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Flipping Houses With No Money
Joe: Hey, this is Joe Crump and I’m going to show you how to flip houses with no money. In fact, I’m going to show you how to make money at closing.
Joe: They say you need money to make money. But I say if you can’t make money with no money, you sure aren’t going to be able to make money with money. So, learn how to do it with Zero Down techniques and you’ll never have to worry about that ever again.
Joe: Conventional wisdom says that you need to use banks, private lenders, hard money loans, partners, and all those things can be good things. But, what if you didn’t have go begging to someone else to be able to put a deal together? What if you could structure a deal in a way that made it possible for you to never have to go begging again?
Joe: Do you really need good credit? Well, if you’re going to go out and get a loan, you absolutely do. They’re going to check your credit, they’re going to check your income. And there’s no way that they’re going to give you a loan if you don’t have those things in place. One of the things I’ve found is that beginning investors screw things up. It’s normal. It’s what’s supposed to happen when you’re a beginner. You’re supposed to make mistakes. But if you screw things up with your credit and your cash, you’ll lose your credit and you’ll lose your cash and you don’t want to do that.
Joe: When I first got started back in the 1980s, I built a $17 million business in just a few years. And in 1991 everything crashed on the market and everything crashed in my business. I lost everything. And the reason I lost everything is because I was heavily leveraged using loans and mortgages and banks and lenders – all those things fell down together and it wiped me out. And I had to start over from scratch.
Joe: And this time when I started over from scratch, I had to do it with no money and no credit. And no job income. So I had to do all those things in order to get my business back on its feet again. And the things that I’m going to teach you are the things that I learned to make it possible for me to come roaring back and do better than I ever had before.
Joe: Should you have cash on hand to be a real estate investor? Do you need resources to be able to do that? No. You need knowledge and skill. You need the ability to do it. If you have cash on hand, great. And eventually, as you start doing these types of Zero Down deals, these no money down deals that I’m talking about where you’re flipping properties and making money and moving on to the next one and flipping more, you’re going to want to start keeping some properties. And you’re also going to start making some excess cash, more money than you need to live on. And so you take that money and you start investing it in your other businesses and your other real estate assets. You’re going to build a portfolio.
Joe: But let’s get started talking about flipping properties with no money down, the different ways tat you can do it and how you can accomplish it. Let’s first talk about those conventional ways, the ways where you do have to go begging to somebody else. Because I think they’re valuable and I think that eventually you may want to work this way. But it’s unlikely that you’re going to find anybody to work with you until you’re competent. And you’re not going to be competent if you don’t do this a few times and if you don’t have any money to do these things a few times, you’re probably not going to be able to use these particular techniques – unless you’ve got a dad or a brother or, you know, a best friend that has some money that trusts you and likes you and thinks that “if I lost this money it’s not going to be the end of the world, I can still work with them.” So, that’s not the ideal situation to be in. Be in the situation where you’re in control, where it’s your deal, where you put it together, where you don’t go asking somebody else for help.
Joe: All right. Let’s get started. The investment partners. There are some good things about having investment partners. The positive thing is you can bring in capital. If you’ve got somebody who trusts you and has money to invest, that’s great. But you’re going to give away a part of your income. It may be 25%, it may be 50%. It may be 75% of the profits that you make. Always, the investor is going to get their money back first before you get your money. So, you have to make sure that it’s going to be a profitable deal for them. And if it’s not profitable, and they lose money, they’re never going to invest with you again. So, make sure that you know what you’re doing before you start working with partners. Also, make sure that you handle their money properly. You don’t want to get put in jail because you intermingled funds with your investment people with your own funds. So, have separate escrow accounts set up to keep the funds. And make sure that you use an attorney to write up the documents, even if it’s with a family member. I would suggest that you use an attorney to make sure everybody is clear on how this works.
Joe: I’ve seen a lot of friendships dissolve over partnerships and misunderstandings. And it’s not because anybody was a bad person in the deal, it was because there was a misunderstanding about how the deal was going to play out, or the deal fell apart for whatever reason, or money was lost or money was made, but the right amount of money wasn’t divided amongst the group. So, investment partners can be problematic as well. So, make sure that you do your due diligence, you get legal advice and you put it together properly if you’re going to use investment partners. I believe that finding investment partners is something that you do down the line as you get better as an investor.
