Key Factors RealEstateAF

From Financial Struggles to Real Estate Triumph: Insights and Strategies with Jade and Eric Flores

• Mark A Jones - Founder of ReviewMyMortgage.com

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What if you could transform your financial constraints into entrepreneurial success? Join us as we sit down with Jade and Eric Flores, seasoned experts in real estate and finance, who reveal their experiences in hard money lending, property flipping, and property management. Jade sheds light on managing a hard money lending company in Central Texas, focusing on loans for fix-and-flip projects and rental properties, while Eric shares insights on handling the construction aspects of their ventures. This episode is packed with eye-opening discussions on the benefits and risks of hard money loans, debunking common misconceptions, and the importance of having some capital and meeting basic credit requirements.

Ever wonder why some real estate investors fail and others thrive? Discover the significant knowledge gaps that realtors face when transitioning into real estate investments and the pitfalls of misguided mentorship. We recount our first unsuccessful flip and the costly mistakes we made due to poor guidance and incorrect property evaluations. Through personal anecdotes, we emphasize the importance of vetting contractors and accurately estimating costs upfront to ensure a successful investment. This episode also explores the transformational journey from financial struggle to entrepreneurial success, highlighting a critical wholesale deal that helped us break free from financial constraints.

Curious about balancing professional and personal lives in a business partnership? Tune in as we delve into the dynamic interplay between different personalities and skill sets, particularly when working closely with a spouse. We share our experiences on effective communication, organization, and maintaining harmony in both business and marriage. Additionally, we touch on the current real estate market trends, project management tools, and offer invaluable advice for aspiring investors. Whether you’re a seasoned professional or just starting, this episode is brimming with practical tips and strategies to navigate the real estate landscape successfully. Don’t miss out on valuable insights that could propel your real estate journey to new heights!

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.

Speaker 2:

Welcome back to another episode of Key Factors Podcast Real Estate, af and the AF stands for and finance, and I wanted to just kind of throw up on the screen real quick, jc, if you can reference that. A quick thank you to everybody that has been tuning in, subscribing, following our channel throughout the last two and a half years. We are just under 5,000 subscribers and growing, so to keep this trend moving in the right direction, I wanted to bring back a guest that I've had on a previous podcast I'll call it a previous life that I believe can add value, and this time she brought along her sidekick or side side piece, side dude, whatever you want to call it right, the main squeeze. So, without further ado, let me introduce jade and eric flores.

Speaker 1:

How y'all doing doing good, man doing good awesome.

Speaker 2:

so, jade, it's been a little while since I've had you on the podcast. We got a new studio, we upgraded our systems and whatnot Fancy now, and now we can have some good dialogue about what you guys do. So if you can kind of start off by telling us who you guys are and then we'll kind of get into your story, because I do believe that it is worth hearing before we go into all of the different rabbit holes that we're about to.

Speaker 3:

Yeah, so we do a couple of different things.

Speaker 2:

Get that mic a little closer.

Speaker 3:

So we work together but we also, you know, kind of do our own stuff. I manage a hard money lending company for central Texas, longhorn investments. So uh, you know, we do anywhere from two to $4 million a month there, and those are all investment loans, right. So fix and flips, buy and holds, um, and then we also flip homes. We have a rental portfolio, we do some owner finance stuff. So we work together in that aspect and then Eric manages our construction things the flips and the rentals.

Speaker 2:

So I know a little bit of Jade's story. But, eric, how did you get into this realm? Did she just kind of pull you in and said you ain't got a choice man?

Speaker 1:

It's time to roll up the sleeves and do what you got to do. Um, actually, I got into real estate because I actually worked in a, a mortgage company, before I was a junior LO.

Speaker 2:

Okay, um grab that mic and pull a little bit closer. Yeah, there we go.

Speaker 1:

Yeah, worked in work. Hey, there's a lot. Hey, how you doing, doing good, how you doing, brother? No, I worked in words with my mom for a while. There Got to do some, like you know, junior stuff, so kind of got a taste of it. And then I worked in the gym industry. So I was doing gym sales, personal training. Long story short, a gentleman by the name of Armando Montelongo I'm sure you guys have heard him before Absolutely. He came, I went and got a real estate license, started working with another company here in San Antonio and that's kind of when we met Longhorn and kind of got going.

Speaker 2:

Yeah, and you guys got going pretty quickly, for I don't know our generation, so to speak, because from what I'm seeing and what I've experienced, there are a ton of folks that are still talking about I want to start investing, I want to start doing this and I'm like you've been saying that for five years. Well, the market's not right for it and it's almost one of those things, that kind of like having a kid are you ever ready for it? You know, to be honest. So one of the first topics that I want to get into is the use of the hard money that you offer and leveraging that, because there's a lot of folks out there that are wondering well, where do I get the funds for something like this? What are the requirements? Is hard money even a good suggestion for my situation and the reason why I mentioned that?

Speaker 2:

Jc, if you can throw a reference up one more time, I came across this website. It says private lenders and let me get that out of there and on one of their marketing ploys it has this here no credit checks or social security necessary, your credit does not matter, and for me, being a lender, not hard money. I call bullshit all the way around when I see stuff like this. Um so, that being said, what number one is the goal when you're offering hard money lenders to individuals, or is it just businesses?

Speaker 3:

no, so we lend to individuals all the time you can either do it through an llc or you can do it through your personal name, um, somebody always has to personally guarantee the loan. So, looking at the website that you're referencing here, you have to be really careful with a lot of these, because there's so many scammers out there tons yep so.

Speaker 3:

Yep. So like that's the number one thing I get, and I get a lot of messages like this Okay, People think that we are a scam because the ease of hard money one. So you know, allowing people to see kind of the insight of what we do through social media has been very powerful, but you have to have some kind of credentials in order to qualify for hard money. It's not like we just hand it out.

Speaker 1:

You have to have some kind of basic economic level to be able to get started.

Speaker 3:

You don't want to just hand it out to anybody. So there is something there. It is very easy, much easier than traditional financing, so it's great for people who are looking to get into real estate investing, don't have any background in it, but you do have to have some kind of capital and you do have to have some kind of basic credit to get started.

Speaker 2:

Okay. And when somebody is asking what are some things that I should be prepared for when getting this hard money? What are those criteria or aspects that are going to be required for something like that? Because, like I said, I get this question quite often on the traditional lending side and it's something that I tell them hey, I've personally used hard money before for our flips, but I don't know what the requirements are in your case scenario. Things change constantly, especially in real estate, so go ahead and get with Jade or get with somebody that you can trust to move forward with getting that information.

Speaker 3:

Well, it also depends on the type of deal that you're trying to do. Okay, A deal of $150,000 versus a half a million dollars? Your credentials are going to have to look a little different.

Speaker 2:

In what aspect you can go down those roads?

Speaker 3:

So mainly capital, right. So I always tell people as an investor, we all have different qualifications, we all have different time capabilities, right? So we need to make sure, especially when you're a new investor, that you're getting into something that fits your specific needs. So when people want to start getting into real estate investing, I always tell them get pre-approved first similar to traditional financing because everybody's qualifications are going to be different. Somebody that has $15,000, $20,000 in the bank, their qualifications are going to look much different than somebody that's got $100,000 in the bank.

Speaker 2:

Absolutely.

