The Science of Flipping - Wholesaling Your Way To Wealth

Episode Date: November 1, 2021

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   

Yo, yo, what is up, everybody? What is up? Welcome back to the science of flipping podcast. I am your host, Justin Colby. And on this podcast is all things real estate investing, top tools, systems, strategies, techniques, how to hire, how to scale, the whole thing to make you an expert real estate investor. And if you are not yet watching these podcasts on YouTube, make sure you get over there. YouTube.com forward slash Justin Colby. Start following me. Subscribe.

Make sure you like these podcast episodes and write any questions you may have right there on my YouTube thread. That is how I'm able to answer your guys's questions. Again, if you are on iTunes, make sure you give me a five star. I would absolutely love that. And then get your butt over to YouTube so you can be watching these live right there on YouTube. For those of you who have been watching me recently, you can see that I am in a different location. I am actually at the Ritz. I'm in the Ritz lobby. I've been staying at the Ritz now for 10 days, which is not cheap. But my house, shocker, that I bought, that was fully remodeled, we ended up doing some remodeling to it. And shocker, it is not happening on time.

So that means I am in a hotel until my house is fully done. Uh, because what we are doing is skim coating the walls, which can be very dusty. We're redoing the countertops. It can be very dusty. So a lot of the work, I don't want my baby to be around. And so, uh, painting the whole house, et cetera, and those fumes aren't great for my baby. And so that is why you see a different location. In fact, I'm going to try to be spontaneous about where I do these podcast episodes. And right now I am just in the lobby of this wonderful Ritz here in Key Biscayne, Florida, as my home is just minutes away from here.

With that said, I want to jump into the thing that I wanted to talk to you guys most about, which is going to be this idea of being able to wholesale your way to wealth. Most people know me as a wholesaler, but what you may or may not know is I've been buying rentals this year. It's actually the first year I've bought rentals, which is my biggest mistake in business. If there's one thing I can help you guys not make the mistake of, it is start buying rentals immediately. So that being said, I want to talk a little bit about my passion for this because it really has become some of my passion. And there's a lot of

questions that I get between how do I find contractors? How am I finding the properties? How am I estimating repairs? All of those types of things. But the thing that most people don't understand is this idea of being able to have the money to buy these rentals. So I want to talk to you guys a little bit about that. Now, wholesaling your way to wealth is essentially what I coach on. I coach all of my students on how do you wholesale your way to wealth and how you can scale that business up. But what that really means is breaking into the, the investing game through wholesaling and why that's so important is I can't tell you how many people I've actually talked to that have said they started by rehab flipping and they've lost money. And what I don't want anyone to do is lose money. So taking the, the, you know, I guess frame of you guys should be, if you are going to be investing in real estate, to get started, you need to be in wholesaling.

And I'm still in wholesaling and I've done this for 14 years. And I say that just to make sure you guys understand, wholesaling will never stop. Wholesaling really is a marketing game. And that's why I wholesale my way to wealth. Because the homes that I buy, I am marketing directly to the homeowner. Now, mostly I try to wholesale them unless it's a good deal that I find to have a good 1% rent ratio, meaning my all in costs, acquisition, repair, remodel, whatever has to be, let's just say $150,000.

And then I would actually make sure that rents are getting to give or take about 13 to $1,500 a month. I want 1% of my all in costs. Okay. Then I just want to make sure I'm 75% of ARV. Meaning if a bank can come along and take all of my cash out, then I, they will usually lend around 75% of, um, the ARV. And that means all of my money comes back. Now I have not yet done a deal where every single dollar has come back because usually we end up going overboard with the remodel. But that is always our target. And why I wholesale to wealth is because one, you're marketing directly for the homeowners that you're going to want to buy their homes anyways, right? So I market in states and in counties that are well below the median average, right? So I think the median average is about 350, maybe a little bit more right now across the nation.

So I'm in markets where the price point is under 200,000, which is give or take 30 to 40% under the median average. And why do I do that? Well, first of all, they tend to be good rental markets. Secondly, there's room for appreciation. As we all know, real estate, no matter what will always go up. Now, could there be a little rollback here? Could there be some price corrections coming in 2022? Maybe to be honest, I'm not certain. I actually think 2022 remains strong, but you never know. And so over time though, if you look at the last 30 years, 60 years, real estate will always continue to appreciate in the long run. So while wholesaling in these markets, well, I should

reframe it. Wholesaling in these markets is really priority because you can just focus on the homes that have room to appreciate, right? And so I'm buying rentals in Oklahoma. I just, I was trying to get a couple in North Carolina. I potentially, now that I'm in Florida, will be buying rentals in Florida, but that's really the target is to be in that target. Now, how do you find the money to buy these? Well, first of all, if you are wholesaling, I highly encourage you to make enough money so that you can put 20 grand, 30 grand down on a rental, right? And do that one to four times a year. That's what you should be trying to achieve. You don't need to go do four times a month, one to four times a year. Then if you need a financial partner, what you can also bring in is a, you know, for me,

