Off Market…How Southern Are You? with Co-Host Robert Orfino

TRE 61 | Southern Investor Traits

 

Oftentimes, it is ideal to scan through off-market deals because you can actually find some treasures from those. In this episode, Robert Orfino chats with their wholesale liaison, Charles, about these deals. As door-knocking is almost becoming an obsolete tactic, they share their sentiments on how to close deals these days. They also talk about their Disney tours with family and friends, and how meetings on wholesaling at a café in the theme park almost always ensue during these trips.

Listen to the podcast here:

Off Market…How Southern Are You? with Co-Host Robert Orfino

We’re talking a little bit about off-market deals and a few of the things that’s pretty important. We have Charles in here who is our wholesale liaison. He’s going to have another little networking hour for wholesalers and wholesalers only. Those that are truly doing it by themselves, not big real estate offices that pose as wholesalers. We’re still off-market deals.

We’re doing deals. We’re JVing together at these groups. I’ve gotten three properties we’re working on from people JVing together at these meetings. It’s been awesome.

Did those apartments come in yet?

No, I’m disappointed in that, but I’m hoping that this guy will be there at the meeting. We’ll try and get that knocked out.

He should come because whatever stopped us, let’s put our brains together and figure out how to make it work.

He was telling me that he believes strongly that he can get this under contract with the sellers. The problem is that the sellers are letting everyone in their family live there. It’s one of those things where they’re all getting $100 a month rents. We’ll have to figure that out. It’s possible. It’s a good deal.

As long as it’s not open to the whole complex. I haven’t driven by the property. When we get it on contract we’ll go take a look. We’re looking at another one. There’s the flip that’s in the Heights that everyone seems to know about, but we’re trying to make that work. It’s not a big deal for us. We’re not flippers. We’re not going broke because we’re not finding flips. We have three ourselves. One that’s pretty clean. The other two houses need to be divided on a combined lot. I have two houses on one lot. I like to split the lot because I think they’re perfect starter homes. This goes a little bit deeper and this is why you got to have a deep buying list. I’m sure you’ll talk about this because this isn’t a light rehab. They’re heavy rehabs; roof, foundation and air conditioning. Right off the bat you’re in for about $10,000 to $12,000. We want to add 500 square feet off the back. The lots are deep enough, but if you add 500 square feet off the back, your houses are going to be between 1,300 and 1,600 square feet on those lots and they will sell.

It’s a good strong area. It’s appreciating out there and it’s a good deal, especially as a package. Get all three of them, a great flips.

Will You be able to bring those deals to those wholesalers because they have their buyers?

Yes.

That’s a great little exchange. That will work just fine, wholesaler to wholesaler. I came across one and the ladies were in here, Linda and Cindy. I said, “What’s the biggest hurdle?” They said, “The expectation of the house. New landlords expect B-plus properties to cashflow.” I’m like, “That’s not what they do. They appreciate.” We found one. It’s $163,000. It’ll rent for about $2,000 or maybe more. It needs maybe $5,000 worth of work.

It’s in Cypress. That’s a strong area.

The houses are worth $220,000 and we’re at $163,000. There’s already a good 20% equity in that house. It fits almost all our criteria except the cash-on-cash. It’s a little low. It’s 12% or 13% on cash-on-cash, but the appreciation is going to be there massively. Jim’s going to bring about 20%. You’re going to have to bring about $30,000 to the table on that, which means you’re going to have it at $130,000 and the house is worth $220,000. You’ll already going to have $90,000 in equity in that house. That’s a good deal. We’re working it. We have Charles, our wholesaling liason. This is how we envisioned it happening. People reached to us. They’ll text us a deal. It took six or seven meetings. I was all over the place, on the phone, meeting in person with some strong real estate investors in this community. They come across deals. I’m like, “If you want some of these deals, I don’t want to deal with it. I’ll give you Charles’s number.

We will move it. Our network is crazy. There are so many people we know from all walks of life. If you can’t move your deal, if you need help with your deal, we are the right people to talk to. Just ask the people that are at the meetings. We’re interested in partnering with you on anything flip, landlord, rental, whatever it is, we can help you out.

