Epic Real Estate Investing - Fix n' Flipping with Koko Kelejian | Episode 138

Episode Date: December 29, 2014

Join us as Matt interviews L.A. house flipper, Koko Kelejian, on the last podcast of 2014.  Koko discusses how he got into real estate investing, where he finds his deals, and what the most influential part of his business has been.  Enjoy! ------- The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? E ducation P roperties I ncome C oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Yeah, hello, and welcome to Epic Real Estate Investing, the place where I show people how to escape the rat race using real estate. Hope you had a very merry Christmas, and I hope you have a very safe new year. And I've got a great show for you today, and I've got a great announcement to make as well. January 17th. It's coming up. January 17th, the Epic Real Estate Investing team and myself will be in San Francisco for one of our Grub and Grow Rich events. You can go to grub and growrich.com to reserve a spot. Ticket includes all you can eat, all you can drink, and all the real estate questions you can ask. I'll give a short workshop on how to mitigate risk from your real estate

investing. And then after that, it's open forum. Ask me anything. We'll talk about anything you want to talk about real estate related. Or we can even just sit there and and kind of talk about how good the chicken wings are. It's up to you. And, oh, you know, actually I almost forgot. This will also be the premiere of the Epic Inner Circle Mastermind, which is essentially a meeting, a private meeting before the meeting. And you can find information for that at Grub and GrowRitch.com also.

And if you happen to be a Inner Circle coaching client, both events are free for you. And if you'd like to become an Inter Circle Coaching client, I'm opening up a few more spots. I can handle a few more success stories, as we've already got several in the making. I can't wait to share those with you. And if you want to be next, go to epicprocoaching.com, epicprocoaching.com and take a look to see if becoming an inner circle coaching client makes sense for you.

Now, that actually reminds me of a question I got over this past week from one of my inner circle coaching clients. And they asked, when I meet a seller, should I tell them I'm an investor? Now, I'm choosing to answer this question because it actually comes up more often than you might think. As many new investors are a bit reluctant to disclose that they are indeed investors because I guess they think the seller might not want to do business with them because they're an investor. And you know what? That's true. That's absolutely true.

Some might not want to do business with you. But that's no different than so many of those would rather not do business with a real estate agent either and would rather do business with you. the truth is not everybody is going to want to do business with you. However, why would they not? Well, it has nothing to do with whether or not you're an investor. It has to do really with their level of motivation more than anything. You know, a truly motivated seller doesn't care who is bailing them out of their distress, out of their situation.

So just as long as someone, you know, bails them out. That's the primary point here. If the motivation is there, if you're dealing with someone that needs to sell, It doesn't matter whether you're an investor or not. Okay, that point is, you know, moot. I think that's the right word. And so that's the primary point. The secondary point is you don't want to mislead anybody.

You don't want to do that. And you don't want to conceal any truths. No, I mean, not only is that the wrong thing to do. I mean, it's not the right thing to do. It's not how you should deal with people. And also it's not only is it the wrong thing, it's typically sniffed out by the seller eventually. I mean, it's just going to come up in your whole disposition. They can see right through you.

Okay, they're smarter than you think they are. Well, most of them are. Or if so, but if they don't sniff it out, it will rear its ugly head at the most inopportune time, making it even more difficult to, the transaction even more difficult than if you've just been up front in the beginning. Okay. So just, yeah, tell them you're an investor. This is what I do.

It's how I make my living. It's how I feed my family. Now, do you need to sell your house or not? That's your, that's your, uh, your mannerism, your character, your discharacter. position. I mean, here's the typical scenario. The seller asks if you're an investor. What do you say, right? Are you an investor? Well, this is what you say. You say, yes. Do you still need to sell your house? That's it. An answer with conviction and confidence. But in your answer with another question, don't, and don't assume anything. I mean, don't assume that the reason that they're asking.

You have absolutely no idea as to why they are asking. Maybe they're hoping they are dealing with an investor because they know you're a pro and you can make this happen really fast for them. Or maybe they flat out don't like investors and they don't like the idea of you profiting on their distress. Who knows? Whatever it is, though, don't assume. You have no idea as to why they're asking. Now, the most likely follow-up question might be along the lines of, are you going to

resell it? So they want to know, are you going to make a profit? Okay, maybe that's what you think they want to know, but they're asking, are you going to resell it? Don't buckle when you get this question. don't be apologetic about what you do. Don't be apologetic because you're going to make a profit when you do resell their property. I mean, here's how I found I get the best response when answering that question.

