All Forum Posts by: James Hutson

Nathan G. nailed it on this one. 

I am curious what the average home price is where your potential property is located.  In some areas, that price point might be average, in others, astronomical. Keep in mind that the buyer pool at the higher price points shrinks as interest rates climb. 

A friend of mine flips 12-14 houses per month, without fail, year after year (real flips, not lipstick on pig flips). From our conversations (and sending him deals), I've gathered that he relies on wholesalers to source roughly 80% of his flips. 10% come from MLS offers his agent makes (which is largely a numbers game) and 10% from bidding on bank foreclosures or maybe being handed a deal another flipper friend can't handle or doesn't want. Diversifying your deal sources is vital. Bank properties always end in bidding wars (much like the MLS).

I'd recommend using a tool like Propstream or BatchLeads and search for off market properties yourself. They're both pretty cheap to pull and skiptrace addresses.  I love Batch personally but have used both. We've had a lot of success finding HUGE deals searching for homes with the following criteria:  

*Single Family Residential (no townhomes)
*Built between 1945-1990
*Owned at least 15 years
*1,000sqft+
*Equity % minimum: 40%
*Owner type: individual or corporate (LLCs)
*Age of owner: 50yrs+
*MLS Status: No (meaning "show me only houses that are not listed"

Optional criteria you can add: 
*Occupancy status: "Vacant" or "Non-Owner Occupied" (tenant)
Realize that "Non-owner occupied" will give you landlord-owned properties and "Vacant" will be fewer so your results will decrease. Try running the search with the initial criteria I laid out, save that data and then run the same search with "vacant" added. Then isolate those guys and call them first. Vacant properties generally have more motivated owners. 

Happy hunting and good luck on your deal. 

Something that is quite interesting is that despite interest rates rising (like they did again today), the big hedge funds are still buying HEAVILY in most of the major markets that meet their 'buy boxes'. 

I have compiled a rather extensive list of data on 5 of the biggest real estate-specific hedge funds. To give you an idea, where I am (Raleigh-Durham, NC), we have these anonymous LLC's buying up everything and I mean everything they can between $200-400k. I've learned how to determine who the parent companies are of these LLCs (Tricon, America Homes for Rent, etc...) But even these companies are partially or totally owned by the real hedge funds of Wall Street (Vanguard, Blackrock, Blackstone--even some banks like JP Morgan & Chase).

The funds are buying heavily, using the MLS here, online with Google PPC and off-market marketing techniques (direct mail). In Miami, however, the majority of the purchase in the tax records are off-market portfolios buys (from one fund or investor to another fund). 20...50...100's of homes at a time. Less MLS buying. Less direct mail. I can back this up because my cold callers make about 35,000-40,000 calls per month, about half of those are to Miami and other FL markets. The sellers have indicated less direct mail offers from big funds and more private cold calls from either wholesalers like myself, local flippers and even the buyer agents for desperate buyers who can't find anything to offer on, on the MLS.

As interest rates hike, buyers drop their price point to adjust with the mortgage payments their budgets can afford. Let's say they go from $400k to $300k.  This will increase demand at lower price points. The hedge funds will be able to pick up the $400k homes with less competition and fewer bidding wars. The hedge funds also buy in down markets when there are massive sell offs for discounts (like 2008).  They sold off huge quantities of homes in 2013 and captured serious appreciation gains.  This time around, since they're buying heavily at the top of the market, I believe they will offer owner financing on the inventory they'd otherwise be forced to sell off as prices adjust downward (below where they bought them). Zillow is being forced to do this now and they lost over $880m in 2021 as a result of their flipping business going sideways.

Why owner financing? Because they can capture the big down-payments that a bank would, plus a reasonable and competitive interest rate. The last element is the agreed upon purchase price down the road, which WILL be above where the fund bought the house. We see funds buying into or starting companies that build-to-rent. Entire subdivisions of these build-to-rent homes are going up, with very nice amenities. Instead of the one time sell that most builders get, this time, the developer/fund will collect a massive downpayment (much like buying a home in golf community, you pay the downpayment to the bank and a premium/deposit for the community). Plus, they get high rent and eventually a massive sale amount. 

Canada has put a hold on foreign buyers (entities) from purchasing SFRs (to rent out) for the next 2 years or so. Where will those funds go next...America. More funds will turn to build-to-rent as time goes. Further evidence is the massive tracks of land being bought up by individuals through private LLCs and then either leased out to developers to build or sold to them (Bill Gates is now the largest individual owner of farmland in the US).

It will be an interesting next few years. I'd wager that: Rents will continue up. Home prices will eventually stabilize and dip in some areas. Funds will continue buying for now. Home shortage will continue due to the delayed effect of builders not building homes to match anticipated growth down the road, back after the 2008 recession. Lots of moving pieces. 

Happy hunting to you all.

Greetings all. I'm definitely looking forward to picking this book up!

I will probably use BRRRR for small multi-family properties instead of single family. I'm in one of the hottest markets in the country (The Triangle, in NC) It's Raleigh, Durham and Chapel Hill. The surrounding cities and towns are exploding as well.

Single family rentals are lucky to hit 0.07/8% of the value per month in rent.  The cost to buy-in is getting too steep to justify the rental profits. As a result, more investors are turning to small multi-family (which is also limited here). 

Happy deal hunting to all!

Investment Info:

Single-family residence wholesale investment in Durham.

Purchase price: $115,000
Sale price: $122,000

A colleague was flipping a home and the couple next door approached him with the desire to sell. I was brought in to discuss options and negotiate terms. There were negotiations back and forth. One of the high costs/repairs for their home was the in-ground pool. Negotiations with the wholesale sales price with the cash-buyer was primarily focused on the pool.

What made you interested in investing in this type of deal?

