The Science of Flipping - When Should You Start Buying Rentals?

Episode Date: March 31, 2022

The #1 training and coaching system to launch, grow, and scale your investing business!𝐋𝐞𝐚𝐫𝐧 𝐌𝐨𝐫𝐞: http://www.thescienceofflipping.com Become a 𝐓𝐒𝐎𝐅 𝐈𝐍��𝐈𝐃𝐄𝐑 and get access to exclusive training and resources:https://insider.thescienceofflipping.com 𝐈𝐍𝐒𝐈𝐃𝐄𝐑𝐒 𝐆𝐄𝐓 𝐅𝐑𝐄𝐄 𝐀𝐂𝐂𝐄𝐒𝐒 𝐓𝐎: ✔️ Science of Flipping Academy  ✔️ All the systems and software I use in my business✔️ All the tools you need to run your business ✔️ All my Scripts, Contracts, Spreadsheets✔️ Special Discounts✔️ And Much More... 𝐇𝐚𝐯𝐞 𝐚 𝐪𝐮𝐞𝐬𝐭𝐢𝐨𝐧?Get immediately connected with a team member on messenger:http://split.to/tsof-messenger 𝐁𝐞𝐬𝐭 𝐑𝐞𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐅𝐨𝐫 𝐖𝐡𝐨𝐥𝐞𝐬𝐚𝐥𝐞𝐫𝐬✅ 𝐁𝐞𝐬𝐭 𝐑𝐞𝐚𝐥 𝐄𝐬𝐭𝐚𝐭𝐞 𝐒𝐨𝐟𝐭𝐰𝐚𝐫𝐞: http://bit.ly/tsofsoftware✅ 𝐁𝐞𝐬𝐭 𝐃𝐫𝐢𝐯𝐢𝐧𝐠 𝐟𝐨𝐫 𝐃𝐨𝐥𝐥𝐚𝐫𝐬 𝐀𝐩𝐩: http://bit.ly/tsofd4d✅ 𝐁𝐞𝐬𝐭 𝐒𝐤𝐢𝐩 𝐓𝐫𝐚𝐜𝐢𝐧𝐠 𝐒𝐞𝐫𝐯𝐢𝐜𝐞: http://bit.ly/tsofskiptrace✅ 𝐁𝐞𝐬𝐭 𝐓𝐞𝐱𝐭 𝐁𝐥𝐚𝐬𝐭𝐢𝐧𝐠: http://bit.ly/tsoftext✅ 𝐁𝐞𝐬𝐭 𝐃𝐢𝐫𝐞𝐜𝐭 𝐌𝐚𝐢𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞:: http://bit.ly/tsofmail✅ 𝐁𝐞𝐬𝐭 𝐃𝐚𝐭𝐚 𝐏𝐫𝐨𝐯𝐢𝐝𝐞𝐫: http://bit.ly/tsofdata 𝑾𝒉𝒂𝒕 𝒕𝒉𝒆 𝑷𝒓𝒐𝒔 𝑯𝒂𝒗𝒆 𝑻𝒐 𝑺𝒂𝒚 𝑨𝒃𝒐𝒖𝒕 𝑱𝒖𝒔𝒕𝒊𝒏: “Justin is one of the best trainers in this space. He really gives everything to his tribe.”– Brent Daniels (TTP) “Justin’s ability to connect with people and help them understand what he is teaching, is unparallelled”– Kent Clothier (REWW) “We have been in the trenches flipping homes in Phoenix for over a decade, he is one of the best to do it.”– Sean Terry (Flip2Freedom) 𝐀𝐛𝐨𝐮𝐭 𝐉𝐮𝐬𝐭𝐢𝐧:Justin Colby is the founder of The Science of Flipping Podcast and The Science of Flipping Coaching Program and is an active Real Estate investor having flipped over 1500 homes in multiple markets across the U.S. Justin runs an 8-figure real estate wholesaling business that closes 20+ deals each month in multiple markets across the U.S and has helped 1000s of clients learn how to become successful real estate investors. Justin subscribes to the philosophy of "Wholesaling To Wealth" and is the foundation of his coaching program which teaches you how to get started wholesaling or streamline and scale an existing wholesaling business as well as build long term wealth through wholesaling, flipping, and building a rental portfolio. Subscribe To Justin Colby:http://youtube.com/justincolby View All My Videos:https://www.youtube.com/c/JustinColby/videos  

Let me clear the air for you once and for all. You do not need any of your own money, and you do not need any of your own credit, and you do not need a bank such as Wells Fargo or Bank of America. Yo, yo, welcome back to the Science of Flipping podcast. I'm your host, Justin Colby, and we are going to be talking about rentals, building wealth, when you should start, why that's important, and quite honestly, what my views are so that you can start building wealth right away.

