Epic Real Estate Investing - EPREI 023 : Real Estate Investing with Fix and Flipper Steve Kissane

Episode Date: January 8, 2012

On this episode, Matt continues his series of "real" real estate investors succeeding in today's market and interviews long-time friend and 20+ year veteran of real estate investing, Steve Kissane. Learn more about your ad choices. Visit megaphone.fm/adchoices

Epic Real Estate Investing Podcast, episode 23. Without further delay. Your guru. Sorry. Your guide to a better life through real estate investing. Matt Terrio. Hello and greetings from the Epic Real Estate Investing podcast. Happy New Year from the podcast that's going to show you how to build wealth through creative real estate investing.

So you will 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. My name is Matt Terrio, author, full-time real estate investor, and family man. If this is your first time listening to this show, you're going to want to do two things. First of all, welcome. Glad that you're here. But you're going to want to go back and listen to episode one for the ground rules of the show. And two, I want you to download the free real estate investing course, how to do deals,

no money required. And 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. And that's yours for free at free real estate investing course.com. Okay, so before we get into today's episode, I've got a few announcements. First, I want to say thank you to Joe and Alex over at the Real Estate Investing Mastery podcast for having me on this week as their guest. And if you haven't subscribed to their podcast, I highly recommend it.

They've got a great show. They're great guys. They've got a wealth of information. and they're very successful real estate investors. So go check them out over at Real Estate Investing Mastery podcast. And second, I want to say thanks to all of you that have recently left reviews on this podcast. I mean, thanks to 212 and Boo Bias. That's how he spelled it.

There was a bunch of S's at the end. Big Ad. And Joe McCall, thank you for your reviews in iTunes. Those reviews, they really help with the rankings. So if you like what you hear on this show, feel free to log into iTunes. search Epic Real Estate Investing and let me know what you think. Okay? Much appreciated on that.

Third, I know many of you have been waiting. I've been getting a lot of emails and inquiries as to when the Epic Pro Academy is going to launch. So I've got good news for you. January 12th. January 12th is the day. And in the meantime, I've posted a few new videos on the homepage of Epic Pro Academy. That'll probably be of interest to you. The first one, the only realistic road to financial financial.

freedom that no one is telling you about. That video is up. The second video, you can steal one of my top three methods for finding motivated sellers. I walk you through that step by step on how to do that. And as soon as I'm done recording this podcast, I'm going to go work on a third video for you. How to eliminate the risk from your real estate investing. I mean, imagine that. How much investing would you do if there was no risk? I'm going to show you on that video exactly how I go into each deal with absolute certainty and no fear. I know I'm going to win every single time and I'm going to show you how you can do the same thing also. Okay. Now, I won't be leaving those videos up forever. So be sure to go check them out and you can view them at Epicproacademy.com. Okay, so we're going

to start off the new year, resuming our series of interviewing real real estate investors doing real estate in today's market. But what makes this series so special to me and, and, and What I believe makes it unique from other interview type formats is the people have chosen for this series, they've got nothing to sell. They have nothing to promote. And they're not speakers. They're not teachers. They're not gurus. And you'll probably notice that many of them aren't really the most polished speakers either.

I mean, they just don't teach. They don't publicly speak. All they do is real estate. And to maintain integrity with this show's theme, I want you to hear how it really is out there. I want you to get an unfiltered sense of what's really going on. and what it takes to be successful in this business. I want you to know how this business really works. I mean, it's a shame that you're probably only going to get real answers from real estate investors.

Real estate investors with no hidden agendas. I mean, it's so often that people get their real estate investing education and their information from people that used to do real estate or they do a little real estate here and there, but selling their real estate information is now their primary business. and there are so many that do that because they've found it's much easier to sell the information on how to do real estate than it is to actually do the real estate itself. And I'll never lie to you about this. I'll never lie to you about that real estate, it's hard work.

It can be stressful. It can be frustrating. And oftentimes it can keep you up at night. It keeps me up at night. And it's going to take probably more work and more money than you're going to be comfortable with investing. But at the same time, if you stick to it. if you stay committed and you maintain some flexibility.

And what I mean by that is not everything happens how it's supposed to. In fact, frequently, stuff can come right out of left field and smack you right upside the head, doling out painful lesson after painful lesson. I mean, just hard blows of reality. And that's what I mean by recommending that you stay flexible. And then just keep your eye on the prize. Okay, keep your eye on the prize because it does get easier as you go. And the rewards at the end are like nothing else that today can really.