Joe: And one of the things you may find, like I did, is that I don’t need investment partners because the money that I’m making from the deals is enough to bring me in the cash that I need to be able to do the cash deals that I want to do. So, keep that in mind as you go and build your business organically. Build it from like, a bootstrap. Pull yourself up by your own bootstraps and do it that way.
Joe: The other type of money could come from hard lenders. Hard lenders aren’t a bad way to go. They can bring you in cash, they’ll typically give you money based on 55% loan to value. So, if you find a property that you’re able to buy for 50% or 55% of its market value, they’ll typically give you enough money to cover that cost. But they also have high interest rates, anywhere from 8% to 20%, plus points often, which can make that percentage go up even more. There’s also some restrictions on how long you can have that money. And it depends on the hard money lender, but it could be six months, it could be a year, it could be three years. So, make sure that you understand the terms and make sure you give yourself enough time to complete your deal.
Joe: If you take out a loan, and you go out and fix up a property and then you put some of your own money into that property on top of that, and you’ve worked on it for three months, six months, and six months comes along and that loan comes due and the hard money lender is saying I need my money, and you’re saying I don’t have it yet, I need to sell this property. It’s a slower market than I thought it was going to be, we haven’t sold it yet. Or, I mispriced it and we didn’t get it sold, or I thought it was going to be worth more than it was and I don’t have enough money to be able to get it sold.
Joe: That lender could then take that property from you and take all your equity and all your work and hard effort away from you if they choose to do so. Now, a lot of hard money lenders will work with you, so find a good legitimate hard money lender, because there are some good ones out there, if you’re going to do hard money. But, if you can do this, again, I keep repeating this, if you can do it with no money, you’re better off.
Joe: The other type is, you know, private money lenders, and that’s typically family. And there’s thing that you can do with a Roth IRA. You know, you probably have family members that have retirement accounts, either IRAs or Roth IRAs or other types of pension funds. And they can probably put some of that money into self-directed IRAs. I love self-directed Roth IRAs. And if you can get your family member to put some of their pension fund into that fund, then they can fund an LLC that you can work with. And you can work with them directly.
Joe: Now, this is typically only going to happen with somebody who loves you. Someone who cares about you and your best interests and trusts you implicitly. But, if that’s the case, and they’re trying to help you get moved forward with your business, it’s a great way to do it and private money can be a really good way to do it. Going out and finding private money from other sources, from people that don’t know you, and you have no track record, it’s going to be very difficult. But that’s possible, too, if you’re good at marketing and you’re good at sales and being able to talk to people.
Joe: But if you’re good at those things, again, learn how to do the Zero Down techniques because you’ll be able to do it without that and you’ll be able to not have to pay a percentage of the profit that you make. I think that’s one of the biggest problems with using any of these techniques. They are expensive. And they’ll eat into your profits. So if you ever buy a property and you don’t have as big a profit margin as you thought you should have and that happens every once in a while, you know, you get into a property and you’re doing some rehab on it and find out, oh, no, we need some new floor joists. And you’re just going to spend another $10,000, or that roof wasn’t as good as we thought it was when we came here. Or, we turned on the water after it’s been winterized and we find out that all the pipes had burst before it ever got winterized because it’s been sitting vacant for a year in the freezing cold. These things happen to us all the time and we find problems that we didn’t expect and we build in to our deals the knowledge that it’s probably going to cost more than we think it’s going to cost. And if we do that on every deal we do, on average that will be the case. Sometimes it’ll be much bigger than we thought, sometimes it won’t be nearly as expensive as we thought.
Joe: Before this video is over, I’m going to tell you the Zero Down structure that I use and teach my mentor students that I believe, and I see as being the fastest way to cash in your pocket right now. So, hang on through the video and I’ll reveal that particular secret to you before the end of the video.
Joe: So, those are the conventional ways to buy properties and to get investors to help you buy properties where you don’t need a dime of your own money to make it work. I’d like to propose a new paradigm. I have named this technique the Joe Crump Hierarchy of Zero Down Structures, named after myself. I’m going to show you what those different structures are and why you need to use those structures in order to buy without any money at all.
Joe: The first structure is Subject To. Some of these structures you may have heard of before. This is where you take the deed “subject to” the existing loan. So, essentially the seller deeds you the property and you take over the payments on the property. You don’t give them any money. You ask them to pay the next month’s payment and then you take that property and you have control of that property and you can turn around and sell that property and you can sell it on a lease option. You can sell it on a land contract. You could sell it for cash. There’s a lot of ways that you can sell that property. Subject to is one of the easiest and fastest ways to build a big portfolio quickly.
