In this episode, Jason Bible and Robert Orfino talk about a wholesaling event they’re holding where they have three single-family homes up for grabs, insisting that if one thinks that the market is expensive at present, it will be more so in the future. Stating the fact that letting educators convince people to stay out of the space will allow you to get up to 30% on cash return, they discuss what you can you buy with the cash you have that can bring you profit. Tune in to get information on Jason and Robert’s wholesaling event as well as their mastermind.
Listen to the podcast here:
Super Investor Meeting Wrap-Up, Wholeseller Breakfast, Loans
Real estate events are fun.
It’s one of the biggest crowds I’ve seen.
It was a decent event and I got to talk to a handful of people. There are some unique deals I got pitched. It was weird unique stuff. This was between events. I’ve got a guy that said, “I’m down in Freeport. I’ve been doing some mailers down there. I know you guys are buying on Surfside.” He had some projects he looked at 300 to 400 acres of land. I said, “Do you normally buy land?” He said, “No, I just want to do single-family,” I said, “Don’t waste your time.”
What are we going to do then?
He said, “The neighbor told me that he sold his about the same plot for $12,000 an acre.” I said, “Tell the guy that called you to have that guy call him.” He was like, “Don’t get in the middle of this. He is looking for you to pay $15,000 an acre.” That’s the game we’re playing. I’m like, “If you don’t do that, just go do something else.” There was a handful of other weird quirky like, “I’ve got this deal. Take a look at this thing.” You were talking about all the flooded house in Memorial.
Every wholesale had a flooded house in Memorial. “I’ve got one for you. It’s ARV $600,000.” No, it’s flooded. There is one guy who has a deal up in Humble and he came to one of our events. I remember him and he was a nice guy. He’s talking about the numbers and I don’t know where the area is. There is Tom and I’m like, “Tom, come over here.” He’s like, “Look for this.” I’m like, “Just try and get $15,000 off of the price.”
You hammer away on the poor guy.
The guy’s like, “I think I can do this.” He was like, “What was your brick face? How did you get them wish granted in front of the brick?” She thinks about all kinds of issues. We’re all legitimate. Tom schooled him in 3.5 minutes. It was like a $15,000 education. I was like, “Sorry.”
“Sorry, I won’t do that to you again.”
It was impressive. I listed every single thing and he’s going to pay per square foot, upstairs, downstairs and a lot of stuff. The guy is not off by much though. He’s off by about $10,000 to $15,000.
Go back to selling and say, “This is what the number is.” You and I were chatting, maybe it’s time to go start buying stuff inexpensively in Memorial.
Yes, maybe. My neighbor has a gate.
To get into the side yard there?
Yes, I like the gate like Wayne Manor.
Are you going to get a big O for Orfino on the gate like a big brass one?
Yes, I’ll get the sun.
“Welcome to our residence.”
The dirty little secret in my world is it’s Oro-fino. It’s gold or sunlight and fine. I’m a fine gold, but it is the sun and it’s bright, so the sun would be my crescent.
I don’t even know what they talked about in the event because I hung out.
Eddie did a good number. He did a good talk about fifteen-year mortgages and he is right in line. It was exactly what we talked about. I’m not looking to make cash, I want money rentals. I’m just building wealth.
I had a joke in the event, I said, “There is a lot of guys that have radio shows and podcasts and all that.” They’ll say, “My cashflow is $300 a month,” It’s like, “No, it’s not. You don’t have a $300 monthly cashflow.”
What you have is a future payment on an air conditioning system.
That’s exactly what it is. It’s $300 or $400 a month in cash. What I find so fascinating is how profit is calculated in multifamily versus how profit is calculated in single-family. Any multifamily commercial guy will immediately go and say, “Somewhere between 40% and 60% expense ratio.”
Cut it in half. That’s the easiest number.
If you’re looking in a house and rents for $1,300 a month, you’ve got to be all in at $750 a month. None of them are because you’ve got to buy it for $50,000. Be all in at $50,000 for something that rents that much. The guys and gals that teach multifamily and single-family investing, they gloss over that. They are like, “Never mind.” You go back again, “You use this expensive ratio for this asset class, but you don’t use that for this one.”