Are you going to resell it? My answer is, well, I might, but my intention is to hold on to it. I won't know for sure, though, until I complete my due diligence. I wouldn't let that concern you, though, because if I decide not to hold on to it, I know someone that will. What would you like to have happen? Or some question like that. It depends on where you are in the process.

But just be straight. Yeah, it's my intention to hold on to it. That's not my intent to resell it. But, you know, I'm not really going to know until I can look at the market and the market conditions and do a little bit more due diligence on the property. And if it fits my portfolio, you bet I'm going to hold on to it. But if I don't, if it doesn't fit my portfolio, don't worry. I got someone else that'll take it.

So don't let that concern you. You still need to sell your property. So don't be apologetic about making your profit and be straight with people. I mean, remember stage one? Think like a millionaire real estate investment. investors make profits. That's their job. And that's yours too. So on the phone, I've got one of Los Angeles's premier fix and flippers. He happens to be in my mastermind group that I mentioned last Monday. And he's becoming a very good friend of mine. I've asked him to come on the show and share a little

bit about how he got started, how he lost everything in 2007 and how he got it all back and what he's doing right now with his fix and flip business. And he's there also to share the little shifts that he's making for the new year. He sees the market evolving in a certain way, so he's going to evolve his business. He's going to share that with you. He's got some really good ideas on finding good deals in the new year, and we're going to talk to him in 30 seconds right after this. Does your money work for you as hard as you do for it? If not, no worries. You do not have a money problem. You merely have an idea problem. We're cashflow savvy.com, and we'd like to share a new idea with you around income real estate that can transform your financial future.

and accelerate its arrival. Go to cashflow savvy.com and download a free investors package. Cashflow savvy.com. You do not have a money problem, merely an idea problem. Cashflow savvy.com. More ideas, less worries. Cashflow savvy.com. On the phone, I'm joined by Los Angeles Fix and Flipper Extraordinaire Coco Collegian.

Coco, welcome to Epic Real Estate Investing. Hi, man. How are you? Good day be here. Fantastic. Glad to have you here. Hey, just to get started, why don't you just kind of share with us how you got started in real estate investing? A little bit about your background on how you came to be a real estate investor.

Sure, absolutely. You know, it's funny, but I actually started out as a chiropractor. And you probably don't even know that. No, I did not know that. Yeah, yeah, I was actually chiropractor practiced for eight years. And that was fun and interesting while I was there. and I got introduced to real estate sometime in 2004, haphazardly, actually. And it was during the boom of, let's say, Vegas and whatnot when those spec homes were taking off.

And my father had actually thrown my name into the hat, sort of speak, for building these spec homes out there. Next thing I know I'd get a call from Katie Holmes that I won a slot in their raffle there. And that's how we started and started doing it. and the spectrums out there and picked up three of them and then also went out to Cape Coral, Florida, which turned out to be a great boom bus cycle out there as well and picked up about four of them out there. So it was interesting because those two markets at that point in time, 2004, 2005, they went up, I think, 48 and 49 percent respectively. Right.

On a year over year. So it was absolutely nuts. And that's why I got interested into it. And I moved myself over to real estate officially, I would say, 06, I think it was. And we started lending to begin with. We opened up a shop here in Studio City. And we opened up a lending firm and did a lending thing for a while until the bus happened. And we felt that really, really hard.

That was, I think, in 2007. So everything came to a standstill. Doors were being locked on lenders. just remember our entire loan pipeline essentially just shut down overnight almost. And I remember it was July 2006, if I'm not mistaken. And we're doing loans and we did a pivot again and we moved into real estate and obviously the stress sales were a large part of the market at that point in time. So we started getting into that and slowly evolving into a,

the short sales and so on and so forth. And we gave a big short sale office doing our first ones, and I think 08 is when we started. And then you could do those back-to-back closings. Right. So it's really interesting. Yeah, so Corey Bowright. I was a troll on his forum for a long time, you know.

It's funny, but now I get to see him in some of these mastermind events, and it's awesome to actually rub shoulders with guys like that, guys like you. And that's what we started doing a lot of short sales, a lot of doing the fix and flip stuff. We've back-to-back closings that eventually dried up because the title companies kept changing the requirements. And finally, you had to actually, you know, close on a property take possession. And then, of course, we sell it. Right. So that's what end up happening.