The next show is going to be on joint venturing. The Hustle, The Muscle, and The Money, that’s what we’re calling it. We’re going to do a joint venture. Here’s the thing that killed me, Charles. I have a good guy. We do some work together and he found the deal $20,000 cheaper and everyone else was looking at that deal. The guys who flip we’re like, “You’ve got to have that number.” He’s deep on it and he goes to a big name guy in this city and they do a joint venture on it. He found the deal. He’s going to manage the construction. How much do you think he should get on the net?

The other guy brought the money. He’s going to be doing the construction and he found the deal. In my opinion, 50%.

He’s getting 30%. I’m going to announce that we will do joint ventures with people. We’ll do them at 50% all day long. I could not believe that’s it a good deal with a lot of exits. It can be buy and hold, Airbnb or a flip. I’m looking at it saying, “That’s a lot for just bringing in the money.” He’s new at it, so I get it. He doesn’t understand, but if you knew, you should be looking at 50%. I will do joint ventures with wholesalers, flippers, renters, syndicators and with apartment buyers all day long. We’ll set up the structure so that we’re not married for life. There are outs, clear roles and responsibilities. Still, the strategies that you think work are where are these people getting their deals from? Yellow letters, door knocking, cold calling.

 All of the above. The trend for a while was a lot of people were going to cold calling, but since everybody’s doing that, people are starting to go to other avenues.

I think that MLS play is getting tougher. Three people I spoke to are flippers and buy and holders. Two of them were like, “I used to get all my deals off the MLS.” I’m like, “How’s that working for you now?”

You have deals on the MLS, no question about it. However, you better be invested and ready to spend your time there and be prepared to deal with real estate agents. They want more than a normal seller for sure.

The reality of that is it’s going to be the early birds. These people seemed very laid back like, “It was a Sunday afternoon and I just picked up and there are two deals.” That ain’t happening anymore because we’re as fast as anyone else in this business. We’re on to it too. You are born and raised in Texas, but do you consider yourself Southern?

I’ve never been asked that question.

When you hear the south, politics, or weather, do you immediately connect with that when they say that? That’s the thing I’m trying to figure out. I am clearly not from these parts and I’m trying to figure it out. Are we Texan, Southern or are we Texan and Southern? I talked to people who are like, “We’re definitely part of the South. I’m like, “I got it.”

TRE 61 | Southern Investor Traits
Southern Investor Traits: Always be invested and ready to spend time in MLS and be prepared to deal with real estate agents who want more than normal sellers.

 

We definitely are. When anyone says, “There are some weather coming down in the Southern region,” that’s me.

Let me give you one point for each of the foods you’ve eaten. Everyone can play along. Have you ever had peach cobbler?

Yes.

I have never had peach cobbler. I’ve seen it, but I always go for the chocolate chip cookie. How about chickens and dumpling?

Yes.

I’ve never had chickens and dumplings.

You have never been to the Cracker Barrel?

I’ve never been to the Cracker Barrel. What about cornbread?

Yes.

I like cornbread too. I’ll even eat it with the jalapenos. Gumbos?

Yes, I like gumbo.

Frog legs?

Yes.

I’ve never had frog legs. Chicken fried steak?

Yes, I love chicken fried steak.

I never had chicken fried steak. I’ve had fried chicken, which is a play on chicken fried steak. I don’t even know what this burgoo is. Hush puppies?

I love hush puppies.

Souse? You don’t even know what that is?

No.

Shrimp and grits?

Yes, I love shrimp and grits.

I’ve seen it on the menu but I never ordered it. I don’t even know how this could be a thing, oyster casserole?

Oysters, yes, but no casserole

The five stages of grief in door-knocking are denial, anger, negotiation, depression, and acceptance. Click To Tweet

Congealed salad?

I don’t even know what that is.

Fried green tomatoes?

Yes, I’ve had those.

I’ve never had fried green tomatoes. Pickled pigs feet?

No, I have not.

I don’t know how you would eat that. Cheese pie?

I don’t know what that is.

Red-eye gravy?

I probably had that. I’ve had every gravy.

Turnip greens?

No, that’s nasty.

Rabbit stew?

No, that’s not a Texas thing.

This is the Southern thing. Red beans and rice?

I love it.

Corn puddings, I don’t even know what that is. How about fatback?

No, what does fatback?

I don’t know what it is either. Fried bologna?

Yes, I have had fried bologna.

