BiggerPockets Podcast 130 with Will Barnard Transcript

Link to show: BP Podcast 130: Ten Smart Tips for Making $1M+ Flipping Houses with Will Barnard

Josh: This is the BiggerPockets podcast. Show 130.

Will: And I did net over just slightly above a million dollars.

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Josh: What’s going on everybody? This is Josh Dorkin, host of the BiggerPockets Podcast here with my cohost Mr. Birthday Boy himself, a big fat giant three zero years old, that’s right he’s 30 ladies and gentlemen, he’s finally growing up. The man, the myth, yeah he’s a myth. It’s Brandon Turner. What up B?

Brandon: What up? Do I sound older and wiser?

Josh: You still sound like a petulant little child.

Brandon: That is because I’m still 29, because we were recording this a few days before my birthday, this intro. We recorded the interview, what a month a and a half ago with Will. Yeah, but my birthday’s in a couple of days and I’m going to be the big three oh, which means I get 30 spankings. Do you remember that, like when you were a kid?

Josh: I don’t remember that, but that’s what you and your wife do for fun, you know that’s usually a weird question. This is not really an interview about you, but I mean if that’s what, I mean, it’s cool. I’m not going to judge you Brandon.

Brandon: 30 Shades of Grey. 30 Shades of Grey, it’s all right.

Josh: Do what you gotta do brother. I mean, whatever makes you happy. And I mean listen, you seem to be pretty happy.

Brandon: I’m a happy guy. A pinch to grow an inch and a sock to grow a block. That’s what everyone says right?! I mean, Happy Birthday and a pinch to grow an inch.

Josh: I don’t know what that is.

Brandon: Okay, that might be a Minnesota thing. Anyway.

Josh: Happy Birthday. You know, things are good man. Summer is going well and it’s your birthday, and listen, I’m happy to have you here on this very important day and…

Brandon: Very important. They should make it a national holiday, really.

Josh: They might. Because you are really that important of an individual.

Brandon: You know, I didn’t want to say it, but since you brought it up, I am.

Josh: All right! Enough about you. Let’s get into the show, man. We’ve got a cool show today with one of our prior guests and so before we go there, let’s get today’s quick tip!

Brandon: Today’s quick tip is - it actually comes from Grant Cardone’s book The 10X Rule, which I did not know when I started this process, but it totally makes sense now. The idea of setting big goals. And here’s why I bring that up. When I was like 21, I read a book called A Million Bucks by 30 by a guy name Allen Corey, who is a real estate investor. If you’re listening Allen, what’s up? Because I know he listens to the show.

Anyway, I read his book when I was like 21, 22 and it was called A Million Bucks by 30 and I said, that’s my goal. A million bucks by 30. And so I sent this monstrous goal, and I don’t think I quite hit it unless I want to be really really liberal with my property values and what their worth, and maybe if the market heated up a little more, but anyway, the point was even if I didn’t make my goal, I got close to my goal, maybe, or even part way to my goal, doesn’t matter.

The point is, hey, the point is I had a big goal, I worked towards that goal, and even if I didn’t hit the goal itself, I’m still way further than I would have been had I not set that monster goal to start with. So the quick tip for today is that no matter where you are, go set a monstrous goal and then work towards achieving that goal, even if you don’t hit it, if you fall short, if you fail at that goal, you’re probably better off.

Josh: I love it. A not so quick tip.

Brandon: A not so quick tip, but it’s important I think, maybe.

Josh: Nah! I think it’s great. Maybe. Listen, you’re getting old, and you tend to ramble when you get old.

Brandon: That’s what happens!

Josh: That’s what just happened to you. It was awesome.

Brandon: You know I’ve got my walker now that I’ve been using. Because now I’m 30, geriatrics and all of that.

Josh: You are pissing off more and more of our audience every single day. I’m glad that it’s not me anymore! It’s a beautiful thing!

Brandon: I’ll take one for the team!

Josh: All right, speaking of team, let’s introduce today’s sponsor.

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Josh: Big thanks to our sponsors as always! All right. Let’s get to the show. We’ve got a guy today that was one of our earliest interviewees and his show was all about flipping luxury real estate and today we’re going to actually talk about how this guy went and did a million dollar flip and then he’s got 10 amazing tips for you guys on how to make a million dollars in real estate. So let’s welcome Will Bernard, who’s been one of the most active members of the BiggerPockets community for the past, probably, half a decade, if not longer. It’s really great to have him back, so let’s get to this.

Will! Welcome back to the show man! It’s great to have you!

Will: Oh! I’m happy to be here! Thanks for having me again!

Josh: Yeah, yeah, it’s been a while! What show were you on the last one, I think it was in the 20s right?

Will: I think it was like 30, 32 something right around there. It’s been a long time actually.

Josh: It’s been a lonnnng time!

Brandon: Well we should have probably had you on the 100th app after episode, but whatever, this is 130, which you can get to the show notes people at BiggerPockets.com/show130 Check out all of the notes and you can leave Will messages and comments and all that fun stuff.

Josh: Yeah yeah! Well Will, you’re back and it’s been quite a while. And really quickly, we’ve got kind of a different show today and before we get into it, what have you been doing the last year? What’s been going on?

Will: Well, you know, pretty much more of the same, just been renovating homes and flipping them. You know I’m in the luxury markets, so I’m flipping multi-million dollar homes. I’ve been continuing to do that. I am looking this year to make a switch back and start doing the under $100,000 flips again. I need to keep that rolling. I kind of got away from that for one reason or another, and I’d like to get back into that. Although the competition is fierce there, the profit margins are slimmer, I’ll make that up in quantity and with my experience, I’ve got ways to make it work.

Josh: Nice, nice. And you’re in California, right?

Will: I am in Southern, sunny Southern California.

Josh: Jealous! Nice, nice nice.

Will: As you should be! We have the best weather in the world.

Josh: It’s miserable here. It’s raining. Denver is supposed to have 300 days of sunshine, and we’re sitting here in like two weeks of rain, it feels like. Brandon?

Brandon: It feels like we have 300 days of rain, every year.

Josh: Yeah, awesome, awesome.

Will: You don’t know what sun is, do you Brandon?

Brandon: I don’t! I heard about it one time. I saw it like through the clouds, and everyone was like “That’s the sun!” and I was like, I thought they were talking about like I had a son and I was confused, and it just got weird.

Josh: Sweet, sweet.

Will: Easy to get confused there.

Josh: Hey, Will, let’s get back to this, because we’ll just start b-s-ing. Last time we talked about this famous seven figure flip. If that puppy isn’t done by now, I don’t know what the hell’s been happening. So the seven figure flip, what’s the story, man? Is it done? What are the final numbers? Give us you know, the low-down.

Will: Sure! Well I had a thread on BiggerPockets and it was called Seven Figure Success Stories, and I started out, was a purchase of a large 7200 square foot home with about 8 acres. The property was in Agora Hills, California and when it was all said and done, that actually closed and sold last April, so we’re just over a year since I closed that and got paid. And I did net, over just slightly above a million dollars. So it was my best deal ever. By far.

Brandon: Wow! How long did it take you beginning to end?

Will: Beginning to end, I think it was, well it depends on what you call the beginning. The beginning as far as when I closed Escrow on purchase to when I sold it, it was about 18 months. I’ve checked the records on that. It was a long time. It was a huge project. Before that though, it was like a year and a half in the process of getting the original contract to actually close because I had so many problems with the seller, which was a bank.

Josh: And we talked about that, I think, a lot on the previous podcast. So you did end up netting a million bucks, that’s unbelievable man!

