#2 Getting Even MORE Creative with Larry Goins
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Itunes – www.TonyJavier.com/itunes
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Guest Bio: Larry Goins has been investing in real estate for over 30 years. Previously, Larry served as president of the Metrolina Real Estate Investors Association in Charlotte NC, a not-for-profit organization that has over 350 members and is the local chapter of the National Real Estate Investors Association.
Larry is an active real estate investor and travels throughout the United States speaking and training audiences at conventions, expos, and Real Estate Investment Associations on his strategies for buying and selling houses.
Larry has also written several books on real estate investing that are available wherever books are sold.
Larry and Kandas are also the host of the BRAG Radio Network. BRAG is all about investing in real estate to Be Rich And Generous.
Between speaking engagements and mentoring other investors, Larry oversees the daily operations of his investing business that wholesales properties, seller finances properties and holds properties for investment.
More about him – www.TonyJavier.com/larrygoins
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Show Transcription:
Tony (00:04):
All right. We are on. Mr Larry Goins is our guest today. Mr. Godfather had been in the business a long, long time. How are you doing Larry?
Larry (00:12):
I’m doing awesome, man. How about you?
Tony (00:15):
I’m doing fantastic. Doing fantastic. It’s great to have you on. It’s been a while since we talked, we met several years ago and you’ve been doing some great things over the years. You’ve done a lot of education and seminars and sharing your knowledge and lots of great stuff. So when I put this, put this together, you’re the one of the people that I thought of. So I guess just go ahead. I’ll let you take it over. Introduce yourself to the people, what you’ve got going on. And I guess what you specialize in.
Larry (00:39):
Sure, sure. Larry Goins , I live in Lake Wylie, South Carolina, a little small town, just South of Charlotte, North Carolina. And, um, I’ve been doing real estate man over 34 years now. And uh, my very first house and I think it was 86 maybe something like that. Uh, yeah, it’s crazy. Right. But, and by the way, it was an FHA non-qualified assumable loan. They stopped those in the seventies.
Tony (01:16):
You assumed it from someone else.
Larry (01:18):
I did. I just took over the loan and you could do that with FHA back then they stopped that in the late seventies, but there was still a few of them left over for the next 5, 10 years or so. And, um, but anyway, that was my first deal, but we bought and sold probably a thousand properties in 12 different States and written a few books about real estate. One is called getting started in real estate day trading. Uh, and the other one is called HUD homes half off how to buy a hundred houses for pennies on the dollar I was doing. I was basically, I tell Chris Chico, this he’s a good friend of mine. I tell him I was doing virtual investing before he came up with the term virtual investing.
Tony (02:01):
So when you say virtual investing, what market did you, did you go into and tell us about that? Cause a lot of people, um, you know, they have competitive markets and want to venture out into other markets and I get that question quite a bit. They’re like, should I go into other markets? So tell us about that, how you put that together?
Larry (02:19):
Well, my very first deal that was virtual and this was years and years ago. Um, I’d put out some bandit signs, right? So I get this call from this lady named Rochelle and she had a house over in Fairmont, North Carolina. It was about three and a half hours away from me, right? So she tells me about the property and I’m looking it up. And you know, I made her an offer of 2,500 bucks, right. She wanted 15,000 for it. I said 2,500 bucks. Cause I’m a firm believer if you’re not embarrassed by your offer, it’s probably too much anyway. She calls me up and her grandmother had given her the house, her grandmother was still living, but she gave her the house and it had tenants in it paying something like $300 a month. Right. So anyway, she didn’t want us, she just needed some money. So I made her that offer. I mean, can you believe she didn’t hang up on me? That’s one of the things we teach our students, how to do is how to make ridiculously low offers and not have them hang up on you, build a rapport with them.
Larry (03:19):
So about a week later, Rochelle calls me back and she says, Larry, she said, you made an offer on my property. She said, I can’t take that, but I will take $3,000 if I can have the money next Friday. So $3,000. Wow. So I said, here’s what I want you to do. Okay. I want you to take some pictures of the house inside and out. Every room, any repair areas, all mechanical items, all four sides of the house and the street view both ways. Okay. This was before smartphones. Okay. So guess what she did. She didn’t even live in the same town where the house was. She mailed the tenants. Remember those little disposable cameras you could get at CVS and Walgreens. She mailed the tenants, the camera, the tenants took the pictures. They mailed it to me. I had to go to CVS and get the film developed. Right. So, so, uh, I looked at all the pictures and I said, yes, Rochelle I’ll do it. So what I did was we didn’t even have a contract. Okay. What I did was I told my attorney, I said, I’m buying this house for $3,000. Here’s the seller’s name? Call her up. Tell her when you got everything ready. Let me know. I’ll wire the money into the account. So I wired the money into the account. The attorney called up Rochelle and said, Hey where you need to come sign and pick up your money. Right? So I bought this property, never saw the property. I only saw pictures. And to this day, I’m assuming it was pictures of that house.