Now, the question I get posed all the time is, I don't have money, I don't have credit, I don't really know how to find a deal, so how can I start buying rentals? Let me clear the air for you once and for all. You do not need any of your own money, and you do not need any of your own credit, and you do not need a bank such as Wells Fargo or Bank of America. I promise you this. As last year alone, I bought 14 rentals with, you guessed it, none of my own money, none of my own credit, and I did not use a bank. So I'm going to tell you how I did that. But first, let's jump into what I think everyone really wants to know. Should I start out buying rentals early on in my career or should I accumulate a bunch of

money first? Well, that's a really good question. And if you stay to the end, I'll tell you how you can do everything without any of your own money and any of your own credit. And by the way, if you have not yet realized, this is also a video. You might be listening to this on iTunes. It's also a video right over there on YouTube. Make sure you are subscribing to my YouTube. I drop at least five videos a week.

So you want to make sure you're subscribing to my YouTube, youtube.com forward slash Justin Colby. With that said, I bought 14 rentals last year. And yes, this was my 14th year in the business. So it's a little, I don't know what the word is, but kind of interesting, 14 and 14. But I'll tell you this, the biggest mistake I've made, and I think a lot of you guys have heard me say this before, is I didn't start accumulating rentals early enough. I would have told myself, looking back 14 years from today, to start buying rentals immediately. And here's how to structure it, right?

Now, I didn't have me 14 years ago. All I knew is what I knew. So I'm trying to impress upon you out of the gate. If you are just getting started or maybe you've done some deals, making a little bit of money, you do not need to hoard or stow away a vast amount of money for you to buy rentals. You also don't need to have good credit so you can go to some bank. You don't need either. So I'll tell you a little bit about that towards the end of this episode. But what I can tell you are there are ways that you can bring in a capital partner. Now, that's what I actually did on my 14 rentals.

And it's not because I didn't necessarily have the money. It's because I knew the same thing that a lot of restaurateurs know. Now, a little interesting. What's a restaurateur? If you've never heard that word, some people have, some people haven't. It's usually the type of people that create a great chain of restaurants or they have multiple restaurants in different styles of food, right? So in Miami, that's really, really big. In Scottsdale, that's really, really big. There's something called the Fox Concepts. Well, the guy's last name is Fox, and he basically created, I think he's up to like

14 different concept restaurants. Out here, there are several different restaurateurs that have a very similar type of thing where they have concept restaurants. And one of the things I learned quickly about these individuals and their ability to scale, since restaurants are not cheap to get started, let alone to maintain, is they always bring on capital partners. And I don't want to say always 100% of the time, but I would say the vast majority of the time. And I thought to myself, well, if it's good enough for them and they're building out and starting restaurants for millions and millions and millions of dollars, don't you think it's good enough for me? And I took that to heart and I really realized, you know, Dave Grutman is a restaurateur in Miami, very, very famous. Some

of the hottest restaurants in Miami, Komodo, Poppy Steak, and more are his restaurants. And he's a huge advocate of this model of bringing on capital partners because that way you can scale faster. So why you don't need your own money is because there are plenty of people out there. I know this to be true because one of my high-end elite students literally just put one post on Facebook saying that she's looking for capital partners on a couple real estate opportunities she has. And immediately she had three people up to $500,000 worth of capital that she had exposure to now. Now she still needs to work out the relationship and how that's all going to look. But three people with a sum total combined of

roughly $500,000 came to her saying, I'm interested in this opportunity you have in real estate investing. And so again, this is really important for you guys to hear. There's a lot of money on the sidelines right now. There's a lot of money in self-directed IRAs, 401ks, people who are literally just hoarding cash, which I'm not, by the way, just to be clear, I am not hoarding cash. Inflation is brutal right now. Quite literally in normal inflation markets, two to three percent is kind of normal. So even if you're keeping your money in your bank account and you're getting one percent, you're still not even keeping up with inflation. Right now, inflation is seven percent or north of seven percent. I haven't even looked in the last couple of weeks. And so cash in the bank really doesn't do any good. So I really invest almost all of my cash.

It's actually kind of crazy. I think my accountant thinks I'm nuts and would advise otherwise, but I do. For me, I do that in a place so that I can diversify, so I can have pieces of income coming in everywhere. And so I have multiple businesses I run. Obviously that is cash intensive. And so there's a lot of people out there that do have cash. Again IRAs, self-directed IRAs are a great

way to find that. Other people just to actually have cash sitting in the bank account but you don't know that because you don't ask for it. So one of the things I learned really really early on is if you don't ask you don't get., you don't need to go around begging people and asking people, hey, can I borrow money? That's not what I'm saying at all. What I'm saying is give people the opportunity. In a simple post, like my student posted here on Facebook, just on her page, not in groups, just literally on her thread, got her to raise roughly $500,000 in potential capital. And it's because she just put it out there, right? So the next thing I would tell you is you don't need a bank. So let's just say you make a post on Facebook as Justin told you to, and you then realize,

