I’m going to show you how I bought this house for $15,000, flipped it and sold it for $215,000. I’m also going to show you how I turned a $16,000 profit into over $100,000 tax free. I do a lot of these, but this one is really unique and I’m going to use multiple strategies here, including one that keeps me from paying taxes on this property. Why do I create these videos? Because someone a long time ago showed me how to buy properties with no money down, and I want to show you how to do the same. As you know, there are more millionaires created from real estate than any other investment vehicle. That’s why I love real estate because you can buy something with no money out of your pocket, create tens of thousands of dollars, if not hundreds of thousands of dollars in equity in a short amount of time, and sometimes do it tax free.

(00:48)
Like I’m going to show you here, I bought over a thousand properties totaling over a hundred million dollars, most of which I use none of my own money. Hi, my name’s Tony Javier, owner of Inc. 5,000 rated real estate investment company, and in this video I’m going to show you how I found the property, funded it in some of the sweet before and after pictures to show you what we did. Before we start, I’d love if you hit the like and subscribe button. This is called the Gentleman’s Agreement. I spend a lot of my own time and money making videos for this channel of which I don’t get paid. So if you could just do me a favor, I don’t ask a lot, just hit the like button, the subscribe button and share it with anybody you think would want to get into real estate with you.

(01:24)
This is a great conversation starter. So investing in real estate is actually pretty simple. It’s not easy, but it is simple. To be successful in this business, you have to have the right strategy and the right team behind you. But in 2001, I had no money, no college degree, and no experience. And I’ve been able to buy over a thousand properties as I mentioned. So if I can do it, you can do it too, and that’s why I do these videos to inspire you. So let’s get into this property. It’s located in my main market of Wichita, Kansas, 1814 North Macombs in Wichita. This property was actually a referral, which to this point we still don’t know exactly where it came from, but I think because our TV commercial is seen hundreds of times every single month, people will see our commercial and then when someone says, Hey, I’m looking to sell my property, they say, Hey, go check out professional home buyers.

(02:08)
So they’ll Google us, call us, and that’s how they get ahold of us. So I’m pretty sure that’s how this person got in touch with us. There’s lots of reasons that people want to sell their property to us. Usually their property is not in good shape. They want to downsize, they want to move into retirement home, they want to sell an inherited house, and sometimes they just have financial issues. This person actually was in foreclosure and they knew that we were the quickest and easiest way for them to sell their house without having to go through foreclosure and losing the house. So we came in, the property was in really bad shape, we offered them $10,000 and after negotiations back and forth, we end up settling on $15,000. So I’m going to reiterate this every single time, but make sure you offer lower than what you want to pay because that gives you room to come up and show the seller that you’re willing to work with them.

(02:52)
And of course we tell them and show them that we are willing to buy the property as is. They don’t need to clean up, they don’t need to do any repairs, and we will close on the day of their choice. That’s very important because even though you can give them cash, they may not want to close for a few months. In this case, they did want to close quickly, so we ended up closing in a little less than three weeks. The more benefits you can give the seller to working with you, the better off you’re going to be. So after we bought this property, we put around $74,000 into this house.

(03:21)
I want to take a moment to share with you 10 x tv. It is the buzz in the real estate investing world right now. And guess what? I was one of the first to do TV commercials over a decade ago. If you want high quality motivated seller leads that are asking you to do business with you, instead of you reaching out to them, go to claim my market.com and we will show you our TV launch formula. We have the shows and stations that we know work. We have the scripts that we know work. We’ve basically taken the formula that I’ve created over the last decade plus that I’ve been doing TV commercials, and we are now plugging it in for over a hundred real estate investors around the country. And if you want to be one of those as well, reach out to us. Claim my market.com.

(03:58)
If you want a 10 extra marketing, go and apply and see if we have a spot in your market. Now, back to the video. As you see, it needed a lot of work. Here are some before and after pictures to show you the huge transformation. As you can see on the outside, everything was overgrown. It’s actually amazing just by cleaning up the yard and getting rid of the trees, it makes a huge difference. But as you can see, the siding and stuff was damaged and outdated. So even if it was in good condition, we probably still would’ve painted it because it’s only, I dunno, a few thousand bucks usually to paint a house. So we painted it a nice updated gray. We put nice black shutters on there. I think we had to do new gutters and downspouts, and we spend usually about a thousand to 1500 bucks on landscaping.

(04:39)
So all of this here that you see is done for about five to $7,000. Huge difference. And as you can see from the inside, we clean the property out, we put new flooring down, we painted the property. We always do hard surfaces in the kitchen and dining room. And as I’ve said in previous videos, when the kitchen and dining room are together, which most of the time they are, if you do that whole area and hard surface, it’s going to make the area look so much bigger as opposed to splitting the flooring out. Some people put hard flooring in the kitchen and then they put carpet in the dining room. Number one, that’s a big no-no. And number two, it just looks so much better. And depending on the house, if it’s a higher price point house, we’ll actually put hard flooring or hard surface flooring throughout the whole main level.

(05:21)
And then carpets in the bedrooms. Carpet actually saves a little bit of money. So by doing it in the bedroom saves some money and people actually light carpet in the bedrooms in Kansas, you need to check your area to see what works best in your area. So as you can see here, we knock the wall out and we put a big island in. Anytime you can open up a kitchen and put a nice big island, especially in this price point of about 125 to 150,000, it really makes the house pop and makes it feel like it’s worth way more money. That’s why we were able to get a lot more money than we had projected. Okay, another investor tip. So we manage all of our renovations and subcontractors. What this does is it allows us to save a lot of money by not paying a general contractor and we control the job better.

