Buyers, Agents, And Secret Deals with Guest Co-Host Robert Orfino

TRE 35 | Ways To Do Deals

 

As the adage goes, there are many ways to skin a cat. This is particularly true in real estate as you can decide how basic or diversified your portfolio could be. Jason Bible and Robert Orfino  talk about recent deals they are making, such as their transitioning Airbnb portfolio growth, and the ways you can go about these deals – be it wholesaling or a fix and flip. They sit down with buying agents to discuss rookie investor mistakes and the importance of having clear expectations before your first investment.

Listen to the podcast here:

Buyers, Agents, And Secret Deals with Guest Co-Host Robert Orfino

We have a lot of stuff going on. We’ve got two banker meetings. We’ve got two crews down in the hunting ground. They went down to the house. They’re staying at the beach house. We got that going on. We’re excited about that. We got the other crews wrapping up and then Anthony came in. He picked up a truck and started setting up the Airbnbs.

How’s Anthony enjoying this weather?

He hates it. It’s laid out and here’s the thing. I got on the phone with my two partners and I said, “We’re doing this.” We’re talking about building some other systems and things like that. I said, “What are we trying to do here? How big do you want this?” One guy said, “I don’t think there’s any limit.” I was like, “I’ll get you 500 properties in a year. Are you going to handle that?” It got real quiet. He’s like, “No.” I’m like, “You said it’s unlimited. Now, you’re saying 500 is a limit. Where is it, 100?” He’s like, “100 will be difficult.” I’m like, “100 is difficult.” We had one of the big investors in Houston come up with a list of 31 properties that said, “Rob, you could do as many on this list as you want. Tell me what work needs to be done and I’ll buy the furniture and make them Airbnb.” That freaked me out. I’m like, “Hold on, buddy. Let’s get the systems in place.” We’re working on this, but we will have the bandwidth to do yours and mine 50 and then probably another 50.

We didn’t chat about this. We can take in another 50 for the Airbnb in the three areas we’re working, which means those are probably going to be relegated to the people that are in our group because I imagine we don’t have the capacity outside of that.

No. It will be in our group.

I’m okay with that. The other thing is our 50, I want to go to the Hill Country. We’ll have to see what that looks like.

That is not part of the three areas. We talked about Airbnb. For the audience, you should take a serious look at this. You don’t have to get into it. If your rentals are doing well, if you’ve got some apartments or small apartments, that’s awesome. For sure though, you and your wife or your partner can manage four to five of these by yourself and do very well. When you hit five, you’ll probably hire an assistant. You teach your assistant everything that needs to happen. When you’re out of town, your assistant takes over and you’ve got a nice little light work business after six months. That’s the attraction for a lot of people. I don’t think it’s the Hail Mary. A lot of people are like, “I’ll turn it into an Airbnb because I can’t sell it.” I’ve been there and I’m doing that. That’s not the most profitable way to do it.

No, it’s not. You’ve got to be a little more strategic.

You have to work with the right agents and the right team and make sure that we’re finding something that works for an Airbnb. We’ve got two coming up that will be on the list. We looked at one. It’s an off-market deal. We’re looking at it as a possible Airbnb. I know I found one. We might be able to bring those to our events. We have the Portfolio Builders Club. It’s $50. It’s at Seasons 52. We’ll have lenders, contractor, title and we’ll have some other people there. They can come and you can talk to them. We’ll also do a little education. You’re going to do a little event and talk to you about working off the MLS and that you’re finding deals.

I’m going to talk at the Portfolio Builders Club about deals that Rob and I are doing and what those look like. One thing we get a lot of questions about is, “Jason, what’s a deal? I need somebody to tell me if this is a deal or not.” I’m not sure that’s the best way to do it because everyone’s got different deal criteria. I’m going to get there and say, “Here are the last couple of deals that Rob and I have done and then we’re going to present a handful of properties that we think are good deals that fit in that criteria. People are investing for different reasons, some for cashflow and some for equity. Some rich guys out there are buying assets on depreciation. The reality is that everybody’s a little bit different. At the current cycle that you or I are in, I’m going to share with people, “These are the kinds of deals that we’re buying. Here’s one Airbnb, here’s one small apartment and this is what we’re doing.”

