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Key Factors RealEstateAF
Educational Podcast for Consumers, Mortgage & Real Estate Industry Professionals. We'll Talk About It All! Key Factors podcast, powered by https://ReviewMyMortgage.com . Your Host Mark Jones invites Industry Pros to help uncover & educate on the key factors of various topics. There’s something for everyone so let us be your guides and get educated. Subscribe & Follow on Spotify, Apple Podcast, Facebook, Instagram, & all other podcasting platforms. Host : Mark A Jones Founder of ReviewMyMortgage.comProducing Branch MangerSr. Loan Officer. NMLS ID# 513437NMLS Consumer Access: http://www.nmlsconsumeraccess.org/Powered by ReviewMyMortgage.com
Key Factors RealEstateAF
Mastering the Texas Real Estate Market: Strategies for Investment Success with Nicole Ricks and Tom Ochoa
Unlock the door to real estate mastery as I, Mark Jones, bring together industry powerhouses Nacole Ricks and Tom Ochoa to share their wealth of knowledge on the Key Factors Podcast. Our conversation promises to equip you with actionable strategies and insights to navigate the Texas property market. With an emphasis on integrity and creative investment solutions, you'll learn from Nicole's hands-on experience with Align Properties and Tom's innovative approach at New Western, where ethical practices pave the way for success in real estate investing.
Venture into the heart of the Texas real estate scene, where you'll discover how to make the most of investment opportunities, even in situations as complex as foreclosures and divorces. Our guests shed light on the art of aligning property portfolios with investor goals, and the critical role relationships play in acquiring high-potential properties. Whether you're contemplating house flipping or holding for rental income, our experts reveal the transformative power of real estate and the strategies that can help you turn even a modest iron bar into a treasure trove of value.
Step into the realm of real estate and mortgage insights, where every episode serves as a guide through the ever-evolving market landscape. This session is not just about making transactions—it's about crafting a vision that guides your journey from humble beginnings to towering achievements. Nacole and Tom's anecdotes and expert advice are more than just stories; they are roadmaps to leveraging failures as stepping stones and recognizing the potential in every opportunity. So, whether you're a seasoned investor or taking your first step into the world of property markets, join us for an enlightening journey where we dissect the key factors that fuel real estate triumphs.
Key Factors Podcast is Powered by ReviewMyMortgage.com
Host: Mark Jones | Sr. Loan Officer | NMLS# 513437
If you would like to work with Mark on your next home purchase or as a partner visit iThink Mortgage.
Let the journey begin and welcome back to another episode of Key Factors Podcast. I'm your host, mark Jones, and we are powered by ReviewMyMortgagecom, the largest index of mortgage programs in the nation, and with the continued value provided by this show, guys, we want to go into the investor side of things to shed some light for first-time homebuyers, for seasoned investors and maybe first-time investors getting into the market, because what I've seen a lot lately is the idea of home affordability not being possible. But yet a half of my contracts that I'm receiving are from investors, and we're not talking corporate investors, we're talking mom and pop, second, third time trying to leverage their funds and understanding that property continues to gain value. So I've brought along two friends today to have a discussion and shed some light on some of the nuances and opportunities that are out there that you guys should know about. So, without further ado, I'd like to introduce my guests. I've got Nicole Ricks to my right.
Speaker 2:Hey Mark, how are you doing?
Speaker 1:Doing well, and I've also got Tom Ochoa.
Speaker 3:Tom, how are you doing? Hey, mark, doing fantastic man. Thanks for having us here today, absolutely.
Speaker 1:God dang, you got a podcasting voice like instantly, instantly. So thank you guys. We've got Nicole Ricks from Align Properties EXP is a spinoff of EXP doing her own thing, killing the market and Tom, her partner that works currently with New Western, and New Western was something that I just recently discovered. To be honest, when you guys came into my life, that was the first time I had heard of something like that. So, before we get into that, if you guys could just take a moment to tell us who you are, how you got in the business and what you guys do for the time being. Ladies first. Who wants to go first? There you go, ladies. Hey, what a gentleman who says property is dead.
Speaker 2:So I'm Nicole Ricks, with A-Line Property Groups brokered by EXP Realty, a good friend, super excited to be here with my good friend, mark. This is an awesome podcast, awesome discussion that we're going to have today and overall it's really to help buyers, help sellers, help people out there that are looking for alternative options, and this is a great opportunity for people.
Speaker 1:Absolutely, nicole. How long have you been in the business? Been in the business for eight years, okay, good deal, and operating just in San Antonio.
Speaker 2:No, statewide. So started at the bottom and went to the top. Now you're here, From McAllen and continued to tap into different markets Austin, San Antonio, Waco, Dallas, Houston, and now we are our primary offices in San Antonio, but we still service the entire state of Texas Awesome.
Speaker 3:Awesome, tom, your turn brother, absolutely man. So I'm here in New Western, San Antonio, been here for five years now and New Western, you know, when you say that you hadn't heard about New Western, it's kind of surprising. We're in. You know, 25 States got a huge footprint. Our office did 1100 assets last year, wow.
Speaker 3:So we're all about helping. You know, investors obviously come into the market and help them a lot of opportunities with buying and selling on both sides, you know. So what we do is obviously we help, you know, savvy investors. We go most of our stuff is off market. We buy direct from the seller and what we do is we we'd help to customers with with problems. You know we look for problems.
Speaker 3:We don't necessarily go out and look for who's looking to sell or who's looking to buy. We actually look for to solve problems. You know, for customers, there may be a situation where maybe they're getting a divorce. You know, maybe there's some issues with taxes that they may be having issues with, and we go in there and we figure out what's more important to them, what's most important to them, and come up with a solution. And you know we typically one of the things that we do very quickly is we? We close really quickly, typically within, you know, a week or so, to give them what it is that they need so they can move on to the next chapter of their lives.