provide. I mean, giant chunks of cash and steady streams of cash flow make life a much better existence. And that's why I do what I do. That's why I love real estate. I mean, the pleasures and the rewards of successful real estate investing far outweigh the pains and the lessons. But just know that there's going to be some pain. There's going to be some lessons. You're never going to escape that. If you happen to escape that, I mean, you're probably just not investing in real estate. And if you keep your investing in this perspective, at least this is my perspective. This is how I view it. I'm either making money or I'm learning. I'm either making money or I'm learning. Now, some of those learning experiences, they're much more expensive than others, but look at those painful experiences

in that way. It's just education. I mean, and why would you ever do what so many people do, and I've never understood this? Why would you pay so much for your education through those experiences and then quit? I never understood that. I mean, would a doctor, after investing hundreds of thousands of dollars in their education, investing countless hours of blood, sweat, and tears, and practicing their performance and perfecting their technique, would they just quit after their first malpractice lawsuit, citing that the medical industry, it doesn't work. It's too risky. It doesn't work in my market. I'm just going to go find something else to do. Would you ever hear that? No, of course not. You would not. That doctor would simply take note of what got him or her into that

malpractice predicament, and they did just be sure not to make the same. mistake again. They wouldn't make the same mistake twice. And then they'd keep going. Look at your investing. Look at your real estate investing lessons in the exact same way. And just keep going. It's worth it in the end. And besides, I mean, what's the alternative? What else can you go do to experience all the different benefits real estate offers? I mean, you can create two types of income in real estate. You can create active income and you can create passive income. You get amazing tax breaks and shelters like nothing else out there offers. I mean, you can virtually eliminate your tax liability through real estate investing.

You can create equity. You can benefit from appreciation. And you can control and manipulate the power of leverage inside of real estate. Like, no other investment can provide. So stick it out. Don't quit with the first or second hiccup, okay? Got it? Don't quit after your first or second lesson. I mean, you likely paid good money for those lessons. Now you know and your future is brighter because you now know. All right. So today on the phone, I've got a really good friend of mine, and we actually met during a real estate transaction. In fact, it was my very first real estate transaction, my first experience as a real estate investor. And although he and his buddy, his partner, they did most of the work. I did find the deal, and I was able to execute the exit strategy for them so that we all

got paid. So I do consider this my first deal, and that's how I met today's guest. He's an accomplished fix and flipper, yet also understands the power and importance of buying and holding. He understands the power of cash flow. He's got nothing to sell, nothing to promote. He's just a regular, old, full-time real estate investor with over 20 years of experience, and he's doing me a favor by coming on the show today to share his knowledge and experience with you. So on the phone, I have my good friend and business associate, Mr. Steve Kassain. Steve, welcome to the epic real estate investing podcast. Thanks, beyond. Good, glad you're here. So just before we get into some of these questions, and how did you get started investing in real estate?

And what was the initial attraction? I got started investing in real estate. It's gone 1990. And the initial, basically I purchased a home, fixed it up, lived in it for about six months, and then I saw the market was starting to turn, so I actually ended up reselling it pretty quickly. I got out before the market started turning at that point in time. And then at that point in time, I was looking at where to put my money, and I ended up starting to invest, not in California at that time, but down in Texas.

And so I basically just, you know, real estate was something I've always been interested in. And at that point in time, like I said, the returns, you know, made some good money on my initial purchase. And at that point in time, you know, went down in Texas, started buying, you know, small duplexes and fourplexes type of things from the, RTC and things, and then just kept going from there. What's your primary acquisition strategy, or where do you find most of your deals? Today I'm doing mostly, basically doing single families and duplex, duplexes. And mostly in the lower end market, you know, I'm looking at a resale, you know, on a resale side of it, I'm looking, you know, between $300,000 and $300,000.

I'm trying not to guide right now in today's market. I'm, you know, when I, my resale number is keeping it under $300,000. I'm purchasing things, you know, in the $100 to $250,000 mark. Got it. And mainly, like I said, in the entry-level market, because I feel right now that's the safest and the best market. You know, the entry-level got hit really hard from the subprimes, and they got hit hard and quick. So, you know, when you're looking at the lower-end market, they got hit hard, and like I said, hard and quick versus some of the other markets.

You know, you look at the $5,000, $700,000 markets. I mean, there's still a lot of, I mean, there's still a lot of foreclosures filtering through all the markets, but I see more downside in the higher-end market than I do in the lower end. So I'm focusing on purchasing single families and duplexes and fixing them up and reselling them. Got it. So you're doing more of a fix-and-flip. is your main strategy right now? Right now I'm doing fix and flip.

It's starting to look at, you know, buy and hold this year. But so far in 2011 was doing mainly fix and flip, and now is starting to continue with the fix and flip and also starting to look at some buying holds going forward because I think we're close to bottom. Right, right, yeah, that seems to be the consensus right now. So for your fix and full, Where are you finding your deals to fix and flip?

Majority of the fix and flips in this year were going through buying REOs. You know, buying REOs, I think that is the majority of where our deals come from. We haven't been going down to the courthouse. We stopped going to the courthouse after everything going on with the MERS started happening. And, you know, all of a sudden you were purchasing properties. And next thing you know, you were being sued for different things along with the banks. everyone else you were one of the many people on that list so basically uh over the last 18 months we pretty much were focusing on the majority of our deals have been coming you know through r ails

um you know working with uh with uh brokers who are dealing with alleles and trying to get you know get the deals through them and so far it's you know it's it's very good as you know it's very competitive i mean there's a lot of people out there doing that same thing but you know if you can build a relationship and you get a foot in the door you know you that's uh we We find that, you know, we find good deals there, and then we found enough fun to keep us busy. Right, right. For those that might not know, can you explain to the audience what MERS is? Yeah, MERS was the, I forget the exact initials.