It’s important to know that there are lots of ways to skin this cat. We say it all the time, you can go and fix and flip. You can go and wholesale. You can buy single-family rentals. We have some single-family rentals. At this point where we’re at, we’re looking for the other people around us that are at the same point in their careers. They’re maybe a little ahead or a little behind, we want to start transitioning our portfolio. We’re not talking about anyone. We’re working on every single day is our transition here. We’re putting some things to the fund. We’re putting some things in our personal name. We’re moving things out of our personal name, freeing up capital, all kinds of things. We’re transitioning our portfolio to be in such a manner that the smallest residential property that we’ll personally have in our portfolio is a triplex. We like duplexes but we have another place for that. We have a fund. Fourplexes, a four-unit is the perfect thing to have in your personal name. We went through this with Merrill. You get your homestead mortgage. You get three others to maximize your credit score. If you’re going to do those three in your name, make them three units, at least or four units preferably.

You get twelve doors at $300 a door.

You and your spouse have twelve so that means you’ve got 24 and that 24 is throwing off $200 a month for sure. You can make $5,000 a month on that. It’s the same thing over on this side. We’re taking our time to find the right three to fours, but we’re transitioning. It happens. In this business, you need to grow.

The challenge you’re running into if you’ve bought single-family in the last couple of years, I hear this at every single meetup I’m at. Every time I have a conversation with a single-family landlord, the problem is that real estate is getting expensive. The other way to say that is appreciation is running rampant. Appreciation is up, new construction costs are up, your insurance is up and taxes are up. HOA is slowly getting up there. The maintenance on a house is increasing. Interest rates have gone down. Now, you’ve got this problem where I’ve got this great single-family rental that I bought right after the storm. I’m all in for $110,000 and it’s almost a $200,000 house. It’s getting taxed like a $200,000 house. It’s getting insured like a $200,000 house. It’s time to transition. Let’s give it a try with Airbnb, hold onto it for a couple more years and then sell the thing when it’s a $250,000 house.

If you’re getting started, then it’s not going to be within the beltway. We’re going to be looking at Texas City, La Marque, Baytown and Rosenberg where you can still buy an $80,000 off-market deal, put $10,000 in, it’s worth $130,000 and you’ve got your fix three to four years there. There’s still a play for single-families. I don’t think you’d seen Katy. You have a play for single-families and we teach dads big game hunting. We’re going to go out to California, grab a bunch of people and bring them out here.

We have two guests, the lovely Cindy and Linda. These are our buying agents. We told you we’re going to expand the team and we brought in some heavy hitters. I’m going to ask you a little bit of background on yourself. Cindy, you can go first. You’re a broker. Tell us how long you’ve been doing real estate.

In real estate, you've got to be strategic. Work with the right agents and team who will find something that works for you. Click To Tweet

I’ve been in the business now going on sixteen years.

I guess you’ve seen a lot.

I’ve seen the market change quite a bit.

I bet you have. Has it always been Houston?

It’s always been Houston. I like Houston.

Linda, how about you?

I’ve been licensed for five years.

You’re an investor as well, you and your family.

TRE 35 | Ways To Do Deals
Ways To Do Deals: The real estate attraction is when your rentals are doing well, you start managing five units and above and get an assistant who can take over when you’re out of town.

 

My family and my fiancé, we all invest.

What we did was we know that we have a lot of people that follow us. There are a lot of people that are interested in looking at some of the deals that we look at. What we’ve said was we need to make sure that we have the right amount of the right agents in a position to help the people. We’ve had some maturations and maturing on our team. I think we found two strong candidates to work with people. These are our buying agents. Here’s how it works if you’re looking to buy property, whether it’s single, duplexes, we’ve got a number of duplexes we’re chasing down, quads, up to small apartments and Airbnb.

What we’re going to do is there’s going to be an interview process because here’s the thing. These are not buying agents so that you can wholesale deals on the MLS. These are buying agents who are going to help you close the deal and start cashflowing or start getting massive appreciation. We have to differentiate. A lot of people come to you and say, “Will you make a whole bunch of offers for me?” We’re like, “No, we’re not doing that.” That’s not the role that these guys are playing. These aren’t agents that are going to work with wholesalers out there, just to be clear. There are plenty of agents that will go find them. You’re not going to find them here. These are agents that are designed to work in the buy and hold space. I know you are looking all over the place. Where have you guys focused in the past?