Joe: This is how you build a million dollar portfolio in less than a year, using these techniques. Just buy one $100,000 property a month for a year, you’ve got over a million dollars in real estate within that period of time. So, it doesn’t take long to make that happen. The trick is making sure that you have positive cash flow on the properties that you’re buying, because most of the ones that you’re going to get subject to are going to have mortgages that are pretty close to the full value of the property. It’s rare to find a subject to deal that has a lot of equity in it. It’s great when it happens. Sometimes it does. But most of the time it won’t, so you have to make sure that the income on that property is going to support the property.
Joe: That means that if you’re buying subject to, you’re typically going to buy properties that are under $250,000. If you’re in a high end market, this probably isn’t the best technique for you. But anything under $250,000 is probably going to work for you because you can get enough income on that property from market rent or from lease optioning the property to pay your mortgage and still have a positive cash flow. So that’s the top of the hierarchy. That’s the one that gives you the most control because it gives you the need to the property. Then you can do anything with that property once you have the deed. You still have to pay the loan, and if you don’t pay the loan the mortgage company takes the property back, and you damage the credit of the person who originally took that loan out.
Joe: And that’s something you absolutely do not want to do. You get a lot of power in this structure. And with great power, as they say, comes great responsibility – or at least that’s what Spiderman’s uncle said to him. So, make sure that you protect everybody in the transaction. Make sure that you do these, and use these techniques, ethically and honorably and make sure that you’re not stepping on anybody’s toes or destroying anybody’s credit or stealing anybody’s money. I think that’s too common in the real estate investing industry. There’s too many investors out there that are just looking out to see what they can do, when in fact, if you will go out there and try to solve the problems for buyers and sellers and other investors you will make a lot more money. And, it’ll be long term sustainable. People will start to trust you and you’ll be able to build your name in the area that you’re working, or the areas that you’re working. So. Subject to. Top of the hierarchy. Most powerful way to buy properties with zero down that gives you the most control in that deal.
Joe: One of the things that I always tell my mentor students, the people that I coach personally for six months. One thing that I tell them is that you have to assume that you’re the most ethical person in the room. You know that you’ll do the right thing. And in order to do the right thing, you have to be in control of the deal. So, you always want to structure these deals so that you’re in control so that the right thing can be done. So, that’s why I’m teaching you how to make sure that you can be in control.
Joe: The second layer of the hierarchy is what I call Multi-Mortgage. Multi-mortgage is a subject to deal with equity. So, let’s say you’ve got a property that has a $50,000 mortgage on it, and it has $50,000 of equity and you’re willing to pay $100,000 but you don’t have $50,000 to come up with. What you can do, is have them deed you the property, subject to the existing loan, you can start making payments on that. And then you can have a second mortgage for $50,000 and you’re the borrower and the seller is the lender. And you create a new mortgage or trust deed that gets recorded on that property and you make payments to that seller. So their position is protected, you make the payments to them, you own the property and you’re able to make it work. You just have to make sure that the combination of the first mortgage and the second mortgage payments are still less than the income that you can get when you sell that property.
Joe: And typically, when I talk about selling a property a like this, we’re talking about selling it on a lease option, or perhaps a land contract. Those are farther down the hierarchy of control. And that means that when you sell it you’re giving less control. When you buy it, you want more control.
Joe: All right. The next structure in the hierarchy is Land Contract, or Contract for Deed. It’s a land contract if you’re in a mortgage state, it’s a contract for deed if you’re in a trust deed state. Essentially all that is is a piece of paper that says I’m going to buy this property at this price on these terms over this amount of period of time with these payments. And then you’re going to make those payments until that property is paid off and then when it’s paid off that’s when the seller transfers the deed to you. And that’s when you take that property.
Joe: So that’s called land contract, or contract for deed. And it’s one of my favorite ways both to buy and to sell. It’s right in the middle of the structural hierarchy, of the Zero Down structure hierarchy. And you can go either way, both buy or sell. Subject to, multi-mortgage, you never sell subject to or multi-mortgage. You buy subject to or multi-mortgage. When you get to land contract or contract for deed, you can either sell or buy with those structures. And there are some ways that we protect ourselves with those as well, which I don’t have time to get into today, but there’s some other things that you can do to protect yourself if you’re buying on a land contract or a contract for deed that’ll make it safer for you and safer if you sell it on a land contract as well.
