The Science of Flipping - Wholesaling Your Way To Wealth PT. 1

Episode Date: August 9, 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  

All right, so before we get into this, make sure you do two things for me. First, go and give me a five-star review on iTunes. Now, do it only if you mean it, but the reality is I know I'm delivering for you guys, so I would greatly appreciate it. Go and give me a five-star review, and hey, you can even write a review. That'd be pretty cool too. Second, make sure you head over to the YouTube channel, youtube.com forward slash Justin Colby. Subscribe because you'll be able to see me on YouTube. What is up, everybody? Welcome back to the Science Flipping Podcast. I am your host, Justin Colby, and here's the cool thing. This is going to be a two-part episode, meaning once you

finish this one, make sure to jump right over and get part two, which will be coming out tomorrow. This is something that I actually think is super, super important because i have been doing this business for 14 years primarily vastly primarily i've been flipping and wholesaling properties and whole tailing and just recently in the last year or so i've been starting to buy and hold properties and so this episode we're going to be talking about this concept about wholesaling your way to wealth and starting to actually accumulate wealth through rental properties. So that's what this will be about. If this is your first time to the podcast, welcome. This is all about the right tools, processes, procedures, and operations to run

a successful real estate business. I've been doing this now for 14 years and I've done over 1800 flips and I'm actively buying rentals as many as I can get each and every month and so I want you guys to understand my business model and how you can implement it for your business model no matter what city or state that you're actually in and if you are listening to this on iTunes right this moment, understand one thing. I actually record this on video as well. And you can go check it out on youtube.com forward slash Justin Colby. And you will see all of my podcasts right there on a playlist.

You can just simply subscribe and hit the notification button. It'll notify you when these podcast episodes are launched on YouTube as well. And then you'll get to see me, right? And so if you're actually watching this, you see me already. But if you're listening to this on Spotify or iTunes or otherwise, why not check it out? You can see all the funny things I do with my hands and the funny facial expressions I make. Why not come check it out on youtube.com forward slash Justin Colby and they will be under the playlist, the science of flipping podcast. Alright, so now that that is all out of the way, let's talk about this idea

of wholesaling your way to wealth or even flipping your way to wealth. If you are someone who does more fix and flips, the reality is wholesaling and fix and flipping brings in a ton of cash. It's almost like an ATM is how I actually look at it, where if you just consistently are wholesaling and flipping, you can make a whole lot of cash, but then what? The reality is I know this to be true, and I've coached thousands of students at this point.

If you have any interest in coaching, go to thescienceofflipping.com and go fill out a quick, simple, easy the science of flipping.com to see if you would like me to coach you with that said i know almost everybody almost everybody get into the wholesaling or flipping game so they can ultimately build wealth through rentals and that's what it should be you guys actually should be doing that and if I can look back and say one of the bigger mistakes I've ever made was simply not getting into the rental game earlier and the reason being is it was so addicting to make as much money as I was making right wholesaling is quick cash rehabbing is slower cash but bigger cash and it's fun to be able to buy the nice cars and go on vacation

anytime you want and buy the nice watches and all the other things. But the reality is I wasn't building wealth per se. And so now 14 years into the game, I've started to do that. So let's walk through what I'm currently doing, where I'm doing it, why I'm doing it there, and give you a little food for thought of how to do that. And then part two, we'll jump into like, how do you structure it all? Specifically, where am I finding the money to do that? Am I using my own money or am I using someone else's money?

And so we'll go into all that in part two. So here's my model as a moment in time. We are currently actively wholesaling and flipping, specifically, let's just say wholesaling in roughly seven states. Seven states right now, and at this point, I'm not certain how many cities within those states, but seven states we are currently wholesaling.

We do anywhere from 10 to 20 wholesale deals each and every month, right? And so let's just use the arbitrary number, $12,000 on average, because sometimes we make 20,000, sometimes we make 7,000. So let's just use 12,000 as our average. The reason being, I would tell you is because that is our average $12,000 per wholesale fee. So if we're doing anywhere from 10 to 20 of these each and every month, you can just do the math, that's fine. But now, what am I doing? And how am I leveraging that business into buying and holding? Well, the first thing is I want to stay in markets that are well below the median average home price. Okay. And so again, I haven't looked within the last 30 days but it used to be 325