I started off a lot in Inner Loop. That was my mine many years ago when I first started. I was living down in Inner Loop. There’s a lot of that for the first five, seven years. As my clientele changed and they got married and kids and started moving out towards the suburbs, Galleria, Katy, Spring Branch, Memorial, Sugar Land.

How about you, Linda?

I worked a little bit of everywhere. As far as the investment side, we do Jersey Village area, that’s where I grew up and also Fort Bend. We like Stafford, Sugarland, Missouri City.

Are you buying single-family?

Yes, we’re doing buy and hold. We’re also in the transition period trying to grow bigger with fourplexes, small multifamily and eventually bigger.

The problem right now is that real estate is getting so expensive, but the other way to say that is appreciation is running rampant. Click To Tweet

You sat in on Merrill’s weekend. How was that?

That was great and really eye-opening. There were a lot of things that consumers don’t know about credit and what your profile looks like. That was beneficial.

It’s scary stuff out there. We have a company that keeps wanting to pull my credit and I’m like, “No, stop.” We want to work with some individuals. Who would our perfect client be like? We’ve talked about it in meetings and who we’re looking to work with. We always say, “You’ve got to have some money in the bank.” If you’re meeting with someone and the interview is, “I have got no money to put down. I want to figure out how to do it with no money.” It takes money to do real estate, would you agree?

Absolutely.

How much do you think a person needs liquid to be able to start buying a single or duplex?

I guess depending on the price point. You’ve got a trip down at least 20% to 25% for the down payment and then you have the rehab costs. I’d probably say 30% to 35% cash at hand.

That’s a real number. The problem is a lot of people who’ve gotten this misnomer that they can get into this business with no money. You can wholesale, but I’m not sure you’re taking down a lot of apartment buildings with no money unless you’re working with private lenders and that’s a whole other show. We have a Bus Tour coming up. Are you excited about the Bus Tour? Have we figured out if we can stop at Buc-ee’s yet?

We are going to make up. That’s mandatory.

TRE 35 | Ways To Do Deals
Ways To Do Deals: Buying agents help you close deals and start cash flowing or getting massive appreciation. They are not for wholesaling.

 

What do we got lined up? What are you guys looking? Don’t give us the address and stuff, but give us a little taste of what you are working on.

We’ve got a duplex in Stafford. We’re going to make our way out to Baytown. The smallest sub-markets and it’s probably good to start off. We’re going to stop by one of Jason’s flips.

That should be fun. You will be on the bus. We’ll also have a lender and contractor on the bus. We’ll see if the title wants to get up and get on the bus, probably not. We’re trying to get insurance person on the bus. It should be very educational. Our Bus Tours are usually great successes. People like everything they see. If you’re interested in doing the Bus Tour, you can text me at (281) 401-9008. Text me and put “Bus Tour” and we’ll get back to you. How do you feel about the Houston market, Linda? What do you feel about the Houston market here for investors?

I still feel that there are a lot of opportunities. Jason mentioned that the threshold is a little bit lower now. You see a lot of people entering. You see a lot of first-time investors. People who have some capital set aside and they want to do something with it. That’s why we’re here.

Cindy, how do you feel about the market?

I love this market here. We’re a transitional city. People are always in and out all the time. Headquarters of so many major companies and it’s still growing fast. You can see other construction around the city. That tells you we’re growing.

I call this the world’s largest work camp. People come to work here all the time. It’s amazing. We’ll talk about some of the mistakes that first-time investors make out there. I want to remind you that we have the Portfolio Builders Club, which is a little bit high-end. We’re going to Seasons 52 and there’s usually lamb on the menu, which I love. There will be some wines and good food. We’ll go through some of the properties we’re working on. We’ll probably bring some wholesale deals and off-market deals and we have the Bus Tours.