Fried squirrel?

No.

Boiled peanuts?

TRE 61 | Southern Investor Traits
Southern Investor Traits: Door knocking in real estate has already become a lost art.

 

No.

Chitlins?

I’ve had, chitlins.

I just know that they came from nasty, but I’ve never seen them. I’ve never been in a place where the menu have chitlins.

It’s something you make from home.

There was a great soul food place I used to eat at in LA, but it was soul food vegan. It was good. I did vegan for a year. Pear salad and butter beans?

No, just a boxer butter bean. I don’t know what that is.

Deviled eggs?

Yes, I love it. My wife cooks deviled eggs.

They’ve been put on the plate in front of me and I’m like, “I can’t eat them.” Po’ boy?

Yes. I love it.

Oysters or shrimp? What do you have on your po’ boy?

Either crawfish and shrimp together. There’s a place called Bayou Boys and it’s in Needville. You’ve got to go there if you’re down in the South. It’s so good. The best po’ boy.

Fried gizzards?

No, I haven’t had gizzards.

Chocolate gravy?

No, that’s weird.

Gator tail?

Yes.

Chicken livers?

Yes, I’ve had chicken liver.

Poke salad?

No.

The closer you get to the foreclosure date, the quicker the stages of grief move through. Click To Tweet

How many did you get? Over ten? If your one to five, you might be a Yankee. Six to ten, how’s your mom? Eleven to fifteen, born and bred. Sixteen plus, you’re showing off you’re a Southern.

I’m showing off Southern. I had way more than sixteen.

In my life, when people have put jambalaya in front of me and I always think, “That’s gumbo.” They’re like, “No, it’s jambalaya.” I’m like, “I just want the gumbo.” I’m safe with gumbo. I know what gumbo is. I was talking to someone and they said, “What do you eat?” I’m like, “From the Northeast, everything’s Italian based.” Do you know what pasta fazool is?

No, what is it?

It’s beans and pasta. I grew up poor. We were a poor Italian Irish family in Jersey. My dad was a roofer so there was no work in the Northeast from December through March. Those are the lean months. We had pasta every night. Spaghetti and broccoli and pasta fazool. The big night was Thursday night because we’d have spaghetti with clams and linguini sauce. The one big meal we had every week when we were poor was there was a pot roast on Sunday with potatoes, carrots and all that stuff. I grew up making spaghetti sandwiches, spaghetti inside white bread. When you’re a poor contractor’s son, that’s what you eat up there.

We have our wholesale networking event. It’s in 1111 East 11th at 10:30. I might show up because I’m going to be in the Heights. I’ll probably talk to everyone in there and become real estate agents. It was funny I meet with this guy and he’s done a ton of flips and he’s like, “I find all my deals on MLS and they’re not out there anymore. I might have to start doing marketing.” I’m like, “It’s too late.” You’ve got about 500 people in this town that already ahead of you. You’ve got problems.

The lost art that’s been gone is door knocking. Nobody wants to door knock.

There are also not a lot of foreclosures. That market’s gone away. When you door knock would you do pre-foreclosure or would you door knock? There are always foreclosures, but it’s not 11%, 12%, 13% of the marketplace.

There’s no better way to do it than get right in front of them with the solution to their problem.

Instant appointment.

It’s immediate, but people are fearful of that and I get it.

I’m going to go over door-knocking because we used to teach a good hour on door-knocking and here’s what I think is the secret of door-knocking. There are five stages of grief. There’s denial, anger, negotiation, depression and there’s acceptance. When they get that foreclosure letter, they go into those stages of grief. If you need to have a response and identify which stage they’re in, and if you’re not responding the way that stage needs a response, you’re going to fail at it. We talk about it all the time. When you knock on the door like, “I’m here to maybe buy this house. Is there’s anything we can do? My team and I, etc.” They jumped down on your throat. They’re in anger. They still have four more steps to go. Give him some time. I’m sure you get this a lot, “We’re good. I got my lawyer. My brother-in-law’s looking at it. He’s going to take care of it.” There’s a lot of that negotiation. In their mind someone is negotiating on their behalf.

That is the hardest stage to get through from what I’ve seen and experienced is to people to come to reality with their situation. It takes a while. The closer you get to the foreclosure date, the quicker those stages move through.

