The Science of Flipping - How to Flip Your First Home

Episode Date: December 23, 2020

It's the end of 2020 and you haven't flip your first house yet.....so how do you do it? What are things you need to know before diving into your first project?

What is up, everybody? What is up? Welcome back to the Science of Flipping podcast. I am your host, Justin Colby. This podcast is all about tools, systems, strategies, processes to help you become the most profitable expert investor you possibly can be. So I am here to help you out each and every day. I have daily podcasts. So make sure you are jumping on here every day to learn for the next 10 to 15 minutes. As you heard on my last podcast, very, very exciting news. A monster investor who's done over 1 billion. Yes, I said that right. 1 billion in acquisition of rental properties is actually partnering with me and I'm partnering with him to help those trying to jump into building wealth

that have maybe money on the sidelines that maybe have money in self-directed IRAs. Maybe the money is not making the returns they want. You name it. He wants to be able to partner with you as well as myself to be able to help you build your rental portfolio. If that is of interest to you, please make sure you send me a direct message on social media at the Justin Colby or just shoot me an email info at the science of flipping.com info at the science flipping.com. This is a big, big, big announcement. We've been working on this for a very long time. I get tons and tons of questions of people trying to figure out a way to build wealth, jump in the rental game. And he is offering his services, his Yes, we are going to change subjects completely, getting your first flip and collecting massive checks. I just did a YouTube video regarding this.

So if you also want to watch that, it gives you a little bit more context. But this being said, there's three major challenges for people to get into the space of rehab flipping. Now, I wanted to find this because there's a lot of people that will, and even myself, right? The podcast is called The Science of Flipping. Now, there's a lot of people that will say flipping is wholesaling. And a lot of people will interchange that,

whether it's wholesaling or rehabbing. Let's be very clear. I want you to get your first rehab flip. And the three big challenges that most, if not all people bring to me when I say, hey, why aren't you going to rehab flip that or whatnot, is your deal, the money, and contractors. So let me hit the first one first, because I believe, as a moment in time, getting a deal is one of the biggest, I mean, all three of these are the biggest, but you know but finding your deal is

challenging right now. The market is on fire, specifically here in Maricopa County, which is Arizona, Phoenix. We are literally at an all-time low of listings since we've started recording listings. We are at an all-time low, which means it's hard to find deals. It's even hard for agents to find deals. So everyone is hungry. Everyone is salivating. There's three main ways that I find deals. One is direct marketing to the homeowner. That could be PPC, direct mail, cold calling, text messaging. This podcast isn't about, this episode is not about doing a deep dive on that, but it is what I would suggest anyone to do, especially if it's your first flip, because you will get the biggest, deepest discount if you're direct to the homeowner. The next will be the MLS and or

realtors. Now, as I just mentioned, the MLS, especially where I'm at, is at an all-time low. So there's not a lot of opportunity there. However, realtors come across quote unquote listings that are pocket listings all the time. That may not be a great listing because maybe the person needs to sell fast. Maybe the home's not in very good condition. The seller doesn't have the money to rehab it or fix it up. So they would call me and I am able to buy that through the realtor. So it's still a very viable source to find deals. And lastly is wholesalers. Wholesalers are everywhere. It seems like these days because of people like myself or other, you know, educators out there teaching how to how to wholesale. Wholesaling is the best way to break into the business. But I'm talking about how you get your first rehab flip to get the big profits. Wholesalers are great because they're doing all the work. They're spending all the money. They're negotiating the deal. They're

doing all the upfront. I've bought hundreds of homes to rehab from wholesalers because I didn't, when I first started out, I didn't want to have to do the marketing. I just wanted to buy the deal, rehab it and sell it on the market. Right. And so they took their time. They took their money. They took their energy. They found the deal good for them, they're going to make some fee off of it. And I get to rehab based around my numbers, right? So where to find all of these individuals, including my next topic, which is money and hard money lenders, and even contractors, are meetup groups, meetup.com, as well as Facebook groups. There are local groups. If you just look up wholesaling, flipping, real estate investing, et cetera, you will find local

groups in your area where you can find realtors, you can find hard money lenders, and you can find wholesalers. Okay. Now the next thing, which most people will say, oh, I can't rehab. I have no money. Well, that really shouldn't be a problem. There are hard money lenders out there. Their interest rates are higher. They're anywhere from 10% to 18%, but they lend only on the asset itself. And so if you're buying a home for $100,000, they'll lend anywhere from 80% to 90% of the purchase price. So typically you'll get an $80,000 loan or a $90,000 loan. And if you build a good reputation with them, potentially they will be even more aggressive with you, meaning

they potentially could get up to funding a hundred percent of your acquisition. And so you combine that with like, you know, using private money. Now, most people will say, well, Justin, I don't have money myself or my family doesn't, we're not rich or my friends aren't rich. I understand that. But I promise you this, if you actually go out there and give someone an opportunity to be a part of a flip with you and not try to just go say, hey, let me borrow money or whatever you might say, there is a tact to this, right? And you give them an equity split. Maybe it's 25%, 35%, 50% of the profits. The money is absolutely out there. There are a lot of people out there with self-directed IRAs, 401ks, retirement plans, insurance plans, you name it. They are out there

and they have money that they need to use because they're making no return on their money. You need to really think that through. It's never a lack of resources. It's a lack of resourcefulness. Most of you guys have heard me say that. So with that said, I would tell you money is absolutely everywhere. You do not need your own money. Find a hard money lender in these Facebook groups. Find them in the meetup groups. They are absolutely everywhere. And lastly, guys, what I think is the bane of my existence in rehabbing is the contractors. Contractors, you know, tend to be behind in time and over budget, right? And so finding a good contractor is really important. Here's my suggestion. You can

absolutely find them in these groups in meetup.com and Facebook groups. But I would ask others in these groups, have you used these contractors? Give me a good referral. And then I want to talk to those people about the referral they gave me. And then I would interview the contractor. I want them to be licensed. I want them to be a licensed general contractor. And then I want to see some work that they've done, either work that they're currently want to see some work that they've done, either work that they're currently doing and or some work that they have finished so I can see what the result really is. Then I want to talk to at least two or three other people who have worked with that contractor so that I can feel comfortable that this person is the real deal. They know what they're doing. They're on time. They're on budget. They are not going to make

my life more difficult. They're just going to make this seamless for me to be able to get this done. So rehabbing is tends to be big profits bigger than wholesaling. But the three challenges, where do I find the deal? How do I find the money? And what do I do about contractors? This answers that now it's not a deep dive. I understand that. And, you. And I do a deep dive in my YouTube channel. Go over to youtube.com forward slash Justin Colby. I have hundreds of videos talking about this subject, whether it's marketing. I just shot a video about this subject as a whole. Go to that YouTube channel. Do a deep dive on my YouTube. I promise you are going to get this entire business model in a nice little bow. If you are interested in talking to me about maybe a strategy session call, if you have further questions and you want my help, just go to thescienceofflipping.com, go to thescienceofflipping.com, plenty of free resources, as well as a form that you can fill out to get on a call with me personally. So I can help you out with your business, with your business model. And if we're a good fit, great. But anyways, go to

the science flipping.com to potentially jump on a strategy session with me. I hope this finds you guys. Well, check out a bunch of my videos, youtube.com forward slash Justin Colby. And I will talk to you guys on the next episode. Peace.