Epic Real Estate Investing - EREI 071: Simplifying Your Business and Finding the Money

Episode Date: October 21, 2013

It's common to make the real estate investing business more complicated than it is and in result lose focus. An unfocused mind, and business for that matter, accomplishes nothing. Deals are harder to come by, money is harder to find and progress is stifled when a real estate investor loses focus. On this episode, Matt creates clarity with regard to your property criteria, minimum deal standards, what your week should look like and finding money for your deals. Matt shows people how to invest in real estate at EpicProAcademy.com, or he does the investing for them at CashflowSavvy.com. Download his free real estate investing course at FreeRealEstateInvestingCourse.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. Hello. Welcome to another episode of Epic Real Estate Investing. And if this is your first time listening to the show, welcome. Glad you that you're here. This is the show where I teach people how to invest in real estate. And I do it right here. And I do it online at the Epic Pro Academy.

at Epicproacademy.com, or in many cases, I actually do the investing for them at cashflow savvy.com. Now, why would I do it for them? Well, good question. You see, some people, typically busy people, you know, your doctors and your lawyers and your small business owners, really any busy professional, they want to invest in real estate, they have money to do it, they want to do it, but they just don't have the time. So I do it for them. It's their money. They call the shots. They can be as hand, on or hands off as they want to be, I do all the heavy lifting for them and make sure that everything ends up well. So if that sounds like something that might make sense for you and your situation, go to

cashflow savvy.com and download one of our free investors packets, cashflow savvy.com. Okay. So had an awesome webinar this past Thursday. I did an online training of how the the seller information questionnaire is the secret weapon of the master negotiator. Sorry if you missed it. Don't fret, though. I'm holding another online training this Thursday evening. Go to EpicproWebinar's.com to register. It's absolutely free.

And this week I'll be going over the three option letter of intent very much, you know, in detail. And you can get a visual representation of what I went over last episode, episode 70. and I'll be giving away my three-option calculator, where I came up with all those calculations from the last episode, and just with the entry of a few numbers, it spits out your three offers, of which you'll have, all you have to do is basically fill in the blanks of the three-option letter.

And if that sounds like something that might make sense for you, go to epicpro webinars.com. The live webinars are free and open to the public. The recordings of these webinars, however, will be archived inside the Epic Pro Academy. So if you're not a member, you definitely want to be there for the live training. Or you can become a member and not have to really worry about it. Watch it on your time.

It's your leisure. As many times as you want, even. So epicpro webinars.com, that's where you register. Okay, so I recently received this call on the Epic Real Estate Hotline. Hey, Matt. This is Ben, Ralph. Hey, I just recently started listening to your podcast, and I'm trying to think real estate investment.

And one of the things I've noticed that you have mentioned several times in evaluating your properties or your deals is to quickly sort the ones that meet your criteria versus the ones that don't. Right now, I'm at a stage where I'm trying to choose a lot of that criteria. And I know that I'm going to go and I ask you what type of things I should consider for my criteria. The answer is it depends. But I was wondering if we move forward as you see more of your podcast, if you might kind of say what their criteria is and what they utilize theirs, that might help me to get a better feel for what I want to use with my criteria. I appreciate your podcast. Thanks for your help. Good day.

Okay. Thanks, Ben. I think that's what you said your name was. It wasn't the best connection. So forgive me if I got that wrong. But Ben is having a challenge in determining his personal. property criteria. And I love this question. And I love that Ben was even in the mindset to ask it, as I think every investor absolutely should be. I mean, this is a vital aspect of your business,

knowing your property criteria. And, you know, every one of you should be able to recite what your property or your investment criteria is. And you should be able to just do it at the drop of a dime. And, or drop of a hat. I forget how that metaphor goes. But here's why. It comes down to the difference between shoppers and buyers. The best investors are shoppers. They know what they're looking for. They shop for what they're looking for. And when they find it, they can make a very quick decision and scoop up the deal. And they always get a deal because they're shoppers. They're patient and they wait till what they're looking for appears. A buyer, however, is the person that, you know, stops to analyze everything that comes across their desk and buys for the sake of buying. And

I've talked about the differences here before between the shoppers and the buyers, but what we're really talking about here is focus. Focus is essential for any business to move forward and grow. And real estate, no different. For example, you know, if you were to walk outside, this is an example of focus and the power of focus. I mean, if you were to walk outside on a warm, sunny day and feel the sun shining on your face, that's very nice and pleasant, not causing any damage.

and feels good, that's energy dispersed. But if you were to take that sun, that same sunlight, and direct it through a magnifying glass, that light, that sun would then burn. It burn into wood, it burns up leaves. And from my personal experience when I was a child, it burns ants, it burns snails, it burns all kinds of bugs. And, you know, and if you were to focus that light even further in the form of a laser, that light would burn through steel.

