To keep up with the times and technology, any industry is expected to always be at the forefront of innovation. Businesses and people involved in the industry are also expected to keep moving forward because if you don’t, then you lose the opportunity to reach your goals. Jason Bible and Robert Orfino sit down to discuss the changes in real estate and the opportunities out there available for grabs. They explain what an iBuyer is and the possibility that having a customization option before buying can affect many industries. Also, learn and understand the hustle if you want to achieve your goals in real estate with a well thought out analogy.
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Keep On Moving Forward With Co-Host, Robert Orfino
Thanks for joining us. This is Robert with Mr. Texas Real Estate. This is the Texas Real Estate Radio Network. Jason, how are you doing?
We’re a nationally syndicated show. At some point, we’re going to get real audio video stuff going. We’re going to look like a real professional radio show at some point here. I did a walkthrough of the studio. I was like, “Demos done.” The floor is sticky and the handrails are gone.
We’re not ready for that yet. The floor will be next, but we need to run some extra electricity there. We don’t have enough power. We’re going to run a few more outlets underneath and then see if we can find an air conditioning underneath the floor, which would be the best way to cool all that stuff underneath there. I had an interesting conversation with a good friend of mine. I’m not going to tell you what market he’s in. He’s not in one of the three markets that I’ve been in New York, LA or Houston. He is in the top ten markets. He has been working with iBuyers for two years.
Let’s talk about who and who an iBuyer is because when you want to have fun with realtors, say iBuyer and watch them go into convulsions. It’s like they get possessed. Let’s talk about what an iBuyer is.
An iBuyer, the i stands for the internet. It’s an open door. It’s a person that supposedly cuts out the real estate agent to get to a seller to sell their home directly to them.
You can go online and “sell your house” online.
This is the wholesale destroyer.
The big guys got in, Redfin and Zillow. I don’t believe that Gary Keller is far behind.
It would not surprise me at all. There have been some discussions there or eXp is going to get there too. The idea is they’re cutting out the real estate agent. One of the things that you’ll hear about iBuyers is they don’t make that much money. Let me back up here. The largest asset class in the world is single-family real estate. We have not been able to commoditize it like we do other assets. You go to Amazon. You order a pair of Nike, whatever. They’re the same as any other Nike in your size and the color that you want. A lot of these consumer products have turned into little more than commodities. They’re trying to do the same thing with single-family houses. It makes a lot of sense. There’s a lot of money to be made there.
When you trade commodities, you’re not working on big 20%, 50% margins. It’s all nickel and dime stuff. If you can commoditize a house and run consistently on a 3% or 4% margin, you’re good to go.
You’re going to make piles of money. I’ll take it one step further. You’ll see people will say like, “Zillow is losing this much money on each house or Offerpad is losing.” I’m like, “No, you don’t understand what they’re doing.” They’re doing two things here. One is they’re collecting consumer data for home sellers. Years ago, when I went to Opendoor, you know who they were hiring exclusively? Data scientists, that’s all they were hiring were data guys. They had two dozen postings for data guys. What they’re trying to do is figure out what are the habits of the consumer. Step two for them is they want to sell you, the home buyer, everything for your house that you can’t buy on Amazon. Mortgage, title, warranty, even contractors to do fix up stuff, they want to be a part of that entire value chain that you can’t get through Amazon Prime.
Let’s say you’re Redfin and you have all this data or Zillow and you have all this data. You do a survey or take a quick survey after you’ve bought a house. The question is, did you repaint after you bought the house? You find out that 60% of the people that buy a house are repainting. Why are you putting any money into the paint before the house goes out? Unlike the hedge funds that came in and did this big scope, you’ve got these folks that can limit the scope to FHA guidelines, screens, knobs, ranges, heating. We don’t need the paint because everyone’s going to paint or you’re giving them a painting credit.The largest asset class in the world is single-family real estate, and we have not been able to commoditize it like we do other assets. Click To Tweet
How much did it cost you to paint in this city versus that one or this region versus that one?
That consumer data is a platinum mine.
There’s a reason Gary Keller has a massive database. There’s a certain company out there. They got a big lawsuit and they have to audit them every six months to make sure they’re not stealing Gary’s data. It’s why Keller Williams is deadly. They’ve got an amazing data set, one of the best in the world for real estate.
