Brett and Larry's Podcast #5 Flipping Houses for a Living (Ep562)

Flipping for a Living

Episode Transcript

(00:07):
It's Thursday night. You're on theBrett and Larry podcast show. We're a
little late tonight, but these guysthat we got on the show, we're
out making money, so we hadto drag them in here. They're gonna
give you all the secrets tonight.There's my buddy, Brett. Brett tell
everybody hello, Well, nice tosee everybody, And I think you're gonna
find this show interesting. These twogentlemen of our on our radio show before,

(00:29):
and everybody loved having them on.Now we're gonna actually get to see
some of the things that they dowith the video we're gonna put in tonight.
Yep. So we got Drew Chance, we got Chris McCanny, and
you guys are gonna learn about flippinghouses for a living. So Brett likes
to do this, believe it ornot. He's a media mogul. And
he went to Indiana and bought oneor two houses. And everybody's like,

(00:51):
why would you go to Indiana?Sure they were cheap, Well, the
reason I went to Indiana is becauseyou guys are here. There was a
few people. I'm already for thebig leagues. I mean, I know
my limitations, but but I'll tellyou Indyada was good and it was a
good experience. I found out somethings I never tried to sell. When
it's snowing. People don't work asmuch out there. The contractors even when

(01:15):
it's snowing, it's like it snowsall the time. Yeah, we don't
work, you know. That wasthe problem. So the things that we
don't have that problem here, youdon't have that deal. We've had a
lot of rain this year. Peopleare very scared of rain, you know,
Like framers are not working, youknow. But in Seattle they frame
in the rain like they're used toit. But here it shuts things down,
interesting, slows down a lot.So all right, let's start from

(01:37):
the beginning. So let's pretend ifsome of our listeners want to get into
this the way things already, everybodyneeds extra money. So what's the first
thing you do. I'm guessing it'slike, identify some really good deal,
right, So let's start there,take it or me sure, so you
hit the nail on the head,Larry, Like, identify the good deal
is a lot more difficult that itsounds, right, as you all know

(02:02):
or may or may not know,there's a very little inventory here in San
Diego right now. So what's happeningright now is that we not only have
competition from other investors that do thesame thing, we're having competition from end
users that would take a house todaythat they wouldn't have taken a few years

(02:24):
ago and figured they'll just do therenovations on their own just so they can
get into a house. So yeah, it's it's about any business really.
You have to build a good team. You have to have a good title
person, you have to have agood escrow person, you have to have

(02:45):
good contractors. A team sport whatwe do. So I would say the
two things you really need or youneed dollars, So you need capital and
you need deals, like the twomain things. And then he's saying,
you need a team around you thatcan help you. So real cit agent
who can help value it, acontractor who can analyze how much the costs
of the repairs, are going tobe a good lender to finance the deal?

(03:08):
And are you still lead in thesesituations? Are using lenders a lot
or are people coming in just withcash? I mean we're competing in some
guys that are cash, but mostpeople finance they use hard money loans,
bridge loans, short term financing tofinance the projects, which gives you the
leverage you can do more than oneproject at a time. Typically the average

(03:30):
deal for us is like four tosix months on a single family cosmetic renovation,
but you know, if there's permitsand additions and stuff like that,
that can be twelve to twenty fourmonths, you know. So the financing
is a tricky part because the costsof capital have really skyrocketed in the last
couple of years. Whereas you know, we used to borrow money about seven
percent for hard money loans, andnow it's gone up to like ten to

(03:52):
eleven percent, so it's got alot more pricey recently. So you have
your own cruise, right, becauseyou can't take jobs off all their guys
for off their other jobs and tellthem, okay, I got a deal
now and they go on and abunch of you got your own crew,
right. We work with three fourdifferent general contractors that do different things.
So some of them are ground upbuild So when we're building apartments, we

(04:15):
have a certain contractor for that andthat's the only project we do with them.
If it's a single family renovation,we have a guy that we typically
go to for those. If it'sany of our Imperial Beach projects, we
have one contractor who's really good withCity of IB knows the inspectors, you
know, all by first name,and you can get some things done.
So it just kind of depends onwhat the project is is who's going to

