May 26, 2025 • 36 mins
The path to financial freedom for first responders doesn't always require working extra shifts or sacrificing family time. Sometimes, it's about recognizing opportunities that others miss and taking calculated risks that yield outsized returns.
In this eye-opening conversation, Mike reveals how he transformed a dated but functional house into a profitable investment without going "HGTV style" on renovations. Walking us through his recent wholetail flip that netted $62,000 in just 48 days with only about 10 hours of his personal time invested, Mike demonstrates the power of strategic real estate investing for busy first responders.
Unlike traditional house flipping that requires extensive renovations, Mike focused on targeted improvements that would appeal to first-time homebuyers: replacing carpet in key areas, touching up paint, improving curb appeal with landscaping, and ensuring all systems functioned properly. The biggest expense was replacing a failing septic system, which he identified early and negotiated into the purchase price.
What makes this case study particularly valuable is Mike's transparent breakdown of the numbers and decision-making process. From the initial purchase at $168,000 to the final sale at $310,000, he shares exactly how much was spent, where the money went, and why certain renovation decisions were made. He also discusses potential pitfalls to watch for, including the unexpected complications that can arise with properties that have solar panel leases.
Perhaps most importantly, Mike emphasizes the value of building strong relationships in real estate. By treating the referring agent generously and focusing on long-term connections rather than maximizing profit on a single deal, he ensures a steady stream of off-market opportunities that don't require active marketing or lead generation.
Ready to discover how you can leverage your limited free time as a first responder to build wealth through strategic real estate investments? Listen now and learn how to identify, fund, and execute profitable deals that can dramatically accelerate your path to financial independence.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
All right, everybody, we are back with First
Responder Financial Freedom.
As you can see, it is justmyself and Mike today and we are
going to be chopping it up, butwe're actually going to be
going over a deal that Mikementioned in the group and that
got a decent amount of interest.
So what we're going to do todayis kind of expand on his post,
walk through how he found it,how he funded it and then how he
(00:24):
flipped, fixed it and then,excuse me, he got a nice return.
So with that, mike, if you want, let's just go ahead and start.
So we'll start off with how didyou find this deal?
Kind of give a littlebackground before we go into
this.
Speaker 2 (00:39):
Well, a little more context.
We were flipping houses a goodbit over the last several years
and about two to three we'llcall it two years ago, we pretty
much stopped cold turkey.
We were no longer activelylooking for flips or wholesales
or any of that stuff so that wecould focus on building our hard
(01:00):
money, lending business, jumpCapital and also pursuing
storage facilities, which we'vebeen doing.
So I say that just because thisone kind of will quote fell
into my lap.
You know, so I have been, Ihave our meetup, we've been
networking for years andoccasionally people still call
me with deals and that's how Ifound this.
(01:22):
One is a real estate agent hadsold two houses for this uh
individual previously and, uh,they were met with a special
circumstance, so he knew we buyhouses like this and just
reached out to us nice, okay,and then is it in your.
Speaker 1 (01:42):
So, like you mentioned, you guys, you and
bill were flipping a lot, soit's in your previous target
market that you would do.
And, like it's funny, when wewere talking right now, I just
got a carrot lead for Boise andit's kind of the same thing,
right, like I'm not activelypouring 100% of my energy into
it, but I have come to theconclusion.
Well, I know what, like myideal target is and if it comes
(02:12):
up, I'm going to buy it.
There's no reason not to, andit sounds like that's what you
did with this.
So you want to walk throughpurchase price versus like, so
actually, let's do this.
How did you analyze the?
Speaker 2 (02:16):
deal and decide yes this is the deal for us.
I took the phone call, I knewright away whenever he told me
the area and roughly what theprice was.
I didn't even have to comp itto know that we were in the
ballpark of what they needed.
So, um, that's how how Ianalyzed it.
But with that being said, uh,the agent was telling me like
(02:37):
hey, this is really nice, it'san older person and let me
rewind like they had a veryspecific need.
So the agent wanted to list it,obviously, but they had a very
specific need where she was thepower of attorney for the
individual who had developed along term medical condition
(03:06):
passed five years prior, andthey were just, she was not able
to keep up with it.
She needed 24-hour care.
So they needed a very specificamount of money, um, on a very
certain date.
So they had a very specifictimeline they had to follow.
And the agent explained likehey, if we price it like this,
you know well, you know thewhole listing presentation and
they were willing to forego likehighest and best dollar for the
(03:31):
certainty of having the moneyon the certain date.
They needed to put their lovedone in long-term housing or
long-term care.
So that's not necessarily how Ianalyzed it, but that's how
they came up with their initialdollar amount, and then that's
how I was able to sit there andsay well, what you're telling me
in the area it is pretty much.
(03:53):
Yes, I'm interested.
Can I come look at it today?
Speaker 1 (03:57):
So perfect.
And then when you got there, Imean this is going to go to, was
the condition as described?
Was it a little bit better orworse?
I know usually with the actualhomeowner they say it's great.
They always say, oh, it doesn'tneed that much work, and
sometimes that's true andsometimes like, oh, this is a
full gut rehab, yeah, no.
Speaker 2 (04:15):
So, um, it was in what I would describe as like
good, but dated shape.
So, um, whenever I walked it, Iwas like okay, everything looks
good, um, it's just old, likeold as in, like dated, not like
mechanically or functionally old, just ugly okay, no, did you
(04:39):
guys?
Speaker 1 (04:40):
when you're considering like so when I buy
I'm considering my exit options,right, like hey, if I flip it
I'm gonna get this price, if Iwholetail it I'm going to get
this price, if I wholesale itI'm going to get this price.
And usually for me, if I canmake it work and all three of
those are viable options, thenit's a hundred percent go for me
.
I don't really need to worryabout it, because even if I
don't want to flip it, I likewholetailing.
(05:01):
So when you're talking aboutthis, in my mind I'm like I
wonder if they wholetailed it,because that's what I would do,
even if I took a little bit offthe table.
Unless, like you said it's,there's not a new roof, not
electrical or plumbing needs,it's just a cosmetic flip.
Then let's rock and roll throughthe cosmetic flip and make that
extra money.
Speaker 2 (05:31):
Yeah, so you're a hundred percent right.
We looked at all three of those.
And then I also look at afourth option now, which is like
who do I know that wants to buysomething like this that I
could then lend to?
So, um, with this one we lookedat what it would be to flip it
like full cosmetic rehab, versusjust hold tailing it.
And you know, hold tailing forthose not familiar is basically
just taking a house and makingit financeable, making it nice,
but not like ripping everythingout and gutting it, so to speak.
So we compared the numbers andwhere this is at.
(05:52):
I knew that this is like a primefirst time home buyer area USDA
FHA financeable.
People buy here because of theschool district type thing.
So I immediately was like allright, I don't know if I,
frankly, I just I'm at the pointwith flipping.
I'm like I could care less if Iever do it again.
(06:12):
So, uh, spoiler alert we endedup whole, whole tailing it.
So we we did not do a full gutrehab.
So, uh, we still managed tospend about like 19 grand, but
you know that used to be like aflip.
Now, right, we wholetailed itand spent 19 000, with the
(06:32):
lion's share of that being aseptic tank.
So, um, okay, you know I can, Ican kind of talk about like
numbers and just kind of getlike a little nitty-gritty about
it.
Um, because I think a lot oftimes people speak in
generalities with this stuff andbe like, well, I need to see it
, you know.
So the original, the originalcontract price was $180,000.
(06:53):
And the only thing we put inthe contract was it was subject
to a well and septic inspectionand, truthfully, uh, once I got
there I was like, well, we canline item, scratch the well
because this is on public water,there's hydrants, it's got
public water, but it's still hada septic system not abnormal
(07:15):
for this area.
However, I do this nowregardless of what I think of
the septic situation might be,because in this geographical
area of the county I have beenwe'll call it screwed over by a
septic system where I ended uphaving to do either an
innovative system or a holdingtank, which significantly
(07:39):
impacted my sales price, and theonly reason I didn't lose money
on that deal is because I rodethe wave in the market whenever
things were crazy.
So now, whenever I buysomething like this, I want a
septic inspection.
It cost me, you know, seven or800 bucks because they have to
pump it, jet it.