When you start looking at these numbers and you start understanding, these guys are buying at $0.92, $0.93 on the dollar, but they’re cutting out the agent. They’re like, “We’re going to pay the 6% anyway. We’re good at that. You’re going to get your money and everyone’s fine.” You have this thing and you go back in. You can go out and sell another 3% more on top of the market. You’re good to go.
If you capture everything else in the value chain, title, insurance, mortgages, the mortgage side alone, they know when all you guys need a refi if you bought from them. They know the rates. They’re going to start calling you and say, “You are automatically approved.”
That was the Keller mortgage. When you got to Keller mortgage, you could click a button that will automatically refi based on how much of a percentage you want to save. If you put in at the time of your home purchase and they said, “Rick, you just bought your house. Would you like to automatically refi if the rates drop 0.5%, 1% or more than 1%?” You click the button for 1% or more. When the rate drops 1% or more, you get a DocuSign on your email box that says, “We have gone ahead and taken care of it and lowered your mortgage rates, click here.” It’s cost-free too. They don’t charge anything.
They pay for the appraisal if it’s over $150,000. It’s a crazy product out there. Those things are going to come back. It’s a matter of time until those products if they haven’t already.
It’s the data. Once you understand that market, once you’ve mined that data, then you can commoditize it.
That’s exactly what they’re doing. Let’s finish the story here. What’s going on with the iBuyers now?
Before we get into the iBuyer stuff, someone laid out in this scenario, “I’m doing my first owner finance deal. The owner owns it free and clear. His lawyer is preparing documents.” It’s a red flag. He’s like, “What should I do?” I’m like “Two words, Ashley Patten. Call Patten Title. What are you messing around for?” Why are we doing this social media poll about the serious financial transaction? Remember he who writes the contract wins. When I hear, “The lawyer is putting the paperwork together,” I’m like, “That’s not good.”
What did Ashley tell us one day? How many deeds of trust? It’s some ridiculous number. I was like, “Is it that many?” It’s like, “Go to them. It’s got to be affordable.” They do a gazillion of these things a week.
We’re processing some private loans right now through our business. One of the lenders is like, “You guys got it cheap from Patten.” I’m like, “We never asked for a discount. This is the number they gave us.” It’s MRTXRE@PattenTitle.com or go to MRTXRE.com and you’ll find them on our website.
They can do anywhere in Texas. They’re all over.
They’ve got an office in Austin. It feels like it’s free from principals out there. It seems it’s a little more Austin.
I need to go to the Austin office. That’s where all their marketing people are. I imagine it’s a fun office. They’re in Austin and Dallas. They’re here in Houston, one in Cypress and one in the Galleria. The Galleria office, I’m always surprised how easy it is to get in and out. It’s right there at Westheimer and 610. Get in and go upstairs, sign your stuff, walk down that long hallway.
Back to the iBuyers, a friend of mine has been in the industry moved from different company to company. He says there’s probably going to be some mergers going on, which makes sense. The big guy is Zillow. You’ve got these three other tech companies out of Silicon Valley or the Silicon Coast. It’s time to start consolidating.
Redfin was in deep trouble before the crash. It had something to do with revenue and they couldn’t raise any more money or something. I don’t have to pull that story. They pulled away back and fired a bunch of agents, which most of them were new agents. I wonder where the consolidation is going to be because we’ve got Opendoor, Offerpad and Redfin are the biggest ones.
Those smaller groups that weren’t hosting the MLS listings out there will probably combine.
Watching this whole technology unfold is what’s fascinating to me. How big are they going to get? How much impact are they going to have on the marketplace?
It will be big.
One of the things that have been the saving grace for Houston as it relates to iBuyers and hedge funds competing with investors is, our storms and our HOAs. A lot of times they can’t contend with that because our HOAs are so oppressive. Whenever we have a storm that blows in, they freak out, sell a bunch of property and they’re out of the market.
I’ll tell you the two things that are amazing when you start thinking about it is the customization of the home. It’s not the wholesalers and agents that are going to take a hit, it is a world of remodeling that’s going to take a hit. If Zillow says, “What color do you want in your house before you move in?” We’ll provide the painters and they’re taking those margins. There goes the painting guy.
Home Depot starts to be a little nervous too.
It’s for pushing down those doors. Amazon is starting there iBuy program. For sure it’s going to impact the real estate industry. I don’t think we have anything to worry about for the next few years. I’ll be retired by the time you guys are all complaining about it, one way or another.
