Epic Real Estate Investing - EREI 067: Josh Justiniano is Having Beer with Matt

Episode Date: September 27, 2013

Matt launches his new series "Beer with Matt" where YOU the podcast listeners have the opportunity to visit the Epic Real Estate Investing studio and get your questions answered live on the air. You provide the questions and beer, Matt provides the answers... and drinks your beer. If you'd like to sit in and ask Matt some of your most burning real estate questions over a couple of cold ones, send an email to [e-mail] with "Beer with Matt" as the subject line. We'll do our very best to accommodate you. If you're not in the area and you'd still like to ask Matt a question, call into the Epic Real Estate Hotline at 1-888-891-7203 and he'll answer your question live on the air. Download Matt's free real estate investing course "How to Do Deals : No Money Required" at FreeRealEstateInvestingCourse.com If you've got the money, but don't have the time... Matt will do the cash flow investing for you at CashflowSavvy.com Learn more about your ad choices. Visit megaphone.fm/adchoices

Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. All right. Yeah, welcome. Hello, and welcome to another episode of Epic Real Estate Investing. If this is your first time listening to the show, welcome. Glad that you're here. And this is the place where I teach people how to invest in real estate. And I do that through this podcast, and I do it over at the Epic Pro Academy.

which you can find at Epicproacademy.com, or in some instances, when people realize how much work this is and how much time it takes, I actually do the investing for them, and I do that for them over at Cashflow savvy at Cashflow savvy.com. So today, I've got an exciting episode for you. It's the very, very first of its kind here on the Epic Real Estate Investing podcast. You see, I get a lot of requests for things like lunch and coffee and my favorite, beer and hot wings. and I accommodate as many of those requests that I can. And I got to thinking after I've had so many of these awesome conversations with listeners of this podcast, it's a shame that I haven't recorded them.

I think a lot of those meetings and times out with the people would have made four really awesome episodes for this show. So last month, I made an episode that from now on, if you want to take me out to eat or if you want to buy me drinks or whether that's beer or coffee, We're going to do it right here in the studio, meaning you got to come here. Okay, you bring the beer, and if you don't drink coffee, we'll do. But you bring the beer in hot wings, and you interview me, and you bring your list of questions. You ask me here live on the air, what you want to know, and I'm going to give you my straight and direct answers. No preparation. I have no idea what you're going to ask.

I'm going to be calling me specific episodes Beer with Matt. And today is our very first episode of the sort. And if it turns out horrible, hey. We'll just go ahead and we'll discontinue them. And if they turn out to be a success, we'll continue. And my first guest is here in the studio right now on the hot seat with his questions in hand. He even gave me a – oops, we just had a little text message. Let me turn the iPhone off.

Are you in the office tonight? Yeah, I'm in the office tonight. Okay. So he's got his questions ready to go and he's ready to fire away. So without further ado, I introduced to you Mr. Josh Justiniano. Correct. Did I say that right? Yes, you did.

Josh, welcome to the Epic Real Estate Investing Podcast. Thank you for having me over here. It's a wonderful office. Yeah, you know, I really enjoy a lot of the content that you put on there. It's very solid content, actionable. So, you know, first I'd like to say thank you. Oh, you bet. You bet. Let's go ahead and officially cheer so they know that we are having beer with Matt right now.

Very good. So, Josh, where are you from? I'm from 1,000 Oaks, California, so not too far from your studio over here. Okay, very good. And how long have you lived there? past 23 years okay so you're born and raised then yes yes I was you're 23 years old you told me that in advance yeah so you're a young guy that's good I wish I would have gotten involved in this with when I was your age what do you do during the day what are you doing for a living right now

I'm actually a paralegal out in Thousand Oaks I work full time so and then I go to the school I go to school in the night in the evening time so you know I've kind of brought my brother on to help me with a lot of the calls that that I'm generating and very good Yeah, so, but it's, it's definitely been, it's definitely been, I wouldn't say an emotional roller coaster, but it's definitely been a learning experience taking those calls. Well, hey, this actually can be a very emotional business. So no apologies for that, absolutely. So, you know, when you're not being a paralegal and you're not investing, what are you doing for fun? Hanging out at the beach, you know, having a beer.

Doing the California thing? Doing the California thing. Yeah, you got to love it. Very good. So what is it that, you know, at the age of 23? What motivates you? What gets you out of bed each morning? Well, you know, I guess just these past, I've been working at my job for a little over two years. And, you know, I just, I can't see myself, you know, living that life, that nine to five life day in and day out, you know, until I retire. So, you know, I guess I'm just looking for, and I'll be in. alternative vehicle to, you know, accelerate my ability to, you know, enjoy life pretty much. So, well, cool. So you're looking for something, something new, something different than what you're doing right now.

Exactly. Exactly. Perfect. So what is it about real estate? Well, you know, I guess it's just such a powerful vehicle to create wealth with. And, you know, there's so much opportunity and there's so many different niches that you can go into. So it's not just, you know, a black and white kind of, and I think a lot of creativity goes into real estate as well.

So that's another, that's another, you know, aspect of the business where, you know, it really gets me going is the creativity part of it as well. Okay. So, perfect. So, you know, you've got this view of real estate. Are there any, you know, personal examples in your life, any relationships that you have right now that have, I guess, been evidence for you that, you know, what you want out of this is possible?

Well, you for one. Okay. You know, and I've, you know, I have a mentor actually out in Los Angeles and, you know, he's built a nice lifestyle for himself and, you know, it just, it just seems viable if you put the work and the action into it and it's obviously it's going to take more than uh you know a couple years that the you know the gurus quote unquote say but um you know i think it's a really viable uh like i said a viable vehicle for uh you know for creating a lifestyle got it got it cool so you handed me a list of questions i did yes you're very prepared and very organized i love it uh the title is epic

beer time questions there we go i think i like epic beer time better than beer with Matt, so maybe I'll borrow that from you. But hey, I'm done asking the questions. This is your time. So fire away. Well, you know, I spent a lot of time on these questions because I really wanted to help generate some good content for you. And I think, you know, from a beginner standpoint, I think that a lot of these questions,

I think a lot of other people can relate to these as well. So, you know, this first question I have is, you know, it's a, a two-part question, and I feel like it's a gray area for, you know, many people in the industry, but, you know, is wholesaling always an ethical practice, you know, in certain instances where the property is decrepit and, you know, I can't sell via conventional means, you know, this may be necessary, but what about when the property's in good condition? And, you know, what sort of disclosures should you give the seller when, you know, when doing the strategy? Got it. So the, the, The first question is you're asking, is it always an ethical practice?