We end up doing a lot of the fix and flips. And we're doing that for the last, I think, for six years at this point. and we started getting to high-end short sales, the higher end of the market. And here in California, there's a ton of those, and started doing that for a minute. And then now I started doing some high-end custom home building.

So we've got some of those in studio cities, Shumatoaks happening. Some big monster projects, 4,500 square-foot homes. So that's been the gist of it pretty much. You know, it's just been a slow, but hopefully planned out methodical adventure moving forward in the market, you know? Right, right. So you've really, you've been through it all.

I mean, you went through the, you went through it on the investment side with, you said Las Vegas and Cape Coral? Yep. Yeah, those two places got destroyed. And then the lending environment got destroyed. So you really, like, you really got hit hard when the bust happened. Well, I mean, first. of all, why did you choose to try it again?

And how did you, you know, pick yourself back up and get started again? You know, when the lending crashed in 06, it was just a wake-up call. It was like, okay, well, this was too easy for too long. We knew that. And, you know, we were going to meet the guys were writing three-point nagam option arms, you know, and then doing two those a month and taking off golfing for the rest of the month. You know what I'm saying? That's what they were doing.

And so, you know, three points on 500,000, you know, and that was it. So it was just too easy. And it had to come down. The hammer had to come down and eventually did, obviously. But there was just a lot of opportunity. We saw the opportunity. We always wanted to get into that side of the real estate business. But we didn't know anything about it.

You know, I mean, I don't tell this to many people, but I'll tell you. You always want to get into what side of the real estate business? The rehab business. Rehabism. Got it. Yeah, the design element of that, that really piqued my interest. You know, basically designing those homes and bringing something on the market that was something that was tangible. It wasn't just paper.

And you had, you know, some work and effort involved in it, and it was an end product. You know, so that was appealing to me. So that's what we looked into that part of it. And, you know, just doing the paper shuffle, it was good while it lasted, but we knew it couldn't last. It was just too easy to do back-to-back closings without participating in the transaction at all. You know, so. But, yeah, what I was saying is that, you know, I don't tell those to many people, but I was trying to take a fast track into that part of the business, the rehab part of the business.

And I got taken for like $5,000 with one of the gurus, you know, the old, old school gurus back in the day. And I thought I could take a fast track to the investing world, you know, try to learn it overnight. And that was a big mistake. I learned it through the ropes, learning as it progressed, going to different types of events,

meeting with people, rubbing shoulders, you know, and learning essentially how to do these transactions, looking online and trying to find my way. So, but we had to pick up and regroup, and we did that.

And I'd have to say, the last, you know, five, six years have been awesome. I've been really awesome. You know, and I think it's come to a pivot, I think, slowly but surely. Right. Yeah, let's talk about that.

You know, you're someone who was immersed in the business from both sides just before the bus. Then the bus happened and you've recreated yourself. You've built your business back up and you're doing very well for yourself. So what are you doing this time around in preparation for potentially another bust? Obviously trying to limit our exposure and try to hedge our bets. So we're trying to get these last projects out the door right now. And once they're done, I think we're going to be holding off on that, just watching the market. And a lot of the short term, most of our rehabs are done in about, excuse me, we're in and out of a property in 120 days.

So that's what we'd like to keep it at four months. And most of the time our rehab essentially takes four or six weeks. And then in escrow, we try to get an escrow. see in like less than 10 days. We follow a couple different guys that methods for listing it low, trying to get activity quickly, get the desk immediately, and then move forward. So that's what we're trying to do to limit our exposure. And we are taking our ARVs and scaling them back a little bit, you know, just knocking a little

bit off of that, just to be conservative, just to make sure that we're protected. And we're not going to overdo a property. you know, what we do is we try to bring in, right now there's a real shortage of rehab homes on the market. And in California, like Southern California, California in general has got a 40% decrease in flip sales this year. So it's a huge, huge amount of flips that are gone from the market. And so what you have is a little bit of equity. I think we just passed the threshold. We have less than one million underwater homes in California.

just recently. So with that said, now you've got a lot of people that are essentially underwater from 2007 on. Now they've got a little bit of equity. Now they're like, okay, let's get rid of our property. Let's move up. Let's do something. So you've got those people coming to market. I think that presents a lot of opportunities there because now you've got possibilities to work with sellers as subject to deals.