Larry (04:55):
Right. But, uh, but then what I did was I sent out a few emails to local realtors. I started looking online and I started sending out emails to local realtors. I said, I have this house it’s rented out for $300 a month. Tenants are hardly ever there. They’re missionaries. They travel. I said, I will take, I will sell it for $15,000. And I’ll pay you a $3,000 commission. Right? So I’m thinking that’s the same thing as being on the buy or sell side of a hundred thousand dollar house. Right? $3,000, 3%. So I had several realtors email me back. They’re like, you know, Larry, I could sell this for you. No problem. I’ve attached a 12 month listing. I didn’t want to sell it in 12 months. I wanted to sell it tomorrow. Right. So one realtor email me back and he said, Larry, for $12,000, I’ll just buy it myself. Right. So, so sure enough, about a week later, I get a FedEx with a HUD design. I signed the HUD with a return FedEx. I sent it back and then the next day I get another FedEx with a check for $12,000. I’m thinking, man, I just bought this house. Never met the seller. I never went to the closing. I never met the tenant. I sold the house. I never met the buyer back then back then TonyI did all my business phone, fax, FedEx, email and internet. I’m like, man, I got to figure out how to do this again. And that was the beginning of real estate day trading. Right. That’s what I do now buy and sell properties over the phone. We don’t go look at it. I mean, somebody goes to look at it. I don’t go look at it. Right. But we do all of our business now, phone, email, and internet. We don’t even use fax and FedEx anymore.
Tony (06:53):
So that’s interesting. So I live in San Diego. My market’s in Wichita, but I’ve got, so I technically, I guess kind of virtual do virtual, not wholesaling, but fix and flip, but I’ve got a team on the ground. So I’ve got people in the trust that I’ve had for a long time. So for those that don’t have that, um, do you like set up markets yourself or is it basically just, you just find a deal and then you find your people in that market to do that deal?
Larry (07:21):
You know, ask specifically, I’ve done deals in 12 different States, but I specifically focus on about seven different counties outside of where I live. I’m in the Charlotte MSA, metropolitan statistical area. I’m in the Charlotte MSA. but basically what I do is I go out about two counties to the small towns outside of it. Right? Like you’re, you’re in Wichita falls. Is it? So we would take a major MSA and we’d go out about two counties and that’s where we market it. Where there’s less competition. You have cheaper houses. There’s see it’s where people were born and raised. They have ties to the community. They want to stay there. You only need one buyer per house. So people, a lot of people say, Oh, small town, you know, you’re going to have trouble selling it. I’ll only need one buyer, perhaps that’s it. Right? So we buy in small town USA, we buy cheap houses. it’s not as susceptible to market fluctuations to, you know, to all different kinds of things that go on in the world and in the economy. And quite frankly, most of our houses are cheap, cheap, cheap houses. Like right now I’m buying three brick houses side by side, by side for $30,000 for all three of them. Right. And one of them was rented out for 375, the other one’s rent ready, and the other one needs a paint and carpet to get it rent ready. I’m buying another house for $4,000 that we’re getting ready to sell it for $15,000. And we’ve got another property that we bought that has 40 acres, 3000 feet on a huge Creek. It’s almost like a small river and has some wetlands in the back and has a house with a barn. We’re buying it for a $100 and selling it for $159. So yeah, there’s a lot of, lot of great opportunities, but quite frankly, most of our deals are under $50,000. And what I have found Tony in my 30 plus years in doing this small town is where it’s at. And also what $30,000 house is always going to be a $30,000 house. I don’t have to worry about a $300,000 house. When the market tanks, it goes down to worth 250, right? And I don’t have to worry about inspections, appraisals, financing, market conditions, lenders, any of that stuff, all my deals are cash transaction. I either wholesale the property, which is real estate day trading or a seller finance the deal one of the two.
Tony (10:06):
So I have a story kind of similar to yours. My first deal that I bought outside my market, someone called me and it was a town about two and a half hours away. And they wanted 70 grand for this house. And I just kept blowing them off and they, they just kept blowing up my phone. I don’t know why they kept calling me. Of course, this was close to 15 years ago. So this was, you know, there wasn’t near as much competition, but eventually you kept calling and lowering his price. Like he was negotiating himself down. And finally he’s like give me $25,000. You can have his house. And I’m like, what the? And so I did, I called someone that was in that area. They drove by, it verified. It was there. They’re like, this is a hundred thousand dollar neighborhood. I did the same thing. Sign the contract. He actually drove in, signed it with me. Didn’t look at the house, closed on it. We went and cleaned it up and we sold it for, I think it was either 65 or $69,000. And all we did was clean it out. So we made $40 on a $65,000 house.
