Epic Real Estate Investing - Real Estate Investor vs Agent - Mark Ferguson (Interview) | 589

Episode Date: February 14, 2019

Meet Mark Ferguson, a successful real estate entrepreneur, who helps agents and investors reach success! Learn what Mark thinks about the real estate investor vs agent debate, how he evaluates single-family flip opportunities, and why he thinks people should buy a personal house. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. I don't pay anything off early. I have exotic cars that I have loans on because I can use that money to make so much more in real estate. So there's a lot of crazy stuff I do. At the same time, I have reserves and cash available. I'm not like, you know, jumping over the edge in debt. But I think that all debt is bad is a myth that I'm not on board with. Welcome to Fott Leader Thursday and right here on the Epic Real Estate Investors.

show. I got a hot show for you today. Stay tuned. Okay, so today I'm joined by the founder of Invest for More. He believes smart people who want to win in today's society and build a life they love must learn how to become investors. This is why I think I was attracted to him because it's essential. It's essential. You can't do it without it these days, really. He created his company to help people become real estate investor either as rental property owners, flippers, wholesalers, or even note owners. And he spends a great deal of the time helping agents in their success as well. I just want you to know who I'm talking to. So you don't know, you don't think he's just another guru.

He has flipped more than 150 houses sold over 1,000 houses as an agent broker and owns 20 rentals, including a 60,000 square foot commercial property. So please help me welcome to the show, Mr. Mark Ferguson. Mark, welcome to the epic real estate investing show. No, glad to be here. Thanks for having me and looking forward to it. Great. Yeah, there's a lot of things I could have said about you.

So I wrote them down so I didn't forget anything. There's so much more that we could have talked about. Where do you tell me what you were doing just before you guys. got into real estate and what inspired that transition? It was pure luck. So I graduated from the University of Colorado with a business finance degree. And my dad had actually been a realtor for 15, 20 years before that. And I didn't want anything to do with it, but I couldn't find a great job. So I thought, I'll just work part time for him. And then that turned into me getting my license. He would flip houses once in a while and it ballooned into a whole career and investing.

And it was pure luck. But boy, I'm glad it happened that way. That's for sure. Sure. Okay, great. So, you know, just it was in the family a little bit, in the blood. It took off and, you're like, this is good money. Let's keep going. Yeah. And one of the biggest things that attracted me to it was I saw my friends who were in the corporate world and their schedule and they made okay money, but they had no freedom, you know, and they had no real past. And with real estate, I could make my own schedule. It was kind of up to me what I did. And that was the biggest draw to it, was having control of my future. Mm-hmm. Right. I mean, I think, yeah, I concur.

So it's interesting. I was excited actually looking forward to talking to you because you are an investor and you are an agent broker. So, and I've been an agent. I was an agent for four years before I was an investor. So I kind of understand, I think. But I was curious today in today's market, how do you differentiate between your, say, a lead comes in and you're talking to somebody? How do you differentiate, is this going to be a listing or is this going to be something I'm going to buy? and are those leads generated differently as well?

It's completely changed over the last couple of years where it used to be I would handle listings, buyers, investing all on my own. But lately I've really tried to differentiate myself where I am strictly doing the investing. So if I have a seller lead, sometimes we'll send marketing out or networking or whatever it is. My sole goal is to buy the property as an investment, rental flip,

whatever it is. And then if that doesn't work, then I'll hand the lead off to one of my agents and give them the referral because when I don't have time to be running around doing agent activities as well. And two, I think it is much easier to get those deals if you're focused on just the one, the buying side. But you can learn pretty quick into the deal from talking if it's a good lead for listing or buying. And if it's a good listing lead, then I'll hand it off to another agent. And that way there's no kind of conflict of interest either with me trying to say, oh, you really need to buy it when actually they'd be better off listing. it. Right, right, right. Yeah, I belong to a mastermind group that I got 100 of the most,

I don't know, successful real estate investors in the country. And there's a lot of agents in there also. And that's pretty much the only way everyone's been trying to crack that code and figure out how to get the best of both worlds. And how you just explained it, it seems to be the only way that is working for everybody in there. So I know you're out there because I know you're out there in the field. So as you're looking for your investment opportunities, what's your best source for off-market deals? It's direct mail still. So, you know, we send out postcards, absentee owners, you know, elderly. And we try and do that consistently every couple months.

