you read reports, you know, a year and a half ago, they sold a million foreclosures from the banks. and this year I think they're on pay to sell $800,000.

And you're going, there's $4 million in the pipeline, and they're only getting rid of $800,000 to a million properties a year. We've got a long time to get through this stuff. And then what I also use is they use foreclosure radar. You can look and see what properties are supposed to go to sale that day and you see how many properties postponed by a month because someone filed for bankruptcy or because they're negotiating a short sale or a loan modification.

And so if you just look at your target area, and let's say it's mine where it's Southern California, you'll see, you know, 400 properties in your target area that are supposed to go to sale that day or that month and maybe only 30 or 40 of them or actually sell that month. And you go, man, there's really an extend and pretend being put on by the banks because if they were to release all that inventory now, real estate would just crash. they'd lose more money, the United States would be hampered. So they're really controlling the inventory that comes out. And when you see those numbers of how many people are in default,

based on how many we're actually clearing through the inventory, it's going to be a slow and painful process, and it's not going away anytime soon. So you really got to look at the supply and demand to see where real estate's going here. You know, this is one of the reasons I love talking to you, and I love talking to actual real estate investors. I mean, you can tell right away inside of a conversation who's doing it and who's pretending.

What are some of the – how much have you invested in your real estate investing education first? Do you continue to invest in your education and in what ways? So I actually ended up joining on to a real estate investing course back in 2000. in 2008. And it was basically a real estate school out in Arizona that hired actual real estate investors like myself, and they taught different courses, wholesaling, fix and flipping, buy and hold, multifamily units, seller finance notes. And I actually spent, I went, hey, I went to college and got a business degree and

and focus in entrepreneurship, but I want real estate. I need a crash course. I need intimate knowledge on how to do this stuff and what better than to go to actual investors who are teaching it. So I ended up spending $20,000, and it was actually an incentive where you could split it with a partner and do $10,000 and $10,000 between the two of you. And I went out to Arizona, you know, once every two months and took a week. I would just leave work and took a week long, would spend a week out there

and learning as much as I could from these courses. So that gave me a great base, and it was probably one of the best investments I could have made for myself because even though I went to business school, it doesn't teach you details of the real estate market, when you get these experts doing it telling you the exact details of how to do things. So that was step one. And then once you get the confidence through those type of courses,

I then started finding a great accountant, finding a great lawyer, and great accountants are going to teach you how to structure your business and do the taxes. And my lawyer has just been fabulous in terms of teaching me how to protect myself. You know, we can get an eviction done now in two months, which in California is really tough to do, but we're so on point. And then, you know, I acquire, you know, I subscribe to periodicals at a real estate base. I, you know, I'm a part of the apartment owners association in Southern California. I listen to Bruce Norris, who is an incredible resource at the Norris Group,

who does all sorts of fix and flips in the valley, and he goes and lobbies to Washington, D.C. on how they should help investors. I subscribe to Forecaster Newsletters. So those always keep me up to date. I'm constantly getting emails from the Association of Realtors to give me updates on what's going on in my market nationally. And then lastly, you know, I went out and found mentors. You know, I found a mentor at a USC football game.

We were watching the game and he was sitting next to me in the seat. And he happened to be a trustee on the board of USC and he was in commercial real estate. And I said, you know, I'd love to follow up with you. And he gave me his card. And I called him and he helped me with my business plans. He goes, here's what investors want to see. Here's how I do it when I'm raising my money for my big commercial deal. And, you know, those people, you know,

They're not big and scary because people want to talk to them all the time and they give out their business cards and maybe one in ten people will call them and one will actually follow up and write the business plan. And then, you know, one out of ten from there will actually take what he uses, fixes it, and then send it back to him for comments. I mean, there's not a lot of people who say what they're going to do and then actually, you know, do it. And that impressed him and he's been a mentor that's helped me a bunch and, you know, and helped educate me as well. So, I mean, you've got to spend money in periodicals in real estate education. You've got to spend money on the right people to do your accounting and legal, and you've got to find mentors and then just stay up with the market. And you actually stay educated by constantly doing deals

because you're actually going what the market's doing as well. So that's the best advice I can give in terms of education and how I kind of went about doing. And, you know, with regard to a mentor, because that's a question that I get frequently. It's actually a question I have a little bit late. for you, but let's talk about it now since you just brought it up. I mean, that's exactly how it happens, isn't it?