It's like the mortgage, something. It was basically with the servicing company. It was the servicing, although it was somebody who basically started servicing all the mortgages for the different banks. You know, so it was all of countrywide or Bank of America or Wells. Fargo, you know, had a loan that, um, back in 2004, 2005, they were transferring over MERS. And MERS was basically handling everything with that, with that mortgage. They were handling the payments, handling, you know, processing the payments, processing any, you know, transfer, you know, if that note got sold, as many of those, many of those mortgages

and the mortgage-backed securities, you know, they were packaged and they were resold. And MERS was, was tracking all of that for, for the banks. and everybody. And so they were handling all that. And then, you know, obviously when the market collapsed, and a lot of those loans went bad, and they may have been part of a mortgage-backed security, it was kind of like it was hard to determine, you know,

which mortgage went bad, what's the effect on that bond or, you know, on that security where the mortgages were securitized. And anyways, the bottom line, there was a lot of gray areas that people weren't sure if everything was followed as far as transferring, you know, that individual mortgage from the bank to the, to MERS, and then eventually it was being foreclosed on it, you know, was everything processed correctly? And it was hard to track all that. And so, therefore, that whole issue came up about 18, 18 months two years ago where people were saying, well, I was incorrectly foreclosed on. And all of a sudden, now, you know, if you're buying a property

down at the courthouse, you were buying it. You're basically buying that note, and then you had to go and evict that the homeowner, and that's where attorneys are starting getting involved and saying, well, we're suing, you know, whoever bought the note, we're suing whoever, you know, the bank and everyone else involved. And next you know, you see 10 parties, you know, on the lawsuit, and they were tying up property. You know, so all of a sudden you couldn't go and start doing work on that house. You had to deal with them, deal with the lawsuit first.

We started, we basically at that point in time, we started staying away. And since then we, you know, we found enough deals in the REOs that we haven't gone back at this time. Got it, got it. You said you had developed the, you developed relationships with brokers that have those REO relationships. Have you been proactive about developing those relationships? How do you go about meeting those types of brokers? Yeah, basically meet them through, through our dealings, basically. a lot of them, you know, some of them I've been working with for, you know, before the,

before this whole downturn, because I've been dealing in Los Angeles market now for the last 10 years. So some of them, you know, had a relationship before and then so we continued that. But even right now, you know, we'll talk, you know, we see a, you know, we see somebody who's doing a lot of, whose name, you know, whose name pops up on a lot of listings. Yeah, we'll try to, you know, make an introduction and, you know, give them a call, try to, you know, we'll make an offer. And then, you know, if we make an offer, obviously, you know, just like everyone else, a lot of times it doesn't go through because they've got, you know, 30 other offers.

But we'll try to get our foot in the door and try to, you know, get the know, you know, give them a call, try to work with them and build a relationship that way, you know, and take them to lunch. Right. Just good old-fashioned schmoozing. Yeah. Yeah, it's kind of like you can't, you know, it's, you can't, you know, you know, you can't sit down and say, hey, I do a lot of investments and, you know, pick me, you know,

kind of thing. It's like, you know, usually you end up get rejected a couple of times, but you start talking to that person. And actually, you know, you slowly get that get them to know that, okay, yeah, making offers. And then if they have deals, you know, something, they know that you're going to come through.

And the main thing is once you do, start working with them and, you know, you have to give them an answer quickly, and then once you do say you're going to do it, you have to follow through. Otherwise, you know, you can easily, you know, they have to know that they can rely on you. You know, if you're going to, you say, yeah, I'll buy that price, and I'll close on in 10 or 15 days than have to perform.

Got it. So, let's see. What is your typical day looking like right now? I mean, I know you're a full-time real estate investor. You're doing fixing flips, and you're starting to look at, you know, buying holds for this year, and I want to ask you about that in a second. But what does your typical day look like? Typical days in the mornings, you know, we're up looking at, looking at, you know, we do,

We look at all the new listings. You know, so in the first part of the day, we're looking at, you know, we're all looking at the MLS. We have somebody who's looking at the MLS hog and seeing any new listings and things, and we all following up on that. And then, you know, any deals that we get, you know, we're talking to those brokers, not every day, but obviously if we get a call. But then in the mornings after that about 10 o'clock, though, then we're downtown looking at either, hey, looking at potential deals or, you know, looking at different projects that we have going on, a lot on that. And then back in the office, usually by around 2 o'clock in the afternoon, looking, and then again, we try to spend the majority of our day looking for new deals.