Speaker 1:Absolutely Matter of fact. We were having a meeting this morning with my loan officers and this came up in discussion the concept of wholesalers. Are you guys actual wholesalers?
Speaker 3:to Texas. We have a list of 8,300 qualified investors that we're going to go ahead and bring to your property and we're going to go ahead and whatever figure you and I agree to, we agree to buy the property for $250,000. That's what we're going to do and typically our properties we typically 75 plus percent of what we put under contract we sell. So we get the actual seller what they need and we get it quickly so that they can move on. They're not having to typically wait a month or so to get their money. Typically they get it in less than two weeks.
Speaker 1:So, safe to say, it's similar comparison to, let's say, a mortgage broker on my side of the tracks, in the sense that they don't use their own money. They find the investor that the borrower's guidelines are met and they facilitate that transaction between them, but these two never meet. You're the middleman in between, making that happen.
Speaker 3:A hundred percent the difference between us and wholesalers. A lot of the wholesalers and nothing wrong with wholesalers, they're great people, right, they're trying to make a living. They don't have you know, they don't have their license and sometimes you know they may do things. You know 100 percent. We pride ourselves in doing everything 100 percent, honestly and ethically, letting them know exactly and walking them through the entire process and guiding them from the beginning all the way to the end to get the check and and hopefully move on with their next chapter of their lives.
Speaker 1:Yeah, absolutely. I mean that first time that we met, you mentioned New Western and, matter of fact, nicole and I nerded out. We were looking for different search phrases in Google to figure out OK, how the hell are they cornering this market? Because they've got a pretty big footprint. Come to find out after discovering them, and in order to have a solid footprint in all of the United States, you've got to have good reputation. You've got to be doing the right thing over and over and over. It's not overnight that you're on to the next deal and on to the next deal, not overnight that you're on to the next deal and on to the next deal. This is something that has been built over time and withstood the testament of time, so to speak, because you'll have customers that will second guess what you're sending them here and there and you're like guys, I'm not about to lose my license over one deal, like, let's take it back here and know that I'm on your side concept. So it speaks volumes both to the company and you guys and what you do. Absolutely Okay. So we know a little bit about who you guys are.
Speaker 1:I want to talk about how much investing you guys are seeing currently in today's effed up market, so to speak. We're seeing a lot of first-time homebuyers that are being beat out of offers or being discouraged because the payment is too high for what they're looking at. But yet, like I was mentioning, we're still seeing plenty of investors and I'm not talking the corporate investors, because I wouldn't be working with corporate investors. I work with individual borrowers on residential properties, whether that be a single family or multi-unit property, and those are coming in and we're talking folks from. This is my second investment property all the way to this is my 10th investment property. What are you guys? This is my 10th investment property. What are you guys seeing in that regard?
Speaker 3:You want to touch on that, Nicole.
Speaker 2:Sure. So there are tons of investors out there who are looking for good deals, just like any regular home buyer is looking for a good deal. The properties that are brought to the market are, again, people who need something quickly. That may be a person who's going through foreclosure, a divorce, something like that. So, with that being said, they are below market value due to the fact of their circumstances. If you put a house on the regular market, premium price, but it takes time, money, energy, commissions, all of these great things, and so the number of investors that are in the market right now, especially in the Texas market and San Antonio market, is just numerous. I mean just New Western alone, which I'm not saying they're the only company out there. There is plenty of companies that are working with investors, but them alone has nearly 10,000 investors, when you're talking 10,000 repetitive investors.
Speaker 1:Serial investors.
Speaker 2:Yes, exactly Serial investors they are. Maybe they're buying one a month, maybe they're buying one a year, maybe they're buying one a week. You know what. That's up to their own portfolio and their own goals. But these people are buying. They're either buying lots and building and selling. They're either buying, rehabbing and flipping. They're also doing a lot of rental properties. We talked about that a little bit, right? So the rental properties they're buying, rehabbing and holding. So their holding cost is going to be less because of the fact that they're buying this property at a lower market number or market price not necessarily market value and then they have the value add opportunity to build the equity in that property as well. So there is plenty of investors who are looking to buy. It's really about finding the right type of investor for their, the right type of investment for their portfolio is what we're looking for.
Speaker 1:And that makes good sense. So, with there being so many options out there, I mean you've got a owner of a property who is more than likely owning this as their primary residence and they see it as a burden or an expense. Bigger pockets that see those as opportunities and those opportunities can be okay. If we get this property for X, we can put X amount into it and sell it for X, or we can get the property for X and hold onto it and allow it to build itself while it's also contributing to the revenue of paying it off or paying it back, et cetera, or even write-offs in that matter. There's so many different options or opportunities when it comes to the need that's to be fulfilled.
Speaker 1:On the homeowner side, let's talk about ways that these properties are acquired. You mentioned it a little bit and I think you also mentioned it a little bit, but I want to kind of segment that in regards to where are you guys finding these properties? How does New Western go about this? Because you've seen wholesalers that will do the door knocking straight up. Hey, I see that you're late on your taxes. Are you open to having us pay it off and put a little cash in your pocket and we'll acquire the property and you can go on down the road and in some cases they'll say you know what, we'll pay the taxes off. You sell me the property for X and you can stay there, but now you pay me rent. You know what are some ways that they are finding and acquiring these properties? Absolutely.