Larry (11:06):
Nice. That’s what I’m talking about.
Tony (11:09):
Those are awesome. So based on what you said and what I just told you about that deal, it’s really, it’s not, it’s not necessary. The location of property, it’s buying at a price that you’re comfortable enough with buying it at. Even if you haven’t seen it. Are there any other, are there any other integral details that you can share about that? Cause that’s, you know, again, there’s so many people right now that tell me their market’s competitive. Their market is competitive and they need to go out, you know, they need to do something else. And I haven’t advised them of not, uh, I haven’t advised them to not go out of their market, but I’ve told them if they do it, they need to be really careful because, um, so many things can happen outside of your area. So are there any other nuggets that you could share of maybe things like maybe, you know, things that you’ve run into that people should avoid?
Larry (12:00):
Well, there’s a lot of different things, but I love the small towns. Number one, you don’t have the competition. See, when you are in a, in a big MSA like you and I both know a lot of guys that are in Phoenix or in, you know, wherever it is, Charlotte, North Carolina, or in Orlando, or they’re in, you know, Orange County, California or Chicago, or so, I mean these big markets, there’s a lot of competition, right? I mean, you know, one of your sales guys will go to a house and they got a stack of postcards on the kitchen table from other marketers. Right. And they’re getting text messages from other ones while they’re sitting there with you. So one of the things I’ve learned about small town, not near as many people are marketing to them and you don’t have to worry about the competition.
Larry (12:51):
See when you’re in a major MSA, when you’re at a major MSA, you’ve got to have followup campaigns, you’ve got to have closing. You know, you gotta have acquisition guys that know how to close, know how to handle objections. You gotta have guys that know how to close the deal. Right. know how to use NLP, neurolinguistic, programming, mirror, and matching people. That sort of thing, right. When you’re in small town USA, all you gotta do is be a good old boy, right. Or girl, right. Hey, how y’all doing, what’s going on? So you thinking about selling a house, I could probably help you. I’ve been doing this a long time. You know, I’ll make it a very simple process for you. I mean, we have all the followup systems, the campaigns with email, SMS, RVM, all that stuff. But when you go into small town, small towns are much more forgiving, much more forgiving and you can be more successful quicker in a small town. Plus the values are a little bit lower and it really does help out
Tony (13:58):
One thing that scares people away. And I even have this philosophy to a point cause I own, you know, I’ve got over over a hundred rental properties and I’ve got probably a handful I would say that are under 30 to $40,000. And I’ve tried to kind of stay away from those and less like, I mean, if I buy it for three to five grand that I would buy them. But there are a lot of people that stay away from those deals. Now tell me, so, you know, obviously you buy it for 3000, you sell for 12,000, that’s a no brainer. But for those deals that are rented, you may not be able to sell. I mean, tell me, I guess a little bit about those. Do you keep those longterm, you know, those properties that are rented, do you wait for them to move out if they’re rented and sell them? Like, what’s your like obviously a multiple strategy. So tell us, tell us about your, I guess your whole strategy, uh, if you, if you have that and how that plays into your game as well.
Larry (14:56):
Great, great, great question. I’m really glad you brought that up. Listen, I’ve been doing real estate a long, long time, right? Longer than some of the guys we know have been living. Right. So there’s two things about real estate. I hate. Okay. Well there’s actually three, there’s three things about real estate. I hate rehabs. Okay. I hate, I hate rehab and guess what? I’m a licensed GC. Okay. but I hate rehab. Hate rehabs dealing with contractors and I am a contractor. Okay. Number two is I hate short sales. Okay. A short sell is a long bite. I’ve said that for years. And the third thing I hate is tenants. Okay. I hate tenants. I hate dealing with tenants. So what I do is if I’m going to keep a lower price property, which is a very valid point that you brought up. If I’m going to keep a lower price property, I’m going to not have a tenant. I’m going to have a homeowner in training. All right. That’s all I call it a homeowner in training. We’re going to put them on the path to home ownership. Okay. We’re going to make them put some skin in the game. They’re going to be responsible for some repairs. And if it works out okay for the first year, then we’ll give them an option to buy the house. Okay. We’re going to give them, we’re going to give them an agreement to be able to option the house. Right. And then we’re going to be able to give them an option to buy the house. And then if they pass that for the next year, then we’ll sell it to them on a land contract. Right. So because when you’re, when you’re seller financing or renting a property, your first year is your most critical. If they could pass the first year, you know this, that they could pass the first year. You’re just about HomeFree with them. Right? So especially on the cheaper houses. So we want to, we want to help them, but we want them to have some skin in the game.
