The Math Isn't MATHING! | The King Closer Reacts - The Titanium Vault hosted by RJ Bates III

Episode Transcript
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Speaker 1 (00:05):
What's up everyone?
Welcome back to the King CloserReacts.
I am the King Closer, rj Batesthe third, and today I'm going
to be responding to a bunch ofyahoos talking shit about
wholesale.
Let's see if they know whatthey're talking about.
Let's get into the first videodon't buy this house.

Speaker 2 (00:20):
instead, buy this house because if you buy a nice,
new, shiny house like thisthat's already been developed
and refurbished, it's going tocost you, in this area, about £1
million.
It's a liability.
Instead, if you buy a houselike this, you can buy a rundown
house in the same street forjust half a million pounds For
£250,000, you can make it looklike this one, meaning you've
made £250,000 in profit.

(00:43):
Now what you can do is you canremortgage the property and you
can pull out all of your 750,000pounds that you initially put
in completely tax-free, leavingyou with a free house like this.
Because you bought a house likethis, you are welcome.

Speaker 1 (00:59):
I love the guy's accent.
Now, I guess this is like theBRRRR strategy in the UK.
Right, it's not free, though,like, let's watch out our like
loose language here.
You got into it with no money,right, but you did take out a

(01:21):
750,000 pound loan on it, right?
You still got to repay it.
Most of us over here in theStates we refer to this as the
BRRRR strategy.
Right, buy, rehab, rent,refinance.
Yeah, that's it Got there.
I just got burr.

(01:42):
But anyways, a repeat, I guessthere's another R at the end.
We added that one Repeat.
But that's what he's talkingabout.
Again, this is for investorsthat are trying to build this
portfolio.
That's what most of us do.
Of course, the tax-freeincentive there.

(02:03):
That's when, ideally, you wouldbe in for like 700,000 pounds
and refi for 750,000.
So now you're liquid 50,000.
Where you have that foroperating expense, you actually
make a little bit of money.
That would be the idealscenario, but good breakdown
from the UK.

Speaker 3 (02:24):
So I've talked to a lot of guys since I moved to
canada that do it in toronto,because toronto is huge right,
it's like the biggest city incanada.
A lot of wholesalers in canadathat do it and the regulations,
like all the stuff.
It's not really there, theydon't really have it.
Uh, they're not really aware ofit that much in canada, like
the, at least the regulation.
So yeah, you can do it inCanada, it's pretty same kind of

(02:46):
same thing except the data part, like batch leads, right and
like right.
They don't really have data likewe do here in the States.
So a lot of people are doingthey're doing like flyers and
they just flyer like everything.
Instead of like a list, they'lljust do like the whole, a whole
area, or paper, paper, clickpaper lead.
Yeah.

Speaker 1 (03:04):
So inside of TU we actually have quite a few
Canadian members.
Some of them want to come downto the States to wholesale
because the price points arelower and there's more volume
opportunity.
But we do have some heavyhitters, specifically in Toronto
, what Nathan's talking about.
He's absolutely right.
Some of those guys also want tocome down to the States with

(03:27):
some of those larger assignmentfees that they're making in
Canada and then they want to buyAmerican real estate.
Quite a few of them areactually coming in and what
they're doing is they're notstopping what they're doing in
Canada, they're now just addingthe States in and they're doing
a lot of hotels and ovationshere, Claude being one of them.
Claude's brother, Luke,actually just joined us a couple

(03:49):
of months ago.
They're doing significantvolume in Canada.
So I do think it's a viableoption.
I have to say it is now on mybucket list that I do want to
wholesale a deal in Canada.
I've actually thought aboutdoing like, hey, could I do a
deal in each province?
I don't know, that might betough.

(04:10):
That one up in the north, thatone might be tough.
We might have to write that oneoff.
But it is interesting to seethere are some subtle little
nuances that, at least from myvague understanding that I see
the difference between Canadianwholesaling and American
wholesaling, purchasing Canadianwholesaling and American
wholesaling, One like when youassign your rights off to the

(04:31):
end buyer, the end buyer doestake over, like the
communication, the TC work, therenegotiations, all of that,
like the communication of theseller.
That's very different than howwe do here.
But outside of that what I'veseen is is just there's an
opportunity to make largerassignment fees on Canadian real
estate, specifically nearToronto where the price points
are super high, just less volume.

Speaker 5 (04:53):
If someone to make a million dollars in real estate
what would you recommend forthem to do?

Speaker 4 (04:56):
Do not immediately go into real estate investing.
I think a lot of people thinkthat that's where you make money
.
That's also where you can losea significant amount of money.
Brokerage is a no riskinvestment.
Your time is what you'reinvesting into creating
relationships for people thatare going to pay you to help
them do a real estatetransaction that you have
nothing to do with.
You don't have to buy the glueor the nuts or the bolts.

(05:18):
There's no capital investment,and that's what's always set me
free, because the risk is yourtime, but the reward can be
endless.

Speaker 1 (05:26):
Okay, first thing I want to say is if you're buying
glue when you're rehabbing ahouse, something went wrong.
But I do agree with his take on.
The first thing you shouldn'tdo if you're deciding to get
into real estate is real estateinvesting, flipping houses,
becoming a landlord.