A few years is probably a reasonable amount of time to expect those guys to get their stuff.
It’s been the market for about three or more years. It takes ten years. Someone said to me, it’s like, “I’m not going to go to eXp. It’s new.” I’m like, “It’s eleven years old.”He who writes the contracts wins. Click To Tweet
I’ll give you a good example. The whole like cash for houses thing, which home investors invented is less than 30 years old. You don’t want things that Gary Vaynerchuk is famous for. It’s like the internet started at Windows 95. It did where it came out to the masses. It takes about 25 years for an industry to mature.
It takes ten years before it becomes public.
To give a little SpaceX update, they went from dead broke, Elon crying his eyes out in a bar just wasted from 2002 until 2020, until they started putting dudes in space. That’s insanely fast.
Most people think SpaceX has been around for 2 or 3 years.
Even twenty years is insanely fast to do what they’ve done. It takes a good 20 to 30 years for an industry to “mature” to where it gets accepted by the masses. The price has come down.
That’s why we joke when we see people’s business cards that say CEO on it. We’re like, “Come on.”
I get it, you had to put CEO on the dock somewhere.
Do you want to impress me? Let me know who the recording secretary is. That’s the guy who’s going to comply with the state regulations.
You’re the guy that keeps the LLC valid.
I was thinking every once in a while, I’ll throw in a motivation video on YouTube. It’s usually Jim Rowan and I’ll listen to it while I’m getting ready in the morning. I love the teachings of Jim and all that stuff. At the end of the day, the guy was a marketing guy. We put this entrepreneur journey, this real estate investment journey on a linear path. I don’t think it’s that. That’s not the best way to describe it even in entrepreneurship. I was trying to think of an analogy and the best I can come up with is standing in the middle of a bullseye football field long. You’re dead in the middle. There are five chains around you and at the end of each chain is a big boulder.
Your success happens when all five of those boulders are inside your circle. Take that picture. You’re standing at the 50-yard line. You’re standing right on the Texans logo. You’re standing in a little circle. There are other rings and other rings out. There are five heavy chains like anchor chains. You look and you follow the chains out. It’s tied around some boulders. Your job is to get those boulders inside your ring. You pick up one of the chains. You can barely lift the chain, let alone pull it.
You’ve got to go and get some training. You’ve got to go and work out, get stronger, get better so you can start pulling that chain in. Come back, it’s still a little tough. You go and get a friend. Both of you are pulling on the chain and it starts to move in. You test all five and you find an easy one that’s lighter than the other. You start pulling it in, pulling it in. The next thing you know within a month or so of working this thing out every day, that big boulder is inside your circle. It says, “Hard money.” You’ve got the hard money inside your circle. This is great.
There’s another one over there and you start pulling it and it doesn’t move at all. You guys both work on it. You pull it in. It works 3 inches a day and has got to go 100 yards. That’s going to take you a year, pulling on that chain every day to get it inside your circle. If you’re disciplined, you go and you pull it 3 inches every single day. It gets closer and closer. There’s another chain out there as a big, hairy boulder. You start pulling this thing, two people and you get it going, a little bit easier. If you find out, if you throw a little gold at it, it will move a little faster.
You start greasing the chain with some gold and pull it in. That’s marketing. It’s not a boulder at all. It’s a big, hairy monster. It needs to be fed every single day. Now you’re feeding this thing gold. You’re pulling on this other change. You’ve got the hard money behind you. You’ve got marketing. You’ve got hard money. You start pulling this other chain. It’s getting closer and closer. Still taking the time. Finally, that little 3-inch chain after half a year, you can read what it says on the rock. It says, “FICO.” You keep pulling on a change 3 inches every day, getting that FICO scores closer and closer.
You’ve got FICO. You’ve got marketing. All of a sudden, there’s a rock that moves. That’s your first rental portfolio. It’s very small. Your first rental house, pull that one in. You keep feeding the monster, another rock pops up. You pulled two now in. I got two properties, but you’re pulling them in. It’s a constant struggle of balancing how much time, how much effort you have to pull these rocks into the circle. You notice now that you’re trying to pull it and it’s not working. You’re trying to get more properties and you’re failing.