Tony (16:59):
Talking about skin in the game. So you said land contract, which basically is an owner carry, right? So after a year you do an owner carry where you’re financing the property. What does that first year look like? Is that, is that just renting? Is it rent to own? Like, what do you call that that first year where you train them to be a homeowner
Larry (17:16):
The first year we’ll give them an option, right? We’ll give them an option to buy the property. And then we want to make sure that, you know, they know they’re responsible for the repairs. Okay. Now you’ve got to be very careful with this because you know, we all know about Dodd Frank, right? Dodd Frank is, you know, limits the number of seller deals you can do if you’re dealing with consumers and you want to be careful where if you’re doing a lease option with somebody and you have to evict them, you don’t want them to go to court. And you know, and the judge says, Oh, wait a minute. According to your paperwork here, they have, what’s called equitable interest. You’re going to have to foreclose on them. Now they’re not really a tenant. So you have to be very careful in the things that you do. So what we do is, is we make their option consideration, apply toward their closing costs. Okay. And what has to happen for them to get the equitable interest is they have to actually close. Okay. So the other thing that we do is if they’re responsible for the repairs, any judge, if you go in front of a court, a judge is going to tell you, you can’t keep all the benefits and give away all the risks. So what we do is, you know, we tell them you’re responsible for any repairs up to X dollars per month, right? It may be $150 per month or $250 per month or something like that, depending on the amount of rent, right? If it’s a $300 a month house, it’s not going to be much. If it’s a thousand dollar a month house, it might be 250 a month, right? So you can’t make them responsible for a new roof, heating and air, you know, things like that. Right. You’ve got to you, you’ve got to put a limit on it, right. To where you still have some responsibility. But what you’re doing is training that person to be a homeowner and unclogged their own toilet, right. Unclogged their own toilet and fix their own little things and make sure they don’t tear up the house in the meantime, because they, in their mind, they’re buying it.
Tony (19:35):
And again, going back to skin in the game. So we do, um, similar to what you do. We do rent to own, which is a rental agreement with an option to purchase. And we do that. 2 separate agreements that way. If they don’t pay, then we take the rental agreement to court and say, they are paying rent, or we’re paying rent. Now they’re not, we can evict them. Right. Um, and we require three and a half percent down now on lower priced houses. That may not be that much money. What’s your, what’s your philosophy on that? How much skin in the game do you like to have your people to have?
Larry (20:08):
How much do you have to work with?
Tony (20:11):
That’s your question is what you’re saying.
Larry (20:12):
That’s it? If they say, if they say I have $3,000, let me ask you a question. You know, and sometimes they’ll say, how much do you require down? Well, you know, typically on average, it’s about 20% is what people put down when they buy a house, right? 20% on this house as a $50,000 house, that would be $10,000. Is that something you think you could do? If I can help you become a homeowner without having to go through the bank? Well, now how close can you come? Well, I might be able to do four. Well, let me ask you a question, cause I really want to help you here. I want to help you become a homeowner. Um, but is there anybody you can reach out to that might be able to help you with your initial investment? Notice? I didn’t say down payment that time, I said initial investment on your house, on your new home. Right. I’m even going to refer to it as a home, not a house own your new home. Right. And uh, well, I don’t know. Mom might be able to help me great. What’s her number. Right. So I’ll call them and talk to mom myself. Right. And, and, and I’ll tell you what, I’ll always get the money, especially if they’re living with mom right now. Right? Cause mom is basically paying to get them out of her house.
Tony (21:32):
No, I love that. It’s kind of like asking the question when you’re negotiating with a seller. If I were to, uh, pay you cash close on the day of your choice, what is the leash to be willing to take for your property? And there’s obviously different variations of that question. Right? So rather than naming your price, having them named the down payment, I like that. That’s, that’s, that’s a, that’s a good strategy.
Larry (21:53):
You always try to bump them up. Is there anybody that can co-sign to get alone or is there, do you have a retirement account? Is there anybody, you know, that has a retirement account can borrow against it? You know, is there anybody that owes you money? Do you have any vehicles? Do you have anything you could sell or trade or barter. I’ve taken cars, boats, guns, gold, all kinds of things as partial down payment.
Tony (22:16):
That’s good stuff. Um, cause obviously the more they have more skin they have in the game, the more likely they are to go through and it lessens your risk because you know, there is a statistic that says how many people go through with that? Not in my average is way higher than the national average. I’m sure yours is too, but it sounds like you have a good system.
Larry (22:35):
You also got to realize that if they, if they themselves, the person living in it has zero money to put into it. And mom and dad, or grandma, or grandpa is putting up a hundred percent of the money. They’re not going to be there very long. Right. Cause it’s not their money. They don’t care. You know? So I do want, if at all possible I’ll take the parent’s money. But uh, if at all possible I want the person living there to have some of their own skin in the game.