But I need to really work on getting that better because, I mean, every time we send out a couple thousand, we get a deal or two. So it's our best way for off-market, but I'm still getting more deals from the MLS than I am. any other source. And being an agent is just a huge benefit to be able to do that just because I can act fast. You know, I'm not paying commissions. So I save money over other investors. I have access to the MLS. That's just been a still a gold mine for us, even in a crazy hot market. Yeah. So you, you see real value in being an investor and holding your real estate license. For sure. I say it all the time. I think I figured it was your last year, year before. We saved $270,000 on commissions because I make a commission when I buy a property, whether it's a rental or flip, if it's on the MLS. And then I

save a commission when I sell it when we're flipping houses. I still pay a buyer's agent, but I don't have to pay a listing agent because the agreement with the agents who list it for me are, you know, they do that for free because of the other perks they get. And so it saves me so much money, but the biggest advantage is getting more deals because I can pay less than other investors. And then I check my hot sheets like five times. You can pay more. Yeah, I can, yes, I can pay more because I have yeah I pay less commissions and so I check my hot sheets all the time and as soon as a good deal comes up I'm out there in half an hour looking at the property making an offer and a lot of times we'll get

those before other investors even know they're for sale mm-hmm what market are you in I'm in Northern Colorado Northern Colorado really area we've seen 300% appreciation over the last seven years it's crazy it is crazy so let me ask you at this when you're looking on the MLS, first of all, in your investment preference, are you looking more to flip more or are you looking to hold more? I love rentals. I think rentals are really the long-term strategy, but our market's gotten so crazy. It's really hard to find them. So I stopped buying residential rentals in 2015 because the price to rent ratios just didn't

make sense. Right. But then I bought six commercial properties the last couple of years and switch to that niche. So I'm always looking for commercial stuff. now, but for residential properties, we're flipping 100% of them almost. So we did 26 flips last year, and those are all rehabs. And so primarily it's flipping unless we find that really good commercial deal. Got it. When you're looking at the multiple listing service and you're evaluating single family homes for flip opportunities, what are some of the things that you look for that stick out to you? Some of the things I've learned over the years is number one, don't take on the big giant project that you think is going to be amazing because there's this huge

profit potential because those big giant projects almost always turn into just never-ending problems. So, you know, we still make money on those, but just the time and effort and resources it takes to, you know, add on to a house or completely gut it to the studs just rarely pays off. So, you know, we have to buy houses that are more than, you know, cosmetic stuff. But kind of that middle of the road flip where you're maybe doing kitchens, bass, a roof, flooring, painting, that type of thing. And then, of course, we want decent profit potential. It's really hard to find deals with all the competition around here, but we still do find them. So we kind of want to make at least $30,000 on each flip. After all the expenses and financing and all of that.

And then as far as age, location, you know, I'm not really concerned about that as much because we're selling them fast, where with my rentals, I'm much more concerned with the age and location and those things. Right. So when you're scanning through, you're just really kind of looking at what looks underpriced, basically. Exactly. That doesn't take too much work.

Yep. And people tell me, how do you go through all the MLS listings? How do you narrow your search criteria? How do you figure all this out? And the thing is, I look at the hot sheets, which is your new listings. Like a hot sheet, I can pull up the new listings since the last time I looked. looked, you know, if I'm looking four or five times a day, there aren't that many listings to go through. But if I have to look through the entire MLS, it can take some time.

So I'm looking through those all the time. And yes, I know my market really, really well. I was born here. I've been here for decades. So I know what prices are. I can recognize addresses, different areas, towns, and be like, hey, that's a good price. And then usually at least every week, I'll go through basically the entire MLS, everything that's listed within 30 miles of me, and go through each property, just like, okay, you know, what's a good price, maybe what's been on the market for three months, which is a really long time here. There have been a bunch of price reductions just to see if there's any properties I missed on my hot sheep.

So it takes work. It's definitely not easy. Yeah, no one ever said this was easy. Simple. Yes, but easy, right? So what's your biggest win in the last 12 months and what did you learn from it? The biggest win by far was buying the building where I'm at right now. So I've been wanting to buy a really big commercial property for years and I actually

have been working with a commercial broker because commercial... Just where your brokerage is in right now. Yes, exactly. Yep. And so I started working with a commercial broker because I wasn't super familiar with commercial. He was connected. I was not connected in that world. And it's so different than residential.

It's just crazy. But he brought me this pocket listing, which was a strip mall that had a grocery store, a restaurant, a coffee shop, another little office and some vacant space. And it was just a killer deal. It was $2.2 million was what they're asking for $68,000 square feet, almost five acres of pretty prime location. And the reason it was kind of cheap was the grocery store had real low rents, but they'd been there 40 years.

there's some vacant space and there's a pocket listing. So he's trying to double in both sides of it. And so we jumped on it. End up getting it under contract for a little less than list price. And it's just been a crazy moneymaker. And along with it, we're able to take one of the vacant spaces, remodel it, started my own brokerage, moved in here. And it's just been a ton of fun, really exciting.

And then just a great investment. Like I said, there's a property down the street that sold for $5.5 million last year that had 40,000 square feet. So it's just we got really lucky. But it spoiled me too. So you have other tenants sharing the building with you? Yep. There's a grocery store that's been here.