(05:47):
There is an extreme risk.
Liability comes along with that.
You need to build up the skillsets and the understanding one
how to underwrite deals.
Do you have the connections,the contractors?
Do you know how to manage arehab on a property?
If you're a landlord, do youknow how to manage tenants?
Do you have the liquid capitalto be able to handle if

(06:09):
something goes wrong with one ofyour properties?
So I do agree with that aspect.
Now, on the side where he saysbrokerage is the way to go, of
course he's going to say thathe's a broker and I don't think
there's anything wrong withdoing that.
I think that's definitely achoice.
But if your intention is to getinto real estate investing, I
would suggest getting intowholesaling because it would

(06:29):
teach you more of the skill setsthat you need to inevitably
become a flipper or landlord.
You're going to understand howto source your own deals, going
direct to seller.
You're going to understand howto comp and underwrite.
You're going to obtain a ton ofknowledge by the conversations
that you're going to have withother real estate investors,

(06:49):
whereas if you go into thebrokerage route, very rarely are
you going to try to work withthe real estate investors or
distressed properties, becauseyour commission is based off the
price point.
So say, it's a $500,000neighborhood, that's full market
value.
You could make somewhere in therange of $15,000 for listing
that house or representing abuyer.
But if you are working with areal estate investor or you're

(07:14):
working with a distressed seller, they're going to need to sell
that for $250,000.
What does that do?
Well, that means yourcommission went in half.
So very rarely do broker orreal estate agents and brokers
get into this wanting to workwith distressed properties, and
that's why there's a massiveopportunity for wholesalers.
So for me, wholesaling would bethe route if you inevitably

(07:37):
want to be a real estateinvestor.
But I get his point and Iunderstand his position because
he is a real estate broker.

Speaker 5 (07:45):
The future of wholesaling real estate.
Now, there are some fears thatcertain states will make
wholesaling illegal or somethinglike that, but I can tell you
that as long as it's still legalto buy and sell properties in
any form, wholesaling will bealive and well.
Because as long as people cando that, as long as you can
still buy something at a lowerprice than you can sell to
somebody else, wholesaling willalways be alive and well, guys.

(08:05):
So there may be a little changein how you do stuff, but by and
large, it's always going toexist as long as people are
alive and people own property.
So keep at it, guys.

Speaker 1 (08:14):
Keep building your business, and if you want more
strategies on becoming asix-figure wholesale, I don't
want to hear that, but I agreewith his take Wholesaling is not
going to go anywhere.
I think regulations willincrease over the course of time
and I think it's going to justcontinue going down the path
that is transparency, disclosure, maybe us mandating that we put

(08:40):
things on our marketing when weare dispoing deals, getting
sellers to sign disclosures upfront when we're getting
contracts signed.
I think that's going to becomethe commonplace and honestly, I
kind of welcome it.
Right, the competition that Ialways say they suck so bad.
It's going to eventually comeback on them that they have

(09:03):
built their business on afoundation of lies and a lack of
transparency.
So for me I have said,ultimately what's going to
happen is it's going with moreregulations.
There will be less wholesalers.
There will be fear aroundwholesaling.
People that are taught how tolie and manipulate and that's

(09:23):
what their foundation of theirbusiness is built around will
leave the industry, which iswhat they're trying to
accomplish with theseregulations.
And inevitably what will happenis is due to the lack of
competition.
It will impact the sellers.
Price points will go downbecause now you won't hear the
well, I've already talked to 10of you guys.

(09:45):
I'm getting so many calls.
The motivation will increase,sellers will become more
desperate and price points willinevitably go down for us as
wholesalers.
So for those of us that stickaround long term, I foresee
several years down the road.
We will be making even moremoney.

Speaker 6 (10:03):
If you buy a property for $100,000 and you put
$20,000 down and you wholesalethat the next day or 30 days
later for $120,000, you've justmade 20% in, let's say, 30 days.
Do you know what that rate ofreturn is?
That rate of return is 240%,because if that money was

(10:25):
working for you for the year, itwould be 12 times 20%.
That's right.
That's the returns that you canget in real estate.
When you start to understand it.

Speaker 1 (10:38):
I know we've talked about this before on Getting
Closer Reacts, but that brotherright there just did a wholesale
and real estate Steiner math.
That's what that was.
Listen, the math is probablycorrect.
But here's my issue If you'rewholesaling, you're not buying
it for 100,000.
You ain't putting anything down.

(10:59):
You're not spending any money.
That's what wholesaling is.
The money that we have to spendis in our systems and our
overhead and our lead generation, not on the properties, because
then I'm flipping it, I'mwholetailing it, I'm novating it
or something.
It ain't wholesaling.
Wholesaling is I got it undercontract for $100,000.

(11:23):
I go to Jordan and say you wantto buy this for $120,000?
He says yeah, he goes and buysit for $120,000.
Title company wires me $20,000.
Go ahead and do your Steinermath on that.
What's my rate of return?
I got $20,000 and I put nothingdown.
That's infinity Boom baby.

(11:44):
That's our episode of the KingCloser Reacts.
Let me know what you thoughtabout my math there.
Then I guess we probably have alittle bit expenses.
I'll say it's a thousanddollars.
Let me know what that percentof return is.
It's a hell of a lot betterthan whatever he said.
Show me some love like today'svideo.
We'll see you guys tomorrow.

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The Math Isn't MATHING! | The King Closer Reacts

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