That's the power of focus. That's the difference between focus dispersed and energy dispersed and energy focused. So then I'll tell you what my personal criteria is and this is where your focus is going to be. This is what my focus is. And then I'll tell you what my personal criteria is and then I'll tell you what it was when I got started. And then you can kind of use those as starting points or at least examples to create your own. Right now I focus on buying single family homes of three bedrooms or more. I focus on buying those single family homes in markets of which I can pay cash for the property

and still receive a double-digit cash-on-cash return from 60% of the gross rent. It's very specific. And with that focus, I have two sides to my business. I have essentially two engines running. One of those engines, it fixes, it tenants, and it flips the properties as cash-producing assets to people too busy to do it themselves. That's where the cashflow savvy.com comes into play. Okay? So I do that and create these cash producing assets for people that just don't have the time or don't want to do the work themselves.

The second engine, it fixes tenants and holds the properties as cash producing assets for my own portfolio. So those are my two engines. One does it for other people. One does it for myself. And the one feeds the other. And in the past year, I've opened up my focus slightly to diversify my large portfolio of single family residences with multifamilies. But other than that, I'm very focused on my criteria.

I don't look too much outside of it. And because I don't, my business and portfolio, you know, it experiences healthy growth year after year. Anyway, that's what my criteria looks like right now. But when I got started, it was a little different. You see, my criteria when I got started was three-bedroom, two bath, single-family residences. And it was in the area within 60 minutes from my home.

and those properties were priced below the median price for the area, yet priced above what I considered war zones. And as far as price range, that's basically what I look for right now as well. But it was below the median price range for the area, yet priced above what I consider to be war zones. And here's why. You see, if you're going to flip or rent a property, the highest demand in the marketplace is for three-bedroom, two-bath homes. and in the demand with regard to price range are homes priced below the median. So I had the most demand in for the property most or the highest demand for the type of property I was looking for and I had the highest demand in the price range I was looking at.

So my end customer, there are a lot of them is what I'm trying to say. And you see these types of neighborhoods are where those properties would fit or that criteria was, those are typically transitional neighborhoods where people are constantly moving in and out, buying their first or second home or moving out to buy their second or third home. There's a lot of sales activity in a neighborhood that fits that criteria. So it was very conducive to flipping and wholesaling. And then my final criteria, my minimum deal standards is what I call it, was that I had to at least make $2,000 on the deal.

Some people like to use a percentage. I like to just use a flat dollar amount because I really didn't care what the percentage was. If I got to put $2,000 in my pocket, that made me happy. And as I got more experience under my belt, as I got more busy, my minimum profit, that $2,000, I raised my standards on that and it grew. And today with regard to a flip or a wholesale, my minimum deal standards, my minimum profit is now $10,000. I just won't do the deal unless I'm going to make $10,000. and anything less than that, I just say no to. It's very easy to decipher.

It's very easy to distinguish what's a deal and what's not a deal to me. So there are two examples of criteria that and that's what I focused on and also what I'm focusing on now, as well as a little bit of an insight as to why that's my criteria. And to go even further there, this criteria, these criteria at that time initially and right now, they were in alignment with my goals at the time. My goal of initially was to just start generating cash because I needed a job. I needed to make some money and pay the bill. So that's why I was doing a lot of flipping and wholesaling.

And now that's all changed because my goal is becoming a millionaire real estate investor, receiving a million dollars of cash flow each year. That's my next goal. So this is why in the academy I have you established. do this in the free course. I establish you or have you establish your why and your goals in the very beginning because all of the decisions that you make inside of your real estate investing business should be based on where you want to go. Your decisions should be should move you closer to your goals. So if you're faced with a deal or a deal comes across your desk,

you're like, is this going to move me closer to my goals or not? That should be your very first question. And the way you can do that is you have a very specific criteria defined for what type of property and what type of situation and what the minimum payoff or return on investment is for you. That will move you towards your goal. So it makes your decision is very, very easy and quick. So, Ben, what are your goals? I mean, do you have those clearly defined? If not, do that first. And then once you know what you want to accomplish with your real estate investing, then establish your investment criteria or property criteria based on that. Okay, feel free to use either of my criteria as a starting point or an example,

and then just refine it to meet your own personal needs. And once you have your criteria clearly defined, now you know exactly what you're marketing for and you're going to know what your lead generation efforts look like and where you're going to focus. And when you do generate leads, you'll know whether pursuing that lead is worth your time or not. It makes this business very simple.

