The Science of Flipping - Episode 65: Justin Colby Interviews Contractor/Investor Robert Orfino About Building Systems And Virtual Investing

Episode Date: August 24, 2015

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Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. Welcome, welcome, welcome everybody to the Science of Flipping Podcast. I am your host, Justin Colby. It has been a long time since I got back with you and I wanted to make sure that this episode packed a huge amount of value for you guys. I have a very special guest on the line. Before I bring my special guest on the line, I want to just make sure everyone understands that this podcast is all about showing you and helping you produce the systems and automation and organization in your business. As real estate investors, we oftentimes get caught up with doing absolutely everything,

and this podcast is focused on building a true business and leveraging yourself out of real estate investing in the day-to-day activities so you can truly build a business no matter where you are in the country and use these systems and processes in your business to be able to build the life you would like to create the life by design and whether you are wholesaling fixing flipping buying a rental it doesn't matter your strategy as we are able to show you the systems that can be implemented to build an incredible business my story goes that we have been fix and flipping here in Phoenix, Arizona since 2007 and honestly

it did not start off great. We were sleeping on couches, I lost my house, my partner Eddie lost his house, we lost our cars, we could not afford anything when we first started investing in real estate. And lo and behold, we were able to scratch together our first deal nine months into being real estate investors. And when I say scratch our deal together, I mean, we were clawing and scratching to get anything done. And quite simply, we just didn't know what we didn't know. And we were able to put that deal together. That same year, we got our second deal put together and it was off to the races. At that point, we invested a large sum of money in real estate coaching and in mentorship. And from there,

it's been no looking back. And so again, if you are are here you're interested to talk to me a little bit further one-on-one about your business about possibly working together in a coach relationship go ahead and email me at info at the science of flipping calm I personally will have my assistant email you back and we can schedule a time to talk. And if that's something you would like, it's info at thescienceofflipping.com. Now that all that is done, let's bring on my special guest. This is a personal friend of mine.

We have known each other for quite some time. We are actually a part of several different masterminds together. And if you are not a part of a mastermind, I highly encourage you to become part of a mastermind. They are costly, but they are some of the best opportunities to build your business and surround yourself with like-minded people, with people who are more successful than you. We are a part of several masterminds together. He is absolutely crushing it in real estate right now. He wears multiple hats, which we will talk about, but let's bring on our guest, Robert Orfino. What is going on, buddy? Hey, Justin. Thanks for having me. I really appreciate it. This is very exciting. Right on. Well, let's just kind of jump right into your

business. I think most people on this podcast know what I've done and where I've been and the struggles and triumphs I've come across, but let's kind of talk about your business. Now, you're in Southern California right now, and you're absolutely crushing it right now, which is fantastic. But that wasn't always the case, right? I think three or four years ago, you were trying to find your way and ultimately found one of our products, Find Cash Buyers, now that you were able to help kind of launch your business. Is that correct? Yeah, I can just go back a little bit. You know, we came through the recession like a lot of other folks and we got our butt kicked.

And, you know, it was tough times for a lot of people. We woke up one day and we were about $527,000 in debt with about $410,000 of that personally guaranteed. Wow. Wow. Yeah, right. So when I hear folks say they're down to their last $10,000, I consider them lucky. We want half a million the other way. And we were doing some big projects that were bond-based, and when the bond market dried up and municipalities couldn't pull bonds anymore to do the big green projects we were working on, we were stuck out there.

And we had a lot of commitments. And, you know, we sat down. And the scariest thing you never want to get yourself into is to sit down with the IRS because you owe them money. And the IRS, the federal government, told me to declare bankruptcy. That was the quickest and smartest path out and we would owe them the least amount of money and of course we would all go to the IRS, but that was the best way. We refused to do that.

When I say we, my wife and I, I'll just get off a little tangent with her. I hit the wife lottery. I mean, she's beautiful. She's smart. MIT, MBA from Michigan. I mean, I'm the luckiest guy in the world. I'm blessed to have her. She's my partner in just about everything we do.

