The Science of Flipping - Episode 144: Interview with Jim Huntzicker – 7 Figure Wholesale Deal

Episode Date: June 4, 2019

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Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. Yo, yo, what is up, everybody? What is up? Welcome back to the Science of Flipping podcast. I am your host, Justin Colby. And if you're actually watching this on video, you see I do have another special guest here, Mr. Jim Hunsinger. But before I introduce him, this is all about systems, tools, strategies, networking people to help you grow your business. That is what this podcast is about. So I'm going to talk a lot about strategy, systems, tools, but also what this episode is about is your network, the value of your network. Mr. Jim Hunsinger is a expert investor. He's been around as long as I've

been around, 10 plus years. And so I brought him on specifically to talk about deal specific networking and keep saying in the deal. And he has some, you know, awesome stuff. We've known each other now for a long time. And, you know, Jim, you know, why don't you do yourself some justice here and tell the people a little bit about yourself. I mean, we've we've done so much together that it's it's great that you found time. I just want to thank you to find time to be on this podcast here. Hey, man. Thanks for having me on. It's great.

It's been great to catch up with you. Proud of this call. So, you know, I've been around. Yes, I've been in real estate since 2005. And I started out as an agent, started working out with investors, realized, crap, they're making a lot more money than I am. I started investing in 2007, which felt like a crappy time because that's when the market crashed.

But it actually was a really good thing because my best year in the business was 2010, right before my kids were born. I kind of calmed down a little bit, but you know, I've, you know, I've done, I've been involved in 500 transactions. My primary business for years was using the MLS to get deals to flip. And I was a, you know, I was a rehabber. So I rehab most of my deals. My average rehab over the years was about 80 grand. They weren't small rehabs ever. I rehabbed most of my deals. My average rehab over the years was about 80 grand.

They weren't small rehabs ever. I mean, I've done rehabs as much as 440,000 on a rehab. That ended up maybe I should have done a new construction. That's another story, but it did work out. There was a small profit in that one. But I've done some teaching for national companies. In fact, that's where we met originally, I think, isn't it? It was.

It was. Yeah, a long time ago. Yeah. So I've been around the block of real estate. Now, I'm doing multifamily as my primary focus. I kind of hung up my rehab business last year for single family because I'm in suburban Chicago. It's just not the right time for that, you know, to do it. You know, wholesaling, I get some deals brought to me and the wholesaling is a little bit that I'll do but I'm not really looking for deals there. The only deals I'm looking for right now are multifamily and I'm looking for them all over the country right now, which is part of what we're going to talk about today. Yeah. And I think that was why I really was genuine when I wanted you on this and we've been going back and forth about how

to get schedule time. And I really wanted you to talk about this very specific deal that you and I've talked about in the multifamily space. And I think, listen, at the end of the day, Grant Cardone has done a wonderful job getting everyone ignited on multifamily and even bigger apartment units. I mean, he's just been everywhere for the past year. Which is great, but I also think there's some detriment to that because I don't think everyone really has a fundamental understanding of these deals. And on top of that, I don't think many, if anyone has the ability to get them done. Right. And so the reason why this is so important is because your story about this very specific, uh, multi-unit anyone could have gotten done. And in fact, it's largely upon, uh, the network and you basically

knowing the right people getting involved with the right people, getting involved with the right people, and you had a massive payday. And I know you want to talk more about that deal specifically. And that's why I want you to teach these people as quick as you can, how that all came about, right? How did that deal come about? And again, remember, you're speaking to a rookie investor and some very knowledgeable veteran investors, right? And all of the above. Well, so first of all, I've been studying multifamily for a couple of years before I ever even attempted to get into a deal. Talking to high level guys that I knew that were doing it, they were, you know, in some masterminds I was in and just really, I made it a

point to learn as much multifamily as I can. And not the stuff that they're teaching on the surface. I want to learn the backend structure of how these things are financed. Because my goal was to get in there with no money, none of my own money. Like I've done all my deals over the years, but now this is multifamily. It's bigger money, it's bigger deals. And so I wanted to get into it. So I really have wanted to learn the structure of how these things get financed and what's possible, what lenders will allow, how they'll allow private lenders to put down payments and all kinds of different stuff. And then more importantly, the non-recourse loans in the back end, where you can get out of these things. They're literally cash out refis at the end on