Yeah. Well, always is a big word. I guess if you do it ethically, it's always an ethical practice. Okay. I'm not really sure exactly where you're going with that, but to maintain your ethics and do honest and fair dealings with the people that you're doing, you know, I believe in being honest and transparent and letting people know what your motives are. And, you know, if there's anything that you know about a property or a specific situation that can affect the value of what you're wholesaling, I think there's a duty there to disclose. And, but there's also a presentation part of that. So if you have information about a situation or if you are intending to do something other than what the person is thinking that you're going to do, you know, there's a way to present that where you can be ethical and also.

So I guess preserve your integrity and your dignity at the same time and keep the deal together, so to speak. Right. Okay. Does that answer your question about the ethical part? Yeah. Is there something else that might have spawned off of that? Well, you know, basically what was happening is I'm getting a lot of leads, but the thing is, a lot of these leads are saying, okay, yeah, I'd be willing to sell at this price. When I know and understand that it's not, it's worth more than that. And the property's in good condition.

So, you know, where I'm coming from is, you know, should I explain to them, you know, listen, you could put this on the MLS with a realtor and sell it in this, you know, hot market in California right now for, you know, a lot more. So is that something that you should explain to somebody or is that? Okay, that's what you're saying.

Yeah. One thing you should, I don't believe in doing it. First of all, you're an investor. Okay? So it's your job to go and buy low, sell high, and create a win-win situation for everybody. Correct. You're not a, even though you can sometimes take this role,

you're not a counselor, you're not an advisor. If they called you and they want to sell the property to you, then I think you should accept that because that's what your job is. Okay. Okay. I wouldn't say, hey, why are you going to sell it to me such a discount? You could sell it over here. Like, you know, I don't think that's,

unethical by holding that back, you know, but they called you because they like something about your message, something about your advertising, something about your demeanor where they want to work with you. So I certainly wouldn't say, you know, in any business, it's, you know, if someone walks into Best Buy and, oh, dude, I wouldn't buy the radio here because it's much cheaper down the street at Walmart. You know what I mean? That makes sense. Like no one would do that. So this is your business. Okay. So look at it as your business and you want to retain. the customer. And with regard to your question of, you know, you know it's worth more, you know they could get more on the MLS or if they used a realtor, that can be a very powerful negotiating position up front.

Why haven't you called a realtor? Why have you considered putting this on the multiple listing service? Why have you and why aren't you? That can be a very positive or powerful question in drawing out a seller's motivation as to why they're selling. You're going to find out where their urgency is and what they're looking to avoid by not going that right. And if they do want to go to that route, it's better to find that out right now than it is later at the closing table. Okay. So as far from an ethics perspective? I think that clears up the question.

Okay. The cloudiness of that. Okay, cool. But on the other hand, on the other point of that question, you know, what sort of disclosures should you give the seller, you know, if you're intending on wholesaling the property? Got it. Perfect. So this is a question that frequently comes up because people don't understand how they can make an offer on a property if they don't intend to actually buy it themselves. Is that kind of where you're going? Yeah. Okay. So what I like to say is I'm an investor. I buy and sell properties all over the area, and specifically this area in your type of property. But I'm going to need to do a little due diligence to see if it actually will fit into my portfolio. I have very specific criteria. On the surface, your property looks like it's going to fit. But I'm not going to know for sure until I do my due diligence. but just in case it doesn't fit my portfolio, don't worry. I have a few other people that it absolutely will fit their portfolio. So even if I don't buy it, maybe one of my associates will.

I like that. Okay? Yeah. So if you put that up front, it kind of lays the groundwork that, you know, hey, I want to buy this. I have every intention of doing so. And if you can come up and you absolutely do, because if you come up with the right price and terms, then you would buy it, right? Yeah.

So you're going to go ahead and do your due diligence. and if it doesn't fit, if the property doesn't fit or the deals in terms don't fit, don't worry. I have someone else that will probably it will fit for. Okay. So, yeah, that answers my question very clearly. Thank you. Cool. So, you know, my next question was, you know, were you ever planning on getting into commercial real estate?

And, you know, if so, why or why not? Am I? Yeah. Personally, yeah. Okay. I could be. I'd never close off the possibility. And there's two types of commercial.

There is commercial residential and there is commercial commercial. Retail and industrial. Exactly. Right now, I'm not really looking for commercial. If for the right opportunity across my path where the city demographics and economics lend itself to lead me to believe that it would be a positive move, then I'd absolutely be open to it. But generally, right now, as right now, I would kind of say no.

Okay. Only because this country is not manufacturing as much as they used to. The way that people work in this country is very different. There's a lot of virtual working. There's a lot of people working from home and people outsourcing. And that type of commercial is the way America used to work, I don't know if that's ever going to come back or not. Right.

Okay. But there are other types of commercial. There's retail. Okay, so I'm definitely would be open to that. If you had good tenants in your property, like if you had a Starbucks or a Walmart or a Target in your property, that would be awesome. That's certainly something I would look for or look, I would consider.

Other things like hotels or recreation or anything like that. Absolutely. I think as the baby boomers age, things like recreation is going to be a growing business. Right. And growing industry. But that is kind of just outside. of my expertise. Okay.

So you kind of set it up front when I had asked you about real estate, that there's so many different ways and niches that you can make money in real estate. Right now, I'm focused in. I love my little single family houses, especially in the Midwest and the South, because I can pay all cash for these properties and get double-digit cash flow returns. That's beautiful. With no debt. That's good.

So I kind of get the best of both worlds. I like that. And, you know, now in the last six, seven months, I've picked up, I think. 80 units in multifamily. Wow. That's a lot. So I'm definitely looking at multifamily also, but residential. Right. Okay.