Joe: The next in the structures is the Lease Option. A lease option is simply a lease with an option to buy. So, someone who’s going to come in, lease the property and they have an option to buy for a certain period of time for a certain specific price point. So, let’s say I’ve got a property that’s $150,000, and I take the property, I sell for $150,000. I ask for a $10,000 down payment on that property from the buyer. They give me $10,000 and now they owe me $140,000 plus they make monthly payments to me. If they exercise the option they pay $140,000. If they don’t exercise the option and three years passes, it goes back to month to month and I can ask them to leave or I can ask them to pay another lease option fee or I can sell it to somebody else after they move out.
Joe: So, those are the things that I can do once I have that property. The likelihood that a lease option buyer is going to exercise their option is probably less than 30%. But they tend to make really good tenants because they see the property as their own. You know the old saying, you know, you don’t wash your rental car. You take care of the things that are yours and a lease option buyer typically takes better care of a property than a renter would.
Joe: So, now we’ve got Subject To, Multi-Mortgage, Land Contract or Contract for Deed, Lease Option, and then at the bottom is Assignable Case Deals. A lot of you may know this already as wholesaling. A lot of people do wholesaling where they’ll get a property under contract at a specific price, raise that price and turn around and sell it. In order to do wholesaling, you typically have to get a really good price. Remember: there’s two ways that you make money as a real estate investor. One is you buy properties substantially below market value. And then turn around and either flip it to someone else for a chunk of money, for an assignment fee, or you buy it yourself and you make money that way. But you have to use your own cash to do that.
Joe: The second way is you buy it at or below market value, but you buy it on terms, any of these Zero Down structured terms that I’m talking about. If you buy it on terms you won’t have any cash into it but you can still make money by flipping that property even if you pay full market value for that property. So, wholesaling is where you’re buying the property substantially under market value. And when I’m talking substantial, I’m not talking 10% or 20%. I’m talking 40%, 50%, 60% under market value, depending on the price point of the property. The higher the price of the property the more leeway you’ve got on something like that. And then it makes a big difference on how you go about buying that property and how you’re going to finance it and how you’re going to rehab it and what are you going to do as your exit strategy?
Joe: One of the things to remember with wholesaling, there’s a whole lot fewer wholesale deals out there then there are other types of terms deals. I can do lease option deals at a 20-1 ratio with wholesale deals because there’s just so many more people out there that are willing to sell their property for full price on a lease option than there would be people that are willing to sell cash for half it’s market value or somewhere in that neighborhood. So, if you’re looking for a lot of leads and you’re looking for being able to do a lot of deals, then doing deals on terms like this where you’re doing lease option, flipping lease options, is going to be a lot more profitable, a lot more sustainable and it’s something that you can systematize. You can have a ready list of people that you’re constantly going after to make that happen.
Joe: One of the things that, one of the tools that I use is a tool that I created. I call it the Pushbutton Automarketer. And you can go to PushbuttonAutomarketer.com and look at this system. But what it does is it’ll go to Zillow, it’ll go to craigslist and it’ll find for sale by owners and it’ll scrape that data, it’ll scrape the phone number, it’ll scrape all the data about the property. And it’ll bring it in to the Automarketer. And then it’ll send out a text message to those sellers saying something long the lines of, “Would you consider selling your home rent to buy rather than selling it outright?” Or, “Would you consider selling your home rent to buy rather then renting it?” if it’s a for rent property.
Joe: And then those people will respond back to us. Typically we’ll get a response rate of anywhere from 5% to 80%, and probably it runs around 20% to 25%. Which is phenomenal. If you send out postcards, if you get a .5% response rate you’re doing good. You’re cost per lead when you send out postcards is going to be anywhere from $20 to $50 per lead. When you send out a text blast, your leads are going to cost you between $1 and $4 apiece. So they’re going to be much, much cheaper and you’re going to have a lot more people to work with in order to do this.
Joe: The leads that come in through the Automarketer, 80%, 90% of them are going to be people that say, “No, thanks. I’m not interested in doing a lease to own.” 10% to 20% of them are going to be people that say, “Yes, I’d be interested.” The reason that these leads are so good is because for sale by owners are people that we know are trying to sell their property right now. They’re actively in the process trying to sell it. Absentee owner leads can be great, expired leads can be great. But for sale by owners, they’re active, they’re excited, they want to sell it, they’ve got confidence in themselves that they can sell it.