So that's the hardest thing to do right now is to find the deals to keep you going. I mean, once we get the deal, and once we get a deal and we got it wrapped up, then, you know, we've got the crews out there and they can, you know, we can come up the plan, what we're going to do as far as rehab and everything, and once that's going, then, you know, it's easier to monitor that. But the majority of our time right now in this market, because it's pretty tough to find deals, is looking for deals. So, you know, we're doing, again, we work, we do the, you know,

we're looking for the aureoles, but we're also, you know, we do deal directly with a couple, with, we have a couple programs, so we do mailers. So we do do mailers out to people. We get a couple deals out of that, but it's not like it used to be. get a lot of times when you do get a response and you're talking to somebody who wants to sell. They're usually underwater and we tend not to want to deal with going to the whole short sale cycle and things like that. So we tend to not to follow up on those.

So we do do mailers because we have found some good, you know, it's paid for itself because we have got a couple deals that way last year. Got it. So tell me about your mailers. Is this a service that you use or do you do a – A handwritten letter? Is it a typed letter? Do you do it yourself? It's a type letter.

We have a number of standard letters that we have on the system. And I know we've gone through a service. We're not sending hundreds of thousands all the time. But, you know, we're sending a few hundred every month. And it's a, you know, we get different reports from the title on who to send it to. And, you know, we search certain criteria that we like. and, you know, that we get a good response from. And then we just have a few letters here,

specifically, depending on what we're mailing on, we have the letters here, and we, you know, we do that in-house right now. We have looked at possibly having, you know, there's some cheap services out there right now that you can do, you know, to have a lot of that done. We are looking at that, but we haven't actually pulled the trigger on that. Got it, got it.

So when you send out your mailers in the phone starts to ring, Do you have that go to a voice answering service, or do you answer those phone calls live? No, we have an answering service for that. You do? And then you just collect those numbers, and then you return the phone calls later on. Correct, yeah, because we want someone to answer the phone all the time. And we'll find out, you know, if you don't have someone actually answering the phone, that just most of the time that person's going to hang up.

So we don't, you know, so it's worth it to have an answering service, pick those up, get the information that, you know, they have a dialogue that they follow. and certain questions and we follow up with them. Oh, good. So you have a live person, a live answering service? Yes. That's cool. Very cool.

I think that's a good approach. What are some of your... Go ahead. No, it's because, yeah, we used to, you know, prior to that, we would, if you didn't have a live answering service and you had them call in the office and someone was in there, we typically, you know, you can come back to the office, you'd see, okay, you can look to see how many calls you got

and see all these hangups, and I'm like, okay, they're not 800 numbers. So their local numbers, people call and hang up. So chances are it's a little letter. And sometimes you only get that one shot to really get them. So it's worth it to have somebody a live person answering the phone. Exactly. Exactly.

I totally agree. I mean, if you don't get that person when they're calling on their time, you know, it's hard to get them back in the mood and the mindset to get them to discuss their situation. Correct. Yeah. Yep. Awesome.

So how is your, right now you're investing mostly in California, right? Yeah, we do have property out of state, but we're not, not active, we're just investing right now 100% in California. Got it. Okay, so with the system that you kind of explained to me with your marketing and what your typical day looks like, how many fix and flips are you doing right now a year? We did 16 last year. 16, that's good. And you are holding, you are holding property right now. You do have some buy and holds.

Can you tell me a little bit about those? Yeah, now have a number of rentals. Some of them, more recent purchases, some of them have had for a long time. But yeah, have a number of duplexes that we have right now and have some large, one or two larger buildings, 16 units, 12 units. We have started looking at those, you know, the smaller apartment buildings. Like I say smaller, I mean, you know, under 20 units. So there are some good deals out there right now on those, especially in the C-type areas,

which is kind of downtown South Central area. The big investors haven't really gotten in there, those types of units. So we do see some out. We do follow those, and everyone's, if we do see a good deal there, we will do something on those. But the majority, we're focusing when we look at fixing flips, just that when buying holds, we're looking at, you know, starting to do more buying holds this year. We're looking at the small, you know, when I say small, you know, we're looking at actually four plexes and under. We've received good opportunity there.

Got it. So with those fourplexes and those duplexes as you look, starting to look for your buy and holds, is there a certain, how do you select those? First, how do you select the area? And as far as when you find in your right area, the property that you actually choose, that you're going to make an offer and that you want to buy and hold, how do you analyze that? And what's kind of the deciding factor, whether this is thumbs up or thumbs down? Well, the first thing we look at is we look at gross rent multipliers, just our key thing in the beginning. We say, okay, you know, number one, is it rented or not? So that's the first question.

Because on all the ones that we buy, we want two things before we still, before we do anything. So we want cash flow and equity from day one. So we want to, we want to buy cash. We don't want something that's, okay, in five years from now, it'll start cash flowing it. We want, you know, we're looking at something that's going to cash flow, you know, right away. So if it's empty, we know in two months we're going to have that fixed up, rented, and we're going to be cash flow on that right away. The other thing we want to do is we want to buy equity, just like we do on the flips.

If we're buying a place for $100,000 and we're going to resell for $200,000, we're looking at that same thing on the buying holds because, you know, we want to buy a duplex or a fourplex that's, you know, undervalued. And once we do our repairs and get it rented, then, you know, we have built in equity. So two things we're looking for equity and cash flow from day one. And, you know, like just on the general, we look at, you know, the first thing we look at, you know, right away is we say, okay, we're looking, you know, we're doing a lot of stuff downtown. We're looking on the west side for buying all also because we do see that, you know, it could be on the west side long term. That's going to do really well.