It’s like, “What is going on? Why is this not working?” You look around the hard money rock and there’s another rock behind it. You get rid of the hard money rock. You blow that up. You start pulling out another chain. That’s called bank financing, but that also moves like a foot a day. It takes you a good 100 days to get that thing inside your circle. In the meantime, you stop feeding the beast. You’ve pulled your FICO in. You pull the chain in for bank financing. You’re finally getting all that stuff lined up. Lo and behold, it’s been two years and you start pulling on other rocks.
We’ve got to get taxes done. This is a big one. It says, “IRS.” You’ve got to pull that in, make sure that it’s done correctly. You spend your time and your effort standing in the middle of this bullseye pulling on five different chains, trying to get them all to the center. Some days you don’t have enough energy to pull all five in. Most days you don’t. You’ve got to start choosing, where are you going to pull the chain from? Where are you going to drag that boulder in from? Where’s your effort going? It’s getting harder and harder. The closer they get, the harder it is to get them in. You’re getting bigger and bigger like the scene from Conan, walking around the circle over and over. You’re building up. You become very strong with this stuff.
This is the last one. It’s sitting out there. That’s called your ego. Whether you’re going to be on the humility side, that’s the thing, or are you going to be on the totaled id feeder side? That one’s squirrely. You pull it and takes off. It moves left and moves right. You’ve got to keep getting under control. You’ve got to pull that in. That starts taking a lot more of your time to get that the last boulder into the circle and you turn around and the marketing beast has gone out a little bit. The FICO has rolled back out another 10 yards. You’ve got to come back in. You’ve got to pull these chains. Keep getting them all together.
There’s another ego thing. You’ve got your cheap money over here. You’ve got your FICO score. You’ve got the beast. You’ve got your portfolio, and that’s getting even bigger. That’s getting harder to pull in now. It’s a constant struggle of you standing in the middle of this bullseye, pulling out five different chains, trying to get them all to the middle of that circle. That’s what I think real estate investing is like. It’s not a journey. It’s not a run. It’s not a 26-mile marathon straight ahead. It’s constantly having to pull these giant boulders closer to you and spending your resources day after day. What happens is you’re in that circle and you’re like, “Forget it, I’m going to Vegas for a couple of weeks. I’m taking off. I can’t do this anymore.” You leave and he comes back and all these things, all these boulders have rolled farther out again. It becomes difficult. However, once you do finish pulling all those in, that’s when it gets good.
We’re talking about what that journey looks like for success. Sometimes it’s not a marathon. My analogy is in the middle of a football field and a better analogy is we’re on a small hill. You’ve got these five chains. At the bottom of the hill, attached on these chains are rocks. You’ve got to pull these big boulders up. Sometimes you can get some help. You can bring up a friend to help pull it up. After a while, your friend gets tired and he leaves. Maybe you got another friend. He starts pulling to get the chain, get that rock a little closer up the hill. He leaves then maybe you say, “I’m going to buy someone to help me to do this. I’m going to hire someone.” You start hiring people to start pulling these chains up. You’ve got a small little 4 or 5 people on the top of this hill, pulling them up. You’re like, “We’re set except Suzy doesn’t pull as hard as Adam. Adam doesn’t spend as much time pulling the rock up the hill as Steve does.” We’ve got to go ahead and talk to Steve, Adam, and Susie, and get them motivated and get them on the right path.
All of a sudden, you’re managing those guys. I could get this marketing beast up this hill, feed it and get all the results I wanted to. This other rock that has all my properties can come up the hill. Now that’s not happening. You’re spending time with these other people. That gets tiring for you. Along comes a guy with his little hotdog cart and he says, “I’ve got a better way to do that. You come on down here and buy this. It’s only $1,000. I can show you how to move those rocks up that hill magically.” You run down there to the hotdog vendor, “Give me the golden hotdog and I’ll pay you $1,000,” your 1297. You run back up the hill and you try and figure it out.
Meanwhile, while you’re trying to figure that out, the boulders are slowly rolling back downhill. You realize these instructions are for a completely different hill. Being that entrepreneur and being that real estate investor, you’re going to have to work on getting all those five boulders up at the top of that hill, inside your circle with you or your team or your partners. Whether you’re buying or working with people to give them something the reward at the end, it’s a constant struggle of, “Where do I spend my resources? What rock do I get to get up this hill a little bit closer?” It’s not a run. It’s anything but a run. It’s a constant challenge to move the progress a little bit further. For us, it’s marketing. It’s cheap capital. It’s your FICO score. It’s your financial statements, which are very challenging. Once you get to the next level and you’re pulling that FICO rock up the hill. You get to a good level and you’re like, “I can buy this machine that’ll help me on this other rock.” You go out and buy this other machine. You get some other things. You can get two more houses pop up, two more little boulders in your property. You look down at the hill at the FICO rock and it’s back down to the bottom again.