Will: You know, I can’t complain!

Brandon: I know, my best flip ever was, I don’t know $30,000, or something like that, maybe? So yeah, you’re doing a little bit more than I’m doing. That’s actually why we wanted to bring you on the show today! I want to pick your brain. As I’m kind of getting a little bit more back into the flipping mindset, I kind of went away the last couple of years and did a lot of rentals, so today I’m being completely selfish and I want to pick your brain on how to be successful at flipping houses.

Josh: Oh it’s all about you! It’s all about you!

Brandon: It’s all about me! So that’s why I do this show, so that I can become a better investor, you know? That’s it! All right, so I asked you to prepare 10 things to become a better flipper. Hopefully you at least grabbed a few of those, or maybe you can come up with them on top of your head if you didn’t, and we’re going to go through 10 different ways, or whatever you want to call it, 10 tips for being a successful flipper, is that cool with you guys?

Will: Absolutely!

Josh: Let’s do it, let’s do it! All right.

Brandon: So number one, what do you got?

Will: Number one.

Brandon: Or 10, are we counting backwards or forwards, or does it not matter?

Will: No, let’s start from the beginning!

Brandon: Okay!

Will: Going forward. Number one, know your market.

Josh: Know your market. Fair enough. Why is that important Will?

Will: Well, let me explain what know your market means first of all. Knowing your market, there’s a lot that encompasses that. First and foremost you have to know the areas, so you have to know what streets are bad, what neighborhoods are bad, what neighborhoods are good, what neighborhoods are selling and what neighborhoods are sitting. That only comes from, whether, in my case, when I first started flipping, I was flipping in an area where I was born and raised and grew up, so I knew every street. I knew half the people in the city, it was easy for me. If you don’t know that, you’ve got to get out there and try out neighborhoods.

You’ve got to do research. And just looking on the internet isn’t enough. You’ve really got to put boots on the ground to know your market. Secondly, inventory levels. That’s a vital importance. You need to know what is actively listed on the market for sale today. Of those active listings, you need to know what are REOs and what are short-sales and what are standard sales and probates, and then you need to know what those inventory levels were three months ago, six months ago, 12 months ago. So you have something to compare to. And by analyzing all of that, you can see where a market has gone.

Brandon: And how do I find that? I’m not a real estate agent, so how do I find that data about my market? Like how many properties are on the market and all that? How do I get that data?

Will: Leverage other people, and that would be your real estate agent. So if you’re not an agent, get your agent, who is on your team to pull that data for you. They should be feeding that to you every three months.

Josh: Now you said, kind of driving the neighborhood. So is that what people are calling driving for dollars, is that the just cruise around and look at houses and figure it out.

Will: Well driving for dollars is a little different in that you’re driving neighborhoods and you are accomplishing what I’m talking about, but that more specifically is driving neighborhoods looking for vacant houses or houses where the weeds are growing 15 feet high in the front yard. You pretty much know it’s vacant, you’re going to want to send a letter to the owner and then see if you can purchase it. That’s driving for dollars to try and find leads on deals.

Josh: Gotcha.

Will: In doing so, while you’re driving around for dollars, absolutely you should be going in these areas and looking at these houses, seeing what neighborhoods are looking good, you’re on one street and you see a bunch of hoods drinking 40s on the stoop, you may want to stay away from that street.

Josh: Unless you want to flip that house, right?

Will: Well if you want to flip that house, that’s fine. But the problem is, who’s going to want to buy that? You’re going to have a lower buyers pool trying to sell to a buyer who doesn’t want to live next to a bunch of hoods. So that’s why you want to buy in good neighborhoods when you’re flipping.

Josh: You know they may want to. They may be drug dealers who are looking for suppliers and you know. There’s buyers everywhere, right? You know everyone’s a, nah I’m just giving you a hard time. No that’s great. So the key is get out there, explore, get to know the neighborhoods and buy doing that, what you, it almost becomes, automatic, you know, you can see a property and know kind of what it’s worth, right?

Will: Yeah, exactly. Once you know your neighborhoods and you’ve walked and you kind of know okay, this area, this 3 bedroom, 2 bath, 1500 square foot house, this one’s worth $400,000. And if you’re in this area, it’s worth $600,000. If you’re in this area, it’s $250,000. So it’s knowing those areas and even more importantly than that, there’s really specific information.

For instance, in one of my cities I know that if I’m on the left side of this one boulevard, or just north of this boulevard, I’m going to pull higher price points than I was if I’m on the southside or on the eastside of these other two boulevards. So I mean, literally the two houses could be an eighth of a mile apart, and so anyone who didn’t know the area looking on Zillow or just looking on the map can see okay, so that same size house, same area, that’s a con! But in reality, because I know that neighborhood and one is one side of the boulevard and one is on the other, I know that one is going to be higher price than the other. That’s where knowing your market really comes into play.

Josh: Yeah for sure. You know I’m selling my house right now. And the neighborhood I’m in right now, I think it’s like six blocks by four blocks and so that’s one neighborhood. You cross over one street in one direction and another street in another direction and you’re in a completely different price point and the same goes on the other way.

To an outsider, you’d have no idea. You’d look and say, oh you know all the houses look the same, well you know, you cross this side of the boulevard, you’re in a better school district. It’s not, there’s nothing wrong with the street, it’s jus the school district. Well that school district is commanding more money, so the houses are higher priced. The other way it’s a dividing line where proximity to a specific park is. And so you cross that line, now you’re closer to that park in a different neighborhood, even though it’s the exact same neighborhood, and the price changes. Yeah, and that’s one of the reasons everybody gives me grief and you know, I’m out here always talking smack about places like Detroit, or I don’t know Toledo, let’s get some other enemies. But, you know the reason is, you can’t possibly know those dividing lines. You can’t possibly understand those neighborhood divisions from far away without really getting down and dirty and walking or driving or at least doing a lot of homework and evaluating the neighborhoods. Am I right?

Will: That’s correct. And that’s why I always suggest, don’t try and flip from afar. Even buying and hold from afar is difficult enough. Trying to flip from afar, you’re really really asking for trouble. I mean, unless you have a partner with boots on the ground. You can do that, certainly. You have to have somebody with boots on the ground doing that work for you.

Brandon: Yeah, yeah. I agree wholeheartedly. I think it’s smart. Smart. Moving on. Let’s move onto number 2.

Will: Number two is build your team and have it in place before you buy.

Brandon: What do you mean your team?

Will: Your team is going to be consistent of your escrow company, title company, insurance agent, attorney – got to have a real estate attorney, if you don’t you’re trying to cut corners and it’s going to cost you more in the future, so definitely have that – and of course the highly important part is your contracting team. So all of your contractors and your sub-contractors. Have these guys in place before you start buying, because if you buy and then you start shopping around, you might be able to close and not have your team filled in, and time is your enemy. So if you start wasting time, you’re eating up profits.

Brandon: Yeah. I just did that on the house that I’m renovating right now. You know I bought the thing, and it was kind of a drama to buy it, and there’s a whole longer story, that I’m not going to get into. But by the time I finally got it, I realized I never had a contractor lined up before hand. And like I knew I was supposed to, but I was just so busy with everything else, you know you’re trying to rehab a house, and I just didn’t do it. So now I’m looking at it, I’m like, it put me a good week and a half behind schedule. And then the first contractor ended up being terrible, so I had to fire that guy. Now I’ve got a second guy in there, and again I’m way behind schedule now. And there’s all these things you have to remember to do. And so this one’s going to be a rental in the end, so I’m not as needing to, I’m not like, holding hard money on this property or anything like that, but still, it’s two weeks of this property that I lost, and that’s still holding costs on that and everything, so.

