The Science of Flipping - Episode 42: Justin Colby Interviews Chris Mclaughlin | Real Estate Investing Podcast

Episode Date: August 5, 2014

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Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. Welcome, welcome, welcome everybody to another episode of the Science of Flipping. I'm your host, Justin Colby, founder of the Science of Flipping podcast on iTunes, as well as the Science of Flipping Academy.com. If this is your first time ever getting to this podcast, hearing this podcast, whether online or on iTunes, I highly suggest and urge you to get over to the Science of Flipping.com. That's the Science ofofflipping.com. That's thescienceofflipping.com. And for several reasons, we have a blog post that keeps you up to date on what's going on in the real estate market. If you register, we give you our free ebook. Our ebook is incredible valuable because it's the 15

most costly mistakes you can make in today's real estate market. Now, I have a special guest on this phone and I'm willing to guess if he would read my e-book, he would agree with all of them. And so this is an e-book that I put together because we've made mistakes and I want you to not have to make those mistakes. So go to thescienceofflipping.com, get our free e-book, The 15 Most Costly Mistakes a Real Estate Investor Can Make in Today's Market. But also register because in the coming weeks,

we have something very, very, very cool that you're going to want to hear about and be a part of. So make sure to register for nothing less than the e-book or even just to make sure you get on our list to see what's coming here in the very soon future. So I want to get right to this guys. I have an incredible guest on the phone. This is someone that I've looked up to since we got started in 2007. He was one of the individuals that really kind of got me and my business partner, Eddie Rosefield, into the game virtually. We followed him via YouTube and other online resources, and he really taught us a lot,

whether he knew it or not. We didn't really have much of a relationship until probably this year we were able to meet finally towards the end of last year. Since then, we've built up a pretty good friendship. When he comes into Phoenix, he texts me and says, hey, we've got to grab lunch. I jumped on a couple calls with him and vice versa. I just asked him to do us a huge favor here at thescienceofflipping.com and to jump on a podcast with me. And so today I get the pleasure of introducing all of you to a rock star, Chris McLaughlin. How are you, buddy?

Doing great. How are you, Justin? Man, I am doing awesome. As you can tell, I'm having a ton of energy. I've sucked down a ton of coffee. I've been up for hours. I'm rocking and rolling this morning, dude. So thank you so much for blessing us with your presence. And I really appreciate you being here. And for those of you out there, you know, Chris is again, as I said, we followed

him from 2007. He had a product called Short Sale Riches. And obviously back in those days, the short sale game was heavy and hot. And he was the man. He was able to show us how to get into that game. And since then, times have changed, wouldn't you say, Chris? And might not be quite as good. I'd say things aren't like they used to be when it comes to short sales. But luckily, I think the banks have finally gotten some more, I would not to say get their act together, but they still haven't really gotten their act together, but they've got more help, at least on the short sale side of it. So things are getting, approvals are getting done a little quicker than they used to be,

that's for sure. Yeah, no doubt, no doubt. And so let me tell everyone a little bit about you because I want everyone to really understand the magnitude of you being able to drop some knowledge on everybody here on the science of flipping. And first and foremost, you're listening to someone who is well-educated. He is a licensed attorney or lawyer in the state of Florida. So he is a very educated man. So make sure to get your notepad out and to really listen to what he's saying because he does everything by

the book, as we all should. I've taken a lot of lessons from him on how he does business. He is a licensed realtor and broker owner, correct, Chris? Chris, you own four offices, KW or Keller William offices there in Florida as well, correct? Yes, that's correct. I've got owned, gosh, started that about 11 years ago. So it's really grown. So it's been a real blessing to me. Yeah. And you have over what, 500, maybe 550 agents there in between all your offices, correct? Yep. I think we're right now just pushing the 550 mark.

We've got over 340 of them over in Tampa, and then the balance over in a town called Lakeland and Winter Haven, Florida, and Polk County, Florida. So we're kind of the West Central Florida area that we handle. And last year we closed around, gosh, nearly three-quarters of a billion in property, and we're closing in on that billion-dollar mark. That'll be a great milestone when we achieve it to cross a billion dollars in sales.

Man, that's awesome. I don't even know, even myself, when you start talking about a billion, my eyes get crossed. That's such a huge number. Congratulations. That's phenomenal. A lot of real estate. A number. So congratulations. That's phenomenal. A lot of real estate. A lot of real estate. That's for sure.

