The Science of Flipping - Episode 37: How Bay Area Flippers Make 7 Figures | Real Estate Investing Podcast

Episode Date: June 6, 2014

document.addEventListener("DOMContentLoaded", function () { podlovePlayer("#player-5eb5ab320b38b", "https://thescienceofflipping.com/wp-json/podlove-web-player/shortcode/post/541", "https://thescienceofflipping.com/wp-json/podlove-web-player/shortcode/config/default/theme/default"); }); <p> document.addEventListener("DOMContentLoaded", function () { podlovePlayer("#player-5eb5ab320b3e5", {"title":"Real Estate Investing Podcast u2013 Episode 37: How Bay Area flippers make 7 figures","subtitle":null,"summary":null,"duration":"","poster":null,"chapters":"","transcripts":"","audio":[{"url":"http://thescienceofflipping.com/wp-content/uploads/2014/06/Podcast-37-How-Bay-Area-flippers-make-7-figures.mp3","mimeType":"audio/mpeg","title":"AUDIO/MPEG","size":0}]}, "https://thescienceofflipping.com/wp-json/podlove-web-player/shortcode/config/default/theme/default"); }); <img src="https://thescienceofflipping.com/wp-content/uploads/2013/09/itunes-justin-colby-150x150.png" alt="itunes-justin-colby" width="150" height="150" /></p> Justin truly defines living your life by design on this podcast. He is on vacation in Punta Mita Mexico with his two close friends, who are also very successful flippers. He interviews both Randy Waller and Tony Shira on how they find deals in the Bay Area when other investors say it cant be done. Randy and Tony have built a strong 7 figure business in the bay area flipping homes.

Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. Welcome, welcome, welcome everybody to the Science of Flipping Podcast, episode 37. I'm your host, Justin Colby. Now, I am extremely excited today. I am live in Punta Mita, Mexico. We are sitting right on the ocean. You could probably hear the waves crashing. And I am so dedicated to getting you this podcast that I wanted to have a podcast while I was on vacation because this podcast is all about how to create a seven-figure flipping business with the right systems, with the right people, with the right processes in your business so that you can absolutely be on the beach in Puta Mita

for seven days while your business is consistently running. So thank you all your loyal listeners. I really appreciate the love. I've been getting a ton of emails. I'm out here. If you aren't following me on Instagram or Facebook, make sure to start following me so you can see all the great pictures that I post from Punta Mita, Justin Colby on Facebook, and JustinColby55 on Instagram.

Otherwise, if this is your first time to the podcast, please get over to the website, thescienceofflipping.com, and pick up your free e-book, The 15 Most Costly Mistakes a Real Estate Investor Can Make in Today's Market. You need this e-book. It is the best e-book. I wish I had the e-book when we first started. So get over to the website, thescienceofflipping.com. Pick up your e-book.

Also, if you are interested in working closer with myself or my team on any level, please email us at info at thescienceofflipping.com. Or if you're interested in having me mentor you, we have a coaching tab on thescienceofflipping.com that you can fill out some information, and my personal assistant will get back to you to figure that all out. So listen, let's get right into it.

Again, I'm on vacation. I have a four bedroom penthouse suite here in Punta Mita, right on the water, looking at the ocean. You can probably hear the waves crashing and I'm here with two of my best friends and they are also real estate investors. Talk about creating the lifestyle by design, the life you want while your business is running. They own multiple real estate brokerages. They flip multiple multi-million dollar homes a year. They sell new homes. I mean, they are all put together. They have a huge business.

I'm here with them, their wives, their kids. We're relaxing. We're enjoying good time. And this is what this podcast is all about, guys. So I want to introduce some of my closest friends and some of the people that can, you know, over the next 10 to 15 minutes teach you some of the systems on how in the Bay Area they're able to want to interview two of my closest friends while we're on vacation who are flipping millions of dollars worth of real estate in the Bay Area each and every year

and profiting seven figures while they do it. So I just want to introduce my friends, Randy Waller and Tony Shira. All right, Randy and Tony, well, this is a fun trip here in Punta Mita. We're on vacation, living the lifestyle we want to live, but I know you guys are absolutely knocking the cover off the ball in Northern California where most people would argue it is very difficult to find a deal, to find a profitable deal, and to do any sort of volume. I know you guys are doing it currently.