Will: And in the flipping world, I mean time is of vital importance. If you’re flipping a house like mine where you have close to $30,000 a month in holding costs, that week is going to cost you $7,000. There goes $7,000 just for wasting that week, so bye bye $7,000.

Brandon: Can I ask you about contractors? What kind of contractors are you getting? You know like there’s like, J Scott once, I think he wrote in the book on flipping houses or maybe it was on BP, but it was like three levels of contractors he divides. You know the under-the-table kind of crappy guys. Then there’s the middle guys. Then there’s the high-end. Do you kind of go by those categories as well? Do you define them a little differently? Who are you working with?

Will: I don’t really have a defining point of that level, but what I do work with is I have a general contractor that I will go to, and I’ve gone through a multitude of general contractors, believe me, and then mostly though, I have my own team, so I have a bunch of subs. So I have my tile guy, my carpet installer, you know my painting crew, my landscaping crew, etc, etc. So I have all these individual crews, and then I also have backups too, so like, if my one drywall guy is busy at another jobsite and I need him this week, then I’ll call my back up drywall guy. So I have all of these subs and I act as the GC as the owner-builder of the property, and then I go from there. Having the main subs, and then your back up subs is important. If you don’t have the backup subs, that’s okay when you’re first starting out, because it takes time to get these guys, but over time, you’re going to have backups and you’re going to have to get rid of and exchange one for another, because somebody’s screw you, or somebody’s going to mess up and you’re going to fire them.

Josh: Okay, so what’s your best tip for finding these guys. You know, I think we talk about it, and anytime we talk to somebody who’s doing flips, but you know, I think one of the hardest things on the planet is to find a quality contractor, so any tips we can get are always going to help. Or even if it’s one you gave us last time, you know we’re all about it. So what’s your best tip on finding high-quality contractors?

Will: My best is probably going to be referrals, of course that, there’s a little bit of problem there, because if I have an excellent contractor, I’m not going to just give him out to you, Brandon, because then, he’s going to be on your job site when I need him. I don’t want to give my good guys away. There’s a little problem there, if you go to another investor asking for his guys. Now that being the case, there are some bigger GCs that have crews where they can do your project and my project and that’s not a problem. As far as the individuals, hiring the subs, man, those little word of mouth, “hey can you give me a drywaller, or can you give me a painter, or whatever” asking for referrals or talking to others. I’ve talked to real estate agents for referrals. I’ve talked to other contractors.

I’ve bumped into people at Home Depot or Lowes, that’s always a good place to find some contractors because they’re buying gear, buying equipment and materials. Jay Scott always made a comment one time saying that, a good place to get them is to go there in the morning, because that’s when the hustle guys are there. If you’re going there in the afternoon, maybe those guys aren’t hustling. Now that, you could have a guy coming right back, because they missed something or they ran short on something, so it doesn’t mean if he’s there in the afternoon that he’s no good, but generally speaking that was his principle.

Josh: Nice, nice. And really quick, I’m going to plug the book that Jay Scott wrote, which is the book on flipping houses. We also have the companion book, the book on estimating rehab costs that BiggerPockets published. You can check them out at BiggerPockets.com/flippingbook to get more information on those there. All right Will, so we’ve got our team, we know our market, what’s our next point here?

Will: Okay, so tip three would be, become an excellent negotiator. Everything you do in the real estate field, everything pretty much is a negotiation. From negotiating with the real estate agents to get the commission from 6 to 5 or 4.5 to negotiating the property itself, getting the asking price from $300,000 down to $250,000 to contractors and negotiating with them and getting their prices down, or getting their timeline speeded up. Everything is a negotiation. And if you’re not good at it, you’re going to not make as much money. That’s the bottom line. So you have to learn how to negotiate.

Brandon: How do you get good at it?

Will: Practice is one, obviously. Two, reading books on negotiations are key, because they’ll give you a lot of insight and a lot of good ideas from people who have been down that road and you can take their experiences and then apply them to your own world.

Josh: Gotcha. And do you have any favorite books that you would recommend on negotiation for anyone listening?

Will: Well I’ve always recommended Donald Trump’s attorney, Mr. Ross, he wrote a book on negotiations. I forget the title of it, I actually have it here, let me see.

Josh: That’s George Ross, something.

Will: Trump Style Negotiations.

Josh: Okay, cool. Any others that stand out to you.

Will: Not really. That’s the first one I read and that’s the first one that really got me going. And then talking to other people. And one of my real estate agents, a good friend of mine, he’s just a really phenomenal negotiator and I’ve sat in rooms and listened to him talk on the phone, and listened to him talk live with other people, and listening to other people negotiate is really helpful. Good real estate agents are good negotiators. Not only do they negotiate the other party, they negotiate with you. They try and calm you down when the other party’s firing you up and you’re about to murder somebody because they’re being a pain in the ass in the transaction.

Josh: Whoa, whoa, whoa, slow down man. Did you just admit? You know, there’s only a couple of 100 police listening, it’s okay.

Will: I didn’t say anything specifically, Josh. You can’t prove anything.

Josh: Oh gees. Nice, nice. Yeah no. I think you’re right. A good agent is absolutely going to do that. And you know the funny thing is, I think a lot of new people think, “Hey, when I get further in my career and I’ve done lots and lots of deals, you know I don’t need an agent anymore.” But I will tell you, an agent down the line is just as valuable for that very reason. No matter how many deals that you’ve done, you still have emotion, period.

Will: Period.

Josh: If you can count on somebody else to kind of help you, keep the emotion out of it, keep you calm, keeping your eye on the ball, you know, I think a good real estate agent is really going to be an important partner no matter what you do. I strongly recommend people be good to their agents when they find a good one, because a good agent’s going to really help you out. They’re going to help find you deals and they’re really going to do exactly what you said, keep you calm, they get to know you. I mean, I know Brandon your agent sends you text messages. You guys close contracts via text. I mean you don’t even have to communicate anymore.

Brandon: Yeah we do a lot via text or email. I don’t talk to him that much. Which is nice. I can just do it quickly throughout the day.

Will: Well, a lot of people, I will say, it is a good idea to get your real estate license, but not so much so that you can list your own properties, although that’s an advantage, but more so that it gives you a lot of the tools and the resources and the ability to at acquisition, maybe feed someone a referral fee or get a referral fee and that extra income is huge. All the access is huge. So I definitely recommend having the license, but as far as like, listing your own properties and then selling them, particularly when you’re doing properties like mine, I just don’t have the time, the resources, the ability to do what they do. My time is better spent, going out and managing the project, finding the deals, contracting them, etc, etc. And I’m leveraging other people’s times, so I’ll leverage my agent’s time and have him do that job.

Josh: Hey Will. What was the best negotiation you’ve ever had? You know, for you, whether it was price, or for you, that’s pretty much what we’re talking about. But whether it was a contractor, or on an offer? But what was your biggest negotiation win?