So you don't really know what you're doing is what you're saying. You have no idea what you're doing, right? Just woke up one day and fell into it all, you know. Yeah. Didn't take any work, you know. No hard work involved. You just kind of just, you know, it's just handed to you, you know. That's right.

That's exactly what all of us successful people happen. Right. Guys, again, I can't stress this enough. Chris has blessed us. This guy really has his stuff together, right? And we all as business owners and entrepreneurs and real estate investors want to get to a certain level. Sometimes it's just to make six figures. Sometimes if you can get to a point of making a hundred grand,

that's exactly where you want to get. When Chris is dealing with his business, he's talking about doing a billion dollars of real estate transactions. That is a huge number. So understand how great this opportunity is. Get your notepad out. This man is active in real estate, not only on the realtor side and the brokerage side, right? But I've had the pleasure of creating this friendship now during this year. And I know he is doing five to six flips every single month in Florida. Not only is he flipping homes, but he has an incredible rental portfolio, right? He has just shy of what, 150 rental units. Is that correct? Yep. A little over 140 rental units. And they've, about 80 of those are single family

residences here. And, you know, people thought I was kind of crazy a couple of years ago when I just, you know, started buying houses with a vengeance. You in 2008 and 2009, when things were just absolutely at their worst, I really just said, it's time to buy. And so luckily, I added a bunch to my portfolio at that time, and they make for great rentals. Nowadays, it's just tough to find them because you've got a lot of people that want to get into the flipping business, and so they're bidding out properties, and they're renovating them, and then they're reselling them.

But it's tougher right now to buy something and just hold it, because the cash flow doesn't work as strong as it worked if you gobbled them up just a couple years ago. Yeah, and one of the things that you and I have been very, very successful at is we both buy from auction, right? And so one of the places a lot of my students, whether they're from California, New York, talk about the auction as a resource to buy. Now, are you finding in Florida, as far as rental, let's just stay on rental properties, do you even find that the auction is hard to find numbers that work for rental properties? Well, they certainly work for the funds, but the funds have a lot of money. They will, you know, so we've got, you know, some big, big, big funds here, Colony Capital and Blackstone's down here. And we've got some big names that are Starwood and they're all, you know,

bidding up properties. But in general, what we're finding is that if it's a good rental, then you've got to get it so that it's not going to fall into the fund's parameters. And so what I mean by that is typically the funds want to buy the year 1990 or newer. So they don't want to buy anything that's, let's say, built in 1985 or 1980 or something like that. So if you see a property that's coming up that's not 1990 or newer, you know that you're going to be able to jump on that. And some funds are also year 2000 or newer. So it just kind of depends on what they're doing. But we kind of jump on that and make offers on properties that we know that the funds aren't going to compete against us on.

So that's just one little strategy for your team. If you're out there and you're bidding against funds and you're buying at the auction, don't waste your time previewing the properties that you know the funds are going to buy. Focus on the ones that might be outside their little ballywack. Another suggestion would be funds typically want three bedroom, two bath with a two car

garage. If it's got a carport to it, that might not be in the funds criteria and therefore even though it was built in let's say 1995 or maybe even the year 2000, it might be something that you want to look at. Yeah, that's a great suggestion. Yeah. it might be something that you want to look at. Yeah, that's a great suggestion. Yeah. Yeah, and I know my listeners know for sure we were beaten over the last three years

here in Phoenix with the funds. I mean, I don't know if we were the first place to go for them to go, but Phoenix just took a beating over the last, say, three years with the funds coming into town because as you would agree, Chris, you're used to going down to an auction and everyone's kind of playing with the same piggy bank, so to speak, right? Where you're all looking for the same amount of numbers.

You all pretty much have the same amount of finances to get deals done. So it's a little bit more eye to eye. You know, you play some strategy there. But for the most part, you know what you're getting. But man, when they came into town, their numbers are so aggressive relative to us, right, Chris? I mean, they can work on a 5% to 6% model where people like us want to be working between 10% to 20%. Absolutely. I mean, what I tell people is that the funds are paying retail at the auction market.