The motivation of the sellers and the location were key indicators that this was going to be a solid deal.

How did you find this deal and how did you negotiate it?

JV with a colleague who was flipping the home next door.

How did you finance this deal?

End-buyer (cash)

How did you add value to the deal?

Built rapport with the sellers and handled tricky negotiations to get the price to where it needed to be so that it was a win-win-win for the sellers, my colleague and I, and the flipper.

What was the outcome?

A successful and smooth transaction. The sellers were ecstatic to have cash and be able to move out west to live with their children and grandkids.

Lessons learned? Challenges?

Rapport rapport rapport. Even if you FIND a great deal, you must build a relationship with the sellers before you can press for the deal and larger profits. You can't solve their problems and bring value until they're comfortable enough with you to share their situation and what they need. It's difficult for a stranger to ask you to help them solve their problems and improve their lives.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Amazing attorney brought by the end-buyer (flipper). Will consider sharing to any local investors upon request.

Can't wait to be able to carve out the time to listen to this one.  We've had so many 'greats' as guests on the podcast (I've greatly enjoyed Crant Cardone's) and I'm sure Gary's is chalk full of tips.  He's one of the most real people out there!

@Jason Sylka welcome aboard!  

Thats incredible that you've put that all together and I'm sure a lot of people on here will greatly benefit from this.  Glad to see you're an action-taker, so keep it up!

@Nate Burgher I definitely agree with your suggestion.  I'm not that familiar with Houston, but being a Realtor and investor myself, I can safely say that finding a Realtor who knows real estate investing is invaluable.  The tricky part is finding an agent who has experience with that market but also has the time to dedicate to you.  Most agents who've been in 'the game' 10+ years have the business flow to keep them busy.  

@Brian Hatcher Make sure the agent knows how to calculate the basic investment numbers we deal with day-in and day-out.  Having the right mindset, as you mentioned, is also vital.  I dislike how every agent uses the same sales pitch "If you know anyone who's looking to buy, sell or invest...".   Most residential agents are about as savvy with investments as they are with commercial real estate so be cautious. 

I've found a few solid rentals on our MLS, however, the most lucrative deals tend to be sold investor-to-investor at local deal-making sessions and through the local REIA. Make sure to not rely solely on the MLS for deals, get out and network with the local pros and the more you get in front of them, the quicker you'll build a reputation as someone who is serious and set on making things happen. Who you know is important, but who knows you is far more crucial.

Happy hunting!

I wanted to start this discussion by stating that I'm sick and tired of getting approached by people recruiting for MLM companies.  The worst part--the last guy swore to me it wasn't MLM and that he was being mentored by some local serial entrepreneur who is looking for young, ambitious millennials with 'that spark' in them. 

Needless to say, I could smell MLM despite him lying and hiding it.  I did more digging and found out that yes, this so called mentor, is nothing more than a big-wig for the MLM company 'Gen-E Group'.  He claims to mentor young entrepreneurs about business development, start ups etc, but he doesn't really. Instead, I feel that MLMs are taking the potential entrepreneurs out of the workforce by selling them on this lazy, 'profit from a yacht' mobile luxury lifestyle.  Kids with degrees who can't find jobs right out of college are being suckered in on promises of fast and easy money.  I don't care if the companies are legit and people can make money...what I care about is pulling these young minds out of 'circulation' since they aren't creating any real value in this (and most) MLM companies.  It feeds off itself and new blood...not a whole lot different than what Madoff did.  Ponzi but legal.  I just pray that the true entrepreneurs want nothing to do with cookie-cutter franchised MLM companies anyways and want the hard work and struggle that comes with actual value creation.  Something from nothing is much more rewarding. 

I get the creating multiple sources of income...but only if you're creating true value.  I mean this guy went off on how they're 'different' (doesn't every MLM company claim this too?!).  Something about partnering with Amazon and Amway and bla bla bla. 

Now, this guy probably does get involved in Fractional Reserve Banking like he claims...because he's so wealthy he can.  But I'm upset with the fact that he sells MLM as if it's true entrepreneurship.  It's the worst possible form of franchising there is (no/low start up costs, promises of no risk and only reward, no hardships associated with starting a company from the ground up, on and on).  Know that saying "It's too good to be true"? well I think of stuff like this, this way "If its TOO safe (now/low risk), it's no fun and its bulls***" 

I have been looking for a real entrepreneur mentor.  Someone who's been in the field I'm in and where I want to be in 10, 20, 30, etc years.  Modelling is the fastest, most effective and efficient way to learn. I want to model myself after someone but at the same time, be me and throw my own twist on it.  Not a copy and paste entrepreneur, but one who has shoveled crap for and learned from a more wise and experienced professional. Something no business school could ever teach.

I would work for this person for free just to learn from them.  A real estate investor who specializes in: (1) Multifamily (apartments), (2) Commercial (retail and office) and (3) Commercial development.  I've had my eye on John Kane, CEO of Kane Realty and owner of North Hills. Short of pulling a Charlie Sheen from 'Wall Street' and calling his office every day, there isn't much chance I've got at meeting him, let alone convincing him he needs me. I know I need him. It's my big chance and I'm gonna go for it. Burn the bridges, accelerator to the floor, brakes permanently cut.  

I agree, it's about scale.  Cardone is a big thinker and doer.  He would rather focus on and close a couple large deals per year than hundreds of smaller ones. His returns will be larger and though big deals take more time, energy and resources (not to mention patience), it would be less chaotic (I feel) than re-doing the same start-to-close processes over and over for smaller deals.  I think he's just playing in a bigger ballpark at this point in his career than most of us.  I think a lot of us here share the same goals to get to that scale some day.

Excited to download and check it out!  Thanks for updating everything and adding the messenger feature!