Joe: And the big ticket here, or the big important point here, 85% to 95% of for sale by owners do not succeed. They end up taking the property off the market or having a realtor sell it for them. So, the very fact that they are on Zillow or craigslist for sale by owner proves to us that they don’t know what the heck they’re doing. And they need our help. And we can come in there and we can buy that property on a lease option, get them full price for their property and what I do is, we use what I call a Lease Option Memo. And this Lease Option Memo is a one-page document that says I can buy a property on a lease option and I have the right to assign that purchase to another buyer.
Joe: That gives me a principal position. It makes me a principal in the transaction and makes it possible for me, if I don’t have a license, to be able to turn around and sell that property because I’ll be a principal. It’s legal to sell your own property. It’s not legal to sell somebody else’s property. So you have to be a principal in order to make it legal. And a document like this will make you a principal in the transaction and make it possible for you to turn around and flip that property.
Joe: So, let’s say I find somebody who’s a for sale by owner and he’s got a property for $200,000 that he wants to sell. And he’s a for sale by owner, he’s not having any luck with it, and I say, “Would you let me buy it on a lease option?” And he says, “Yes, I’ll let you do that.” I’ll then take that property, get a Lease Option Memo, make myself a principal in the transaction – and I’m licensed. I’ve had a broker’s license for thirty years. But you don’t have to have one to do this.
Joe: I’ll take the property, I have control of it, and I’ll turn around and I’ll put it on the market for $220,000. I’ve raised the price by $20,000. And I’m going to try to make $20,000 as a down payment. And I’ll put it up there as a lease with an option to buy. A three-year lease option. And then I’ll put it in at, the monthly payment will be at market rent. So, let’s say market rent on that is $1,700 a month. I’ll post that as $1,700. If I go over market rent on a deal like that, I won’t sell it. So I’ve got to make sure I’m at market rent or below. The purchase price isn’t as important. If it’s only worth $200,000 and I’m selling it for $220,000, I can still do that on a lease option. So, I’m going to ask them for a down payment. And I’m going to try to get as much of the cash as I can out of it. But maybe I’ll only get $10,000 in cash, maybe I’ll get another $10,000 as a promissory note which will be just between me and the buyer. And they’ll make payments to me over time.
Joe: Now, so I can make $20,000, I’m going to get a buyer that still owes $200,000 to that seller, plus $1,700 is the first month’s rent is what I’m going to give to that seller. And the deal is done. I’m in. I’m out of the deal. I have no money into it. All I used was my skill, my ability talking to sellers and my ability to go out there and find buyers. It was a very simple process. From beginning to end I spent about ten hours doing it.
Joe: Now, when you get started it’s not going to take you ten hours. You’re going to have to talk to probably a hundred people before you get good at this. And it’s going to take you time to learn this process. So you have to be patient with it. Some of the common mistakes that house flippers make is not being patient with themselves, not giving themselves time to learn the process. You have to have skill, you have to have knowledge to be able to do this. You have to know how to talk to people.
Joe: In my six-month mentor program I would say that we spend the most time talking about how to talk to sellers. We do role plays. We look at scripts. We talk about what do I do if they say this, and what do I do if they say that? We talk about objection handling. We talk about why it’s of benefit to the seller to work with you. We talk about why it’s a benefit to the buyer to buy these properties. We talk about why it’s a benefit to you and how you can control the conversation and how you can keep things moving forward using the Socratic method of sales.
Joe: If you can learn those techniques, if you can learn those negotiating techniques, you’ll be far ahead of everyone else in the game. And you’ll be able to go out there and make this work. You know, if you go – and people ask me, is there competition for flipping houses this way? And absolutely there is. But if you became a real estate agent, there’s far more competition. I’m in Indianapolis and if you just look at the real estate agents in Indianapolis, there’s 10,000 of them here. And only about 10,000 houses sell every year. So, that means that each agent, on average, sells one property which isn’t enough money to live on. That’ll make them a few thousand dollars.