But we'll, our minimum GRM, we're looking for something that's, you know, a GM of 7% or less. So we don't pay more than 7% for the grosser and a multiplier right now. That's what we're looking at. So if it's more than 7%, we typically won't look at it. Got it. So you'd said that you did mostly fix and flips in 2011. You did 16 of those, and you'd mentioned earlier that you think we're getting close to the bottom. What are you seeing in the market or what are you reading or what types of indicators are you looking at

that has you believing that we are close to the bottom? Well, I believe we're close to the bottom in the lower end for sure. you know, when I say, you know, and again, in those areas that, you know, with the resale value of under $300,000, I believe, you know, we're close to the bottom, but closer or near the bottom. Those areas got hit hard, and we're,

and just, we see, you know, when we do a flip, we know that there's a lot of, there's a lot of pent-up demand for those homes. If you price you're right, you're going to get a lot of offers right away. The only issue really, is it's hard for people to get loans, but the demand is there, but, you know, there's obstacles for those people to buy, but, you know, and those buyers under $300,000, purchasing a home

under $300,000, it's usually the, it's cheaper for them to buy that house and pay rent and pay the mortgage than is to rent that house. So the rent versus buy decision is favorable for doing those types of deals. But we don't see that on the other, you know, on the upper end, I say not the upper in, but the middle, you know, if you get the property, you know, between five million, middle for L.A. is, you know, $500 to a million, a million dollars. We don't see the same. We're not as positive in that area as we are in the lower end because the equation is a little different

than the factors, different factors affecting those houses. You know, the rent versus buy decision doesn't always make sense in that, you know, if you're buying a $700,000 home, your mortgage may not be cheaper than going to renting a house. of in, similar to that. And the other thing, there's a lot of unknown issues impacting those houses, you know, a lot of, there's a lot of negative things coming out of Washington that have a bigger impact on those types, on the $700,000 or $900,000 home, you know, whether they're going to, you know, if the mortgage interest deduction goes away, which we don't think it's going to go away,

but, you know, they've been talking now for over 12 months that, you know, they want to eliminate the mortgage interest deduction for a friend. when making over $250,000. Well, if that goes away, that's kind of a major impact on that $700,000, $800,000, $900,000 house because now all of a sudden, if you're making over $250,000 and you're not going to get the mortgage interest deduction,

it doesn't make a lot of sense to go buy that house right now. So we still see a lot of negative things coming out of, you know, out of Washington that's having a negative impact on those types of homes, but we don't see it. It has not having the same impact on the lower. or in homes because, again, whether you get the mortgage interest deduction or not for a $300,000 home, it's still cheaper for you to buy and pay the mortgage than to, even without the interest deduction.

And plus, you're making under $250,000, so it's not an issue. Again, so we see it being the other bottom. I mean, we still see the upbrand, just like we've seen in the last couple months, you know, there's been the price, the actual price in California has come down, but the majority of that is mainly due to the number of higher-end homes selling. And again, I think a lot of that results. So, therefore, the percentage of higher-end homes selling November was less than, say, in April, May, or June, and therefore we've seen the average price and the median price

in California coming down the last couple of months. But the majority of that is due to the fact that there's not enough. There's less up-rent home selling, and we think that's a lot of that due to, you know, negative things coming out of while. Washington and people sitting there saying, okay, you know, why I'm going to wait until everything kind of, until we figure everything out as far as, you know, like a mortgage, trust deduction, a lot of other things come out of Washington. People are on the sidelines until all that clears up. Got it. Very cool.

So I know you've been doing this for a long time, Steve. And you've been doing this since 1990, as you mentioned. How much do you think you've invested in your actual real estate investing education and do you continue to invest in your education? Yeah, no, I invest all the time. Unfortunately, I don't have a budget. Some people I know go into the year and they say, okay, I'm going to spend this much on my education. I don't do that exactly, but I do take courses all the time.

You know, if I see something good, I do it basically. It's more selective than, you know, saying, okay, I'm going to spend $2,000 or $3,000 this year. It's more selective. It's a good cost, and I think it makes sense and something that, you know, I want to know about, I'll go take that. You know, I subscribe to a couple of different newsletters to stay on top of, you know, on top of what's going on because as much as I try to stay on top of what's going on,

you can't stand on top of everything. So, you know, everyone is like, subscribe, you know, Bruce Norris, his letter is very good. I think he does a great job at really quantifying, you know, exactly what's going on. You know, not just saying, you know, what I think he actually gets in and quantifies it. with facts and shots and everything, and I think that's really helpful. And then just, you have really staying on, you know, yeah, but do take a cost probably every other month or so. End up taking at least a one-day, you know, one-day cost.

