The Science of Flipping - Best Real Estate Investing Tips For 2022
Episode Date: February 15, 2022The #1 training and coaching system to launch, grow, and scale your investing business!๐๐๐๐ซ๐ง ๐๐จ๐ซ๐: http://www.thescienceofflipping.comย Become a ๐๐๐๐ ๐๐๏ฟฝ...๏ฟฝ๐๐๐๐ and get access to exclusive training and resources:https://insider.thescienceofflipping.comย ๐๐๐๐๐๐๐๐ ๐๐๐ ๐ ๐๐๐ ๐๐๐๐๐๐ ๐๐:ย โ๏ธ Science of Flipping Academy ย โ๏ธ All the systems and software I use in my businessโ๏ธ All the tools you need to run your businessย โ๏ธ All my Scripts, Contracts, Spreadsheetsโ๏ธ Special Discountsโ๏ธ And Much More...ย ๐๐๐ฏ๐ ๐ ๐ช๐ฎ๐๐ฌ๐ญ๐ข๐จ๐ง?Getย immediately connected with a team member on messenger:http://split.to/tsof-messengerย ๐๐๐ฌ๐ญ ๐๐๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐ ๐จ๐ซ ๐๐ก๐จ๐ฅ๐๐ฌ๐๐ฅ๐๐ซ๐ฌโ ๐๐๐ฌ๐ญ ๐๐๐๐ฅ ๐๐ฌ๐ญ๐๐ญ๐ ๐๐จ๐๐ญ๐ฐ๐๐ซ๐: http://bit.ly/tsofsoftwareโ ๐๐๐ฌ๐ญ ๐๐ซ๐ข๐ฏ๐ข๐ง๐ ๐๐จ๐ซ ๐๐จ๐ฅ๐ฅ๐๐ซ๐ฌ ๐๐ฉ๐ฉ: http://bit.ly/tsofd4dโ ๐๐๐ฌ๐ญ ๐๐ค๐ข๐ฉ ๐๐ซ๐๐๐ข๐ง๐ ๐๐๐ซ๐ฏ๐ข๐๐: http://bit.ly/tsofskiptraceโ ๐๐๐ฌ๐ญ ๐๐๐ฑ๐ญ ๐๐ฅ๐๐ฌ๐ญ๐ข๐ง๐ : http://bit.ly/tsoftextโ ๐๐๐ฌ๐ญ ๐๐ข๐ซ๐๐๐ญ ๐๐๐ข๐ฅ ๐๐๐ซ๐ฏ๐ข๐๐:: http://bit.ly/tsofmailโ ๐๐๐ฌ๐ญ ๐๐๐ญ๐ ๐๐ซ๐จ๐ฏ๐ข๐๐๐ซ: http://bit.ly/tsofdataย ๐พ๐๐๐ ๐๐๐ ๐ท๐๐๐ ๐ฏ๐๐๐ ๐ป๐ ๐บ๐๐ ๐จ๐๐๐๐ ๐ฑ๐๐๐๐๐:ย โJustin is one of the best trainers in this space. He really gives everything to his tribe.โโ Brent Daniels (TTP)ย โJustinโs ability to connect with people and help them understand what he is teaching, is unparallelledโโ Kent Clothier (REWW)ย โWe have been in the trenches flipping homes in Phoenix for over a decade, he is one of the best to do it.โโ Sean Terry (Flip2Freedom)ย ๐๐๐จ๐ฎ๐ญ ๐๐ฎ๐ฌ๐ญ๐ข๐ง:Justin Colby is the founder of The Science of Flipping Podcast and The Science of Flipping Coaching Program and is an active Real Estate investor having flipped over 1500 homes in multiple markets across the U.S. Justin runs an 8-figure real estate wholesaling business that closes 20+ deals each month in multiple markets across the U.S and has helped 1000s of clients learn how to become successful real estate investors.ย Justin subscribes to the philosophy of "Wholesaling To Wealth" and is the foundation of his coaching program which teaches you how to get started wholesaling or streamline and scale an existing wholesaling business as well as build long term wealth through wholesaling, flipping, and building a rental portfolio.ย Subscribe To Justin Colby:http://youtube.com/justincolbyย View All My Videos:https://www.youtube.com/c/JustinColby/videos ย ย
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If some of the smartest people on the planet, the MBAs from Stanford and Harvard and Columbia and et cetera, if they're all buying in these markets, do you think they know something about those markets that maybe I should know or maybe I'm not seeing yet, but they are?
The answer is yes.
Right?
So follow the money.