Look at it, even though Ididn't think there was going to
(08:00):
be an issue, when they did theseptic inspection it had three
cracks in the tank and so weknow right then, and there
financing is going to be anissue, unless you just get
somebody that gives you an allcash offer, no inspections.
But those days are pretty muchover, at least for us.
So $180,000 purchase price.
We went back and said like hey,here is the septic report.
(08:22):
I'm not trying to pull woolover your eyes, but this was the
condition.
We said we could pay one 80.
If everything was good, this isgoing to be, you know, anywhere
from a nine to $15,000 issue.
So we kind of worked out anumber.
I think we settled it.
I think it was 12,000.
Cause I think the contractchanged to 168,000.
(08:42):
So that left us a little bit ofwiggle room and getting the
septic fixed and still took alittle bit of a roll of the dice
.
But I have a pretty good septicguy now that I use for every
septic install and inspectionand I said I just want to make
sure that we're going to be ableto get the permit for just a
direct tank replacement.
I don't want to find out that.
(09:04):
Oh no, like now there's somenew guideline where again, the
holding tank is an issue, or ainnovative system which could be
40 or $50,000.
Big difference, right?
So I don't like renegotiating.
But it was spelled out for thefolks at the beginning Like if
(09:24):
this is an issue, we're going tohave to have a price adjustment
.
They weren't happy about it butthey said, hey, like that's
fair, that's what we talkedabout.
So we adjusted the price to168,000 bucks.
Speaker 1 (09:36):
And that's the thing too.
I think, like going into it, alot of people are taught to
renegotiate oh, I just lock itup and we'll renegotiate later.
I think that's poor businessand you're already taking,
you're taking advantage ofsomebody who usually is in need
of a solution, and a quick one.
So there are backs up againstit.
But, like to your point, I mean, it's super valid.
(09:57):
You know that it's an issue.
You can explain why, explainwhy you're doing this, and sure
enough, it came up.
And then it's not like it's atwelve thousand dollar bid and
you guys asked for twenty fivethousand dollar credit.
You just ask for the exactdollar amount.
And it happens over and over.
And I think, too, it points toonce you start doing this, it's
like our job on the firedepartment once you go on a few
(10:18):
auto X's, you start to to getbetter, more efficient, know
what to look for, and it's thesame thing with this.
Okay, now you've had a couple ofseptic issues.
You know roughly what the costis, you know the appropriate
questions to ask and you knowwhat could end up costing you 40
as opposed to 12.
I think like when I wasflipping a lot in Boise $35 a
square foot.
I can nail that with everythingoutside of major systems and I
(10:40):
got super fast on the phone.
I could one call close peopleimmediately because I knew the
area.
I'd bought houses in most ofthose areas.
I knew the construction costs,I knew what to look out for and
certain things.
For me, like in California,septic is not big.
Everything where I live is in.
You know it's.
But I started to get propertieswith septic and I had not know
(11:03):
it's.
But I started to get propertieswith septic and I had not um, I
did not get a public uh, I'msorry a septic inspection,
inspection.
And then I ended up having tobuy one, for I think it was like
nine or 10 grand at that time,which sounds about right.
It was probably five or sixyears ago.
Speaker 2 (11:13):
Yeah, that's a tank.
That's reasonable.
It's a whole.
Yeah, it was just a tank.
Speaker 1 (11:17):
Well, and the contractor had driven over it
too when we were doing work, sothat was a big reason as well.
So but okay so cool, yeah, ithappens, and I think it was
Friday afternoon and they wereprobably having cervezas on
Friday afternoon and hey, heowned up to it and then he ended
up paying for it.
But yeah, just like littlethings like that that you can't,
you're not going to know unlessyou do it.
(11:39):
So okay, like that, that youcan't, you're not going to know
unless you do it, so okay.
So you guys renegotiated andthen, yeah, just to clarify, I
100.
Speaker 2 (11:45):
Support what you said .
I do not get into the businessof renegotiating deals, um, but
that's why I had that in thecontract.
So anyways, um clarify that.
So what was the next question?
Speaker 1 (12:02):
So you guys locked it up and then you're going to
close on it.
And since you own Jump Capitalas well, obviously I'm curious
did you use your own privatemoney sources or did Jump
Capital fund this deal?
Speaker 2 (12:15):
No.
So my business partner Bill andI, we each stroked a check for
a hundred K each, put it intoour one account and that's what
we use to purchase the propertyand to fix it up.
Speaker 1 (12:29):
So cause.
Speaker 2 (12:29):
Once I looked at it and we knew we were going to
wholetail it.
I knew I had a rough idea, likeI think I said.
You know we're going to spend15 to 20 and we spent 19,000
bucks, give or take a couplehundred.
So, and like I said, the lion'sshare of that being the septic
tank replacement.
Speaker 1 (12:46):
So I like it.
The only thing that I've had aproblem with when I'm putting my
own cash in cause.
I do like to use thesefinancing, and I don't know if
this is the cases and it soundslike it wasn't is every deal
I've actually truly paid my owncash for.
I lag on it because there's nofinancing deal.
I said oh, it's already mine, Iown it, I'll just let it sit
there for a while and focus onall the projects that I had at
(13:07):
that time that were financed,because I'm like, well, I don't
want interest accruing on stuff.
But again, if you're notfull-time flipping anymore,
that's not an issue and it'snice to be able to dump the cash
in there and get the return ofpayroll interest.
Speaker 2 (13:19):
Yeah, just to be clear, I mean I have zero other
flips going on, so that's why Idid it that way.
But whenever we had eight or 10of them going at a time, no,
there was no Mike stroking acheck for that much.
So, yeah, the cost of capitalwas basically zero because we
(13:40):
were able to do that.
But like and I don't have theday we closed, but like, if we
closed on a wednesday I knowit's a wednesday or thursday
because of the timeline theyneeded for the skilled facility
um, like they, we closed on amonday.
We gave them like a couple daysto get their personal
belongings out that they wanted,but they didn't want to take
(14:01):
anything really.
Uh, we just came like two orthree days, anything they wanted
they could leave in the garageand we got right to work.
So there was like a 48 hourdelay maybe from closing to work
starting, and that was more toaccommodate the seller and their
family, not seller and theirfamily, not our timeline, Okay,
(14:21):
and then so two things.
Speaker 1 (14:22):
Then what did?
You estimate as the timelinefor the rehab and you already
mentioned it, but you estimated15 to 20 grand for that rehab
and it came in right aroundthere.
Speaker 2 (14:33):
Yeah.
So I think Bill and I said it'dbe 15 to 20.
And, like I said, it was 19.
It's always on the high side orslightly over.
It's never on the low side.
But the timeline I anticipatedbeing approximately four to six
weeks, because the unknown wasthe septic permit that we had to
get, and they'll you know, theygive you the window of two to
(14:54):
four weeks.
So what we did is we went aheadand just started knocking things
out and the biggest thing wehad to do was clean it out,
because it was just like 40years worth of, like you know,
yard sale crap and got all thatcleaned out.
Um called my flooring guy.
I said, hey, I need three roomsof carpet.
(15:14):
I don't care what it is,builder grade, gray is fine.
He came and did that all in oneday, had a guy come in and just
patch and paint, because theytook like the tv off the wall
with like big holes.
But we did not paint the wholehouse, we literally just painted
like the living room, theentryway and part of the kitchen
, so like 600 where the paintwork is so not a lot of paint is
(15:38):
what I'm getting at and uh,then what else do we have to do?
um, smoke alarms, you know justthe typical like winter required
repair type stuff.
And then the septic tank and,uh, landscape the outside.
So we did like a nice landscapejob out front, give it some
curb appeal.
(15:59):
Like a couple thousand bucks,like that gets us a pretty nice
landscape job for this pricepoint.
So did we have to do that?
And maybe not, but itdefinitely made it look a heck
of a lot nicer and to me it'sworth the 2000 bucks or whatever
.
The big unknown besides theseptic for this was this house
(16:21):
had solar panels.
So I don't know if anybody hasdealt with solar panels
listening to this, but I would,10 out of 10, encourage you not
to put them on your housebecause when it goes to sell
that those, those are not likeproperty of the house, those are
being leased from the company.
(16:42):
And then, whenever they did thehome inspection I know I'm
getting slightly ahead theyfound a leak in the roof which
the inspector said was a resultof an improperly installed solar
panel which so we had to gothrough the customer service
aspect of the solar companywhich come to find out is going
(17:02):
out of business this particularone.