And she came home from the IRS in tears, saying, the IRS just told us to declare bankruptcy. And I refused to take that answer. And so I had to figure it out. And it's one of those things where you need cash back. You've got to figure it out. And I turned to real estate. So we had a contractor's license.

We were doing some green projects. And we started looking for avenues to work in the real estate world. At that time, Fannie and Freddie were still flipping homes. They're actually doing the repairs. We got into with Fannie and Freddie and did maybe a hundred projects with them. And then all of a sudden they stopped and just said, we're not repairing anything anymore. We're just going to sell it as is. So for those of you in Southern California, about four years ago, you remember that everything was as is? So that revenue stream dried up.

But I was in it. I was in real estate. I started looking around, and I went to a real meeting, and there was Kent Closier and you. You were at the back of the room as well. And we listened to the fine cash buyers now. And I wasn't thinking about doing wholesaling. I just wanted to get in touch with the folks that were actually flipping homes

because I was a contractor. So with a total of $126 marketing campaign, basically stamps and we printed the letters ourselves, we emailed folks and the return address on the letter said your new rehab contractor we got a response we got several responses from it and we created about eighty four thousand dollars worth of business in 90 days so you you bought the system, buying cash buyers now, for how much? We bought the system for $1,000. And you put, what, roughly $150 in the mailing?

$126, yeah. And you made how much? We got $80,000 worth of construction business. That's what we used because they're cash buyers. They're buying homes. What are they doing with them? They're flipping. So we went after those because we needed work immediately.

And, I mean, we're talking about a turnaround of maybe two weeks before we're getting our first two rehab jobs. Then that grew from there, and we started focusing on servicing investors. You used your contractor's license, and you went after this software, Find Cash Buyers Now, and you said, you know what? If these are cash buyers, they're investors. And if they're buying cash, they're likely flipping the home. And so I'm going to market to them to try to get some rehab work out of them to start building up a little bit of a nest egg to really be able to move forward. Is that basically the mindset you were in? That's it. And I still do it to this day.

When we're looking for some other investors, we'll send it out and just tell them, hey, we're rehabbing. We're just a little more sophisticated now. We've got some nice flyers of the work we've done. And we're looking for folks that are flipping million-dollar-plus homes. Those are the clients we're looking to take on as a contractor. Yeah, so it worked. I mean, and from there on, whatever Kent says or Kent is promoting, we're buying.

We're there. We put our faith in him, and we've been rewarded in space. So we're – I can't tell you how happy we are to be a part of that family. That's just an amazing opportunity for us, and we got lucky. We almost didn't go, but something made us get up and drive to L.A. and deal with the 405 traffic and see you guys there and buy the system. Yeah, and that's great. And, you know, obviously Kent being my business partner, there's a lot to that.

And one of the things that I want to really hit home about what you're talking about here is a lot of times people talk to me on the faith level of being investor, but they might be a realtor. They might be a contractor. They might be an electrician. They might have another trade that they can somehow be able to use our systems and processes that they can actually go create business for themselves and create a little nest egg, get a little cash flow going, let's call it. And I want everyone out there to realize that though you might be a full-time wholesaler or want to be, or a part-time wholesaler, a full-time fix and flipper, or a part-time fix and flipper, or even a loan broker, realtor. You can use systems in marketing that can not only provide you possibly an ability to build your buyer's list or find a deal, but you can also leverage that into possibly a rehab if you're a contractor, a listing if you're a realtor, other work depending upon what you're really doing. If you're a inspector it

could get you a couple inspections right so I want you to always be open-minded again I talked a lot about you know the type of glasses that you're wearing and I myself have just purchased I mean my partner Eddie we just purchased a very large program and actually that program is talking to us a lot about how focusing and hyper-focusing like you do when you wear glasses, right? If you have bad vision, it's hard to focus, but you put your glasses on and you have a much better focus on everything. Being able to do that is going to be huge. And being able to wear a different set of glasses with this business as a whole, real estate, can be all-encompassing.

