A lot of students right now are coming to me with this very same subject. In fact, I am dealing with myself in my own business, right. Like, for example, there is a deal that literally I’ve been in contract since April of 2020. And because the tenant will get out and because the homeowner went to the court system got even the judge to approve the Writ of Execution to get them for the constable to come out and remove the tenant. But because of the tenant, the moratorium rights continue to be extended. Even the cost can’t remove them? Yeah. So I’m still sitting here trying to close this deal still to this day…
𝐉𝐨𝐢𝐧 𝐎𝐮𝐫 𝐏𝐫𝐢𝐯𝐚𝐭𝐞 𝐅𝐚𝐜𝐞𝐛𝐨𝐨𝐤 𝐆𝐫𝐨𝐮𝐩
I’m working with the seller right now desperate to sell, it’s kind of a distressed landlord, they have a tenant currently in place. Yeah, really is from my understanding, five, six months back rent being very difficult. And there to a point where they not only do they want the tenant out, but they just want to sell the property basically be done. Right. So there’s the key pain point, there’s the problem to be solved. It’s my understanding, they tried to go the traditional fiction route a couple times down to the core a couple times, they’re a one off landlord who aren’t exactly sophisticated. Their first their first air was, this is a month to month handshake lease deal with a clear, you know, a complete stranger who was clearly not vetted, you know, on the front end, from background checks, you know, just feasibility of tenancy. So they kind of shot themselves in the foot right off the bat. And now they’re reaping the benefits of not doing their proper due diligence on the front end. So the land, the tenant is basically refusing to pay also being very difficult in allowing access to the property. So just being a total total headache, in my opinion, having, you know, been through this a few times, it sounds like they’re just gaming the system at this point. Right, they know that they’re not going to get kicked out anytime soon. They clearly have to pay and have no intention of paying. And the landlord clearly doesn’t have enough experience or have their ducks in a row to be able to, you know, efficiently handle an eviction. So I wanted to talk to you about being the problem solver for them in an effort to get this property under contract and make it an opportunity. Give me your two cents on how Yeah, dude, this is kind of the story I just painted for you there.
Yeah, a lot of students right now are coming to me with this very same subject. In fact, I am dealing with myself in my own business, right. Like, for example, there is a deal that literally I’ve been in contract since April of 2020. And because the tenant will get out and because the homeowner went to the court system got even the judge to approve the Writ of Execution to get them for the constable to come out and remove the tenant. But because of the tenant, the moratorium rights continue to be extended. Even the cost can’t remove them? Yeah. So I’m still sitting here trying to close this deal still to this day. And the homeowner has done everything. Right. Right, in terms of an eviction, you know, the tenant is not paying the mortgage, or I’m sorry, the rent, no communication at all, not proving that they’re out of job like, so part of this moratorium, like in there, and I’ve read the whole thing, obviously, but that tenant needs to prove that they’ve been infected, not infected, but affected by this whole process, that they’ve taken a hit on their wages that they can no longer afford to pay rent. And in such they can’t be evicted. Okay. But this, you know, continues to be extended and extended. And so, based around the moratorium from the original moratorium of evictions, they keep extending that, which basically gives carte blanche to these tenants to basically screw over the homeowner, the landlord, right. And I think there are findings recently that are coming about that there are loopholes in this rule. I have heard, I’ve not been able to execute it on myself, that there are ways to get some of these tenants out. However, that being said, let’s focus on your question at hand. How do you help the seller out? Right, essentially, is the question and ask the right question. Because what I can tell you is that the landlord needs to go down the process of going to the courts going to the filing eviction process, and then going in and trying to get a writ. Basically, that gives the constable or Sheriff as you will, the right to physically remove this tenant. Now there’s a couple things that you need to make sure that happens, the homeowner needs to give a 30 day notice, and they have to physically give it to them. Right. So I would say if they’re not getting into the door, because they’re upset, or they’re hiding, take a picture that you left it on their doorstep, etc. But they actually still have to give them like a 30 day eviction notice,
even in a submit and I don’t tend to be a property manager expert at all. But I don’t know what how it plays out is simply even when there is no like legal lease contract, it was literally just like a you want to rent your rent, here’s a key move in.
