Epic Real Estate Investing - How to Find Deeply Discounted Properties | HTH 014 | 522

Episode Date: November 21, 2018

Buy deeply discounted properties directly from the sellers, provide them a service, and put really good money in your pocket! Learn where to acquire cash flow properties, how to find deeply discounted properties, and why it is best to buy directly from the distressed owners. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Don't wait for appreciation to buy real estate. Buy for cash flow and wait. In other words, Hold That House. Your host's Matt Andrews and Matt Terrio. Yes, hello and welcome. Flipping houses, it can make you rich.

Holding them will make you wealthy. And that's what this show is all about. This is the Hold That House show. And it's about becoming wealthy. You know, real estate is the final frontier where the average person has a legitimate, genuine shot at becoming wealthy, at achieving wealth. And it doesn't come through flipping houses. You can make a lot of money there for sure. But holding those houses, that's what's going to make you wealthy.

So welcome, glad you made it. I am Matt Terrio, and over there is Mr. Matt Andrews. He's on fire. He is on fire. And before we begin, we've got a free gift for you. Go to hold that house.com and download the 4thare. hour work month. I know it sounds too good to be true, but it can be your reality if you follow the 10 commandments to managing property managers. And that's what that book is. That's what it consists

of. And it really is the key ingredient to financial independence through real estate. The key that they're just not telling you about. But never fret. Don't fret. We're telling you all about it. And you can get that for free. For free at hold that house.com. All right. Maddie, Maddie, what's going on, bro? I'm doing good, man. I'm doing good. What are we talking about today? You're looking good.

Thanks, buddy. Yeah, you've been working out. I've been working out. That's not I was thinking. Eating well. He must be working out. So we talked a lot about managing properties, a lot about holding properties, a lot about a lot about finding the good tenants and managing the property managers, but how do you find

the properties? Yeah, how do you actually get the properties that are going to be cash flow properties? Absolutely. I mean, as a buy and hold investor, like your number one priority is to make sure that that investment pays you back and pays you back consistently and generates an income for you. And that's cash flow. So that's your first calculation. Your second calculation is if you can buy that cash flowing property with some equity actually built into it, buying the property at a discount. Sure. So that's your second criteria you'd like to meet.

Absolutely. Although the first one is enough. You know, if it meets your minimum deal standards and you get the return on investment that you're looking for, the first criteria is enough. If The cash flow is there, it's enough. But it can be even better if you buy for equity. Absolutely. Don't pay full price if you don't have to. That's right. That's right.

So how do you find these discounted properties? And specifically, we're going to talk today about how to find deeply discounted properties. Yeah. And so we'll just kind of discuss the three realms to acquiring property, or these three realms of where you can acquire properties. And the first realm is the multiple listing service, the retail market. You're going to find properties that are listed with brokers. You're going to find short sales. You're going to find REOs.

You're going to find, you know, that's what makes up the multiple listing service. Sure. And just know that you can find deals there. They certainly exist. There are definitely markets out there where you actually don't even need to find a discount. Boom, just buying it off the MLS will cash flow. And like I said, that could be enough. But to find a deal on the multiple listing service, understand that you're probably going to have to submit a lot of offers.

You're going to have a lot of competition. you know, the real estate or the multiple listing service is not what it used to be. You know, it is visible. It is completely transparent. It is accessible. And, you know. In those competitive markets, I mean, you have to make a ton of offers. You do.

You know, I mean, I'm in a few different markets that are fairly competitive. We have to make hundreds of offers on the MLS to get one deal. Just to get one deal. So just the process of offering can kill you if you don't have a good process for that. but it is a numbers game. Right. And like you said, you are basically competing against everyone in the world. There's no barrier to entry.

Exactly. Well, and then the one barrier would be, and this could be a really big challenge, is finding a realtor that's willing to do all that paperwork for you and submit those offers. Exactly. Because I was a realtor. And when investors would come into my open house and say, hey, I'm looking for a deal, all that said to me was, I'm going to have to write a bunch of lowball offers for you. And that was just a person, a client that I didn't want to take on.

So those are some of the challenges. and the barriers that you're going to have to, you know, find a deal on the multiple listing service. Sure. And some of you would say, well, isn't that, you know, can't you find good short sale deals on the multiple listing? Well, again, that's a numbers game. It is a number of game. You have to put in probably hundreds of offers that, you know, for those of you that don't know, short sales as an acquisition strategy can be very lucrative.