Oh, I understand. Yeah, same building. The restaurant, an office next to us. We still have one vacant space we're trying to rent. And then a coffee shop is actually on a land lease. So they own their own building, could pick it up and move it if they wanted to. But they pay us rent for the land. Got it. Congratulations.

Oh, thank you. It's scary, but awesome. Yeah, no, it sounds like a huge win. So is there a lesson in there somewhere? How is this impacting how you move forward? I want to, well, like I said, it spoiled me because I keep wanting to find more deals like this. And I bought this with a partner. He has a big deal and really helped me pull it off because he's had more experience in commercial. He also did a bunch of flips back in the past and is also a private money lender for me too. And so he's been a real help with it.

But both of us, we talk about all the time, like, how are we ever going to find a deal like this again? It keeps spoiling us, but we're still looking. I really, if I could have 10 of these, you know, I'd just be perfect. But we're always looking for the deal, kind of been doing some more off market commercial searching. Hopefully we'll find some more stuff,

but it's really open my eyes to how leases work, how brokers work, how the lending works. is all so different on commercial. Awesome. So what do you like most about what you do? I think I like being able to do whatever I want, which is, you know, kind of why I got into real estate in the first place.

And it took me a while to learn that as my business progressed. But for a long time, I was an REO and HUD broker where I sold foreclosures for banks. And that's kind of when I really became successful, started hiring, you know, assistance to help me out. And that's when I realized. that, you know, I don't have to do everything myself. I can take the tasks I don't like doing and hand them off to my team.

If I don't like doing paperwork, if I don't like doing taxes, even mowing my lawn. I can have someone else do it. And I try to focus on the things I really love doing, which is finding deals, buying houses, and just kind of trying to grow the business. So the thing I love about it most is just being a business owner in general, but being able to focus on the things I love, which is really just finding great deals. It's great. What do you see happening in the market that has you excited and how is it changing your business?

That's tough. That's a really tough question because it's been crazy here. Median price in Greeley was 110 in 2011 or 12 and now it's 320. So our market has gone nuts. A lot of Colorado has. And I think it's slowing down now. We're starting to see some indicators. Days on market are a little longer.

So I don't see a crash coming like we have. last time. I think everything's much different. I could definitely see a slowdown. I could see things, you know, pulling back a little bit. So we're being kind of cautious right now, not going crazy with buying, but we've always been that way too, no matter a good or bad mark with what we buy. But it's tough. I still am happy to buy great commercial deals if the numbers make sense. But, you know, we looked at one the other day where the owner said the tenant might get three or four months behind on rent. And then all of a sudden catch up. We're like, well, that's $20,000 to $30,000 behind. And get.

So it's like, you know, that's not a deal we're going to do right now with the tenants that shaky. So, I mean, we're just solid investing. And it's not something we do too different in any market. But we've always tried to do it kind of the same way. Got it. Well, Mark, I've really enjoyed this. I can see why I was attracted to your channel because I'm still looking for somebody to bring on the show that I disagree with. But I see the person like that, I don't really like that person.

I hate real estate. No. Right. So if there were, well, we talk about real estate all the time. What do you wish you could talk more about that you don't get the opportunity to? That's a good question. One thing, I love cars, but it's not a car show. It's fine.

Money, I think a lot of things that our society lacks are just money education on buying houses, on investing. And I think there's a lot of people out there. Maybe I can provide some stuff you'll disagree with me on. Yeah, let's go for it. Like to promote themselves in their marketing over what they really believe. So like the grant card owns of the world who say you should never buy your own personal house. I hate that philosophy. I think it's horrible.

I think buying your personal house is one of the best ways to get ahead in life. Like he said, getting a great deal, one of the best ways to get financing, lines of credit, buying below market. So I really disagree with that. And Kiyosaki says that a lot too. So two of the big real estate guys, I really disagree with that philosophy. You're right. We disagree there. That's good.

We'll have to come back and share. Okay. Okay. But no, I just think I'm buying a personal house is one of the best things for someone who's just starting out can do if they really take their time to get a great deal, get great financing. And then kind of piggy bank on that house either to use it as a rental property if they move out or flip it after two years and pay zero taxes on the profit. And a lot of people get stuck like, oh, I don't have the money for an investment. I don't have 20% down. I can't get financing for flip where they could do that with their own personal house

if they're willing to sacrifice, live in a place they work on, you know, things of that nature. So that's something I don't hear all the time, but I kind of disagree with some of the concepts going around about personal finance. Right. So you wish you could talk more about that is what you're saying. Yeah, a little bit. I try to talk a lot about it, but on the podcast, it usually gets more into the investing side instead of the personal side.