We do work with a lot of new people. I’ll tell you who we’ve come up against a lot in the last few months. These are people that are paralyzed because they can’t make a decision. They’ve taken the classes. They’ve paid a lot of money to a lot of different gurus. They’re like, “We’ve got to get started,” but they’re terrified of making mistakes. Let’s think about some mistakes that we know that you could make and this way, we’ll get it out of the way for them and they can go straight ahead and buy some properties on the Bus Tour. Let’s talk about that first-time investor, that first-time landlord. What mistakes do you think they should look to avoid, Linda?

It takes money to do real estate. Click To Tweet

I would say underestimating the rehab and also managing the contractors because that could be a full-time job and I don’t think people are prepared for that. If you have a W-2 job and you want to start building up your retirement to real estate investments, you can’t just hand it off to a contractor. You need to know what they’re doing on your property and if it meets your expectations. That’s probably the biggest headache for me, but it’s also knowing the market well. Pick an area that you want to focus on. One of the wholesale deals that I purchased, I ended up paying $12,000 over asking and I outbid fifteen people, but it was still a steal of a deal. I think people had that sticker shock because they were expecting to pay that asking price that was advertised for a few more, but I knew what I was looking at.

It’s nice to know what you’re looking at and make sure that we’re managing the contractors. Cindy, do you have anything to add to that first time buyers there?

I came across people who are investors or buyers in general that want to focus on the area you know, but also people pigeonholed themselves into an area and they don’t go where the returns of the money are at. You’re focused on finding the right property unrealistically.

We have a lot of that. We have a lot of people that think they’re going to live there.

You’re not living there. As long as that cashflow is flowing.

That’s a big problem. We had a buyer and she just wants B-plus rentals and I’m like, “They don’t make money.” She’s like, “I want the granite countertops.” I’m like, “That’s great, but this will not make money.” It will appreciate, but there’s no cashflow. You might have to be pitching in. As soon as they are broken down or anything, you’re going to have to throw money into it. That’s a big thing. Cindy, if you had to do it all over again, knowing what you know now, would you still be in real estate?

I would have dove into it straight after high school. Not that college is not important or education is not important, but I wish I would have gotten right into real estate in my early twenties and start investing then. It’s never too late to invest but, in hindsight now, had I started many years ago in this market.

That’s the slide that Jason always puts up. He’s like, “These properties are going to double in value in ten years.” Everyone’s like, “How could that be?” He says, “Look, in the last ten years.”

TRE 35 | Ways To Do Deals
Ways To Do Deals: A first-time investor mistake is underestimating the property rehabilitation and management of contractors.

 

I don’t think I’ve ever sold anything to a client that they came back and said it’s depreciated. I’ve never had that call.

Linda, how about you? If you had to start all over again, you’re bright-eyed and bushy-tailed senior in high school, where would you go?

I would have the same answer as Cindy. I wish I got into it sooner. My parents were real estate investors. We own a commercial property and some single-family, but also out of college, one of my first jobs is in Houston I was a marketing coordinator for John Doherty. I had a lot of interactions with real estate. I just didn’t see the light until way later.

You had your leather jacket on. You’re a bit of a rebel. You weren’t going to do what your parents did. That wasn’t for you.

Originally, they wanted me to be a doctor, not surprisingly. I was surrounded by entrepreneur parents who were in real estate. That influenced me.

There are a great couple of chapters in Rich Dad Poor Dad where the successful entrepreneur’s families always want their kids to be doctors and lawyers. That’s probably the worst thing for them. They should be, “Here’s $1 million, go out and start your own empire.” The people that we’re going to get on this Bus Tours, there are going to be a lot of first-timers. They’re going to be curious and you can walk them through the process. You’re going to be holding a few hands. They’ve got to have a propensity to action. We said the contractor was a mistake. The first thing we talked about is not having enough money realistically. We have a gentleman we sold a duplex to. It was a great deal in Texas City. It was a duplex and it was already cashflowing. They make $1,700 a month. He’s in at $110,000 but he was shocked at how much money he had to bring to the table because first of all, it’s a duplex. It’s not 20% down, it’s 25% down on the loan he has. There was a whole bunch of fees on top of that and it was a substantial amount of money that he had to put out.