Joe: So, that means that there’s some agents that are selling a lot of properties and the biggest majority of agents aren’t doing anything at all. And that’s what’s going, that’s how it’s going to be with investors as well. You’re not going to have nearly as many investors using these types of techniques out there because they just don’t know about them. They’re not conventional techniques. But, there are going to be other investors out there and if they’re better than you and they’re talking to the same people, those people will work with them. So, the only way that you put the deals together on a regular basis is you get good at this. And it doesn’t take that long to happen.
Joe: I tell my mentor students give yourself three or four months before you can expect to make money after you’ve signed up for my program. Give yourself the time to do it. And, I also make them commit to putting in eight to ten hours a week on the phone talking to sellers making offers. Not something that anybody’s too excited about doing – me included. I don’t enjoy being on the phone and I know most of them don’t enjoy it either. But if you learn how to do this, that eight to ten hours will turn into a half-hour a week, an hour a week. You’ll be able to put deals together, instead of talking to a hundred sellers together, you’ll talk to five sellers. You’ll talk to three sellers. You’ll talk to ten sellers. You’ll make it a lot easier because you’ll have the skill. It just takes time to develop that skill and the biggest mistake I see most new investors make is giving up before they actually learn how to do it. They decide, oh, this isn’t going to work, when in fact, it’s just their skill level that’s the problem.
Joe: The other problem that is cited as the biggest problem for flipping houses is lack of money and hopefully this video has helped you see that lack of money is not a problem at all. In fact, using money sometimes become a bigger problem. And it sometimes becomes more difficult when you use money because you have so many other risks and so many other people involved if you’re borrowing that money from someone else. So, learn how to do these Zero Down structures and money will never be a problem for you again. You’ll never have to go begging again to anyone to buy property, to flip a property, to make money on real estate investing.
Joe: All right, let’s talk about a few tips that’ll help you get going. Some Tips for Flippers, as they say. So, know your market. It doesn’t matter where you work. You can do this in any market. I’ve done these strategies and my students have done these strategies for years. It’s been an evergreen strategy. All these techniques have been evergreen. I’ve never had a problem or a time in the market that I haven’t seen these things work. And I’ve been doing this since the eighties. So, these are evergreen techniques that’ll work anywhere you go.
Joe: You can do them in high end markets, you can do them in low end markets. You can do them in appreciating markets. You can do them in a depreciating markets. You can do them in suburban markets, rural markets, or urban markets. We’ve had great luck in all three. But you might want to do things a little bit differently in a different market. If I’m working in Los Angeles, for example, I am going to be in a market that is above, you know, $400,000. So, I’m going to be working in $400,000 to $1,000,000 on average. The highest property we’ve done lease options on has been $5,000,000. The cheapest one we’ve done a lease option on is $5,000. So, you can spread the gamut on this. And you can do this with any type of property. And we can buy properties for less than $5,000 occasionally, too, and that’ll be for a different video.
Joe: So, knowing your market is important and knowing what the capability of your market is and what type of structure you should use in the market that you’re doing. I find the structure that works in every market and the structure that I use to teach my students is lease with an option. Flipping lease options. I’ve been asked in the past what would you do if you know, everything was taken away from you and you had nothing and you were out on the street living in a box under a bridge with nothing. If you’re homeless, you know, how would you get started again?
Joe: And honestly, it probably wouldn’t take me very long to start making money again. I’d try to get my hands on a cellphone, so if I had to, maybe I would go stand on a highway exit and beg until I made forty bucks, go down to Walmart and get a telephone. And I’d start making phone calls. I could go to the library and get on craigslist on the computer at the library and I’d start making calls to sellers and putting together lease option deals that I’m going to flip.
Joe: So, essentially what I’m going to do is, I’m going to call, ask them if they’ll sell their home rent to buy, then I’ll take their property if they do, I’ll get control of it. I’ll turn around, raise the price, sell it, get a lease option fee for myself, get the buyer for the seller and pass that seller on to them. And that’s how I’m going to make that money immediately.
Joe: So many people say that you need a budget in order to start investing. But honestly, you don’t. You could get started immediately. Even if you’re living in a box under a bridge you could get going immediately by simply going down to the library, logging in, going to craigslist and then start making offers to people online, either through the phone or directly through the computer by sending emails to them.