Speaker 3:Well, you know, mark, a lot of what we do every day is relationship, right, so we have relationships with realtors. We find a lot of stuff on MLS. Okay, that's basically, you know, opportunity that has been on the market maybe for a long period of time, stagnant, not doing anything. They come to us and, you know, give us an opportunity to go ahead and bring some investors and buy that opportunity from them. Okay, that's one source, it's a big source. Another one is we go directly to the seller. We, we do a lot of advertising. You know, online we do a lot of. We're actually people will actually contact us on our agent pages or directly on Facebook and they'll say hey, look, I want to sell my home. You know, we'll give you an idea. We want to always want to figure out what is the most important thing to that seller. So we always invite them to our office, which is City View office here on Huebner and 10. Okay, so that we can meet with them. You know, we figure out exactly what it is that they're wanting to accomplish with that property, right, but you know, we get with them, figure out what's more important to them, get everything written down, and then we go ahead and we start looking for exactly for some reason, get everything written down and then we go ahead and we start looking for exactly For some reason. Typically, you know, we'll have about 85 to 100 opportunities monthly. Wow, that come to the market. Wow, right.
Speaker 3:But if, for some reason, you know, we have a buyer looking for something, you know we have two different teams in our office. We have what we call an acquisition team, okay, and they're out there all day doing what you're talking about, yeah, what you're talking about knocking on doors, the relationship with the wholesalers, talking to realtors and acquiring these properties from the sellers. And then we have another team, which is basically a disposition team, which is what I do, and basically we go ahead and we bring these. We go ahead and we sell these opportunities to investors. All of what we do is either cash or hard money, and we have our own title company, which is Spartan Title, okay, and we go ahead.
Speaker 3:And we also do have hard money lenders as well, you know, and so you know they're welcome to use theirs. The reason that we use ours is because ours are super fast. We want to make sure that that person is getting to the closing table and getting what it is they need. We don't want them to put down a deposit and not be able to follow through, not be able to close because this hard money lender that they're bringing didn't get them, and finish closing the deal because there was maybe an affidavit of airship that needed to be signed that wasn't taken care of or something that wasn't taken care of. So that's what you know. Spartan Title, our company, takes care of.
Speaker 1:They really do a really good job of making sure to getting through all that and making sure that that buyer that seller is going to get what it is they need at the end, which is to basically get it closed and get it done. No, that makes perfect sense. I mean, I'll compare it to a realtor that has a preferred lender, and that is a myth that you can't recommend your preferred lender. You've got to give them a list of people. That that's a myth. That was never written down. It was a let's try this as a best practice so you don't get in trouble.
Speaker 1:But the idea behind referring your preferred lender is you know they're not going to drop the ball and if they do drop the ball, you know how and where to kick them right in the tail when it's time, versus attempting a new title company, a new lender, a new hard money lender. They've got to learn your process. They've got to learn what the hell they're doing in many cases on this scenario and it just could end up being a nightmare in the end. Hence more money for that buyer, for the investor, et cetera. So I'm a fan of using people that work. You know the concept of if it ain't broke, don't fix it 100%. If it does break, find another one that you can replace, literally the same way that you acquired the first one because there's a reason why it didn't break to begin with.
Speaker 3:That's right 100%.
Speaker 2:So, regarding the acquisition side of things, you know, we are looking at people who are in all different types of scenarios. You're talking about people, like we mentioned, that were getting a divorce, that may have been going through foreclosure, who are behind on their taxes, people who inherited property, people who passed away these things that happen in everyday life that can totally destroy the opportunity for that owner to pay for their property, to pay for those taxes, to pay for that stuff. If you inherit something and all of a sudden you're like I don't know what to do with this, I've never even been there, or I don't have the money to pay the taxes on it, or now there's a mortgage, what do I do? There's all of these sudden problems that you have to deal with in the midst of a loss.
Speaker 1:Yeah, no, you are right.
Speaker 2:That's where a lot of it comes from is that these people don't have the time, the money, the energy to go into a regular selling market. You know, putting it with a realtor, going on to MLS, selling it, showing it, eventually getting it under contract and then selling it for a premium price, which is where most people are looking. That's Zillow, Realtorcom, all of these websites that are IDX, so it's feed-.
Speaker 1:Oh, the mainstream market.
Speaker 2:Exactly.
Speaker 1:Such a liar. It's like the mainstream media.
Speaker 2:That feed these properties from MLS, yeah. So, with that being said, the properties that most of the properties that these investors are buying are not on MLS Now, yes, some of them are. They're great opportunities that maybe the realtor wasn't doing their job to get that property sold. Or maybe they never had the conversation with the client of, hey, like, do you really need to sell right this minute? And if they would have had that conversation, they might would have known hey, this isn't the price we need to go for. We need to go for a different price.
Speaker 2:Or situations can change. You can be, you know, hey, their husband pass away, or all of a sudden they get really sick. Now their situation completely changed overnight and their need has now changed overnight. And so those are opportunities where you know, new Western goes in and acquires properties at a specific price and that's where the seller knows what they're getting. You know what. It's not just going on the market on MLS. I'm going to get offers for whatever price and I have to then decide yes, no, maybe negotiate, and I rely on my realtor to help advise me on that, and realtors do an amazing job. I'm a realtor, he's a realtor, like we do amazing jobs in advising them, but not a lot of realtors are educated on the investment side.
Speaker 1:I agree 100% with that statement. Yes, and that's mostly the reason why I wanted to bring you guys on to share some insight and also to share its complications, because it is not something. It's reminds me of when a realtor, for the first time, takes on a commercial deal but have never done it before, anything like that, and they're thinking that it's just going to be just like a residential, that rude awakening, totally different, yeah, so I want to go into. There was something that you mentioned which was the cash, or hard money. What is the reason for that? I know the reason, but I want you guys to kind of get that articulation out Absolutely Well.