Robert, you're a wholesaler. You're a flipper. You're a contractor. You wear multiple hats. Being able to figure out how to treat each lead or each opportunity that comes down your way is going to be very, very big. You're a great example of that. The reason why I wanted you on this podcast is you're not only a successful contractor, but you're a very successful investor. Not only that, but you're able to even build a local Southern California real estate investing

business, but you're also jumping into the East Coast, right? You're from Jersey and you knew you had a couple good relationships out there and you said, you know what, this is working really well for me in Los Angeles and Southern California and you basically took your business and said, we can do it both in Los Angeles and Jersey, right? You've been able to do what we would call virtual investing, virtual wholesaling, virtual flipping. You've been able to build basically two divisions of your company, correct? That is correct.

I'm a Jersey guy and grew up in the casino pier, Seaside Heights, and I went back about a year ago for Thanksgiving, visit my parents. They don't believe in cable. It's just sort of not much to do at the house. So I took a walk down the street, looked at the real estate office. They had the little eight and a half by 11 listing showing.

I looked at it and I said, holy cow, you can still buy a house here for $200,000. So I started studying the market. I made some more trips out there, which my parents love. They can see me a little bit more. And I started going to the Rio clubs out there.

Just analyzing the market, talking about what's going on. And what it found out very quickly, it's the number two foreclosure market in the state, excuse me, in the country. So there's definitely opportunities there. It is clearly a buyer's market. And I had just come out of that market in LA

working with hedge funds. They were buying thousands of homes. So I said, well, hey, I can do this. So again, giving all credit to my wife, she built a lot of those systems. We do a lot of it online. We use nothing too crazy. We use Google Docs to share information with multiple people, multiple users. You know, we have our Dropbox set up.

We want to see pictures all the time. And I went out there and I built a team. And with some friends, with some people I was just meeting, the key for us, and I think if you're going to try and do this virtually, is to have backups in place. So we work with four agents. We're buying deals right off the MLS at roughly 50% of the ARV, putting in another 10% or 15% of the ARV,

and then going out to market at 65%, 67% ARV. Those are good deals. We find them all over the place, and we find them on the MLS because there's motivated sellers there. We also do wholesaling there where we're finding properties that we're trying to get them to hold paper. We love to have folks do owner financing while we're doing the rehabs. There's never enough money to do all the rehabs that we want to do. So if we can get the owner to hold paper for 6, 9, 12 months, whatever it is, that helps us out greatly and it just allows us to accelerate our business. Yeah, I think, you know, for all of my students out there listening that are part of my coaching program and Ken's coaching program, we just did our second segment of a three-segment training

on virtual wholesaling, specifically wholesaling. And it all comes down to being able to take a proven system and being able to automate it. And we have done that in Dallas. We ourselves are wholesaling deals in Dallas, Texas. Our main business here is in Phoenix. Just this month alone, it looks like we're cracking the $100,000 for profit just this month alone, it looks like we're cracking the $100,000 for profit just this month alone, which is a great number. We hope to make that number a lot more consistent for the months going forward.

But the idea is we built a very, very, very successful seven-figure business here in Phoenix, and we can replicate the systems over in Dallas. And just for ourselves, we found in Phoenix, for every dollar in marketing that we spend in Phoenix, we roughly get $3 back. So great profit margins. For Dallas, for every dollar in marketing we spend in Phoenix, we roughly get $2 back in Dallas. So because we have a proven system and because we've been able to leverage other people in our business, we've been able to build a very successful business in Dallas as well as Phoenix. And it sounds like you have done the very same thing there in Jersey. Yeah, we're looking at wholesaling as a way to find properties cheap for ourselves to flip. And then essentially, when we run out of money, we can't have any more.

We have just no more bandwidth to flip anymore. Then we wholesale the property. And again, I'll give Kent another plug. We're using fine motivated sellers now. It's the only list we're using in New Jersey, and we're doing fantastic. We're sending out about 1,100 every four weeks. We'd like to do postcards. We think they're fast and they're cheap, and if folks are motivated, they're going to keep a postcard.