Tony (23:06):
Yeah, for sure. That’s a good point. Really good point. So you’ve been in the business for 34 years times have changed, right? you can’t, you don’t have, you know, Polaroid or throw away cameras anymore. Right. So tell us today. So things have changed even in the last few years, I’m sure you’ve seen this in your market. And probably other markets is there’s so much access to information. So there’s so much competition. So we, investors have to be creative. Right. There’s so many different new methods of finding motivated sellers. So what are some things that you share today, um, that you’re doing today that you didn’t do a year ago? Three years ago or five years ago.
Larry (23:53):
Wow, great. So, um, I used to buy all my properties through MLS and hunt, right. And then whatever the market changed and, and got so much competition, there weren’t as many properties on the market. I had to go direct to seller again, used to do that years ago, but then I had to go back again. So we started going back direct to seller in 2018. I was a little behind, behind all that because a lot of people were already exhausting, you know, MLS and HOD and all that stuff, auction sites. But, the, because I went wide, instead of going deep in one market, I went wide. Like I was, I was making an offer on every single HUD house in North Carolina and South Carolina and Alabama every single day. Right. So I was going wide instead of going deep in one market. But there came a point that even at that point, I couldn’t continue to do 5, 10, 15 deals a month. Right. So we started doing direct mail. Uh, one of the big things we do is we use a specialty list and, uh, it’s a very expensive list, but it goes through multiple, um, multiple data, uh, data points. Yes. Yeah. And it’s almost like list stacking, but, but I don’t know, but I love that list.
Tony (25:20):
Is that Chris Richter.
Larry (25:23):
It is. It is. I love that list. We use it. I’m getting ready to do double the size of my list. I mail out 25,000 now getting ready to bump up to either 375 or 50,000. But, um, but we love that list. We also do some RVM with that list, a ringless voicemail, some SMS. Uh, we also use a CRM called Podio that we had custom designed and we’re always updating and upgrading it. And um, and I love that CRM. We use smartphone, uh, SMRT phone.io, which integrates through Podio. So when somebody calls, I could see their calling, it goes, I could see who it is. It goes right into Podio CRM. And I’ve got a lead manager. She takes all the leads that come in and she’s in the Philippines. She’s been with us now for about a year. She does really, really well. And um, so we have automatic followup campaigns, sequences, and I mean, I’ll get, you know, it’s kinda funny that, um, I’ll get just random text messages from people coming back through the CRM that says, yes, I’m ready to sell right now. I mean, we also get some that say it’s sold or I’m not interested or stop messaging me, whatever, but they get a text every single month. Hey, this is Larry. I was just following up. We spoke a while back. I was just following up to see if you still have a house you wanted to sell. Right. And some of them are, no, some of them are, leave me alone. Some of them are it’s sold. Some of them are, yeah, I’m ready now.
Tony (26:59):
So you buy that list from audantic, you, you, uh, send them out mailers and you text message him. So you get them from both, both, both angles.
Larry (27:08):
We, you know what, we were doing some SMS marketing, but we don’t really do much of that. The better quality lead is for us anyway is when they get a postcard and they pick up the phone and call us, I would much rather somebody call us because now we’re answering the phone, Hey, this is Larry. How can I help you? Right. Instead of sending them SMS or cold calling or whatever, and, you know, Hey, I know it’s a shot in the dark, but do you happen to have an interest in salad? You know, it’s all great ways to market, but we get much, much better response when they call us and we’re answering the phone. Right.
Tony (27:48):
So smrt.io, is that similar to car rail or is that different?
Larry (27:52):
Similar to call rail, but smartphone integrates with Podio seamlessly. What CRM do you use?
Tony (27:58):
Well, we were using Podio and we custom built it. We did the whole thing and it just became, it kept failing us for some reason. So about a year and a half ago, maybe two years ago, we got rid of it and we went super basic and simple. We were doing spreadsheets and just using Google box, but we just started using Trello, which is a project management system. And so we, we have, when someone calls into call rail, it goes into Trello. It goes into a spreadsheet, it goes into Trello and then we can take the leads and put them into, you know, need to follow up hot leads, need to put over contract deadly. So we just kind of put it in a lead flow. And then the good thing about that is, is when we start our project management, we just flip that and put it into our project management board. And then it goes all the way through the process.
Larry (28:45):
Well, you do rehabs too. So you have that project management. We don’t touch them. We don’t touch them. We might clean one out that’s about all we ever do with the property.