Speaker 3:The main reason is so we can close in a shorter period of time. That makes sense. You know, you've got a seller who is in a distress situation. Whatever the situation may be, I had a situation here last week where we were offering a 14-door multifamily and the actual seller passed on, passed away, like I mean, like wow, you know. And so the situation obviously goes you know they have their, you know their actual son, their daughter, who gets involved and all that.
Speaker 3:But the reason we do that and we go in there and we're able to buy this asset at typically a discounted price is because we go in there and we close in a very short period of time, typically less than 14 days. We pay cash or hard money, right, and so the person who buys a property then has the opportunity, depending on what their strategy is, whether they want to turn around and flip it and then go on to the next project, or whether they want to turn around and you want to go ahead and cashflow. Like Nicole and I, we're both investors. We have a couple of properties here in San Antonio and we specialize in short-term and mid-term rentals.
Speaker 3:You know, hold on to our properties and we'd like to go ahead and cash flow them and so on and so forth, but it's depending on what the strategy is. But the reason to answer your question is so that we can close in a shorter period of time versus having to go through all the hoops. And sometimes you know proof of income, proof of residence. You do it every single day, right, absolutely so. Typically when they're doing a rehab it's six months and then you know, before the six months is up, if they decide they want to go ahead and hold on to it, then obviously they'd come to someone like yourself who's an expert in your field and go ahead and refinance out of it and hold on to it or go ahead and sell it and make the money out and go on down the road.
Speaker 1:That's right Now. That makes good sense. And for those that are wondering why hard money is close to cash, is in the market, on the selling side, hard money is almost the same as cash. You're dealing with a private investor that is going to cut you the check. In some cases they're going to take lean position. It will be a higher interest, much shorter term, with a potential balloon associated with it. But that investor is taking out this hard money because they're experienced in many cases and willing to take that risk in the short-term losses for the long-term gains. I should say I myself me and Kristen used hard money when we were doing our flips and it worked great. We essentially would use the hard money to buy the house $200,000 to $300,000, and then use our funds to rehab it and boom, lo and behold, it was ready to go faster than what you would use hard money to do the purchase and the rehab at the same time.
Speaker 3:Absolutely. And of course, you just figure in your cost depending on you're going to borrow X amount of dollars. You figure, hey, six months for us to go ahead and flip it at this payment, this is what it's going to cost. So a lot of people think, well, they get caught up in the interest rate. Oh, the interest rate's too high. It's 10%, 11%. As long as you just figure that into your total rehab, okay, and you're not really paying for it. The person you're selling it to is basically taking care of that. You're exactly correct.
Speaker 1:You just have to just plan on, are in this to make money, and if you're making too much money without enough expenses, I mean you're going to get whacked, that's right. So you got to find the good expenses that help you get to the next stage, and whether that be continuing to buy additional properties, leveraging it over to buy properties to hold, who knows what your end game is. But I can tell you that there is more than likely a next move when it comes to getting properties like these, absolutely.
Speaker 2:Now, the other reason that most people, when they're in a distressed situation, are looking for a quick close, cash or hard money, is because of the fact that there's less risk for that deal to fall apart. True, when you've got a 30 to 40 day close. A lot of things can happen in anyone's life in 30 to 45 days and, with that being said, that is a higher risk for the seller. So what they're looking for to be able to get out of their situation at that discounted price, they are looking for guarantees, they're looking for things that can okay, great, I'm going to get out of here, it's going to be done versus it being where well, it's on the market.
Speaker 1:We're under contract, we're for solving problems, but the idea and the concept is time kills all deals. At the end of the day, the longer it goes, the less chances it's actually going to close. So glad that you brought that up Absolutely 100%.
Speaker 1:Okay, so we've talked about the wholesale difference between what you guys are doing and what you offer versus wholesale, and there's a distinct difference between the two. I want to ask why someone would use you guys versus just going online and finding properties and doing what they can. I mean, I know the answer to this, but if you guys could share, because there's a lot of folks out there that are, I would say, maybe targeting realtors in the sense of what's your value? What are you truly? What am I paying you for when I partner with a realtor? What advantages am I getting out of this, and why is that something that I cannot do on my own? You know that in a market and in a world these days that everything is at our fingertips, they can jump online and find anything they want, or so they think you know. This is something that I think you guys can be very clear in regards to why can't I just do it by myself?
Speaker 3:Absolutely, Nicole. You want to start on that and I'll finish up.
Speaker 2:Absolutely Experience.
Speaker 3:Okay.
Speaker 2:So I remember the day when you could Google something and actually get a real answer.
Speaker 1:Oh, I like that yes. Now you Google and you say it used to be conspiracy theory, now it's consistency theory.
Speaker 2:So now you Google something and you go through all these articles that you think are pointing you in the right direction and it's really just a paid comparison or a paid blog or a paid whatever, and it looks so real.
Speaker 1:You're right.
Speaker 2:And that comes to everything in life. We're not just talking about real estate, we're talking about everything, yeah and so, with that being said, you know, having a realtor who's actually in the trenches, who's already gone through the training, gone through the experiences, talked to the people learned the lessons to be able to really achieve what the seller is looking for and to be able to bring the right investors to the seller in that aspect, it's priceless because you don't have to go through the headache, the turmoil, the leading you down the road that never ends.
Speaker 1:Well, not to mention the things that you guys spoke about in the beginning of this on how you acquire and find these properties. I think people take that for granted. They think that there is. I remember there's a huge uproar. I'm going to buy foreclosures. I'm going to buy foreclosures. Where are you finding them? Well, we're going to look on MLS. No, no, dummy, You're too late if you're looking there. And then you've got people that are buying on the courthouse steps. But there are so many other opportunities and one would say shame on you for going and buying that house from those people versus the alternative of them foreclosing, versus the alternative of them continuing to not be able to pay the taxes, not be able to pay the repairs, living in the current situation that they're in and then they get foreclosed on anyway because they're late on their taxes multiple times.