I just feel like the population is growing and growing and growing and they're all going to need someplace to live. So you're just keeping it laser focused right now is what you're basically saying, huh? Absolutely. Yeah. This is just my thing. It's what I know. It's what I do.

Not that anything else out there is wrong. This is just what I do when it's working for me. So I have no reason to venture out at this moment. And do you think that residential real estate and investing is like a required prerequisite into jumping into commercial or would you say somebody could just jump into it off off the bat? Is that something that? Oh yeah, absolutely. I don't think residential is a prerequisite. No? No, not at all. I think it could be a little easier. There's less moving parts, less variables involved. So I think it could be a little easier to get

started that way to get the basic structure. But if you got the right mentor, if you got the right education, if you got the right program, by no means do I think you have to start in residential. No. And have you changed your strategies to keep up, or to keep consistent deal flow in this current seller's market? Definitely. Definitely. Definitely.

For example, in, what year were you? 2013. In 2010, you know, I flipped probably 60 short sales here in Southern California. Wow. Okay. So I was, I was putting. an A to B transaction together where the bank was the A. I was the B, so I was buying. I'd get that under contract and I would negotiate that on my own behalf as the buyer. And then just when it looked

like I was about to get that short sale approved, I would start marking the property to my buyer's list. I'd find a buyer for that and I'd put a little cushion in there for me. And I would, you know, I'd make $5, $10, $15,000 every time I did that. So that was my strategy. I did a bunch of those in 2010, then the market started to shift a little bit. First thing that started to shift was the bank's guidelines. They started to put deed restrictions on the property. So I wasn't able to flip the property the same day or the next day. I had to wait 30 days, 60 days, 90 days, depending on the bank. So that was something that came in where I had to change my strategy. Additionally, there were more buyers, and you've probably heard of this, that Wall Street has

somewhat come into the real estate market and some specific markets. And they started paying a lot more. So our negotiations got tougher and tougher, and we weren't getting the big discount that we were. So my strategy in Southern California was no longer working, and that's when I started to look in other places. There's a great book called Who Moved My Cheese? Oh, yeah. Have you read the book? I've read it many, many years ago, yeah. Okay.

So my cheese was here in Southern California, and someone moved it. So I had to go find it somewhere else. And because I was just purchasing a property in a 14-unit building in Memphis, I noticed that there was an amazing opportunity down there with the price of the properties in comparison to what they would rent for. So like, wow, we could just pay cash for these. They'd give double-digit returns. And so that's where I kind of moved through the south and in the Midwest.

And that's where I've been operating since. And, you know, more specifically, how are you handling the inflow of competition into the current market and separating yourself from other investors or buyers from a seller's perspective? from a seller's perspective. Got it. Okay. As far as competition, I have a very unique, I think, view on competition. I'm not concerned about it at all.

I think there are more deals than there are investors. And if you, you know, if you go to a seminar or if you go to a RIA meeting, you think there's tons and tons of investors out there that are competing for the deals, right? They're in your market. It's saturated. They all want the same thing. and what I've found is very few of them actually execute on what they talk about. Very few of those are investors.

And I know this from my own experience, but I also know this from my coaching, my clients, my students, is when I give them an assignment to go to a RIA meeting and maybe at this point they've closed a dealer to at this point and they've gone to the RIA meetings to go and start networking and meeting other investors. Very quickly, they come back to me on the next call that we have, says, I had no idea. at how much I already knew. And I couldn't believe how many questions I was getting just because I've done a deal or two. There are so many people in this room or in that room that have never done anything. And as a new investor and you walk into a RIA meeting, it's very, it can be intimidating

because you don't really know a whole lot yourself. But then you quickly realize after you just do a deal or two, everybody else in there doesn't know a whole lot either. Okay, so I don't see a whole lot of competition. I think there's a whole lot more deals than there are investors out there. and the other part of that is as far as opportunities and deals, you know, what causes someone to sell a property to discount is adversity. It's distress. It's just life happening to them.

And life happens every single day. So there might be no deals today, but life is going to happen all over again tomorrow. And it's going to cause a whole new wave of opportunity. So as long as you stay consistent with your activities, you'll always be in line to hit that opportunity to hit the opportunity to have and cross-pass. with it. And that second part about the competition is so few people conduct their activities consistently. Right. Does that make sense? Yeah. Okay. And I think there was another part of your question. I forget what I was. Yeah, it was how are you separating yourself from the other investors? But I think you kind of touched on that a little bit. Right. Well, I don't really have to

separate myself from the other investors. What I do, my approach, when I meet with a motivated a seller, I really try to present a scenario where they have options. And I also try to always put myself on their side. So it's me and the seller against the market. Right. It's not me against the seller, which I think is how so many other investors approach it. They're negotiating, they're going to submit a lowball offer, and they're going to hope that this person's motivated enough to accept it

or they're desperate enough to accept it. I think that's really the amateur way to go about it. But if you go, okay, Mr. Seller, I'm here to help you get what you want. Hopefully it's in alignment with what I want as well. So we're just going to have to go out there and look what the market's giving and see if we can both get what we want. Doing it like that, it's just you two against the market. It's not your opinion of value versus their opinion of value.

So it's almost like you guys are on the same team against everything else. Absolutely. That's a great approach. Absolutely. And then the third part that I do, the third thing that I do is I always leave a written offer behind. To every single deal? To every single deal.

Whether they want it or not. And if they won't accept it, when I get home, I'll mail it to them. Because when people start to experience any sort of adversity and selling their house is something that they think is going to solve their issue or whatever their situation is, they got something pretty serious going on in their life where they'd have to sell their house. And unfortunately, things tend to snowball.

And when things go bad, they get worse and worse and worse for a while before they get better. It's just a pattern that I've noticed. And so a no today doesn't mean a no tomorrow. And it might be 30 days, 60 days, it might be six months from now. When they finally get to the situation like, you know what? I've been looking for a solution. Nothing's happened.

I got to sell this house today. Who should I call? Well, the person they're going to call is the person, the person that left something behind. And very few people will do that. Or very few investors will do that. They'll hear a no and they'll just move on to the next deal. And I do move on to the next deal.