Will: I’ve had quite a few of them, but I’d have to say, one of my most recent ones was about a year and a half ago. I had a property that I’m actually in escrow on the sale right now, but when I was negotiating they were asking $3.7 million for the property. I negotiated down to $2.7 million. So I talked them down a million dollars, which was huge. But more importantly I got them to carry an owner-finance note for $2 million and then when we went into escrow, I had all of my documentation ordered and the seller tried to pull a chandelier out of the property, which is attached, which is part of the property. He tried to pull a statue from the property, he tried to pull a tractor that was in the paperwork from the property, and what I was able to do was I negotiated to have the agent pay me for that chandelier. I negotiated to have them give me $10,000 credit for that statue he took. I had him return the tractor and on top of that, they had a termite report and it had about $10,000-$12,000 worth of items on it for repairs, of which cost me a couple $2,000-$3,000 to fix myself. I got a credit for the whole thing and then saved all that money. So all of these credits and all of these negotiations into one really added up and helped tremendously.

Josh: So how do you do that? How do you get somebody down $1 million? What was your leverage? How’d you do it?

Will: It was a back and forth with a number of counters. I started at like $2.3 million, so I was at a $1.5 million under what he was asking. I went back and said “Hey, here’s where I’m coming up with this pricing, and here’s, I’m trying to give evidence to establish why I’m at the price I’m at.” And then, we got up to a certain point and he finally came down to a certain point, but I was trying to actually get it for $2.5 million, and the reason I settled on $2.7 million was because he carried the note for $2 million at 6% interest, instead of me paying 10 or 12 over a year and a half’s period, I just saved over $200,000, so I’m actually in the plus by paying $200,000 more give him what he thinks he wants and yet still having the net result be the same for me.

Josh: Brilliant. Really really smart.

Brandon: We could probably spend a whole day on this negotiation, but let’s move on to number four.

Will: Okay! Probably one of the most important, and my favorite. I preach this all the time. Know your numbers inside and out. And those numbers are knowing how to calculate your ARV, how to calculate your renovation costs. If you don’t know those two numbers, then you will fail. It’s impossible to make an offer without knowing those two numbers.

Josh: So what is the ARV, what is that and how does it work?

Will: So your ARV is your After Repair Value. That is what you’re going to, or your anticipated sale price of the property. So, if you’re looking at a house and they’re asking $200,000 for you have to know that after you renovate it that there’s comp supporting it that it could sell for x amount of dollars, let’s say $300,000. So if you’re going to buy for $200,00 and your estimated ARV is $300,000 and then you know your repairs are $25,000, you’re all in for $225,000, you sub for $300,000, you have a $75,000 growth spread. You have to know that you have a big enough growth spread to account for your acquisition costs, your holding costs, your resale costs.

Brandon: Do you use any of those, you know 70% rule or anything like that, when you’re doing numbers?

Will: Absolutely. I know a lot of people are not fans of rules, and again, people need to realize that these are not rules, they are guidelines, or rules of thumb. They are not set in stone and they are not silver bullets, and what works for me and my market may not work for Josh in his, or you in yours, Brandon. Or it may not even work in my market next week or next month, so you always have to change, and adapt. I use the 70% rule in a variation of that. It’s usually the 75% rule depending on what properties I’m talking about, but I use it, it is not an end-all be-all, it’s just one tool in my tool box.

Brandon: Can you explain quickly what it is for those people that don’t know?

Will: Sure, so the 70% rule says that your acquisition price, let’s say $175,000 and your rehab cost of $25,000, so you’re all in for $200,000. That is 70% of the ARV.

Josh: Okay, Okay. So another way of saying it, you take your after repair, you multiply it by .7 and then you subtract out your cost of repairs, correct?

Will: Correct. Same way to get to that. You’re getting the same number.

Brandon: And that’s why it makes sense, you know, on a property. You know if I’m going to go in my area, my average purchase price, is you know, I don’t know, $100,000 after repair value, and I were to do 70% on that, and then let’s say it needed $20,000 worth of work, you know that might work okay, but now let’s say the after repair value was $50,000. 70% of $50,000 leaves no room for spread.

Will: No, really, now you've got to use the 60% rule. And just the same, 70% is a little tight on $100,000. I’ve always said if you’re over $125,000 you’re okay at 70% typically all day long, unless you make some other major rule. But typically if you use the 70% rule and your exit value is $125,000 and above, you’re okay. Now again, if you’re going to get into a $2 million, then you can’t use the 75 or the 80% rule. You just can’t, but if you’re in that $300,000-$400,000 you can buy, if you’re good enough, you can buy it 80 cents on the dollar and still make a decent profit if you’re doing enough quantity and you have the right teams.

Josh: Right on, right on.

Will: So again, those rules are valuable, but they’re not the okay, yes I’m going to buy because it hits the 75% rule. It hits the 75% rule, so check box 1, now I want to check my cash on cash, check box 2. Now I want to check my internal rate of return, or check all of these math figures and make sure they’re all hitting my targets.

Josh: Right on. All right Will. Number five, it’s about leverage.

Will: Using financial leverage wisely. A lot of people are going to want to use leverage, of course, but you have to use it responsibly. If you over leverage, I see so many investments get themselves in trouble, I’m just helping somebody on BP who made a loan to somebody, I will keep the names off for privacy purposes of course. They made a loan in third position to a rehabber who took down an acquisition, or a hard money loan, took a large second out, probably to finalize the acquisition, so he’s got a 100% financing. Then he took a third loan out from this poor guy, to probably do his rehab, and now the house is sitting there, he’s upside-down and this guy’s in trouble. So this investor over-leveraged. And you just can’t do that. So you have to use leverage responsibly.

Brandon: And when you say leverage, you’re essentially talking about loans, right? I meant that's the idea of getting a mortgage on something, and not going crazy with the mortgages right?

Will: Correct. Leverage is borrowing money. And borrowing money can be from a conventional financing through banks. You can go private money, people you know. Accountants, family, friends, who don’t have time to flip, don’t want to flip, and want other options other than stock market, so they can invest in your projects. Those are private money lenders. And you can go as far as hard money lenders, where that’s their business, is to make loans to rehabbers and they’re going to charge more interest, they’re going to charge points and fees, it’s going to be more expensive and there lies the problem. So if you’re going to utilize hard money lenders, make sure that you have enough spread, and that you get in and out quick, because time is your enemy.

Josh: Hey, Will. So you made a million bucks on this flip. We’re talking about leverage. I think a question that a lot of people are wondering is that you probably had some cash sitting around, now are you still going out there and finding lenders to help you finance your projects, or are you paying cash for them now, you know what’s the advantage to both for you?

Will: I am absolutely and still utilizing private money lenders to leverage every one of my deals. So when I first started, I actually leveraged 100% acquisition and almost 100% of my rehab on my first California flip that I did. But, I got it at such a great deal, and the market was so perfect and the timing, it was safe. So I had a huge amount of equity, how I bought it, and I had buyers lined up when I sold it, so it was safe. As I built up capital, then I borrowed money from private money lenders and combined that with my own money so that I can keep that loan-to-value low and keep those lenders safe.

Brandon: Makes sense. I love it. One thing to illustrate a lot, and I say a lot, and I think it’s in like, I say It all the time, the idea that like creative investing is not about being broke, right? Like trying to get loans and like, you know I wrote the book on no and low-money down, right? There’s my plug.

Josh: Oh, shameless!

Brandon: I know, shameless. A lot of people look at that and they think it’s like, you know, it’s that concept of creative investing for people who are broke, or completely out of money, or you know late night TV I got no life and this is going to make me millions of dollars. But I like to say creative investing is not about that. In fact, the more sophisticated you become, the more likely you are to use leverage wisely, like you are. Even though you might be able to afford to be able to flip houses without, you still do it because it enables you to do more houses and expand your business.