Speaker 2:Exactly A lot of times they are getting money. It's not a subject to let's be very clear. We're not talking about subject to where they're most likely not getting a lot of money from their home. If these people have been in the home, you know 10, 15, 20 years, which a lot of these people have. They take money with them. They're paying off those taxes. They're paying off whatever it is and they have the relief.
Speaker 1:So what are we really doing? We're helping them, I agree. Yes, I think that's kind of what I'm trying to articulate here is is people see wholesalers, they see what, what? You guys are a little bit more established than a wholesaler, so I'm not going to put you in the same category, but it is the same concept and they see it as well. You guys are opportunist and you're taking advantage of people, are they really? Or are they not giving them a bone? You know, like, here's the rope, I'm not giving it to you for you to hang yourself. I'm giving it to you because here to you, because I'm going to be pulling from the other side. Concept Correct it's an opportunity.
Speaker 3:That's why we like to meet with our investors and our sellers and visit with them and figure out exactly what their main thing is, what they want to accomplish. We sit down and we go. What's the most important thing to you? I want to try to get this squared away because my dad, you know, I have my family in a completely different state. I'm set on my payments. I'm living paycheck to paycheck. Now I've got $12,000, you know, tax bill and I can't afford it, you know. So let me go ahead and let's, you know, find a solution to your problem. Let's go ahead and get it sold quick, okay, so that you can go ahead and get your money, pay off the taxes and move on to the next chapter of whatever it is you want to do.
Speaker 1:Yeah, and that's pretty clear. You know absolutely.
Speaker 2:And the other thing I want to mention there is the longer this person is in this situation, the worse it gets.
Speaker 1:Yeah.
Speaker 2:So I have a.
Speaker 1:Time kills all deal and people yes.
Speaker 3:Weird huh. The interest doesn't go away or the taxes don't go away, they just get. They just get Debt and taxes, that's right.
Speaker 2:When things are already bad, they just keep getting worse. I had a family that she had an IRS lien against the house. That was from her ex-husband. Okay, that's one little problem. That's not really like a huge problem, right, it's a little problem. Okay, now she's two payments late behind. She little problem. Okay, now she's two payments late behind and she's going to be foreclosed on. Yeah, okay, she borrows the money to get it caught up. Fix the problem for a little while, right, yeah, but wait now she's got a lawsuit from her HOA and wait and wait.
Speaker 2:It just keeps getting worse. So if you're in a situation like that, you need to know how to get out, versus just wasting your money because that money is not going to you, that HOA lawsuit is not going to help you, those late payments are not going to help you. She had never had a late payment before. She could have gone and bought another house. But because that happened now, here we go.
Speaker 1:Yeah, minimum 12 months she's going to wait to even be considered for another property, unless she goes hard money. And guess what? They're not lending to you either.
Speaker 2:Not for primary residence.
Speaker 1:Correct yeah, that you make a great point there that a lot of folks in this situation don't know what to do. You know, and unless somebody like you guys stumble upon them, they don't get the relief that the others do. I don't think that there's like you go online and say help me solve my bigger issue.
Speaker 3:You know, if I can interject something, it's all about having options. You know, and sometimes you know people don't don't do it because they don't know that there's an option, they don't know that there's another opportunity. You know, I don't know it's strange.
Speaker 1:It's weird that I talk about this concept even with first time buyers. They're scared to even apply for their options. They don't know there's options.
Speaker 3:Exactly. You know you talk to investors every day and they're like well, you know, I don't know. I only have, you know, $60,000 cash saved 401k. I don't think that I'm ready. Hey, let me just let me share with you what an option would be for you.
Speaker 3:Let's look at a hard money option and let's take a look and let's take that money and instead of maybe buying one property, maybe we buy two properties. Okay, then you turn around and and you refinance, and you take that money out and and you know there's so many important thing to them and give them some different options and help them to understand hey, with that money, you know, you don't have to pay completely cash for this asset, you can go ahead and you can borrow against it, and then you can turn around and set up my one property and buy two. And we actually did that a couple of months ago. We had a property up in Spring Branch that we went ahead and we sold. We did a 1031 and instead of just buying one home, we've actually bought two. So we used hard money and we used what was the other one that we did. It was a DSCR it was a DSCR loan.
Speaker 1:So I mean it worked out great. Now DSCR has been coming up quite often in conversations, and I myself didn't even start doing them up until about a year ago, when rates started coming up and first-time homebuyers started drifting away. And here we go. Here come the investor. Phone calls hey, I'm looking to park some money somewhere. I may or may not qualify. Why? Well, I haven't filed my taxes yet, or my debt-to-income ratio is too high. Why? Because I've got multiple rental properties, or many different reasons. But a DSCR loan gives two shits about your income. It cares what you're doing with that property and how you're going to generate income or revenue for that new asset to pay for itself and then some.
Speaker 2:An option a lot of people didn't know existed. Talking about options, you've got options on the seller's side and you've got options on the buyer's side. Yeah, and if you're on the, you know I'm in a desperate situation, seller. Or if I'm in a, hey, I need to park money somewhere.
Speaker 1:Correct. No, you're on the money, my properties.
Speaker 2:I need to find these good properties and these loan options. And people with the hard money loans sometimes don't realize that that's not forever. Hard money loans are such a temporary short period of time that you're paying a higher interest or you're paying whatever it may be. That is a little bit higher. Yes, it's a premium but at the same time, it's temporary. You then can refinance that property into many different options, and I think that that's a great thing to start educating people on, not just as investors, but as those first-time investors.