I've been involved with real estate clubs. So, you know, once a month, go to different meetings, once a twice a month, go to different meetings, talking to people at those clubs and what they're doing and also seeing the different speakers that they have come there to talk about. you know, different aspects of the market, what they're doing to, you know, yeah, things are changing so quickly that, you know, you know, three years ago, no one was doing REOs, now everyone's doing REOs and things. So, you know, REOs, you know, there's a lot of different ways to buy houses. And as the market, you know, as things change, other ways of buying houses will, you know, maybe start making sense in five to six months. So, you know, you want to, you want to be on top of what's going on. So, you know, you know, you want to be on top of what's going on. know, you know, want to make that switch, you know, want to start doing different things because, um,

O Rios are hot right now. I mean, they will be for a long time, given the number that are going to be coming on, but there's also going to be other areas where you, you know, you can, you can, you can find good deals out there that will start making them soon. Yeah, and I thought, to answer your question, I think it's, it's really important to, uh,

invest in, um, your education. And, uh, and we, yeah, I do that a lot. Mm-hmm. Speaking of education, what is something you now know that you wish you would have known when you got started? Creative financing. You know, there's a lot of ways to buy and hold property, a lot of ways to pay for, you know, if you can find a deal, there's no reason you can't get that deal done. And if, you know, whether you have the money or whether you need to bring somebody in on that deal and talk to somebody who, yeah, it's a lot of this thing, you know, you make money when you buy the property. You know, you all make money when you sell, you all make money.

You make money when you buy it. So if you can, if you're out there and whether you're a big-time investor or a small investor, you can find a good deal. And you have the knowledge to then go and either, you know, put the deal together yourself or at least to realize, hey, you know, what a half? I have a good deal, I have it locked up, but now I don't know what to do. If you have the contacts or, you know, you've got the education to then talk to somebody and say, here's what I've got. You can make that work. So I think, knowing about creative financing and knowing having a good network of people that you can turn to so that, you know, when you do all that work to find a good deal that you don't lose it.

So looking back in hindsight, yeah, just getting that. out there networking with people, having a good, a good core group of people that you can, you can work with, whether it's, you know, a lender, an investor you can turn into and say, hey, here's the deal. So really, excuse me, really getting out there, A, in networking and then creating a good, a good group of people that you can work with and talk to when you do find a deal. And just knowing more about the financing, because, you know, once you know about the financing and having different ways to finance and fund a deal.

It's one of the key things in this market. Once you find a deal, you can get somebody to fix it up. You can get someone to sell for you. But finding the deal and putting the deal together is key. So I think knowing all the different options that you have and getting educated in the mind is important. Got it. Do you have maybe a story about one of the more creative ways

that you've acquired a property? Yeah. Well, back in the early 2000, so it was a purchased a, I think that was a 16-year-in property. It was on the market. The guy actually ended up buying about three places from this one individual. Someone just had a lot of apartments, apartment buildings and different things. And he needed, he received grants in trouble and was trying to unload a number of them. And he had to sell them really quick.

So basically ended up getting, talking to a hard, again, it's kind of what I've described before. I had a good deal. You know, I knew I could make the deal work. Now it was just a matter of, you know, getting this guy the money that he needed to sell it because, you know, he needed cash. He couldn't just do it, you know, we couldn't do any kind of, he couldn't carry anything or do anything like that. So basically, um, ended up getting a hard money loan in first position. I got him to, we got him to take a second position and then I ended up going out and actually kind of getting a third, a silent third. And using that silent third to put up money, it was more like somebody I knew because, you know, and then buying that person, buying that second out right after we closed.

It was kind of, I'm trying to remember the exact reasons we had to do. It was kind of funky. But, you know, that was one way, yeah, we had to get a hard money loan up front. So we're paying 11% on the money. Paying off the second, we had to pay it off within four months because the seller had to have money within a certain time frame. So we were able to convince him to take that, you know, to do that second and that we'd get him paid off within four months,

and then we have to go out and get that money to pay him off. So that was one. It wasn't very, that's not super creative or anything. Right. I mean, just knowing what your options are, I guess, you know, that putting, pulling three different people or three different financing sources into a deal is, you know, a lot of people out there looking that they think they have to have the money to go out and invest. And, you know, and yeah, you do need the money into invest, but it doesn't always have to be your money. And there's multiple sources to get that from. And that's kind of what you did there. Yeah, and that was, yeah, it turned into being a no money down deal. People said, oh, you're crazy, you borrow money at 11%. I said, I'll borrow money at 20% if it's going to cash flow, you know. So, I mean, I literally. People saying, why, you're nuts paying 11%? Why?

It's a property I don't own today. In a month or not, I'm going to pay somebody 11%. They're going to be happy. I'm going to collect my rent, and I'm going to put money in my pocket every month. We're all going to be happy. So that's one thing, too, is, you know, not to get, you know, it doesn't matter what interest rate you're paying if you have to pay a high interest rate to get a good deal that's going to, you know, pay you at the end of every month.