So they're paying as if the discount for auction doesn't exist because that's where they're getting their, you know, essentially their purchase. But I typically see that, you know, when you buy at auction, and of course for those who are new to the flipping business, you know, the reason why we like to buy at auction is that there's a lot, lot less competition. Why? Because of a couple of things. Number one is title issues. People are scared because you can't necessarily get title insurance when you're buying. You're just going to have to do the title yourself and make sure there's a clear chain of title. So there's

title issues that will scare people off. Number two is condition of the property. That's definitely going to scare people off because at the end of the day, you don't really know what you know until you get in and you can really get into that house. Well, these things can be occupied or they can just be boarded up or the electric's off and so you can't really go in there and inspect and know what you're going to get. You don't know if that AC unit is going to work. You don't know if copper has been stolen out of it already. You don't know if they poured cement down the drain.

So those kind of things, you know, scare people away. So if you're doing the kind of numbers that I'm doing and what Justin's doing, you know, those don't scare us because we know that, you know, sure, if we get a bad one, you know, then we get a bad one, but by and large, we're going to get good deals. And then the third and the most important aspect of it is that it's a cash deal. And cash is king. And the reality is the ability to close with cash within 24 hours here in Florida, a lot of people don't have that ability or they get tapped out very quickly.

So you might have somebody who's got a line of credit for $100,000, $200,000, $300,000. Well, they can only buy two or three properties and then they're tapped out. Well, the funds obviously don't have that issue. So they've got hundreds of millions of dollars behind them that they're gobbling up properties with. So just as people are looking at this, I would just really encourage people to look at the opportunity to buy at auction and partner with someone who's kind of sophisticated,

who's done it before, and then learn it. And then I think once you've done it a couple of times, you'll get more confidence, and you can find that you're getting deals that are probably 20% to 25%, maybe even 30% below market. And then you can, of course, fix them up and then turn around and resell them on the open market. Yeah, that's absolutely absolutely and it's funny. You and I probably could spend hours talking about the auction and what we see down there. Now, Chris, just out of curiosity, so here in Phoenix, right, so we tend to like to leverage our properties depending upon how many we're doing.

So if we're in the five to six homes a month zone, we don't need to leverage too much. But again, if we can get good deals, we'll leverage our money so that we can get more and more good deals. Now we have lenders here. They are hard money lenders, but they are very used to the auction and will lend in that 24 hour timeframe Obviously, they want us to be a little bit more aggressive on our skin in the game, so to speak. So let's just use $100,000. Most hard money lenders would lend $80,000 on a $100,000 purchase. But at the auction, they're a little bit more aggressive,

so they would only lend $70,000 just because it's obviously a quick turn. They don't have a lot of due diligence time. But still, we're able to leverage that. So instead of us coming all out with $100,000, they come in with $70,000, so we only have to come in with $30,000. Is that the same there in Florida? Yeah, absolutely.

And what we find is that people are more interested in lending you money if they know that you're going to be buying at auction because they typically know that it's going to be a good deal. I think people know that a foreclosure and REO, REO stands for real estate owned, for those who are new to the podcast. But REO properties and short sale properties are good, but typically foreclosure auction properties are even better than that.

So you're getting even a better return than what you would get if you went and bought a foreclosure directly from a bank or foreclosure that's on MLS or a short sale. But we are finding the ability, we don't have right now, to be honest, a problem with capital. And that's a good problem to have in the sense that we don't have it. But capital is not a problem for us. Our biggest challenge is just getting the deals because there's competition. The competition is coming in, and you've got the funds that are buying up stuff. So if these darn funds would go away, we can make a lot more money,

but we're still able to gobble up five to six a month and flip five to six a month. We're still very pleased with that. Frankly, we've got excess capital right now where we'd like to be doing 10 to 12 a month, but we've just got to find the deals. That's a good problem to have. It's a great problem to have, right? I understand, but we always have to talk to people who may not have that money. We've got to make sure that they get that idea of how to maybe do it if you don't have a ton of

money i just brought a student on for example talk about a student who's committed not only did he quit his job he and his wife are selling their home because they have equity in it they're going to take their equity to start their real estate investing business. Wow. That is what you call commitment, right? Yep. That's all in right there. And the reality is, I mean, Justin, there's a ton of shadow inventory still out there, especially in the big hard hit states.

So if you were in California, Nevada, Arizona, and Florida, if you're buying in those states, there's a ton of shadow inventory still to go through the system. You know, there's still people that are underwater in their homes that are just going to give up on their homes rather than try to, you know, wait it out. So there's going to be another five years of just really good deals that this is the time to do it. You know, if you want to do it, you know, there's never been a better time. I mean, technically, there has been a better time.