Speaker 1:Yeah, I agree.
Speaker 2:You know what? I don't qualify for two mortgages. What do I do? Well, a DSCR loan is a great option.
Speaker 1:Yeah and I think that the first question to that, if somebody says I don't qualify for two properties, is what is your intent of the second property? I think intent isn't. No, its possession is nine-tenths of the law Whoops. I think intent is something that gets overlooked too often. People don't ask the questions to be able to provide those options and solutions to whatever problem that is there. And in this case it's like okay, if you are planning to generate income from this, from buying it real quick and selling it real quick, well then know that DSCR is not an option for you. But if you're planning to hold this and let it pay for itself and continue to build that portfolio based on that concept DSCR all day long. Matter of fact, there's two different types that allow you to either do long-term rental or short-term rental, and now that we've had a little time in this market, we've got comparables for both.
Speaker 1:You know whereas before I compare it to barn dominiums. Still to this day, it is tough to finance a barn dominium. Why? Because there's no comps yet Nobody knows what it's truly worth. When you go and buy that land and throw this massive warehouse yeah, exactly Onto it, because there are not comparables to that property. Now it takes a herd of folks that risk their cash to essentially create that market, then there are comparables for it, but that only works for the certain area in which that happens. I mean, you can't take a comp in Houston and compare it to San Antonio. That doesn't work, you know. So you guys mentioned something about a bigger picture, bigger concept. I'd like to talk about BiggerPockets for a moment, and I know that that is an avenue or a resource, but I didn't dive deeper into any of it. Would you guys like to indulge us on?
Speaker 3:that we love it, we use it, you know, every day. As a matter of fact, I was reading a thing on BiggerPockets today. They had an article. They're talking about the 25 hottest markets and they're talking about all of the southern states, pretty much California all the way to Florida and Texas, and everybody's moving and migrating because you know lesser cost of living, you know warmer, you know climates, you know just a great opportunity. Yeah, and a lot of the Northern States, like New York, I mean there are a lot of those people are migrating down here because it's just cost less to be down here, you know better weather and so on and so forth, and I was reading an article about that. It's very interesting. The city that we're actually from, which is McAllen, down on the South Texas, is number three right now, one of the third hottest markets right now in the United States. You know El Paso, another border town, you know, and so it's just ability Um, the weather's great uh cost of living.
Speaker 1:There's just so many factors and there's still opportunity down there.
Speaker 3:Absolutely, a hundred percent. You know they were talking about that. So great opportunity. You know and love San Antonio, san Antonio market. Obviously it's just amazing. You know, obviously we're biased cause we live here, but we love it Absolutely.
Speaker 1:So back to the BiggerPockets thing, because right now, starting right now, this is like my interview with them, so I'm going to send it to them and say hey, you need a new guy.
Speaker 2:Biggerpockets is a great way to educate yourself. It's a great way to build a community. It's a great way to find investors who are like-minded. It's a great avenue. It was definitely needed in the investor community and I think it fills a huge void. It would be a great thing to have that type of same concepts in a lot of different industries and a lot of different sectors, but it definitely educates you. Even though we don't necessarily do a lot of long-term rentals, which the majority of investors do, we do short-term, mid-term rentals. There are still a lot of people that are going to be talking as far as forums, blogs, questions, all of that within the BiggerPockets community, about all types of things. They're asking about short-term rental, they're asking about long-term rental, about different markets, and that's a great opportunity for you to be able to engage in those conversations, build the relationships If you're, you know, seeking investors to partner with, if you're seeking investors to sell properties to, if you're seeking relationships. It's definitely filled a lot of the need for that communication.
Speaker 1:Absolutely, and most that are listening. If you are a consistent podcast consumer or YouTube consumer, you may have come across BiggerPockets as the podcast, where they have a couple of different anchors, so to speak, that provide insight on investment strategies. They go layman terms all the way to pretty advanced. But going a little deeper into that is a community, a community of forums and groups that they get to share ideas, they get to share opportunities, investment strategies, et cetera. So there's the surface level of value, but then there's something deeper, within, bigger pockets, that they've created, that you guys are a part of, and I know that it's a melting pot of, like I said, opportunities that you wouldn't have had otherwise.
Speaker 3:There's no doubt that's a plethora of knowledge we use in the Airbnb DNA. You know where we have a put in a property address. We have a lot of investors like, hey, we're thinking about short term rental. Yeah, what does this opportunity look like? Well, not a problem.
Speaker 3:But know, there's a, there's a place on BiggerPockets where you go and put in the property address in there and ask you two simple questions how many people are going to be sleeping there, how many bedrooms it is? And it voila, it gives you a total amount on. Hey, it's good, this property can make up to $60,000 per year. Wow, which is unbelievable, wow. And so you know you share that information with your investor. Hey, look, do you want to make $30,000 a year on traditional renter or do you want to make $50,000 a year on a short term? You know so. Obviously the STRs, obviously there's a little more risk involved. But I mean we make 35 to you know, 45% more a year on our short term rentals. You know there's a little bit more turnover involved. We see housekeepers coming in and out and so on and so forth. But we see housekeepers coming in and out and so on and so forth. But we figure all that and we factor all that into our expense and at the end of the day, it works out great.
Speaker 2:Yeah, I would definitely say that it depends on the market as to how much more you would make, but the rule of thumb is definitely two to three times gross. So that's a great number for people who are interested but don't really know what that looks like. It is more work, no doubt, but it's typically two to three times gross. So if you're making, you know, $12,000 or $24,000 a year on traditional rental again, this is gross you still have some expenses. You're making a lot more profit margin on a traditional rental if you've put a really good down payment on it. But on the short-term rental side it can actually gross about three times more and it usually profits anywhere in the number of six to eight times more. It's quite a bit more because of the actual profit that you walk away with after paying off that mortgage, after you paying the expenses to maintain the property, and the property stays in better condition.