And we're seeing somewhere around 80 phone calls, sometimes 86 phone calls back, which is tremendous. And we have the systems in place to handle it to make sure we're getting back to folks, talking to them and understanding their problems and making sure it's an area that we want to buy and moving forward. So, again, having the systems in place and then having boots on the ground, folks you trust that can run out and take a look at the property, it's critical for us. And whether it's a real estate agent or it's an old fraternity brother, having those systems and people in place is just critical for us to do it in New Jersey. Yeah. We love it.

My next question was really lined up with who do you have, and you just kind of mentioned it. But, for example, here in Phoenix, we have a lead manager, acquisition manager, project manager. They handle the day-to-day, right? I think we're closing seven deals this month alone, and I can tell you the deals we're closing, but that's all I can tell you the deals were closing but I saw I could tell you about them right in Dallas we just dropped a large group of mailing out in Dallas as well and we have two Realtors who are our boots on the ground is two women their partnership and they're very good at what they do and they have their own buyers list that they said listen we would love to work with you you know we're full-time Realtors but we already

have a buyers list of investors that we've worked with and if we can put some business together there's a great opportunity this is going to be very seamless you know as you guys are getting the deals under contract we're going to be you know driving property, taking pictures for you, at times maybe even negotiating for you. But ultimately, we're also going to have your buyers that are going to be in-house. And so we built that relationship so that it's almost a one-stop shop. And so that's who we use in Dallas. And it sounds like you also have a very similar situation where friends you know, friends, family, fraternity, brother, or just realtors that you've connected with are great boots on

the ground when you're looking to build in a outsourced wholesaling or flipping business. Yeah. And the key for us was finding the right real estate agents. They do a lot of the groundwork. I'd say about 90% of it. And then when they get to something tough or if I have a wholesale deal that's not in their area, then we rely on some other folks. But we sit down and we have lunch, and I bring all the real estate agents together. They're not overlapping in any areas. One person's doing Northwest New Jersey,

the other one's doing Northeast, Central, and then sort of Southeast, the beach communities. And we sit down and we say, this is what I'm looking for. This is how you do it. Take pictures, send the pictures to this Dropbox address, do a rough rehab estimate for me, and here's a basic per square foot cost and then look at the roof look at the hvac system look at the uh if there's an oil tank in the ground that's a big jersey thing oil tanks in the ground um look at five or six things that are outside of that per square foot cost that can just increase your rehab numbers and they do they send me pictures and it's absolutely fantastic.

And if they buy the house for me, obviously they get the listing. They're getting it on both ends, and it's really sweet for those guys. And I probably look at about 100 to 110 properties every morning based on what all the agents are sending me on their drip system. Yeah, that's great. That's great.

Well, let's speed some time up here and talk about what you're currently doing, right? I think everyone now knows that your bread and butter for the most part years ago was being a contractor. You're from Jersey. You moved to L.A. You were able to utilize a couple of our systems, Find Cash Buyers Now, to start building a little bit of revenue.

From that point, you started really investing in yourself and coaching and other products like Find Motivated Sellers Now to build a real estate business in LA. And from that point, you built a virtual wholesaling and flipping business in Jersey and now you got a couple cool things that I want people to know. I know I have a lot of Southern California listeners out there but you started a RIA or at least a meetup group that I know

you're very very excited about down there in LA. Tell me a little bit more about that. Sure. Amazing. So for me, I'm looking, we're doing wholesaling and we're doing our flipping, right? So we do that every single day. And as I look back, I'm thinking, oh, I shouldn't have wasted time here. I shouldn't have wasted money there. I wish someone would have told me this. And I just said, well, you know what? Why don't I just do that? So I set up two meetup groups that are sort of category killers, if you will. One meetup is Los Angeles real estate wholesaling. And the only thing we're talking about is wholesaling. And it's the meetup that it up that I wish I went to four years ago. It's not selling every single night. It's not a 90-minute sales pitch. It's a lot of learning, a lot of interacting, a lot of networking.