Even if it’s $30,000, he’s going to be making 14% to 15% cash-on-cash. That’s not a bad place to be. Having the money, knowing the contractors, knowing your market and being able to expand your market. If you’re looking to buy rentals in Katy or Sugar Land, you’re going to wind up buying rentals in Alief and other places because it’s not there. We’re joined by our Mr. Texas Real Estate agents and they are the buyer’s reps, Cindy and Linda. You can connect with these guys. Go ahead and text us at (281) 401-9008. Say, “I want to buy a house,” and we’ll connect you. There are probably about 400 buyers on the list, so you’re going to do an interview process. Linda, take us through a little bit of that.

We’d like to sit down with all of our potential buyers and maybe some of the ones that haven’t been spoken with in a while, just so that you can meet us and we can meet you and learn about what you’re looking for. As far as the criteria, we want to be very selective about who we work with so that we can meet your expectations and put all of our energy and effort into looking for what you’re looking for, a minimum of 700 FICO score, at least $25,000 to $40,000 in the bank and a decent income. We also have to figure out expectations and what’s realistic for you. Are you going to be hands-on? How much of rehab is going to be too much? Do you want something turnkey?

Start investing. It's never too late. Click To Tweet

Setting expectations is important to have them understand that. That’s important.

We’re always asking, “What are you trying to do?” There’s the interview process. We have an office up at Keller Williams. If you reach out to us at (281) 401-9008, we have office hours at the office. These guys can get on the phone with you. It’s also important to make sure that their partners and spouses are there.

The other decision-maker. We don’t want to waste anybody’s time and we don’t want to have to wait for you to ask for permission and be ready to go.

Because the deals are coming fast and furious. We have some duplexes and some single-families in the pipeline. There was a triplex that we threw away. We didn’t like it and we didn’t like the area. We wouldn’t recommend it to anyone and we throw it away. A lot of these times and just so you understand this process, Jason goes out and he scours the MLS and some other. We have trolls we bring wholesale deals. We give everyone in our group a 24 to 48-hour head start. We’d say, “We have a duplex.” It’s like, “On Friday, we’re going to list some duplexes. If no one puts an EMD down by Monday, then Jason and I will.” Most of these deals that we’re looking at are deals that we would buy.

I’m not saying that we’re endorsing or giving any financial advice. For sure if no one’s going to buy them by the Saturday Bus Tour, you let us know and more than likely, half of that stuff will be picked up by us. We liked the deals that we represent. We do not push garbage down people’s throats. This is a real deal. This is an easy rehab and you can get through this. I don’t know if you guys looked into this, Jason, I know you have. We’re at Keller Williams and one of the greatest mortgage programs out there that FHA, Fannie Mae product for your first one, two or three rentals is to Keller Mortgage.

If you are a licensed agent and you are a real estate investor, you need to be with Keller Williams just for the Keller Williams Mortgage Association. You could apply your commission, any credits, all that stuff directly towards any of your out-of-pocket costs. If you’re a wholesaler out there and you can get a deal 10%, 15%, 20% off and it appraises at that higher number, you can take the rest of that as commission. Apply it towards your mortgage and be nothing out of pocket on a retail deal. I haven’t shared that publicly, but you can do that.

That’s why we’re also building a whole at-large team for agents. We get investors all the time like, “Should I get my real estate license?” We’re like, “Yes.” A bunch of yahoos will be out there like, “Don’t do it. You’ve got to disclose that.” We’re like, “Whatever, that’s fine.” We know why you would want to be having an agent’s license with Keller because it’s 0% fee loan plus $1,000 bonus if the house is over $150,000. It becomes subprime. It’s below the going rate out there.

What’s interesting too is as soon as you work with Keller Mortgage, they immediately send out an appraisal. You don’t pay for it if doesn’t close. It’s an absolute no-fee mortgage. It is an amazing little product.

TRE 35 | Ways To Do Deals
Ways To Do Deals: Work with your buying agent. Be clear on your expectations and make sure they are realistic. Being transparent in the initial process goes a long way.