Speaker 1:That's true.
Speaker 2:So it's a win-win situation, but it really depends on the market. You know, some markets are really really good and other markets are not so good.
Speaker 1:Yeah, I mean, as long as you've got an attraction, so to speak, that they're coming for consistently in different locations, the market's going to be okay Because, let's face it, despite whatever the market is doing, there are still people that want to travel and want to explore and want to experience different things, absolutely, and that gives them an alternative option to stay in a hotel. Let's be honest, if you've got your pets with you, if you've got multiple kids, anybody trying to bring all that with them, but many times they would love to, but they just don't. But now the idea of the short-term rentals, mid-term rentals it opens up the door to being able to experience that as a family together, or something like that.
Speaker 2:You know, the BiggerPockets has a lot of different calculators. Now, this is not just short-term rental, that is a short-term rental resource, but there are tons of rental calculators on there. There is cash on cash calculators. There's a lot of different avenues for you to be able to analyze a property without necessarily having to dig in real deep. You can get a surface level analysis pretty quickly and then, if it meets certain criteria, dig further versus wasting a lot of your time and that's really a part of being with realtors, or in our case. You know, we're very experienced in this and if you're looking for a partner to show you the ropes, that's exactly where this podcast here we're talking about today comes into play, because of the fact that that's something that sets us aside. If you need resources, we've already done all of it. Yeah, you know, I could have Googled for years and I'm sorry. I would have never found bigger pockets like that calculator that I need, and there's a reason for that.
Speaker 1:You know, when you create something that adds value, you better charge for it and give it the value that it deserves. I mean, if you give everything away for free, people will take it for granted and then it won't get used. So that's the truth of the matter. I mean, you go to those seminars and you don't pay anything, and the ones that you actually pay for, you make sure you get something out of it. Right, absolutely of. When dealing with the first-time investors and I think that is more so, who would maybe be listening to this? First-time, second-time investors what advice would you give to them? Because my advice would be start with the end in sight, and what does the end look like? We never know what the end looks like, but you can at least paint your beautiful picture. Yeah, no man, I left mine at home. What happened that eight ball?
Speaker 3:Hey, that's a different kind of ball we're talking about, bro.
Speaker 1:So the idea behind starting with the end in sight. You can never paint it exactly what it's going to end up being, but if you don't know what that looks like in your mind when you start, how the hell are you even going to reach it? Um, I think if you are planning to become an investor and I'll be honest, when we, my wife and I started investing, we didn't know what type of investor we were going to be either. But it was like, okay, we don't have a ton of money, so let's, let's convert this one to an investment property. And now we're long-term renters. But our long-term uh investors, um, fast forward several years after purchasing several long-term rentals, it was like, okay, we've got some change saved up, now we can become flippers, short-term, et cetera. Um, and we let that dictate what our uh, our end game was going to look like. But for others out there, what advice would you give to them?
Speaker 3:Good strategy, you know, depending on, obviously, what they're trying to accomplish, but always like what you're talking about what's going to look like at the end. You don't want to get a first-time investor into a full rehab. It's going to be $100,000,. You know, especially when we have investors a lot of them in different states come in and doing something. We want to go ahead and we want to help them with a smaller project. You know, maybe a hundred thousand $115,000 home, something with a light rehab. You know, and what I mean by that is under $30,000, $40,000, something that may need some cosmetics, maybe some walls, maybe some floors, something simple. You know where they can get a base hit and be able to make a little bit of money. You know we want them to do well, maybe get a double off the wall instead of just not doing anything. You know that's what we would recommend to a first-time investor kind of get your feet wet, kind of get started, kind of. You know, especially if you're using hard money, build a relationship with a hard money lender. You know, and figure out exactly hey, this is what I need to come to the table with. This is what it's going to cost me per month. There's so much money I'm going to make and put them.
Speaker 3:You know, real estate it's all about, you know, and you know this, you know having having a house in a great location, you know, and then and then having a home where basically you can go in there and just rehab it and then turn around and flip it or or do whatever it is you plan on doing with it, but just something that's not going to cost a ton of money to get their experience going and then moving forward in the right direction and once they make that money, move on to another one and once they get going and experience and maybe go on another one. Maybe it's a little bit bigger rehab, maybe it's a mid rehab or maybe it's a hundred thousand dollar rehab. You know where there's more opportunity typically on those large ones, and you know this mark on these larger rehabs, typically there's more meat on the bone, sure, as far as there's more money more margin, you know but?
Speaker 3:but on the first time, investors finding an opportunity in a good location uh, that's not going to cost a lot of money to get going and get your experience level going and then move on to the next one.
Speaker 1:Yeah, as they say, how do you eat an elephant one bite at a time? So, tom, you had put a quote on the book of faces. Uh, yesterday, maybe the day before, that resonated with me and I wanted to read it for the guests. Absolutely, and this is matter of fact. In the editing process, I'm going to throw up an image. You can see it right here. No, that's probably not what you're thinking. It is a bar of silver guys, and that's what it is right, that's exactly.
Speaker 3:It's actually just an iron bar, an iron bar.
Speaker 1:Very good, okay, so follow along with me on this, guys. The following goes this is a thousand gram iron bar. The raw value is around $100. If you decide to make a horseshoe, its value would increase to $250. Instead, you decided to make sewing needles, the value would increase about $70,000. If you decided to produce wash springs and gears, the value would increase about $6 million. However, still, if you decide to manufacture precision laser components out of it, like ones used in lithography, is that right? I think that sounds right. Okay, good deal. It would be worth $15 million.