Speaker 3:

So the type of deal that you're getting into needs to be parallel to the type of capital that you have to your name right. So that's where I try and guide people first. So, get pre-approved first. Minimum qualifications have to be $20,000 in the bank, $15,000, $20,000. Honestly, with this current market, I'm looking more at like 20. I've noticed that people with only 15 are just not getting any deals just because of inflation, which we can talk about later.

Speaker 3:

But 20,000 in the bank, 600 credit score, that gets you in the door to start investing. Now, that is directly going to be dictated by the type of deal that you find. So two different things go into the type of deal that you find. So two different things go into the type of deal that you're looking at. One is the size of the deal. Okay, how much you're looking to finance. You know size of ARV, size of renovation.

Speaker 2:

See that, eric. So size does matter, it does.

Speaker 1:

It does. Don't let anybody tell you otherwise.

Speaker 3:

So size of the deal and man, you got me all thrown off.

Speaker 2:

Okay, so okay.

Speaker 3:

So let me back, I'm back, I'm back to take my mind off of that. And the type of percentage that you're buying at right, like if you're buying a percentage deal, 70% of ARV or 75% of ARV. For those who don't know what that means, it just means you have more equity in the deal, you have more spread in the deal. Somebody that's buying a deal like that is going to be less out of pocket than somebody buying an 80, 90% deal, which, for people that don't know what that means, just means you have less equity. Your spread, your profit margins are much smaller. They're riskier. So that goes into play also with the type of capital that you're going to need. So two factors size of the deal, percentage of equity that you capture.

Speaker 2:

Makes perfect sense. Now I'm remembering back gosh, this was I don't know three years ago that we started doing our own flips. We unloaded our whole portfolio of investment properties. Then we waited a little while and it was like, okay, there's tons of opportunities out there. And the first two showed up on our doorstep. We had some friends that had some friends that were looking to unload a couple of properties, needed some work, et cetera.

Speaker 2:

And at that time I was working with what was it? 24 seven finance, 24 seven lenders, something like that. They were actually parlaying with Review my Mortgage. We were testing them out. So I figured what better way than to test you out personally? And we had no investment on flip experience. We had rental properties, all that good stuff, plenty of equity, plenty of capital. But they wanted a business plan. They wanted what do you foresee getting out of this transaction? So we had to go and get our estimates with our contractor. We had to show that if we had an oh shit moment, we had funds to cover it. And what was our exit plan, our exit strategy? Is that something that you guys still do?

Speaker 3:

Yes, well, so I look at that. So you don't need to draft anything up necessarily. It's not like when you go and you request a business loan and they make you lay out all of your business plan models and what you foresee, and it's not like that. But I am looking at your capital and so what I'm taking into account when I'm looking at the deal is if you have an oh crap moment, are you going to be able to support that? And I'm having those conversations with the borrower because you need to have capital leftover after closing to be able to support those oh, you know what moments. So I do look at that behind the scenes. And that also comes into play with the percentage of equity deal that they're doing size of renovation, size of capital. So I look at all of that when telling them whether that deal is going to be suitable for their specific needs or not.

Speaker 2:

Right, right. So, now that we've got a basic understanding of that, I believe that education is one thing that is lacking in this arena, and I believe that you both are doing a great job on social media of giving tidbits of that education by way of example. What are your thoughts on the lack of education that is happening in this realm of real estate?

Speaker 3:

Well, actually you speak on real quick because you he went through real estate school.

Speaker 2:

OK.

Speaker 3:

So one thing I see in my niche you probably see it too is that realtors are just ill-equipped on the investment side. It can be great on the traditional side, but when they step into the investment arena it's different.

Speaker 2:

Absolutely.

Speaker 3:

And there's nobody teaching realtors how to navigate when you step into this side of the transaction and you know, you went to real estate school.

Speaker 1:

Yeah, I was going to say that's, that's you, don't. They don't talk about that really. You basically get taught how to fill out contracts, which is great, because that's just upholding your fiduciary dues, your ethics, things like that. What you can and cannot do to get in trouble You're not an attorney, things like that, right, things like that. What you can and cannot do to get in trouble, you're not an attorney, things like that, right um. But when it comes to investments, man, it's, it's really. I mean, they talk about it like, hey, you might want to as a realtor, you're going to come across opportunities. Make sure you're being a fiduciary, not take advantage of that. But as far as education there's, I would just say there's really none, right? Um? The problem I see today is, as a realtor, I don't necessarily market myself. People can't call me and hire me. It's not what I'm trying to do. But one thing I see with other realtors is people will kind of align themselves along investments when that's truly not what they've never done. Pause there for a moment.

Speaker 2:

That's a big deal Because I've got a lot of situations that I'm not going to say I come across. It's more so that I hear about and then we end up getting the customer because of the situation that occurred. But you've got a lot of realtors out there that are giving advice based on things that they read versus, have done or experienced, and the school of hard knocks for me has always been the greatest learning tool I've come in contact with. It's kind of to the point that I've made before, but I'll bring it back, and it's like the cost of college is X amount of dollars, I don't know, $50,000 a year. Whatever it is, flipping a property, you could lose your tail the first flip, and losing your tail is always what is that word? Relative to your own budget, et cetera. So if somebody loses 10 grand on a flip, did they really lose their tail or did they get a pretty inexpensive education?

Speaker 1:

in my opinion, right yeah, I was gonna say yeah, but you can talk about that let's go down that road, because I do want to talk about that I mean, if you watched last, I'm sure she shared some of it. Uh, I think the number was like north of 60 plus thousand. Okay, you know that we lost in our first, you know, uh, unsuccessful flip and that was your first one, that was our very first one take, take us through that if you could.

Speaker 1:

Okay, we got this product from a group of folks that we probably shouldn't have done business with, but we did, okay. Anyways, we assumed a hard money loan, right, we assumed one. Is that what happened? Or did we go-?

Speaker 3:

That's what I actually learned about hard money. Okay, went through this transaction School of Hard Knocks right.

Speaker 2:

So you learned the hard way about hard money. Hard money oh absolutely.

Speaker 1:

Yeah.

Speaker 3:

I did so well. We had kind of like a mentor. So one thing I will say about the investment industry and I don't know about any other industry, but specifically investment industry you have to be very careful of mentors and gurus, because most of them, the majority of them, have an underlying cause of what they want out of you, and it's traditionally money, right.

Speaker 3:

So in this case, we trusted somebody um, purchased a deal from them, trusted their comps right, and this kind of goes back to, like the education piece of things, this there wasn't a whole lot of education available. We were I mean, I was 22 years old- yeah, we were Um, that's super young starting something like that.

Speaker 3:

There was nothing available. There was no education sources available to us that wanted to be able to help us without taking something from us. So the group actually one of the bigger Ria's had this mentor speaking on their stage. Um, so he we felt was very trustworthy. Um, anyway, we bought a deal from him and, uh, we were underwater before we bought it because it was in Alamo Heights, but it wasn't.

Speaker 2:

Gotcha it was. It was close to Alamo Heights school district wrong.

Speaker 3:

And not Alamo Heights. So by the time we got into it we were already underwater. Um, then we lost money throughout the rehab because just everything yeah.

Speaker 1:

Didn't really understand construction. I'll be honest, like you can fake it, like that's the right thing, but when you actually get into it, how much does a door cost? How long is it supposed to take? You know, like, what are the expectations. You don't know what. You don't know Absolutely yeah.