80% based on the current rents. It's awesome. So once I learned all that stuff, I felt comfortable like, all right, now I'm going to start to get into it. So I started letting people know that I was doing some multifamily already too. And the first mastermind I went to, I'm kind of an introvert and I'm kind of a loner a little bit. And so I usually eat lunch alone, oddly enough, because I do like to talk. But somebody came and sat at my table. Everybody from the mastermind came to the Whole Foods. They sat all around me, sat at the table. Everybody's talking. It was great. Well, the person that sat at my table had a ridiculous deal they told me about, I'm like, if those numbers are accurate, I'm like, that is a really good deal. Like you should go lock that up. As soon as you get home

on Monday, walk to the guy's office with a contract, put it down and make him sign it. If he's willing to sign it. Cause you're telling me he is. So just go with a contract. And she was like, well, I don't really, I've never done that. I'm like, look, do you want to buy a deal? Do you want to get into real estate or not? Take it. What's the worst going to happen? He's going to say no. And then you're right where you're at right now. Or he says, yes. And we have a deal. Well, he said, yes. So her and her partner had no idea how to get in this deal, but that's how I met. They were just straight networking and mastermind talking about it. That's it. That's how I got this, got into this deal. Let me stop there for one second. Cause I, you know, people know me and

they know I run three different masterminds with my partner, Sean and Kent. And you and I literally have been a part of masterminds since the day I met you, right? Like 2010. Yeah, for sure. And still today is a way that, you know, I guess what I really want to impress people is not necessarily just mastermind, the meetup groups, the real meetings, the masterminds, there are so many ways to connect that can bring a opportunity like Jim is talking about now. If you're not using networking as part of your seven fundamental marketing strategies in a massive way, then you just simply aren't doing enough in your business. And I just really wanted to press upon that because Jim didn't go out there

and spend a bunch of money marketing. He's a part of a mastermind. The guys are talking this understand the value of networking and simply talking about what you're doing, the deals you're looking at, the buyers you're needing for some, whatever it is, talk about it because you might be sitting next to Jim and Jim says, let's do this. Right. So keep going. So I just wanted to make that. Well, no, no, no. Right. You're, you're, you're so correct. I mean, going to masterminds, I've never stopped. I pay big money, like, you know, to go to them because I want to be with the right people. I want to be surrounded by the right people. And I like meeting new people and I'm not, I'm not a good networker by nature. Like I,

you know, a lot of people say, well, I'm, you're either nervous because you don't know whatever. And so like I was sitting at that table alone, like that's a terrible way to network, right? But that's kind of how I am. And, but people came, you know, but I'm willing to talk. It's not like I don't talk to people. And so, you know, they came to the table, whatever. And, but, but going to all these groups and, you know, meetups and whatever is so unbelievably powerful. I've done so many deals over the years, just meeting and talking to people at these. And you, you, you, you learn so much more. You learn stuff, you know, stuff that you had never learned before. I mean, it's just, it's so powerful talking to people at these masterminds. I've been doing them, you know,

since 2010. And I mean, you know, every year, I'm in multiple, it just depends on how many I decide I'm going to go to that year. And a lot of them seem to have four meetings now, you know, and so that's a little much, I got a couple of kids. And so I make about two or three of those, but, but anyway, so the, um, um, the deal, this deal, the, the, the one that we brought to the table, I'm gonna go over the numbers of it. Cause it was, it was ridiculous. It's a seven figure profit on something I sold for 2.3 million. So it's, it's not a figure profit. Yes. It's literally a million $60, $1,,060 was the profit on this thing. Now, when we bought it, we thought it was going to be a three-month flip. We actually had it sold before we even closed on it.

So we bought it for $1,250,000. The owner thought he took us because the tax assessed value was 1.2, and he got 1.25. And so we thought his $50,000 was everything. And we sold it for 2.4. Those buyers were cash. Three months later, we're supposed to close on Friday. On the Monday, we were supposed to close. They call us and say, hey, we need a 30-day financing extension on our cash deal. And so, we're like, well, that's annoying. But okay, give us 50 grand hard now and we'll extend it for 30 days. And they're like, no, we're not doing that. No extra money. And we're like, well, then we don't have a deal. So that deal fell apart.