The better time was about three years ago. Right, right. But, you know, nobody, you know, you couldn't get as much capital back then. You know, that's the thing. So it's a fun, you know, one thing's a function of the other. You know, three, four years ago, I was able to gobble up capital to buy and hold.

But if I were to go to a bank and say, yeah, I'm going to go buy some, you know, houses down at the foreclosure auction, if I did that five years ago, four years ago, they would have said, you know, this guy's cuckoo. And, you know, no way. But the reality is nowadays it's a lot easier to do. So I would really encourage people to, you know, partner with someone who's got good credit and then use that ability to partner with people with good credit to really get into a local bank. Because if you can get local bank financing, even if it's only 60% LTV, then you can always

go find a hard money guy to put the balance in. So they can put the down payment down for you, and then you can finance it at a local bank. But you're going to have to have somebody who doesn't have credit blemishes and who's got good credit. But there's a good person to partner with. Because right now, just in all my portfolio that I own is all bank financing. And so that's really, really important because when you're looking at those cash flows

and you want to cash flow the deal, having an interest rate that's well below 5.5% is definitely helping as opposed to having to pay 10% to 12% of your money. Now, when you're flipping properties, and I know this podcast is more about flipping than owning, who cares if you're paying 12% of your money because you're only going to have that deal for two to three months max. So I'd gladly pay 15 percent interest. I don't really care. Just get the capital. Exactly. Yeah. And that's the thing is a lot of people are always, oh, I got to find the cheapest money. I got to get 10 percent money or 8 percent money. But the reality is, you know, if you can get that low of money, a lot of times people charge you pretty substantial points and things of that nature. And so you really got to, you're kind of trying to turn and burn, right? You really don't want to be in a flip for more than 120 days. So

you just got to look at ease of capital with the cheapness, if that's even a word, of capital. Yeah, access to capital is always more important than the cost of capital. Yep. Getting that ease and access to it is more important than the cost of it. Exactly. Cost, I said cheapness. That's funny. Yep.

Well, good. And again, guys, I want everyone to be listening up because Chris and I both have heavily utilized the auction as a resource to find property. But one of the things that I wanted to jump into a conversation with Chris right now is your ability to grow businesses. First of all, I'm very impressed with your entrepreneurial ability to not only have a business and make a lot of money, which is great, but you're able to scale. And that's a lot of people have a lot of trouble with scaling a business and and you and I just had a call very recently about how we've been able to scale here in Phoenix and how I'm able to live a pretty nice lifestyle

where most people would feel like they have to do everything in their business and I'm kind of on vacation and out of the country and living that. Let's talk a little bit about the importance of scaling in your world, right? You're not only flipping five to six homes a month, but you have 140 rental properties, which most people would pull all of their hair out. And I know you have a great head of hair, so you don't. And you have four brokerages with 500 agents. And talk about scaling a business. I mean, you really have become a master at scaling a business. Let's talk a little bit about that.

Well, I think there's two components to it. Number one is just kind of the realization. And I was told this by kind of a mentor years and years ago, is that there's only two ways. So folks, write this down if you're listening to the podcast. There's only two ways to make big money. And to make big money, you have to either leverage people or you have to leverage money.

Now, what's great about real estate is it is the art of leveraging money because the reality is you can only put 20% down and you can go get 80% more money. Or 30% down, go get 70% more money, what have you. But it's essentially, because it's a known quantity, it's easy for banks to evaluate or other hard money lenders to evaluate. You can leverage money. And that's how you can make big money, because you can go buy something that you don't have

as much skin in the game, but you're buying something for a hundred plus thousand dollars. And then you're turning around and selling it for 150. Well, you only put, let's say $10,000 in and you just sold a hundred thousand dollar asset for 150. So you just made, you know, 10,000, you just turned your 10,000 into 50,000 when you flipped pretty big deal because you leveraged money. Okay. Now the same concept for me was leveraging people. And I knew that I could not succeed alone. If you look at, um, you know, most any, any business or any successful business owner, um, they're always having other great talented people under them working. And so I kind of go back to the cash flow quadrants of Rich Dad, Poor Dad to kind of illustrate this to your list or to your podcast list.