(04:36):
build it for us. But yeah, we don't do any of it ourselves.
The permitting part in San Diego isthe challenging. I heard Chila Visa
for example. I mean, justthrow Chula Vista under the bus, but
I heard some time it takes alittle longer to get permitting in Chula Vista.
I'd say they're all bad, youknow whatever. You got to pick

(04:57):
the ones that you like to workwith. So we've found the City of
Imperial Beach is a very small municipalitywhere you can get in and talk to
someone that day and there's very fewpeople in each department, whereas City of
San Diego you can burn up awhole day, go in and just ask
a simple question. There's such abig municipality with so many people, you
know, applying for permits. Jilivisis the second largest city in San Diego.

(05:19):
There's like six hundred thousand, sevenhundred thousand people that live in city
at Chula Vista, so it's abig municipality as well. They're a little
bit more maybe antiquated, I guessyou know. Word doing a project in
National City very similar, it's justolder, not as modernized as City of
San Diego has become very digital.Everything gets submitted online. Their processes are

(05:44):
a little different Chilavis and National City. So you have to learn that they
all have their own nuances and thenfigure out the ones you were willing to
work with and you like to workwith, and that you can be profitable.
And yeah, it takes a lotof time to get a permit approved
from the day you buy something,get the plans drawn, and get it
approved where you're able to do constructiontakes a while, depending on what you're
doing later. I think to backtrackon your original question, somebody just looking

(06:09):
to get into this business, goodquestion. So what I always recommend is
get involved with the local real estateinvestment groups that are out there. There's
a really good one here called SDCIA. They meet the second Tuesday of every
month, and you'll get investors thathave never done a deal to investors like
us that have done three hundred plus, so you get a really really good

(06:32):
group. They're all like minded,wanting to get in the business, wanting
to invest. But I would recommenddoing that to start, so you can
get around others. And another reallygood example is one of our investors as
two kids in their twenties. Icall them to kids because I'm in my
fifties, but came to us thisweek actually and like, hey, we

(06:54):
have some money and we want todo some deals. Like what do we
do? And fortunate for them thatyou know, Drew and I are going
to help him out, and we'regoing to find the property and they're going
to invest the capital, and thenwe're going to let them ride along through
the process, just so they cansee exactly how it's done. And that's

(07:15):
what I would recommend. Get involvedwith somebody that's already doing it. It's
not rocket science if you're teaming upwith guys that have the experience, just
like in any industry, I wouldimagine, So get involved with your local
real estate investment clubs. These youngmen, no the actually their father is
one of our investors and he's beeninvesting with us for years now and actually

(07:38):
one of the sons intern for usover the summer. N he's now a
Navy seal, So thank you forhis service. That's amazing. Yeah,
and so just a great dad,great kids. People. You truly want
to help out, and Drew andI always do that. We're always helping
others. And people were like,well, why are you helping others?

(07:59):
You know? I said, well, it always comes back to us in
some way or other. It alwayscomes back though. I'll meet somebody that's
never done a deal and lo andbehold, one falls in their lap and
I get a phone call. Nowwhat do I do? You know?
And so we'll just help people.But I would recommend get involved with the
local investors club. Find yourself assomebody that's already doing it, and just

(08:22):
like any other thing, you needto offer them something so that they want
to try to help you and towork with you. So how can you
add value to their business? Andfind out what that is and then you
go do it. And then that'show Drew and I started out. We
started out finding deals for other peopleand bringing into them, and as we
got more experience and saw how itworked, and we eventually branched out and

(08:46):
started doing that's really still find dealsfor other people. Yeah, we do
sometimes, you know, like ifit doesn't fit our box, we you
know, wholesale them or sell themoff to another investor that we know would
like that project. In Amperial Beach, we know a lot of the guys
who do things, so we cansell them a project still make a real
estate commission or some sort of afee by doing so. That's another really,
really good point to get started inthis business. Whole selling is not

(09:11):
a bad thing. And as Drewidexplained it, you go find an opportunity
and instead of you going through thewhole process, you pick up the phone
and you call somebody like us.There's one hundred of us out there,
and if you have a real opportunity, we're going to take it down.
And if you have the property andcontract for four fifty and you could sell
it us for five hundred and moveon, you make fifty thousand dollars and