I just make sure that I leave a piece of paper behind. Because when they do want to make that call, that's who they're going to call first. And I've gotten that. I wouldn't say several deals, but I've gotten enough deals from that practice to where, okay, this is worth it. It's an extra three, four deals a year from that practice. Right. So, I mean, so you leave a written contract to every single lead, no matter how bad the lead is? Yeah, sometimes, and sometimes it's not a full contract.

Sometimes it's written on a piece of scratch paper, written on a napkin. Oh, and you'll just mail it to them? Absolutely. Or when I do the mail, I always give them three options. I'll send my three-option letter of intent. So I say it's three or four sentences of each, this option, this option. or this option. Okay.

If any of those make sense to you, give me a call, I'd be happy to execute those and close in seven days or less. So those are my three options. Okay. Okay.

And at the very least, it opens up dialogue. Okay, I don't really like this option, but if we tweak this a little bit, would you be open to that? And all of a sudden, it's like we have, I have someone that's considering selling to me

now when they weren't before. Right. And they're more likely to counter to and, you know. Exactly. Exactly. I know that you had past experiences with a recording business that went out of business.

but how are you implementing what you've learned from that experience to make sure some of your systems methods or other methods of finding deals don't become obsolete? I definitely learned a lesson to keep an open mind and if I see something new coming down the pike to learn about it You know when I was in the music business the internet was still like you know it was really just it was a. Oh, you know that was like that was the extent of the internet for the average consumer and and, you know, I just didn't think it was that big of a deal. I wasn't paying much attention to it. In hindsight, I just feel like a total idiot.

But in the, and then it was like, what is this thing? You know, how are we going to sell? How is this going to work? You know, even the people of the industry, of the major labels, they had no idea. They messed it all up. So what I've learned from then is, uh, is just to keep an open mind about emerging technologies, emerging systems, emerging strategies, emerging tactics. I stay up to date a lot more with the laws and the politics and things like government policy when it comes to inflation.

I pay more attention to what's happening overseas and how that impacts the U.S. dollar, the U.S. economy, how that impacts real estate. So I'm much more open to things that are bigger and beyond me rather than just staying right here in my little microcosm. The other thing that I probably learned even more from real estate or excuse me from my time in the music business was the power of relationships and the power of communication and things like loyalty and honesty and integrity. Like I've always had a really good heart and I've always had the best intentions. But sometimes I might cut a few corners which for the reason that I thought was for the greater good and then it wouldn't come out. for the greater good and I looked bad and not so good. So now my whole strategy with real estate now that I got a chance to do over is I'm, I really nurture my relationships.

I always take the high road. I'm more than honest, sometimes to a fault. I honest with the utmost integrity. I do what I say I'm going to do. I'm very loyal to my people. I pay the people that work for me really well. And I have found that has been the biggest difference maker than anything. So learning how to, you know, nurture your relationships, right?

Mm-hmm. Absolutely. Just for the, you know, I have you here in the studio. I've never met you before. I know you're a listener. We've exchanged a couple emails. And this is a relationship. And sometimes going deeper is much more powerful and much more impactful and can cause

or create a bigger contribution to your business than trying to go really, really wide. You know, promoting. a podcast casts a really wide net. But the people that are that eventually I make contact with, I try to go deeper with those people. And that has made a huge difference over the last couple of years in my real estate business. Some of my podcasters, podcast listeners are my biggest and best allies and business partners. And so that's probably the bigger lesson that I got. And even another part of that is not to hold anything back, not to operate from a place of fear, not to operate from a place of scarcity, to where I don't want to reveal all my

secrets. I'm not going to tell you, you know, because you might go out and do a deal with it before I get to do a deal, or you might steal a deal from me. Those, that was the type of thinking I had, you know, in my last life in the music business. Like, everything was a secret. I didn't want to steal my idea. I didn't want to steal my beat. I don't want to steal my song or my hook or anything like that. And now it's just like, here, have it. It's yours. And even somebody like, you know, I've had Sean Terry, another podcast. On your last podcast. I've had him a couple times on the show.

I've had Joe McCall now a couple times on the show. And that, in the music business, that would have, I would have viewed them as direct competition. But because I didn't, and I was very giving, and I operated a place from a place where, of abundance where come one, come all, let's just share information. You know, those two relationships have had a very positive impact on my business.

where I would have totally missed out on that before. And so those are some of the lessons that I've learned from music and just business in general from before and what I've applied to now, which has really produced some really amazing things in my life. Yeah, and I know that, like I said, earlier, the content of your podcast is just very actionable. And, you know, when I first was listening to some of these podcasts,

I was very surprised that people were so willing to open up to their models, their business models and how they do things, but I'm sure it's helped you exponentially. Absolutely. In your opinion, should a relatively new investor spend money on creating systems to automate their business from the get-go,

or should they wait until a consistent stream of income is coming in before worrying about this aspect of their business? I think the most important part of a real estate investor's business is to really hone in and create a skill out of their people, their interaction with people, their people skills. Because right now, today, I could put the perfect system together for anybody, say, in a direct mail system, they'd get tons of phone calls, and they would mess all those phone calls up.

And it could be the absolute perfect lead generation system or through an internet system. Like you've got to get through that space of being able to close a few deals just on your own personal interaction, just on your own, on you. And then once you've got that and you've got the confidence down, then I say, by all means, start pumping some money into it and start generating some leads so you have a lot more people to talk to. But before you spend a whole bunch of money, and I'm not saying don't spend money, but, you know, Sean Terry just, you know, he spends, he sends out 100,000, 200,000 pieces. is a mail and he wants to send out a million pieces of mail every single month, right? So, but I wouldn't recommend that for a new person, not because it would be a bad, a bad investment, but I think they'd squander a lot of opportunities because their skill and their experience isn't there yet.

Right, right. So basically just worry, like, understand all the aspects of the business first and go through the motions from A to Z, and then you can start setting, implementing systems in place. Is that kind of what you were saying? Yeah, I don't think you need to understand all aspects. I think what you really need, even if it's just once, you need that first personal interaction between you and an owner of a property.