And the reality is there's four quadrants under Robert Kiyosaki's cash flow quadrant. And I really encourage everyone to buy that book. It's a great book. And also read Rich Dad, Poor Dad. It's a great book. And also read Rich Dad Porter. That's a good book, too. But under cash flow quadrant, you have the first quadrant is the top left. And so if you've kind of drawn out in four, you've got the top left is the E quadrant. That's the employee quadrant.

In order to be successful in life, you've got to get out of that quadrant. Because ultimately, as an employee, you're upsized limited. You're only going to be able to do so much, and your ceiling of achievement is going to be hit pretty early on. So you just don't have the ability to scale. Your talent necessarily isn't going to get recognized because you're going to be held back. So then you want to go from that E quadrant down to the bottom left-hand corner quadrant,

which is the S quadrant. And S stands for self-employed. So you want to ultimately, you know, move from E to F. And then as you're doing that, you're an independent contractor. So I would liken that to going from, you know, being a employee at a big Fortune 500 company where, you know, you've got, you know, to clock in and clock out and you've got all the restrictions, and maybe you'll make a 3% or 4% raise the next year, to then, let's say, going and becoming a licensed realtor. And as a licensed realtor, now whatever you sell,

you've got a good commission split, especially if you're with Keller Williams. We give great commission splits. So if you've got a good commission split, and if you go sell $10 million of property that first year, you're going to bring in gross commission income of over $300,000, which is way, way more than, you know, you would make at another little, you know, company that you used to work at as an employee.

But what's the problem that you've got? The problem that you've got is that there's only one of you, and you can only do so many deals in a day and in a 30-day period. So ultimately, you've got to go over to what's called the top right-hand quadrant, and that's the B quadrant, which is running your own business. And the benefits of that are that you finally get leverage. You're leveraging people. So the tasks that bog you down every day,

doing those contracts and donning your eyes and crossing your teeth and scheduling inspections and putting the sign up in the yard and taking the sign down in the yard and doing the virtual tour and taking all the photographs and all that kind of stuff, all of a sudden, you're now putting somebody else in the quadrant, in an E quadrant, and you're hiring them under you, and you're leveraging all of those little tasks, and you're getting them out of the way. Okay. And so the benefit of that is that all of a sudden now you then have more time to focus on what you're really good at. And let's say what you're really good at is talking to people on the phone and lead generating for more deals. And so if you've spent, you know, let's say 20% of your time just doing the 80% that brings

you the money, then you're going to find that you're going to be making a lot more money, right? So it's kind of the 80-20 rule on its side, if you will. So then from that business quadrant, you ultimately then go to what's called the I quadrant, which is living off of investments or owning multiple businesses. And so, you know, people look at me and they say, well, you own multiple businesses. I was like, yeah, I do. I've got, you know, I'm interested in social media company.

I've got a property management company I just started. I've got, you know, four real estate brokerage firms. I've got a holding company for all my real estate. And I've got, you know, some other companies too that, um, that do various and sundry things, but it's always just, and for me, it's been recognizing in the very beginning that I want to figure out what tasks I need to get done and then hire somebody to do those tasks so that I can focus on the 30,000, you know, foot picture, uh, so that I'm not getting bogged down into details. And so I want to, I'm, even though I'm an attorney and I've got a master's in business and stuff

like that, people would think that I'm very much organized. If you were to take a photo of my desk right now, you'd see I've got crap all over the place. Sure, sure. So I am not organized. I recognize that I am a person that I like to, just, I like to just go on to the next thing, go on to the next thing, go on to the next thing. And so what I need to have behind me is a very competent and capable staff that can pick up after me. And they can come in and say, okay,

you know, Chris has just been in here. It's a whirlwind of stuff everywhere. Let's figure out, let's file this appropriately. So when he needs it again, he can ask for it and we'll find it. So, you know, that just kind of gives you a big overview, I think, at 30,000 feet of, you know, why it's important to own businesses. But, you know, beyond that, and this is really a credit to the Keller Williams franchise system, because beyond that, you really have to do due diligence on the type of person you're hiring behaviorally. And so Keller Williams has a class called Recruit Select, which is really a phenomenal class. Because what they do is they take a, if you've ever heard of the DISC profile,

there's another similar behavioral characteristic analysis deal called the ABA. And basically, based on the ABA, which is very similar to the DISC, but a little bit more specific on things, you can then determine whether or not somebody's going to be a good stick for the role. Because what you want to avoid when you're hiring people for business is you want to avoid hiring someone who naturally doesn't fit the role. Because what you want to avoid when you're hiring people for business is you want to avoid hiring someone who naturally doesn't fit the role. So if you've got a real outgoing extroverted person, you don't want to put them in a bookkeeper role, right? They're not going to enjoy that.