You still go through the right ways of doing it. Yeah. Fortunately, that’s, you know, unfortunately, it’s just an unwise move that the seller made, right. I mean, you shouldn’t treat your business that way. Like it’s an investment property, which means is like an investment treated like a business, right? So having your buddy your family member, hey, yeah, sure, just come on in and start paying me every month, not the right way to handle it. So now they’re now they’re, you know, dealing with the bed that they made, right. And so you still want to go through an eviction? Because essentially, they can be viewed as squatters, right? Because there’s no lease in place. And they’re not paying the rent. And at some level, there’s a way that you could, you know, hey, they’re squatting, right? They’ve just staying in my house, I need to remove them. And that’s essentially the argument when you go to the courts to get the judge to say, hey, they’re not paying rent, or squatting. I gave them notice of eviction, you know, the lease is over, or there was no lease, there’s no binding agreement to keep them in there. So I gave them the 30 day, and they don’t leave. So can we get the constable or the sheriff out there to remove them? Now, again, I’ve heard there are ways to do this. And it works where there still rules that if you do a certain thing, or that or whatever, that you can actually get a removal. I have not experienced it personally, right? Like I’m still in this scenario trying to buy a home. So it is a hard answer for you. However, that being said, one of the ways that I have worked with sellers is I actually go to the tenant and say, Hey, is there a way for me to talk to the tenant? And you know, Mr. seller, the reason why I’m asking that is because if I can get the tenant out on my own dime, then I incentivize them personally, then I’m willing to do so. But I’m going to probably need to negotiate a little bit with you Do you see a value for us to come down on that price? So I can go put my team work energy and effort and money into this so you can sell them? Again, this goes back to sales, like literally I did a sales training for the level of coaching group last night. And ultimately, what this is, is you align your values with their values. So what this homeowner likely values the most is to get this damn tenant out, right, so that they can actually sell the property. Now, yes, everyone wants as much money as possible, but let me tell you, I have friends in the scenario. They will do anything, they will reduce, like, I was going through a call last night with a buddy, he wants to sell his home for 200,000, he would take 150. If a buyer would just take this over, you take a $50,000, like literally a 25% discount on his home to get rid of this headache that he has. So as as a buyer, my suggestion is going to this homeowner in aligning your value with theirs, really understanding the pain that they’re going through, you know, if it’s just a little minute headache, and they don’t really care, maybe you’re not going to be able to really lean on that and create a lot of value for them. But if it’s a headache, the way my friend has the headache, you can create a lot of value and you can get a great discount for the value provide them. So you need to ask those questions, right? That’s the important part here is to make sure you’re asking the right questions about like, if I can get this done. I’m going to spend my money, my resources, my time, I’m going to need a discount, are you willing to be a little bit more negotiable on the price, right, and see where they land. And then ideally, what you’re going to do is try to be Mr. Good guy, hey, I’m looking to buy this home, I’m buying it for whatever reason, like make it a heartfelt story, it doesn’t matter. You’re telling the tenant this, by the way, the tenant might not even answer the door, right? or answer your calls or any of that and say, Listen, I know you’re in a tough spot right now. What do you be willing to talk about me, you know, cutting you a check to leave? And let them answer. Because depending upon where that tenant is, listen, there’s two types of tenants. Right now, in this scenario, there’s the actual dickhead that doesn’t, they’re taking advantage of the scenario, they’re taking advantage of this moratorium, they’re taking advantage of the landlord, and they probably are still working, they still make an income. They’re just like, well, if I don’t have to pay, I’m not going to period. That’s the decade then there’s other people that are really financially hurt by this whole scenario. And they don’t know what else to do. And they lost their job. And then they kind of spiraled out of control. And they didn’t go get a job because they don’t have you know, all this other stuff.
And so then you got to empathize with that person. But either way, you got to try to become a friend. And then you know, $3,000 cash for keys, like back in the old school days, when I was doing that for foreclosures, I would give the homeowner like, Hey, I’m gonna buy this from the short sale, but like, I’ll give you cash for keys just to get out, make it easier for me, right? And so I’d give like $3,000 cash for keys, maybe in 5000. So depending upon what the seller says, My my advice is to say, hey, do you mind if I talk directly with the tenant? If I can work my magic? Are you willing to be a little bit more flexible on price? Because I’m probably gonna have to come out cash for keys and pay them and help them move and in obviously, time and money and all that kind of stuff. And then if so you just go to the tenant and see if they’ll play ball be the nice guy. Hey, I know you’re in this situation. I want to help. I’m buying the home for my daughter, my sister, my family, whatever. And, you know, is there a way that I can give you cut you a check to see if you can move? See what they say? If they say eff off if they’re like no if they’re unreasonable, like yeah, $30,000 or something crazy. Let’s go back to this is where we’re at. I mean, this is this is why like literally, I’ve been trying to buy this home since April, is the tenant has cut off all communication, the homeowner, the landlord, they boarded the windows, they won’t answer the phone, they won’t answer the door. And the moratorium is written in a way that that the landlord actually got the judge to execute the writ, which brought the sheriff down to remove them. But because of how the moratorium is written in this example, the sheriff is like my hands are tied. I can’t physically remove this person. Yeah, they don’t answer the door. I can’t go on and pull him out. So that’s what you do. And you just you do your very best to navigate that now. Again, like my buddy said, you know he wants to sell his home for 200 grand but he would take 150 not everyone’s gonna take that steep of a discount. Well, let’s just say you’re willing to cut a $5,000 check for cash for keys for the tenant. But you’re able to reduce your purchase price by 1015 grand worth it. Right. Right. Have you guys negotiated price yet?