And to actually go through that process. And before you even put anything on paper, just come to the place where you both agree. Yes, I agree to buy it from you at this price on these terms. just to get yourself from creating the lead to that point, I think is really key. And once you do that once, you're like, wow, that's all there is to it. That wasn't so tough.

There's nothing to really be scared of. And everybody will think that once they actually do it for the first time. So once you have that level of confidence that I've done it once, I can do it again. Then you can start putting some systems to play in place and you can get as elaborate as you want, as sophisticated as you want, and pump as much money as you want into it. But I think you kind of have to have that experience first. Otherwise, you're just going to generate a bunch of leads and you're not going to know what to do with them. Right.

I can definitely relate with not knowing what to do. Somebody calls you. I was wrestling. The first time I ever got a call was probably wrestling with the phone for about a half an hour before I gathered up the courage to call. I so get it. I so get it. I've been there. So, you know, what kind of creative deal structure are you using in your business and what strategies have you found to be like the most profitable?

Okay. The creative parts are typically have to do a seller financing. I believe that the way to really create wealth or one of the true magic aspects of real estate in creating wealth is the ability to use leverage. But for a lot of us, for most of us, accessing that leverage through a bank, or, you know, one of the more traditional institutions

is really difficult and out of reach, especially today, you know, the guidelines are much more strict and it's harder to get through to that. So the next place, if you're not going to use your own money, is to access the equity that the seller already has and use that and try to create terms there, which would, you know, be very similar to the terms that a bank might give you. So that's probably my biggest right there is,

I typically offer one of three ways. And you've probably heard me say this before on the podcast where, hey, we can do this at my price in your terms or my terms in your price, which one you want to do because I'm okay with either way. So I'll, and that three option letter of intent that I give them, I'll always give them a cash price,

all cash price. So if all cash is your terms, here's going to be my price. And it's typically somewhere around half or so, half, 50, 60 percent. I mean, each situation is going to be different, but that's kind of the rule of thumb, what it would look like.

The second one would be a interest-only payment over a certain term with a balloon payment and a certain amount of money down. So that would be my second option. And the third would be, okay, I'll just give you whatever price you want, and we're just going to divide it into a bunch of payments. Okay, so it could be like amortized over 40 years, 50 years, just whatever price they want. Well, okay, that would be the seller financing one. When you use the word amortized, that would be, you know, that would be more of a traditional seller financing.

Okay. Or more of a traditional financing, period. When we talk about the third option, okay, if your house is worth $300,000 and you want $600, you know, most people will say, you're insane, I'm going to walk away with this. Or, and if I heard that, I'd say, okay, how many payments can I divide it up into? Okay. So when you divide an amount into payments, all of a sudden you've eliminated amortization. You've eliminated interest. Now you've got principal-only payments.

Interest, yeah, no interest at all. Right. I don't use no-interest payments as my vernacular or in my vocabulary, but I ask them how many payments can I divide that up into? And all of a sudden, when you start doing the math and you compare those, you always want that one. You know what I mean? You always want, okay, I'll divide it up into 100 payments.

That's an interest-only loan. I'm sorry. In-interest-free, yeah. Principal-only loan. So 100% of your payments go buying down the principal. So even if you pay double, you know, over a 30-year amortized loan, you're going to pay double anyway. So I can pay up to double. And if I divide that up into 400 payments and that's principal only, you know, I'm getting equity on every single payment that I make.

So I can typically make a, I can pay you up to double what you want on principle only. In most cases. In most cases, right. But I never, you're never going to pay them double. but like if the house is worth 300 and they said they want 350 or 375, which is still a lot more than what the market would bear, but if I got that into principal-only payments,

I could pay down that $50,000 or $75,000 extra really, really quickly. That's definitely powerful. Wow. And still cashful along the way. So, you know, many gurus, they explain that, you know, anybody could do real estate. And to a certain extent, they're correct. But this begs the question,

How much do you think raw intelligence contributes to overall real estate success? And then the next part of this question would be a, would you say it plays a large portion in your success? Or would you say more determination, ambition, and experience plays a larger overall role? I think there's a certain level of, I think, sophistication is required. I don't know if it's intelligence. I don't even know if sophistication is the right word or education is the right word. I think grit and persistence will beat everything. There was a book, or not a book, a movie a while back.

I think it was starred William H. Macy and he was a door-to-door salesman. It might have been called door-to-door, something like that. And it was a true story about a guy who was mentally challenged. I don't know what his specific condition was, but he was mentally challenged. He was a little difficult to look at. He didn't speak very well. He's kind of slow, and, you know, his intelligence certainly wasn't, you know, up to normal. And he became, he set the record for the most door-to-door sales ever in history.

And I forget the exact numbers. That's a true story? Yeah, true story. Wow. And what it really boiled down to when you watch the movie was he just knocked on more doors than anybody else. He just kept on going. And I think that would absolutely work with real estate. as well. I mean, Sean Terry does what he does and makes the amount of money he makes because he sends

more mail than anybody else. That's true. You know, now he's skilled and he's intelligent and he's experienced so he can certainly capitalize on that, but he still sends out more mail than anybody else. A lot more. Yeah. Right. So he closes a lot more of the opportunities, but someone just getting into the business, one person goes and sends out 100 pieces a week and the other person sends out a thousand pieces a week, even experience not being equal, that person that sends a thousand pieces a week is going to do more deals. So I think the grit and the persistency is much more important. Okay. So what does the day in the life of Matt look like? Let's elaborate on some of the daily habits and tasks that contribute to the lifestyle that

you've created. And for yourself through real estate. And are there any habits or rituals that are not included on the daily task sheet that you've drawn up for investors that you practice regularly? Very good. On that daily success sheet, you know, if someone is successful, like Sean Terry probably has no idea what my daily success sheet looks like. Joe McCall has no idea what my daily success sheet looks like, probably. Richard Haynes, who's just on the show, he has no idea what my success sheet looks like. But they're all very successful. So even though they don't know what it looks like, they're still doing the same.

activities. Okay, they're just doing them in different ways or they're doing it and they're just don't know that they're doing it because those are the activities that produce the results. So I don't have it in front of me, but for example, submitting ads is one of the activities that you can do, okay? I don't submit a daily ad, but I submit a weekly podcast. Right. So there's my ad, right? So, and there's a saying that those who educate the market dominate the market. And I think, He, you know, Sean Terry, he's kind of the star of the show today because he keeps coming up. But I think the last time, the first time he was on the episode, he said, I'd ask him what are some of his bigger lead generation activities. And he said, teaching.