We would tell people and we’d be like, “That’s great. Your attorney’s taking care of it, but I want to let you know he hasn’t taken care of it because you’re still on the list.” That’s pre-foreclosure door knocking, but you have to identify the stages. When they don’t answer the door and you know they’re home, they’re in depression. You’ve got to be like, “I’m trying to do here to help you. I’m possibly the only one who’s looking to help you.” I’d say those lines. If they’re in anger, you’re like, “I’m totally sorry. It’s my bad. If there’s anything I can do for you, I’m going to leave my card,” just run away. You don’t want a heated exchange. You don’t want it escalating and that, “No, that’s not me.” The denial is like, “It’s right on there.” They’re like, “That’s not us. We’re good.” I was like, “I liked this house. I’d like to buy it. I’m going to be at auction and I’ll probably buy this house or we can buy it early and I can get you a moving van and take care of it.” We also have another problem. Charles is going to Disney World like it’s a high school road trip. We’ve got a plan, Charles.

I found out that Robert is the guru of Disney.

I’m not into the movies in the princesses. I love the theme park. I love the construction and how they built it.

We’re going to take our girls for the first time, four years old and thirteen. They’re definitely into the princesses. They may not be into exactly what you’re into, but I know that you can still give me some great tips.

Your biggest problem is meals.

Yes, my amazing wife, Crystal, she’s good at planning. She’s been focused on where are the meals and what are we going to do. We do need some good direction on that good stuff.

We got beaucoup problems we’re trying to solve here. I think the character breakfast are the easiest ones to book, but you’re not going to get them until 9:30 in the morning. That means you can’t go to the park that day. You do your character breakfast in the morning at 9:30. You show up at Park Fare, that’s in Grand Floridian or Chef Mickey’s over Contemporary. You can take a bus to the transportation center or the easiest one is take the bus to the Magic Kingdom and get on the monorail and go around to the hotel you need to go to. Give yourself about an hour and ten minutes if you’re at the All-Star Movies. When you get there, you’re going to have a great time and great meals, everything. You overstuff yourself. There are tons of food and then you’re going to feel a little lethargic. You have a good reason not to go to the park. You’re doing the late character breakfast and then you can go back to the hotel, you can do a pool day for half a day. You can go over to Downtown Disney, check out all the stores and all the little things that are over there. That will be great for the kids and that’s your off day.

What do you say on character dinners?

I think it can be hard to find one. You can keep looking.

That would be like Cinderella.

TRE 61 | Southern Investor Traits
Southern Investor Traits: We’re going to need more and more off-market deals as the market rises.

 

You might find it in Cinderella’s Castle. That’s a big one. There’s a buffet in Epcot. I think you’re going to find a hard time finding a character dinner this late in the game. I’ll tell you that I’m going in January and I booked all my dinners.

You booked it up that early. My wife’s a beast. She’s good.

There are not a lot of character dinners outside the park, those were inside the park. Maybe you could do Tusker House, which is in the Animal Kingdom. That’s a good buffet and good food. That’s got Minnie, Mickey, Donald and maybe Pluto. I don’t think Goofy’s on that one. Are your family early risers?

We will be on this, that’s for sure.

If the park opens at 9:00 you’ve got to be at the bus by 7:45.

Why is that?

Because it’s going to take you time to get through security. You’re going to have a bag. You might have a stroller. Everyone’s going to be checking that and the buses run every fifteen minutes. They start usually an hour before the park opens. They usually start an hour and fifteen minutes. You’re going to get there at 8:10, 8:20 depending on what park you’re going to. Your 8:20 is going to take you ten, fifteen minutes to get through security. They do a rope drop. The parks open a half hour early because they let everyone start walking in.

Here’s the critical one you have to do. The Animal Kingdom, you’ve got to get there at rope drop and you’ve got to go to Pandora. The greatest theme park attraction in the world is the Avatar Flight of Passage. There’s a whole thing called fast passes and you get to figure that out, but you’re not going to get a lot of the good ones. Take them so you can plan your day around this stuff. Just get whatever you can. Get the Haunted Mansion. Get The Pirates of the Caribbean, but the Animal Kingdom, you for sure got to get on this line. You will leave at 7:45 in your hotel room and you’re not getting on the ride until 10:00 and it’s worth it. Make sure you check the height restriction so she can ride and then make sure we all go to the bathroom and come back on line.