But it is a numbers game, and it's all about a pipeline. Yes. So you have to make tons of offers on short sales. You have to be prepared to have those in your pipeline for sometimes, you know, five months, eight months a year. We had one short sale that was in the pipeline for 18 months before we got the first counter back from the bank. You know, and then it's just a process of going back and forth with the bank.

So again, you know, can you get good deals that way? Yes. Can you do it by just making one or two offers? No. Right. It is a numbers game and then it's a follow-up process and it's a process you just have to work for quite a while. Very time intensive.

Very time. It takes a long time. They should call them long sales. They should call them extremely long. long sales. Exactly. Exactly. All right.

So that's realm number one. Realm number two. Now, this is kind of what I call the good old boy network. And this is where a lot of the big players, the big fish will acquire their deals. And that's through auctions. That's through asset managers. That's through more auctions because there's several different types of auctions. Sure.

And what it takes to play in that game are deep pockets and contacts. A network. And moving quickly, for sure. And you can play in that game if you are so inclined or so blessed with those types of resources. And that just takes a long time. You know, you can go in there with other people's money and play that game. You can go in there and create those contacts. But again, it's time intensive.

And people that are winning at that game don't like outsiders coming in. They don't. They don't. And the more competitive of the market, the more closed that group is. Exactly. You know, I mean, if you're the newcomer, you know, you're going to get shut out and you're going to have to figure out that system. And it, you know, took me in some of the competitive markets I was in of going down to these auctions for, you know, six, eight months before I really figured out who was who and what was going on. It's very political.

It's very competitive. And like you said, the people that are there already, you know, they're trying to lock you out. Right. You know, they're trying to band together and make sure the new outsiders aren't getting in. Right. And so you have to have pretty thick skin if you're going to play that game. and you have almost no time for due diligence. Right.

So what we talk about a lot, working with, you know, other sources of acquiring properties, you have the time to kind of check a property out and maybe change the contract or even back out on it if it didn't end up being what you thought it was. With auctions, you have very little time for due diligence. In some cases, like some of you probably seen on some of the house flipping shows or they buy at auctions, sometimes you don't even get to see the inside of the house. You know, maybe you had time to drive by it, and then you're going to the auction. you're putting in the bid and you're putting down, you know, in the case of some of the

options I work out, you're putting down 8 to 10% right there and you've got to get the rest in cash to them in 48 hours. So, I mean, you have to move really quick and you have to have a system that's almost failproof as far as knowing what you can offer for these properties. And it can be a great source, but it's a whole business in it of itself. Yep. And it's just a different level of the game. It is. Yeah. And it can be fun, but it ain't for beginners. Right. That's for sure.

Yeah. And just like all of these approaches, they all take time. They all take, you know, resilience and tenacity and some experience. Yep. You know, the experience goes a long way here. So that's realm number two. Realm number three is where the really deeply discounted properties exist. And that's going straight to the source.

That source being the private property owner. And to get deeply discounted properties from the private property owner, you're going to look for three types of distress. You're going to look for distressed properties. Maybe the property is in need from repairs and rehab. Or you've got to look for distressed owners. And they can, I get, they're all, the distressed owners, they're distressed for one of three reasons. Either they've got financial distress, the property's in distress, or they have personal distress. So they've got a bankruptcy or a divorce or a job relocation or a job loss, a death in the family. Or they're just, they, because they've lost their job, they're behind on their tax.

or they haven't been able to get around to those repairs. And so these are people with problems, property owners with problems. And where you can get the deepest discounted properties are positioning yourself as a problem solver. And this is what I have found is that distressed property owners will exchange their equity for peace of mind. And they will do it every single day of the week. And twice on Sunday.

Absolutely. I heard that in a movie once. You can't put, yeah, that's pretty good. Twice on Sunday, yes. You can't, yeah, you can't put a price on freeing somebody from the worry that they're experiencing or relieving a burden. You know, people will do crazy things to get out of situations like that. They will. I mean, crazy things like selling you their house at 25 cents on the dollar.

Happens on a daily basis. Happens on a daily basis. And here's the thing. You're not taking advantage of them. You're doing them a favor. And now mind, you absolutely are. Yeah, absolutely. And you are because.