(09:33):
you've done none of the work.Those are the best deals. But also
in the beginning, rather than doingthe project, you know, if you
send it out to all these peopleand they go, hey, I want
to do it, I want todo it, then you kind of know
you have a good one, right, so like it kind of confirms what
you're thinking and then you can stillgo ahead and do it even though you
know that all these other investors vettedyour deal for you. So I think

(09:54):
there's a lot of value in that. We've wholesold quite a few properties over
the year, and it does likeflipping a house can take six months or
a year. You might get intoa deal where you make no money after
that whole year, and getting thatincome right away as a new investor,
I think is really helpful, youknow, bringing in some income. So
these house, as you're talking aboutit take it takes that long to sell.

(10:18):
Those probably need a lot of work, don't they. I mean,
so it could be of the permittingprocess, it could be the construction that
you know that you're you're trying todo a second story edition and or taking
the people out of the house tellingstory. Oh yeah, so we pursued
it. We purchased a property inMarch of twenty twenty one in Rancho Penisquitos,
and we knew it had a tenantin the property and it's going to

(10:39):
be a challenge for us as whatwe're told, you know, and we
were going to be able to buythe property for six hundred thousand dollars that
we thought was worth a million.So it's like quite a spread. You
know. You usually don't get thatmuch of a spread and usually get about
twenty five percent discount to the marketvalue, maybe thirty. It's like forty
percent off. So we're like,you know, this is a good buye.
So we went to the guy andoffered him, you know, twenty

(11:01):
five thousand dollars if he would moveout of the house. Twenty five thousand
to move out of the house torent her. He said, and he's
paying fifteen hundred dollars a month rentfor a four bedroom to bath house and
probably rent for close to five thousanddollars a month. And uh, we
offered them money. Didn't want totake it. Really yeah, And so
we did all of the legal thingsproperly that we should do. Is that

(11:24):
a landlord who wants to say,hey, we no longer want to keep
this on the rental market, we'dlike you to relocate and renovate our home
and be able to sell it.You know, it's our property. We
should be able to do what wewant with it. After three years.
We went to court. He's onlyone time, and we got to There
was a moratorium against evictions in twentytwenty one, so we could even do
any sort of eviction. We justhad to wait once that was lifted.

(11:46):
It took like nine months to getin front of a judge. The judge
dismissed it right away, said theservice was improper. It was missing like
one little paragraph that said something aboutpersonal possessions and the property. So we
were just very frustrated. We endedup just selling the property to another investor
who thinks they can get him outand said, good luck. You know
some of the last three years.You know, you don't get back.

(12:07):
And they got a lot of us. Know that guy, his name is
Michael Keaton. Can you imagine you'repaying fifteen hundred dollars per month right and
somebody comes he's here's twenty five thousand, move on. Can you imagine?
I was. I have a storyand I love everybody, but I owned
I owned a fourplex in City Heightsone time years ago. Oh if you
knew that? And uh, thisone guy just that I met him when

(12:31):
he went in and I did aproperty management company, worked handling everything.
He hadn't paid in like four months. So when I met him, originally
hit this really cool too of aheart with a knife for the dog through
with the blood dripping on it,because I looked at him. I don't
know why I remember that. Andso when I go to talk to him,
I had my I had a sheriffwith me because at this point it

(12:54):
was getting give me a problem.And when I got there, a lady
answered the door. Well, itturned out that the lady also had the
dagger, the same dagger that hedid. It. Well, turned out
he got a sex change, hechanged his name, he got everything else
done, but he didn't take thetattoo off. He says, well,

(13:16):
he is a liver anymore. Sowell you can tell you can tell he
that, uh, he had enoughmoney to do the other work, but
he forgot to take the tattoo off. We ended up getting evicted. That
that was kind of a different situation. So the other thing these guys,
the other thing these guys do greatis they set up the house, pick

(13:37):
out all the right colors, allthe right materials. You do that.
He does staging, your wife doesstage. We work a lot hand in
hand. Dream pretty much does thedesign on it. But yeah, to
go back real quick, Brett,the properties we're getting right now, Like
I said earlier, we're in competitionwith the end user, So the stuff
we're getting right now is really reallyrough. Last that's what we bought.