Will: That’s correct. I also want to point out that if you’re in this business long enough, even the best of us are going to have projects where we’ve made mistakes. I make mistakes everyday. So don’t think that just because I have a decades plus worth of experience that I don’t make mistakes, I do. I’ve lost money on deals. Quite recently, I’m going to have a deal that’s going to be closing that’s in escrow. I’m going to lose six figures on the project. That’s pretty sad. It’s frustrating, but you’ve got to take your licks. The thing is, is that I have leverage on these properties, and every single lender on these projects is getting paid back 100% of their principal and 100% of every interest they were promised. And I think that’s of vital importance to point out. If you don’t take care of your investors, you’re not going to be in business for too much longer, and you’re going to create a name for yourself.

Josh: Hey Will, and I’m guessing that you make it very clear to your lenders that you’re taking a six figure loss, and they are getting every dollar back to remind them that you know, you know what, despite the fact that I’m bleeding through the pants, you guys are going to be taken care of, and I’m assuming they’re going to come and give you money again for the next one, right?

Will: They are well aware of that already, they already know my position, they know the troubles I’ve had on this property. I’ve had pretty much every thing that could possibly go wrong, go wrong with this property, which is hence why I’m losing so much. But they’re well aware of it, and yeah, I want to say that I just banked private lenders for life. If you treat lenders like that, and they know that you’re taking it in the shorts six figures and they’re getting all their money, and they made money, they made more than they even anticipated because it went longer, so they’ve made even more interest. They’re going to be stoked as all hell.

Josh: Right, right on.

Brandon: That’s so important. That goes into, ties into the reputation thing which is how much your reputation matters. I mean like, finish it like during the real estate crash, and I know like life was tough for a lot of people, and a lot of investors lost money, maybe people listening here, so I’m not saying, like you’re a terrible person, but those people like, who despite losing money makes sure that everyone gets paid of, I mean it just, it builds your reputation in such a way that is very powerful. Maybe that’s a bit of encouragement for people listening. Do what you’re going to say you’re going to do and do it right every time. No matter if you win or lose or not, just make sure that everybody who gives you money, wins.

Josh: Yeah don’t screw those people over, for sure. You know. It’s such a small industry, I mean there’s billions of people in it, but word spreads fast. Real estate is local, if Will screws over his local lenders, all of the local lenders are going to know that he screwed them over and it’s a wrap. I mean he’s not going to have access to cash anymore.

Will: That’s right. My reputation is everything, and I’ve spend decades building that. Why would I want to ruin it over screwing someone out of $100,000? I’m just not going to do it!

Josh: And the same goes for new investors. I don’t get to press upon this enough, but the new guys who kind of come out and are like, “Hey you know I’m going to be a wholesaler. And I'm going to do this, and I’m going to try that, and it’s okay if I kind of screw up a few times, and burn a few people, or steal a few deals, or whatever it is.” That will destroy you. It may work once, but like over the long term, that’s not going to work out if you do crappy work, you name it, anything you do follows you! The contractors who aren’t quality aren’t getting recommended. You know? The investors are screwing up, aren’t getting referrals, aren’t working with other people because you can’t screw people over. Your reputation means everything in this business. All right. Number six, time.

Will: Yeah! Time is your enemy. I’ve already referenced that several times already on this podcast, but you have to stay on track and make sure you're your deal is flowing properly. If you don’t, you’re losing, you’re eating up your profits. So everyday that goes by that you waste, you’re having your taxes, insurance, utilities, interest, maintenance, etc, etc. And these things add up real fast. So your time is your enemy. When you need to get that acquisition, the day you close, you should already have the dumpster there, already locked and loaded ready to go. Get your crew in there to demo out everything you’re going to demo and start moving forward. And just move forward, and move forward. You’re going to have some setbacks, that’s going to happen. But where you have setbacks, you try and make up in other spots and try and catch up here, you know. Maybe the drywall team was going to have three guys hanging drywall and instead, you need to save a few days, so you have them bring in five. And have them bang it out extra fast. Wherever you can save that time, save it.

Josh: You know I think one of the biggest reasons that new flippers screw up is they fail to account for the time value of money. You know it is one of the bigger reasons we built the flipping calculator on BiggerPockets. You can check out at BiggerPockets.com/flippingcalc But, yeah, I mean. You know I think people see these TV shows and they’re like “Yeah, okay, well this isn’t too hard. We just go out and buy it for X, make repairs and sell it for Y.” What are these holding costs? Why would I have to think of the cost of a loan over time? The cost of utilities, keeping the electric on, all of these things. Those are the things that you don’t think about that just kind of suck you dry, aren’t they?

Will: No doubt. And not one of those shows, they don’t go into that fine line detail. They make everything look glamorous and easy, and everything is dramatics, they’ve got to argue with the contractor and all that BS. When it’s all said and done they leave out a lot of the important factors that go into managing a rehab. That’s one of them.

Brandon: One more thing, just to add to that, is you know, this is something that I’ve been hit with, you’ve probably been hit with as well. When a flip goes so long, especially in a market that’s changing, you know if a market doesn’t change in a positive way, if it changes in a down way. Like the longer your flip goes, the more uncertainty you have. Like if it takes you a year to flip a house, a lot can happen to a market in a year, and it’s not always a good thing. Maybe you get lucky and that market goes up, but maybe not.

Will: Right, no, you’re absolutely right. That’s a huge factor and that’s why you need to know your market, so you need to know where your market’s going. And if you know that there’s a possibility that in six months you could have a market correction and it could change from going up to down, or from up to flat, or from flat to down, you need to know that, and so that you know it and you get out of it. And the other thing is, in price. Knowing to price your property right, and if you’re having trouble selling it, it’s better for you to lower that price from $300,000 to $280,000 instead of $300,000 to $295,000, go ahead and take that $15,000 loss right off the bat, because if you sell it, you know a few days after you lower the price, the time you save will eat up a lot of that $15,000 loss. As opposed to dropping it $5,000, and then another $5,000, and another $5,000. Now you’re back to that $285,000 and yet you’ve wasted another month and a half.

Brandon: I did that once on a house. I started at $170,000, went to $165,000, $160,000, $155,000, $150,000, $145,000, $140,000, $135,000, $130,000, $125,000 and sold it at $125,000. Had I just dropped it to $140,000 you know from the $170,000 I probably could have actually sold it from there. But I just let the market just keep going down. And I just, I was.

Will: Or when it dropped to $125,000 you had multiple offers.

Josh: Been there. Been there for sure.

Will: We all have, and it’s one of those things. So others listening from this podcast can learn from it and hopefully not repeat our mistakes.

Josh: Right on.

Brandon: All right, next one. Number seven.

Will: Number seven. Know each phase of the renovation project and in which order things should be completed. I don’t how many times I’ve walked into another rehab project and seen things going on where I’m like, why are they doing this when this isn’t even done? So and this is only going to come from experience, so if you’re brand new, you’re really not going to know what order to do things in, so you have to rely on contractors who are experienced to tell you that. And if you don’t believe somebody, then get a second opinion. But make sure that you stay in line and do things in the proper order. It’s terrible if you go in there and you put in your cabinetry and your flooring and you do that before you’ve gone and painted all the walls, because now you’ve got to mask everything off. I’m not saying you’re not ever going to have to mask, but what I’m saying is you have a nice clean palette, it’s so easy to just prime the whole house, be done, and then you can come in and set in your cabinetry and you can do your fine line painting after. It’s just those simple processes to do in the right order. It saves you time and it saves you money. Plus, if you do things in the wrong order, you might end up having to rip something out and then redo.

