If We Can Do This, You Can Too!

Fifteen Years Ago I Would Have Said You Were Scamming Me!

So, that probably sounds pie in the sky, and sixteen years ago when I bought the complete Carleton Sheets course for $99 (the call center people wanted $5,000 with a coach thrown in) I would have said it was too! (If you want to skip my story you can go to the bottom and see the deal, but if you read along you'll be glad you did!) Sharing the Success without telling you how to do it seems braggadocious.

Even after doing 45 flip/buy and hold properties in my 20's while owning a real estate brokerage I would have said this couldn't be done. (That probably was because I was driving my luxury car on early morning paper routes to cover vacancies, because I didn't know what an emergency fund was).

In my mid 30's I sold as many as 35 properties at one time to the hedge funds that started gobbling up properties like the whale did Jonah, but I made all the money for my investors and just took home nice commission checks. Somewhere along the line I realized that buying a few rental properties here and there wasn't going to make me wealthy (maybe stable, but not wealthy), and selling them by the dozens made me popular with the people I was making rich, but gave me income not wealth.

I Had to Do Something Different and You Can Too!

A friend of mine who is a coach from "Rich Dad, Poor Dad," bought 6 properties from me in 2008-2009 with $90,000 worth of down payments he borrowed from a friend and then refinanced a year or two later to pay back. He bought houses that had sold for $150,000-$165,000 before the crash for $40,000-$50,000. I found them, did all the renovations on them, brought on the management team to place the tenants and I made $18,000 for being his highly expert investment oriented real estate agent. He made 25% Cash on Cash Returns and within 6 years had about $580,000 equity in the homes (not counting making 150% of someone else's investment money back, which was an infinite return after he refinanced, paying them back). So he made $135,000 on his friends $90,000 and got to keep $580,000 in equity off of the banks investment (remember he had no money in and it was all leveraged after the refi). So while I did all the work and had most of the expertise I made $18,000 and he made $715,000. The worst part was that because I had several employees helping me do about 25 a month of these (in a good month) I only took home about $9,000 before taxes.

We Raised Capital (You Can Too)!

I had learned a lot helping a lot of friends and clients get rich off of the Atlanta downturn, but I hadn't built true wealth. A friend of mine called me up one day and we decided that if my friend could borrow money and do that, why couldn't we raise some capital.

• We scheduled a meeting with some well off friends and family and presented the success we had in Atlanta helping other investors hit their goals. We had plenty of proformas of actual deals we had done, and references.
• We showed what returns were being made in the Napa, CA, Marin County, San Francisco, Los Angeles, and San Diego markets compared to the Montgomery, Birmingham and Huntsville, AL markets. (For those looking for cash flow buy and hold passive income it wasn't hard to convince them that 20-25% Cash on Cash Returns were better than 1-2%). We raised nearly a million dollars.

We Built An Incredible System

Having already built a system with analysts, scouts on the ground inspecting the properties and getting renovation scopes done, offer teams, closing teams, and property management it was easy to replicate. We had to be up earlier, be the first offer on the listing agents desk, hit probate records, auctions, FSBO's, Expired Listings and maintain a strangle-hold on REO's, Fannie, Freddie and HUD's in the MLS.

• We weeded through thousands of properties and made 70-100 offers per month and started winning 20-35 homes per month.
• As volume increased we became a nationally managed account for Home Depot and received major material savings that made our properties way more competitive.
• We hired the crews to work directly for us getting way better labor pricing than our competitors.
• Our attorneys and lenders started fighting for our business and lowered all of our fees.
• We bought a national franchise property management company to protect our interests and those of our clients.

These points allowed us to provide tremendous value to where subdivision developers told us they couldn't buy the foreclosures and renovate them cheaper than we could, so they invested with us directly instead of buying and fixing the homes themselves. By providing tremendous value we had instant demand! RealtyTrac Even Featured Us in their December 2015 newsletter on why Alabama is a hot cash flow market!

1031 Exchange Clients and Hedge Funds

Pretty soon we had California, Utah, Georgia and clients from much more expensive states wanting to 1031 Exchange their low return properties for THREE to TWENTY SEVEN TIMES the NUMBER of PROPERTIES they had and Triple to Six Times the net annual cash flow!

• So we helped a client sell 1 property that they had for 30 years, and were making $18,000 per year and put them into 27 properties where they should be making nearly $120,000 per year off of the same capital. (We also reset their depreciation clock giving them way more tax advantages). The house they had was a money pit, the ones they went into averaged around $17,000 each in brand new renovation and were turn-key! They went from 1.8% return to 17% return potential. THATS HUGE VALUE FOR THEM! In the process $400,000 came back to the us and our investment partners in 4.5 months.
• Now that's not a lot of profit per property, we made a little over $7,000 per property. However, because of the value another hedge fund just committed to buy our next 50 properties, and if things go well they need 1,000!
• In the mean-time we provide full time jobs to 13 people, part time employment for another handful, full time work for 9 rehab crews, and nearly full time employment for six real estate agent/brokers.

It Only Looks Like It Happened Overnight!

This one cycle only took 4.5 months, and while the money keeps our business vibrant, provides jobs and makes a huge impact on the communities we invest in, it didn't happen overnight! I've been working on this craft for 17 years. I've had failures and gotten back up after learning from them. The next cycle of 50 properties will probably take two months and they are pre-sold!

• Provide tremendous value, give more than you receive. Selling an asset that brings in $3,600 per year in net passive income for a $7,000 profit (all while taking the hassle out for the buyer) does that! We could have held for two years and made the same while keeping the property.
• Push past failures, disappointments, learn from each deal you do. Turn small successes into medium ones, and those later into great ones!
• Money follows success. Track record will bring you all the capital you need!