Or, you know, or even working with them, to do a partnership of some sort, you know. So those, we've already done a couple of those transactions in the last six months, and those have worked out fantastic for us because, you know, they can carry the paper. We'll just put it into a trust. So there's a lot of different ways to organize those for the beneficial to both parties, and that's worked out. Super, super.

So, you know, short sales are definitely, they're not gone, but they're becoming a little bit fewer and further between. How are you finding most of your deals right now? I'd have to say that most of them are relationship-based. And that's been cultivated over the years with different agents and so on and so forth. But we do do some type, with a little bit of organic marketing as well. And we're essentially looking to partner up sometimes with the client, you know, the traditional sale or even a short sale.

you know, sometimes we can help the client stay in the property for a little bit longer. We've used legal channels to assist the client, sometimes in prolonging that foreclosure and so on and so forth. So we're using those to essentially get prices down, grind the lender down a little bit, and have them work with us because once a file goes into court, you know, they're a lot more, let's say, easier to deal with and just dealing with the short-cell negotiating team, you know, at the back of the lender. So that's helped out tremendously as well. Got it. Got it. So let's see.

I know you work with your wife, Gina. And one of the bigger challenges, I guess, with the listeners here at this show, I wouldn't even say the listeners of the show because I don't know all of them, but the ones that have communicated with me is the ones I see succeed are the ones that are on the same page with their spouse. And the ones that have challenges are ones that, you know, they find themselves being an entrepreneur and a non-entrepreneurial environment with their family and their friends and, most importantly, their spouse. And so they struggle a little bit.

Has it always been, you know, you guys always been able to work together easily? I think I'd be lying if I think, you know, so. I was hoping you would be truthful about that. Right. Absolutely. Yeah. You know, we do have a fantastic relationship. And, of course, because we work hand in hand.

in the business, it puts us on the same page with a lot of our conversations, and essentially we do have to be on the same page if we're moving towards the same goal. And, you know, she handles a different part of this than I do. So that's nice because we all have our separate departments. And of course, everything has to mesh together, so we have to have a lot of communication. I think that's the key to our relationship is that we do have a lot of communication. Unfortunately, I know a lot of investors, they'll be doing one thing while their counterpart is doing something else, you know, maybe it's a, it's a, you know, a 9 to 5 type of job or what have you. So it's difficult to meet at the end of the day or the evening at dinner and essentially

go over everything that transpired during your day. Because as you know, Matt, I mean, the things that happen during our day sometimes are just, you know, crazy. Mind-law, right. Yeah, from escrows to out-of-state investors to, you know, to title companies and these issues. I mean, there's all sorts of stuff. So, but being on the same page as far as the business is concerned, that does help us out. And we always have a commonality because we're always trying to strive towards the same goal. So, again, communication.

I think that's the best thing for that. And if you are an investor, and you know, I had the same, I mean, you've heard this a million times, but how many times have you heard parents, family, this, that friend, you're crazy. It's not going to work. Right. You know, give it up. Really? you're going to flip homes and make a lot of money.

You can't even buy a car with your credit, right? So all that stuff. But, you know, it's not true. You know, it's not true because, unfortunately, those people can't see past the small obstacles are in their way. And, you know, just getting past those couple hurdles that's going to put you over the edge. You know, rubbing shoulders with people that are in the business, I think has been the number one most influential thing to my business,

seeing what people do and looking at the guy next to you or the lady across from you and saying, hey, you know what? This is what they're doing. And that's awesome. And they're doing it. They're not just saying it.

They're doing it. And so I can do these things and may not be as good as them day one, but I can do them and I could learn. And next thing you know, you've got a deal falling in your lap. You're like, okay. Let's go to bat.

Right. But. Got it. That's, yeah, you know, when I first, almost all of my original business was based off relationships. And not until, you know, I say the last several years have I been a little bit more intentional about creating it and doing the marketing and scaling. And I found that the relationship business, although it's not the quickest way to build the business, it is the best way. Is that been your experience? You know, I would say it is one of the best ways because it continuously brings,

you know, haphazardly when you don't expect it. And that's a good thing and a bad thing because we do have a, I think we've got a pretty good sphere influence and we try to stay connected with that sphere as best as we can. And of course, we're

two people, my wife and I. So then, you know, the sphere is larger. So with that said, it is fantastic when those deals come through because it's family, it's friends, it's relationships, it's attorneys, it's agents that you work with and so on.