Speaker 2:

And there's a lot of folks out there that believe I'm going to flip this property and I'm going to do all the work myself. I've seen it work, but very rarely Every flip that I've done successfully has been because I had a contractor that I trusted and knew that they were on top of their stuff when it was time up front and I think that's the most important part is estimating everything out to determine, okay, how much money are we going to make and is that enough money to? Is the juice worth the squeeze?

Speaker 3:

basically, Well, a couple of things that I see new investors do on the hard money side is one, and we made these same mistakes, so that's why I'm pointing them out. One is accepting a bid, a contractor bid, from somebody other than the contractors that you personally vetted out.

Speaker 3:

So a lot of new investors will depend on wholesalers to supply them contractor bids or contract amounts I'm sorry, renovation amounts or even from their realtor. Sometimes the realtors will go and just get contracting bids from somebody they've never done business with before or maybe have done one deal with them before. So that was the first mistake that we made, and just the lack of understanding. There were just so many mistakes.

Speaker 2:

Yeah, I mean, let's take that situation that you lost your tails For sure. What was? Obviously you guys chose to continue moving forward. But how tough was that to make that decision versus going. You know what this might not be for us. I mean, we're in a hole. Do we keep going and dig a further or deeper hole, or do we work our tails off to get out of it and start making some money and turn this into what it is today?

Speaker 1:

Right, Um, I'll take this one real quick so uh here's what happened. So obviously we lost the money right, and then you have to decide what you're going to do. Yeah, um, that's a big financial hit to take on top of that 60 plus there was a tax return in there too, of ours personally, that 60 was borrowed family and um, obviously lost it. We just have to go make it up. Yeah, so it's almost like burning the boat type situation. So, um, we lost our play.

Speaker 2:

I'm sure she shared a story before we lost our place. We were living how to move, relocate, because it's been a while and it was on a separate podcast and I want the folks out there to to know. Guys, yeah, yeah, um.

Speaker 1:

So so we lost the. We, we did terrible on that deal. Um, I was working for armando at the time. Yeah, um, expectations there kind of kind of fizzling out, wasn't really, wasn't really bought into that organization where I probably should have been or wanted to be, just wasn't my cup of tea right, didn't align morally, ethically, um, so, anyways, lost my job with them. You know, just, you know tell, like, how it is I lost my job, came home like you didn't know what to tell jade, like dude, this sucks. Um, we can either, you know, make this payment for the house or we can hold on to it because we don't have very much, you know, in the bank right now. Let's go make a move. And so we did that.

Speaker 3:

Um the move was with his parents. Yeah, let me, yeah, let me prep this, let me prep this yeah, no money in the bank.

Speaker 1:

They were about to list their home. I think they're about to list their home and I remember making that call like hey, mom dad, hold off, hold off when he's like can I bring my wife and my baby to? Come live upstairs and that's what we did. So we took over upstairs. Um, I already had lost some of his, you know, retirement money. Sorry, but can we live here now for free?

Speaker 1:

yeah, this is great, I mean it is not a good situation to be in. But looking back, it was what we needed, right, yes, um. So then, talking to my mom, I think it was, and she wanted me to go the mortgage route, okay, and I needed back up. I was a junior processor, not a loan officer, I don't know why. I said that that's okay, anywho. So I asked her hey, will you loan me money for real estate school? Okay, so I ended up getting a real estate school While I'm Jade is.

Speaker 1:

I had already worked for Mona, so we kind of have some of these criteria, these books. We're trying to figure it out, piece it all together. She's super bright I mean, everybody knows that right. So she was able to figure that portion out. So my job was now to go make these connections. Okay, so I was in real estate school. Jade is getting calls from agents and wholesalers, right, basically, how it went down. So this is kind of funny. So I read all the time real estate. I'm thinking I'm awesome because I came from this guy's organization. He was on TV and I'm like you guys don't know nothing.

Speaker 3:

You know what I?

Speaker 1:

mean, this is easy Contracts, that's what our transactional coordinators are for. I don't even know this Anywho, so I remember all and she's like, hey, we can do this. Yada yada gave me the numbers and I think we needed five grand is what we needed, and so I did the whole thing. Hey guys, at lunch come see me. We'll talk about investments and and an agent who is still an agent today. I need to reach out to him, like do you remember that moment? How are you?

Speaker 3:

doing.

Speaker 1:

I'm doing great. Um, I asked him hey man, uh, 5k and I'll give I think it was a 20% return. It was something stupid, stupid ROI interest and you'll have it in two weeks. It's everybody's like that's great money, right. Talking at lunch, and, and I called Jade, I said I don't know how to she kind of she was going to be an attorney because she kind of knows the formalities of people Nerd, nerd, smart, kid, smart, rebel, so anyway. So yeah, long story short, I drove and I met him at I think it was Warsbach and somewhere off I-10, right outside of Sabre, right, I was going to school there. He ends up.

Speaker 1:

I remember we get a call from his fiance, okay, and she's like I can hear, like you don't know who the hell this guy is. Like what are you doing? Yeah, like, do you have you seen what he's done? And I'm over here like bro, it's going to work out, it's going to be great. You know, let's get a, let's get some type of assurance here. We didn't have any assistance. This is her, her, what I don't want you to call it when you're trying to go to law school, but pure genius, pure genius, dude. Yeah, pure J J genius, yeah. So I remember going to the bank and, hey, can you print this document? And it was just such a weird situation. It was kind of uncomfortable for me, but I got the money Came home, we did it, pieced everything together, ended up selling the deal.

Speaker 3:

It was a wholesale deal, so we made our profit.

Speaker 1:

There you go, yeah.

Speaker 3:

Like $3,000 for us personally.

Speaker 2:

Sure, and just making connections and putting it together.

Speaker 3:

Well, $3,000 when you have $0 in your bank account and your car just got repaid is a lot, dad, I'm moving out.

Speaker 1:

Just kidding.

Speaker 3:

That was what gave us the light to know okay, this is real, we can make this happen.

Speaker 1:

We can do this.

Speaker 3:

And his dad's military. So he was very much of like listen, guys, you need to make something happen.

Speaker 2:

Right. You have one month to make something happen and get on your feet, or else you need to get out of the house and go get a real job. Go be a man. Eric, look back on it now. Aren't you glad that he did that?

Speaker 3:

I am, and it's so interesting though, because he he believe in this real estate investment thing. He was like this is not real, you guys need to get a real job, you guys need to go out and find a real job. And we're like, just give us a little bit of time, we can make it happen. But it was like fight or flight, and we're both fighters, clearly.

Speaker 1:

Yeah right, we don't back down.

Speaker 3:

And so that wholesale deal allowed us to give them a little bit of money and pay off some of this stuff, like my car getting revoked yeah, it put gas in our tank so we could even go and look at deals.

Speaker 2:

Right.

Speaker 3:

And anyway, long story short, we got that done and that's kind of what boosted our fuel to get started. And then, you know, we just continue to do it again and again.

Speaker 1:

I want to say one thing about that too, because I think it's important for people to know this. So we made that little bit of profit right, and you have to remember it took a little while to get to that point of profit right. Okay, we failed on the deal. That was like a year. We thought about a year before finally got into the year. Then another year went by, you know, now I'm in real estate school, so by the time this happens, like it's like a two-year period has already gone by. You know what I mean?