So the technician had three nocall, no shows for the repair.
So on the fourth and final timethey did come out, and then
they said that was nothing, wedid.
So, and then we get into thislike well, shoot.
So we got it in writing fromthe solar company, gave it to
the lender, gave it to theinspector and the buyer and
(17:25):
fortunately they were cool withit.
But I can tell you that it wasa lot of back and forth and just
a lot of unknown.
I just don't think they'reworth it, honestly, and if you
have any anticipation of sellingyour house in the the near
future, I just I would stronglyencourage you to rethink the
putting those on.
So but that was, that was, uh,probably one of the biggest
(17:49):
issues with this house.
Besides the septic.
He had trouble get.
The buyer had trouble gettinginsurance, um, initially because
of the solar panels.
We were able to help them withthat, um, and then, yeah, so
anyways, I got a little bitahead of myself, but the solar
panel issue was kind of a painin the butt.
Speaker 1 (18:08):
Okay, yeah, and that's true too, and a lot of
times you know when they'released.
If you owe them, it's a littlebit easier.
But if you lease them and youcan't even buy out that lease,
it's like, let's say, you paid25 grand for that lease.
It's going to be like a 50 000buyout.
Speaker 2 (18:20):
So yeah, I would, I would suggest people get a
little bit yeah, the buyout, Iwant to get 30 grand yeah there
you go see, so it's usuallysomething that's crazy to where
it doesn't make sense to do it,so uh real quick kind of a
selfish question and thinkingabout your lending business so,
knowing what you, know?
Speaker 1 (18:36):
do you request, do you require your borrowers to
have a septic if it's in an areathat you guys are worried about
, or is that just you?
Let them hold the dice yeah, no, we do.
We require septic inspectionbecause of those issues yeah,
you don't want, especially ifthey are newer investors, you
(18:57):
guys know, is that what you gotto protect your capital?
Speaker 2 (19:00):
So okay, absolutely, and that's one of those like if
you miss a a heavy up, or youmiss a I don't know a couple of
windows, no big deal, you miss aseptic system, make a torpedo
the deal.
So yeah, we're very particularabout septic inspections now.
Speaker 1 (19:19):
Oh, that's cool, so okay, so you guys closed, you
fixed on it.
Oh, carpet, that's what I wasgoing to say.
So two things you mentioned, Ithink, for people who are
worried about not worried about,but thinking about full-tailing
Carpet, especially for bedrooms, super cheap, creates a
different feel.
And then the exterior right,you're trying to create an
experience when you're sellingthat house.
So if you do the landscaping,it looks nice, it looks clean,
(19:41):
even though we know that thehouse is going to need work
inside.
It has a lot of curb appeal.
Painting for me in Idaho is adollar per foot for exterior, so
most of the houses I buy areusually about $1,200 to $1,700.
So, to your point, I spend$1,200 to $1 to 1700 paying up
the outside of the house if I'mfull-time.
So now you have the landscape,the exterior pot, go inside, new
(20:04):
carpet and then everything else.
It's like, hey, we can doeverything else.
There isn't carpet, it looksfresh and I think you're going
to get a ton of money in returnis that a dollar for labor
material, or just labor, laborand material?
yeah, but it's not fancy.
I mean, these are entry-levelhomes.
Speaker 2 (20:24):
Sure.
What about interior?
Speaker 1 (20:26):
$250,000.
And that's white ceilings andthen one color for the walls,
and then trim, trim.
I want to say it's like anextra dollar or square foot or
something like that.
So you're talking $350,000 itused to be.
Speaker 2 (20:42):
Obviously this is extremely specific to your area,
but if you're just completelystarting from scratch, if you
budget three to four bucks asquare foot, that should at
least get you in the ballpark.
And, um, like I said, I knewthere was enough margin on this
house that I didn't need to knowevery stitch of carpet or
anything.
Speaker 1 (21:02):
So the carpet was $1,400.
Speaker 2 (21:04):
And, like I said, all we did with the carpet that was
there, you could tell it waslike probably vacuumed like
twice a week every week for thelast 40 years.
But the problem is it was allof green and it just looked
horrible.
So like we're rip it out, youknow.
So $1,400 ish in carpet, supereasy.
And the paint, you're right,Like just so when they walk in
(21:28):
it looks clean.
You know everything wasfunctional inside the house the
furnace was updated, the hotwater heater, you know like old,
old, dude, pride and ownershiptype stuff, like the dates
written on it, all nice, theowner manuals like in a bag next
to it, um, and then the, theother stuff, like the appliances
(21:49):
were updated, but the kitchenwas very dated.
So stainless steel appliances,very dated, like wood grain type
kitchen, but functional.
Same thing with the bathroomvery dated, looking, functional.
So I knew right out the gatethat this is like a, a three,
two.
You could probably call it afour, two with the basement, um,
(22:10):
but realistically it's a three,two.
So who's going to buy this?
Good school district, it's in alittle neighborhood.
It's a three, two.
This is going to be afirst-time home buyer and
they're probably going to wantFHA or USDA financing.
Well, we knew FHA was going tobe an issue and whenever we got
the listing, it was because weweren't going to end up holding
(22:32):
it for the 90-day period.
So, if you're not familiar, ifyou use FHA and Tyler's probably
a better person to talk aboutthis than me you have to hold it
for 90 or 91 days before youcan sell it to somebody using
FHA financing.
Why, I don't know.
I guess to prevent peopleflipping houses and I don't know
(22:53):
.
I'm sure there's a moredetailed reason that Tyler could
provide.
But we were looking at who ourend buyer is for this and
everything's functional.
It's nice, good school area.
So I figured most people aregoing to walk in and it's going
to be honey.
Oh, we could fix that.
Oh, we can update the kitchen,we can update the bathroom over
time, you know, but they couldhave moved in that day type
(23:14):
thing.
So carpet paint, no lightfixtures, smoke detectors, co
alarm, that kind of stuff.
And then, uh, we gotprofessional photos done and the
agent that brought it to me, wegave them the listing.
So that's kind of how we got itto market.
Speaker 1 (23:34):
And then it's okay.
So a couple of things likethings in that, Although the
most recent this is what Iremember, I don't think.
So agent obviously gave you thedeal.
You want to make sure that shegets the deal that way, the next
time something comes up likethis, you're going to get
another deal that has zeromarketing costs.
And then what were you justtalking about, too?
The end buyer.
Speaker 2 (23:55):
Oh, the end buyer, yeah, so.
Speaker 1 (23:58):
I like that you did that and I think a lot of people
I think this is.
What was one of my strong suitsis let's always think about who
we're going to sell this to.
How are they going to financeit?
If it's fha or va or usda, whatkind of things do we need to
know?
And then a big one for me isknow your loan limit.
So Mike just said he knows thatthis is probably going to be
(24:20):
FHA financing first-timehomebuyer.
And a good example is let's saythis house is $400,000, but FHA
loan limit in this county is$300,000.
You now have an issue becauseyou have a set of buyers that
can only go up to a certain loanamount and your house is above
that only go up to a certainamount and your house is above
that.
So if I was always borderline,I would bump it right up to that
(24:41):
max FHA limit and then knowthat hey, if we get an FHA buyer
, we're good to go.
But if we get a VA orconventional, we can also go
above that, and then, yeah, the90 day rule is correct.
The only thing that I would sayon that is, if it's within 180
days, most lenders are going torequire to a business just to
verify the value.
(25:02):
But yeah, that's all.
Speaker 2 (25:05):
And it doesn't always happen.
There's just one I can think of.
Speaker 1 (25:07):
I can remember the address in my head in Idaho
where we got a great appraisal.
Then the underwriter said hey,I want a second appraisal
because this house appreciatedso much in the last 80, or no.
We're at 88 days.
No, that doesn't make sense.
No, we're at 118 days and shesaid it's less than 180.
I want to replace this and thatfreaked me out because I was
like dude, this deal's almost tothe finish line, yeah it
(25:30):
doesn't work out.
I'm an idiot.
And then, luckily, it did workout.
So that was something, eventhough I'm a lender.
Um, I learned almost the hardway.
Luckily you know so.
Okay, so you got it to market.
Let's talk about what was yourpricing strategy.
And then did you get a hundredpercent of that stuff like that?