Josh: Yeah I don’t think we’ve actually talked about that in 120 shows. The order of things does matter. Yeah! Great, great bit of feed back Will. If anyone, or if people don’t know the order, like you said, ask another contractor, or just jump on BiggerPockets and say “Hey I’ve got this rehab and you know, I’ve got these three or four subs that I’m trying to figure out how to coordinate, what should I do?” And people will jump in and help out, you know so definitely don’t hesitate to utilize the resource.

Will: No question, yeah the BP forums are a vital resource for that.

Brandon: Great, great, great. All right moving on! Number eight.

Will: Number eight! Dealing with contractors and subs can be difficult so you have to know how to manage them efficiently and productively.

Brandon: And this is something that I am not very good at, so Will, tell me how to become better at that.

Josh: Yeah how does anyone do that?

Will: You know that’s a good question. Even today I have a project in Beverly Hills, ongoing and there’s just always something. Talk to the general contractor on here who I subbed out to a stucco company, and the stucco company, we were supposed to put stucco on this portion of the house, and there’s going to be some wood fascia in another portion by the entry. So we told them, okay here’s what we’re going to do, talk to the general contractor and he’s supposed to pass that on. Supposedly he has, and there yesterday, the employees of the stucco company are coming up and asking, “where’s the wood going, where does it stop, where does the stucco start?” I’m like, man! This is stuff I’ve already gone over the GC with, he should have gone over the stucco. I appreciate them asking me instead of just doing what they think, so by all means, ask, but the point is, now I’ve got to step in and make sure this is being managed properly and that’s frustrating, but it’s part of your job, so get in there and do it, and make sure that you’re on the jobsite. And if you’re not on the job site, make sure you have a project manager on the job site every day! Because if you don’t, things are going to get done, these subs are going to do whatever they think is best, and it might not be correct.

Josh: So, and I think this is why we always talk about rehabbing a property, flipping a house as a job. This is not something you can do while you’re working a 9 to 5. “What, oh yeah, I’m going to go flip houses, you know” Well, I mean you could do a live in, but I mean.

Will: Well, let me throw in one caveat with that, Josh. You can have a 9 to 5 and flip houses, but you’re going to do it with a partner. You’re probably the money guy.

Josh: No I’m saying, you can’t personally do it by yourself. You can, it’s just, your timelines are going to be crazy, if it’s just night and weekends, I mean you have people that you’re trusting that you probably aren’t ready to trust, unless you’ve been doing this a long time. You know starting out and saying, hey I’m going to flip a house just for fun on the side, I think we’d probably all caution you against, wouldn’t we.

Will: I agree. I couldn’t agree more. And you said, then maybe I’ll live in the house while I flip it and fix it and all that stuff. I guess, great idea if you’re living there yourself, so you’re getting some use out of it, and if you live there for two of the five years, you sell it, you get that big huge tax deduction from that, to avoid capital gains, however, you’re talking about doing one flip very slowly, and you’re losing the time value of money. Rather than do that and trying to do everything yourself and swing this hammer and hang this drywall so you can save $1,000, spend the $1,000 get in and out an extra three weeks, or four weeks or three months faster. I don’t know how many times I’ve heard of guys saying “well I did it myself. I did all the work myself. I save $10,000” Yeah but it took you nine months to finish a project, what would have taken me three! In those other six months, I could’ve flipped three more houses. So they lost money.

Josh: Hold on. I hear where you’re coming from, but let me stand up and defend those guys. Those guys probably don’t have $10,000 to hire the guy to do the job for them, or they may just want to not, they may not want to be flipping three or four houses at once. You know they may want to be casual, you know. At the end of the day, there’s no one correct path, right? I don’t ever want to be a full time flipper, like you. Not that there’s anything wrong with that, I think it’s great. I would love that I could do it, it’s not something that’s not me, right? I may want to be flipping one at a time, while I’m in it, and kind of working on it, so you know. I think, each situation is going to be different.

Will: Right. There’s no right or wrong answer here. It’s a matter of what do you want? Do you want to just do this on a casual basis and flip one house here? That’s fine. Whatever floats your boat. But if you want to run a business, and you want to make it profitable, and you don’t have to flip three houses at a time, what I’m saying is flip one house at a time, but do it in three months instead of nine. Then go to the next house, and flip that one in three months. Then go to the next one, that way you’re doing four a year instead of one a year. That’s what I’m saying. You have to make the decision. Do you want to flip houses and make money? Is that your desire. Then make it a business and treat it like a business.

Brandon: I love that. I think that there’s a huge distinction there, and I talk a lot about that, about the business thing on every blog, every blog post I talk about business. But, a lot of it is just lessons I’ve learned. Back on show 120, I told my story of how I bought that huge house that I started at $170,000 and I dropped the price to $125,000. I flipped that house myself. My wife and I did all the labor ourselves. You know I could have probably hired contractors to go in, and the entire flip could have been done much better than I could have done it, and probably they would have been done in a month and a half, two months, versus me taking a year to fix it up, and then the market changed and then all the drama happened and you know, that was two years of my life that I lost on that property. And in the end I lost $10,000 in cash, just because I didn’t treat it like a business. You know it was my hobby of flipping a house, I thought it’d be fun, I’d watched the TV shows. I like that story, because it was tragic, but moving on.

Josh: I like that story because you lost. Nah! I’m just kidding. That’s awful. I’m a terrible person!

Brandon: That story will save thousands of people thousands of dollars. That’s why I tell it all the time, because it sucks and it happens, but all right, moving on. Number nine!

Josh: Nine!

Will: Number nine! Put your rehab money in all the right places. Know where you can save and where you can’t skim.

Brandon: How do you know that? How do you know where you can save, and where you shouldn't?

Will: Okay, well it’s pretty common knowledge in our industry to know that the best money is spent in kitchens and bathrooms, particularly the master bathroom. The kitchens are huge! If you redo kitchens, you almost can’t lose. When you redo kitchens and baths, you’re adding major value. Paint is a huge thing. Fresh coat of paint and fresh flooring is always a huge bonus, and it’s a great spot to invest in money, because you’re going to get your capital back and likely with return. The other thing is curb appeal. Front yard, back yard, landscaping, making the front entry look nice. That stuff helps sell houses and putting that little bit of money in that curb appeal goes a long way. So not only does it add value to the house, but it helps it sell up quicker and that’s value to you, because time is your enemy.

Brandon: Yeah, and that’s true for landlords as well. Like people that have rental properties. There’s little things that you can do that make such a huge impact. Like I went to Home Depot the other day to buy a front door for the property that I’m working on. And I picked up the front door and I had a choice between the $307 one that had the nice oval round glass in the middle, and it looked really really good or the $150 one which was just flat, with nothing. And so for like an extra $150, you know it’s a big chunk of money, but it’s the first thing that a tenant is going to see. If I was selling the house, it would be the first thing that a buyer would see. When I go to sell it someday, it’s kind of a long term flip, I’m going to sell it five years from now, hopefully, I want to have replaced the door, and at that point it’s already set for that. There are those little things like that, like the curb appeal that help a property to stand out.

Will: Even if you got five bucks more in rent a month because of that door, you know, the life of that property you’ve made out. And when you resell it, maybe you’re going to get a few bucks or more for it. So it’s money well spent in that curb appeal.

Josh: So you’re talking about places to spend money. Where shouldn’t they spend money? Where do novice flippers tend to put money, where they go above and beyond and they may not need to?