It makes decisions very quick and simple. And when it's simple, it tends to get done more often. And being quick is actually a very positive attribute in this business. Okay? So hopefully that answers your question, Ben. Thanks for the question. It was an awesome one. Next call comes from Joseph.

Yes, my name is Joseph McCullougham from Interlock in Florida. My question is, once I find a potential house, where do I get my funding at? Because I have not built my buyer's list yet to be able to purchase this house so I can either rehab it or I can wholesale to somebody else. Okay. Thanks, Joseph. And that's a very good question. It's a very common one, in fact.

And you asked it the way that most people do. and that gives me an insight as to how you are approaching your business or the general business of real estate. You're looking at step two before even taking step one. And step two is a lot easier if you take step one. And if this, you know, and this, it stops a lot, if not most beginning real estate investors. It stops a lot of investors from ever achieving anything. in this business. And I'm not making you wrong for that. It's just very common.

And I just want you to know that you're not alone. Okay? It stops people right in their tracks and they just, they never get started. If you, if you've been listening to this podcast for any length of time, you have all heard me say, find the deal first and the money will find you. And until you do that, until you approach it that way, it's a tough concept to grasp. I understand it was for me as well. But you've got to trust it.

The business is so much easier when you conducted this way by finding the deal first and then finding the money, by taking step one first before you take step two. Don't be concerned of how step two is going to happen before you've even taken step one. Because a lot of times after you've taken step one, then it's very clear how step two is going to happen. Now, when I say find the deal, that doesn't mean just identifying it. It doesn't mean saying, hey, there's a house over there. You've got to take it a step further.

you've got to get the deal under contract. You must have control of the deal before anybody will agree to give you the money for the deal. And that goes for institutional lenders, your banks, it goes for hard money lenders, it goes for private lenders, friends, family, associates, and even your buyers list.

And here's what I mean, Joseph. Even if you did have a buyer's list, you can't wholesale the property to one of them until you have the deal under contract. And if you want to fix up and then flip the property, a bank, a hard money lender, a private lender, none of them are going to give you the money until you have the deal under contract. And even if you went to them first and said, hey, I've identified a property over on the

corner of First and Maple Street, well, you loan me the money so I can fix it up and flip it. They're going to need to see the contract. And even if they agree up front, if you went to them in that manner and they agreed to up front to give you the money, they said, sure, Joseph, go ahead, we'll give you the money for it. And if they agreed to give you that money before you had it under contract, you still have to go get it under contract. And that agreement or their agreement, their words, it's still going to be contingent on that deal actually being everything you said it was to get their agreement in the first place.

There's still going to be a contingency. and to confirm that that deal is everything that you said it was, you're going to need to have it under contract to perform your inspections. You're going to need to have it under contract to search title. To confirm that it actually is a deal of which you and your lender or buyer are going to turn a profit without any extraordinary effort or risk. There's still going to be an inspection period. Even if you present these are the numbers, this is how it breaks down.

Well, you still have to go get it under contract, and then you have to confirm all of that information. You've got to confirm all your numbers. And if you can't confirm those numbers, nobody's going to give you the money. That's just the natural progression of this business. Now, in addition, if it truly is a deal and you have control over the deal in the form of a binding contract, a purchase agreement, it's very easy to find the money. even if you don't have a buyers list.

I mean, here's what I mean. If you have a deal, this is what you do. If you have a deal, create a small, simple, little property flyer. Put a picture on there, put a picture of the property, put some detail, some basic information about the property, put the numbers there, you know, what's the price, what it might fix for, what it might rent for, and then put your contact information. Then, attend the next investor club meeting in your area. and you're going to either ask for a few minutes in front of the room to share your deal with the group.