You're some of my best friends, and I know your business is pretty through and through, but I want all the listeners to know what they do and how they do it. We are on vacation, so this probably won't be the longest podcast. Randy, why don't you start it off by just describing the multiple facets of your business. I know fix and flipping is a huge component of your business, but why don't you just start it off and give us a brief overview of what you guys do. Thanks, Justin. Yeah, Tony and I own two real estate brokerages in the San Francisco Bay Area. We have a local brokerage that we founded in 2007 called W Real Estate.

We also own an Alon Pinnell franchise in Santa Rosa, California. That's sort of the majority of what we do day-to-day, as well as running a mortgage brokerage. And another arm is our property management company. We got into fix and flipping about four years ago with a major client that their money comes out of Canada. They were buying at the auctions when there was a lot of volume down there. We've since transitioned into finding deals on the market, short sales REOs, or even there's no shortage of properties that are just beat up out there that you can fix up, and they're not a distressed sale by nature.

These days, you have to be a little bit more creative to get a deal. You have to be competitive with your original offering price. And then what we'll do is we'll go in with multiple inspections, the types of inspections that most people wouldn't even think of getting, such as a drainage inspection. Drainage is kind of a scary thing, and it's easy to convince people that there's high dollars needed to fix drainage when there's really not. That's just one way that we're able to get our hands-on deals these days. Yeah, those are tying something up, getting it to maybe a higher offer price than you initially thought of or that you would want at least

and then being able to go back in with certain inspections and be able to beat the seller up on the price is probably a pretty good thing to do in this market, especially because a lot of the gurus, so to speak, will be teaching to put in $0.50 or $0.60 on the dollar offer. And in these days and times, especially in the Bay Area, especially in the California Area, especially in the California economy, that's absolutely booming. You just can't get away with that. But you mentioned you were, you know, working with kind of a fund, and they were buying a lot of the auction. I know I've worked a lot at the auction. I know you both Tony and you both comp properties, but let's talk

a little bit more about kind about the process of how you guys were comping those properties at the auction for this. I'll let Tony speak on that because I know he really focuses on this quite heavily. What's the process when you're comping the properties and what is the size of the list and how does that usually work for your business? Justin, working out the auctions is a tireless process, and looking at properties to comp, it takes a tremendous amount of work. You spend time doing market research, everything from MLS to Google Earth

to getting a feel for the neighborhood, the neighbors, the school districts, what's nearby. We usually find a lot of our value in the deals that we are able to obtain in areas that are desirable. That's something that we shoot for. It's much easier to create value in those areas. Some of the properties that you may deal with don't have to be super distressed, but perhaps they have a bad floor plan or they don't have good curb appeal. Those are usually things that you can change, especially in places that just have an intrinsic value in that neighborhood. That's the best way to create your margins. When you talk about the auctions themselves, the properties that we

comp on a daily basis and try to determine their value, they're all over the board. They're in multiple counties and you have to be an expert in those markets the only way you really become an expert in those markets is by spending time in those areas you can't learn everything about local real estate markets or specific areas by looking at a computer you need to go to places look at houses that are on the market look take a look at them walk them see what they sell for, see why they may have sold for a higher or a lower price versus another comp that may be down the street or around the corner.

You get that information by being out there and taking a look. So the comping process really is, like I said, a tireless process. Randy, I know Tony was talking about it's a tireless process, and there's a lot of inspections to be done as far as looking at the homes, looking at the columns, look at what's been sold, why it was sold at a certain price. But I know you guys have absolutely built systems, built an incredible team. You have people in place to do this for you

so that the three of us can bring our beautiful women and children out here to Punta Mita, Mexico. We've been out here for seven days now. Tell me a little about who's on your team and who's doing some of the inspections and running the properties and comping. Because I know for sure the two of you, Randy and Tony, are not doing it. So Randy, why don't you tell me a little bit about who's on your team to do this for you? Right, Justin.