Speaker 2 (25:48):
Yeah, so got professional photos, which I'm
always a big stickler about,because I think if you're
sitting on the couch with yourwife or your husband or whatever
the case may be, and you'relooking online and it doesn't
even look good on your phone,you're never even going to get
the opportunity for them to comelook at it.
So I always am a big fan ofprofessional photos.
We get it listed and right outthe gate we get like six or
(26:12):
eight showings, which is alwaysa good sign.
Design.
If you have a house and youragent lists it, they should be
able to set you up on the MLSshowing time or whatever it is
so you can get notified asshowings are requested.
So you can at least have apretty good idea of the interest
level.
If you're not getting anyshowings, that's a concern.
(26:32):
So I say that just because Iknew right out the gate like I'm
getting notified showingactivities, good Rewind.
We priced it Kind of again, likewe know we're wholetailing.
I think when we looked at itwe're like this is a 275 to 285
house, get it all done, we'removing and we get it relisted
(26:54):
like within from two weeks ofbuying it.
So like we turned it aroundpretty quick, because what we
did is we listed it before theactual new septic tank was
installed.
We were just waiting for thepermit.
So a little bit of a gamblethere.
But we just put in the noteslike hey, new septic tank to be
installed before closing, andthe agent's like hey, man, I
(27:15):
think we can get 310.
So we listed it for 310.
Like I said, six state showingsright out the gate.
We let it go, uh, like thatthursday and friday, let it go
like that Thursday and Friday.
Let it go over the weekend.
Sunday night we get two offers,one of them for 310, one of
them for 325.
(27:42):
So okay, we originally estimatedthe ARV closer to like 285, but
310 and 325, good stuff, 325,FAA financing.
We only held it for, you know,at this point, 16 days.
So we said, hey, can you changeyour financing?
Long story short no.
So we went with the.
I think it was justconventional financing.
For the 3.10 offer, I said, hey, pigs get fat, hogs get
(28:04):
slaughtered, let's go with 3.10.
Let's turn and burn.
So we did that, went intoescrow.
They put their EMD down and wewent under contract that weekend
.
So I don't know a couple ofdays on market tops.
Speaker 1 (28:18):
Okay, so I love the listing on Thursday.
Yeah so Friday, saturday,sunday review offer, sunday
(28:40):
night or Monday night, that'salways good.
Yeah, your buyer is in thatfirst group For whatever reason.
I don't know why it works outthat way, but that's your best
buyer.
Okay, so you guys closed.
Any hiccups?
Speaker 2 (28:53):
through closing?
Not really.
Like I said, the lenderrequired repairs.
There was a couple, just stupidthings, but it was super minor
stuff, I'm trying to even think.
One was they wanted the faucetfixed in the shower, but there
actually wasn't an issue.
The inspector just didn'trealize how to operate it
because it was like one of thosenot quite handicap accessible
(29:15):
but like handicap retrofittedtype bathrooms.
So the guy I sent over there,he videoed how you do it.
We sent it to him.
He was good with that.
And then the other stuff wasjust um, trying to think smoke
alarms, co alarm.
Other than that I don't thinkthere was any other lender
required repairs.
The other hiccup was the becauseit was, um, it must have been
(29:39):
usda financing.
Now I'd say this I think I justsaid conventional because the
only time we had an issue was itgot pushed back twice because
the financing wasn't ready, likeI don't know why, but you know
it's like, hey, you guys havehad notice like this is closing
and it was like it was supposedto close on a Wednesday, then
(30:00):
they pushed it to a Thursday,then they pushed it to that
Monday and either way, we got itclosed All things considered,
not what I would describe as abumpy road compared to some of
the ones I've had in the past.
So from the day we bought itthat closing to the day we sold
it that closing was 48 days.
(30:20):
So, we netted 62,000.
And that was with me paying anextra 10k kicker to the agent on
top of the commission.
Why did you?
Speaker 1 (30:32):
do that just as a bonus because of how well it
went yes, well I mean going thispoint going into it.
Speaker 2 (30:39):
Um, we had a agreement.
Speaker 1 (30:41):
Yeah, like hey okay so I think it's fair.
You guys made a ton of moneyand I like overcompensating
especially people who aremotivated, like sales, by money.
It's like okay, these guys tookgood care of me.
They didn't grind me down on mycommission, which a lot of
footers do.
They're like oh, you can listit for one percent and all these
things like why not makesomebody happy and compensate
(31:02):
them well to whether they'rehere the first person that they
think that, especially you guysmade, you guys netted, but you
said that much money in 48 days.
Yeah, even with you and billeach putting that 100 grand
return like quick map, you guyseach made about 30 on your money
in 15 days, right?
Speaker 2 (31:17):
yeah, it was like less than yeah, it was, uh,
exactly like are you gonna do a30 return?
Like of course you would so ifI, I did it.
Honestly, again, I still don'tlove flipping, but I'll do those
Like if as they come to me.
That's why I'm like you knowwhat, yeah, I'll give him more
than what he actually expected,because to me it's like I'm not
(31:39):
looking at the next one and onlytransaction, like I want to be
the like first name in yourphone that comes up when you
come, come across something likethis, and it's a little give
and take, like we've helped thatagent then get other listings
for people that we've loanedmoney to where Bill's not
licensed, and stuff like that.
(32:00):
So it's like it's just areciprocal relationship and like
I'm not saying I always wouldhave thought this way, where
it's like no man, I'm keepingthat extra 10.
But now it's like you know what?
I'm trying to play the longgame here like um.
So if it works for him and itworks for me, great, let's keep
going.
So, absolutely.
Speaker 1 (32:20):
and that's one of those like it there's.
Speaker 2 (32:25):
It's like people are always yeah, but you can do this
, oh, you don't have to borrowmoney.
Like, even if I would add toborrow the money, pay three
points.
You know, use hard money,there's still enough meat on
that bone.
Like, don't be stupid.
Like you know, if you're buyingit and I had other exit
strategies, I could have kept itas a rental, I could have owner
financed it, I could have doneseveral things, but this was one
(32:47):
of those.
It was like you get in, you getout.
If you can make that kind ofmoney in my opinion in a month
and a half, like sure, why not?
You know?
Speaker 1 (32:58):
Oh, I agree, and I give you a look at the purpose
of our show.
You go to any one departments.
How long would it take you tomake that much money?
Yeah, and if you did one ofthose a year and took that, you
could have a 30 down payment ona hundred thousand dollar rental
and there's so many things youcan do with that and I mean,
(33:20):
don't get me wrong, that's 62k,like I still got to pay tax and
all that jazz
Speaker 2 (33:24):
don't get me wrong, it's not like I just stuffed all
those benjamins in the backpocket and I have a business
partner that we have operatingcosts and we split it 50-50.
But let's just say 30 grand,okay, and just back out taxes.
Divide that by your hourly rateand how much time would it take
away from your family to earnthat Right, dealing with
(33:49):
oftentimes the dumbest people inthe world?
Right, I, maybe, and this is aguesstimation I probably had 10
hours in that deal and that'sprobably being pretty liberal.
Like five to 10 hours tops inthat deal to make that.
Just call it 30,000 bucks, likeI'll do that all day long, you
know.
So, um, again, that this onesounds sexy.
(34:12):
Like 62 grand in 48 days.
Don't get me wrong, there'sbeen plenty I've had that are
not sexy, but this one wasrecent.
This one I thought was uhinteresting to talk about
because when I posted the photosI'm like this is the after
picture, you know, like, uh,it's also the before picture.
You know it's like you don'thave to go hgtv on these things.
(34:35):
Like we painted it white, weput gray carpet in, cleaned it,
oh.
The other thing I forgot to dois I paid like 500 bucks for a
deep cleaning afterwards.
Um, I had our cleaning lady goover there and just you know,
because contractor clean isdifferent than cleaning lady
clean- and it is well worth the500 bucks or whatever the house
(34:57):
you know.
It is like have them go do adeep clean and yeah and yeah.
So again, there's been plentythat I could tell you all about.
That would be interesting, butfor all the wrong reasons.
So don't think they all go likethis, and I'm not just trying
(35:21):
to give you the highlight reel.
I've had a unique situationwhere, like, real estate has
basically been my income outsideof like a base paycheck because
of what I've been going through.
So like it's just a proof thatlike sometimes you have to just
go kill it to eat it andnobody's going to do it for you.
So I know we don't have a lotof time, but hopefully I was
(35:43):
beneficial.