You might have just answered the question, but I'll ask it anyway. We'll talk about personal finance specifically then. What is one commonly held truth that you disagree with? Is there another one besides buying your own house? That's not really commonly held, but that's a great one. The debt is bad. So that's one I really disagree. Everyone's like, oh, I want to pay off all my debt.

I want to pay off my houses. I want a 15-year mortgage. I disagree with all that too. And a lot of people say, man, you're just living on the edge, on risk. but I think debt is one of the most amazing tools you can use if used smart and wise. So if you've got reserves, you've got backups, you know, long-term debt to me against real estate, you've got some of the lowest rates, you know, some of the most secure debt you can have, and you can just make so much more money buying rentals or flipping or even investing in other things

than the three, well, not anymore, but four or five percent interest rates that you can get on those loans. So I don't pay anything off early. I have exotic cars that I have loans on because I can use that money to make so much more in real estate. So there's a lot of crazy stuff I do. At the same time, I have reserves and cash available. I'm not like, you know, jumping over the edge in debt. But I think that all debt is bad is a myth that I'm not on board with. Yeah.

All right. We're back in the agreement mode. Actually, the video that I release tomorrow, by the time people are here to our interview, this one will already be in public, but it's exactly that how to, how to leverage debt to build wealth. And yeah, don't pay any, I'd say leverage as much as you possibly can to build. And when you're done building, then you can go ahead and think about paying it off to preserve everything.

But if you want to go fast, that's what our society kind of wants, right? Yep. Leverages the way to do it. It's funny. One thing I'm kind of proud of, which is kind of silly, is I paid off my car loan after six years without making one extra penny to principal. So it's really hard at the end. It's like, man, I've only got like $1,500 left.

I just paid off him. Nope, I'm not going to do it. Right, right. Yeah, I mean, even if, you know, the idea that even if the asset, even just breaks even, you've done yourself an incredible service by, you know, you've hedged your, what do you call it, your financial statement. against inflation because you still have the asset that's preserved. And then you've got,

then you free up your liquidity to take advantage of those opportunities. And when these amazing commercial buildings come along, right? Yeah, exactly, exactly. Yeah, perfect. So Mark, if there were three guiding principles for your success, what would they be? One is, always be honest, do things the right way. I learned that from my dad a long time ago.

You see a lot of people who kind of cut corners, agents, investors, both of them, to make a quick buck. And they kind of screw people over and that always catches up to you. I mean, in the end, you're going to lose people who could have made you a lot of money, lose their trust if you don't do things the right way. So that's one thing. I always try to be as positive as I can. It's not easy.

I like to say, you know, it's easy to be positive when things are going great. But when things are going bad, that's when it really comes into play of really analyzing the situation instead of getting mad or angry or something. sulking. It's like, okay, what happened? How can we fix it? You know, what can we learn from this? I mean, that's, that's really one of the best ways you can make your business better is by the bad times. And then finally, really just building cash flow is a, you know, a concept that I've always loved and just having that passive income come in, whether you're working or not, if you get sick, if you want to retire, if something worse happens, you know, that's just

something that everybody should have and almost nobody really does have in our society. So those are the three real main things I focus on. I like it. Be honest, be positive and focus on cash flow. Yep. Right. I was just reading that that's today's retirees, their biggest fear is running out of money. Right. That they're going to outlive their money. But if you got cash flow, it replenishes itself. Yeah. And definitely, right? Perfect. Mark, you do so many things and you're all over the internet. So I wanted to kind of leave this up to you. If someone wanted to get in touch with you, what would be the best way for them to do that? No, my blog is the best way. It's investformore.com that's invest, F-O-U-R-M-O-R-E dot com. And people ask me what that means. And I started just for

just about to. Yep. When I first started, I got four mortgages in my name. And the big bank's like, oh, you can't have any more loans. You already have four. I'm like, what do you mean? And then you figure out you can get more than four loans and that's kind of what the whole invest for more is is getting more than four loans on rentals so um that's the best way is on that site you can email me mark at investformore.com have a bunch of articles free book on there all kinds of stuff and like you said the youtube i think we have 300 400 videos on there we do videos of every flip every rental and then lots of educational videos as well just showing everybody what we're doing yep and that's great stuff and that and that's how I found you. So yeah, if you're into flip-in and you like what Mark

had to say today, go to his YouTube channel to certainly subscribe, great information. You got his blog. He gave you his email address. So I guess that's it. Thanks. Thanks so much for joining us, Mark. I'm glad we were able to make it work out this time. No, no, great to be on the show. Thanks a lot. Had a lot of fun and yeah, look forward to talking to you again here soon. Cool. Yeah, let's do it again. All righty. So that's it for today's episode of Thought Leader Thursday. I'll see you right here next Thursday on the Epic Real Estate Investing Show. Take care. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.