 

That’s for the stuff in your name and then the non-QM products and stuff in the LLCs. We’ve got some other things we’re working on, but it’s hard to beat that loan. If it needs to work, then that’s going to be a hard money loan. We’ll have a hard money lender on the bus with us and they’ll explain their deals. If it’s ready to go, and I always say rent-ready is anything $5,000 or less, paint or carpet or get new appliances and you’re good. Something you could put on your credit card, that’s rent ready. Anything beyond that, you’ve got to do some repairs and you’re going to work with hard money. We’ll also have a hard money lender on the bus with us. That’s a pretty exciting day for you. If you’re interested in getting on the buyers’ list, if you’re interested in the Portfolio Builders Club, which is a little bit of a high-end lunch and if you’re interested in a Bus Tour, which is Buc-ee’s, we’ve got the whole spectrum right there. It’s (281) 401-9008. Tell us what you’re looking for. Any last bits of advice for investors out there?

Buy now. You’re going to regret it many years from now.

Are you regretting not buying many years ago?

I’m regretting it every day. I’m going to start now.

So am I. A good market, Linda.

Get out there and network. Educate yourselves. For me, the longest deal was the first one. I had to get over that fear. I was a little bit impulsive and ended up buying that one online at Auction.com, but then after that, I’m good now. Have a team around you. Whether that’s somebody that you work with, contractors, vendors or whoever, it helps to have that support.

That’s why we built out the Mr. Texas Real Estate team is because we know what investors are looking for. We know there are not a lot of good places for them to land. They’re out there in the wilderness working with wholesalers and trying to do the MLS thing by themselves versus working with a team as we have with two buyer’s agents and then with Keller running that mortgage program. We also have connections with contractors and title. We have your power team if you will, ready to go if you’re doing buying and holding. If you’re interested in joining us, it’s in Seasons 52, that’s $50, text me at (281) 401-9008. If you’re interested in the Bus Tour, that’s $97 for the day. You can bring a partner for free. We’ll feed you at both places.

They’re going to make ten offers on stuff that I was looking at. We’ll probably get four to five under contract. We’ll take those to the Portfolio Builders Club and then we’ll show some of them on Bus Tour and a handful of other properties. How this works, just to give you a little behind the scenes. We start making offers on properties and we have real conversations with agents. It’s not like, “I’m an investor. I’m a big Tom. I’m a big deal. I’ve got an investor who’s got $5 million or $10 million to deploy in this market in seven minutes. We need $10 million of property right now.” A lot of times what happens is we start having conversations with agents. They go, “A seller on this one is not willing to take off. That probably makes sense for you, but I’ve got six other listings and three pocket listings. Do you want to look at those?” We’re like, “We’ll look at those, of course. We’ll absolutely look at those.”

I think there’s this misnomer out there and for us, we’re okay with it that you can’t find deals on the MLS. That’s where we’re finding all our deals.

More than learning from masterminds or having the capital, you've got to have the propensity to action to start in real estate. Click To Tweet

“There are no deals on MLS,” I’m like, “There are no deals for you. There are plenty of deals for me.”

We’ve had some buyers say, “If it’s on the MLS, don’t bring it to me. I’ve already looked at it. You’re not going to get better than me.” I’m like, “Okay, that’s good. That’s awesome.”

I’ll do a case study where I’ll show some of the deals we bought and they’re like, “Where did you get that?” I’m like, “I got it on MLS. I picked up the phone and I was nice to somebody on the other end.” It’s no more difficult.

It blows my mind. You’re worried about where it’s coming from. Does it meet your numbers? I’m not paid to coach people who are digging so tight on those foxholes and like, “We’re not going to do any of that stuff on the MLS.” I’m like, “That’s fine. We’re not going to work together. Good for you.”

I don’t have any time to retrain your negative thought process of this thing. I’m like, “If you don’t want it, that’s fine. I’ll just buy it.” You can see the case study at the Redneck Country Club in the future. It’s one of those things or you can get on one of our webinars and like, “Where did you get that deal?” We got it on MLS. We sent it over to our team and our team does all this stuff. I’m not even making offers. I’ll say, “Team, can you go make an offer on this thing?” A couple of weeks later, it pops back up and they go, “Here’s the contract,” and they’re ready to go and let’s go buy it.

There are a whole bunch of people that don’t understand the inner workings of our organization and that’s fine. To a lot of, “How does this get done?” The answer is not me. “How do you do all that stuff?” I don’t do all that stuff. It’s not me but we do have a team and we’ve got two ladies that will focus on getting you deals.

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