Maybe that’s too complicated. There is a guy in California. He’s like you but the older version. He’s in tune with the market, into what’s going on economically and how it all impacts real estate. The guy’s name is Bruce Norris. His claims to fame was in 2007 when he got up in front of the California Home Builders Association and said, “You guys better be packing up shop. It’s over.” They booed him off stage, but the people that listened to him, 1031 to Texas, Oklahoma and Memphis, were able to save their wealth in 2008 and 2009 when everything has happened.
That was his big claim to fame. He basically saved a lot of people a lot of money by telling him that the market was going to go down. He is in my room in California in Country Club. It’s a big room with 75 people there. It’s my biggest night ever. We used to charge like $30. The meal is going, everyone was happy and I said, “Should we be buying and holding?” He was like, “Yes, you should be buying and holding.” I’m like, “What kind of cashflow should we be looking for?” He turned to me and he said, “That is a very unsophisticated question.” I was like, “I just got schooled,” I felt it, too. It still stings but he is right because there is a whole bunch of other things to tie into that. All I could say is, “Go and get a couple and don’t overthink this.” Yes, you’re unsophisticated and so am I. I was unsophisticated in the first five I bought.
I’m selling two in reorganizing and all this stuff. I’m moving things and LLC’s, and 1031 is coming my way. We’re doing 1031 and I’ve got $400,000 coming out in New Jersey, so we’ve got 1031 at somewhere. Just get started is the big thing. Get 1, 2 and 3 then you’ve got to look back and say, “I wish I did it differently,” At least you did it. That’s the big thing. In this market where we were going, it’s accelerating so fast. We’re moving fast. You’ve got to start buying. We’re finding deals every single day. Cindy found a great duplex. It was on the market for one day and she got it under contract. She is a champ. They’re out there. If you guys are saying, “I’m thinking about going and I’m thinking about doing this,” stop thinking and text me at 281-401-9008 and say, “I’m ready.” That means I’ll get one of my agents to connect with you and we’ll start buying some properties. That duplex is a no brainer. It was $175,000 inside loop in a good area. I’m thinking it’s a 3/1 and a 2/1, so it’s $24,000 to $26,000 of gross. It’s a beautiful deal. She’s on that.The market is accelerating fast. You’ve got to start buying. Click To Tweet
Jeff from the Mastermind, he has got one down in Texas City. They’re playing games but it’s like, “We’re just not going to do this deal. We’re going to negotiate. We need another $4,000 off and we’re close.” As Casey would say to us, “What are you talking about $4,000? Get it done.” We’re going to get that one done. He worked with our agents and got a nice duplex down in Texas City. That was on the market that everyone saw and everyone passed on. We grab that one and then we have our eight-unit that we’re waiting back and forth on to get that thing wrapped up. If you guys are interested in buying a real estate and if you want to start your investing career, if you’re on Facebook, go ahead into the Facebook group, Mr. Texas Real Estate and post, “I’m ready.” I’ll have my agents reach out to you and we’ll start building your portfolio. It’s not that difficult guys. Money is cheap and it’s getting cheaper. That doesn’t make real estate cheap now. They will start running up the price at real estate, so get in as quickly as you can here. Do you remember the 99 Percent Movement?
They did a protest on Wall Street and all the investors and bankers were throwing dollar bills out of the window. It’s total disregard.
Do you know they did a couple of those protests here?
A friend of mine took her son and she was like, “I will show you that we will do some protest even though I don’t agree with any of this nonesense, but at least you get to see civic duty in that.” She takes him down there and they were somewhere by the CBD downtown. She said that it was like S550 guys rolling down the window saying, “Get a job you bunch of losers.”
Learn the code.
That’s right. This is before learning the code.
“Learn the code you bunch of losers.”
Don’t do that on Texas. Buckle up and get to work.
We have the wholesaling thing, right?
Yes, we’ve got the wholesaling.
This is how you know if you’re a wholesaler or not. When you’re asked to introduce yourself and you say, “I’m an insurance person and I do wholesaling,” you’re not a wholesaler. “I am an engineer,” no, you’re not a wholsaler. We do this on a weekday because that means that you don’t have a day job ,that you are doing this full-time, that you’re committed to the cause and that you’re in. That little group has grown massively and you’re going to get some good feedback from Jason. He is going to be talking about marketing and how you should be going about it. We did a little internal number in our office, went through some stuff and it was eye-opening out there. It’s still a good market if you know what you are doing. If you’re just shotgunning it and hope is not a strategy on that type of deal, then you’re going to have some problems.
There’ll be probably about 100 people there.
Do you want 100 wholesalers?