You want to get that thing to the top. When it gets to the top, you notice there’s another rock behind it. On that rock, you can read the words business line of credit. Start working on that. None of this stuff is happening in 30 days. None of these rocks are magically coming to the top of the hill. It’s a constant struggle of turning around and figuring out, “Which one do I have to work on now?” You’ll sit there and listen to all these efficiency guys, gurus and coaches. They’ll tell you how to hire out and do VAs and all this other stuff. You’ll be like, “Why isn’t this working for me? I’m smart.” Most of the time because it’s something cool to say. It makes you sound smart, but it becomes impractical.
It’s like, “I’ve got twenty VAs.” Talk to the guy like 60 days later, “Yeah. That’s not working out. Now, I’ve got three managers.” Talk to him two months later, “Yeah. I had to fire all the managers and back to the VAs.” It’s a constant struggle to find that balance. Meanwhile, that rock keeps rolling downhill. It’s the same thing with Airbnb. We’re going to do a great class for Airbnb. You’ve got one rock, that’s your cleaners. You’ve got one rock, which is your maintenance. The other one is at your front desk. The other one is financing. The other one is growing your business.
You’re constantly trying to pull these things up. You think you can hire people to pull them up, but they’re not coming up. It’s a constant balance of pulling these things to you, bringing success in and it’s hard. The farther these rocks come up the hill, getting some into your circle, the stronger you become. Some people look at that hill before they even get on top. They’ll think about, look around, walk around it, study all the rocks, study the chain, trying to figure it out. You’re like, “I’m going to have to sit down and figure out a little more operations here before I jump on there.” I’m like, “I’m telling you, the quicker you get on top of that hill and start pulling stuff up, the quicker you get to the finish.”
“I want to study and weigh. I want to know the density of this boulder. I want to know the actual type of rock that this boulder is made out of. I want to understand the chain and the tension on the chain. I’ve got to understand all that stuff.” We’re like, “You should do that from the top. You should get up top there and start pulling up these rocks because you’re wasting time.” That is the vision you should have. The picture I have in my head is not a run. It’s not a marathon. It’s not a sprint. It’s standing on top of a small hill, trying to pull these five big boulders up the hill. You can do it with a partner. You can do whatever.The journey for success is not a marathon. It’s constant progress. Click To Tweet
You start getting this thing up there and up there. Let me tell you what happens once you start getting them closer to the top of the hill. You’re almost there. You can see it. What’s going to happen is the people that helped you at the beginning and then left are going to come back and say, “Let me jump right in. I know what to do. Let’s finish this thing up as we started it.” You’re going to be like, “I pull these things up 80% of the way. You were here for the first 10% and I’ve got 10% to go. I don’t need your help. Your help is not wanted. It’s not needed. I’m strong and you’re still weak. You haven’t grown. What you want to do is come here and watch me finish. That’s not going to be allowed.”
I’m talking about that path for entrepreneurship, real estate investing, and finally getting where you need to be. I don’t think it’s a linear journey. It’s a matter of constantly pulling things towards you, attracting the right things towards you. As our analogy says, you’re on a small hill. There are five chains and the bottom of each chain is attached to a boulder. Your job is to pull all five to the top of the hill. The one is capital. The other one is marketing. The other one is your portfolio. The other one is ego. I’m going to let your ego get in the way. You can bring people in to help you manage and pull on it.
You have to manage them. You’ll notice other ones will start sliding until you find the right people. You can bring in partners. They can all pull on this stuff together. That doesn’t quite work that way. It’s not a quick run. You’re not going to get this done in 60 days, five years. That boulder that says FICO on it, that thing can only go up the hill 3 inches every day. You got 100 feet to the bottom, 400 days. It’s a year plus before you can get that thing to the top. Your financing, your hard money or your bank financing boulder, that comes up pretty easy. Hard money comes up easily. Choose the first one you pull up on top of the hill, but the one attached to it, behind it is the bank one and that one takes forever too.