If you have any questions,we'll post this one and I can
break down anything else thatmaybe I left out or clarify
anything, but just wanted tokind of get you nuts and bolts
and some numbers with what awholetail can look like when you
just go out there and do itRight.
Speaker 1 (36:02):
So love it All right.
Well, we will see everybodynext weekend.
Please remember to share theshow and please, if you know
anybody who you think is a goodcandidate to be a guest, send
them our way.
Speaker 2 (36:15):
They make the introduction and we'll be sure
to get them on the show yeah,even even if they're not going
to be a great one, just we'll gowith mediocre, like just send
us somebody.
No, I'm just kidding but yeah,just share the show and please
reach out.
If you found any value, we'dgreatly appreciate it.
Speaker 1 (36:34):
All right, thanks, mike.
All right, everybody, we are back with First
Responder Financial Freedom.
As you can see, it is justmyself and Mike today and we are
going to be chopping it up, butwe're actually going to be
going over a deal that Mikementioned in the group and that
got a decent amount of interest.
So what we're going to do todayis kind of expand on his post,
walk through how he found it,how he funded it and then how he
(00:24):
flipped, fixed it and then,excuse me, he got a nice return.
So with that, mike, if you want, let's just go ahead and start.
So we'll start off with how didyou find this deal?
Kind of give a littlebackground before we go into
this.
Speaker 2 (00:39):
Well, a little more context.
We were flipping houses a goodbit over the last several years
and about two to three we'llcall it two years ago, we pretty
much stopped cold turkey.
We were no longer activelylooking for flips or wholesales
or any of that stuff so that wecould focus on building our hard
(01:00):
money, lending business, jumpCapital and also pursuing
storage facilities, which we'vebeen doing.
So I say that just because thisone kind of will quote fell
into my lap.
You know, so I have been, Ihave our meetup, we've been
networking for years andoccasionally people still call
me with deals and that's how Ifound this.
(01:22):
One is a real estate agent hadsold two houses for this uh
individual previously and, uh,they were met with a special
circumstance, so he knew we buyhouses like this and just
reached out to us nice, okay,and then is it in your.
Speaker 1 (01:42):
So, like you mentioned, you guys, you and
bill were flipping a lot, soit's in your previous target
market that you would do.
And, like it's funny, when wewere talking right now, I just
got a carrot lead for Boise andit's kind of the same thing,
right, like I'm not activelypouring 100% of my energy into
it, but I have come to theconclusion.
Well, I know what, like myideal target is and if it comes
(02:12):
up, I'm going to buy it.
There's no reason not to, andit sounds like that's what you
did with this.
So you want to walk throughpurchase price versus like, so
actually, let's do this.
How did you analyze the?
Speaker 2 (02:16):
deal and decide yes this is the deal for us.
I took the phone call, I knewright away whenever he told me
the area and roughly what theprice was.
I didn't even have to comp itto know that we were in the
ballpark of what they needed.
So, um, that's how how Ianalyzed it.
But with that being said, uh,the agent was telling me like
(02:37):
hey, this is really nice, it'san older person and let me
rewind like they had a veryspecific need.
So the agent wanted to list it,obviously, but they had a very
specific need where she was thepower of attorney for the
individual who had developed along term medical condition
(03:06):
passed five years prior, andthey were just, she was not able
to keep up with it.
She needed 24-hour care.
So they needed a very specificamount of money, um, on a very
certain date.
So they had a very specifictimeline they had to follow.
And the agent explained likehey, if we price it like this,
you know well, you know thewhole listing presentation and
they were willing to forego likehighest and best dollar for the
(03:31):
certainty of having the moneyon the certain date.
They needed to put their lovedone in long-term housing or
long-term care.
So that's not necessarily how Ianalyzed it, but that's how
they came up with their initialdollar amount, and then that's
how I was able to sit there andsay well, what you're telling me
in the area it is pretty much.
(03:53):
Yes, I'm interested.
Can I come look at it today?
Speaker 1 (03:57):
So perfect.
And then when you got there, Imean this is going to go to, was
the condition as described?
Was it a little bit better orworse?
I know usually with the actualhomeowner they say it's great.
They always say, oh, it doesn'tneed that much work, and
sometimes that's true andsometimes like, oh, this is a
full gut rehab, yeah, no.
Speaker 2 (04:15):
So, um, it was in what I would describe as like
good, but dated shape.
So, um, whenever I walked it, Iwas like okay, everything looks
good, um, it's just old, likeold as in, like dated, not like
mechanically or functionally old, just ugly okay, no, did you
(04:39):
guys?
Speaker 1 (04:40):
when you're considering like so when I buy
I'm considering my exit options,right, like hey, if I flip it
I'm gonna get this price, if Iwholetail it I'm going to get
this price, if I wholesale itI'm going to get this price.
And usually for me, if I canmake it work and all three of
those are viable options, thenit's a hundred percent go for me
.
I don't really need to worryabout it, because even if I
don't want to flip it, I likewholetailing.
(05:01):
So when you're talking aboutthis, in my mind I'm like I
wonder if they wholetailed it,because that's what I would do,
even if I took a little bit offthe table.
Unless, like you said it's,there's not a new roof, not
electrical or plumbing needs,it's just a cosmetic flip.
Then let's rock and roll throughthe cosmetic flip and make that
extra money.
Speaker 2 (05:31):
Yeah, so you're a hundred percent right.
We looked at all three of those.
And then I also look at afourth option now, which is like
who do I know that wants to buysomething like this that I
could then lend to?
So, um, with this one we lookedat what it would be to flip it
like full cosmetic rehab, versusjust hold tailing it.
And you know, hold tailing forthose not familiar is basically
just taking a house and makingit financeable, making it nice,
but not like ripping everythingout and gutting it, so to speak.
So we compared the numbers andwhere this is at.
(05:52):
I knew that this is like a primefirst time home buyer area USDA
FHA financeable.
People buy here because of theschool district type thing.
So I immediately was like allright, I don't know if I,
frankly, I just I'm at the pointwith flipping.
I'm like I could care less if Iever do it again.
(06:12):
So, uh, spoiler alert we endedup whole, whole tailing it.
So we we did not do a full gutrehab.
So, uh, we still managed tospend about like 19 grand, but
you know that used to be like aflip.
Now, right, we wholetailed itand spent 19 000, with the
(06:32):
lion's share of that being aseptic tank.
So, um, okay, you know I can, Ican kind of talk about like
numbers and just kind of getlike a little nitty-gritty about
it.
Um, because I think a lot oftimes people speak in
generalities with this stuff andbe like, well, I need to see it
, you know.
So the original, the originalcontract price was $180,000.
(06:53):
And the only thing we put inthe contract was it was subject
to a well and septic inspectionand, truthfully, uh, once I got
there I was like, well, we canline item, scratch the well
because this is on public water,there's hydrants, it's got
public water, but it's still hada septic system not abnormal
(07:15):
for this area.
However, I do this nowregardless of what I think of
the septic situation might be,because in this geographical
area of the county I have beenwe'll call it screwed over by a
septic system where I ended uphaving to do either an
innovative system or a holdingtank, which significantly
(07:39):
impacted my sales price, and theonly reason I didn't lose money
on that deal is because I rodethe wave in the market whenever
things were crazy.
So now, whenever I buysomething like this, I want a
septic inspection.
It cost me, you know, seven or800 bucks because they have to
pump it, jet it.
Look at it, even though Ididn't think there was going to
(08:00):
be an issue, when they did theseptic inspection it had three
cracks in the tank and so weknow right then, and there
financing is going to be anissue, unless you just get
somebody that gives you an allcash offer, no inspections.
But those days are pretty muchover, at least for us.
So $180,000 purchase price.
We went back and said like hey,here is the septic report.
(08:22):
I'm not trying to pull woolover your eyes, but this was the
condition.
We said we could pay one 80.
If everything was good, this isgoing to be, you know, anywhere
from a nine to $15,000 issue.
So we kind of worked out anumber.
I think we settled it.
I think it was 12,000.
Cause I think the contractchanged to 168,000.
(08:42):
So that left us a little bit ofwiggle room and getting the
septic fixed and still took alittle bit of a roll of the dice
.
But I have a pretty good septicguy now that I use for every
septic install and inspectionand I said I just want to make
sure that we're going to be ableto get the permit for just a
direct tank replacement.