You are. You know, some of those people are facing something that would be far worse than just not getting full market value for their property if they don't get it sold quick. Exactly. You know, the property could degrade. You know, it'll cost them more. In many cases, it could go into foreclosure. I mean, you truly are, as somebody coming in to buy a property at a deep discount to someone in distress, you are providing a service. And, you know, what a cool business to be able to both provide a service to somebody and put really good money in your pocket because you've got another great cash flow rental.

Exactly. So it's great. And that's just regular business already. I mean, the highest paid people in the world are people that solve people's problems. That's it. Right? Whether it's a product, whether it's a service, and this is no different. Sure.

And these opportunities happen every day. And they happen every day because life happens to people every day. Life doesn't stop. Yep. I'm a knock on wood there. And hopefully this is not my last day. Yeah, exactly. And you're looking pretty good.

I think you're fine. Thanks, right. We'll be back with more right after this. When you go to work for your money, does it return the favor? If not, no worries. You do not have a money problem. You merely have an idea problem. We're turnkey allies.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 turnkeyallies.com and download a free investors package. Turnkeyallies.com. You do not have a money problem, merely an idea problem. Turnkeyallies.com. More ideas, less worries. Turnkeyallies.com. So, I mean, let's talk about.

some of the different ways that you and I use to attract. So how do we find them? How do we find those direct sellers, those distress sellers, right? Particularly how do we get those distressed sellers to raise their hand and say, hey, look over here, I need some help. I need your help. Right. So how do we do that?

So there's a few different ways. I mean, one way, and I'm sure a lot of you have probably heard of this, many of you probably even use this to get the properties you have, that's direct mail. Right. You know, actually sending, you know, researching and finding lists of people who are in some way to stress and there's a lot of different subcategories of that you know out-of-state owners you know Liz Pendens lists I mean I won't go through all the different types of lists you could buy default foreclosure yeah you know bankruptcy lists divorce lists there's all kinds of lists all kinds of

lists and if you guys go to you know what's one of the direct mail services you guys use like yellow letters complete is one that I've used before okay um epic marketing center epic marketing center Okay, absolutely. So, you know, there are different sources. And you can go to those and you can look at the types of lists you could purchase and then you send, you know, letters or postcards or, you know, whatever makes sense for you. You can send those letters to them, say, hey, I buy houses. Here's what I do.

I'm looking to buy some more houses in your neighborhood. If you'd like a cash offer, no obligation, give me a call today. Right. You know, and the right people, if the right people see that, they will call you. Right. They're not all going to call you. No. And you're not looking for all of them to call you.

Right. You're looking for the time. people that need to sell. And the people that need to sell will respond to that message. Isn't it amazing in this day, in 2015, that direct mail is still probably the most effective form of identifying motivated sell-up. Super old school and super effective. I just, when I first heard that, I was like, I'm not going to send letters to people. Are you kidding me? Yeah. And then after a few years of being hardheaded and watching the people around me, find these deeply discounted deals through this means. I was like, okay, I surrendered. and, you know, life has been good ever since.

Proof is in the pudding, right? If it works, it works. So that's one way that we can generate leads. And there's a whole, and we'll probably do an entire show on direct mail at some point. Right. It's a pretty cool business. If you know how to do it right right, it's a great lead generator. For sure.

But you have to do it the right way. You can't just go out there, buy any list and send a bunch of postcards. You have to write them the right way. You have to have to have the right copy on those postcards. You've got to make sure you're sending them to the right people in the right format. And then sometimes it's a cycle, too. I mean, I get calls. We'll do a direct mail campaign.

And sometimes I'll get calls eight months later. Yeah. Somebody saved that card because they knew that they were coming into a time when they were going to need that. And they saved it. And they'll call me back years later. Sometimes we've sent direct mail to people who have passed away. And their kids going through their stuff, find the letter and call us and say, hey, my mom

passed away. I need to sell her house. I found this letter here. And you do business that way. So you never know how this stuff is going to come back to you. It could be the next day. could be a year later. Sure.

You know, your direct mail is a business in of itself. It is. You know, it's, it is the right activity. In many respects,

it's probably the best activity for this specific purpose, but it still must be formed, or performed consistently and with persistence. Absolutely. It's not just one male and boom, you got to have all the deals you need. No, wouldn't that be great?

You're right. It is a cycle. It's a cycle. It's a cycle. Absolutely. For sure. Okay. So that's number one.

What else we got to find distress others? Another way is Bandit Signs. We talked about that. We talked about that in one of the episodes as a way to find good tenants. It works for deals too. And you put the same kind of message on that in a shortened form that you would put on a postcard or a letter or a flyer.

