What I Learned From Carlos Martinez | Titanium University - The Titanium Vault hosted by RJ Bates III

Episode Transcript
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SPEAKER_00 (00:04):
So there's this guy inside of Titanium University,
and you saw him on the thumbnailof this video or in the
thumbnail of this podcast thatyou're listening to.
And his name is Carlos Martinez.
I love this man, but I lovegiving him a hard time.
Me and him, we laugh and wejoke, we give each other a hard

(00:25):
time all the time.
He started a rumor inside ofTitanium University that I'm
five foot four.
I'm not, I'm I'm six foot.
I don't know how this cameabout, but he started this rumor
that was five foot four.
And since then, I've been givinghim a hard time.
In fact, every singleimplementation call ends with

(00:47):
Carlos having his hand raised.
And I say, Carlos, I see yourhands raised there.
And then instantly the Zoom callends.
That's how I end all myimplementation calls.
But part of being inside ofTitanium University is I do
one-on-ones with every singlemember.
And they have a calendar linkand they can schedule them

(01:09):
whenever I'm available.
And I just had one with Carlos,and Carlos taught me a valuable
lesson that I wanted to sharewith you guys.
And it's twofold.
It's one, what he's goingthrough and the adjustment that
he's currently making inside ofhis comping and underwriting.
So Carlos came in to Tu, startedlearning the closure formula,

(01:34):
how to comp and underwrite, andhe gained pretty significant
traction early on.
In fact, he started closingdeals left and right and started
making good money, but he had afull-time job.
And he got to a point where hehad to make that decision.
Do I quit the job or do I keepnot creating my own reality?

(01:56):
Right?
I'm doing deals, but I'm notactually doing what I want
because my time is being takenaway because of the W-2.
And so he quit that job and wentfull time.
But life happened.
He had an unexpected occurrencehappen in his life that took the

(02:20):
majority of the money that hehad made off of those deals
while he had the W-2.
So now he's in this predicamentwhere he just quit his job, he
no longer has that income.
The money that he had made fromwholesaling is now gone.
And what happens?
He starts feeling that pressure.

(02:41):
And he talked about this whereit was hard for him to embrace
being the buyer during theconversations because of his
current financial situation.
And rightfully so, right?
His back is against the wall, heneeds to close a deal.
And so what he started doing wasmanufacturing deals instead of

(03:05):
going out and really educatingthe seller and finding deals, he
started kind of manipulating thenumbers a little bit and just
getting signed contracts.
And it was kind of that dopaminehit by saying, Oh, well, look,
today was a good day because Igot a property under contract.
But unfortunately, you fastforward, you take the time to do

(03:29):
the recon, you get the pictures,you send it off to whoever's
doing dispositions, or even ifhe was working the dispositions
himself, and it ended in atermination or an attempted
renegotiation with the seller.
And because of that, hisfinancial situation only got
worse.
And this is what I love abouthow Carlos decided that he was

(03:54):
going to overcome thissituation.
I always preach about you needto be conservative on the after
repair value, aggressive on therehab numbers, and then put in a
significant assignment fee.
This is exactly what Carlos did,and he has called it the 10-5-10

(04:17):
rule.
So what he is doing is everytime he underwrites a deal,
whatever he calculates as theafter-repair value, he is
subtracting$10,000.
Whatever he is anticipating, therehab needed to achieve that
after repair value, he's adding$5,000 to it.

(04:40):
And then whatever he is puttingin as his anticipated assignment
fee, he is adding a$10,000buffer to that.
What this is allowing him to do,and now, mind you, this is this
can always change due to pricepoints, right?
This wouldn't work if we'retalking about a$5,000 offer on a

(05:02):
property.
This is for average pricepoints.
Same thing would go if it's amillion-dollar property.
You would have to be moreconservative on your
after-repair value, moreaggressive on your rehab, and
probably make a largerassignment fee.
Just average price points,$100,000 to$300,000 houses,
somewhere in that range.

(05:22):
He's using this 10-5-10 rule.
And I love this pivot, thismental move by Carlos to now
give himself a better chance athaving a higher contract to
close ratio.
He is in a situation that lifecame and slapped him in the

(05:45):
face, and now he is mentallystruggling to overcome this
while he's on the phone tryingto embrace being the buyer, run
the numbers correctly.
And I tell everybody this you'regoing to struggle with comping
and underwriting for a very longtime, probably forever, because
you're buying properties sightunseen.

(06:07):
There are so many assumptionsthat we have to make during this
process, like the after repairvalue, but also the rehab.
Like the after-repair value, weknow what the facts tell us, but
until we really get out and seethe property and we actually
hear the feedback from thein-buyers, we truly don't know

(06:28):
what that after repair value is.
Same thing when it comes to theamount of rehab.
We're going to ask a bunch ofvague questions to the sellers.
We're going to understand theirperspective, but they're not
really looking at it through thelens of an in buyer and someone
that would be coming in andactually remodeling this house.
And so there are a lot ofassumptions there.

(06:50):
And because of this pivot thatCarlos has made, he's now given
himself a$25,000 buffer on eachand every one of his deals.
This also gives them room tonegotiate when he is talking to
a motivated seller.
So if he's only$10,000 off, heknows he gave himself a$25,000

(07:11):
buffer there.
He could probably still get thecontract signed and it'd still
be a movable deal.
So if you're like Carlos andyou're in a position right now
where things are tough andyou're struggling to embrace
being the buyer, try out whatCarlos is doing with this
10-5-10 rule.

(07:32):
$10,000 off to after repairvalue,$5,000 more on the re-am,
$10,000 more in your assignment.
And to be clear, the assignmentfee that he is putting in is
$20,000.
So it's not a five, it's not a$7,000 fee.
He is now going for a$20,000assignment fee.

(07:54):
Carlos, I love this.
You're going to be right back ontrack where you were when you
decided to quit your W 2.
Now, for those of you that arelistening right now, if you've
tried this out inside of yourbusiness, let me know in the

(08:14):
comments how has it worked outfor you?
Show Carlos some love.
Like today's video.
We'll see you guys tomorrow.

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What I Learned From Carlos Martinez | Titanium University

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