Your marketing, your properties, your ego, all these things you’ve got to have to manage and pull up. Ego is a big one. We don’t think it is. Sometimes you’ll catch yourself talking, you’d be like, “I use the third person. That’s crazy.” You start thinking that your little success, your portfolio of 10 or 15, which by standards makes you an institutional property owner. You’ll think, “I’m super important now.” You’re not. You can get to 150 doors. That’s where we’re at. We’re not super important. Real estate is a checklist. The struggle is constantly pulling these boulders up the hill, watching one roll this way and one roll that way. It’s difficult.
At the end, when you’re getting close, almost all of them in your circle, or maybe 3 out of the 5 are in your circle. That’s when all those people along the way will come back. They want the reward. The reward is not for helping the rewards for finishing. You need to be here all along the way. Once that is done, once all five of your boulders are on top of your hill, you’re feeling good. You’ve got ten free and clear properties, you have a bank line of credit, you are cashflowing. It’s easy to stop these things from rolling down the hill versus pulling them up the hill. It’s easy to stop the boulder from rolling down.
You have a choice. You can stay on that hill, enjoy the view, which you never got to notice while you’re working and it’s not bad. It’s a little hill you made yourself. It’s got ten little boulders as your houses. They’re free and clear. You’ve got a line of credit boulder. That’s awesome. You’ve got a bank financing boulder. That’s great. You’ve got a marketing beast. You can turn on and turn off whenever you want. You’ve got a very small ego boulder. It’s in check, completely manageable. That’s where I want to be. Maybe because sometimes I’m on a hill, but I’m looking over there and there’s a mountain. It’s got five chains.
I’m like, “I know how to do this one. Maybe I should go over on that mountain and check it out.” You’ve got your ten free and clear. You’re going to go over here and start dealing with apartments or storage facilities or a massive Airbnb portfolio. All these other mountains around you, you’re like, “I didn’t see these. I was so focused on this.” If you did notice them along the way, those rocks rolled downhill, while you’re looking at the mountain for Airbnb, while you’re looking at the mountain for Class A apartments.
Pulling those up that hill is critical. Getting that one and once they’re up there, it’s easier. You can check back every couple of days. It’s not a big deal. Maybe you go after another mountain or maybe you enjoy the view from the top of your hill. Either way, it’s not a marathon. It’s a constant pull of the things that you need to attract them to you. Sometimes it’s brute force. Sometimes you pay for it. Sometimes you partner with people. Here’s what I know at the end of the day, we’ve got 40 people in our Mastermind. From day one, we can at least recognize what the boulders are.
After 30 days, we can show them how to expedite some of this stuff up the hill. However, we cannot show them how to do it in 60 to 90 days. We’re sitting there and we all have our little hill. We’re all waving to each other, talking to each other and having some fun while we’re doing it. We’re all doing the same thing. Some people move faster. Some people move slower, but we’ve all recognize it’s going to take us 3, 5, 7 years to get these boulders on top. We can go do a mountain or we can rest here and enjoy our hill.
We have a Mastermind that helps you get those boulders up the hill. It helps you make some of them lighter. That’s probably the best analogy. You’ve still got to get those boulders up the hill, even if you joined the Mastermind. You’ll see Jason and me at the bottom of the hill with a little hammer and chisel and chopping some rock off the boulder, making it lighter for you. That’s what we do at the bond. Jason and I are running around and hitting your boulders with some pickaxes and knocking some things off and saying, “You don’t even need this one.” Sometimes we’ll smash the hard money, “You don’t need this one. Go right to this one.”
You can imagine yourself on top of that hill and Jason and I at the bottom running around, chipping away at the boulders. You’ve still got to get them to the top. We’re trying to make it a little bit lighter for you. That’s what the Mastermind is about. Are their lessons, coaching and checklists? Yes, all that stuff is in there, but it’s not the focus. The focus is on identifying your hill and having Jason and I come around and making those little boulders a little bit less heavy. If you’re interested in joining our Mastermind, you can check our page out MRTXRE.com, go to the tabs that say Mastermind. You’re going to find that the criteria. You need a six-figure annual income, preferably W-2. You’re going to need a FICO of about 700, 720. You’re going to need some capital to deploy.