Yes, I’ll take the 100 wholesalers out there in the backroom to get up there on stage and teach a little marketing. This is for the solopreneur wholesaler.
We’re trying to work with those people and help them out.
This is the mom-and-pop shop, not the wholesale company that’s just a bunch of real estate agents. That’s not what we are looking for. Try to figure it out and do a couple of deals a year. How do we grow from 3 to 4 deals to 6 to 10 a year? How do you make that transition at some point to buy and hold and flips and all that? That’s the group.
Those guys are there too, but they don’t wear their shirts.
They will sneak around and say, “I’ve got a deal for you.” They are dealing with drugs, but it’s distress real estate.
It probably seems they are looking for their victims.
“You look like a clueless new investor.”
“Do you and your wife have some money?”
They’re like, “Let’s go to my truck. I got these flyers for this deal in the Heights. It’s an up and coming area. I swear it’s worth $800,000.” “There are no comps above $400,000?”
Isn’t the Heights like east or west on 45 and below the 610?
It’s east of 45 and north of 610. “Is that Oak Forest?” “No, this is the Heights north.”
This is the East Valley of the Heights, so it’s east of the 69. Is this the Kashmere Gardens?
No, this is not the Kashmere.Money is cheap, but that doesn’t make real estate cheap. They will start running up the price, so get in as quickly as you can. Click To Tweet
This is the Eastern Heights.
“Heights Del Norte.”
Who is the agent that keeps giving you grief and keeps saying EaDo and it’s not EaDo? “It’s Greater Eastwood,” and I’m like, “That’s not EaDo.”
She’s like, “It’s not EaDo.” I’m like, “It’s EaDo,” She’s like, “It’s Eastwood.” I’m like, “I don’t care.”
Jet Lending has done a blast on that and he will probably do another blast. We have three single-families in Greater Eastwood, which is east of East Downtown and not EaDo.
It doesn’t matter. The value is the same.
It doesn’t matter because the house right down the street with a little bigger square footage was sold for $300,000. They are roughly 900,000 square foot houses and you can go up at one of them. I saw the footprint there. I saw the peak and I’m like, “We can blow out. We can put a couple of dormers up top and create another bedroom up there.” I don’t know if we do dormers down here. The other ones, you have to go off of the back if you want to add on. If not, you can repair them if you know what you are doing. This is not for a beginning flipper. I know you guys are struggling to find deals, but this is for someone who has been working with his contractor for years and understands what has to get done and can get in and out of these things fast.
We have three single-families that we are wholesaling. If no one takes the center one, I’ll take the center because I know I can go up with it and put an extra 400 square feet upstairs. One of them has to be replotted. We feel confident about the lot and they can all have their own single lots. They are 800, 900 to 1,000 square feet. If you know how to add on and if you go out the back for 400 square feet, you’ve got yourself a $300,000 house. If you just rehab it as is, you’re probably going to be sitting at $230,000 to $250,000. On that house in EaDo, you guys need to call Michael Bailey because we’re working with Jet Lending on this one.
This is, “We’re serious and we’re buying.” This is not, “I’d like to come out and just poke around.” These are occupied properties too. This is not 100 people walking through a house.
We want to make sure you prequalified and we will be out there. There are three single-family homes and they are about 900 square feet. If you add on another 400 and get it to 1,300 square feet, those houses are selling above $300,000. If you just take it as is and then rehab it, then you’re sitting at $225,000 to $240,000 for a house and/or if no one buys them, we will put them on the market. We will put them out there and list it at $160,000. It looks like that’s what is selling in that neighborhood. The investors who don’t come will see it on MLS and buy it.
Those little deals, the rent’s $1.50 a square foot. If you’re not into big cashflow, you could buy them for $140,000, $150,000 or whatever the higher offer is. What do you think will get them ready at that price point?
I’m the wrong person to ask because I want a new roof, I want the foundation and I want all the airconditioning updated. I want all new flooring and new kitchen cabinets. I don’t want to have a call from a tenant for seven years and the number on that is $40,000.
You’re in at $180,000.
If you’re in at $180,000, then you have an appraisal around $220,000 on that. That’s good. That’s going to be 80% LTV like we did that exercise. It’s almost a free real estate.
The amazing thing about these properties is their appreciation is going to be absolutely insane. You can see it in the last couple of months how much they have appreciated. Inside the loop, East of Downtown, rent them for two or three years, turn around and do an even better rehab on the way out and they are probably $400,000 house in the next couple of years.