(06:02)
If you give one contractor the whole job and they jump off the job site and you fire them, you’ve got to start all over. But if you have just a painter mess up and you need to get rid of the painter, you just bring another painter in and you can continue the job. So saves money, saves time, and you control the job better. We also, if you’re big enough and you’re doing enough of these, we have guys on staff that manage our rental properties, but they also go in and do a final punch list. So if there’s a bunch of little odds and ends, instead of having to bid contractors and then schedule them and get them to come back, we found that this takes anywhere from a week to three weeks to get contractors back and finish a job. Whereas with our guys, we can send ’em in a day or two, they knock out the punch list and the house is ready to go and this saves us hundreds of dollars, if not thousands of dollars per deal.

(06:45)
Alright, so let’s get into the numbers on this house. This is going to be fun. So we bought this house for $15,000. We put $74,000 into it, and this is where it gets interesting. We actually decided to hold onto this house as a rental property. We thought the property if we sold at that time would be worth $125,000. Since we were refinancing our private lender out of it, who lent us the money, we had the bank appraised the property to do a new loan and it came back at $150,000. The appraisal did. So the bank loaned 80% of the $150,000, which is $120,000. And since we only had $89,000 into this property, we were able to get $31,000 in tax-free money back. That was of course before expenses. So it’s probably closer to $25,000. And because this is a loan, we don’t have to pay taxes on it because we have to pay that loan back.

(07:36)
Man, I love real estate. So many good things I did on this property that you can only do in real estate. So we rented the property. We actually ended up making money on the rental part of it, which I didn’t even factor into this, but the tenant approached us eventually to buy it after renting it for about three years. So we pulled comparable sales and the property went up $65,000 more in value and we sold it for $215,000. So instead of making $16,000, which is our projected profit, and I’ll flash the projections here on the screen and that $16,000, I would’ve had to have paid taxes. So I would’ve cut that in half. But instead because we kept the property, it went up in value and we will make over $100,000 on this property and it’s going to be tax free, which I’m going to explain here in a minute.

(08:21)
So this is where real wealth is created by holding onto properties as rentals, they go up in value and you can pay them down over time. So how is this tax free? The IRS says that if your intention when buying a property is to keep it for a long-term investment, when you sell it, you can trade it into another property or up to three properties of like kind, which means real estate to real estate. So it could be single family to single family, it could be single family to apartments, doesn’t matter as long as it’s real estate, you don’t have to pay taxes. So instead of making $8,000 after taxes, I was able to do what’s called a ten one exchange, which is what I just explained. So that a hundred thousand dollars in profit, because I didn’t touch it and put it into an escrow account, a third party qualified intermediary, I was able to put that into three other properties without having to pay taxes.

(09:10)
So think about that. $8,000 is what I would’ve gotten if I would’ve flipped it, which is what most people would’ve done. And actually it probably would’ve been a little bit more because the property did app price higher. But instead, I was able to create a hundred thousand dollars in equity that I was able to put into three other properties. Then now I will do the same thing with, and by the way, that method that I just mentioned to you where we buy the property, we renovate it, we rent it, and we refinance it. It’s called the bur method, subscribe to this channel and hit the notification button because I’m going to do a video on this. It shows how to do these. I actually did 10 of these very early in my career and created over a hundred thousand, I think it was closer to two to $300,000 worth of equity just by using this method when I was like 23 years old.

(09:54)
There’s so much wealth that can be created from that method. So the secret to not paying taxes is keep a property for long-term. When you sell it, just do a 10 31 exchange and keep doing that. Not to mention as you own the property, and I’m sorry if I’m throwing too many things at you, but as you own the property, you can actually depreciate it and most of that cashflow you get is tax free. Now, I’m not giving tax advice. You need to check with your CPA and if they’re good, they’re going to know these rules. And last thing I’ll say about the 10 31 exchange, the rule of thumb is you need to own the property for more than a year. Some CPAs want you to own it for more than two years. But again, if your intention was to keep the property long-term and something happened where you decided to sell, whether you evicted the tenant, they offered to buy it from you, or your finances changed, or you just had a change of heart, you still had the intention of keeping that property long-term.

(10:41)
So just like all the other properties I do, I didn’t have to meet the seller. I didn’t have to step into the property, I didn’t have to manage the contractor, I didn’t go into the house. All I saw was a deal analyzer and I saw pictures and approve this house that my team brought me. So if you want to learn how to build a real estate business or any kind of business, and also for productivity tips and all kinds of other business advice, make sure you hit the like and subscribe button and also the notification button because we put a ton of these videos out that show over the last 20 plus years how I was able to build seven and eight figure businesses from scratch. Many people think it takes money to make money. While that’s true, that doesn’t mean it has to be your money. We actually fund these deals with other people’s money and pay them a nice return for doing so. Again, I’ve done over a thousand of these deals, over a hundred million dollars in real estate without using my own money. So if you want to learn how to get money from other people to do deals, watch this video here. And also here’s a video on the top five ways to make money in real estate. Thanks for watching and we’ll see you in the next video.