They’ve thrown out a price initially. I mean, they have they have made it very clear that they want to sell you know they did their one offs, dad being a landlord it just absolutely look on their face. they desperately want to sell their over the whole landlord thing. So they’re definitely on board to sell. They’ve thrown out a price to us which even at that price, I think is a reasonable price based on you know, the opportunity that the total opportunity but The big variable that’s holding anything up is this incredibly difficult 10 at the moment, so, you know that I had not thrown out a solution yet, but based on everything I’ve heard, I knew that the only way this is going to happen is to be a problem solve, right, which is what you do most the time. And so the first thing came to my mind was like a cat for keys opportunity. I haven’t really had to execute one of those before, but I mean, I’m familiar with the, you know, the idea or strategy behind it. One question logistics, I have found that saving go that route, say we’re able to get them to a position to the tenants to say, okay, you know, what, yeah, I’ll do that. What, what logistical II put in place for any type of protections or accountabilities there to like, you know, we come to a verbal agreement on it, you know, do you have them sign something to say, Oh, yeah, this for that. And once
you have them execute, perform, then it could just be a Word doc stating the terms. Right, we are giving you $5,000, you, you know the name to be out of this address by this top. And if you do not perform, you agree to be, you know, to have a share of common remove you that, you know, you give up all rights to stay in this home, that you will consider yourself a squatter, if you do not leave, like you just write it all out and say, Hey, you know, I want to make sure I’m covered here. I’m happy to do this. But I want to make sure if something changes in your mind, I’m not caught giving you money, and you’re not moving. Right. Now, the other thing I will do is I potentially pay for a moving company. Right? Now, some of these people, like don’t even really have much to move anything. But you know, one of the deals that we just recently did, we paid for the moving company, I think it was like 20 $400. And we paid for the movie company, which makes it that much easier, right? Because one of the big reasons that people don’t want to do this is they don’t know where to go. They don’t know how to move, they don’t have, they may not have a car they might like so they’re like, screw it, I’m just staying. And so again, providing that value, like cash for keys is part of it. Paying for a movie company could be another one. Again, don’t just offer everything at one time. This is salesmanship right? So you have these bullets you’re trying to bring out when the time’s right? finding them another rental, giving the rental deposit for them. All those things now, that doesn’t mean on them in above have the 5000 maybe that’s part of the 5000 cash for keys, hey, here’s what I’m gonna do, I’m gonna give you $5,000 cash for keys, I will help you find a place I will potentially pay for your rental, I will potentially pay for your deposit on the new place that will go live. Are you open to this conversation? And so then you just refine the terms and then on that RIT written document that you make them sign you write out on based around the terms agreed upon, you will no longer you will you know leave the premises. If you do not leave the premises by this date. You I you agree that a sheriff can physically remove you. I mean, write it better, you get what I’m saying. But like you write that out and say, Hey, you you’re willing, you’re knowledgeable that, you know we will evict you one day after this date. The sheriff will physically remove you have better language, but you get what I’m saying. Right and then you have them sign.
I think that’s likely the route it’s gonna have to go here. But I figured it was a good talking point . Yeah. And here’s the reality is, again, depending upon the motivation of the seller, you’re in a good spot. So I potentially would contract this deal. Have you contracted yet? Not yet? I probably would. Because there’s gonna be other people that maybe have a little bit more risk than you do that are gonna go contract it.