Same thing is that if you're looking for a bookkeeper, you don't want to find somebody who's going to be, you know, having ADHD and like, you know, going squirrel all the time and, you know, jumping all around the room. You want to find somebody who's going to be, you know, having ADHD and like, you know, going squirrel all the time and, you know, jumping all around the room. You want to find somebody who enjoys kind of a quiet, you know, atmosphere of, you know, looking over all the numbers and dotting the I's and crossing the T's and counting all the money. So you've got to get those right people on board. And Keller Williams has done a great job of just as a franchise of helping me identify you know what's the right behavioral characteristics for this role in this particular

brokerage firm so you know what's nice about this is i can go away you know next week i'm going to go away for the entire um week and i've got a nice trip to san francisco and we're going to do the wine country and everything and while i'm on trip, everything's going to go running very smooth because I have all four offices are independently run. So I have a team leader of each office. I have a bookkeeper in each office. I have a, you know, what we call a call coordinator, you know, the receptionist in each office. And then we've got, we've empowered the agents through an associate leadership council to kind of run the office as well. So the reality is I don't have to do a whole lot because it's all a business system that's set up to run on autopilot. And that's really been a, you know, just a great addition to my curriculum, if you will.

So even though, you know, I went and got a law degree and got an MBA, they don't really teach you this kind of stuff. You know, you just kind of have to learn it while you're doing it. So I'd say that's just a couple of little tidbits for you on running businesses. Yeah, no, I think that's great. I mean, some of this higher level stuff is stuff that people absolutely need to hear. Even myself, just having these conversations with a like-minded person or friend, and it's great to have these conversations. So I know we're kind of getting, we're getting long on time. We're already in a half hour. And so I know most listeners, you know, they have kind of a checkout point and it's

usually around this 30 minute mark, but I wanted, I want all you listeners to, to stay tuned because this next question is going to be one that really is about real estate, really is about real estate investing. And that is being a licensed realtor versus an investor. And then also how to leverage realtors or your brokerage, right? Now, you're in a very unique situation that you own the brokerages. But I'm talking to those who are trying to make a decision on getting their license as an investor or not. And then also, if you are licensed, how to leverage your ability to understand investing, flipping and otherwise, throughout your brokerage. Because I know you, Chris, you're leveraging your agents to bring you deals at some level. It may not be a lot,

but at some level, there's deals coming into your pipeline because of your agents. So I want to really hit on that before we jump off this podcast about the decision on whether to become licensed or not and how to leverage it once you are licensed. Okay. Let me go back to the glory days of short sales. And there was a program called Short Sales Riches. And one of the fundamental tenets of that particular program was the fact that you could, you know, kind of flip short sales on autopilot and that you wouldn't have to get bogged down in all the nitty-gritty.

But one of the key components of that was that you ended up giving an agent a real estate commission. And oftentimes they could get what's called double commission. They could, you know, help you buy it and then turn around and resell it. So they might typically, in the industry, get 3% on the sell side and then 3% on the buy side. So if you went and sold a $100,000 house as a realtor, you'd get $6,000 or 6%. Well, the same is true today for what I do, and that is that even though I have a real estate license, I want to impress upon everyone that's listening to this podcast to incentivize your workforce. Your workforce is the real estate community.

So give them an incentive to bring you deals. So people bring me deals, and they know that I always give them the commission. Sometimes I'll even say, if you get me a good deal, I'll pay you $1,000 plus your commission. So that they're incentivized to always be thinking of me when they're in real estate. So if, Justin, you were to say to me, you know, Chris, is it a good idea for people to get a real estate license, I would say certainly because then they can get access to a multiple listing service, and it doesn't matter that Zillow bought Trulia.