(14:01):
I think we took like twelve dumpstersconstruction dumpsters out of the property and then
they're just all overgrown. And wespent eight thousand tree removves, so twenty
thousand dollars just to get rid ofthe junk and remove trees before Wherever even
started off. How long did thattake. It didn't take a week,
a couple of weeks, that's prettyfall. Yeah, they had like twenty

(14:24):
guys working on it. So that'sthe kind of stuff we're getting right now,
just because it's hard for us toget what we call these very light
cosmetic fixers which you go in andpaint and carpet. Those they're tough to
find right now. Sure, youhave to take what the market gives you,
and those are not available right now, So let's show the audience what
kind of work they do. Wegot that video to run Sarah sum so

(15:52):
it was a lot small so wow, Yeah, that was a fun project.

(16:40):
So we bought that house. Itwas a single family home. I
think it was a two bed,one bath. The original house had code
violations on it as the city atChula Vista and paid three hundred and ninety
five thousand for the house. Itwas in really rough shape and you kind
of looked like a barn almost inthe back of a detached garage that somebody
had built an illegal unpermie. Itdid like randy flat above that garage,

(17:03):
and so that was one of thethings we had to clean up. But
we got draftsmen. We designed thatproperty with plans to build a detached ADU,
so that's a two bedroom, twobath ADU with a two car but
there are two like one car garageson it. And then the front house
we expanded the original footprint to adsquare footage and then became a three bed,
two bath main house with a onebed, one bath junior EIGHTYU.

(17:26):
So a single family home became atriplex eight three ninety five. Sold it
for a million five put on themarket, sold in the first hour,
first showing, and we listed fora million three ninety five. They paid
one hundred and five over the askingprice for the first buyre that's just sold.
Yeah, like right off of Palomar, and it's on Fifth Avenue,

(17:49):
so close to the Broadway right thereand Palamar just a couple of kind of
the older part of Tuli Vista,but a nice you know, you know,
it's a good street and it's ourneighborhood. Beautiful job man, Thank
you, Thank you so Drew andChris's number is going across the screen.
There, see you the phone numberof Islander Properties And if you want to
call them about any questions in thebusiness, or if you've got a lead

(18:14):
for them. Of course they lovethat anything they can buy. If you're
a buyer and want to buy aperfect property, you should see these properties.
When they're done with them. Ohmy god, you want to be
owned. So anything you want totalk to them about. There's a number
of scrolling down to bottom. Youguys are Michael Angelo and Da Vincia.

(18:34):
All right, we usually buy theworst house on the block, and when
we're done, it's the best.We kind of overdo our houses a little
bit, but they sell faster,they sell for more money and integrity.
You can tell that people don't knowyour your work. You know, you
guys, you're very honest. Youhave a lot of integrity, like I
said, and Laurie speaks highly ofyou all the time. I mean,

(18:56):
he doesn't do that too often fora lot of people. You know.
Thank you air answers. Okay,we're gonna move on a little. Okay,
So The Big Dump our movie.It's doing fantastic. It's on YouTube
now, you can watch. It'sthirty seven minutes long. They're watching it
and Washington, d C. Thecongressmen, the senators are all watching it,
watching it and it's a teaching tool. It's a learning tool, So

(19:18):
you want to watch it. TheBig Dump on YouTube. It's gonna be
shown at the biggest elementary school inCalifornia, thirty thousand students. And Brett
just won his election Tuesday night.Do you ever really win in politics?
You know? But it's not completelya political job. Tell them what it
is. So it's it's kind oflike a human resource position. And so
what we're going to be looking foris good candidates to run that are workable

(19:45):
and I can get things done.Because there's been a lot of grid luck
between the two parties for a longtime. So the goal is to find
a way to make things more workable. And if anything, learned to be
kinder to each other, because Ithink we've lost we've lost side of that.
So I think that's why I decidedto get involved with that. And
I know people all over San Diego, so I think it's going to be
a good good fit. And somepeople believed in me and I luckily got