I just got someone that has $200,000, but the rentals, that can only buy me one or two rentals based around buy it. And for me, I do the BRRRR method. So I buy it, remodel it, rent it, refinance, and repeat. That's the method I run. Now, 200 grand might get you a couple, but you need to leverage that with a bank or lending of some sort. So now there are actual lenders right now that used to be considered hard money lenders. They used to only be there for my or your ability to rehab flip properties. They now have the ability to do long-term 30-year rental loans. And my loans that I've been getting are roughly 5% interest, which, by the way, is going to be very similar to what a bank gives you. You just don't have to go through all the

hurdles, the personal credit check, all those types of things to work with these lenders. You just need to make sure that the asset is appraised correctly, right? So if I buy it and remodel it, I want to be in roughly 75% of ARV. And as long as I can do that, they're going to lend based on the asset and the viability asset, not necessarily me. Now, yes, I do still have to sign docs. And yes, I'm saying that there is, you know, I owe the money back. But the reality is that you're going to have to do that with the bank anyways, right? You're signing to say, I'm going to pay you back, right? So there's no difference there. And I would tell you guys,

you don't need your own cash. I just told you that about Capital Partners. And I just told you there's many, many, I know two of the biggest right now, lenders that will help you buy long-term holds, right? And what's even better is if you do come across your own deal and you are going to have to remodel it, they'll give you the more traditional kind of hard money lending for a very short time, and then they'll refi you into their long-term hold lending. I mean, it's just brilliant. Now, here's the other thing that I can tell you is if you are not yet already doing this, this is the one action step I'm going to tell you to do right now. Okay. Right now, many people come to me, especially when they're just getting started saying, I don't have enough money even to put down earnest money on some of my deals, or I don't have enough

money to put down a down payment on some of my deals. I can't even get started thinking about buying rentals. Well, I want you to get out of your own mind because here's your first solution that if you're an action taker you are gonna do this right away there's a company that I use called PCS so if you go to prime corporate services.com forward slash TSOF stands for the science of flipping go to prime corporate services.com forward slash Tsof if you're on youtube you will actually see it right here on the video it'll show up on the video prime corporateservices.com forward slash tsof and why i want you to go there is because they have an ability to get a line of credit for anybody now if your credit is absolute garbage, I mean just awful, you may still be able to

qualify. You might not get much. You might get $1,000, $2,000, $3,000. But what that might do for you is give you enough capital to put down an earnest money deposit to get the property locked up. Because some of you are thinking, I don't have any money. I can't even get that going. That's your answer. Now, this is for everybody, by the way. If you don't have any lines of credit, if you don't have any business credit, if you don't have anything like that as a moment in time, go to this website, primecorporateservices.com forward slash TSOF. Talk to them. The call is complimentary.

Book a call with them. It'll be totally complimentary. So let them know you heard Justin's podcast or watch Justin's video and get your lines of credit. Because for some of you that might have good credit, you might be able to get a $5,000, $10,000, $20,000, $30,000, $40,000 line of credit, maybe a $50,000 line of credit. Again, using other people's money, not your own. And that might actually allow you to avoid even bringing in a capital partner. So the first thing that you need to do, I'm telling you, is go have a complimentary call with them. Talk to them about wanting and needing a line of credit. And they will talk you through

the process of what it takes to get one. For some, you might get a $2,000 or $3,000 or $4,000 or $5,000 line. For others, you might get a $30,000, $40,000, $4,000 or $5,000 line. For others, you might get a $30,000, $40,000, $50,000, $60,000 line. It will not hurt you, right? This is the key to using other people's money. I need to really understand that because, again, if you are one of those that get the larger line, you might not need to bring in a capital partner, okay? So really important that you do that. And then I would say, you need to fix your mindset first and foremost. If you believe you need to have the money,

you're just thinking incorrectly. Now I want you to realize this, rehab flipping homes, most people don't use your own money, most. So what makes it different for a long-term rental? Or maybe even a short-term Airbnb rental? There is no difference, okay? So if you're okay using other people's money on a rehab flip, why are you not going to be okay using other people's money on a long-term hold? It's silly, right? I just literally told you the three steps that you need to take

to get started today. My biggest mistake I ever made in my career was not buying rentals earlier in my career. If I just bought one rental a year for the last 14 years, I would have that first rental almost completely paid off. The second one, very close to completely paid off. The third one, great amount of equity. And guess what I get to do then if I started back in year one? I can go to the bank and get a HELOC, a home equity line of credit, and I can wrap those properties and the equity out, strip the equity out, and go buy another 14 rentals if I would have done that in year one. So it's never too late. Get started now. Don't tell me you need to go get a deal done first or wholesale a deal first or fix and flip a deal first. Garbage. You can start today buying rentals.

Now, I would encourage you to go make a bunch of money wholesaling and flipping homes. I love that. I'll teach you how to do that if you want me to. But I'll also tell you, do not miss this opportunity to have low interest rates. You don't need a bank. You don't need your own money. Go to primecorporateservices.com forward slash TSOF. Get your own line of credit. Let them know you got to schedule a call with them. Let them know I sent you. And that could be just the start you need for all of this right here. So hopefully this helps you guys. See you guys on the next podcast. Peace.