We buy houses, any price, any condition, cash, three days, and then your phone number. Something very, very simple like that. I like to keep my signs simple because you have too many words on there. You have to write it too small and people can't see it from far away. So we buy houses cash in three days and your phone number. Right. You know, sell your house in three days, all cash and your phone number.

Just something really, really simple. The people that are the right people are going to see that as a lifeline, and they're going to call you. You know, so, you know, that's just another method. It's a lot like direct mail. It's super old school, but it's effective and it works. It's not as targeted as direct mail because a lot of people that will see that sign are not prospects to sell their house, right? So it's not as targeted as direct mail, but still a really good method. It can be fairly low cost if you're.

effective at doing that. So that's another way. You know, that's a great way to do it. And then another way, of course, is, and this is a broad category, internet marketing. Right. So again, you know, there are so many ways. I mean, I could just, I could list, you know. That's about 10 episodes it could be. That is. You know, Facebook, LinkedIn, you know, Craigslist, Backpage. Craigslist, eBay Classified. eBay classified. eBay classified. That's right. I didn't even think about that one. And then, you know, a dozen other sites you've never even heard of, you know, probably. Type in online classifies into Google. You'll get about 1,000 pages.

There are a lot of them out there. Two of which you've heard of and the other 998 is like, where are those coming from? Right? Yeah, exactly. So there's all different ways to market and advertise there. It's all about getting in front of the audience who needs that. You know, there are even ways, you know, I was talking with a good friend of mine the other day who's created a really cool system of Facebook pay-per-click advertising.

And he goes in and targets by zip code and targets a certain demographics so that, you know, only people in that zip code and that demographic will see that show up on their Facebook. Hey, we buy a house, it's cash for your house in three days, you know, and that's provided good leads too. So there are so many different ways to attract leads. But like Matt, you know, correctly hit on here, this is how real investors are picking up the deals, because these are the deepest discounts you can buy. I think direct to owner and then direct to an asset manager, probably the two best ways, you know. and the more direct you are to the property,

the better the deal is going to be. The more middlemen you have in that deal, I mean, every middleman in a deal. Takes a piece. Takes a little piece, right? And every middleman in the deal is a barrier, too, to getting that deal done. And I always, you know, I tell everybody that, you know,

so it's like if I can sell a property, if I've got a property you want Matt, and I can sell it directly to you, that can happen really quick. It's investor to investor. We can have a meeting in the minds. We're on the same page. It's done.

Right. But if I'm trying to sell a property to you, and in between we have my realtor and your realtor, and then the people that work for those realtors to do the paperwork and all that kind of stuff, right? Every one of those people is a barrier to us getting that done, and it's going to reduce the price you get, you know, for your house or for your property. As a seller. As a seller. Right. Right. So, you know, think about that. So the more direct you are, the better the deal is going to be. So the smart investors, the, The upper echelon, you know, so to speak of investors are the ones who systemize ways to find these distressed properties and lock them down at deep discounts because they're direct and because they're exclusive with very little or even no competition. Right.

Our auction house analogy from last episode. By going directly to the seller, you're the only guy in the auction house. And if they have a Picasso painting for sale and the bid starts at $1, guess how much you're going to pay for that Picasso painting? $1. Exactly. If there's another person at auction house, who knows how much you're going to pay? Because they might want them more than you do. Absolutely.

Right? So, yes. How much is that property worth? As much as someone's willing to pay that day. Exactly. You know, so if someone's going to overpay for it and you get caught up in the emotion there, you know, you can overpay. That someone might be you. Right. Exactly.

Exactly. So, you know, on the MLS, that happens a lot. We see it happen all the time. You know, like a hot property comes out. A bank puts it with an REO broker comes out. And immediately there's 30 offers. you know well guess what

somebody it may not be me but somebody is going to get that property and they're most likely will pay too much for it right right because you're dealing with 30 other people so half of them will drop off immediately and not put another offer in then they'll go through a second round and then they'll do a highest and best round for those of you that have

bought off MLS you know how this works you get a highest and best request and then whoever comes up to the to the highest number gets it and right now especially in the hot markets people are overpaying right and some of those some of those buyers that are overpaying are hedge funds. They're coming into auctions and they're just simply paying too much for properties,

more than we would pay as cash flow investors. That's why you want to stay away kind of from that realm number two, unless you've got the right information, the right advice, the right experience. If you've got an actual system in play, that realm two can get very expensive. That definitely happens there. So I know this is a lot of work, right?