Is that ride a place for little kids?

I’ve seen little kids on them. I just don’t know how tall she is so you’ve got to figure out the height restrictions. It’s certainly a ride for you and your thirteen-year-old. You can split up. You can do a little parent swap if you want it.

My thirteen-year-old loves roller coasters, the fast ones.

That’s going to be the Rock ‘n’ Roller Coaster over at a Disney Hollywood Studios. The problem is right around your time. They’re going to have previous for Star Wars and you’re not going to be able to get into that because they have a whole weird thing you’re going to get into. The park might be good because people will be heading over there and you can get on Rock ‘n’ Roller Coaster. Right next to Rock ‘n’ Roller Coaster is Tower of Terror, which is a drop ride up and down. The two of them are themed amazingly. You like it over there. If you’re going to go to all four parks and you’re going to spend a day over there and you’ll see that. There are a couple of shows and Star Tours is good.

Would you say that it’s more worth it to stay at the park or outside the park?

Inside the park because if you are staying at a Disney’s hotel, you get access to Extra Magic Hours. There is no parking. They’re not taking cars. You’re going take the bus. You’ll take the shuttle from the airport to the hotel and you’ll be good to go. I think the earliest you can arrive is around 10:00. You can’t get into Orlando any earlier. If you’re going to do five or six days, that’s a good day travel day to come in, get settled, take the kids to the pool, plan out your week a little bit. Take them over to downtown Disney for some food at night. There’s even miniature golf that you can do. That will be easy first day. The second day, everyone’s up at 6:30. Everyone’s out of the shower by 7:10. Buy some bagels and peanut butter so you can get protein in the kids early in the morning and get out the door.

Thank you so much, Mr. Guru.

We’re doing a couple of things more than just Disney. Our wholesale liaison is going to be hosting a little networking hour at coffee place called A 2nd Cup. It’s 1111 East 11th at 10:30. We know that wholesaling is a very lonely business, so you need this.

Every single time we come, we grow. We’ve had two, three different people every single time showing up, plus we’ve had the originals coming. Everybody’s getting extreme value and everybody’s fellowshipping and enjoying themselves. It’s a lonely business only, so you need your people, you need people around you to support you. They’re going to give me some good tips to work.

It’s important to network within your field. We’re talking about the wholesaler, the solopreneur. We’re not looking for big real estate companies that poses as wholesalers. Can we talk a little bit about off-market deals? I think we were all business. As wholesalers, we pay a very important place in the marketplace. We’re going to need more and more off-market deals as this market rises. I think the flips are probably already off the MLS. Buy and hold, there’s plenty.

A lot of what I’m seeing too from fellow wholesalers, they’re leaning more towards selling to the landlords. It’s beneficial in several ways. There’s more inventory and there’s also more profit margin.

You will know there is a very big shift in this marketplace when Jet Lending, Capital Concepts or Catalyst comes out and saying, “We do 75% ARV on flips.” When they say that, then you know the market has shifted because they are not doing enough loans at 70%. It’s harder to find and they have got to go back to their direct lenders and their underwriters and some of them broker deals. Lima One Capital out in North Carolina, they’ll do 75% already. It’s when one of the hard money lenders in this town shift to 75% ARV. When that happens this market has officially shifted. The flips are 75% ARV. It puts everyone back because we have an extra 5% to play with. That’s when those wholesalers will come back with some more flips and there will be a little revitalization. In California I can get 82% ARV hard money.

I can’t believe they would do.

Because that’s the market. They need to be at 80% to deploy the dollars because nobody can find a 70% deal.

That’s why all these California people want to come out here and invest.

When this market shifts up to the hard money lenders go to 75% ARV on the flips, we know this market is shifting.

I think we need to change your name to Mr. Disney Investors. I think that would be good.

We’d go out there to meet with investors. Jason would go out there. I’m always like, “Do you want to have dinner? We’re going to Disneyland.” We’ll just go on one of the Disneyland hotels and have dinner right there. He’s like, “What are we doing here?” I’m like, “Why wouldn’t we be?” This has been great hour. If the market is shifting, the wholesalers need to understand what’s going on. For sure they’re working with buy and holds people. Thanks.

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