I also will also bring in, um, uh, private lenders, right? That helps me move faster. And when I go to the bank to take the money out, their money gets taken out and whatever remains in, remember I told you, I try to get all of their money out, but if there's money left in, whatever gets remained in, I give them a 4% interest rate on that money, which is super cheap. And then overall, what will happen is at some point I will refi all of their money out when I have a large enough portfolio that there's enough equity in there that I can take it out. Now I've been getting a lot of feedback on my TikTok recently. If you haven't yet followed me on TikTok, make sure to. TikTok is Justin Colby TSOF. But I've been getting a lot of feedback about how terrible rental properties are because of what Biden's

doing and people not paying rent and the headaches and the challenges that come with rental properties. But what I can tell you as an investor, I'm not all in on anything. I have rental properties. I have cryptocurrencies. I have a piece of a gold mine. I have stock. I have a good, you know, a vast array of what I invested. But what I will tell you, especially my accountant will tell you is real estate is the best business tax tool that you could possibly have. And as a businessman, if I buy enough rentals, it's a true business play, right? Because it's a tax write-off. Things like property taxes, things like mortgage interest, things like repairs, things like depreciation. Now that can't work against my active income. So would I pay myself through wholesaling homes and flipping homes and coaching? I can't use it against that income, but I can use

it against the income the property pays me. So that's a huge, huge, huge value. And while I will always be in real estate, I will tell you, you guys always should be wholesaling. A very close friend of mine who runs a very, very successful real estate business has been doing a lot more keeping in his rental portfolio, and he has never wholesaled. In fact, he just hired me to be his coach. Very, very successful in his own right, but he doesn't know the wholesaling space. So he hired me.

I am coaching him and his team, by the way. And he's come to this realization that everything starts with wholesaling because now he can buy more rentals with wholesaling because he just has more access to properties that might fit his rental buy criteria. And so I will tell you right now, you need to be a big, big believer in wholesaling your way to wealth. And if you aren't wholesaling yet, you need to start because it is absolutely everything when it comes to, do you want to flip a lot of properties? Be a wholesaler. Do you want to hold a lot of properties? Be a wholesaler. If you want to wholesale a lot of properties, be a wholesaler, right? I mean, it just comes down to you now have what everyone

wants, which is deals. So I will stay under median market value by about 30 or maybe 40%. I do not want to be in the higher price points at all. I don't want to be above 300 at all. I'm much more closer to 200,000. So does that mean Phoenix, Arizona, which is my prime market? Yeah, that means I'm not going to be in that market. That's what that does mean. Would I be in maybe some outlier markets?

Potentially. But, you know, middle America still has a lot of that. Florida still has a lot of that in terms of price point. So there's still a ton of opportunity, no matter what anyone says. But here's what I wouldn't be doing. I wouldn't be buying rentals from wholesalers. I wouldn't be buying rentals from agents. And the reason being is very rarely do they come across

the 1% rule and the 75% ARV because they're asking top dollar. Now, I'm not saying I never have. I would just say the vast majority of the homes that I'm buying, vast majority, are coming from my own marketing efforts. And that gives me the numbers and the margin that I want. That's why most people can't make it work with rentals right now is because they're trying to find them on the MLS. Stop that. Start marketing directly to homeowners. I have tons of free trainings on YouTube. This is why I'm telling you guys all of these podcast episodes are on YouTube, youtube.com forward slash Justin Colby. I have hundreds of hours on YouTube to help you with this. If you

have any other questions, you can feel free to reach out to me on YouTube or on Instagram or on Facebook. Send me a message. I'm happy to help you guys. Um, but this is the game, wholesaling your way to wealth and money is absolutely everywhere. That's why you want to start with wholesaling, make 20 grand, 30 grand, 40 grand, put it down on a rental property and then leverage it. Someone like Lima, not someone, but a company like Lima one capital, who I'm happy to give you guys her name. If you just send me a message on YouTube under this video, I will give you her name and email information and you can contact her about buying rentals and leveraging with her. It's fantastic. So I hope that helps. I hope you guys are rocking and rolling today on Monday and

I look forward to talking to you guys on the next episode. Peace.