And that stuff just comes to you because they know that you practice good business. But on the other hand, it can't be accrued sometimes because when that business does not come through the pipe, then of course you don't have an organic means to generate continuous business. And like you said, we've been more aggressive in that realm as well trying to market. And right now we're branding her brokerage as best as we can and pushing that as best as we can. and making sure that we're out there touching even people that we don't know that are not in our sphere, just pushing a sphere out as far as we can so we can generate more organic business that comes to us. But marketing in itself is one of the things that I'd like to be an expert at

and try to strive for different ways to produce good quality leads that come into the marketing channels. And that's one of the things that we're going to focus on 2015 is direct-the-seller type of marketing, Um, you know, be it like every day, every door delivery with, you know, use of U.S. Postal Service, um, uh, be it, uh, farming specific areas, postcards, the specific, um, mailing list and so on and so forth. So, you know, a combination of those, but you're absolutely right. It does take a minute to actually get those relationships built and for them to produce a business. But when that business comes in, I mean, it's rock solid. You know, you don't have to convince them. Right. don't have to deal with, you know, them shopping you usually. I mean, it's not the standard, but usually it's, it's, hey, you know what, I refer this person over to you. So what do you, you know, you got to, you got to make sure you offer them great service and then they'll come back again and again. So that's what happens with family and friends that come to us. Right, right.

You know, you said something that sparked a question for me. You're getting ready to pick up to your marketing in 2015 with some various sources that you had mentioned, various strategies. Are you guys looking at a difference between branded and versus non-branded marketing? You try a little both, or are you going more one way towards it or the other? You know, that's a really good question. And I've heard a lot of different schools of thought about that. And I know that people have test those ideas out, and I think that's a great idea. You definitely have to test it out.

I'm looking at it from a brokerage model. You know, it depends on, you know, sometimes the individual investor doesn't have a relationship with a brokerage or whatnot, but sometimes it does have those types of relationships, synergistic relationships with, let's say, a brokerage. Because the brokerage can get into a home quicker than sometimes the investor can. And some people will tell me different. They'll say, oh, well, you know what, a lot of people don't want to deal with agents. But it depends on what you're pitching, right? If you're going to get your foot in the door, I mean, because all we're trying to do is have a conversation. If we can have a conversation with a potential seller, then there's a possibility that we can make something happen.

It may not even be fruitful for us. It may just be a referral, but that referral will maybe pay off later down the line or so on and so forth. But just having conversations, if I can have 10 conversations with 10 different sellers, then I might be able to close one or two of them. But if I can't get in the door to have those conversations, then there's going to be no business. So sometimes we will market branded through the brokerage to basically show a couple different options. You're wanting to sell? Okay, great. Well, if you want to sell and you want to be like, you know, if you want to put your property up on the market just like everybody else is doing, then fantastic.

You can definitely go that route and we have a brokerage to do that. But if you want to cash off or you want to quit closed or your circumstance is a little different, then by all means, we can get that offer as well. Again, this is coming from a brokerage. And we can reduce our commissions and so on and so forth. But again, it's opening the door, cracking that door so we get a conversation out with them. You know, one of the pitches right now is in order to work with more clients, we will

renovate the property at our expense, right? Record a lien on it. And then when the property sold through the brokerage, the seller gets all the benefit

of the additional revenue on the sale. So it works hand in hand with, again, we talked about earlier with some people that have a little bit of equity, but in the Southern Cal area,

you've got a lot of older homes right, 1920, 90, 30 builds. So a lot of folks have not renovated their homes. So you've got a lot of older, you know, deferred maintenance happening. So for those people, if we come in and say, hey, you know what, let's do a $80,000 rehab. But guess what?

You don't have to pay a dollar. We'll handle all the expense. And then instead of selling your property for $500 to be able to sell it for $6.50. So you're going to put additional $40,000 or $50,000 in your pocket. So what will happen is we'll work in concert with the seller. Of course, there's a profit margin on the rehab portion. Of course, we're getting the listing, too. At the end of the day, the consumer is selling their property for a higher number

and walking away a very happy camper, hopefully. So one of the marketing strategies that we're looking into right now and actually producing the material for as we speak. I like it. I like it. Yeah, that comes to the brokerage, though. But then there's on-branding stuff like you talked about. I want to buy your house, right?

With the go back to your strategy just to play devil's advocate here. I mean, I like the strategy, and then you protect yourself by recording a lien on the property for obviously the amount you put into rehab and probably your markup there, right? Mm-hmm. Okay. Right. Is there, what happens if the seller decides they don't want to sell after you've done the rehab? Yeah, it's a great question, and that's bound to happen.