Teaching was a big one. Teaching for seller leads? That was his bigger. Just teaching real estate investing. Okay. Those who educate the market. You know, people in the insurance industry, they'll hold seminars, free seminars at the library teaching people about insurance. And they'll just teach it and they'll say why you need it.

And they'll put little scary headlines of like the three pieces of insurance that you don't want to be caught dead without or something like that. And they do that in the financial services industry. They do it in all types of industries. And so educating. So I've got an advertisement with the podcast and I educate with the podcast. And from that, leads come in. So I make contact with a lot of people. I'm sitting here talking to you right now.

This is our first time we ever met, but maybe a month from now. a year from now, six years from now, we'll do a deal together. So it's planning seeds still. That's what my day looks like right now. I put together a course on showing people how to wholesale, right? And now I've put at the back end that if their buyer's list isn't developed yet, they can borrow mine, right? So I've given them an option. So that generates leads for me.

So I'm still generating leads. I'm still making contact. I'm still creating relationships. I still set appointments. You and I here, we are at 7 o'clock on a Wednesday night. We set an appointment. This would count as an activity. I get points for this.

And you might submit me a deal tomorrow and I'm going to make an offer on that deal. So I actually submitted an offer on that deal. So all those activities are there. They just don't look like the traditional way. But I did all of those, the traditional way to get here. Right. So if someone is out there listening,

well, I'm going to start a podcast. and I'm going to generate leads too. And I'm like, and I would be, go ahead. There's nothing wrong with that. And you still probably will generate leads. But to get where I am right now, you have to do what I've done. And I started exactly how I teach people to do it. Does that make sense?

Yeah. So you like the daily, what was it, the free course that you've generated. So you started out basically just writing the letters, doing all the daily success success. Exactly. I teach in that course exactly how I got started. And I just kept on doing it, kept on doing it. And the one thing I really discovered, and I've discovered this around everyone around me,

is the harder you work on that free course, the quicker that work will get easier. So, you know, I was actually going to save this for a podcast, and I'll probably say it again then, or later on in a future episode. But I have a coaching client, and he's in Cleveland. and he's doing really, really well. And he said,

I'm looking for this on my, what you call it right now, on my iPhone. But I told him that the harder you work in generating leads up front, the quicker those leads are going to start coming to you and you're not going to have to work for him so hard. Here it is, right here.

So he sent me a podcast. This was, this is August, okay, 23rd, so what's that two weeks ago. He sends me a text saying, I just set seven appointments in the past 30 minutes from people calling me from referrals. No yellow letter, no bandit sign, or prospecting required baby.

Boo-ya. So that's the text message that he sent to me. And I told him, I said, hey, I told you if you looked for deals hard enough, they will eventually start looking for you. That's a beautiful thing. Right. But those deals aren't going to find you

until you put it in the work up front. Were you looking for them? So do you practice like any, I guess, meditation or I'm just curious if? Meditation, no. No? I do CrossFit every morning. You know what that is? I have no idea.

You can have to explain it to me. They actually made a sport out of it. It's on ESPN. CrossFit. CrossFit. It's like it's cross training. So I go to the gym every day and we never do the same workout twice. So it's something different every single day.

So you're just working out different parts of your body. Yep, every single day. So I would say that would be my equivalent of meditation. Okay. So do you like lift weights different ways? Lift weights, push-ups, pull-ups, sit-ups, running, sprints, jogging, jumping. It's the whole nine yards. And a million combinations thereof, yeah.

Okay, right on. So what are the top three traits that you see your most successful coaching students display? Ah, it's actually just one. Top three to five. Well, I guess one now. Really one. And there's a very direct correlation, and it's very clear and obvious. Those that use the Daily Success Report and use it consistently, they all have done deals, every single one of them.

And the more that they've used it, the more deals that they've done. So it's like a direct positive correlation to how many tasks you complete on that sheet? And it's the right tasks specifically. The high point tasks? No, the right tasks. Okay. And I only put the money-making activities on that success sheet. Oh, okay.

So those that are really busy and feel like they're doing this business and they're working a lot, if they're not, if they can't give themselves a point on the success sheet, then they're not doing the right activity. Okay, so it doesn't count. So working on your website all day, it doesn't count. That's why I put the system in place where, you know, on epic real estate websites, you don't have to do a lot of work there. You just have to slide your credit card

and click a couple buttons and you're up and running and you didn't waste any time working on your website. So you can get right to it. Right to it. Business cards. You know, do that on your own time late at night. That doesn't count as work.

You know, you're setting up your fax machine. Find the right calling plan for your office. You know, promoting your T-shirt and all that kind of stuff for designing the perfect flyer to hand out. Now, it only counts when you hand out the flyer. The time designing the flyer doesn't count anything. Exactly.

So basically just focus on high value tasks that create money. Money making activities. All of my students that have committed to that and stuck to it have all done deals. I mean, you heard Brad Donnelly from St. Louis. You know, he was in a six-figure earning position inside of probably 45 days. Brad Weber and Cleveland, very, very close to the exact same thing. and he might even pass Brad and St. Louis. In fact, I know those two talk,

and they exchange ideas now. So they've created that scenario. How was, I remember, I can't, maybe like three months ago, there was a podcast that came out. And there was a guy who I guess gave a we buy houses signed to a homeless man. Do you remember who I'm talking about?

Yeah, that's Brad from St. Louis. That's Brad, okay. How did that work out? I'm just curious. You know, I never asked him? You never asked them? I will ask and I will report on a later episode. I want to hear that.