Speaker 1:

A point on is, after we made that happen and we were, you know, upstairs, my parents like loft and uh, we used to sneak it on the window. They don't know, it's not gonna find this out if they listen to this. We used to sit on the roof, outside the window, but I remember her and I like looking at each other like we can do this, and I don't know if she said or I said it, but we were just like all right, it's time to get uncomfortable, yeah, like we're gonna live uncomfortable. And, uh, we took that little bit of profit we had left over, which wasn't much dude and we flew the nest Like we're going to do this again. Yeah, let's go. And so we went and rented another house. You know I go, you know try something to kind of make your way up, and then things started building up from there. But I want to make that point Like we made up our minds.

Speaker 2:

Well, I want to emphasize that point, and reason being is there are a lot of folks out there that see the HGTVs. There are a lot of folks out there that heard from a guy or from a friend that is a successful investor, flipper, et cetera, et cetera, to one go through it themselves. Number two, and most importantly, before you've even gone through it or made the decision to sit down and talk to someone that has actually gone through it, because more times than not that person is willing to share the gamut of what they went through, and that's with investments, business, et cetera. Anybody that I've found thus far that is successful, as long as you are adhering to their time and their restrictions, they're willing to share open book because it's for them that's sometimes more worth it than doing another deal simply because they love to see others succeed or go down the road that they went through and see that it works for everybody. If you put your whole self into it and, just like you said, it's bootstrap time, let's go. So thank you for sharing that, guys.

Speaker 2:

As we jump into this next topic, let's see here We've got plenty of things to chat about here. I've already talked about the hard money, the concept of that. Now Jade with you utilizing the hard money company that you work for. Has that been challenging or is that something that is a huge benefit to now what you guys do?

Speaker 3:

Huge benefit.

Speaker 2:

Okay.

Speaker 3:

So, seeing what I did not like about the hard money lender that we worked with and going through all of that and understanding the struggles that came along with, it it allowed me to kind of formate how I want my business going forward.

Speaker 3:

So hard money lending has been a huge blessing. In addition to what we do. It's opened a lot of doors for us and it allows me to help people, specifically new investors who want to get started, who are about to make the same mistakes that we made, that I can say, hey, let's take a step back and let's have this conversation about what you're about to do. And sometimes the conversation is, hey, this is not a good deal and I don't think that you should do it. My mama bear kind of comes out. But it also has allowed me to have a platform to where I can teach people what to do and what not to do, just from personal experience. So every month I host, I talk about education, right?

Speaker 1:

Yeah.

Speaker 3:

But I host classes for my borrowers to be able and they're completely free.

Speaker 2:

You can plug it. Where do you do them?

Speaker 3:

All that good stuff, yeah, so we usually do them at Stonework Very good, and they're just specifically for my borrowers to come and learn and not have any guru stand up on stage and try and take advantage of them. It's completely pitch free, yeah, but it's designed to be able to help people navigate the investment space without being taken advantage of. So that's been huge too, because it does. I can see every day, you know, changes that people are making or tweaks that they're making in their business, just from being able to take my advice, and people that could have potentially lost a ton of money had they not stumbled across our company. So I, yeah, hard money has been great. It's been a great supplement to what we do.

Speaker 2:

So, with the fact that you both now at this point, I consider you experts, you should consider yourself experts. You've got a lot of questions that you get asked, I would imagine, on a regular basis, and the answers that you're giving, or the advice that you give, isn't from a what I think you should do, it's more from a I've either experienced it or I've been bird's eye view of another transaction that I can also give you advice from, because I'll relate it back to when I was in banking I was a business banker for Chase. Before that I worked at the bank inside of Walmart was in banking. I was a business banker for Chase. Before that I worked at the bank inside of Walmart.

Speaker 2:

It was one of those things that I saw all these different types of people and how they made their money, and for me growing up, it was like I'm either going to make my money in real estate or something along those lines, because the only ones that are actually putting money in the bank and keeping it there are the ones that are business owners or real estate, and you fast forward and you go. Ok, I am so glad that I was in that seat to be able to see how people manage their money, see how they didn't manage their money, what they did wrong, et cetera, to be able to now consider myself an expert from the mortgage standpoint and real estate standpoint. I just don't go out there and say I'm a real estate expert, I'm expert on the mortgage side. Why? Because I'm licensed to do so. My wife realtor, real estate expert. With you guys is it tough giving that advice to people as often as you do?

Speaker 3:

It is so I.

Speaker 2:

I get it, yeah, um, but you know, my biggest thing is boundaries. Okay.

Speaker 3:

I have, you know, in the past been very much of a. I want to help you. I want to help you, I want to help you to where it became overwhelming, because everybody in this, everybody wants to do this HGTV thing.

Speaker 2:

That's right.

Speaker 3:

And you know, especially when you market, a lot people see what you do. Everybody wants to learn and everybody doesn't always go about asking questions the right way either.

Speaker 2:

That's a good point. Can you elaborate on that a little bit?

Speaker 3:

Yes.

Speaker 2:

Because the folks listening are going well, what do you mean? I don't ask the right questions the right way, so a trick word for me is can I pick your brain?

Speaker 3:

Okay, can I take you to lunch and pick your brain? I'm a mother of four kids.

Speaker 1:

Yeah.

Speaker 3:

I'm running a hard money lending company. We're flipping houses. You know I'm managing our business finances. We've got a lot going on.

Speaker 1:

Absolutely.

Speaker 3:

So for me to go to lunch with you if we're really talking about that for me to go to lunch with you, it's going to take me about 30 minutes to get there. It's going to take about an hour for us to have this discussion and it's going to take 30 minutes to get back to the office or wherever I need to be next.

Speaker 2:

Not to mention it's taking your mindset off of what your game plan is for the day Yep.

Speaker 3:

So it's two hours out of my day. I've got four kids. They're all in club sports, right. So me you know dropping kids off or taking kids. I have a very short timeframe in which I have available to me to truly focus on building my business, and you know doing the hard money stuff as well. So for me to take two hours that's like 25 to 30% of my day for two for you to pick my brain is not mutually beneficial, and 90% of the time I've learned that people that ask that way don't end up executing anything.

Speaker 2:

I agree 100% with that.

Speaker 3:

So if you want to learn, the best way to do so, if you have zero experience and maybe you feel like you have nothing to offer, the best way to learn is try to provide some type of value to somebody that you're trying to get value from. Mutual value is incredibly important, especially somebody who's really busy in their industry. If somebody is actually making money and they're not a guru and they're not a mentor, it's because they're successful at what they're doing. So for them to take their time away from doing what they're successfully doing to help you, it needs to be mutually beneficial and that's business in general, absolutely. So instead of saying like, hey, can I pick your brain?

Speaker 2:

It's find a way to become, you know, a value to them. So, jade, can I wash your car while you tell me about the next clip?

Speaker 1:

Yes, you can do that Absolutely.

Speaker 3:

You know like referrals, right. You know like referrals right. Like if somebody I saw on social media was constantly like tagging me in places and creating opportunities for my business to grow. Maybe they have no money, maybe they have nothing that they could feel like they could offer in that space. Other than that, to me that's beneficial. I see you, I see you're trying to me, you're trying to provide value. So just it's just finding value for the other person, making it.