Right. And it’s, you know, we just had the conversation just the other day so we’ve kind of been going back and forth but based on my position, you know, with the contract in hand is to go back with this you know, problem solution use that as far as you know, the negotiation leverage, say if I’m, if I’m, you know, willing to solve this problem for you, basically everything you said, Yep, I’m going to solve this problem for you, what’s that worth you and then find out their goals right, so one other option is to create some level of seller financing with them like do they need to really pocket much money? Are they just tired of being a landlord? Most landlords want to sell because they’re just tired of being a landlord. But they still like having that ROI on investment like the rent, right? Yeah. So you could negotiate something some something you know to the terms of like, hey, by the way this is all dependent upon your you doing your job as a salesperson finding out you know their value but like, Hey, you know, I’m willing to buy this Why don’t we do like a seller financing or subject to less push, you know, anything all interest till the tenant gets out. I’ll make sure to cover your mortgage, but I’ll take responsibility as the homeowner. And, again, you have to know the terms, you have to know how much they’re paying, how much is their mortgage, because essentially, you’re going to be bleeding every month. But if it’s a great home at the right price, and essentially, you’re just waiting for this moratorium eviction to go through, and then you can control the whole thing. They may be worth it, right? Like, let’s just say it’s 12 $100 a month or whatever, I don’t know, I’m just making it up. You know, could you run for six more months at 12 $100 a month, because you see a $70,000 payday at the end of this? Right? It might be worth that argument. But again, this is I’m giving you suggestions, not to confuse you. But that’s how you can start to play this, like, hey, let me let me do something for you. Let me take over this headache, let’s do a subject to keep your loan in place, I’ll take over the ownership, that means I have to deal with it, I’m the homeowner, we won’t start charging me interest or we won’t wrap any other loan, meaning essentially, they like are forgiving any profit for themselves until I can get this person out, I would point then starts let’s just say, an interest payment to you, or balloon payment or something of that nature. You can get creative with them. Because depending upon what they care about, they may not be the money, they may really be like my friend and be able to be willing to say, let me let this go. Let me get out of this. I’ll give you the damn home, essentially, right? If they are based around you asking the right questions, you can get creative as hell. What if they own free and clear? Do you know? I don’t think they do this all the time.
But if they’ve had a decent amount of time, that mortgage might not be much and you just taking over that payment and then taking on the responsibility of the homeownership, there could be a big big value that you get a deep discount for. Right? Right, because then you do a balloon payment and say, Hey, Okay, I’m gonna pay this week, I’m gonna make up numbers, they want to 100 you negotiate them down to 150. At this, they owe 100. So you’re making payments on the $100,000 mortgage, you’re waiting, you’re dealing with all this moratorium stuff, blah, blah, blah, you’re trying to get this personnel, you’re keep going back offering cash and keys, but you’re only paying $1,000 a month or something like that, right? So it’s not crushing you financially. And then you agree that the other 50 grand comes at the removal of the tenant, or you wrap the 50 grand into a rap note rap, right? So you have 100 grand that you’re paying the bank 50 grand that you paid them at a certain level of interest, once the tenant is removed. And then once you sell off, they get all 150 grand like their bank gets paid off, they get 50 grand in pocket. And they’re getting interest along the way, once the tenants removed. Right. There’s no wrong answer, you can get as crit, like I’ve done so many different creative deals. Yeah, those are those are all good ideas. But this goes back to again, I did this training for the level of coaching last night. salesmanship right. Like, like I have, did I show you the, like six or seven most important motivation questions, not only because becoming the best sales managers really yet. So there’s a sales formula that, you know, you will be walked through when the time is right. But essentially what I wanted to get to, are these questions here, right? And if you do a good job finding their motivation and ask these questions, you can start getting as creative as you need to. Right? Why are you looking to sell obvious? Why haven’t you sold yet potentially obvious what makes now the right time, where you going after you sell and now this person is not going anywhere? Because it’s a landlord. But the idea is, you could take that question, you could say, you know, what are you gonna do once you sell, right? So if they’re not moving anywhere, what are you going to do once you sell Why there? What does the sale of the property mean to you? Like what? So this would be huge in the landlord scenario, right? Because this is really like, what does it mean? Well, here’s what it fucking means. I’m done dealing with the dickhead tenant. And I don’t have to keep paying this and dealing with being a landlord. Because guess what, you’re still on the hook for being a landlord. That’s the craziest part of this is you still got to maintain the home or the tenant can come after you. That’s the craziest part. Just because the eviction moratorium is there and you can’t evict them doesn’t mean you get to just not be a good landlord. Right? It’s not right. So them knowing that maybe, you know, why is this important to you? Well, it’s important because I still got to go fix this guy’s toilet, even though he’s not paying me rent. Right? Why haven’t you listed it? When are you looking to close? How much are you looking to sell for? I don’t love this in a direct question, but what I would say is like, without telling me as much as possible, Mr. seller, how much are you looking to sell for? Like, I’ll use those exact words. How much would you like to put in your pocket? I assume you have a mortgage. So this would be you going back? I assume you have a mortgage on this? How much are you looking to put in your pocket? I would use this for you in this example. And then, you know, this is kind of obvious in your scenario, but like, what’s the most important part about selling your home besides price? Because when you get when you hit on these, and the motivation seems pretty obvious. But honestly, if you really help them recognize that pain, right? And really, like, feel it. Right. It will be negotiated, though, though, they’ll be willing to negotiate all day long with you.
Right? Yeah, the documents good. Yeah, I mean, with this one, it’s the I think it’s a very clear and obvious one, it’s now how can I provide them value and solution to this? And how can I do it as efficiently and swiftly as possible? Totally. Something that ends up just being a double headache, not only for them, but for myself, and drags on eight months? Eight more months or something like that?