So the next buyer we go to, now that guy was at 2.4 also. He ended up, we think that was a syndicator. We're not really actually sure because it came in cash. He lost $200,000 in deposit because he couldn't perform. 200 grand. He kept buying extensions for 50 grand. And at the end, I actually, cause I felt bad. I got like, dude, you have three more. I'm not to get any more of your money. You have three more months. If you don't get the loan in three months, we're done. And we're keeping the 200 grand and he couldn't, he couldn't perform. It was sucked. I mean, I don't want to keep something for nothing, but that prop, that property was losing money. So we needed that money to pay for, you know, the loss. So I mean, there was,

it wasn't all the 200, but still at the end of the day, the third buyer we got paid 2.3 for it. And it closed, it closed just at the beginning of 2019, it closed in March. And so it was a two month flip that took 19 months, but we did make a million $60. So it was, it was a lot of headaches and a lot of sleepless nights along that path but in the end it worked out really well so it was good but let me just ask you know one thing I think if I was listening to this I'd say where did you find those three or four buyers? The let's see the first buyer we got was brought to the table by a local agent that was a lot that we didn't list it we called a couple local commercial brokers there to see if they had any buyers that would be interested. And they did.

And so the second buyer came from my, I have an email list from when I was doing some online marketing in the past. And so I had an email list that I sent out to everybody because I was like, crap, that first buyer didn't work out. It's supposed to close in three months. I did, I had never used that list for that before, but I decided to take a shot. And we got multiple buyers from that. So that's where I got the second buyer. And the third buyer, believe it or not, walked in the front door saying, hey, I heard this place might be for sale. Do you guys want to sell it to us? Because he had just bought one down the street and they wanted more. And so I was like, yeah, I do want to sell it. So it worked out. It worked out in the end, but it didn't.

It was a rough road. It was a lot of bumps. And the first buyers ended up being attorneys. That earnest money was hard on that deal, but they scared the title company. This is a huge lesson, okay? So listen to this because we considered going back later to sue the title company, but it's not worth the brain damage to me because it was not only 50 grand, but it's still not worth the brain damage to me. We would get it back, but the title company wouldn't give us the money. We actually had to sign off on giving these scumbags.

They were just shady. They literally were shady attorneys, man. And so they scared the title company to not giving us the money, not giving anybody the money. And then they put a lien on the property and started foreclosure on it, which they had no right to do. But we had the other seller. We thought we were to close it in the end of December with our second buyer. So we signed off and gave them their money back. He's like, let's be done with these jerks. They're not worth the brain damage. And then the second buyer didn't end up closing anyway. So we signed off on it for nothing, but whatever, but you really got to vet the buyers. And so the third buyer is the thing that the lesson here is the third buyer,

we've added the financing. We've added that, you know, cause this was the property was only 40% occupied. Two of the buildings were burnouts. Literally the insides were burnt out. You couldn't tell anything from the outside was wrong, but the insides were burnt out. And so it's hard to get loans on stuff like that. And so we really had to bet the buyers financing strongly if they weren't, you know, we're going to be cash. And so we talked to the lenders that they showed us some stuff they had done on similar projects like this that were even in worse condition than the one we had. So that's the buyer we went with. We actually had one of the biggest apartment buyers in the country as another buyer at that time that was actually offering 2.4. So

we would have made another $100,000 on that. However, this guy is so big and this was a 91 unit. And I know this guy likes to buy 125 plus units. And so we didn't really have his attention. Like he wasn't paying attention enough that I, and so I just, I said, hey man, you're out, which he was shocked by because I'm actually friends with him. But I'm like, I don't think I have your attention, man.

Like I realize you're doing a lot of stuff and you're a big guy and you're buying big stuff, but I think this is too little for you. And he was shocked that I pulled it from him. But that's, that's, that's, that's the level you have to get to in this business. If you really got to pay attention, I already had two buyers that screwed us. I wasn't about to let somebody that's not paying attention, even though he's a buddy and somebody who's really big there, I wasn't about to let it happen. I had partners on the deal. I was controlling the deal. I had to make it happen. So I went with the other buyer because he was, he's the one that came to us in the first

place. So, you know, it was, it was nothing but earnest the whole time and it worked out. So, but you know, it's funny, even that guy, the day of the closing tries to pull 75 grand off the table. I mean, it was, it was like, so that's, that's the stuff I'm not trying to scare anybody with multifamily, but these are deals for very, very big boys. Like you are not, you're going to get in trouble if you don't know what you're doing. You've got to really, really research because this is, this is buyer beware. This is feast or famine. And this is business. There's no protection in the commercial world. Like there isn't a residential world. There's a little bit of protection in the commercial world. There's no protection for you. If you get screwed,

it's because you didn't know what you were doing and too bad. So you really got to, you really got to watch what you're doing. Well, that's why I wanted you on here. I mean, at the end of the day, I want people to be able to connect with you truthfully. Like I'm not in that space intentionally. I'm just not. And so I don't talk about it. Like I'm some big, I just, I go single family, right? Condo, townhome, single family. That's my world. Yeah, for sure. So I think people need to be able to reach out to you, dude. Like if you're good with it, I want them to be able to have your information. So here's what I'm looking at. So here's what I'm looking to do with this. I'm doing interviews on some podcasts, talking about this deal. It's obviously a seven figure profit, very sexy. I want to first say