And what traditionally we'd like to do is put the property into a trust. And if we, as long as we do that, as long as it's understandable about that, you know, we can be blitzed both as beneficiaries or essentially we can just take the property subject to. We can, there's a lot of things, we can, a lot of language that we can incorporate into that trust where it has to be sold and, you know, it has to be priced at this number and reduced after this many days and so on and so forth. So it can be all guided in the trust and then the trustee will just carry out those directions. So we can definitely do it that way.

Another way we could do is also get a power of attorney for this specific property only. And with that said, we again can have power attorney to sign a listing agreement, to sign documents, et cetera, et cetera. It can revocable power of attorney. I should clear that. Right. So if we're able to do that, that would hopefully prevent a lot of those issues from happening. But, you know, you're 100% right.

Sellers will change your mind because once you rehab their home and they're like, whoa, wait a second. Yeah, this is nice. I want to stay. Right? Right. Totally. Cool. But, yeah.

So you mentioned, you know, that, you know, there's definitely a shift happening. You're noticing the market conditions changing here in Southern California. And I think it's pretty much across the nation. People are noticing changes in their market. And the lessons that you've learned from the first time around, you're limiting your exposure. And then I know you've got a few properties on the market right now that there are a few projects that you just finished. And then you were saying you're going to pull back a little bit after. after you execute these exit strategies.

What are your thoughts on that about that strategy or about the future? About what we should, what we'd be doing? Yeah, well, you'd said that you're going to pull back a little bit after you sell these current projects that you have on the market right now. Right, right. As far as building, I'm definitely, I think we're going to retreat as far as building some new projects on because with new ground-up construction,

the process can take, you know, anywhere from a year to a year and a half to get it to market. And that's problematic because, obviously, you know, my crystal ball doesn't work. I don't know how it goes is functioning these days, but, you know, a year and a half from now, I don't know where we'll be at. So that's problematic. And so with new construction, we're going to scale back and wait to see what happens. There's definitely still value, there's a value ad when you add square footage to a property, you know, especially if the price per square foot in the area is anywhere from, you know,

$350, $400, you know, in the San Francisco Valley, a lot of those prices are in that range. And sometimes, you know, we've got San Diego, we just faced the San Diego property that we just unloaded closed desk this week. And we've got a property in Rancho Cucamanga that we're closing tomorrow on. So these properties, as far as price per square foot, you know, we can do a, rehab, you know, at about $25 a square foot on that type of property and sometimes much less. So if we can do that rehab and keep it that low, or if we can add square footage, if we can add 500 square feet to a property at roughly $80, $85 a square foot, but then we're making $350 on it, there's a good value add right there.

So those are the projects that we'll actually look into and consider more. And with those, I think, were insulated to a certain degree. because we're not banking on appreciation to make that deal happen, which is always a, it's too risky. Right. You know, we want to stick to our numbers. We're going to buy at 80%, 80% or below of ARV minus our repairs. We're going to stick to those figures. And we're going to look at those comps.

Like, when I look at comps, I look at comps. You know, what's that bathroom look like? What's this look like? And because right now there's not a lot of rehab homes on the market, I feel like if you put out a superior product, there are still buyers available. The pool is smaller, you know, but there's still buyers available. And, you know, Fannie and Freddie just announced a 3% down payment program for next year. So, you know, instead of 3 and a half, not a huge deal, but still 3%. Makes a big difference in California.

Yeah. Yeah. Right. Yeah. And, you know, the rates are going to be still lower. over for next year. The Fed is, it's going to say that. So it just depends on where the market is because if rates, they stay competitive like this and there's not too much competition as far as rehab homes, then if you do have good inventory that you're able to pick up and you do a good

clean rehab, you should be able to still sell it at your top of your market and still make a decent profit because there's not too much competition. So that's what we're going to try to do. It's just little here, little ones here, little ones there. and just insulate ourselves from banking on appreciation to make the deal happen. Got it. Super. So what do you see is your biggest challenge for 2015? To find inventory.