I like to bring in really successful wholesalers and say, hey, look, these folks are finding deals here in LA at 60%, 65% on the dollar. And here's how they're doing it. And there's the folks that are doing it here and doing it anywhere in the country that are killing it, they all have a mindset of abundance. And we bring that to our meeting. There are things that I sell. I want them to know that there are certain things they need in their toolbox. Obviously, you know, real estate worldwide, the smart system is something they absolutely need. They need to hook up with Trevor with OnTarot.

And that's very clear. I think he was one of your guests or certainly within our group. And there's some little things they need to do. They need to pick a niche in California. They need to find their one little niche that they're going to work as well as doing just a regular mailing. For me, it's networking with real estate agents and brokers. Other folks will do probate, pre-foreclosure, notice of default. Other folks just walk the neighborhoods. They walk the neighborhoods and knock on doors and talk to neighbors and look at houses. So whatever it is, you know, you've got to have a couple multiple channels

for where you're sourcing your deal from. And we teach that. But, again, we do things like don't spend a dollar. We tell folks don't spend a dollar until you listen to 80 of Sean Terry's podcasts. It's free. Listen to the 80 free podcasts that he puts out there. I think he's at 130 right now. I tell folks to start at like 25 or 30.

It's a different market. But listen to all of them before you spend $1 on anything. At the very least, you pick up the lingo. You start getting the formulas. And then if they want to flip, if they're going to flip homes, we do Southern California house flipping as another meetup. Again, it's just only talking about house flipping. We're not talking about notes and all these other things that come across.

These real meetings, we're really, really focused on folks that are serious about flipping or serious about wholesaling, and that's the only thing we talk about in our meetings, one or the other. But the same thing, don't go out and buy these groups. They're very helpful at some point, but if you don't know the basics, just listen to you and all your podcasts. I think you're over 60 now. Listen to your podcast and get that basic education for free before you go ahead and commit that 997 or the 1597 or the 1997.

But once you're on that road, then you have an understanding of where your money and time is best going to be served. So again, if you're going to be the guy who does probate, then you should take a probate class. No problem. You should do that. But if you don't even know what an escrow agent or a child agent is part of the system,

where they fit in or how you have to do that, don't be spending $997 on that program before you even understand the basics. And so, you know, the podcast, the free information on the Internet is absolutely amazing. And there's so much good stuff out there. And it's coming from good sources, positive people, people that come from a mindset of abundance that they don't care if they're giving the information away for free. When they're ready to take the next step, then you can take it. And so for me,

I didn't have anyone telling me that. I ran around and dropped, and this is, everyone listening is probably very familiar. I dropped $1,500 here. I dropped $3,000 here. I dropped $2,000 there. Like, this was a waste of time, wasted my money. And if someone just told me, hey, Rob, if you want to do this, this is where you need to go, this is the path you want to take, then, you know, I would have actually saved some money, saved some time, and probably wound up in the same place I am now. But, you know, along the way, I would have been able to save on some of those costly lessons. And that's all we're trying to provide for folks,

to just show them that there's a path out there, figure out what your path is first, and then be able to pick and choose where you're going to spend your resources so you can have a quicker acceleration rate towards success. That's what we do. That's awesome, dude. That's fantastic. And, you know, for those of you out there trying to figure out how I'm going to find buyers or sellers or a team,

you know, Robert, you did this with meetup.com, didn't you? I did it with meetup.com, and in three weeks, we had over 70 members. Twenty-eight people showed up. This was on the wholesaling one. We did an interview with three, I don't know, multimillionaire investors, real buyers. When we talk about setting up a buyer's list, we talk about what Kent talks about reverse wholesaling. You guys teach and just say, this is why it's really, really important.

And here's three real buyers. They're all buying different areas, different levels of homes. But talk to them. Get to know them. Get their business cards. Get on their list. And providing that was fun. It was absolutely fun, and everyone had a good time, but there was a lot of learning.