I don't want to find out that.
(09:04):
Oh no, like now there's somenew guideline where again, the
holding tank is an issue, or ainnovative system which could be
40 or $50,000.
Big difference, right?
So I don't like renegotiating.
But it was spelled out for thefolks at the beginning Like if
(09:24):
this is an issue, we're going tohave to have a price adjustment
.
They weren't happy about it butthey said, hey, like that's
fair, that's what we talkedabout.
So we adjusted the price to168,000 bucks.
Speaker 1 (09:36):
And that's the thing too.
I think, like going into it, alot of people are taught to
renegotiate oh, I just lock itup and we'll renegotiate later.
I think that's poor businessand you're already taking,
you're taking advantage ofsomebody who usually is in need
of a solution, and a quick one.
So there are backs up againstit.
But, like to your point, I mean, it's super valid.
(09:57):
You know that it's an issue.
You can explain why, explainwhy you're doing this, and sure
enough, it came up.
And then it's not like it's atwelve thousand dollar bid and
you guys asked for twenty fivethousand dollar credit.
You just ask for the exactdollar amount.
And it happens over and over.
And I think, too, it points toonce you start doing this, it's
like our job on the firedepartment once you go on a few
(10:18):
auto X's, you start to to getbetter, more efficient, know
what to look for, and it's thesame thing with this.
Okay, now you've had a couple ofseptic issues.
You know roughly what the costis, you know the appropriate
questions to ask and you knowwhat could end up costing you 40
as opposed to 12.
I think like when I wasflipping a lot in Boise $35 a
square foot.
I can nail that with everythingoutside of major systems and I
(10:40):
got super fast on the phone.
I could one call close peopleimmediately because I knew the
area.
I'd bought houses in most ofthose areas.
I knew the construction costs,I knew what to look out for and
certain things.
For me, like in California,septic is not big.
Everything where I live is in.
You know it's.
But I started to get propertieswith septic and I had not know
(11:03):
it's.
But I started to get propertieswith septic and I had not um, I
did not get a public uh, I'msorry a septic inspection,
inspection.
And then I ended up having tobuy one, for I think it was like
nine or 10 grand at that time,which sounds about right.
It was probably five or sixyears ago.
Speaker 2 (11:13):
Yeah, that's a tank.
That's reasonable.
It's a whole.
Yeah, it was just a tank.
Speaker 1 (11:17):
Well, and the contractor had driven over it
too when we were doing work, sothat was a big reason as well.
So but okay so cool, yeah, ithappens, and I think it was
Friday afternoon and they wereprobably having cervezas on
Friday afternoon and hey, heowned up to it and then he ended
up paying for it.
But yeah, just like littlethings like that that you can't,
you're not going to know unlessyou do it.
(11:39):
So okay, like that, that youcan't, you're not going to know
unless you do it, so okay.
So you guys renegotiated andthen, yeah, just to clarify, I
100.
Speaker 2 (11:45):
Support what you said .
I do not get into the businessof renegotiating deals, um, but
that's why I had that in thecontract.
So anyways, um clarify that.
So what was the next question?
Speaker 1 (12:02):
So you guys locked it up and then you're going to
close on it.
And since you own Jump Capitalas well, obviously I'm curious
did you use your own privatemoney sources or did Jump
Capital fund this deal?
Speaker 2 (12:15):
No.
So my business partner Bill andI, we each stroked a check for
a hundred K each, put it intoour one account and that's what
we use to purchase the propertyand to fix it up.
Speaker 1 (12:29):
So cause.
Speaker 2 (12:29):
Once I looked at it and we knew we were going to
wholetail it.
I knew I had a rough idea, likeI think I said.
You know we're going to spend15 to 20 and we spent 19,000
bucks, give or take a couplehundred.
So, and like I said, the lion'sshare of that being the septic
tank replacement.
Speaker 1 (12:46):
So I like it.
The only thing that I've had aproblem with when I'm putting my
own cash in cause.
I do like to use thesefinancing, and I don't know if
this is the cases and it soundslike it wasn't is every deal
I've actually truly paid my owncash for.
I lag on it because there's nofinancing deal.
I said oh, it's already mine, Iown it, I'll just let it sit
there for a while and focus onall the projects that I had at
(13:07):
that time that were financed,because I'm like, well, I don't
want interest accruing on stuff.
But again, if you're notfull-time flipping anymore,
that's not an issue and it'snice to be able to dump the cash
in there and get the return ofpayroll interest.
Speaker 2 (13:19):
Yeah, just to be clear, I mean I have zero other
flips going on, so that's why Idid it that way.
But whenever we had eight or 10of them going at a time, no,
there was no Mike stroking acheck for that much.
So, yeah, the cost of capitalwas basically zero because we
(13:40):
were able to do that.
But like and I don't have theday we closed, but like, if we
closed on a wednesday I knowit's a wednesday or thursday
because of the timeline theyneeded for the skilled facility
um, like they, we closed on amonday.
We gave them like a couple daysto get their personal
belongings out that they wanted,but they didn't want to take
(14:01):
anything really.
Uh, we just came like two orthree days, anything they wanted
they could leave in the garageand we got right to work.
So there was like a 48 hourdelay maybe from closing to work
starting, and that was more toaccommodate the seller and their
family, not seller and theirfamily, not our timeline, Okay,
(14:21):
and then so two things.
Speaker 1 (14:22):
Then what did?
You estimate as the timelinefor the rehab and you already
mentioned it, but you estimated15 to 20 grand for that rehab
and it came in right aroundthere.
Speaker 2 (14:33):
Yeah.
So I think Bill and I said it'dbe 15 to 20.
And, like I said, it was 19.
It's always on the high side orslightly over.
It's never on the low side.
But the timeline I anticipatedbeing approximately four to six
weeks, because the unknown wasthe septic permit that we had to
get, and they'll you know, theygive you the window of two to
(14:54):
four weeks.
So what we did is we went aheadand just started knocking things
out and the biggest thing wehad to do was clean it out,
because it was just like 40years worth of, like you know,
yard sale crap and got all thatcleaned out.
Um called my flooring guy.
I said, hey, I need three roomsof carpet.
(15:14):
I don't care what it is,builder grade, gray is fine.
He came and did that all in oneday, had a guy come in and just
patch and paint, because theytook like the tv off the wall
with like big holes.
But we did not paint the wholehouse, we literally just painted
like the living room, theentryway and part of the kitchen
, so like 600 where the paintwork is so not a lot of paint is
(15:38):
what I'm getting at and uh,then what else do we have to do?
um, smoke alarms, you know justthe typical like winter required
repair type stuff.
And then the septic tank and,uh, landscape the outside.
So we did like a nice landscapejob out front, give it some
curb appeal.
(15:59):
Like a couple thousand bucks,like that gets us a pretty nice
landscape job for this pricepoint.
So did we have to do that?
And maybe not, but itdefinitely made it look a heck
of a lot nicer and to me it'sworth the 2000 bucks or whatever
.
The big unknown besides theseptic for this was this house
(16:21):
had solar panels.
So I don't know if anybody hasdealt with solar panels
listening to this, but I would,10 out of 10, encourage you not
to put them on your housebecause when it goes to sell
that those, those are not likeproperty of the house, those are
being leased from the company.
(16:42):
And then, whenever they did thehome inspection I know I'm
getting slightly ahead theyfound a leak in the roof which
the inspector said was a resultof an improperly installed solar
panel which so we had to gothrough the customer service
aspect of the solar companywhich come to find out is going
(17:02):
out of business this particularone.
So the technician had three nocall, no shows for the repair.
So on the fourth and final timethey did come out, and then
they said that was nothing, wedid.
So, and then we get into thislike well, shoot.
So we got it in writing fromthe solar company, gave it to
the lender, gave it to theinspector and the buyer and
(17:25):
fortunately they were cool withit.
But I can tell you that it wasa lot of back and forth and just
a lot of unknown.
I just don't think they'reworth it, honestly, and if you
have any anticipation of sellingyour house in the the near
future, I just I would stronglyencourage you to rethink the
putting those on.
So but that was, that was, uh,probably one of the biggest
(17:49):
issues with this house.
Besides the septic.
He had trouble get.
The buyer had trouble gettinginsurance, um, initially because
of the solar panels.