Tony (28:55):
Okay. So let’s talk about that. So you said you hate rehabbing, so you buy property. It’s in really bad shape. It’s not even in livable shape. Let’s, let’s put, let’s say that. So it’s a, you know, let’s say $30,000 property, whatever the number is. And you’re showing someone that property, what gets them to buy that property, uh, or do your lease with the option to purchase when that property is not livable, do they do the work to it? Like talk us through that, how you get them to commit to something that maybe not be, uh, you know, and lovable terms, I should say
Larry (29:29):
Your absolute best properties to do a homeowner in training are properties that are livable or close to livable, right? So here’s the thing. And this is very, very important information right here. If the property is what we call fit and safe. Okay. In other words, the hot water heater works. The plumbing works, the electrical works. It’s got a deck on the back, but there’s rails around the deck. So it’s safe if it’s fit and say, you can legally enter into a landlord tenant relationship on that property. So then we’re going to do a rent to own or lease option. Okay? If this property has some walls that are guarded, you know, the rails off the deck on the back and the decks five feet off the ground, or the hot water heater has been stolen or whatever, we’re going to sell that property on a land contract right off the bat, right? If we’re going to seller financing or if we’re going to keep it in that sense, okay. Most of the time we would just wholesale that property. We’re wholesale on a property. Now that has a, has a roof that leaks and some of the ceiling tiles have come down and the house is full of furniture, but we’re buying the house for four grand, right? We’re selling it for 15. So, uh, you know, 149 and, and, and who knows who that buyer’s going to be. It might be a landlord. It might be the person next door. It might be somebody who wants to, you know, fix up a property and move into it. We just never know who the buyer’s going to be. And we market all of our properties really hard. We market our properties hard and we want to make sure that we market it. Cause we’re always building our buyers list. In fact, most people who buy and wholesale in a major MSA, they have their own buyers list. And you know, about 10 or 20 guys that or our girls, whatever that are going to buy all their properties. We don’t do that. We got a property here, here, here, here, here, here. We got them all over the place we got about 37 deals in our pipeline right now, right now. Right? So we’ve got buyers in seven different counties and properties in seven different counties. So we’re always building our buyers list to market to, but we’re not counting on a few people to buy all of our properties. In fact, the vast majority of the people who buy our properties are brand new buyers that had never heard of us until they saw our property marketing.
Tony (32:12):
So when you say buyer’s list, you know, usually that’s investors, but you also build it for homeowners. So you have both investors and potential homeowners. That way you can hit it from both sides.
Larry (32:23):
Absolutely.
Tony (32:24):
Awesome. So you are talking me into not rehabbing, cause it sounds a lot sexier to not have to rehab and to just put it on the market. And that’s, that’s one of the things that, you know, I, I go back and forth on because don’t me wrong every once in a while we’ll wholesale a property where I know it’s in a great area, it’s livable. We can clean it out. It just just is updated. And we can make just as much money on wholesaling it as we can actually rehabbing it. Um, when was the last time we rehabbed the property?
Larry (33:00):
Uh, probably I don’t know, 10 years ago, maybe. And let me tell you that story. It’s the very last property I rehab. I actually bought it from, uh, from, uh, wow. What is his name? He’s in, he’s in collective genius. Uh, he bought it through, he bought it through HUD. He’s in, uh, a human and Jessica Lee, Brian and Jessica. I bought it from Lee Bryant. Okay. So it’s in Liberty, South Carolina and he’s wholesaled it to us. And then we bought it. We were going to fix it up. So we get within, we were getting ready to have an open house this weekend. Okay. And it was in the middle of winter, the middle of winter. Okay. And it was very, very cold. And we had one of the coldest nights we’d ever had in the last several years. Okay. So next morning I come into the office and I got a voicemail. There’s a person on the phone, left a voicemail that said, Hey, this is so and so, and I, and I live next door to your house and Liberty on such and such a street. I just wanted to let you know that the windows are all steamed up and there’s water running out the front door.
Tony (34:16):
Oh geez.
Larry (34:19):
So, so we go down there and here’s what happened. The contractor left the water on, but the heat off. And guess what? I’m sure you know, this you’re in the rehab business. Insurance companies will not pay if there’s water damage because of freezing pipes. If the water zone and the heat is not , they will not pay. That was a $75,000 expense. Okay. Cause we had to take, and the leak, the leak was from the second story, an exterior window in the bathroom. So the water was coming out of the bathroom, out into the hallway, down into the four year down the steps to the first floor.
Tony (35:09):
You have to start all over. I mean, you had to gut that out completely.