Yeah. And that’s why I say like, maybe you you have a way to negotiate, you would need to know more information, you have a way to negotiate like, how much is your mortgage? Because what if it’s, like $600 a month? Like here, Dude, why don’t we do this? We’ll do what’s called the subject to I’ll take over your payments. How does that sound? Wow, sounds great. Tell me more. Okay, well, I’ll take over your payments, and I’ll take over the responsibility of being the landlord of the home. So any hurdles, challenges, blah, blah. So until we can get this person out, I’ll handle all that I’ll make your payments. So the sale of the property is normal, the only difference between this and a traditional sale is I’m leaving your loan in place. And then once the tenant is out, we can do an interest payment in wrapping and more like, like I’ve kind of told you. My point being is it’s only a lack of your own ideas. Not like how to get it done, the deal can get done, you just need to now be thinking creatively. Right? So I would I would really look at that first, but so you can get more creative knowing the reality of their scenario, like how much is their mortgage? Right, all that kind of stuff? What do they really want to put in their pocket? What are they willing to put in their pocket? Wanting and willing are two different things? Oh, yeah, for sure. More details, you know, the, you know, the better you can solve a problem. And so Okay, so that’s question number one. Great question. You know, and I think it’s very relevant to our space right now. Like, unfortunately, I don’t know when the moratorium is going to stop. I don’t know. And by the way, my own thoughts on this in case you care. I don’t know if the government has a better solution either. Like, I don’t know if they really have an option. Because think about being the government. Oh, we’re going to evict all these people who, you know, I think I read some some crazy stat, like, there would be just in Las Vegas, there’d be like 400,000 evictions. What would the state of Nevada let alone the city of Arizona deal with 400,000 homeless people?
I doubt they could even get through like the legal processes of it. All right. So they be so overwhelmed by all that they wouldn’t even kind of as a side note, that’s why I’m saying like, as much as I hate it, I also can kind of see this other side like, well, what the hell can they really do? Like besides continue the moratorium, right? Because what we kind of felt like being a landlord myself. Fortunately, over the last 12 months, we have not had, I mean, 100% rent collection, no, no issues, total payments, and which has been great. But I kind of treated that to the front end. We say so what do you do on the front end? What’s your system to make sure you’re getting a good tenant? Yeah. So we I mean, we’ve kind of run the gamut. And my wife is actually a she works with me now, but was in her prior job, a commercial property manager multifamily for a large, multinational multifamily management company. So basically, she just took all those same systems requirements, and we just took them on over here. But we definitely for being a smaller operation in the self managed portfolio, we do the full level that all your big institutional management companies do the same. And we do, obviously, you know, face to face meeting, you know, just the good old fashioned gut check of what type of person they are. Right. we prove employment. And what do you is that just a pay stub and oh, yeah, we usually do last two months with pay stubs, and then some type of document if we can get it that just shows that they’re still actively employed there, right. Yeah, yep. So we do employment verification. We Prior landlord verification, we acquired a defendant we call them a is, you know, it’s just an a good guy or not or, you know, what’s the case there. And then you know, your background, your criminal, your credit, all of that. And, you know, we keep the income, you know, the the the expense to income ratio, obviously below below 30%, as much as we can, you know, when we’re wanting to make sure that they can afford this place. And if they have so much as a financial bump, they’re not all of a sudden going to be like, I can’t pay my rent because of this, this and that. I mean, we kind of run the full gamut. Yes, some might say it’s a bit intensive, but we’ve been through 12, straight months of COVID. Now, and we haven’t missed a single rent payment.
So if you do me that this is a favorite to me. I’m buying a rental in Oklahoma City. Today, tomorrow, and then I’m closing on another one in two weeks. So I’m buying like back to back rentals. Do you have a folder with all those documents and stuff that you can share with me or anything that you could share with me? So I can, yeah, like you have a Word doc with your process or anything like that you could share with me so because I’m not this is now going to be out of state. So I want to be even more scrupulous, like, I’ve done my own thing for kind of like the the wild wild west, right. But being that you’re basically you took and inherited some big corporate like, guide like, I want those right. Make sense. So if you could, whether it’s a folder, you have a checklist that I need to get done. Or
I can tell you a Word doc checklist, and then some of the different templates, if you will, that we the lack of better terms still. Yeah, like it even once we approve a tenant, you know, we have a full what we call a term from previous employers kind of a sparco list as a checklist, like a make ready list where it’s a document where your property manager or your lease up agent, whoever is going to facilitate that for you, walks through the day of the key exchange, and takes a literal cell phone video of everything that you have a documented condition report on video. And you know, he’ll walk through and he’ll look at the baseboards, the doors handles, if there’s something on the wall, he’ll notice, if there’s nothing on the wall, he’ll note it so that at the end, it’s not just a checklist piece of paper, it’s like we have video evidence that that hole was not in the wall when you moved in, right? Or all these markings on the baseboard. Were not there that I have to repaint that stuff like that. It’s pretty intensive.