It's worth it. Exactly. You know, I've got a half a dozen properties in Illinois, which I know I paid overmarket value for, but I was able to get in with seller financing and such a low money down, I'm getting 30% ROI. So as long as I'm cash flow and I'm getting 30% I mean, where else are you going to get that? And I've got a lot of people that kind of said the same thing to me. I was nuts to pay that much for those properties. And I was like, well, it's 30% return on my investment. And as long as it's cash flow and I'm making money, I mean, your investors, that's what you're supposed to do is put your money to work. and have it bring more back to you. Yeah, and it's paying you every month, so it's no big deal to hold that. So you can hold that for seven years. And seven years from now, you'll probably be sitting, you know, you have a lot of equity in those. Exactly, exactly. So let me ask you this, Steve, the last question, or actually second the last question.

If you lost everything today and you had to start from scratch, how would you restart? I would restart doing single family flips. I would go out there. I'd find a deal. and then once I found that deal I'd start talking at the same time at once I'd do two things

I would start talking to people you know to potential money people I'd say okay how many you know who are potential money people out there that I could go to and then I was right away

about looking for single family flips and go find a good deal and then once I found that deal and make sure I had a couple different sources where I could go and say here's a deal and here's how much we're looking at you know, you know, if you come in on this, you know, whatever,

whatever you can work out with that investor, but I would find an investor to then, you know, you know, give you the money to do it, where you're just going to pay them a flat percentage or bring a man on the deal. Either way, it's a win-win for you because, you give away part of the deal, you're still getting something versus nothing.

If you can pay them straight interest, that's great. So, yeah, that's what I would start doing first. And the reason why doing that is because you can make money quicker, you know, versus a buy-and-house. where you know you're not going to be able you know if you start to if you lost everything then you know your first thing you have to do is get you know you have to get liquid so doing a fix and flip is the fastest way to get liquid you know get money back in your pocket so to rebuild but you know that's what I would do I would I would start doing fix and

flips right away I lost everything awesome yeah that's uh you need the cash to create the cash flow and you know you got to flip properties to create that cash I agree yeah exactly I mean you know so I know you've done that you've done that you're You've done a ton of fix and flips and rehabs. And this was one of the burning questions that came in from one of my listeners. So I've been asking everyone that does fix and flips this one question. What are your three most important rehab tips you could share with someone just getting into fixing and flipping? Know the market.

When I say know the market, you need to know what you're going to sell that for. There's no way you can tell if it's a good deal on how you don't really know the market. pocket. It's be very current on what's selling and know your competition. What else is out there for sale? What can I realistically sell this for? Do your research when you buy it? You don't want to find out surprises like, you know, as you after you close on that deal. So when I think do your research, I mean, like, you know, find out there's any violations, find out there's any violations, find out of the city issues that you have to deal with. Because they can, you know, you can sit there and you think you're buying a great deal at $100,000.

And then you, you know, after you close, you didn't do your research and you find that you know has violations on it and you know has illegal you know a couple square feet of you know those you know anyways you don't want to find those out after the fact because that you probably if that's the case and you know chances are you may have just lost money on that deal so maybe you don't want to lose my end deal and it's okay you know if you don't make as much as you thought but do your homework up fine so do your research and always have have uh have multiple exit strategies you know uh markets change change, things happen, you know.

So, you know, right now in this kind of market, you know, on these six and flips, I know, okay, I can sell this property, but, you know, let's say, let's say Europe blows up tomorrow, which is something that can easily happen. Right. And next year, you know, yeah, you know, all the banks in the U.S. are losing billions of dollars again, and we're back to 2008, which is, you know, only three years ago. We're back to 2008 where you couldn't sell anything. You could have tons of buyers, but no one can get financing.

So it could happen. So you need to be able to need multiple extra strategies. So if you can't sell that property, you know, will it cash flow for you? Right. No, I agree with that. You should always have at least two because quite often that first one, your plan A doesn't work out. That happens all the time.

So you need the plan B. Yeah. I mean, there's a lot of people who aren't in this business anymore. after 2006 and 2007 and 2008. Right. Exactly. Those were the gamblers. Yeah.

Yeah. Definitely. Cool. So let's just end up. What's in your investing future right now, Steve, that you're really excited about? Well, for this year, we're looking at, like I said, doing, continue doing the fix and flips. But we're also, I'm excited to start really get into more of the buying holes also as a year, as a year progressive. Awesome. Awesome. So yeah, the cash flow is the focus. I know you've got a family, you've got a bunch of kids.