And there's a reason it's a lot of work because this is where all the money is made as an investor. We've talked a lot about leveraging your time and outsourcing and delegating because managing a property or fixing a toilet or mowing the lawn is not the best use of your time. This here is the best use of your time finding the deals. And you know what's funny is I've found inside of the Epic Pro Academy, my online education site, the I have, my audience has split into two parts. Those that want to do it all themselves and those who think they want to do it all themselves. You know, until they go ahead and die in. Until they become part of the other group. Yeah, exactly.

So that's what makes actually the turnkey real estate investments a perfect option for so many people. Absolutely. Because to find the deals, you know, this is how it's done. You know, this is how the people that, this is their full-time gig, this is how they do it. And this is the best use of their time because if you do this right, you get this figured out, you do it consistently, you do it with persistence. It's where the biggest dollars are made. It's where the most time, or excuse me, the most dollars for your time is received.

Absolutely. And that's, you know, I have a great example of that because that's true. Sometimes we think just because we're buying it from another investor or we're buying something already fixed up and turn key, we sometimes have this perception that, oh, we're not getting a good deal. We need to go source it ourselves. We need to go acquire it ourselves. You know, I've had a guy just recently who bought a number of properties from us and, well,

he tried to do it himself. basically. So we had properties that we were selling probably somewhere in the neighborhood of, you know, $50,000 per house, right? And this was in the mid, one of the Midwest markets I'm in. So 50K per house. And, you know, he thought, you know what, I'm seeing some of these houses that I might be able to buy as cheap as 25K. And then I'll do the rehab myself. And then I'll get a property manager in. And I'll create this myself, you know. And so we said, hey, fantastic. You know, no problem. You know, go do it on your own. That's great. We're here if you need us. You know, and so he did about three of them, and he bought him for like 25K.

He messed up the rehabs. He paid way too much for rehabs on all of them. He ended up, you know, having to go through two property managers before he found the right one. And he came back to us about six months later. And we kind of looked at everything together. And I would have sold him those properties. Turnkey already rented on a silver platter for 50K apiece. He had 65K a piece into him because he decided he was going to go get a better deal.

That was just the dollars that he had. into it. Not even the time. Not the time. Not even assessing the time, which we talk about all the time. So, you know, understand what goes into creating a totally, you know, true cash flow property that is producing, you know, and the ability to go buy it from a turnkey provider already rented. Sometimes, especially for beginner investors, they're not correctly valuing what they're being offered there from a turnkey provider. And some people will go and try to do it on their own. And even if they got it for the same price, when it was all said and done, look at how much. much work they had to do for it. Right. You know, so they've really lost. Right. And it's just, I mean, the beginner investor, it's a good fit for, and just the overall busy person, it's a good fit for. And so we just kind of want to show you what it takes to find deeply discounted properties

in the three realms that you can play in to make that happen. And just to, you know, and half of you are going to be like, cool, I got it. Thank you. I'm going to go do this. The other half are like, oh, I don't have the time to do it or I really don't feel like doing that. And actually what Matt and I did is we put together as a service to you as a resource to you. We put together one website that gives you access to all the biggest and best turnkey providers in the country. So you can go to turnkey allies.com, go to one website and you get access to the whole country. And so we put that up for you, turnkey allies.com. And that's for you that are just too busy or don't have the desire to do the heavy lifting. Absolutely. For the rest of you, boy, you're after our own hearts because

that's what we do every day. So that's all I got. for today. Matt, you good? That's it, man. I think we've covered a lot and yeah, a lot more we can talk about in the future for sure. Super. So that resource for you one more time is turnkey allies.com. And flipping houses that can make you rich, holding them will make you wealthy. We'll be back next week. And until then, remember, don't wait to buy real estate, buy real estate, and wait. Contrary to popular belief, a lack of funding is not the biggest barrier to starting a business. It's excuses, but don't let a lack of funding be your excuse.

We are Epic Fast Funding, and we'd like to fund your business with up to $150,000 in revolving credit lines. If you've got 60 seconds and a solid credit score, you could have access to your funds in as little as seven days. Go to Epicfastfunding.com to fill out our 60-second application. It's fast, it's simple, up to $150,000 in as little as seven days. Go to epicfastfunding.com This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.