Speaker 1:Your value is not just what you're made of, but, above all, in what ways can you make the best of who you are? And that resonated with me like nobody's business. It is the same concept of is this just a pen? Some may see it as just a pen, others may see it as the tool that they use to write the next deal, others can see it as multiple different opportunities, and I think, in order for people to start seeing different perspectives and different ways and opportunities, they've got to open their mind and hear different perspectives from other people that then promote different ideas that then become shareable, usable and profitable in many cases, and until you're open to trying new things, until you're open to taking risks and knowing that failure is a part of the process. If you always do what you've always done, you're always going to get what you always got.
Speaker 2:Yeah, absolutely so, percent, yeah, talking about failure and being a part of the process of any kind of growth. A lot of first-time investors. You know we were really. When you talk about a first-time investor, this is typically a person who is a homeowner. They are looking for their next thing. Correct? How do I continue to build on what I have done? And 100% of the time, they are afraid.
Speaker 1:Yeah, absolutely.
Speaker 2:And a lot of the time they are afraid to move. They kind of freeze, they overanalyze, they make it too big of a deal and they end up missing out on a really good deal.
Speaker 1:Yeah. Analysis by paralysis.
Speaker 2:Exactly. And then there's the other side. There's the one who jumps off the cliff and hopes that the parachute open, like, okay, dude, like. But you know what? I got to say kudos to that person. Yeah, and I'm not saying everyone needs to be the one who clicked, you know, not drives off the cliff, don't drive off the cliff, jumps off the cliff. But really and truly, it is about jumping off a cliff. Yeah, you don't know what's going to happen. You don't know what the end is going to look like. You just need to have a picture in your mind, like you said, the picture of what the end is going to look like, and as time goes, that will continue to evolve.
Speaker 1:That's right.
Speaker 2:Your first project may be a flip that's super small and cosmetic, and your dream is to be this incredible luxury home and designer. Okay, well, you know what that first flip is a stepping stone. You don't need to jump from zero to 100. That takes time and growth, and so those little things that you're doing may not be exactly what you love, but it's an opportunity to learn and that progress will continue forward, and I just encourage everyone to just do it scared.
Speaker 1:I like that. I've got a final thought here that you just provoked, and it is the concept of losing in flipping okay, and I'm gonna compare it to college, and the reason why is because college costs money, in hopes that you're going to get this piece of paper and be able to utilize it to make a life for yourself.
Speaker 2:You mean, there's no guarantee?
Speaker 1:No, guarantee, Not a single one. Yeah, not a single one. And in that aspect, you spend how much on college? I mean $40,000 a year. $20,000 a year Depends on the university.
Speaker 3:We have one at Baylor and we have one at University of.
Speaker 1:Texas, there you go. Big difference how much you pay A lot. So that in itself, that concept, the idea behind why you're paying, is it just for the piece of paper? No, it's for the value that you get out of that experience, whatever it may be for each individual. So I'm going to compare it to flipping. If you go and flip your first house and you happen to lose 40 grand, your first time did you lose?
Speaker 2:No.
Speaker 1:No, in my opinion, you didn't. You only lose if that was the only flip you ever did, Right, or are you going to take that $40,000 loss and go? Okay, now I know what not to do. I got a $40,000 education on how to flip and how not to flip and move it on to the next and, let's say, your next one. You lost 20 grand Shit. I'm 60 grand down, but you know what. You're a little bit further along in that learning process and in the education of something tangible that you can utilize to go and get that 60 grand back on the next one.
Speaker 2:And I can nearly guarantee that it's going to be cheaper than a college education.
Speaker 1:I would have to agree with you on that. Well, guys, thank you for joining me on this. Is there anything else that you guys would like to add?
Speaker 3:Just, a pleasure. Thank you for having us. I'm sorry.
Speaker 2:Thank you for having us.
Speaker 3:You're welcome. Pleasure to be here, man. You know, and I've always been a plan for everybody, right? And if you look at it as glass half full versus glass half empty, you know I've always been positive. If you think positive, you think positive thoughts, positive things happen.
Speaker 1:Can I change your mind today? Absolutely. Come on. How about a glass that's refillable? Guys? Thank you so much, those of you listening. I hope you got something out of today.
Speaker 1:There was a plenty of nuggets that you could pick up and actually apply in your everyday life. Whether you are a first-time home investor or a seasoned professional that's doing this. Maybe you're on your third or fourth, and maybe you got lucky on your second and third and now looking for additional opportunities. I want you to take a look at Tom and what he's doing over there at New Western, and maybe that could fit in with what you're doing. There are financing options for those of you that took on hard money loans and are looking to get out of them. Maybe cash out your equity, maybe convert that to a long-term type financed loan. But definitely seek your options, because they are out there, but always and I mean always work with an expert. Thanks, guys for tuning in. Make sure to like, share, subscribe, all that jazz, but we will catch you on the next one.
Speaker 1:Welcome to Key Factors Podcast, where knowledge meets ambition in the fast-paced world of real estate and mortgage. I'm your host, mark Jones, bringing you the latest insight, trends and expert advice to navigate this dynamic property market. In each episode, we dive deep into the heart of the industry, dissecting market movement, exploring investment strategies and unlocking the secret to real estate success. Whether you're a seasoned professional, an aspiring investor or simply looking to stay ahead of the curve, this is the ultimate guide to making informed decisions in the world of property and real estate. So grab a seat and let's uncover the key factors that make all the difference. Welcome to Key Factors Podcast. Let the journey begin.