You made waffles for them this morning and, you know, cash flow makes all that happen. Because I keep those waffles flowing, man. Exactly. Right, right. Yeah. So, well, thanks, Steve. This has been awesome. You're a wealth of information. And, you know, we'd love to have you back if you'd be open to that. Yeah. Now, I'd be open to it. And thanks for the opportunity. I mean, just, you know, everyone, I think everyone realized that good real estate is, but it's, if you look, yeah, I mean, look at the last couple years, like, well, just last year, you know,

real estate, you know, stock market was flatter down, bonds are flat, you know, it's, you can't be real estate. And it's, and it's real. You can see it and hold it. So it's good. Exactly. That's, that's my favorite part of it, actually. Yeah, you know, you have something, so. Well, thanks for taking time ahead of your weekend, Steve, to join us.

and you have a good weekend and we'll talk soon. You too. Take care. Take care. Bye. So that's my buddy, Steve. And if you were listening, and if you've been listening to our last few interviews, all of our real real estate investors doing real estate in today's market, you're probably starting to notice something about this business that you'll rarely

find in a course, if you ever find it in a course, or you're not going to find it in a seminar. You're not going to find it in a weekend real estate investing boot camp either. And what I'm speaking of is the real currency of, this business is relationships. This is a people business. And it's those people and your relationships with those people that will cause your business to flourish. It'll cause your business to thrive. It'll cause your business to go on and on and on and around and around and around. It keeps it going. You see, every piece of real estate you buy or sell is going to be from another person.

There are no silver bullets. You've got to get out there and you've got to share yourself among other people, among other investors, among other real estate professionals, among real estate clubs, and among real estate networks. Your network is going to be the backbone of your business. And you develop that network with your people skills. In my opinion, it's the most powerful, most important skill that you can have as a real estate investor. It's your people skills. Because it doesn't matter how you find your deal. You're going to eventually have to talk to a person. And, you know, if you haven't read it, go out and get Dale Carnegie's book, How to Win Friends and Influence People.

I mean, your real estate investing business is going to benefit more from that book than any real estate investing book that I know of. And what I mean by that is, you can be an absolute beginner in this business. You can totally mess up transactions. You can mess up at every single corner. But if everyone you deal with knows you, likes you, and trusts you, you're always going to get the deal over the next guy. You're always going to have a hand up. You're always going to have someone to help you. You're always going to have someone that looks in your favor and gives you breaks and

gives you deals and gives you. It's just, if they know you like you and trust you, you're so far ahead, then any other skill can put you. In that book, How to Win Friends and Influence People is going to give you that skill. It's going to give you those people skills. I mean, do you remember what Steve said today when I asked him how he'd start over if he lost everything? I mean, yes, he said he'd start fixing and flipping properties to get liquid, right? He's got to create the cash, so you'd have to get liquid again. That's how he would do it. But how did he say he'd do it?

He said he'd go out and he'd start talking to people. That's what he said. He didn't say he'd launch a website. He didn't say he would send out direct mail. He didn't say go put up some more bandit signs. I mean, sure, all of those things work. They all have their place. They can complement your business in very powerful ways.

I use all of that stuff. But that's not how he said he'd, he'd start. He said he'd start by talking to people. And a lot of people, they don't really want to hear that. But with every single one of my interviews, that's been a very common denominator. And they've been on the show, they've got nothing to sell, nothing to promote. They really don't care if you believe them or not. What your opinion is of them, what's your belief about how they do their business, it's not going to affect their reality one way or the other. They're just sharing with you how it is. This is how we created our business. This is how we continue to build our business and this is what's working today.

And it's through people. Also, you'll notice that my recent guess, they've placed a big emphasis on finding deals. That's where most of their time is spent in finding deals. And you're probably starting to notice that they all look for the deal before they look for the money to the deal. I mean, that's a huge mistake by new investors. They try to find the money first. Don't do that. Find the deal and the money will find you. I mean, I spent an entire episode, or maybe I spent two episodes on this. And if you missed it, you're going to want to go back and check that out. I'm not sure which episode that was. I mean, we've only got 23 episodes, not that many. I just don't have iTunes up right now. But just know, find the deal first, and the money finds you.

And they've all said that. They have no idea what questions I'm going to ask them. And they have all answered in almost precisely the same way. Hopefully you're starting to notice that. Another common denominator amongst these interviews. They all continue to invest in their education. I mean, you have to in this business. The dynamics, they're always changing. The market's always changing. The strategy is always changing. The laws are changing. The policy is changing. I mean, does a doctor or lawyer stop with their education after college? No, it's ongoing. You've got to stay up to date. You never are going to know it all. Always be a student. I mean, even our guest today, Steve Kassain has been investing since 1990, and he still invests in his education.

Hopefully the patterns amongst these interviews are starting to appear for you. And take heed. I mean, this is how it's done in the real world. This is how it's being done today in today's market. Now, our next episode, I've got another really great interview lined up for you with a woman who's so successful with her fix and flips. I mean, she's caught the attention of national TV, and she actually ended up on Flip That House.

So that's next. You won't want to miss that episode. And to start the new year off right, go get your free real estate investing course, how to do deals, no money required. I mean, money, it certainly helps, but it's not required. And you can get that for free at free real estate investing course.com. And lastly, go check out the new videos that I posted for you at epicproacademy.com. January 12th is our launch date, but I put some videos up there right now just to hold you guys over. all right. I'm here for you. This show is for you and it's for your success. So let's make 2012 a successful year. Agreed? Awesome. So until next time, as a very wise person once said, a New Year's resolution backed by commitment is not just another resolution. It's reality waiting

to happen. So commit to your education, commit to your business and commit to this year being your best year ever. To your success, I'm Matt Terrio. Live in 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.

success. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.