(20:10):
in, so I'm happy about that. And Brett's doing his training again.
He comes out of the training world, the media world to do training once
in a while, so he's doingit right now. So he's doing anti
aging, exercise, fitness, longevity, nutrition, weight weight loss, and
a lot of people are confused intheir lives too. Even helps you with

(20:32):
that, So tell people about thata little bit. Well, I think
I think what it is is that'ssomething I've been doing for years. I've
won one of the Mystery Universe threetimes in the past and my Younger Career
for my age group, and butI found that a lot of the things
that are going on and actually trainNavy seals and I get contracts with them
and all the law enforcement departments inthe United States. So I've had some

(20:52):
really solid clients that I've worked with. But I found one thing you can't.
It's probably like a house. Eachsituation is uniquely different. So I
found that there's some people that onething would work for one not work for
another. So you have to kindof get into the mind a little bit
and figure out what kind of makesthem operate. It's a little bit different
for each person, but they're allCEOs and Navy CEOs and CEOs have something

(21:17):
in common. People of their owncompanies. If they have a goal in
place and they know how to hittheir marks. If you lay the same
thing out with them the same waywith nutrition and exercise, more likely they're
probably going to do it. Socontact Brett if you HiT's going across a
bottom too. We got the emailaddress. So I don't a lot of
us have something in common. Weall don't sleep exactly. Then we got

(21:41):
the book. If you want tobuy the book, that's on Amazon,
Directions to a Happy Life by LarryDelrose. Very nice book, awesome book.
You will like it. And Ithink that's about it. I see
in a really interesting movie though onNetflix. It's called If I Can Only
Imagine, called I Can Only Imagine, And what it's about is it's this

(22:03):
Christian rock music. So there wasa song called I Can Only Imagine,
and it was the number one Christianrock song in the history of the world.
And it's about how the guy's lifeled him up to writing the song.
It's very interesting. I mean,it's not over religious or anything.
It's just a really nice movie onNetflix if you want to watch that.
And we got President Biden coming onin eight minutes, so we're gonna say

(22:29):
goodbye everybody, so you can No, he's not coming here. We're in
the same studio. He's going tobe in there right now. No,
we're in Coronado. So Brett givethem about bits of wisdom. We'll let
these two guys give bits of wisdombefore we go out. I don't know
if I have any you have alot of wisdom. I think getting a
mentor, you know, as quicklyas you can. Larry's been a mentor

(22:51):
to me. Chris has absolutely beena mentor to me. I started with
Chris fourteen years ago. Getting apartner in business too, I think is
really important. You know, someonethat keeps you accountable and someone to run
with, you know. I thinkyou go further with other people. So
don't be so caught up on givingup half of the deal. That's a
goody good advice. Advice what yougot, Chris, So mine's actually not

(23:15):
business related. Mine's, uh,you've got maybe relates to your book Happy
Life. You got to get rightwith your fitness and your health, because
if we don't have our health,we don't have anything true. Andrew actually
said that to me, like we'rekilling ourselves. We're working, we're making
a lot of money and we weren'tworking out at the time, and I've

(23:36):
lost like thirty five pounds and helooked at me one day He's like,
look good as this. We're makingall this money, but we don't have
it if you don't have your health. So that really resonated with me and
I stuck to it. So getright with your your your health, get
right with your family and your wifeand your kids, and that's what's most

(23:56):
important to me, and you'll sleepright. Sarah to our producer, Sarah,
we love her, Hi, Sarah. Okay, Brett, Let's send
them off front of something great.Okay. Let's find a way to do
something nice every day for somebody,whether it's opening the door or let them
drive in front of you, ormaybe help somebody the car with their groceries

(24:17):
that they're a little bit challenged.Just do kindness, do kind things.
That's all you have to do.It doesn't require a lot to do that.
You've got to get back to beingthat way. Okay, everybody,
we'll see you next week on theBrent and Larry podcast show. We had
great guests today. Thank you guys. We'll see you all next week hopefully.
And you can stream this and youcan listen to it in your car

(24:37):
and all that kind of stuff,so we hope you listen to Thanks you,