Will: You know, it’s not so much going above and beyond. I don’t see that as much, like if you’re in an area where it’s all low-end houses and none of the other houses have granite countertops, then you shouldn’t be putting granite countertops in either, unless you’ve got some smoking deal where you got some leftover slabs and you were able to do it for a few bucks more than what it would have cost to tile or formica or something. That’s okay. Where I’m talking about, where most investor rehabbers make mistakes is in shoddy work. I’ll go in and I’ll look at this and I’m like, what the hell were they thinking! It just stands out like a sore thumb. So what they were doing is, they were trying to cut corners. They were trying to cut corners, and they’ve just left this god-awful thing, and that shows to buyers, so when they walk through and they see that, and they’re like “Well this looks pretty crappy, I wonder what else they skimped on.” And once a buyer starts thinking that, you’ve probably already lost them.

Brandon: A good example of that, I’ll just again, throw another example in here, the house I’m working on right now, one of the walls, like the previous owner or somebody tried to patch a bunch of holes. Probably you know like, nail holes or they just took spackling and spackled it all over the wall. It looked terrible. You know some people might take a rattle can and quickly cover it over, or just leave it and paint it and hope nobody notices. It’s like a little thing, you know but to do it right, and not try to skimp on something like that just goes a long way. It cost me an extra few bucks, but in the end I think it’ll make a big difference.

Will: Yeah, exactly. It’s those little things too. Nothing bothers me more than walking into a freshly rehabbed house and I look down at an electrical outlet and it’s got the old ivory looking stuff instead of the clean white. Or it’s got a big gap between the thing you can see, and you can see through the wall, because they didn’t drywall all the way down far enough. Little stuff like that, it doesn’t cost you much to fix, and yet it makes such an impact to buyers.

The other thing I want to point out is the layout of a house. So many times I’ve walked into a house and just the layout of the kitchen was confined and it sucked. And all it took was opening up a wall, or you know, getting rid of this doorway and opening up this doorway, or moving this wall, making the flow better. When you change the flow of a house from a bad flow to a good flow, or enlarging the kitchen by opening up a wall or taking down a whole wall so that the kitchen is kitchen and family room are all like in one big room now, because that’s hugely popular today. That adds so much value and it’s demo work. It’s nothing! The costs are minute compared to what you get. So some of the biggest things that you can do in a rehab project are fixing bad rooms, bad layouts, bad design.

Josh: Right. That’s great, that’s great. Good stuff Will. All right! Final point here, number 10. The big one!

Will: The Big One! Yeah, you know the saying, you make your money when you buy, but you get paid when you sell. So pricing, staging, marketing and having the right agent is crucial for a quick and profitable sell. And it just goes without saying, if you’re in a nice area and you’re doing a higher end home, if you’re not staging it, you’re not going to get full price for that property. And it’s just not going to sell as quick. So staging is key in a majority of those houses. I’m not saying you need to stage every single house. Because there’s the 1100 square foot 3 bedroom 2 bath cookie cutter house. Everyone already knows, here’s the living room, here’s the dining room. No big deal, you don’t need to stage that. It does help though to throw in some towels, some soap dishes, make it look, you know a flower in the kitchen. Stuff that doesn’t cost you much at all. That’s just that light staging. I highly recommend that.

Brandon: What I like to do a lot on those properties, and I even do it on rentals occasionally, just to make a property look nicer. I’ll go to like Ross or Marshall’s and they always have curtains you can buy for curtains, and they’re like nice curtains, but they’re like you know, redecked from like Bed, Bath and Beyond, but anyway, I’ll get like six or seven panels of these curtains, and go and put them in the living room. And I think curtains will soften up a room almost better than anything else than I can think of.

Will: Yeah. It also helps cut down on your echo, which helps too.

Brandon: Exactly, because you walk through an empty house, and that echo makes people think it’s cold and not inviting. Yeah I love the curtain thing. One more tip that I’ve done that worked really well for me. I went to like, you know those rental places, you can go rent furniture, like rent to own furniture places, that clearly lower-income people use, so I went to them and just said, hey I just want to get this living room set delivered to the house. And he’s like, ok no problem. So I just rented it for two months or whatever it was, and they picked it up, and they delivered there, set it all up. An entire living room and dining room set, and the whole thing cost me something like $75 a month or something like that, for a couple of months.

Josh: For all of the furniture?

Brandon: Yeah! For all of it.

Will: That’s fantastic.

Brandon: Fantastic! And it cost me hardly nothing. That house sold in like a week. It was the fastest I’ve ever done, because it just looked so good.

Will: Exactly.

Josh: That’s great. Awesome. Awesome. I mean, well listen, these have been some really great tips. What final words do you have for those people who you know might be thinking about jumping into the flipping space? You know what pearls do you have to offer here? And then we’ll jump into our famous four!

Will: Okay! I would say that a lot of people struggle with a very common feeling, and that’s fear. I’m scared to do this, or I might lose money, or I don’t know if I can do it. And they allow fear to stop them, and once you do that, you’ve already lost. So you can’t be scared to fail. You’re going to fail. And it’s you know, try try again, somebody knocks you down, you get right back up and you keep on fighting. So you’ve got to get out there and take a swing, because if you don’t, you’ll never know. In my book you’ve already lost, so you really got to just get out there. But don’t go out there and wing it! Have a plan! Create a plan. And if you can’t do that on your own, get some help. You’ve got a ton of people on BiggerPockets that are willing to help you.

Josh: Awesome advice man. Really really good. Cool.

Brandon: All right. Let’s move on to the…

Famous four!

Brandon: All right, the famous four! These questions we ask everybody and we asked you last time, back on the first time you were on the show. But let’s see if anything changed. Question number one, what is your favorite real estate book?

Will: Oh god! I forgot all these questions, and I’m unprepared.

Brandon: Or do you have a recommendation, you don’t have to remember your favorite, but do you have a good recommendation of a real estate book?

Will: My favorite real estate book, well you know there’s always the cliché Robert Kiyosaki, but more so I recommend that they don't just do the first one, Rich Dad, Poor Dad. I recommend that they get into the third one which is Cash Flow Quadrant. I think it goes into a lot more detail and really sets your mind into how to think like a business owner instead of an employee. And once you get going on that it really helps you in your business, particularly when you’re starting out. So I would highly recommend that.

Brandon: So you know what’s funny about that, is like I read you know Cash Flow Quadrant back, back when I read Rich Dad, Poor Dad. And I didn’t get it. I mean, I thought it was fine, I never read it again, I didn’t really care about it that much, I mean it was fine it was a book. But then I was talking to somebody, last week on the phone, and I spent an hour talking to this guy I know, a good friend of mine named Jaron, and in the process I realized everything I was saying was from Cash Flow Quadrant, I was talking about the four quadrants, and all of sudden it clicked in my head, and you know in a weird way, like seven years after reading it the first time, all of a sudden I was like, I get it! And now I’m like, I’m going to pick that up, when I finish the current book I’m on, I’m going to read that again, because now it actually makes sense to me, maybe I wasn’t prepared at the time or whatever.

Will: It’s good that you took it in, and you actually applied it without even realizing it!

Brandon: I think I just never realized, you know some books are just like that. You read them, and internally you process them, it just wasn’t as flashy as Rich Dad, Poor Dad, but I think it’s just as important.

Josh: Cool. Nice, nice.

Brandon: All right, what about, uh?

Josh: What about what? I mean should I just disappear?

Brandon: Shit, I didn’t want to take your question!

Josh: Why don’t you just stuff it? Let me talk here! Boss, sir.

Brandon: You stuff it!

Josh: All right, Will.

Will: Now, now boys.