There is a chapter and resources like so if you go and do your criminal background and all that kind of stuff, like, where do you do that? So like, give me the link of where to go do that or who I need to contact? Like, if you could do that. That’d be a massive favor. And for me, yeah, I can just really get my ducks in a row. Because being that I’m at a state, that’s my number one concern. And I’m like, oh, how do I? What’s the system here? I mean, I know the obvious, right? So like verification plumbing that like I said, like, but dude, if you could do that, if you have a file, if you have a checklist if you have like a resource document that I need to do. And something that to me, that would be really helpful.
Yeah, give me the day that throw something together in an organized fashion. And I’ll email it to you. Done. Cool. Cool. Well, thank you for that as a favor to me. What was your second question? How long remember now? So we we went so deep on that first question that I don’t even remember now. Let me
talk to you guys didn’t talk to you more about this. But the thing that I was going to bring up and we don’t need to take it a whole call, and we were already 40 minutes in. But what I’d really encourage you as you’re making these shifts don’t lose sight of revenue. Yeah. And so one thing that happens when I start coaching someone that is like shifting their business, adding stuff or subtracting stuff, right, just being fluid, is they get so consumed in making the shift. They like lose sight of revenue. And so here’s a little secret that you can use is, first of all, don’t stop marketing. Right? So I know that you’re, you’re having a call today. But hopefully you didn’t tell him to like stop at all until we get it.
No, no, if anything, we’re just saying we’re just reprioritizing marketing channels, I said, even slate across the board, we’re going to reallocate and hit harder on one and maybe back off, the other two still work within the budget that we have currently set. But we’re going to pre reprioritize
remember that. The other thing we’ll be focused on the leads that are in your database. That’s how you do that. So the way you don’t lose track or revenue is to follow up with all your leads in your database, like wow, this transition is going on. Okay. And even to the point of what we just talked about, the creative solutions, going through and saying how many of these conversations over the last months or years or whatever, have I had that maybe I didn’t pose a creative solution. And now they have a dickhead tenant like this seller has. Maybe I can pose another Other creative students, and going back and re engaging with the sellers, while making the shift is a big I don’t know if the word secret but like, it’s been a secret to my success when I’m making chefs is I don’t lose sight of we still need to generate revenue, we’re making big, massive big swings, right? Big changes doing this reprioritizing marking it up, in that can become consuming, and you take your eye off making money, and which means you take your eye off being a leader to make money, etc, etc. Don’t do that. The key will be just don’t, don’t make it hard on yourself. Just go through database, go through your hot leads, warm leads cold leads, you know, and when you get to the cold leads, maybe make it a little less like if you have a text message software, an email, something like that where it’s not onesie twosie, then I would encourage it like I use click send for a text message software. Right? So I pay like less than a penny protects that goes out. And that’s me You run those tech straight to your property. All right? No, no. So I just use the actual software, click Send. And I’ll say hey, it’s been a long time since we followed up you know, I know a lot going on in the world wanted to simply check in, see if you’re still interested in selling, I am still interested in buying, see if I can be of help. And I’ll send that through click Send. And then the responses will come back and I’ll start the reengagement but I do that with cold leads only. I don’t do that with hot or warm, hot. I’m calling. Yeah, calling and personally texting, right. And like literally Hey, dude, they’re hot lead, warm leads, essentially, I do the same thing. It just depends on how many warm leads you have out there. So hot and warm. I’m, you know, dig deep, you know, kind of put yourself into overdrive maybe at night, you know, between four and seven, if you can, I know your dad and the whole thing. Now I realized what that really yeah. So, but if you can, like take that four to seven, just okay, I’m making calls to my leads, right? Like the majority of the work got done during the day. Got it making the changes is then the other now I’m going back and from four to seven at night. I’m gonna call my hot and warm leads. That’s how you focus on driving revenue. Awesome.