There are already $350,000 for 400 square feet more. Those 1,200 and 1,300 square feet houses are selling above $300,000 in that market.
If you start going a little bit further West on Bell, maybe 0.25 mile or 0.10 of a mile.
Do you mean in EaDo?
Does anybody know where EaDo is?
You are at the bar and I was like, “Where are we?” You’re like, “EaDo,” I was like, “This is EaDo? The stadium’s right here.”
That’s EaDo under the shade of the GRB. How far east is that before it turns into Pasadena?
It is East of Downtown.
Technically, New Orleans is EaDo.
That is true. Lake Charles.
I love listening to financial news. The loans are getting cheaper. I got everybody excited at the Noble Mortgage event. I was like, “Guys, you’ve waited long enough and now, rates are getting cheaper. We can pick up. I want to see a fifteen-year mortgage below two and a half.” That’s exciting for owner-occupants.
For our new house in Memorial.
There’s a great article from Kyle Bass. He’s a finance guy. He sits on the board that runs the University of Texas in Belmont. He is a hedge of a fun guy and successful. His claim to fame years ago was he bought a truckload of nickels. I don’t mean an F-150, but a dump truck full of nickels because the metal in those nickels was worth more than $0.5. Somebody’s quote says, “Outlaw that.” His claim to fame was buying all these nickels and then selling them. It’s one of the goofy things he did. This quote is absolutely perfect to encapsulate what’s going on, “This is insane. The Japanese are going to keep doing their quantitative easing and playing their games. The Chinese print money like it’s a national past time and is going to restart quantitative easing.”
What is quantitative easing?In our tiny little world, money is moving very fast through our sphere of influence. Click To Tweet
At the end of the day, all it means is there is more cash in the system.
It’s usually from the government, depending on how their structure is.
They backdoor it through the banks. One of the ways that they propped up the housing market is the federal government was handing $60 billion checks once a month through the financial systems. We’re the only country that has an integer in front of our bond yields which means it is greater than zero. We have 90% of the world’s investment-grade debt. We have a rule of law and we have a decent economy. All the money is going to come here. Get ready guys. If you think real estate is expensive now, just wait.
We have the hotel, which we’re working on. That syndication documents should be ready ASAP and our partners are flying in from the northeast. He is coming down from the Quest event. We are going to take a run down to the beach and look at the hotel. We have three JV opportunities for Airbnb.
If you guys want to joint venture with people that know a little bit about Airbnb, that would be us. Send us a text message at 281-401-9008.
We have the second on a sub-2, but it came back that it was so low, we’re probably going to take the money. We’re going to buy it ourselves. It’s on the deal. We have the syndication and three JV opportunities in them. Bob is looking at one of the JV opportunities, so it will only be two. One guy from the Mastermind probably would be easier for him to move into that one, so it will be one left. We are excited to go there with all these great deals and talk to private lenders, but we had some guys coming and just took every first position loan off the table.
We’ve got the eight-unit that are coming down to Pike.
Yes, but that’s commercial financing. It’s ready to go. We’ll get 6% on that from the bank. We could bring in an equity partner on that. We’ve got to buy more real estate.
It sounds like I need to find a borrower in 2 to 3 hours and cruise around on MLS and find some wholesalers.
If you have real estate, please send it to us.
We are going to meet with our good friend AC Ramos. AC runs an education company and he is a kickass wholesaler and flipper in this town.
We’re looking for more deals. Send them to us.
We need some more deals because we have private lenders who are reaching out to us. Some of the stuff is moving fast. In our little world, money is moving fast through our sphere of influence. You can imagine that no one wants to invest in a negative bond in Germany what’s going to happen to the United States. Blackstone, Colony and these other groups have the infrastructure setup. It’s not hard. If you’re going to give me $3 billion, I’ll go deploy it in Lake Charles, Corpus Christi and San Antonio. They are not going to hit necessarily the bigger markets, but they are smart enough to jump in Corpus Christi and completely change that world.
One thing that I told people at the Noble Mortgage event and I’m going to have the same conversation in Austin at the Quest Trillionaire Mixer, I’m going to say, “This whole 2 to 50 units, there is no real Wall Street money in that marketplace yet.”
That’s our safe haven for now.