Josh: Business books! You know Brandon’s getting greedy these days.

Brandon: I am! I’ll take it all.

Josh: Business books.

Brandon: Business books.

Josh: Oh, are you not going to answer until he says it? Are you guys in cahoots?

Brandon: We are in cahoots?

Josh: Will, what’s going on here? What about business books?

Will: Business books?

Josh: Brandon, why don’t you ask again? Maybe he’ll answer it.

Will: Yeah, yeah. Hey Brandon! What do you recommend for business books?

Brandon: Ah, you know?

Josh: All right, it’s been fun, it’s been nice having you on the show, until next time. I’m signing off. Will, business books.

Will: I’d probably go back to what I recommended during the show is the Trump Style Negotiations by Ross. I think that, it doesn’t matter what business you’re in, if you can negotiate you’re going to be a good business man.

Josh: That’s great that’s great. What about hobbies? What are we doing these days for fun? You’ve got your fam. What else you got going on?

Will: Still playing ball. Still playing softball. Got my travel ball team. We just got back from Vegas, we won that tournament. And late last night, my league, we won the championship. So I’m still doing that, I love that. That’s my exercise. And then the balance is, you know with my kids, my son plays ball as well, so I’m coaching him. He’s got a game today, last game of the season before playoffs! So it keeps me really busy with that. So between me doing that and then spending time with my kids and the rest is with them, so going out to dinner, going to a movie. Going out on the boat.

Josh: Go Mets!

Will: I can’t concur on you with that, but okay I’ll let you have it.

Josh: Go Mets!

Brandon: All right, final question. What do you believe, Will, sets apart successful real estate investors from those who give up, fail or never get started?

Will: I would say determination to succeed separates those that say no matter what I’m going to make this happen, I’m going to make this work and they go out and do it and they apply it in the real world. Those are the ones that succeed. You see the people on BP, the ones that have been there for years. That’s not just by accident. It’s because they made a decision to succeed, and they went out and implemented it and did it. And you see a lot of people that were on there, and then they’re gone? It’ s because they didn’t have that same commitment. You’ve got to make that same commitment to yourself. And it’s not to anyone else, it’s to yourself.

Josh: Hey Will. You’ve been on BiggerPockets for a long time, and this is not part of the famous four, but you know, have you noticed, I mean, clearly you’ve noticed the staying power typically means somebody who has been around BP for a long time, and they probably are still in the biz, for the most part. As one of the top posters, and we actually just printed out an article where I believe you were one of the folks interviewed and we talked about some of our top, top users of the site. What tips, really quick, would you have for anyone listening, on how BiggerPockets can help them not just kind of be successful up front, but to maintain some kind of staying power?

Will: Well you have to realize that it’s a commitment of time. So you can’t expect to get on BiggerPockets, create an account, make a post make a profile, make one post or two, read a few posts and be done. It’s not going to happen. You have to make the commitment, knowing that when you log in, and you make that profile, you’re logging in for years to come, and you’ve got to stay active. You’ve got to be on the site, and not just reading, but engaging the community. You have to make posts. By making posts and asking questions, or answering other people’s questions, you’re creating an exposure for yourself and you’re building your credibility. That can only be done over time. You can answer, have a great answer to a question, and it could be exactly right, but if you don’t follow that up and do that and repeat that, your credibility hasn’t really gained much. And your exposure hasn’t really gained anything. So you’ve got to make that commitment and spend the time on BiggerPockets and stay active. From me doing that, has gotten me friends, private investors, business partners, you name it. It’s just, it’s from my commitment to staying on BP actively. And it doesn’t have to be everyday, even though I’m on BiggerPockets almost every day, but at least once a week, you’ve got to be on there, so make that commitment to get on there and stay on there.

Josh: Awesome, awesome man. So hey, where can people find more information about you besides obviously, BiggerPockets?

Will: other than BiggerPockets, you can go to my website at BarnardEnterprises.com

Josh: Awesome man. Hey listen, thanks so much for coming back. We really appreciate it! Lots of good advice, lots of good feedback and much success to you going forward!

Will: Thank you Josh! If I may, one more thing the listener’s may want me to talk about this, the last time we were on the podcast was a couple of years ago, and we were talking about my occupants from hell.

Josh: Oh yeah!

Will: And I just want to let the listener’s know that a couple of years later, I know one of the members, I forget his name, he had a son born basically the same day I closed on that property. His son is several, three or four years, four years old now, and this still is ongoing! I have a court date later this month. So I should finally wrap it up. Hopefully I win this May, once I do, I can start the eviction process. But it is still ongoing. And what a nightmare! I mean, you can’t imagine how many things could possibly go wrong, have. And the thing is, this goes back to what I said earlier. I had a private investor in second position on this property. He was a BiggerPockets member as well. And I borrowed $80,000 from him, with the expectation of throwing that into the rehab and getting it done, and I was never able to do it. He extended the loan, extended the loan, extended the loan. And finally, it was so long, and graciously he did that. But at the end of the day, I just took profits from another property, paid him off all of his principal, all of his interest. I lost a lot of money on that, but the key was I paid him back. So he’s happy, and you know, he made money. And I will eventually hopefully get my money back. It remains to be seen.

Brandon: And if people don’t know what we’re talking about there. Let me just put in a plug, and we’ll end it with go back and listen to Will’s first show. I mean you’ll learn a ton about Will’s story, about where he came from, how he got started. And that is at BiggerPockets.com/show32 Again, BiggerPockets.com/show32 for that one. But of course, today this is the BiggerPockets show 130, which you can get at BiggerPockets.com/show130 And we’ll have links there, and you can get in touch with Will and pick his brain. All that right there with the show notes and in the comment section. Josh, you want to take us out?

Josh: Will! Thanks so much for being on board once again!

Will: Thanks guys! That was fun!

Josh: Thanks Will!

Brandon: Thank you!

Josh: All right guys, that was Will Barnard. Thanks again to Will for some amazing tips and really really good advice. We definitely appreciate it, and of course, congrats on that million dollar flip! Not a lot of people can say they’ve gone and flipped a million dollar property. So big props to Will on that! Otherwise guys, thanks for listening! Please be sure to leave us ratings and reviews on iTunes. That is really helpful to us! We really appreciate it when you do. Otherwise, get in there. Get together with guys like Will. Connect with them, learn from him! You know, partner with him!

The way you do that is get involved in our forums! It’s free. It costs you nothing. And all you’ve got to do is to devote some time. Commit yourself. Say, I’m going to spend five minutes a day, or I’m going to spend an hour a week, jumping in, helping people out, getting involved in the conversation. By doing that you build up credibility within the community. People who don’t know you get t o know that you know what you’re talking about, and are likely to want to work with you. So jump in there, make moves, make it happen, get involved and otherwise, if you’re not already, please follow us on Facebook, on Twitter, on G+, on LinkedIn, Pinterest. We even have an Instagram account. Get out there, support BiggerPockets by following us, and help share what we’ve got! Share our content. Share our community through these social media platforms. We do appreciate it. That’s all I got for you man. One last happy birthday to you, before we go Brandon!

Brandon: Thank you!

Josh: I see the wrinkles man. In the last like hour plus or minus, I mean you’re really starting to look haggard.

Brandon: Yeah, I was going to go get my mothballs out of storage and put on my penny loafers.

Josh: Excellent, excellent. You just went and pissed off another 10,000 people. Nicely done!

Brandon: No problem!

Josh: Happy Birthday, my friend.

Brandon: Thank you!

Josh: All right you guys. This is Josh Dorkin. Signing off.

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