I mean, you just, by being out there in the conversation, being out there in a community, I mean, you were at a USC football game and happened to sit next to a guy, and because you raised that, raised the conversation, he gave you his contact information, and you actually used his contact information, and it's been an invaluable resource for you. That's 100% true. It's really following up. You'll be surprised there are not a lot of people in this world who follow up and say what they're going to do and then actually do it. And you'll be surprised if you do that and do it to someone who's been successful,

they're someone who's kept their word. There's someone who follows up and does things when you do that and they find a like-minded person like themselves. They'll be happy to help you. And I'm sure for most of them you're going to get a lot out in terms of information and pushing your business forward. Right, right. So, Richard, what is something you now know that you wish you would have known when you first got started, that you wish someone would have told you? Something that, man, you know what?

I wish I had just started earlier. And let me kind of circle around on how I wish I would have known what I could have known earlier. And basically when I bought our first buy-and-hold property in 2008, it was a triplex. And at the time, you know, I wanted more units, but it was such a distressed time in real estate and there were no loans. You can actually buy single-family residences for, you know, 80% of the cost of what we bought this triplex. Now, even though we got better cash flow, these single families were selling at a fire sale. And I could have used money and taken down three or four single families where they would have cash flowed me a little bit less, but the market bounced back up because it was an overcorrection. And I could have sold each of the properties for like $100, $150,000 profit.

And so really to circle around is going, I wish I had started early. I wish I had been in the business for three or four years prior to that because I would have known to, know what, let's not buy this triplex. Let's buy these four single-family homes because I've never seen prices this low. We're not going to get as good a cash flow, but there's no way single-family homes in this area are going to stay that low. It's an over-correction. And so basically to circle around, as I keep saying, is I wish I just had known the market better earlier, and I would have made the right move and made a little bit more profits. than what we did now, but then it kind of goes back to what I said earlier. I hadn't had a starting point.

I didn't know the market. And really, it's the experience of getting started doing a deal. And, you know, like I said, so really what it is, what I didn't know, I wish I just had more and more experience so that I knew what were the great deals earlier. So it's really market experience. Right. Yeah. You know, the same thing.

I wish I wouldn't have tiptoed around it for so long. I wish I would have just taken bolder action right in the beginning. I mean, if you come to recognize that whatever was stopping you before, like wasn't really there, like it didn't really exist? Yeah, it didn't exist. And then when you get that experience, like, wow, now I know what I didn't know, and then it opens up a whole new area of your business that you didn't know you could actually do, and it really helps out.

Right. Okay, cool. Richard, this has been an awesome interview. And you know what? I sent out a survey to all of the listeners. And I know they're getting a ton from this conversation. But they'd sent me in some of their most burning real estate investing questions. And I pulled out some of these.

And I wanted to know if you could help me answer them. Would that be okay? You got enough time? Yeah, that's great for sure. I'm sorry. I've got to interrupt this interview as it goes on and on. and, you know, Richard just shares so much invaluable insight that I don't want you to miss any of it. So I'm breaking this interview up into two episodes to give you a chance to digest all of the great nuggets Richard shared with you today.

No worries, though. I'll post the second half of the interview in the next few days where Richard answers your most burning questions. And I think you'll be shocked by what he has to say. That's it for today. And until next time, as a very wise person once said, good habits formed at youth make all the difference. But it's never too late to be who you might have. been. To your success, I'm Matt Terrio, living the dream. Thank you for spending this time with Matt Terrio and the epic real estate investing podcast.

When you have a moment, stop by iTunes to leave your comments and let us know what you think of the show. And if you haven't done so already, get started investing today by visiting free real estate investing course.com to access Matt's free course, how to do deals, no money required. Until next time. To your success. To your success. This podcast is a part of the C-suite Radio Network.

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