Okay, so two things that we can get her to spend the last 15 minutes it’s called talking about once kind of quick question probably has a deeper answer. But the other one is more kind of a macro level mindset is, is I’m with my company or myself for my investment strategy really trying to hone in on like, you know, I, I feel fortunate that I’ve been able to create within my businesses the resources to give me kind of the gamut of exit strategies, you know, I’m not a wholesaler who just wholesale so I’m not a flipper, who just has the resources to flip, you know, I’m the buy and hold who basically just I just buy deals that are and I read to write I have a lot of extra charges, and which is a benefit. But I find myself in at times and a little bit of analysis paralysis, when I’m trying to put together my macro level strategy, right? What is the the of the strategies? What’s the one that you know, is really my bread and butter focus that not only benefits me today, but keeps me moving towards the long game, right of my macro level goal. Right. So meaning, you know, the end goal is that portfolio wealth, right, get that legacy wealth, right? Get those four phone numbers, have that month to month revenue coming in hitting your mailbox, the first of each month, every single month, and you don’t really have to work. Right, that’s, that’s the angle, get that volume of portfolio. So, as I’m coming across opportunities right now, it’s, I understand it’s a bit case by case but I oftentimes think Should I just focus in on one opportunity and really start hammering that down? Obviously, portfolio wealth is a is a long game, you know, it’s not developed in one off transaction, it’s transaction over time over time, you know, we you know, operate the bur method on basically every one of those who do or should for the next X amount of years, should I just be, you know, doubling down on more transactional type income to try to really heavily liquidate or not liquidate but increased liquid, you know, capital in liquid reserves. When I buy these properties, like, I got it, I got it. Yeah, I’ve shared with you like, on my flip side, I, the the vertical integration that I have across the different revenue opportunities in one transaction, I’m able to touch on, you know, four of the five of them, which is nice. So that creates a very obvious like, you know, what I’m looking to tell something may be really nice to flip this one, because I know what the 1234 checks right at once, but equally, I see the benefit of burn it out and let this suffer cash flow for 10 years, right, growing that equity, a lot of appreciation out, you know, because that’s adding toward that end game goal, which is that portfolio well. So anyway, to wrap that up, give you the context. I find myself like, just going back and forth and back and forth, back and forth. You know, where I should really be Getting my focus so that I can really, really make sure that I’m working towards that end goal.
It’s a much larger. I mean, this is why I’m gonna work with you for six months, right? Because that’s just a work in progress. But my easy answer is this. Cash is always King to start in that cash can turn into wealth, right. And so I don’t think anyone knows this, but I’m starting a program called flipping to wealth. Because there’s so many of you types me types, even, that are like, they can go make a lot of money wholesaling, and flipping. But then they want the big picture, we all want the big picture, which is like, Oh, I have a portfolio of 300 homes, and I make 400 grand a year on rent. I’m out, right. And so I say that to say, if you make a lot of money, it gives you the option to build the wealth. So it’s not mutually exclusive. And so like, for example, I just told you, I’m buying a rental in Oklahoma City. Well, last month, we wholesaled, four properties in Oklahoma City, and I bought, well, I bought two I contracted to I don’t actually physically close until today, and then March 22. But you know what I mean? So we spent all this money, we got six deals out of it, four of them, I wholesaled. And I think on average, I’m making roughly $12,000 per deal. So I made $48,000, I think is about the right number in that market. And then I bought two rentals,CMS. So which kind of leads me to the other part of this question, which is, I think the day to day one, much like we do with our benchmark requirements for the KPIs, but establishing my buy requirements that says if it meets this threshold, I’m going to do X for this exercise number one, if it doesn’t, but it hits this, I’m going to exercise or number two, you know what I mean? So that it’s just automated, because I have two flips that I decided to do flips on right now. But equally, could have been great rental opportunities, right? So do the back and forth, back and forth, and then try this, I thought we were going that route. And you know, in order to do volume, in order to really make this an efficient and confident decision. What I need help with and or really need to do this year is genuinely identify the criterias for each exit strategy. So that I very quickly can just say, you know, what is checks this boss expenses, but we’re going with extra GA, I don’t know if it needs to be that clean upset. It can be. But you can actually, it’s just comes down to the numbers, right? So we have multiple spreadsheets that you have access to and now make sure you have them. But essentially, you know, the rule of thumb for rental is you want to be all in all in a 75% of value. Hmm. So if it hits that number, then you say, Okay, great, at least it checks the box that I can keep it but let me see what it looks like if I buy it rehab it and remodel it and list it makes sense. So you don’t want to just mutually exclusive say checks the boxes around, so I’m just gonna rent it. Because it may just also make a god load of money, if you flip it to most rentals are usually really good rehabs right on this.