We have Blake in here from Capital Concepts. Tell me about the Bay house because we’re about to buy one on the water. It has a bulkhead and the bulkhead is in good shape. We have beach houses. We have Bay houses on a channel. The bulkhead is long enough for probably about a 30-footer. It’s a big lot. What are we in for on that?
Let me take a step back and I want to know everything about Bay houses. For the last several years, I’ve had a little modest place in Bayou Vista. I bought it back in ‘09 or ‘10 from Steve Haber. We love the locations. It’s 45 minutes away. It’s not a very desirable home, but I have three lots now. I bought the neighboring lot. That’s unique. It was fun. The kids are growing up. My kids are now 12 and 14 having a little side yard to play and everything else. Beach houses, we’ve got a couple of beach fronts. We bought this Bay house. NetWorth Realty sent a deal out. I dropped everything and went out there. It’s down in Bay Harbor, right past Sea Isle. Me and four other investors all wanted to pay their price for this thing. Maybe my dad was watching out for him. He’s an old gambler bookie. We drew cards and I won. I skipped. I’m spending $500,000 without talking to my wife. I bought a lot of houses, but maybe it’s different.
I uploaded twenty pictures to her. She was like some teacher in-service thing at school and I couldn’t get her. She wasn’t answering the phone, one of those two. We went and drew cards and I was like, “I’m on it.” A couple of days later, I went to drive her there. A lot of those dry lots down there in the Galveston area. We love the house. It’s about 3,000-square foot house with a large deck. It’s pretty shallow around there to be honest, but they have a lot of wade fishing. It’s good fishing around there. My wife, for instance, she doesn’t want to leave when we go down there. She tells me, “When the kids go to college, we can go anytime we want.”
One of the reasons why I pulled the trigger on it because that’s an area we can do short-term rentals. I figured the negative carry would be less than the one in Bayou Vista, which I couldn’t rent out on short-term rentals. Evolved Network, who I use to manage my calendar, “We’re scheduling photos.” My wife wants it for herself for the summer. Because of all the stuff going on, we’re not going to be able to do some of the travel we typically do. She’s going to go ahead. We’re going there a lot. To answer your question, you’ve got bulkhead issues. You also have a bigger, more important thing. A mutual friend of ours, Tom Barry told me every time I buy a toy, he buys new. I had to have a done deal with somebody else. I didn’t quite buy brand new, but I bought it pretty new. I’ve got four underwater fish lights, which are nice.
I’ve got a friend that’s got a place out in Tiki. That’s always been on my bucket list is maybe get a place down in Tiki.
The location is great.
When I was down there, they have the underwater fishing lights and I’m like, “I could do this.” You’re down there on that first floor. They had whatever game you’ve seen somebody else or whatever. You’re sitting there, you’ve got the game on. You’ve got a little bar down there and then you’re fishing like 3 feet from your house. You get tired of that. You go to bed.
Even if you’re not fishing, I went down there, my mother-in-law and daughter were sitting there watching the lights. I don’t know better fishermen. Some of them like the big spotlight down on the water, but I like green. It’s on the bottom.
We weren’t even going to do it. I put it out to the Mastermind and someone in the Mastermind said, “I’ll do it with you.” He was like, “I’ve got a loan and ready to go on.”To be successful, don’t let your ego get in the way. Click To Tweet
The thing with Tiki, I don’t believe you can do short-term rentals.
It’s not even monthly. It’s annual. They can only do year-long rentals there.
You’ve got to watch that. I’ve got one and a half beach houses right now. One is not operational yet. I want to get a big baller beach house. The thing is most of those subdivisions down there, they’re dune sands or whatever. You cannot rent them on short-term rental. Make sure you can do short-term rentals.
We’re in Surfside, which is nothing but short-term rentals.
The Bayside on Surfside is one little strip away. There’s not a whole lot down there. It’s like, “Let me look on that one.”
We had a $9,000 a week in Surfside.
I’ve got somebody in my little two-bedroom, 900 square-footer, $900 for two nights.
That’s all our stuff down there. It’s all under 1,000 square feet, two-twos. We have one that’s efficient. They’re tiny little properties. You’re in the same business model. It’s affordable housing, a lot of times they’re families. Our Airbnbs are affordable vacations for the average family. That’s the market we’re in. We ought to talk a little bit about the market. You see a ton of deals here and in Dallas and all the other places.
Check out Blake’s website, 4SmartMoney.com.