The Science of Flipping - Best Real Estate Investing Tips For 2022

Episode Date: February 15, 2022

The #1 training and coaching system to launch, grow, and scale your investing business!๐‹๐ž๐š๐ซ๐ง ๐Œ๐จ๐ซ๐ž: http://www.thescienceofflipping.comย Become a ๐“๐’๐Ž๐… ๐ˆ๐๏ฟฝ...๏ฟฝ๐ˆ๐ƒ๐„๐‘ and get access to exclusive training and resources:https://insider.thescienceofflipping.comย ๐ˆ๐๐’๐ˆ๐ƒ๐„๐‘๐’ ๐†๐„๐“ ๐…๐‘๐„๐„ ๐€๐‚๐‚๐„๐’๐’ ๐“๐Ž:ย โœ”๏ธ Science of Flipping Academy ย โœ”๏ธ All the systems and software I use in my businessโœ”๏ธ All the tools you need to run your businessย โœ”๏ธ All my Scripts, Contracts, Spreadsheetsโœ”๏ธ Special Discountsโœ”๏ธ And Much More...ย ๐‡๐š๐ฏ๐ž ๐š ๐ช๐ฎ๐ž๐ฌ๐ญ๐ข๐จ๐ง?Getย immediately connected with a team member on messenger:http://split.to/tsof-messengerย ๐๐ž๐ฌ๐ญ ๐‘๐ž๐ฌ๐จ๐ฎ๐ซ๐œ๐ž๐ฌ ๐…๐จ๐ซ ๐–๐ก๐จ๐ฅ๐ž๐ฌ๐š๐ฅ๐ž๐ซ๐ฌโœ… ๐๐ž๐ฌ๐ญ ๐‘๐ž๐š๐ฅ ๐„๐ฌ๐ญ๐š๐ญ๐ž ๐’๐จ๐Ÿ๐ญ๐ฐ๐š๐ซ๐ž: http://bit.ly/tsofsoftwareโœ… ๐๐ž๐ฌ๐ญ ๐ƒ๐ซ๐ข๐ฏ๐ข๐ง๐  ๐Ÿ๐จ๐ซ ๐ƒ๐จ๐ฅ๐ฅ๐š๐ซ๐ฌ ๐€๐ฉ๐ฉ: http://bit.ly/tsofd4dโœ… ๐๐ž๐ฌ๐ญ ๐’๐ค๐ข๐ฉ ๐“๐ซ๐š๐œ๐ข๐ง๐  ๐’๐ž๐ซ๐ฏ๐ข๐œ๐ž: http://bit.ly/tsofskiptraceโœ… ๐๐ž๐ฌ๐ญ ๐“๐ž๐ฑ๐ญ ๐๐ฅ๐š๐ฌ๐ญ๐ข๐ง๐ : http://bit.ly/tsoftextโœ… ๐๐ž๐ฌ๐ญ ๐ƒ๐ข๐ซ๐ž๐œ๐ญ ๐Œ๐š๐ข๐ฅ ๐’๐ž๐ซ๐ฏ๐ข๐œ๐ž:: http://bit.ly/tsofmailโœ… ๐๐ž๐ฌ๐ญ ๐ƒ๐š๐ญ๐š ๐๐ซ๐จ๐ฏ๐ข๐๐ž๐ซ: http://bit.ly/tsofdataย ๐‘พ๐’‰๐’‚๐’• ๐’•๐’‰๐’† ๐‘ท๐’“๐’๐’” ๐‘ฏ๐’‚๐’—๐’† ๐‘ป๐’ ๐‘บ๐’‚๐’š ๐‘จ๐’ƒ๐’๐’–๐’• ๐‘ฑ๐’–๐’”๐’•๐’Š๐’:ย โ€œJustin is one of the best trainers in this space. He really gives everything to his tribe.โ€โ€“ Brent Daniels (TTP)ย โ€œJustinโ€™s ability to connect with people and help them understand what he is teaching, is unparallelledโ€โ€“ Kent Clothier (REWW)ย โ€œWe have been in the trenches flipping homes in Phoenix for over a decade, he is one of the best to do it.โ€โ€“ Sean Terry (Flip2Freedom)ย ๐€๐›๐จ๐ฎ๐ญ ๐‰๐ฎ๐ฌ๐ญ๐ข๐ง: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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Starting point is 00:00:00 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
Starting point is 00:01:11 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
Starting point is 00:02:06 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,
Starting point is 00:02:59 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.
Starting point is 00:03:35 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
Starting point is 00:04:22 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.
Starting point is 00:04:42 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.
Starting point is 00:05:18 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?
Starting point is 00:06:06 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.
Starting point is 00:06:37 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
Starting point is 00:07:31 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
Starting point is 00:08:22 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,
Starting point is 00:09:18 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
Starting point is 00:10:04 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
Starting point is 00:10:44 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,
Starting point is 00:11:30 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.
Starting point is 00:11:54 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.
Starting point is 00:12:21 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.

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