So this is where I get I get really in my own head on hyper analyzing, because I was like, Well, you know, stay I have an opportunity. And I could flip it and I can make I’m throwing out random numbers here, you know, $65,000 right. pillar day, right? That’s a great day for any clip, right? Especially in my market, or I could for it, right, knowing that I have a huge equitable margin that I could you know, cash out refi in a bur on that. Now my cash out refi is only going to be to that 70 70% right. And so that check might only be 25 to 35. Right, but that’s tax free dollars versus 65,000 on capital gains, right which is really you know, once you really account for what taxes are going to be pulled up that flip is that that’s not really 65,000 anymore. Yeah, well, I mean it’s 65,000 straight cash today you can deal with the gains you know, come tax season. But you know, this is where I start to really deep dive in over probably over make the priority in you are doing I love how you’re thinking most people don’t think this way. But you’re also over complicating it make it the first checkbox is profitability. Yeah. How is my wholesaling rehabbing business doing because I look at it as two different businesses quite literally I’ve different partners like different people are in these businesses like I have a financial partner that gives me all my money to buy and hold I genuine they are two different LLCs to different people like that in the in the rehab and wholesaling business. I don’t have a partner in buying hold, I do have a partner so I treat it differently. So the first thing I want to make sure when I wholesale in Oklahoma City, what’s my profit, profit profitability, and we did really specifically in February, right like, I think for the month, we spent 10 grand in marketing and made 48? Yeah, I would do this all day every day. So my profit margin is really high. Great. I will buy the other two rentals. Follow me, right? Let’s just say my profit wasn’t so high. And I have these other two properties that yes, it could be good rentals, but I also could potentially wholesale and flip them and make a bunch of money, then I got to focus on profitability, right? So maybe I take on one rehab or wholesale project, and then I keep one more instead of buying both of them. Makes sense. Yeah. That’s the gauge, that’s the first thing you gauge everything else on is profitability, your main business, because that mean business is going to give you more and more opportunities to buy and hold. So you got to keep that business really profitable. That’s the first criteria, then it’s kind of a matter of like, well, I like this property, like the area has a good return, I’m gonna do a refi on it, I’m gonna take you know, the numbers are right, meaning I’m under 75% loan to value, so I’m going to refi, the bank will likely give me almost all my money back to that for maybe a couple grand worth of points, awesome, I’m into it for nothing, then I have an equity play. And then to your point, you can do a cash out refi, which is not taxable income, you put that in your pocket, yes, you lower your equity in your portfolio, but you just made 200 grand this year, on non taxable income at a 4% interest rate all day, every day that your tenants are paying off anyways, who cares, I totally get it. But first comes profitability,right? Because then here’s the even just gonna laugh This is even the next level that I start hyper analyzing and stuff that is being new to the business, you know, are having a new business, a young business, right? The goal, especially on the front end is obviously drive revenues, make a profit, and ultimately make yourself bankable, right. And that cash out refi is not really recorded as income, right? Because it’s just taken out, it’s just, it’s just equity piece for you. So you know, come tax time, when you’re trying to go get this big refi loan or larger construction loan or any type of money from a traditional lending source, they’ll go look at your revenues and say I did bur all year long. And you know, you know, wrapped up 10 1520 single family homes, right, that are making a decent cash flow each month. But overall revenue wise, it basically says like we didn’t really make outside of your rents, your company didn’t make any revenue whatsoever, because the revenue that was making was non taxable equity draws, right? So it’s, again, this I’m going way too high level, but that’s why you got to go be profitable on the other business, right, Joe, that, that you can’t, well, you can do whatever you want. But I would highly encourage you not to focus on profitability. And maybe you don’t need to be as profitable as profitable as you could be because you are having this other refinance play. But listen, you’re not gonna be able to refinance every single year. Right, you’re not going to be able to go pull a $200,000 line of credit at 4% every single year against your portfolio. Right. So you got to pick and choose your spots to do that. Right. Right. And by the way, the real answer that I’m going to advise you on is don’t put that in your pocket, go buy eight more rentals.
Right, right, turn around rather than the next, which is how the portfolio I do have basically how I grew it over the past 12 months, you know, I just I didn’t bird and just rolled it into the next little bit.
So I wouldn’t tell you to put it in your pocket. I get the concept. But Dude, I love putting money in your pocket. Go make that in your wholesaling flipping business. Yeah. And go take the line of credit and go buy eight more rentals. Right? I mean, eight randomly, you know?
Yeah, no, I get it. Absolutely. So I mean, that’s a big goal for me, and something to put on our notes over the next six months, he knows I’m trying to maybe really establish that macro level investment goals and the best route to get to that. But on the front end, it’s absolutely about driving revenues, because I’m still a young guy and a young business, I need to get that revenue base, or that just that liquid capital base up, right? You’re not ready if you don’t have any money, right?
That’s the focus. Let’s make you know, for the first 60 days, Brother, you and I are focusing on all the money, make all the money. That’s why like, I want you to go back through your pipeline every night four to seven and go start making those calls stick on profitability, because you’re making big, big changes, shifts is going to take time to catch up when you make the big shift. That’s part of it, then it’s going to take 30 6090 days for that to catch up to itself. So there’s some consistency now going from the shift you made. But that is why you need to keep focusing on the pipeline that’s already in your pipeline already in your CRM to continue profitability. So roger that brother. Well, I think that was everything. I had.