A lot of groups that will be in their normal agenda of the night, the needs and wants is what they call it. And you'll have the opportunity to get up and present your deal. Okay? And by the way, a slight little tangent. Whether you have something to present or not, you should always take advantage of that microphone time and tell them what you're looking for or tell them what you have. always always get anytime there's an opportunity to get in front of the microphone get up in front of the group it presents you as a working professional and magic things happen to working professionals

okay that's another that's another episode but i just wanted to put that there or if they don't have an opportunity to to speak over a microphone get there early okay get there early and start interacting with um the the people the people in attendance pass out your flyers and stay late pass out more flyers and here's where people that that do this if this doesn't work i mean this is where people get stuck and if this doesn't if you do this and it doesn't work for you here's why the people that get stuck they don't have the deal that they think that they have it's very simple it's not a deal it's just not a deal if any house where there's money to be made is not a challenge to sell okay it's just not a deal it's just not a deal

deal. And if there is money to be made there, somehow it looks like it's going to be too difficult to make it. So if you get stuck doing this, if it doesn't work for you, it's just not a deal. Okay? Now, if you disagree and you believe it's still a deal, and you think everyone at the, at your investor club is on crack, that's okay. Take your deal to a hard money lender and present it to them. See if they'll give you the money to do the deal. They'll typically run the numbers right there on the spot, and they'll tell you if it's a deal or not. You know, that that's their job. Every day, just like you get up hoping to find a deal,

they get up every day hoping someone will walk through their door with a deal so that they can loan money to that person. Because they don't make any money unless they actually loan their money out. They are praying and hoping that what you're bringing them is, in fact, a deal. And they will look at your deal from every way possible, from every angle, to see if they can make money on it by loaning you the money. They want to loan you the money. They are hoping it's going to be a deal.

So if it's a deal, they're going to tell you. That's how it works. So find the deal. Put it under contract and then look for the money. And if you can't find the money this way, you're certainly not going to find it any other way. And for my more experienced investors out there, that might be thinking, well, that's not how I do it.

Well, for my more experienced investors out there, that depend on other people's money to keep their business growing, whether you've ever thought of it in these terms or not, this is, in fact, how you do your business too. And if you know you can get the money for your deals before you get it under contract, it's because you've got some experience under your belt. It's because you've created a relationship somewhere,

a relationship where you are trusted and believed to be competent. But it didn't start out that way for you, did it? No. To start, you've got to first. find the deal. You got to put under contract and then look for the money. If you truly have a deal, the likelihood of you finding the money is very strong. Finding the deal is the hardest part. Right now, there is an abundance of people out there with money looking for deals. They are looking for you. So if you find the deal first, get control of it via a purchase agreement, and that abundance of

money will appear. Now, it's not going to work 100% of the time. Nothing does, okay? Nothing does. So don't expect it to work every single time. But if you can't find the money this way, you're not going to find it any other way. I mean, this is essentially what we talked about during last week's webinar. We went through a very simple business system of, one, generate a motivated seller lead.

Two, set an appointment with that lead. three, ask questions and get all the pertinent information. Four, take that information and present an offer. Got it? One, generate a motivated seller lead. Two, set an appointment with that lead. Three, ask questions, get all the pertinent information that you need to make an offer. And then take that information and present the offer.

It takes absolutely zero dollars to conduct those four steps. Zero. It takes nothing. You don't need any money yet. and if you completed that simple little system right there two to three times a week, you'd easily have a six-figure real estate investing business. And you need no money to do that two to three times a week. I mean, finding the money, if you did that two to three times a week,

finding the money would be the very least of your worries. I promise you that. And like I said, when I began answering Joseph's question, if you've never done this before, it can be tough to comprehend. I get it. It takes a little bit of faith the first time, but only the first time. Once you experience it yourself, you'd be like, oh, okay.

Why did it take me so long to do this again? You'd be like, this was so simple. But you've got to take step one to get to step two. Step two might be very, very unclear, but it becomes more clear if you take step one. Like I said, if you can't find the money for your deals this way, you're not going to find it any other way. Trust me on this, Joseph. I have no reason to steer you wrong, okay? I record this podcast each week in the interest of helping you, all of you.

I want you all to succeed at this. I know what real estate has done for me, and I want you to have access to that too. All right. So if you have a question that you'd like me to address here on the air, please call the Epic Real Estate Investing Hotline at 1-888-9-1-7-0.0.0.000. 1-8-88-8-891-7203. So that's it for today. Until next time, to your success. I'm Matt Terrio, living the dream.

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