At the end of the day, the buck stops at the MLS, and there's, you know, more data in the MLS than Zillow and Trulia, at the end of the day, the buck stops at the MLS. And there's more data in the MLS than Zillow and Trulia have. And there's also, you understand what the compensation is, what the co-broke is, a whole bunch of other stuff Zillow and Trulia just aren't going to be able to give you. So you get access to that MLS, which can be really, really nice. Aside from that, I think you don't want to start stepping on realtor's toes because if you get a license so that you can, quote unquote, keep the commission and make yourself another 3%, what you're going to do is you're going to find yourself stuck in that S

quadrant, right? You're never going to get over to the B quadrant because you're not going to be running a business because you're doing everything still. So if you want to be your own realtor and go out and list the homes that you're flipping yourself, go right ahead. But what you're going to find is that you're spending time, you know, putting a home together to sell it instead of spending time on what's really important, which is lead generating for the next deal. So you always want to be lead generating for that next deal, bringing that next deal to pipeline, whether it's through marketing, whether it's through MLS, whether you're buying an auction, whether you're buying an REO, whether you're buying a short sale, whether it's a probate deal.

The reality is there's so many different deals out there. And if you're not spending time focused on that, and instead you're bogged down into the nitty gritty trying to sell a house, which should have already been turned over to a realtor to do it for you, then you're missing out on a huge opportunity. So I'd say get your license, but then use the commission to incentivize a workforce out there to get you more deals. Don't start stepping on realtor toes because all you're going to do is it's going to be very short-sighted. Yes, you'll save a little bit of money on the first deal or two,

but then you're just going to get the reputation as a person who wants to do their own thing. And then people aren't going to bring you deals. People are going to love to bring you deals because if they bring you a deal, that's something that they just came across that no one else has found. You can buy it with them, pay them their 3%, and then they can turn around. And when you're done flipping it, fixing it up, excuse me, when you're done fixing it up, then they can flip it for you and make another 3%. And you can even work with them and say, okay, here's the deal. If we do two, then I'm going to pay you five instead of six. And you can do all kinds of things to get creative,

but just keep that in mind that your realtor community is there as a resource for you to leverage your time. You want them out there doing stuff for you. You want them doing comparative market analysis on the house and telling you exactly what you should price it at and what price per square foot is in the neighborhood and how many active listings are there, how many active tendings are there, what are the most recent 90-day sold in the area so that you can figure out what price per square foot is when you put that house on the market. So you don't need to be doing all that stuff yourself. And if you start doing like what Justin and I do, and you see you're flipping a lot of properties, you get bogged down in the nitty gritty and you're not going to get the next deal.

So I guess the big picture would be, Justin, use the realtor community as leverage and don't get greedy with the commission. Yeah, I think that's exactly what I preach. It's exactly what I do. I decided not to get licensed to leverage it, to be able to say, here's double commissions. Here's a chance to make three times the commission. Here's a chance to get a bonus because you get the deal. You're handing me the pocket list and whatever those things are, I can incentivize them so that they really work for me and I get to leverage their time, not my time. One of the big parts of creating the systems,

building your power team, those are realtors and beyond, but realtors are a big part of it because they bring us deals, they list us deals, they really help us. They give us market comps and all of that, right? So leverage them into that point. Leverage, if you do get licensed, leverage the opportunity you would have

to maybe network within your brokerage to see if they'll bring you their deals as an investor. And I think that's a huge component. Absolutely, absolutely. Well, good, Chris. Well, listen, like I said, this is usually checkout point for most listeners. I bet it is.

Yeah, so I want to say just thank you. You've been great and you've dropped a lot of knowledge on all of us. I truly appreciate everything you do here on this podcast, but everything you do just for real estate. I know you're a champion for real estate investing. You always go to war for us small time investors to make sure that we are able to do what we do so we can keep the economy moving. Thank you so much for that, man. Thank you for our friendship and jumping on this call with me here today, man. I appreciate it.

Great being with you, and I hope it was informative for your list. I'll look forward to many future conversations with you. Right on. All right, guys. Well, this is Justin Colby signing out. I hope you really enjoyed this. This was some top-notch material. Right on. All right, guys. Well, this is Justin Colby signing out. I hope you really enjoyed this. This was some top-notch material. Repeat this. Listen to it over. Rewind it. Do whatever you can. Take notes. Get all this information from a genius like Chris.

Make sure to start putting it into your business. If you are interested in talking to me further about working directly with me on a coaching or a mentoring level, please go to thescienceofflipping.com. There's a coaching tab there if you're interested in working with me and my team on a mentoring apprenticeship coaching type level. We're happy to fulfill that for you and I'll reach out to you personally. Other than that guys, that is all we have for today. We are signing off.

This is Justin Colby. Peace. other than that guys that is all we have for today we are signing off this is justin colby peace