We were able to help them withthat, um, and then, yeah, so
anyways, I got a little bitahead of myself, but the solar
panel issue was kind of a painin the butt.
Speaker 1 (18:08):
Okay, yeah, and that's true too, and a lot of
times you know when they'released.
If you owe them, it's a littlebit easier.
But if you lease them and youcan't even buy out that lease,
it's like, let's say, you paid25 grand for that lease.
It's going to be like a 50 000buyout.
Speaker 2 (18:20):
So yeah, I would, I would suggest people get a
little bit yeah, the buyout, Iwant to get 30 grand yeah there
you go see, so it's usuallysomething that's crazy to where
it doesn't make sense to do it,so uh real quick kind of a
selfish question and thinkingabout your lending business so,
knowing what you, know?
Speaker 1 (18:36):
do you request, do you require your borrowers to
have a septic if it's in an areathat you guys are worried about
, or is that just you?
Let them hold the dice yeah, no, we do.
We require septic inspectionbecause of those issues yeah,
you don't want, especially ifthey are newer investors, you
(18:57):
guys know, is that what you gotto protect your capital?
Speaker 2 (19:00):
So okay, absolutely, and that's one of those like if
you miss a a heavy up, or youmiss a I don't know a couple of
windows, no big deal, you miss aseptic system, make a torpedo
the deal.
So yeah, we're very particularabout septic inspections now.
Speaker 1 (19:19):
Oh, that's cool, so okay, so you guys closed, you
fixed on it.
Oh, carpet, that's what I wasgoing to say.
So two things you mentioned, Ithink, for people who are
worried about not worried about,but thinking about full-tailing
Carpet, especially for bedrooms, super cheap, creates a
different feel.
And then the exterior right,you're trying to create an
experience when you're sellingthat house.
So if you do the landscaping,it looks nice, it looks clean,
(19:41):
even though we know that thehouse is going to need work
inside.
It has a lot of curb appeal.
Painting for me in Idaho is adollar per foot for exterior, so
most of the houses I buy areusually about $1,200 to $1,700.
So, to your point, I spend$1,200 to $1 to 1700 paying up
the outside of the house if I'mfull-time.
So now you have the landscape,the exterior pot, go inside, new
(20:04):
carpet and then everything else.
It's like, hey, we can doeverything else.
There isn't carpet, it looksfresh and I think you're going
to get a ton of money in returnis that a dollar for labor
material, or just labor, laborand material?
yeah, but it's not fancy.
I mean, these are entry-levelhomes.
Speaker 2 (20:24):
Sure.
What about interior?
Speaker 1 (20:26):
$250,000.
And that's white ceilings andthen one color for the walls,
and then trim, trim.
I want to say it's like anextra dollar or square foot or
something like that.
So you're talking $350,000 itused to be.
Speaker 2 (20:42):
Obviously this is extremely specific to your area,
but if you're just completelystarting from scratch, if you
budget three to four bucks asquare foot, that should at
least get you in the ballpark.
And, um, like I said, I knewthere was enough margin on this
house that I didn't need to knowevery stitch of carpet or
anything.
Speaker 1 (21:02):
So the carpet was $1,400.
Speaker 2 (21:04):
And, like I said, all we did with the carpet that was
there, you could tell it waslike probably vacuumed like
twice a week every week for thelast 40 years.
But the problem is it was allof green and it just looked
horrible.
So like we're rip it out, youknow.
So $1,400 ish in carpet, supereasy.
And the paint, you're right,Like just so when they walk in
(21:28):
it looks clean.
You know everything wasfunctional inside the house the
furnace was updated, the hotwater heater, you know like old,
old, dude, pride and ownershiptype stuff, like the dates
written on it, all nice, theowner manuals like in a bag next
to it, um, and then the, theother stuff, like the appliances
(21:49):
were updated, but the kitchenwas very dated.
So stainless steel appliances,very dated, like wood grain type
kitchen, but functional.
Same thing with the bathroomvery dated, looking, functional.
So I knew right out the gatethat this is like a, a three,
two.
You could probably call it afour, two with the basement, um,
(22:10):
but realistically it's a three,two.
So who's going to buy this?
Good school district, it's in alittle neighborhood.
It's a three, two.
This is going to be afirst-time home buyer and
they're probably going to wantFHA or USDA financing.
Well, we knew FHA was going tobe an issue and whenever we got
the listing, it was because weweren't going to end up holding
(22:32):
it for the 90-day period.
So, if you're not familiar, ifyou use FHA and Tyler's probably
a better person to talk aboutthis than me you have to hold it
for 90 or 91 days before youcan sell it to somebody using
FHA financing.
Why, I don't know.
I guess to prevent peopleflipping houses and I don't know
(22:53):
.
I'm sure there's a moredetailed reason that Tyler could
provide.
But we were looking at who ourend buyer is for this and
everything's functional.
It's nice, good school area.
So I figured most people aregoing to walk in and it's going
to be honey.
Oh, we could fix that.
Oh, we can update the kitchen,we can update the bathroom over
time, you know, but they couldhave moved in that day type
(23:14):
thing.
So carpet paint, no lightfixtures, smoke detectors, co
alarm, that kind of stuff.
And then, uh, we gotprofessional photos done and the
agent that brought it to me, wegave them the listing.
So that's kind of how we got itto market.
Speaker 1 (23:34):
And then it's okay.
So a couple of things likethings in that, Although the
most recent this is what Iremember, I don't think.
So agent obviously gave you thedeal.
You want to make sure that shegets the deal that way, the next
time something comes up likethis, you're going to get
another deal that has zeromarketing costs.
And then what were you justtalking about, too?
The end buyer.
Speaker 2 (23:55):
Oh, the end buyer, yeah, so.
Speaker 1 (23:58):
I like that you did that and I think a lot of people
I think this is.
What was one of my strong suitsis let's always think about who
we're going to sell this to.
How are they going to financeit?
If it's fha or va or usda, whatkind of things do we need to
know?
And then a big one for me isknow your loan limit.
So Mike just said he knows thatthis is probably going to be
(24:20):
FHA financing first-timehomebuyer.
And a good example is let's saythis house is $400,000, but FHA
loan limit in this county is$300,000.
You now have an issue becauseyou have a set of buyers that
can only go up to a certain loanamount and your house is above
that only go up to a certainamount and your house is above
that.
So if I was always borderline,I would bump it right up to that
(24:41):
max FHA limit and then knowthat hey, if we get an FHA buyer
, we're good to go.
But if we get a VA orconventional, we can also go
above that, and then, yeah, the90 day rule is correct.
The only thing that I would sayon that is, if it's within 180
days, most lenders are going torequire to a business just to
verify the value.
(25:02):
But yeah, that's all.
Speaker 2 (25:05):
And it doesn't always happen.
There's just one I can think of.
Speaker 1 (25:07):
I can remember the address in my head in Idaho
where we got a great appraisal.
Then the underwriter said hey,I want a second appraisal
because this house appreciatedso much in the last 80, or no.
We're at 88 days.
No, that doesn't make sense.
No, we're at 118 days and shesaid it's less than 180.
I want to replace this and thatfreaked me out because I was
like dude, this deal's almost tothe finish line, yeah it
(25:30):
doesn't work out.
I'm an idiot.
And then, luckily, it did workout.
So that was something, eventhough I'm a lender.
Um, I learned almost the hardway.
Luckily you know so.
Okay, so you got it to market.
Let's talk about what was yourpricing strategy.
And then did you get a hundredpercent of that stuff like that?
Speaker 2 (25:48):
Yeah, so got professional photos, which I'm
always a big stickler about,because I think if you're
sitting on the couch with yourwife or your husband or whatever
the case may be, and you'relooking online and it doesn't
even look good on your phone,you're never even going to get
the opportunity for them to comelook at it.
So I always am a big fan ofprofessional photos.
We get it listed and right outthe gate we get like six or
(26:12):
eight showings, which is alwaysa good sign.
Design.
If you have a house and youragent lists it, they should be
able to set you up on the MLSshowing time or whatever it is
so you can get notified asshowings are requested.
So you can at least have apretty good idea of the interest
level.
If you're not getting anyshowings, that's a concern.
(26:32):
So I say that just because Iknew right out the gate like I'm
getting notified showingactivities, good Rewind.
We priced it Kind of again, likewe know we're wholetailing.