Yeah, yeah. I thought that was funny too. So how have you expanded your business to other markets? You know, what kind of systems do you have in place to help you expand? And, you know, I guess how would you construct a team in all these different areas? Like what kind of strategies did you use for that? Okay. Well, I, that's funny that you're asking this because I executed the exact same strategy.

that I teach. So when I went to Memphis, St. Louis was no different, Cleveland, no different, Kansas City, Cincinnati, all of them the same. Is that I started with Google, and I started finding their real estate investor clubs and their RIA meetings. So I go on to meetup.com. I started emailing people. And I started just creating relationships. And I tried to find my first person on my team, I would always try to find as a good property manager. I'd start with one property manager. He would typically or she would typically lead me to a contractor or a rehab that they like to use. So that would be, that's how I started. And then they would let me know that, hey, I got this one realtor that they'd like to work with investors. And they kind of led me to

that direction. So I'd start with the property manager, go to the contractor and the real estate agent. And that would lay the groundwork. Now as you start to do deals, you start to meet a lot of different people inside of that transaction. There's a lot of people involved in a real estate transaction that bring it all together. And something that I've shared over and over and over again is when you're actually doing deals, all eyes are on you. Everybody's watching. And everybody's hoping you're going to pull it off.

Everyone's rooting for you. Because all of these people that are involved in the real estate transaction, most of them have jobs where they're not going to get compensated unless you succeed. So if they see you succeed once or twice or they see you doing any sort of. sort of volume, all of a sudden, that becomes a lead generation system. All of a sudden, it comes a great referral network. And, you know, your phone starts ringing. And so I want to make sure that when I do find the right property manager and I find

a good rehabber and a real estate agent or maybe a couple wholesalers in the area through the RIA meetings or the meetup groups, is that I want to make sure that they see me follow through, like that first impression is really important. And if I start following through, all of a sudden, I'm the first place those wholesalers. or send their deals to. The real estate agent, I'm the first place that those,

those, the new listings come to. And the property managers, if they have one of their other landlords that are getting ready to sell their building, I'm the first person they call because they know I follow through. And if I follow through,

everybody in the chain gets paid. So that's how I start building. And I have flown out to every single market and I've met everybody. I haven't met the, I probably will be by the time this airs, but I haven't met my, my student Brad and Cleveland,

who's been killing it out there. there, but I will, and I'm looking at other markets, and I will fly to those, and I will make those relationships. So let's say you find a deal in, you know, Cleveland or, you know, wherever you're doing deals right now, do you normally fly out to each deal? Or, you know, how does that, how do you kind of leave all the parts together? Right. So I am a cash flow investor.

I buy property to hold to generate a passive income for myself, and I just keep on stacking them up on top of each other and just collect as many as I can. Now, those properties aren't going to produce cash flow. They aren't going to produce a passive income stream for me unless I have property management there causing that property to produce. So after I, after I've met that property manager, I will call them. My first point of due diligence is, hey, there's a property over there. It's a three-bed, two bath on the corner of third and maple, you know, can you rent this

property and if you can, how much can you get for it? That's my whole assessment. And then I'll say, okay, can you send your contractor over there and have him give me a bid of what it's going to cost to get this property rent ready? And that's it. It's real estate. I'm not going to live in it. You know what I mean? It's an investment. It's an investment vehicle. It's numbers to me. And, you know, the first few times I'll probably send out a physical inspector who works for me, who does not work for the property manager or the contractor. and they'll send me a report and I'll look at it. But for most cases, every property you're going to buy is most likely going to be used, right?

So there's going to be something wrong with everything, with every property. What I'm really concerned with is besides the physical aspects. So physically I'm concerned about the roof, the foundation, the electrical, and the plumbing. If those four things aren't okay, everything else can be fixed relatively and expensively. The other part I'm looking at is can the property manager get that, property to produce? Can they put a tenant in there and collect money from them monthly? So if they can't, that's typically because there's something wrong with the neighborhood, right? Or something funky about the property, but if they can't get it to produce, then that's enough for me to not want it.

But if they can get it to produce and it is not going to take any extraordinary effort on their part, then that's a green light for me. So basically you're just building a real strong core team in whatever area that you're investing in. Yeah. The team is everything. And if you're going to be a cash flow investor, your property managers are everything. They're everything. And you might have to go through two or three or four like I've done in some of my markets to find the ones that are actually going to produce for you.

But once you got a good one, you want to treat them well, you want to hold on to them, and you want to send them as much business as you can because that's really what's going to create your wealth. What kind of questions do you are, you know, because I would almost view, you know, finding a good property manager, I would see, I would think up front you would want to interview them. So almost like a for a position in your firm or whatever. So, you know, what kind of questions do you ask them? How do you screen these people? Well, first of all, I want to, I want to do my best to find a referral for the property manager. So whether that's somebody that I know or say another investor that I meet in one of these RIA meetings or in a meetup group, I want them to refer somebody

that has something good to say about them. That's my first line of defense, I guess you could say. The other part of it is, in the beginning, all the real estate professionals, regardless of who they are, but this specifically refers to property managers, they're going to tell you exactly what you want to hear up front. So there aren't any magic questions. You know, there are a couple episodes back. I gave a whole thing about how to hire a property manager.

And, but the questions that you ask, and you can find a list of questions all over the internet. There's a bunch of them. Just say what to ask a property manager. You'll find, you know, 30 sites that have a whole list of questions. And those questions are what I've found on the internet are typically created by property managers because they want you to ask the right questions. But what I really try to detect are character attributes. A lot of them are competent, just as the character there in alignment with their competence.

and, you know, I've just learned to trust your gut and trust it quickly and make decisions off of that quickly because your gut does know better than you do logically and consciously. And, you know, if your gut tells you something's off, then something's probably off. And what I found is even though I feel or I have faith in my own intuition on those types of things, women have an even stronger intuition in that aspect. So if you have a girlfriend or a spouse or if you are a girl, ask for their opinion.

Ask for their opinion. Say, hey, something's not right for this person. Can you just call them up and see what your take is? Or if you are a girl and you are the investor, trust your gut even more than me. That's interesting. That's an interesting approach right there. I like that. So, you know, what are your plans and your goals and aspirations for, you know, this upcoming year,

2014. Have you kind of mapped those out? I mean, what are your plans? I have. You know, about a year and a half ago, I had had enough rental units to where I was really on the verge of retiring, or at least just really kicking back and taking it easy. And then I created the service cash flow savvy, and I created that really as an ancillary service to the Epic Pro Academy members.