And so we come to our meetings with a positive attitude and a spirit of learning. And with those two things in mind, it makes success just accelerate towards you. So, yeah, we love to find folks that are new and want to learn, and this is the easiest way for them to get involved. That's awesome. And I think anyone out there can do it. And, you know, I'm not trying to steal your thunder, Rob,

but, you know, if you're in Minnesota and you're thinking, how am I going to find buyers and other investors and other wholesalers and other flippers and other, you know, agents and all're thinking, how am I going to find buyers and other investors and other wholesalers and other flippers and other agents and all of that, meetup.com is free. It's easy. Go to Starbucks. Go to a restaurant. It's so simple to do. And Robert obviously has found great success in doing it.

So just another tip on being able to build your know, build your team around you. We're coming up to, go ahead. It's crazy simple on Meetup. I mean, it really is. And you're looking for like-minded individuals. If you're, you know, if you're just a hiker and you want to start a hiking Meetup, it is amazing how that brings people together. It's such a great tool to have in this day. Right on, bro. Right on. Well, so listen, we're right about that wrap-up time. And is there any last word that you'd give to maybe some of those rookie investors or people who are just getting started? Is there any words of advice you'd like to give to them? Yeah, and I'm sure everyone has said it.

You've got to take some action. And sometimes you can't afford or you don't have the time to do massive action, but carve out some time during the week and take action. Even if you have to handwrite yellow letters or if you're doing cold calling for FISBOs or landlords who are are renting to take some sort of action and get started. It took my wife and I 14 months before we got our first wholesale deal because we didn't have a lot of time. We were doing construction, but we didn't give up on it. We carved out pieces of time Sunday morning after breakfast. Hey, let's go online. Let's look and let's make some

phone calls this morning and kept at it, kept at it, kept at it. And then once we got our first one done, which is always the hardest, the next six came like right on top of it. We were like, holy cow. We got to look at this a little harder and figure some things out. And that's when things get started going. Success begets success. The other thing is there's a lot of great coaches out there.

There's a lot of great gurus out there. I'm a guy who promotes them. I believe you should go. But you need to make sure that you're picking the right one. Talk to folks that have been in those groups before. Make sure it's for you. Make sure the time commitment and the money commitment match up. This is not get rich quick, but, boy, you sure can get rich. So I think with those little things in mind,

just kind of being smart on how you chart your course, people will be successful. And it's worked for us. It's absolutely changed our lives. And we're so much better off because of it. Right on, right on. And tell everyone where to maybe reach you, maybe they're in Southern California, maybe they're a contractor, maybe they're trying to figure out how to utilize some of our systems in, you know, tell people where to find you, where to reach you. Sure. So our company is Alpine Green Property Services. We're in Southern California. We're

on the web. If you look on meetups, you want to come to one of our meetups, the wholesaling meetup is Los Angeles Real Estate Wholesaling. Pretty simple. The other meetup is Los Angeles real estate wholesaling pretty simple the other meetup is Southern California house flipping and the only things we talk about are those two topics at each of those meetings whether we're staying concise and staying on topic if you're looking for me in New Jersey my company is Alpine Premier Investments I frequently go to Ria's out there I'm a sponge so I like to go to as many meetings and get as much information as possible

it just helps as I grow my business that's where we'll meet us if you want to look us up on the web again Alpine Property Services if you want to give us a call it's 800-406-6815 you can get as much free information out of me as possible If you want to give us a call, it's 800-406-6815. You can get as much free information out of me as possible if you buy me a green tea, decaf.

A decaf green tea. All right. No caffeine. I'm tired of buying you all those whiskeys. All right, guys. Well, that's my good friend, Robert Orfino. Thank you you very much for your time i greatly appreciate you coming on our show here at the science flipping thank you again brother it's been an honor thank you all right all right guys as always that's all we got for today again if you want to talk directly with me my, learn about how you possibly could work with me or have one-on-one

mentorship, email us at info at thescienceofflipping.com. And we will see you on the next episode. Peace.