We have a pretty extensive system going. Gosh, we probably have up to 20 people involved at any given time in the fix and flip game where from our drivers that wake up every morning early, drive the properties, they take photos of the properties that are going to be at the auction, they make comments on the condition of the property, the surrounding properties and areas and things like that. They also will make notes on the occupant and what we might be dealing with, if it's an owner, if it's a tenant, those certain types of things that can affect your margin. Then we have our contractors who are going to show up and take a look at houses and give us estimates on the rehab. Tony and I are usually back at the office looking at values and comping, and we have

a few full-time assistants back in our office that are helping us dig on certain things that may be recorded on title, getting us costs on maybe a unique feature of the house has some sort of custom doors or something that we're going to need to be replacing. And then we have another set of back office staff that's running title on all the properties every single day to make sure that at the auction we're buying a first, that there's no major liens or any additional hair on the deal. So it's pretty extensive. We do it every single day with every single property that comes to auction. And we'll go months without getting a property. Just for example, this year,

we probably went 90 days without getting a single property at the auction. But then we've just gotten three within the last 10 days. So you just keep with the process and you keep with the system, and eventually it's going to pay off. Absolutely. And so, you know, I'm big on systems. I'm big on implementing people so that you, you know, obviously can do what you want to do and live the life that you want to live. And, you know, you guys run a very big monster out there in Northern California. And I think if I'm correct, you've done over 70 plus flips in the last 12 months or so, which is an incredible number, very impressive.

But the key to being able to find those deals in what most listeners and what most students want to know is how are you able to find that many deals in a market where, you know, 90% of people think you can't even find a deal. So before we wrap it up here, um, I appreciate you guys spending the time,

but I wanted to ask probably the most important question, um, that really is, um, the golden ticket for you guys is you guys kind of time, but I wanted to ask probably the most important question that really is the golden ticket for you guys, is you guys kind of have a vision for looking at deals. And I know Randy and Tony both mentioned knowing your neighborhoods, knowing the type of homes, the school systems, but even more so than that is kind of the vision of what you can do with the home to create the value. Why don't we talk a little bit about when you're looking at a home,

how you're able to take something that most investors with their type of investor eyes would say, oh, you know, you're paying 90%. There's no fat in that room. You're not going to get that. How are you able to create the values and the numbers you guys are getting? Because I know you guys personally are making upwards of a quarter of a million on a flip and even more at times. So how are you able to create those type of spreads in what most people would argue is an economy or a market that doesn't really have that?

It really, for us, it comes down to our experience. We've been implanted in our local real estate economy. We were both born and raised in Sonoma County. We're very familiar with Marin and Napa counties as well. And just knowing neighborhood by neighborhood where the value is, you know, what types of lots, what types of houses people are looking for in today's market, steering clear from the ones that they're not looking for. The model is constantly changing, and being on the forefront of knowing when the model's changing is always valuable.

For example, these days we're looking at properties and thinking about doing additions to them rather than just fixing them up, flipping them. We're taking a two-bedroom, one-bath home and making it a 3-2 with a nice master in an older vintage area has a lot of value these days, and it creates a margin where people would not normally see a margin if you were just going to fix and flip the home. I want to thank you guys for coming on and doing this for me.

I know this is not what you're probably playing while we're out here in Mexico, but I wanted everyone to know exactly how, especially in the Bay Area, how to be truly successful. Guys, to summarize it for everyone listening out there, obviously being an expert in your market is number one. Know exactly where the schools are, where the added values are, where people want to live. But then take the time to look at each home, the sold comps, the ones on the market, the prices, and how to be able to make your home more sexy, so to speak, to a buyer at the end of the day. Whether it's putting on square footage. I know they were talking yesterday about how they have one in Napa that they're going to be adding pools and square footage and talking about what type of beams they're going to be doing. So they really take their time to figure out what would be advantageous to their home and why it would make it a better listing once they're done with the flip

than what's currently on the market. So thank you again, guys. I appreciate the time. As always, we're going to go have a little bit of fun here in Punta Mita, Mexico. And for everyone out there, this was Randy Waller and Tony Shira from W Real Estate, two of my closest friends, knocking it out. Thank you, thank you to my special guests, Randy Waller and Tony Shira. This has been another awesome episode of the Science of Flipping. We are signing off here from Punta Mita. The day is looking gorgeous.

We are looking at some paddle boarders. And again, if you need to get a hold of me for any reason, email me at info at thescienceofflipping.com. Or if you're interested in any mentorship or coaching, go ahead to thescienceofflipping.com and click on the coaching tab. I am signing off as your host, Justin Colby. Peace.