We’re sitting there and Grant Cardone doesn’t teach how to do those deals. Lifstyl and Sumrok recommend doing the bigger deals. I’m sure Kiyosaki has an apartment group. All of those guys will tell you to do 50, 60 and 100 units plus. I told the crowd, “It’s great. Keep those educators telling people to stay out of the space because we’re going to go in there and get 12%, 15%, 18%, 20% or 30% cash on cash return.” That’s in the current dollar, it’s not, “Rents increased 10% over the next three years.” We’re doing well with buying these little units and we’ve been effective at managing those things. Little rehab and not much different single-family houses. We’re just having a couple more doors.
When these people come out and say, “Don’t do this. You need to get the scale and all this.” I’m like, “Yes.” Keep telling that lie and we’ll play in this little marketplace of ten units here, fifteen units there and twelve units here. Some will be Airbnb like the one we’re looking at. Nominal rents are $900 a month and then we can get Airbnb per unit. Their financials were $1,500 a month and I know they don’t run them like we do. We could probably get $2,000 a month per unit and $16,000 a month of gross on something we’re going to pay for less than $600,000. That’s insane. What I told the crowd is, “You don’t need to buy 100 doors and you don’t need 500 Airbnb’s and 1,000 apartments. You need a couple of good single-family that are appreciating, couple of Airbnb’s and a couple of small apartments. That will meet the goals for 99% of you guys in here.”
They get all swept up into those big rooms where it sounds like everyone is doing all these deals and everyone is crushing it. We know that more hard money lenders and a lot of private lenders are taking back deals. We know there are houses out there that are sitting on the market because they overestimate the ARV. There are all those kinds of nonsense in this marketplace for flippers and we know that wholesalers are absolutely insane when it comes to their numbers. If you’re a wholesaler and you can consistently get deals, why won’t you just slap on $7,000 or $9,000 and move it along instead of the fifth last chance email?
I’ve got this wholesaler in town. I’ve got the fifth last chance email. “This is your last chance. This is a great deal,” I’m like, “I’ve gotten the same email from the last five days.”
You have to close in four days because they don’t know how to extend the contract.
They probably own it. It’s like, “Put it on MLS.”
They’re like, “We’re happy to list them for you. We’ll cut the grass for you, too.”
Speaking of it, I need a grass cut for my Airbnb.
I keep forgetting it. I don’t have anyone on that side of town. What we need is the Assistant Property Manager. We’ve got to hire that position.
HOA is all over me.
I’ll have one of the guys go and buy an electric mower and cut it.
It’s fascinating to me because we’re buying a failed flipped foreclosure. It’s amazing to me when you hear everyone sounds like they are killing it and then the next meeting, it’s like, “How did that deal go?” They’re like, “I’m still looking for X, Y and Z.” I had one guy, I said, “How much money have you got?” He’s like, “I’m doing a deal and make $800,000.” I’m like, “No, cash in your checking account.” He was like, “I’ve got about $200,000.” I’m like “When are going to get this $800,000?” He’s like, “Five years from now.” I’m like, “Okay.” I’m getting a lot of people asking this, “How are you guys doing free real estate?” I said, “We don’t discuss that publicly. We talk about it in our Mastermind.”
It is a strategy.
It absolutely works and it’s amazing.
I did it on that webinar and three people were like, “That’s genius.” I’m like, “I shouldn’t have gone into this.” We did it and we do it now. It doesn’t mean you’re not going to put money out of pocket and we’re not saying this is no money. There is going to be some transactional money that you are going to have to do. You’ve got to drive to the place, so you have to put gas in the car. There’s always money needed in real estate. What we are doing is an evolution of what I have been doing with Big Game Hunting just making sure we’re manipulating the numbers. I’m going to bring out Big Game Hunting back. That’s a single-family asset class. We’ll do well and then we’ll add Airbnb onto that. It’s a huge home run, but going around this time, we’ll just roll it on to the Mastermind.
Our Mastermind is a buy-and-hold Mastermind. It’s for people that want to do Airbnb, single-family rentals, small apartments and even small hotels. We want to buy an asset class for you. We’re going to buy the property and we are going to hold the property. There is no blue suit and there is no big pitch. If you make $100,000 as an individual or $150,000 as a couple or household, if you have 700 FICO score and you’ve got about $40,000 in the bank to deploy, we want you in the Mastermind. If you don’t, don’t waste your money. It will be too frustrating for you until you meet those three criteria. It’s $7,500 and we’re not negotiating up, we’re not negotiating down. That’s our Mastermind.