Speaker 2:

Well, I mean to add to your point. If, if that individual or that group is going about the initial question the way that you articulated there, can I pick your brain for a bit? I would imagine that they're also going to go through whatever processes the same way and in my opinion, I call it half ass Instead of doing it with their whole ass. They're just trying to get instant results. They're thinking that you are going to give them this nugget of gold that's going to make them wealthy at some point in time. And I have to refer back to the story that you guys told and your origin of making this stuff happen. That shit wasn't easy, nor was it quick. So why should people expect to have quick, instant answers? That is just a wealth of knowledge in an hour. It's just not possible.

Speaker 3:

And most people want that instant gratification button and they think that, exactly what you said there's some golden nugget that I can provide to them that will just make them successful. And it doesn't work that way. So if you're looking for that golden nugget, you're not going to find it. The only way that you're going to be successful is execution.

Speaker 2:

Yeah, Failure, Go through the process and ask questions, but, like you said, add value. Find a way to add. There's plenty of ways to add value to someone that you're trying to get value from because it's not cheap. You can absolutely go get an online course and pay your subscription, but it's all situational and I think that's kind of what you guys are gearing away from is becoming that um uh, fictitious guru that knows all but is no longer practicing. But they're really trying to make their money $49 per person a month.

Speaker 1:

Right, right, absolute sense. That's what a lot of people are doing nowadays, so right.

Speaker 3:

Because when you're really doing it, you don't have time for that.

Speaker 1:

Yeah you don't, I don't. I just to touch on that please. You don't have time to take pictures and like all these things. You see all these guys, all of our social media doing right, I don't have time for that. So I don't know how they have time for that. You know, we do know. Yeah, like, yeah, I know, we do know. Man, yeah, like, yeah, we know why, right, like fit of the day, I mean all this was cool, I get, I get, I get trying to be social media relevant.

Speaker 1:

I get all that I, I don't know. No, no, and this is what works really well between the two of us, right? So jade's beautiful, right, clearly, right, star, boom, all the girls in the gym, like that's the one bringing us back. We're doing it, man, it man. Yeah, I even did the JT dance, bro. No, in all reality, though, what was I going with that? You know, we're a tandem, and so sometimes they need to have another person on their side of what they're not good at. Yes, and that definitely helps in this situation, like what we're talking about, yeah, ultimate goal, or what she's saying X, you, it's really just becoming a problem solver, and having somebody to bounce it off of, you know, is a great thing, and sometimes people's partners are not that bright and I feel bad. I feel for those people. You know what I mean, and I say that in a nice way.

Speaker 1:

There's nothing nice about that. Well, I say that because I get a lot of calls Right. How about this? How about this? Because you're talking about people asking.

Speaker 2:

I'm not editing that out.

Speaker 1:

Yeah, no, leave it there. Yeah, leave it there. They're like I hate Eric. I keep it real man.

Speaker 3:

That's your partner's thing.

Speaker 1:

And I'm being real about it, and I always say that because a lot of the questions she gets asked totally different questions than I get asked. Right, I get asked like can you come to my project? I have this issue happen and they're trying to charge me this. What do you think Is that relevant or is that good? And so for me, I'm like you know A why are you not asking around yourself? B you don't have that spouse. Like me, I'm very blessed, very fortunate Jaycee's a lot of scopes of work and stuff like that. So you know I can fact check with her when it comes to ARVs. Hey, give me your opinion, then you need to find somebody who can help you get to that point, right, I mean.

Speaker 2:

So, I mean to your point there's a lot of folks out there that believe that husband, wife, wife, wife, husband, husband however you want to look at it, they want to do business with their spouse, but in many cases it probably shouldn't be that way. Maybe your spouse isn't as involved or as sold on this concept as you are, and in many cases you probably shouldn't partner up with that spouse. Simply put, you know, if that is your passion, do it on your own or find another partner that you can kick stuff off of, because, you're right, we are super blessed. Matter of fact, kristen, my wife waited several years before even getting into the industry that I was already in because of that factor. Right there, it was like let's make sure that you, this is going to be something that we can communicate on, let's make sure that this is something that we can relate on. She was always involved on our personal purchase, then convert it to a rental. Move to the next one concept, but the idea of doing flips and all. She handled it all.

Speaker 2:

I was the money guy, made sure that the checks and balances were done, but our contractor partnered with somebody that was fantastic and I could trust. I think that that is a huge, important piece to this equation is finding somebody that you can actually trust, and the best way to do that is make sure that their equity comes from the deal itself, in my opinion, versus paying any other way. I don't know any other way. That's how we did it. It was like you want to go 50-50 on this. Cool, let's be transparent about everything and make sure that if you're getting a deal over there, it translates to a deal over here. But yeah, the idea of power couple everybody wants to walk down that road, live that life, et cetera, but they don't really know all that it takes once shit hits the fan. You know chaos coordinators, yeah, um, so I mean that leads to another question how tough is it for you guys doing all of this stuff together?

Speaker 1:

it's hard, yeah, I'll just say it has it like yeah, yes, please very. We're two different people. Yeah, you know what I mean King and Yang.

Speaker 2:

Well, we are.

Speaker 3:

So it works, and then sometimes it's hard because I'm like why are you making that decision? Yeah, yeah. You know, and I see things from one light and he'll see things from another.

Speaker 1:

Work when it comes to compensating for the things that each other lack.

Speaker 3:

Sure, I'm very you know I'm very typing say it yeah, very fame by the book I. That's why I love numbers. You know I love. I'm just the the brainchild right, and then eric is very creative I'm just muscle, I'm just dumb.

Speaker 1:

I pick things up and put them down. You're a brainchild. Over here she was. She had a killer GPA.

Speaker 3:

He's very creative and he sees things and he's great at speaking to people.

Speaker 1:

Me, I'm like I got a high emotional intelligence. I can sit in that room and hear your story. Very high EQ. Yeah, there you go. Exactly, I like that. I never heard that before. I like that. Yeah, you know, get that maybe an emotional IQ and EQ. I like that man, I like using the IQ Very much.

Speaker 3:

Yeah, that's pretty sweet. Never heard of that. So he's good at acquiring deals because he's good at listening to their problem. Yeah Me, I'm like can we get to a point now?

Speaker 1:

You don't have time for that. Yeah, that's great though, because once I bring something to her, that's all she thinks about. I don't have to explain the story to her. Like we need to help these people, Like I know I want to help them, but she just like Do the numbers make sense? Yeah, Okay, cool, Nothing out of pocket, We'll do it, you know. Like sweet.

Speaker 2:

Yeah, absolutely, that's great. So my next question to that is because I honestly don't like talking about business when I get home and she'll ask well, how was your day? It was great. But I don't want to relive it in the sense that I'm not going to regurgitate what took place today because it's now putting me back in good situation. That doesn't matter. I don't need to relive it because it's it's. We're past it for you guys. Do you bring business home quite often or do you try and separate?

Speaker 3:

That's probably something we could do better at.

Speaker 2:

Yeah, okay. So like we're today on a marriage.

Speaker 1:

Don't bring your problems up, like them.

Speaker 3:

Honestly, that's probably something we can do better at, and we are actively working. Especially when you work with your spouse, you have to constantly work to get better.

Speaker 1:

Yeah, yeah.

Speaker 3:

Not in your business, but with each other. Communication, understanding, forgiveness, all of that.

Speaker 2:

I'm sorry, I thought of that song, forgiveness.