Joe: And basically the message you’d be sending them, “Would you consider selling your home rent to buy?” Just like I explained with the Zero Down technique. So, you don’t need a lot of money to make that happen. But, as you start doing deals and you start making chunks of money, you’re going to find that you replace your personal income very quickly. You quit your job, and I would suggest don’t quit your job until you’ve made enough money to live on three months in a row. If you’ve made money three months in a row, the likelihood is that you’ll be able to do that for the rest of your life, because that shows consistency.
Joe: So you’ve made money three months in a row, quit your job, now you have cash coming in. You’ve got enough money to live on, you’ve got extra money now. What are you going to do with extra money? You’re going to want to invest it. So, make sure that when you start buying properties with the cash that you’ve got that you buy good deals. But one of the things that you’re going to learn by going through this process of learning how to do it with Zero Down, you’re going to learn what a good deal is. And that way when you do invest your money, you’re going to be much more profitable and your investment is going to be much, much safer than if would be if you start when you don’t know what you’re doing.
Joe: I’ve seen too many people lose money on flip deals because they didn’t purchase their property right or something unforeseen happened that they didn’t expect, or didn’t know about that they should have known about if they’d had more experience.
Joe: When you start flipping properties that you’re actually doing rehabs on, then the next big problem that you’re going to have is dealing with contractors. Now, you may be a contractor yourself and say, “Oh, I can do that work. And matter of fact, I’d like to do that work. I enjoy doing that work. I enjoy hanging drywall and going into a property that’s all wrecked and fixing it up and having it look nice when you’re done.” There’s a great feeling when you do that. But you know, I find that I get that same great feeling when somebody else does the work for me, and I’m not the one swinging the hammer. So, find somebody else to do that work. But you need to find somebody who’s going to do a good job at it. You’re going to make much, much more money by flipping properties, by doing deals than you’re going to get by swinging a hammer.
Joe: You know, you may want to say, okay, I want to back off of this flipping deals stuff and I want to go do the work that I could pay somebody $20 an hour for to do this work for me. And instead, you know, you should be flipping properties where you’re making $100, $500, $1,000 an hour for the time that you put in. If you learn how to systematize your business, if you learn how to automate, if you learn how to outsource the work in your business you’re going to make far more money. You’re going to be able to extract yourself from that business and you’re going to be able to still make much, much more money doing it.
Joe: So, instead of putting in 20 hours a week, or 40 hours a week, you can put in one hour a week and you can make more money. The less work you do the more money you make if the work you do is smart. So, make sure that you structure your business in a way that makes that happen. Now, in order to systematize your business, you have to create policies for everything that you do because when you start flipping properties you’re going to find that you do things over and over and over again. And for most of us entrepreneurs, doing the same thing every day is just boring. It’s not fun. We’re creators. We want to design new things. We want to be at the helm, you know, strategizing and making the thing go forward – not doing the same job every day.
Joe: So, what we do is, we get automation to do as much of it as we can and then we get outsourced people to do the rest of the work. I’ve got a program called the PushButton Automarketer which I designed to systematize and automate my business. It will do 90% of the work for us. Then, I have 9% of the work that I have outsourced to other people. And then 1% is the part that I do. I still sign documents. I still sign checks. I still look at the things and I still do the strategy. But most of the day, or most of the time that I’m actually doing the business is me answering questions for people that work for me that make the business move forward. And if you can put yourself into that position, your hourly income will skyrocket and your business will go up like crazy.
Joe: Now, one of the things I haven’t talked about as well. This also starts allowing you, all these things that I’m talking about here, will allow you to start creating a portfolio. If you create a portfolio of properties, that’s what will make you wealthy. Flipping properties will make you chunks of cash, it’ll make you income. It’s great. But you won’t actually become wealthy until you build a portfolio, until you start holding your assets for the long term. That’s what makes you a millionaire. That’s what makes you a multi-millionaire. And those are the things that I teach in these videos here and to my mentor students as I work with them one on one.
Joe: The last tip I want to leave you with is finding buyers. There’s lots of ways to find buyers but if you’re looking for cash buyers for a property, the best way to sell a property is using a real estate agent. When I want to sell a property for cash, and I want to get my money out of it, I’ll use a real estate agent. I know that for sale by owners don’t work. 85% to 95%, and that statistic is from the National Association of Realtors. 85% to 95% of for sale by owners don’t succeed. They either take it off the market or the list it with a real estate agent. When I flip a property that we have rehabbed, I’ll usually just go to a real estate agent, friend of mine, and since I’m an agent myself I could list it myself. I’d rather not do that, so I hire somebody else to do it for me. But if you have a license and you might want to get one if you’re doing a lot of this, eventually, if you have a license you can list it yourself and you can save some money on commissions.