Even if you're just a landlord and you're not a wholesaler or a flipper, follow where they're buying. Yo, yo, what is up? What is up? Welcome back to the Science of Flipping podcast. I'm your host,
Justin Colby. Today, I'm going to give you five strong tips for all real estate investors to
think through when you're investing in real estate. Now, this goes for wholesalers,
fixing flippers, and landlords who are doing long-term and short-term Airbnb type rentals. So I want you guys to pay attention. Make sure you're watching
this right here on YouTube. And if you are watching on YouTube, make sure you click that
like button. The YouTube gods tend to favor videos that have a lot of likes. So make sure you're
smashing that like button. I'd greatly appreciate it. So I want to jump into these five strong tips that I use in my business that I want to
impress upon you for all strategies. Again, wholesaling, flipping, buying, and holding.
First, I personally will stay in markets that have a price point under 30% of the median. Now, as I do this recording,
the median is roughly around $350,000. So if you just do the math, you want to be around
$200,000 as far as a market. Now, you want to know why. Why is this really going to be important?
And you're also going to want to know, can you do that
in surrounding tertiary markets to your main market? So let's talk about those two, right?
So first of all, the reason why I want to do that is because as someone who wholesales and
fix and flips and buys and holds, I want to be able to have all those exit strategies, right? So I want to be able to
hold it in a good portfolio play. I want to be able to flip it. I also want to be able to
wholesale it if just the numbers don't work for me. So that market, again, that 200,000 or less,
by the way, price point is really going to be good for all those exit strategies. If you ever listened
to me before, you know I'm a firm believer of if you can really become an expert at the exit
strategy, it's going to make you a better expert at the acquisition strategy because you just,
you know your exits. So now that doesn't mean we don't do deals that are three, four, five,
$600,000. I'm not
saying that. What I'm saying is when you're targeting a market, really look into what type
of market and exit strategy you're going to have. I also have clients who are really good in the
luxury space, but I'm trying to talk to the masses of real estate investors there, right? Because
if you can actually build into this type of marketplace,
you're just going to have more opportunity, right? You're still going to come across the three,
four, five, six, seven, $800,000 properties. Then you can try to figure out what's your exit there.
And for me, that would be probably, I would look into something like that as more of a
luxury Airbnb place. So that's the first really big tip. The other one is going to be diversify. Make sure
you're diversified. For years and years and years, I myself and many others would tell you the best
place to invest is in your own backyard, the market that you're currently living in. While I
still do plenty of deals in Phoenix, Arizona, I would tell you I do more deals across the United States because
there's more opportunity. Be diversified with your opportunity. Search and seek out where you
can create more opportunity than what you are currently getting in your own backyard. I just
had the honor and privilege to speak at the Scale and Escape event. I'll tell you, the players that
were on the stage with me, and we had a really cool panel of Ryan Pineda,
Greg Herlene, Jamil Pace, Cody Sperber
is a great panel, myself.
We all basically talked about the same type of thing,
which is we are diversified in how we invest
and where we invest.
We're not just centrally located
to literally our backyard.
We are in different states.
We are in different regions. We are in different regions.
And so you need to look where the opportunity is.
You need to be an opportunity seeker.
And that will allow you to become someone who can maximize each and every opportunity.
Again, if you've been following me for a while, you've been hearing this out of my mouth now for the last six months about maximizing opportunities.
Become an opportunity seeker and you will maximize them. hearing this out of my mouth now for the next last six months about maximizing opportunities,
become an opportunity seeker, and you will maximize them, right? So be diversified.
Number three is use leverage wisely. If any of you guys actually do follow me on TikTok,
you will see the kind of the almost parable I use with the father and son and how we're,
you know, I'm teaching through entertainment.
But one of the things that I get the most comments on in these TikToks is my view of leverage.
Many people really believe leverage is bad. And a lot of that comes from what you see with our boy Dave Ramsey. And we're not going to get into that story today. But what I'll tell you is I have leverage on all
of my properties, all of my rental properties, my personal property, and I will continue to use
leverage on my flips. I use leverage. I don't buy cash and rehab cash and sell. I use leverage
on all of it. But the key, the big bold print is use it wisely, okay?
Don't over leverage yourself.
Now, as someone who does buy and hold,
part of the portfolio play for me
will be able to build enough equity
in the 50 or 100 units I will have here shortly
and then strip some of the equity,
some to go buy more to build a bigger portfolio.
Now that only works if your debt is covered in full as well as insurance, maintenance, repairs, taxes.