that's unique. That's not, that's not the norm. Selling something for 2.3, making over a million dollars on it. I don't do that every day. I wish I did, but it's just not, it's not, it's not what you're going to find out there. What I'm actually looking to do, we sold that deal because it made sense because there was a million dollar profit in the backend right away, but I'm keeping everything. Every, every, every complex I'm buying, I want to keep and hold long-term. And what I'm looking to do is meet people around the country that have deals that they want to close on, or they don't know how to, they can't get financed. They just don't know how to take them down. We can get your deals financed. I have literally hundreds of billions of dollars behind me.

All they want to spend money on is multifamily. I just can't find enough of it. So I'm looking for local operators, people that have deals that they want to remain in the deal. They'll be our eyes and ears on the ground and can bring us deals that we can renovate. We're looking for value-add assets, stuff that need work. It could just be under-managed.

It could be under-maintained. Most of these are, you know, they're. We're looking for value add assets, stuff that need work. It could be just be under managed. It could be under maintained. Most of these are, you know, they're, they're a little bit of both. Sometimes there's just a, you know, you can, you can increase the rents to, you know, to restabilize the property because they're just a little bit too low. There's a lot of different angles of how to, of how to restabilize or, you know, fix these properties up. And, but we're looking for a minimum of a hundred units. So I, you know, some people that's a little overwhelming cause I, you know, I've gotten calls after some of these interviews I've did like, well I have a 50 unit and that's fine. I'm not, I'm not opposed to the smaller stuff, but you know, I was buying,

I was buying rentals at the beginning one and two and three and I had like 14. I'm like, this is taking forever, you know? And that's when I started studying multifamily. And so once I started getting the multifamily buying to me, buying, you know, a 10 unit is no more work for me than buying a hundred unit, to be perfectly honest. And so at a hundred unit, you can have the management is a lot easier. You can have onsite management that work for you because that, you know, the rent roll can pay for it. There's a lot of advantages to a hundred unit buildings and a hundred unit complexes. And so,

you know, I have complexes that are on 10 acres. I have complexes that are on two acres, you know, with 15 buildings. And so they're all different all over the country. There's nowhere that I wouldn't buy one as long as all the numbers work. That's it. There's got to be people willing to rent in the market and the rent rates got to work. As long as the numbers work, I'll buy it wherever. I don't accept where I live in Cook County because Cook County is a nightmare. So if you're in Chicago where I'm at and you're in Cook County, I don't want to buy anything here. So how do they get a hold of you? What's the best way to get a hold of you?

All right, I'm going to give you my email and my phone number. My email is jim at jimhunziker.com. It's jim at j-E-R.com. And if you have a deal right now, you want to talk about, you're like, you don't know what to do. You're like, holy crap, I've been waiting for this. I need to talk to somebody.

I can't get it financed. I want to stay in the deal. Call me. My phone number is 847-772-5302. Now I have lots of friends. I don't need any more. Don't call me to say hi. If you have a deal, I want to talk to you about it. I love that. Fair enough. That is fair enough. And I really

appreciate this. You know, guys, like I told you, I'm a single family home residential. That's me. I will help you if you have something that you're looking at. And again, I started this episode off by talking about, you know, Grant Cardone has done a great job making this a national topic for real estate and wealth. But guys, to Jim's point, if you don't actually know what you're doing, you might lose the deal, which is the best case scenario. You just don't make money. The other is you start to actually lose money because you start to invest in the deal and then you lose it and now you're out money. And so protect yourself. I vouch for Jim. Jim is a true blue, honest Chicago in, if that's even a freaking word. It is. Yeah. I'm just going, that's what I'm in. Yeah. So I, so again, reach out to

him. This is personal information. I didn't ask him to go personal. He went there. If you have a deal only get ahold of them and I, you know, dude, again, I really appreciate it. This is what I'm doing. My focus right now is multifamily. It's what I'm doing. It's what I'm looking for. I can't buy enough of it. I could buy 10 in the next 10 days, literally. Like the money is behind me to just buy as much as I possibly can. I love it, dude. Well, I appreciate it, man. Thanks for having me on. Yeah, it's my pleasure. All right. That is it, man. Another great opportunity for you guys to grow your business. So that's it for this episode. We will see you guys the next episode.

Peace.