Speaker 3:

It's our theme song, yeah it is. I'm so sorry we money to work with we've got a ton of money yeah it so honestly, we could probably get better at that I feel like we are better at that now than maybe we have it in the past, for sure we still do it, though we're totally guilty of it. I'm like, hey, did you get that ac guy out there for this property? Or hey, what's the status on this? He's?

Speaker 1:

reminding me right now I need to get her a condo, that's exactly what that was.

Speaker 2:

Super passive what was that?

Speaker 3:

That's my brain, though it never stops thinking like three o'clock in the morning like I'm a checklist, so I'm probably more guilty of it than he is like just staying on that checklist, um.

Speaker 1:

So we honestly, we're being completely transparent, we do, but we probably shouldn't as much, because I don't feel that it's super healthy okay, one thing I will not do is and maybe it's to a fault, but obviously communication, because jade, jade is one of those like it's like like, uh, acuity, right, you want to know what's going on. Like to the like I want to pick up this handful of sand. I don't have a handful of sand. She's like I have you know Exact amount 100,004 pieces of sand in my hand, yeah, and I'm like all right, thing of sand, let's go. But it's great though, right, that's one thing. She is very rigorous like that, but it definitely helps a personality like mine because it calibrates. It's like a nice calibration and I'm sure for me, like she may not say it or I don't know how she feels about it, but I probably helped calibrate her right. She'll never admit that, not on air at least. It's like. Those are those private conversations.

Speaker 2:

You're like man Jason's here. She's like I love you.

Speaker 1:

I get that all the time. I'm like what she's so sweet. What are you talking about? Maybe that's just to me. I guess that's a good thing. But one thing I have gotten good at.

Speaker 2:

I will not bring home the problems in the rehab, Okay.

Speaker 1:

Like the same thing you said, like you don't want to relive what just happened, you don't want to freak her out, you don't want to say, hey, I had 5K in contingency and now they told me this is $16,000.

Speaker 3:

There have been times where afterwards he'll be like oh man, I'm so glad that we got this fixed, because it was about to cost us 12 grand and I'm like what?

Speaker 1:

Yeah, like the flip around. That's exact. Again, that's an exact number and it's a plumbing budget. She threw 12 grand in my plumbing. That's exactly what it was Got to pick the 500 bucks.

Speaker 3:

But aren't because I'm a worry ward.

Speaker 2:

Because it had taken your mindset off of whatever. It is that helps bring that concept in and together into something that is not your lane at the moment.

Speaker 3:

A hundred percent. I like I said yeah, a hundred percent, and I'm working on staying in my lane too. So, yeah, that would have just added another checklist in my head. None of us need that.

Speaker 1:

No no.

Speaker 3:

Nobody needs that.

Speaker 1:

But something I've done to kind of bridge that, and fairly recent, like as in this past week. Recent, I've got a new software tool that allows her to peek into my world, because for the longest time she's been trying to get me to like, you know, mondaycom or something, yeah, trello, yeah, and I'm in my own organization tools that make sense for my contractors not necessarily for what we're doing, sure, but I just found this great company that I'm utilizing now, where she can, bird's eye view, peek into my world and I can keep her out of the problems within it, where I can just send it to the contract. We talk about the mess, but it works. So now she feels good, like, okay, cool, I can see what's going on, see when these pictures are being taken, okay, doing these things, sweet, I put checklists in there, things like that, because that's what feeds her.

Speaker 1:

When you're married, at least, or even your business partner, you want to feed that side of them too. So you keep growing right, otherwise somebody's going to grow, somebody's going to die or get bitter or whatever. So, um, just recently, yeah, really getting better at that. But, uh, like she said, I just try to keep those big problems or the big number problems out of her head, cause I don't want her thinking I, I have to go solve that problem. Correct, yeah, problem solvers.

Speaker 2:

You mentioned something that I want to emphasize for the folks out there listening If you are somebody that is working on projects, several projects, whether it is individual files, realtor, things of that nature you've got to have something to track your progress of that project without it being an Excel worksheet. There are tools like Trello, like mondaycom. Matter of fact, microsoft Teams has the Teams cards concept, to where you create a project and within that project you can share with other individuals that then can add their two cents or add a checklist and move it along the workflow, so to speak, from conception to completion, and I think that those tools will save a lot of folks headache in the long run. If they start day one doing something like that, then going, okay, now we've got three projects, where are they at?

Speaker 3:

Same with finances like business finances, especially when you're doing real estate investing, having all of your files organized in a database that you can refer back to three years from now. You have to be organized Otherwise by the end when you come towards tax season. It's a fricking disaster, and you're scrambling around to try and find receipts and, as a real estate investor, you've got a ton of them especially if you're doing multiple projects.

Speaker 3:

So, um, that's really important from day one, get your systems together and utilize those systems and you might navigate to new systems. Um, because as you grow, you're naturally evolving into new things. Right, but get the basis down and figure out how to do it and then evolve from there.

Speaker 2:

Great advice, jc. What are? How are we doing on time? Okay, we.

Speaker 2:

This last little segment that I want to focus on is almost a bit of a free flow, because I want to talk about today's market. Um, there's a lot of gosh scare stuff. There's a lot of gosh scare stuff. There's a lot of illegitimate items that we're seeing on social media, we're seeing on the news, just things that I have no idea. It's intended to maybe educate or give people fear and, in some cases, hope, but, in my opinion, it's not necessarily accurate for our local market, simply because they're using national and, more times than not, they use California and New York as an example, and that's just not in the realm of anywhere close to what we operate in on a daily basis. That being the case, you guys are still flipping properties and we are in a market to where, um, kristen and I stopped at the end of last year. We sold our last flip and it was like thank you, jesus Break, even. Okay, we're good, um, and we stopped focusing on that because obviously that's not what we do for a living. It was a hobby or an additional, I don't know, stream of income that we had. Yeah, absolutely, and in today's market. I get people asking or, matter of fact, they just tell me there's no deals out there. There's, there's nothing to flip. That's why we're not flipping, or we don't want to start flipping because there's no deals out there.

Speaker 2:

Let's pull JC, if you can pull this up real quick. This is the US foreclosure rate by year and this is kind of just like an overview of it, and obviously, the foreclosures rate back in the we'll call it the I don't know the horrible days, not the good old days back 2008, 2009. Uh, that's. Foreclosures were pretty high. You know. There were plenty of deals being scooped up and as rates started coming down and economy started doing better, you started seeing the foreclosure rate drop. Um 2020, 2021 was the lowest amount of foreclosures, and you can see this on your screen was the lowest amount of foreclosures, and you can see this on your screen. And, as we see, 2022, it doesn't have 2023 on here, but you're seeing an uptick in foreclosures, but nowhere near, not even close, and a lot of folks would think, well, that's only a percent off. No, no, no. We're talking hundreds of thousands of millions of properties that go into this number, so you've got to have a big number to change those figures.

Speaker 2:

Um, I'm not seeing foreclosures in abundance in our area, san Antonio. Um, for many reasons, there was the, the forbearance that had started to get extended. Um, you've got Texas. That is one of the highest rates of. We're going to pay our house, regardless of anything else that we pay before we run out of money, and that in itself is deterring people from jumping out to continue investing or to start investing. So, with you guys being the staple for poster child for that, where are you getting your deals? Are you still flipping? How is that going? What are you seeing in?