000 was the national median home price it may have gone up over the last 30 days 45 days or whatnot but that was the you know median home price now I stay in markets that are well below that now this is specific to my buying holding formula right so I want to be roughly 30 to 40 percent below that so let's just use 30 because it's very simple um 30 of 300 000 is 100 000 so subtract 325 subtract 100 make it 125 125. I wanna be in markets that are valued $200,000 and under. Okay, again, follow me here. I wanna have a 30 to 40% decrease in home price from the national average. So if it's closer to 40%,

then I would be closer to $165,000, $170,000 and under. Well, guess what? There's a lot of cities and a lot of states that have homes under that value. It's actually not that difficult to find homes under that value. Arizona being a state, but I'm doing a lot of deals in Oklahoma City, specifically Oklahoma's where I'm buying most of my rentals. I just recently passed up on three triplexes in Indiana. Only reason being is they were flooded and I didn't personally want to have to deal with the flood insurance and all that stuff. So I passed up on it. I wholesaled it, but I would have absolutely bought those homes in Indiana. And then we're also in Alabama, Mississippi, Indiana,

and Ohio are where we're looking to actually hold because of the price points. There's great areas in Texas as well that we're doing deals that would be a good rental. So take the overthinking out of this. I want to make sure I'm under $200,000 as a price point and well under it. So here's why I'm buying in Oklahoma City and it's because I'm quite literally as a moment in time buying like 20 or $30,000 homes. I'm putting in 30 to $60,000 in rehab and it's running for 850 to 950 a month it is a perfect rental

market okay i'm well below the median price point and ultimately what i'm trying to do is i'm trying to do the burr method i buy it i rehab it i rent it and i refinance out of the property and then I repeat if you so want to add another R on there. And so essentially if I can buy it and remodel it and be in 75% okay be in at 75% of the ARV value then my bank will come in and refi me 100% out of I'll have no cash in the property. Now have we hit it exactly on the mark where I have zero cash in? No. Each property so far, I've had to leave a little bit of cash. Like this last one we just refied, I had to leave $6,000 in the property. But relative to making $450 a month net after taxes, after vacancies, after all costs net in my pocket, that's a heck of a return, right? So how many homes can you buy in

leaving $6,000 into the home. So I'll get there on part two, I'll get to the money aspect on part two. But what I'm really trying to show you is you can quite literally do this everywhere. As long as you start with the wholesaling flipping model first, you see, I market in all of these states i'm spending marketing dollars doing that now if i don't like it if it's not a property i would be interested in holding for example there are homes that i come across in ohio and in oklahoma city and other states that like the price point just isn't quite there meaning i would have to buy it at 130.

I'd still have to put $40,000 into it. It rents for about 15, 1600, but then the end value isn't there for me to get all my money out, right? So those properties aren't ideal. Obviously, I would have to come out more capital, and again, we'll get there in episode two. So for me, I'd rather just wholesale that off for for twelve thousand dollars and move on to the next deal so i'm actively trying to buy as

many as i can however not every property i come across fits the the formula which is again i want to be all in purchase price and rehab 75 of arv and then essentially i want one percent rents meaning if i'm all in at 150 or if i'm sorry if the home values for 150 i want to make sure i'm earning 1500 a month that's essentially my breakdown which is very simple in many many states now if you're in san francisco or if you're in higher price point areas, it could be very difficult for sure. But that's why you need to look at other markets to be in. You can do a wholesaling and flipping business virtually. I'm actively doing it virtually. Yes, I'm still in Phoenix. Phoenix will always be my hub. We're still doing deals here in Phoenix.

Every day we're bringing in anywhere from five to 15 new leads here in Phoenix. Every day we're bringing in anywhere from five to 15 new leads here in Phoenix. And if a good rental comes up, then I will go ahead and go for it. But in higher price point areas, you might have to flip the script. You might have to get to a point of buying a property for more of an Airbnb model. And then that you know you can make the good returns it's just a different model that's not what i'm doing yet however because we're still active in phoenix and we do come across properties that would be good airbnbs in tempe or in scottsdale it might be something i look into here very shortly but ultimately that's the breakdown stay in markets that you can see are under 30 to 40 percent of national median value make sure you're buying it at buying it and repairing it 75 of arv and make sure you

have a one percent rent ratio meaning if you're in for 150 if that's the value of the home you want to make sure you're making 1500 a month rent that is the model you can implement right now to make sure that it is a good working model for you the last piece before we go to this next episode which will be about the money the last piece i would tell you is we are holding our rental properties under our own management until we have 10 properties that we can put together for property management. At that point, then we will outsource it. Otherwise, we are keeping the properties in-house for management. So all of that finding a tenant, sifting through tenants, writing the leases, all of that actually is within our hands. And so once we get 10, we'll outsource that to a property management company.

All right, guys, I hope this episode was good for you guys. Again, if you are listening to this, this is probably the moment. You can go to youtube.com forward slash Justin Colby. Subscribe to my channel first and then make sure you turn on the notifications so that you can actually be notified when I'm dropping another podcast episode. As a matter of fact I dropped three YouTube normal YouTube videos on my channel as well along with these podcasts I'm putting in the work for you guys and make sure any and all

videos you watch make sure you like it give me some feedback I'd appreciate that without all being said I look forward to seeing and hearing you guys and talking to you guys on the next podcast episode, which will be a continuation of this part two of how to run the rental burr method and what I'm doing and how you could probably implement almost immediately. Talk to you guys then. Peace.