Larry (35:12):
We had to gut it from, from me how the second floor down. Right. So down to the first floor, everything even sub floor, it was, it was horrible. So, and guess what, the contractor that did the work had any insurance? No, no, no. Not at all. Do you think you would even come back and fix it? No. No, not at all. Then I had to hire a second guy who is somebody that I’ve found that I actually grew up with. It was in the business and he ended up ripping me off for another 10 grand. Right. So we’ve finally got this house finished. Finally. Got it. Finished, got it. Put on the market, got a contract. And then the home inspection comes up and you know, retail and properties, home inspectors, they always find something. Right. It always costs you anywhere from 500 to $5,000. Right. So they’ve found some other stuff. It’s like, it’s like, they’re holding me over a barrel. Right. They’ve got you. So that’s one of the reasons I hate rehabs I’m really do. I like to turn and burn. I like to turn them. I don’t want to touch them. You know, I used to, when I was wholesaling, I used to get three rehab estimates, a CMA comparative market analysis and an ARV appraisal, I guess what? I had a buyer come back to me one time and said, Larry, I used your appraisal. And, and I used your appraisal to buy this house. And then I sold the house and you told me I was going to make $50,000. I only made 25,000. What are you going to do about it? I said, I thought for a minute, I said, I’ll tell you what I’m going to do. I promise you, I will never, ever, ever sell you another house. You can make $25,000.
Tony (37:05):
So for those that are wholesaling and want to get into rehabbing, this conversation should not talk yet to rehabbing all the, all the rehab.
Larry (37:14):
I mean, listen, it’s not for everybody. Right? There’s other people out there that say, why are you wholesaling? You’re selling the goose that lays the golden egg. Right. But, and so everybody’s got their own thing. The one thing I learned about real estate Tony me is you got to do what you enjoy. There’s so many things I used to years ago, I used to love going into construction projects. I would stop at the store and bring the guys drinks and snacks and all that. We’d walk around and look at the house. I love the smell of sawdust, but I eventually got over it. And I didn’t like it anymore. Didn’t want to have to deal with it anymore. But there was a time when I loved it. Right. So everybody’s got to do what they like.
Tony (37:53):
Yeah. And I I’m in the same boat. So if I had to do everything in the rehab process, manage the projects, put them under contract, the whole thing. I’ve got a team that does all of that. So trust me, if I were in the weeds, I would not want to be in that, that side of it I’d want to wholesale, but I’ve got a really good team that runs the projects and we can make a lot more money by rehabbing them the we can’t compared to wholesaling. So for us, it makes sense. And like you said, you got to enjoy what you do and or you got to do what makes sense and run the numbers and see. Cool. Well, good stuff. What else you want to talk about there? Anything else on your mind, any other good stuff you want to share with us?
Larry (38:32):
Well, I think one thing that lot of people don’t really talk about or don’t really think about is we do a lot of deals where we get the seller to sell us the house with no money down and, uh, and, and finance the house over long period of time. And there’s two things you can do with that property too. So, um, if you’re far apart, like you need to be here and they’re here on the price. I always asked them, you know, would you consider selling your property old terms? If we could meet your price. Now notice, I didn’t say that guys, this is important. Take some notes. Notice. I didn’t say, would you consider selling your house with owner financing? They don’t know what that is. Right. Would you consider selling your household terms? Right? Well, what are you talking about Larry? Well, here’s the thing, you know, you told me you’ve been written this house out as a landlord for 30 plus years. Right? But you’re getting up in age. You love the cash flow. You just don’t like dealing with tenants, trash, termites, and toilets anymore. Right? So what if I could show you a way you could get rid of the tenants, trash, termites, and toilets, and you could keep the passive income coming in. And if God forbid, something happened to you, your heirs would not have to deal with the house, having to fix it up, sell it, whatever they could keep that mailbox money coming in every single month. Right. And not to mention the fact that it’s going to save you a lot of money on taxes. Okay. And then what I do is I encourage them to go talk to their CPA. I’ll give them some numbers, encourage them to talk to their CPA and their CPA. Of course, it’s going to tell them, yeah, this will save you a lot of money on taxes. Right? So we get quite a few deals. I shouldn’t say quite a few, but we get the, I don’t know, maybe one or two a month like that, doing seller financing with our seller. And guess what? No money down. Sometimes I get no payments for 90 days. And sometimes I get three percentage.
Tony (40:35):
Wow.
Larry (40:37):
The most I pay is five, but typically four, sometimes three I’ve started into down. And I’m asking everybody for 3% now.
Tony (40:46):
3%, that’s crazy now 3%, but that’s are those typically those lower priced houses that 10, 20, $30,000 acquisition prices
Larry (40:54):
It could be. Yeah. I mean, we buy some that are more, you know, I gave one guy just the other day. I gave him a and we buy all of our stuff over the phone, but I gave him three prices. I said, you know, at first I said 30,000 cash, but he was stuck at 70. He wanted 70. I said, I can pay you 70,000. I said, I can pay you 70,000, but I need, we need to talk about terms. So I did either 30,000 cash or 70,000 terms. He said, well, what about a down payment? Well, how much payment do you want down payment? Do you want, he said, I need 20%. I said, okay, so I can do 30,000 cash. I could do 40,000 with 20% down. Or I could do 70,000 with no money down.