That's going to be it. Finding the deal, right? Yeah, I think to find the inventory. Finding the deal. Find the deal. Yeah, you know, there's a lot of deals before, and it was just you had to race to get to them. You know, you're just competing with a lot of offers, a lot of people, a lot of investors, and so on and so forth.

but now it's basically finding the deal. So now what's going to happen, I think, is, I mean, again, 40% less splits this year already. Right. So a lot of folks have left the market. And you're going to have to be good at finding the deal. So what we're going to try and do is become experts as far as marketing is concerned. And that's where maybe the brokerage model will help more. Maybe direct-to-seller marketing is going to help more with,

a unique selling proposition, you know, your USB, something that's different, something that's unique, to help them sell, help them get more money out of their project, property, excuse me, and so on and so forth. So that's going to be the thing that we're focusing on and to try to get deals that way. And, again, maybe subject to, you know, try to structure those, especially some of these folks that are obviously, you've got a huge 65 and overpopulation that's retirement-ready. so a lot of paid-off houses, a lot of retirees that have two-story homes that no longer can climb those stairs. I've got family members like that, you know, paid off home.

Sooner later, they cannot climb those stairs, and it's going to be detrimental to their health, so they're going to have to sell that property. Well, you know, that's a small niche, but it's there, you know. those properties. Right? No, I mean, just, you know, you got to start thinking a little bit now and how you're going to find the deal and where likely the distress is going to come from. Right.

Yep. Find the pain, it's all the pain, right? Exactly. Exactly. The news says, if it bleeds, it leads. You know. Yeah, there you go. Okay.

On the other side, what are you most optimistic about for 2015? What are you most excited about for your business? I was excited about for business. Well, I like the model, the brokerage model where that's going. I think that that model that we're trying to pitch right now, the renovation type of model, I think that's, there's something there. You know, we're going to hammer out a lot of details and do some more deals. We've done a couple already this year, so we're going to hopefully get some more deals under our belt,

launch that marketing, which I am excited about. I think it's different. It's new. and I don't think a lot of people have seen it. So they're like, okay, that's interesting, you know, this might work out. And it's a win-win. As long as it's a win-win for most of those, I've always not taken advantage of people. And that seems to be the key element.

You know, are we really providing something of value? Yeah, absolutely. You know, and we've got our resources because what we're doing is take a look at what resources do we have and how do we exploit those resources. Well, you know, we've got obviously a construction background. We've got obviously a design background. You know, can we put these things together and make a house, you know, a true designer, home, and so on and so forth to move on the market quickly, to be sold quickly? Because when buyers are looking at the market and they see Home Depot flip, Home Depot flip.

You know, like, come on, guys. Let's get a little original as far as what we're using the materials and items that we're using. Sometimes it's just as simple as, you know, using a $4 tile versus a $2. You know, and that's not much, you know, on a couple hundred square feet, it's not much, but it makes all the difference. You know, so that product that we're putting out makes all the difference. So focusing on the design aspects of our business and focusing on that part of that marketing, I'm excited for that. I think that's going to be different. It's going to be fun.

It's going to be cool. And hopefully it'll be win-win for everyone. And we'll tackle Southern California by storm. Sweet. See what happens. Yes. Yeah. I'm here cheering you on, Coco.

Thank you, sir. Thank you. You know, one of the things that I've never really expected from producing this show was the amazing connections I've been able to make between people, between my guests and my audience. And we've talked about a lot of stuff here today on different subjects. And I'm sure it sparked the interest of various listeners in various ways. If someone wanted to get in contact with you, Coco, what's the best way for them to do that?

Absolutely. I'm giving my office number. We're here in the Valley, in the Sanford County Valley. We're in Woodland Hills and Sherman Oaks. My number is 818-290-833-33. Again, 818-290-833. Definitely, if anybody wants to reach out, I need something. I'm here available.

Any friend of you is a friend of mine, Matt. Super. Super. Likewise. Likewise. Awesome. Well, thanks for joining me on my last episode of 2014. We're getting ready to going to 2015, and maybe we'll check back in mid-year and see how it's going.

Excellent. Excellent. Thank you so much for having me. I really appreciate it. Love your show. And best luck to everybody out there for 2015. Awesome. Thanks, partner.

Have a good one. Take care. You too. Bye-bye. Coco Collegian 818-290-83333. 818-290-8-3. 3.33. Attention, attention.

Shocking website reveals that shocking websites aren't really that shocking. All kidding aside, go to find motivated sellers ASAP.com to get the inside scoop on how the nation's most successful real estate investors really find their deeply discounted properties. Go to find motivated sellers ASAP.com. Deeper discounts, less secrets. Find motivated sellers ASAP.com. Have a safe and happy news. year. I'm Matt Terrio, living the dream.

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