Speaker 3:

today's market. Is it really a shit show Like people are talking about yes and no?

Speaker 2:

Yeah, Okay, so I'll. I'll speak from the heart side the heart.

Speaker 3:

So, um, on the hard money side, I get that. I do hear that a lot that newer investors or some people who are not actively looking for deals, they are also the people that are like hey, bring me something. Yeah, there's no deals out there, but we had one of our best months last month. Very cool.

Speaker 3:

We did almost $4 million just for San Antonio and when you think $4 million, you have to take into account these are purchased like when you're buying an investment property, you're not buying a $300,000 property. It's a bunch of like $150,000 loans, right? So if you look at that and that's $4 million just for my office for San Antonio, that's still a lot of deals being done.

Speaker 2:

40 to 45 deals if you use those figures. I mean that's quite a bit it fluctuates, right.

Speaker 3:

They're not all $150,000 or more or less, right, but anywhere from $150,000 to $200,000 loans. I mean there's still quite a few deals going out there, and so there are deals out there. In short, now few deals going out there and um, so there, there are deals out there. In short, now we are not getting personally our deals from foreclosures right now.

Speaker 3:

Um, if anything, they could be pre foreclosures. I don't think we've got a ton of those either. It's mainly from um, people bringing deals, personal deals, uh, people that, honestly, a lot of what I'm seeing right now are just people that have or they're inheriting homes, or they just have renters in their homes that are not taking care of the homes. They don't have the money especially with inflation to be able to make those renovations, and so they want to offload them, just as is. So. Actually, even on the hard money side, I'm not seeing a whole lot of those deals that they're purchasing being foreclosures either, if we're on that topic.

Speaker 2:

Yeah, we are on that topic.

Speaker 3:

Maybe out of all of the deals last month, maybe one or two of them was a pre foreclosure deal that we had to rush, but that was about it.

Speaker 2:

That makes sense, and you mentioned something that I think is going to continue being a honeypot for investors, and that is the concept of inheritance of these properties. We've got a wave of folks that are passing on or getting out of their current forever home to go live in a assisted living or a paradise or whatever the case may be, but we're seeing a lot of those. Matter of fact, I've done quite a few of those loans with ulti deeds to where the siblings are trying to get paid out, so they're doing a cash out, et cetera, but with, I think, the largest generation. They're saying that it's going to be a huge shift in the wealth from them to us. Us being millennials, do you see tons of opportunity there for folks?

Speaker 1:

folks Go ahead, yeah, I would say all day, and that's kind of what you. I mean. I don't know it sounds terrible to say that's what you want, but you want to be the outlet for people who need a solution to that, right? Yes, Because majority of those homes, if we're being real, we're talking about the baby boomers right now. Right, so a lot of baby boomers are getting to that point to where, yes, they're hitting that 70, 80, 90-year mark. So time to go to the next place.

Speaker 2:

Less maintenance, we'll call it.

Speaker 1:

Yeah, less maintenance. So the problem is the majority of those folks, because they're on the tail end of life, they're stuck in their ways, they're cool with the parquet floors, they're cool with everything going on. So when they do pass, that's a big budget to take on. So I guess for us now it's just to be there to catch those people or to be an outlet for them or a resource for them, even if we don't buy it, point them in the right direction. I mean, there's been many times over the past couple months I've talked to folks who have been in that situation and they need the finances because, obviously, look where we're at right now economically, but they need the funds. So you know, even though we don't buy the deal, it's, you know, go ahead and do this. You know, airship, the affidavit, get it out of the way. Don't go through probits, take you too long. I would just send an appointment. Actually, last week on Thursday, somebody just passed went there. Same thing. You know, the property. I'm not going to buy it, I'll just tell you that right now Needs too much. I don't see this. No, no, no, they're pretty sweet. I let them know too. And so my point to that is even if you're us trying to be the resource, they would point them in the right direction to go facilitate that transaction, whether it be like a real estate agent or something like that.

Speaker 1:

One thing I was going to mention, as far as the data goes for the pre-foreclosure, because that's a little bit more what I do, right, she's doing more of the loan, sure, on average. So I guess out of May, so April, I'll give you April data On average I was seeing about 60 to 80 pre-foreclosures a day, right, okay, out of those, you know, I'm calling on every single one, reaching out to all these folks. Majority of those folks are working deals out with their lender, right? Lender still wants to make money, right, yeah?

Speaker 2:

If they go sell the house, they may not come back to. Mr Cooper, no, you're exactly right. As a matter of fact, to add to that, lenders are not in the business of owning real estate. Right, we're in the business of financing real estate and making money on the interest.

Speaker 1:

Right, and I've seen more and more deals being worked out, which blows my mind, and so, like she mentioned, that's not something we're actively chasing right now, because we do notice a lot of those Right, um, or majority of the folks who got like, on your little data sheet right there, that 2020, 2021 interest rate really helped some of those folks that were maybe you know 2010 to 2019, who were like, oh, we're about to lose it. Oh, sweet, we've got 1% interest rate. Yes, let's start this thing over. Yes, let's start this thing over. Bank's like come on in so it resets. So that's kind of why you see that data kind of skewed the way it is Going forward. I think in a couple more years, I think you're gonna see that it's gonna jump. Everything is biblical. Yeah, it's took advantage of that. We sold one of our personal residences. Like, these boneheads want to pay us a hundred thousand dollars more than what it's worth Jay's like let's go buy that house.

Speaker 3:

Here and made a hundred thousand dollars on it Beautiful beautiful strategy.

Speaker 1:

Open door, sorry, house open door, but yeah. So you see a lot of that right and a lot of those homes you can't really buy. So I don't want to say it's a waste of time to go after them. There are going to be some, but that's where your expertise comes in. You might want to stack that with, like a high equity so you know what you're getting into, so you're not wasting your time, because that comes with an experience.

Speaker 2:

So would it be safe to say to the audience today that those that are entrenched in this industry, from this perspective, there are plenty of deals out there still to be had, because people know that you are the outlet, like you said, for these types of solutions or problems that they have, whereas a dabbler in this market is going to have a tougher time finding those deals because you're not the known resource. You're doing this every so often, so you're having to go back to resources, or honey holes, so to speak, that have already been looked over and pushed aside, so you're kind of getting the leftovers 100%, absolutely.

Speaker 3:

And to those dabblers, I think they just need more realistic expectations. Great point If it's like your your side gig. You just want somebody to put something in your hand and you take it and do absolutely no work at all.

Speaker 2:

You miss that market, you're not going to get a 70% deal. Right.

Speaker 3:

Like I see this all the time. Can I get a loan estimate? And they're none. None of them are 70% deals because they don't have the resources, they're not going out and networking, they're not doing any of their own marketing Again, just something in your hand. You need to set realistic expectations for those type of deals. They're not going to be 70% deals, they're probably going to be more like 78% to 80% deals, less equity, but you've done no work for them really. So, like I think expectations just need to be set. If you're putting more marketing into it, you're spending more time, you're going to be getting better deals. If you're spending less time, less resources, less networking just the reality of it is you're not going to be getting the same type of deals. Oh my God, I don't know what this is going to be.

Speaker 1:

It's bad type of deals. Oh my God, I don't know what this is going to be. It's not like bees.