Tony (41:41):
Right. And low-interest right.
Larry (41:44):
Exactly. And, and they’re like, you know, yeah. What about the down payment? So here’s another good thing that you can say, guys, write this down. Okay. Is, you know what? I can’t make a double down payment. Whoa, what, what are you talking about? A double down payment. Well, I’m already going to rehab the house and, and that’s, that’s my down payment right there. I’m fixing up your house. Right. So if I have to pay you money and put money into the house, that’s a double down payment. Right. So that’s a really good thing to use when you’re talking with sellers. The other thing did you notice? I said a minute ago, if God forbid something should happen to you. You don’t say when you die, right? You say, if God forbid something should happen to you, then you’re able to, your heirs are able to keep getting that check every single month. And when I’m on the phone, I’m doing this every single month that check comes just like clockwork. Just like closets.
Tony (42:45):
Is that a landline phone. You have there?
Larry (42:48):
Yeah. It’s an old phone. We use smartphones through the computer, but if I’m on the phone,
Tony (42:53):
I guess you said you’re, you’re in your office. Huh?
Larry (42:55):
Yeah. I’m in my office and I do have a landline, but we use smartphone, which is through the computer and there’s a smartphone app as well. And um, yeah, but that’s just, that’s just my desktop. I don’t buy houses on that phone, but I just used it as an example.
Tony (43:15):
No, that’s, that’s a good point. I’m glad you finished off with that because there are a lot of people likes the competition is crazy. Sellers are getting smart and understanding that they can call multiple people. And sometimes it’s hard to meet their price. So if you can come up with a creative way to get them their price and get it on the terms that you want, you can potentially make some deals happen that you normally wouldn’t be able to. Do you remember? Um, Richard Rube, Dan Duran. I used to teach that. I can’t remember what they called that, but they would, I think they call it, I can’t remember the name of it, but basically they would do the same thing. They would say, I can meet your price, but you need to find it.
Larry (43:53):
I have it over there somewhere. I’ve got two other bookcases over there.
Tony (43:57):
I probably have it somewhere too. Um, but yeah, they say you can meet their price, but ask them for 0% interest. Um, and so basically when you have us for 0% interest, every single dollar that’s going to them is going towards principal. So as you know, principal and interest, typically when you start 80% or whatever, the number is, goes towards, uh, interest. So really when you’re paying 70,000 for the property, in other terms, you’re paying closer to that 30 to 40 that you’re talking about.
Larry (44:27):
Right. Right. The other thing you can do about the down payment is look, instead of, instead of giving you a down payment, why don’t I prepay the first year in advance? Now you have no payments for a year, but you know, you’ve just prepaid that and, and, and you have no payments for an entire year, right?
Tony (44:47):
Yeah. Good stuff. Good stuff. Well, cool, Larry. Well, I appreciate you, you know, I got into the business 20 years ago and I think you started doing online education probably what, 15, 15 years ago or so, so.
Larry:
2004 I believe ya
Tony:
So you are actually one of the first people that I started following back the day. I don’t think I ever told you that.
Larry:
Really? That’s pretty cool
Tony:
Like you, Richard and, which I don’t even know if they are doing that stuff anymore, then Kristie came around and all other guys but you, I think you are the one that I follow the longest ago and so it is really good to meet you a few years ago and I am glad we could stay in touch and you can share some good stuff with our listeners.
Larry:
That’s really cool man! I really appreciate thinking of me and having me on. I hope everybody got a lot out of it and there are so many things out there about real estate, that’s one of the cool things I love about real estate. There are so many things you can do with it so you can pick and choose what you like and what you don’t like. Do what you like cause if you are doing what you like, you will stick with it. Like if I had to do short sales everyday I go down to McDonald’s and flip burgers cause I hate short sales, right? So there are so many different things you can do with real estate just find what you like and run with it.
Tony:
Good stuff! Actually I almost forgot to ask one question, I’d like to ask one question – If you had $10,000 to spend right now, you could only spend on one thing, doesn’t matter what it is but something that can bring the most return to you – again whatever it is personal professionally. What would you spend that $10,000 on?
Larry:
Wow! $10,000 and bring the most return – probably buy a house
Tony:
Really?
Larry:
I buy a lot of houses for $5000, $10,000 so it would probably be a house. I could double the money pretty quickly.
Tony:
Good stuff! Thanks Larry. Great nuggets there. Catching up again soon.Really appreciate
Larry:
Sounds good! Thanks for having me
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