I think when we looked at itwe're like this is a 275 to 285
house, get it all done, we'removing and we get it relisted
(26:54):
like within from two weeks ofbuying it.
So like we turned it aroundpretty quick, because what we
did is we listed it before theactual new septic tank was
installed.
We were just waiting for thepermit.
So a little bit of a gamblethere.
But we just put in the noteslike hey, new septic tank to be
installed before closing, andthe agent's like hey, man, I
(27:15):
think we can get 310.
So we listed it for 310.
Like I said, six state showingsright out the gate.
We let it go, uh, like thatthursday and friday, let it go
like that Thursday and Friday.
Let it go over the weekend.
Sunday night we get two offers,one of them for 310, one of
them for 325.
(27:42):
So okay, we originally estimatedthe ARV closer to like 285, but
310 and 325, good stuff, 325,FAA financing.
We only held it for, you know,at this point, 16 days.
So we said, hey, can you changeyour financing?
Long story short no.
So we went with the.
I think it was justconventional financing.
For the 3.10 offer, I said, hey, pigs get fat, hogs get
(28:04):
slaughtered, let's go with 3.10.
Let's turn and burn.
So we did that, went intoescrow.
They put their EMD down and wewent under contract that weekend
.
So I don't know a couple ofdays on market tops.
Speaker 1 (28:18):
Okay, so I love the listing on Thursday.
Yeah so Friday, saturday,sunday review offer, sunday
(28:40):
night or Monday night, that'salways good.
Yeah, your buyer is in thatfirst group For whatever reason.
I don't know why it works outthat way, but that's your best
buyer.
Okay, so you guys closed.
Any hiccups?
Speaker 2 (28:53):
through closing?
Not really.
Like I said, the lenderrequired repairs.
There was a couple, just stupidthings, but it was super minor
stuff, I'm trying to even think.
One was they wanted the faucetfixed in the shower, but there
actually wasn't an issue.
The inspector just didn'trealize how to operate it
because it was like one of thosenot quite handicap accessible
(29:15):
but like handicap retrofittedtype bathrooms.
So the guy I sent over there,he videoed how you do it.
We sent it to him.
He was good with that.
And then the other stuff wasjust um, trying to think smoke
alarms, co alarm.
Other than that I don't thinkthere was any other lender
required repairs.
The other hiccup was the becauseit was, um, it must have been
(29:39):
usda financing.
Now I'd say this I think I justsaid conventional because the
only time we had an issue was itgot pushed back twice because
the financing wasn't ready, likeI don't know why, but you know
it's like, hey, you guys havehad notice like this is closing
and it was like it was supposedto close on a Wednesday, then
(30:00):
they pushed it to a Thursday,then they pushed it to that
Monday and either way, we got itclosed All things considered,
not what I would describe as abumpy road compared to some of
the ones I've had in the past.
So from the day we bought itthat closing to the day we sold
it that closing was 48 days.
(30:20):
So, we netted 62,000.
And that was with me paying anextra 10k kicker to the agent on
top of the commission.
Why did you?
Speaker 1 (30:32):
do that just as a bonus because of how well it
went yes, well I mean going thispoint going into it.
Speaker 2 (30:39):
Um, we had a agreement.
Speaker 1 (30:41):
Yeah, like hey okay so I think it's fair.
You guys made a ton of moneyand I like overcompensating
especially people who aremotivated, like sales, by money.
It's like okay, these guys tookgood care of me.
They didn't grind me down on mycommission, which a lot of
footers do.
They're like oh, you can listit for one percent and all these
things like why not makesomebody happy and compensate
(31:02):
them well to whether they'rehere the first person that they
think that, especially you guysmade, you guys netted, but you
said that much money in 48 days.
Yeah, even with you and billeach putting that 100 grand
return like quick map, you guyseach made about 30 on your money
in 15 days, right?
Speaker 2 (31:17):
yeah, it was like less than yeah, it was, uh,
exactly like are you gonna do a30 return?
Like of course you would so ifI, I did it.
Honestly, again, I still don'tlove flipping, but I'll do those
Like if as they come to me.
That's why I'm like you knowwhat, yeah, I'll give him more
than what he actually expected,because to me it's like I'm not
(31:39):
looking at the next one and onlytransaction, like I want to be
the like first name in yourphone that comes up when you
come, come across something likethis, and it's a little give
and take, like we've helped thatagent then get other listings
for people that we've loanedmoney to where Bill's not
licensed, and stuff like that.
(32:00):
So it's like it's just areciprocal relationship and like
I'm not saying I always wouldhave thought this way, where
it's like no man, I'm keepingthat extra 10.
But now it's like you know what?
I'm trying to play the longgame here like um.
So if it works for him and itworks for me, great, let's keep
going.
So, absolutely.
Speaker 1 (32:20):
and that's one of those like it there's.
Speaker 2 (32:25):
It's like people are always yeah, but you can do this
, oh, you don't have to borrowmoney.
Like, even if I would add toborrow the money, pay three
points.
You know, use hard money,there's still enough meat on
that bone.
Like, don't be stupid.
Like you know, if you're buyingit and I had other exit
strategies, I could have kept itas a rental, I could have owner
financed it, I could have doneseveral things, but this was one
(32:47):
of those.
It was like you get in, you getout.
If you can make that kind ofmoney in my opinion in a month
and a half, like sure, why not?
You know?
Speaker 1 (32:58):
Oh, I agree, and I give you a look at the purpose
of our show.
You go to any one departments.
How long would it take you tomake that much money?
Yeah, and if you did one ofthose a year and took that, you
could have a 30 down payment ona hundred thousand dollar rental
and there's so many things youcan do with that and I mean,
(33:20):
don't get me wrong, that's 62k,like I still got to pay tax and
all that jazz
Speaker 2 (33:24):
don't get me wrong, it's not like I just stuffed all
those benjamins in the backpocket and I have a business
partner that we have operatingcosts and we split it 50-50.
But let's just say 30 grand,okay, and just back out taxes.
Divide that by your hourly rateand how much time would it take
away from your family to earnthat Right, dealing with
(33:49):
oftentimes the dumbest people inthe world?
Right, I, maybe, and this is aguesstimation I probably had 10
hours in that deal and that'sprobably being pretty liberal.
Like five to 10 hours tops inthat deal to make that.
Just call it 30,000 bucks, likeI'll do that all day long, you
know.
So, um, again, that this onesounds sexy.
(34:12):
Like 62 grand in 48 days.
Don't get me wrong, there'sbeen plenty I've had that are
not sexy, but this one wasrecent.
This one I thought was uhinteresting to talk about
because when I posted the photosI'm like this is the after
picture, you know, like, uh,it's also the before picture.
You know it's like you don'thave to go hgtv on these things.
(34:35):
Like we painted it white, weput gray carpet in, cleaned it,
oh.
The other thing I forgot to dois I paid like 500 bucks for a
deep cleaning afterwards.
Um, I had our cleaning lady goover there and just you know,
because contractor clean isdifferent than cleaning lady
clean- and it is well worth the500 bucks or whatever the house
(34:57):
you know.
It is like have them go do adeep clean and yeah and yeah.
So again, there's been plentythat I could tell you all about.
That would be interesting, butfor all the wrong reasons.
So don't think they all go likethis, and I'm not just trying
(35:21):
to give you the highlight reel.
I've had a unique situationwhere, like, real estate has
basically been my income outsideof like a base paycheck because
of what I've been going through.
So like it's just a proof thatlike sometimes you have to just
go kill it to eat it andnobody's going to do it for you.
So I know we don't have a lotof time, but hopefully I was
(35:43):
beneficial.
If you have any questions,we'll post this one and I can
break down anything else thatmaybe I left out or clarify
anything, but just wanted tokind of get you nuts and bolts
and some numbers with what awholetail can look like when you
just go out there and do itRight.
Speaker 1 (36:02):
So love it All right.
Well, we will see everybodynext weekend.
Please remember to share theshow and please, if you know
anybody who you think is a goodcandidate to be a guest, send
them our way.
Speaker 2 (36:15):
They make the introduction and we'll be sure
to get them on the show yeah,even even if they're not going
to be a great one, just we'll gowith mediocre, like just send
us somebody.
No, I'm just kidding but yeah,just share the show and please
reach out.
If you found any value, we'dgreatly appreciate it.
Speaker 1 (36:34):
All right, thanks, mike.
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.