Just as if they, I was giving requests where investors or students and clients had money to work with and they were it was burning a hole in their pocket and they wanted to go out and spend it and invest it and I really just kind of feel that is the wrong thing to do with your own money right in the beginning but some of them were just got to the point where you know this is too much work it's it's going to take too much time I've got a full-time job but I do want to invest in real estate and is there an easier way to do this so that's why I started the cash flow savvy just as an outlet for that and I didn't think it was going to be that big of a deal. But it really exploded and it exploded fast. And so it started creating such a

strong revenue for us that I couldn't ignore it. So even though I was about to, you know, take my foot off the gas and just do podcasts and try my hand at internet marketing in my leisure as a hobby, all of a sudden I kind of got sucked back into real estate. And we started doing that. And now I kind of see this as as long as we can, is the market is where it is and we can buy as far below as replacement costs as we're buying. You know, last year we were buying it half of replacement costs. So if it costs 100 grand to build a property, we were buying it for 50. It was cheaper to buy use than it was to build new.

And, you know, the prices have gone up. The nationwide, there's experience some appreciation, but we're still significantly below replacement costs. And the reason that's important is because when the new home builders, they start building again, they're not going to build until they can actually build a property and sell it for more than what it costs them to build it. And when that happens, what that does is it creates comps, right? So when they start building those $100,000 homes and sell them for $120,000 to make their profit, that means my $50,000 homes that I bought this year and last year, all of a sudden I have

$100,000 comps out there, $120,000 comps. So I've got immediate appreciation. And that's appreciation that's not necessarily gambling because we know they're going to start building again. The population is going to demand it. So they're going to have to build again. So that will happen. If it happens this year or 10 years from now, I don't know. But as long as I keep buying for cash flow, it doesn't matter to me. You know what I mean? So I've got my appreciation built in. So as long as the market dynamics are like that, I'm just going to keep on buying, keep on buying, keep on adding units to my cash flow. That's my plans for 2014. So what about when the market shifts and it doesn't, I guess, present the opportunities that we're currently experiencing right now?

How would you sort of shift your strategy? Well, I've been doing it long enough to where if that comes down to the situation where I can't cash flow anymore, I'm probably not going to invest anymore. And that's why I recommend everybody buy as much real estate as they possibly can, right? now, like while this window is open, it's going to close. It's not going to stay open forever, and I'm not going to pretend to be an economist and predict that, hey, the demographics are doing this and the interest rates are doing that, and this is what the dollar and the inflation is doing, and next year the window's going to close. I don't know that. I'm not that deep into all the aspects, but I know it's going to close because it always opens and closes, opens and closes,

opens and closes. So I would say get as much as you can before it does close and just make sure that it cash flows before or make sure each piece that you get cash flows because if so if it takes 10 years for it to close and for you to experience that appreciation, at least you made a bunch of cash flow along the way, you know? So what would you say to the people who say that it's always a good time to invest? Oh, I absolutely agree. I do agree.

It just depends on what strategy you're using, I guess. It depends on what strategy you're using, but just in the most simplest form, as an investor, your job is to buy low and sell high. And regardless whether the market is down or up, good or bad, whoever's opinion is governing the market these days or during that period, there's always a low price to buy at in that market. And there's always a high price to sell it at. So right now, you know, we might buy it $40,000 and sell it $50,000. And say if the market doubles and appreciates and all of a sudden these things don't cash flow anymore, you can still buy it 100 and sell it at 120. You know, what causes people to sell property is life and life is never going to stop happening to people.

That life situations and circumstances are going to happen. It's going to happen to people and they're going to be forced to sell real estate. And that's where the real estate investor gets to make a profit and help people at the same time. So I guess the last question I have is, you know, how can me or how can I, or anybody else make a donation to your studio here. Oh, that's awesome. Thanks for asking. I didn't know that was coming.

Just launched a new website, Epicrealestate.com, and there is a donation button right there on the homepage. Okay. So you can hit that donation button, and that just gives a straight monetary donation. Or you can join the Academy. That helps right there on the homepage. You can join the Epic Pro Academy.

Or, you know, if you don't want to put out any extra money than what you're already spending, if you do any shopping at Amazon, you can stop by Epicrealestate.com, click the Amazon button just before you shop. It's not going to cost you anything extra, but they're going to send me a little portion of what you do spend.

And when I say a little portion, Amazon sends a very little portion. Okay? And then, you know, if you don't want to make a monetary contribution, leave in a favorable comment over at iTunes. That helps too. Okay.

Matt, I just want to thank you, you know, for all the great content. And, you know, You've been, whether you know it or not, you've kind of been a mentor on some aspects of my investing experience. So I'd like to say thank you very much. And you've been a great help to me and I'm sure many, many other people. So thank you. You're very welcome, Josh.

Thanks for coming down and coming out so prepared because I had no idea what to expect on this first episode of epic beer time. I like this. Well, I feel like it went well. So I think it went well too. I think we're going to publish this. and it certainly went well enough for me to try it again. Beautiful. So if you'd like to appear on an episode of Beer with Matt,

now named Epic Beer Time, send me your request to Matt at Epic Real Estate.com. Matt at Epic Real Estate.com with beer with Matt in the subject line. That's exactly what Josh did. And then we'll do our best to coordinate our schedules and get you on the schedule. And if you don't want to come into the studio, if you're not geographically desirable,

and you still happen to have a question, comment or concern, and you'd like me to answer or address that on the air. You can share that with me at the Epic Real Estate Investing Hotline. And that's at 1-888-891-7203. 1-888-891-7203. All righty, on behalf of Josh and myself, until next time, to your success. I'm Matt Terrio, living the dream. Oh, and if you want to get in touch with Josh, you can find him over at quickhomeoffers.

com. Quickhomeoffers.com. All right, now we're living the dream. You've been listening to Epic Real Real Estate Investing, the world's foremost authority on separating the facts from the BS in real estate investing education. If you enjoyed this show, please take a minute to visit iTunes and share your thoughts. Thanks for listening. We'll see you next time here at Epic Real Estate Investing with Matt Terrio. a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.