If all of that is covered by the rent. So stripping equity out of a rental portfolio is only smart or wise if you're still
in very good shape relative to what the rent is bringing in. Now, the doomsayers and all the
people that may have had an experience like myself may say, yeah, well, what happens when it all
turns around and crashes on you? I can understand that. You got to remember the word wisely. I'm not going to over leverage
myself. I'm always going to be able to maintain 20 to 30% equity in a property. Even after I pull
out some more equity, I'm still going to have that ratio. So it's all doing it wisely, not over
leveraging yourself and finding the right lender, right? My lender is incredible. She has really helped
be able to help us leverage at maximum value versus loan, which gives me a safety
point where I'm always 20% at least of equity. So if the market rolls back at 20%, I still have
great rentals. I still have great income coming in because her loan is a 30-year loan. Anyways,
it's all about having the right relationships, the right lenders that understand what you're
trying to achieve. So use leverage wisely, but use leverage. The third will be, or fourth,
is going to be follow the money. That's my favorite, I guess, saying, tip, trick, if you will, right now.
I am heavily in the markets where the money is. And what does that mean, Justin? Well,
I do a lot of cold calling. If you guys are listening to this or watching this and want to
know who I use for cold calling, I'm happy to make a direct introduction. They're an incredible
company. They're out of Mexico. They're bilingual. They're crushing it for me. So just leave me a comment somewhere saying,
hey, would like to be introduced to your cold callers. And they have multiple plans,
you know, depending upon your marketing budget, but they're an incredible
lead gen source for me. So I do a lot of cold calling a lot, you know, tens of thousands of calls a day. And so I say that to say, I follow where the money is. Where
are the hedge funds going? Where are the iBuyers buying? How can I leverage where my buyers or my
exit strategy would be? If I'm a flipper, I want to know where these hedge funds are. If I'm a
wholesaler, I want to know where these hedge funds are. Unless you're buying as a landlord,
which by the way, leverages me right back into diversifying. I want to buy rentals where the hedge funds are. Why? Because if some of the smartest people on the planet,
the MBAs from Stanford and Harvard and Columbia and et cetera, if they're all buying in these
markets,
do you think they know something about those markets that maybe I should know or maybe I'm not seeing yet, but they are? The answer is yes. So follow the money. Even if you're just a landlord
and you're not a wholesaler or a flipper, follow where they're buying and buy the properties there
as well. And then the you know, the best way to
find those properties, cause that's everyone's challenge right now, um, is for you to go.
I love cold calling. I love cold calling. So again, um, great company I utilize out of Mexico,
they're English and bilingual. And when I say, um, English and Spanish, a lot of them are actually
American educated and they just didn't stay in the States.
So I thought that was a huge bonus.
So, you know, when I listen to their calls, it's incredible.
Anyways, be a big lead gen and either then you can wholesale, fix and flip or buy and hold.
Again, diversify, one of the biggest pillars, right? And then lastly, I would tell you, as someone that
fix and flips and buys and holds, fix the problem before it starts. What do I mean by that? Well,
if you buy a home and there's five years left on that roof, would it technically last you another
five years? Yeah, I mean, essentially it would. But if you're going to hold that for your own
portfolio and you know you're going to have to pay for that roof at some point,
just do it first. Do it now. Do it while you're also remodeling some of the home.
If you're a fixing flipper and you're like, oh, I don't really care. It's five years old.
Do you think you can get more value if you say you just replaced a roof than not and actually increase
that? Do you think a buyer would actually have more value and be willing to pay more
if you took on that burden? So I'll tell you, do the right thing first. Fix the problem before it
becomes a problem. Again, this is primarily for those that are buying and holding and fix and
flipping. I'll tell you, if a roof is $15,000, I'll tell you, I just had to repair half of my roof,
half, and it was $20,000.
I just had to do this, quite literally.
It was half of my freaking roof was 20 grand.
Now, I have tile and the whole thing.
But if someone would have done that prior to me buying it and I didn't have to do that,
would I have maybe paid an extra $30,000?
Now, follow me here.
I had to pay that cash out of my pocket, that $20,000, to fix this roof.
So I did that.
It happened.
But if I came into this property and they said, hey, we replaced half of your roof because there was an issue.
So instead of the price that we're going to sell you, we're going to charge an extra 30 grand.
But by the way, that would go into my financing of buying this home.
That 30 grand would be financed by my loan buying the home.
Do I feel a little different about that scenario?
The answer is yes.
I would overpay because I would just be building into the loan rather than having to come
out cash. Right. And so again, for those that, you know, maybe are trying to shortchange it and,
you know, do quick work and think different, right. Think about the end use of this property
and realize that you're going to be able to charge more if you repair it as a flipper or
realize if you're keeping it, just do it now. That way you don't have the hurdles and
leakage and all the other headaches that you're going to have as a landlord later. So these are
your five expert tips on how to become a big time expert real estate investor in some core pillars
that I run my business with.