Speaker 2:

That's awesome, okay. So, that being the case and it kind of prompted I said the last topic well, this is kind of along the same line, so we're not switching topics but the idea of margins and what is, I'm not going to say, acceptable I'm going to use the word tolerable to go down for an investor that flips properties, especially somebody, on a regular basis, because I know back 2020, 2021, 2022, we were making 50% margin after everything was done and it was fantastic. We were okay with chopping it up with our contractor. These days, what is the going rate of what you're seeing as far as an acceptable rate of margin or return? Because, let's face it, a hard money lender isn't going to lend the money if there's 5%, and that 5% is your oh shit inflationary Contingency.

Speaker 1:

There you go, you go, yes, we'll call it contingency, that's right right on.

Speaker 1:

Um, I'll speak to you on what we do personally. So, um, the start of the year, we kind of sat back, right. You didn't see many, we didn't flip anything, you didn't see our cons, we weren't doing anything. Sit back monitoring the market. How are things going? What's selling? What's moving? You mentioned honey. Right, we have honey holes that we like to buy. The flip we're doing right now it's in our honey hole, right, and that came about through relationships you know what I'm saying Because they needed an outlet. Hey, eric and Jade, that was a freebie on Facebook, by the way, very cool. Yeah, super freebie, which was really cool. Um, and then I lost what I was going to say right there.

Speaker 3:

The percentages that we're buying at oh yeah, from a financial perspective we still stick to.

Speaker 2:

Bottom line. How do you know if it's a good buy or a good buy?

Speaker 1:

You want for the lending stuff? Yeah, 75% and under Okay.

Speaker 3:

So I don't want to be buying anything over 75% right now, only because, um, we're in a weird market. Yeah, we're in a weird market.

Speaker 2:

Yeah.

Speaker 3:

And you know it's.

Speaker 2:

Unknown.

Speaker 3:

It is, and I'm seeing in a lot of areas where there's not a whole lot of appreciation right now and, if anything, it's slowing down for sure.

Speaker 3:

The sales are actually going down. So the last thing that we want is to be buying over 75%, which is, you know about a 25% equity percentage, right, and then get to the end of our renovation and it's time to sell. And now there's been a down take, maybe in that particular market area, and then we go from a 25% profit or 25% margin to a 10% margin. We don't want that right.

Speaker 2:

Or even worse. I mean, ladies and gentlemen, that's what's called getting caught with your pants down Right, but that's what's called getting caught with your pants down Right, absolutely.

Speaker 3:

But that's what happens if you are so eager to buy a deal that you just buy 80%, 90% deals. So we do not do that. Now I will say if it's a small renovation, we have bought more expensive deals in the past and we may consider depending on where it's at. For instance, we bought one in the Northwest side of San Antonio and renovation was like 12K. We were done in a week. We had it relisted. Obviously we couldn't take FHA, but we did get an offer and we sold it very fast. So you know it was a higher percentage deal, but we were able to get a return on our investment so much faster that we were okay with it. But in this market we really want to be around 25 to 30% equity.

Speaker 2:

Very good. Now, before we cap it off, I want to ask you guys if there are folks out there that are considering investing, or those that are currently investing, and maybe they're doing it wrong, they haven't turned a profit, things of that nature. Do you guys have a basic equation to determine what could possibly go into this, how to determine how much we can possibly sell it for? Is there a checklist or an equation that you have that you can share with the folks as to how you make your decisions?

Speaker 3:

So the basic formula if, depending on where you want your equity percentages is you take the after repair value, multiply that by the percentage of equity that you are buying at. So anywhere from 70 to 75% we'll use 70, just on the side of things right ARV multiply that by 70%, subtract your renovation costs and that gives you your ideal purchase price.

Speaker 2:

It's really that simple honestly, yeah, it's not, and that's kind of what I wanted to articulate to these folks is it's not tough in calculating that? It's tough when it comes to finding the property, getting the person that's going to do those repairs or additions, keeping track of all of it, all the extra things that you don't see on the surface.

Speaker 3:

The actual business side of things. Yes.

Speaker 2:

Very good. Yes, I guess the part that everybody is scared to do. Anybody can buy a property, anybody can throw money at it, but in the end did you make money in doing so?

Speaker 3:

Well, that's why not everybody starts a business, right? Not everybody is cut out to run a business. Yeah, and flipping properties is transactional, but it is a business 100%, I agree.

Speaker 2:

Well, guys, is there anything else that you want to add to this conversation? I think we got through everything that I intended to to make this into a golden episode. In my opinion, I think people are going to like the fact that you guys were very transparent. They got to see a little bit inside of behind the curtain, of what you guys do. But, yeah, is there anything else that you want to add to this?

Speaker 3:

We buy houses.

Speaker 1:

Yeah.

Speaker 2:

Plug way, plug way, absolutely we buy houses?

Speaker 1:

send us your houses. Realtors. If you put investment agent and you don't know what the heck you're talking about, call us, let us know. You can still make your money, your commission, looking right at the camera. You make your money, your commission. We're happy to work with you. We're easy to work with. We close fast, lender right, we're good there. The other thing I'd say to the folks who are trying to be flippers is do not erase your contingency budget just to make a deal work. On the way over here I heard Jade on the phone. I get to hear all her calls and I get to hear all these people talk all the time. Sometimes I cringe man, and I'm just like man and I can hear her trying to guide them in the right direction. But it's not. You know they're grown adults, so you got to receive it. They got to do what they got to do. But don't, ever, don't, ever remove your contingency budget. And I recommend between seven to. I know that sounds crazy, but stick to your numbers, right.

Speaker 2:

So you hit a foundation issue or a mold issue Absolutely.

Speaker 1:

And I want to give some like in this last thing. I'll just say it, I'll shut up, I'll give context to when Jade's describing all these things, these numbers, equity and stuff like that. If I can give people advice, you have to consider, like, the price point. You're selling your property and so you need to go look and say what is a more affordable home in san antonio? I don't know, does this go everywhere?

Speaker 1:

So if you're in america, okay, wherever you're at in america only in america, yeah, only in america look at, look in your town, look at the markets that are hot, look at, like, what actually sells and what moves. And if it's a two hundred thousand dollar price point, yeah, you need to make sure you have contingency for two hundred thousand dollar price point because, just like Jade said, that's where you'll lose your butt, like for sure, If you go buying too high and $200,000, man, it's eating it real quick. You do a 10K price up at 190. Another 10K is 180. Like you just killed yourself. You know what I mean. So that's the last thing I'll say, it's just buy low, sell high.

Speaker 2:

There you go, man. That's the name of the game. It worked forever. Thank you for sharing all that you did today. I believe it adds to who you are already what I know very great people and willing to share, but as long as there's some value involved, because your time is valuable.

Speaker 2:

And to the folks out there that are considering doing something like this, this is not intended to push you in that direction one way or another. It's to show you, behind the scenes, true transparency. You can make a great living doing this, but know that it's going to be a tough ride and it is a journey. It's totally up to you to continue moving forward or not. Just know that you only fail massively when you quit doing something. So that idea of providing a free education versus one that cost you a little money, I think the one that cost you a little money is going to be more valuable to you. So again, thank you guys for joining. Hoping that you guys out there got something out of this. Make sure to like, subscribe, share with a friend and if you're looking to unload a property, just look these folks up. Thank you, and we'll catch you on the next one. Thank you.

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Mark Jones

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