Joe: But I prefer to have somebody else do that work for me. I hire a real estate agent, they put it on the market, we get it sold, I make my cash, and then I’ll go and buy another property with that same cash and we’ll reinvest the money over and over and over again. And that’s how you’re able to do this. So finding a buyer, if you’re selling it for cash, you hire a real estate agent.
Joe: If you’re selling it on terms, anybody can do that. You can accomplish that. Let’s say the most common way that we’re going to sell it is with a lease option. So, we’re going to sell that property with a lease with an option to buy where they’re going to pay us a lease option fee as a down payment, probably collect a promissory note for the amount that they can’t come up with. So we try to get as much down payment as we can because it increases our income. If we get a chunk of money, let’s say we get $10,000 as a lease option fee on a property. $5,000 in cash, $5,000 as a promissory note paid out at $200 a month over a period of time until that $5,000 is paid off over that three years.
Joe: So it increases our monthly income on that property by $200 a month if it’s a property that’s in my portfolio. If it’s not in my portfolio, and I’m just flipping this property using the For Rent Method, which is what I talked to you about with the lease options that I teach my mentor students, then it’s just a matter of it gives you extra income.
Joe: Buyers are not that hard to find. Buyers are the easy part. Building a buyers list may be one of the most important things that you do. A sign in the yard is probably going to bring you in 20% of your buyers. Signs are really valuable. Make sure you have a sign in the yard. The second most valuable thing is your list of buyers. As you start advertising your properties for sale, you’re going to start building a list. It doesn’t take long before you have four or five hundred people, a thousand people, that are interested in buying rent to buy on your list. And when you have a list of five hundred to a thousand people that you can send a broadcast email or a text or a voice blast out to, the likelihood about 10% to 20% of those people, 10% to 20% of your properties will sell to that list directly, typically on the first day or the first week that you have it on the market.
Joe: So having a big list like that really makes a big difference. And building that list is not difficult, especially if you use a tool like the Automarketer that allows you to do broadcast messages to those people. It also allows you to send out drip messages by email. There’s a whole series of email messages that go out through the Automarketer that educate the lease option buyers, tell them what lease option is all about, how it works, what they can expect, you know, and it also helps them build trust in you. The more educated your buyers and sellers are the better the relationship is going to be between you and them and the easier they’re going to be to work with. You want them to know as much as possible about the transaction and try to help them through that process so that they’re easier to work with. And then they’re going to trust you and believe in you and you’ll have less roadblocks.
Joe: When people stop trusting in you that’s when deals start to fall apart. So you have to build that trust. The Automarketer will allow you to do that with a sequence of emails, or a sequence of text messages. You can also send text messages to them or you can send them voice messages that go directly to their voice mail and leave them a message. So, let’s say I get a new property that I have signed a least option memo on. I can go to those people and I can send a text blast to them with a link to my clone site, my listing site which is also part of the Automarketer that has a list of all your properties on it. And they can look at the property, they can see the pictures, they can get the information they need.
Joe: There’s a form on there that allows them to fill it out and tell you whether or not they want to buy, lease to own, that puts them on your list again. So there’s a lot of different tools that you can use inside the Automarketer. I’m just scratching the surface here. Go to PushButtonAutomarketer.com to get all the details because it’s a phenomenal tool that has made our job so much easier. But it also can help you find buyers by using the scraper. It will go into craigslist, it’ll find people that are looking for properties to buy. It’ll pull their names out and say I’ve got a property for sale for a lease option. Would you be interested? And put those people on your list. So there’s a lot of ways to find buyers and automated ways that are going to make your job so much easier.
Joe: So, that’s my beginning primer in flipping houses with no money. I hope you enjoyed it. I hope you’ll tune in to other videos that we’ve got. If you subscribe to that button, or there’s a little round button that you can subscribe to there, check that out. Also, check out my other videos in the series. I think it’ll help you move forward. You might also take a look at my mentor program. Got to ZeroDownInvesting.com and spell out Zero.
Joe: You can also go to the Automarketer by going to PushButtonAutomarketer.com. If you like this video please make comments below. I’d love to talk to you. I’ll be happy to answer your questions. Look forward to talking to you soon. Bye bye.