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599: Flipping in a Booming Housing Market

February 22, 2022bmanasseroUncategorizedNo comments

SHOW NOTES FOR EPISODE 599: FLIPPING IN A BOOMING HOUSING MARKET

From a young immigrant from Argentina with no financial literacy to a celebrated real estate investor, author and coach, Joe Arias is living proof that anyone can become wealthy with real estate investing. In this episode, Joe shares how he mastered wholesaling, flipping and rental property investing in just 10 years.

What You Will Learn

How you can find good flipping deals in Southern California
Why today’s economy is perfect for wholesaling and flipping
How you can find good deals in any market
Why rental properties are the best investments out there
Who are the people who sell their homes off-market and at below-market prices?
What are the four main profit centers of rental properties
What are 5 of the best rental markets in the U.S.?
How having a cheap mindset can cost you big money

About Our Guest

Joe Arias

Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess. RealSuccess is an educational platforms focused on teaching people flipping, rentals, passive income, and wholesaling. Joe is also a best-selling author. He has written 4 books (Finding your RealSuccess, Flipping with RealSuccess, and Rentals with RealSuccess, and Success Plan) and currently finishing writing a book about wholesaling. From a young immigrant from Argentina with no financial literacy to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.

More About Joe

Joe came to the US 20 years ago at age 19
He is an immigrant from Argentina
He always followed the “traditional mindset: go to school, get a degree, get a job, buy a house. pay taxes, work hard for many years and eventually retire
He did that for 10-15 years
He got a job, was making money and also spending money
But at the end of every year, he felt like is was never good enough – and he still had no money left over

Real Estate Investing

10 years ago, he attended a 2-day real estate seminar that changed his life
He flipped 2 houses in Southern California the first year and made $164,000
Califo9rnia may not be good for rentals but it is a great market to flip houses
The risk for flipping is all on the purchase – if you can buy an off-market property at the right price, rehab and flip it in 3 months, you can easily make $50-70,000 and up

Flipping in California

You can still find good deals in Southern California
He uses OPM (other people’s money) to so you don’t need to have the cash to participate and get into deals
He also uses hard money and private investors money
Inglewood, CA is an “emerging market” right now
- It’s not an upscale market but you can still make money there
- You can buy houses between $400,000-500,000
- Using hard money, you can get 95% of the money you would need to buy and rehab the property. The rest you can get from a private money loan where you pay the lender 10%
- This would be a quick flip:
  - Simple rehab
  - He would get an “over-the-counter” permit
  - It would be rehabbed in 6 months
  - Two most important parts to upgrade: the kitchen and the master bathroom
  - Change flooring
  - Open a few walls
  - Curb appeal on the exterior
  - Will take $50-80K
  - You buy the materials at discount (he gets discounts through Home Depot)
  - Contractors will only be paid for labor

How He Finds Houses

Sometimes they will use the MLS but they only look at prope4rties on the market for a year or longer
Mostly, they look for “off-market” homes. They use a number of methods:
- Mail campaigns to:
  - Owners in foreclosure or pre-foreclosure
  - Recently divorced
  - Owners of fire-damaged properties
  - People in probate
  - Out-of-state owners that are having issues such as:
    - Liens
    - Health violations
- Social media campaigns
- Craig’s list
- Bandit signs
- Text messaging
- Agents who have access to off-market properties
The whole goal is to find someone with a problem (that you can solve)
- For some reason they can’t get an agent and go on market
- They are often in a hurry

Biggest Mistake(s)

He had a traditional mindset and a “cheap” mindset when he first started
He was focusing on how he could save money instead of making money
It takes more energy to try to save money than to make it
- Saving money is limited
- Making money is unlimited
He spent a lot of time trying to save money
He would hire unlicensed contractors to save a few thousand dollars but it would backfire on him
He would skip inspections (to save money) and he would discover things later that would cost him more than an inspection would have cost him
Another mistake he made: If you have a system that works, don’t change it!
- He wanted to make more money faster
- So he would change a surefire way he was making money to get more and get there faster and it would not work

Now is a Good Time to Flip

In a down market, you want to buy and hold
In today’s hot market, where homes a selling fast, you want to buy and sell as much as you can
Covid didn’t stop people from buying and selling

The Market Future

Joe sees the market eventually deflating
He thinks is could start as early as the next 3-4 months
Even if the economy goes down, he feels real estate will continue on the “slow and steady”
Millennials tend to be driving today’s market
They have been enjoying life, traveling pursuing a career
Now they are settling down, starting a family and they want their own home

Biggest Success

Sticking to systems that work and building on each system to make them better

Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years

He recommends that people with IRAs or 401Ks invest in rental properties
If you don’t have the retirement account, tap into your home’s equity while the rates are low
There are SBA loans
When he started out, he did “credit card stacking” where he got 5 zero percent credit cards and he flipped 4 houses – free money
You can buy out-of-state and make 20%
There are lots of opportunities
You need to think about what strategy you want to use:
- Flipping houses
- Wholesaling
- Rentals – he feels are the best strategy
  - But it is a slow game – you need to wait
  - But in 5 or 10 years, you’ll have a steady flowing of passive income
  - Get a turn-key rental
  - 10-15% cash-on-cash annually
  - You can make money FOUR PROFIT CENTERS
    - Cash flow
    - Appreciation
    - Renters paying down your mortgage monthly
    - Tax strategy
- Private money lender to real estate investors
  - Earn between 8-12%, plus fees
- How to get started with rentals
  - Find a market that is appreciating at 8-13% every year
  - Buy single family homes or small multis (duplex, triplex, fourplex)
  - Or you can buy commercial at 30-40% down
  - You’ll get a 20% return
  - He partners with someone to buy out-of-state turn-key rentals
  - Good rental markets currently include:
    - Florida
    - Texas
    - St. Louis, MO
    - Alabama
    - Las Vegas, NV
    - You need to find the pockets in those places because they are hot and investors are buying there

Taking Action

It’s not just about taking action, it’s about taking the right action
He has played tennis for a while but it wasn’t until he got a good coach that he really got better
The same is true for real estate investing
With a good coach, you can learn how to do real estate investing the right way

Current Business

He gets excited about the possibilities
Part of his business is changing his students’ mindsets
He had one student who really had to re-organize her life for success
Sometimes a person just has to believe that it’s OK to make money
It’s all about mindset
He’s excited about making money and making a difference and teaching others to do the same
It took him 5 years to get into real estate and, in the last 10 years, he has been focused on perfecting his systems
“The only access to success is through failure” – you can’t be successful without failure
Flipping houses is like playing tennis. But imagine if, every time you hit the net, it costs you $1,000 – that’s a typical costs for a mistake while flipping

Finding Good Contractors

Flipping has four parts:
- Finding – This is big: finding the right property at the right price
- Buying – you have full control
- Remodeling – This is a key area
- Selling – you have pretty good control. You can estimate within 5-10% how much you will be making on the sale
Tips on finding a good contractor
- Only deal with a licensed contractor
- Don’t have the contractor buy the materials – Joe buys all his own materials
- When contractors make a bid, it’s only on labor
- When he enters a new market…
  - He likes to have 4-5 contractors offer their bids at the same time
  - He has them all arrive at the same time
  - He has the “Scopes of Work” on the table
  - If someone arrives late, he/she is not allowed in
    - Red flag
    - If that person runs late on the first meeting, they will probably finish late on the job
  - When the meeting is over, he takes the contractors on a tour of the project
  - If someone gives him attitude because there are other contractor there, that person is disqualified immediately
  - Their egos come out at a meeting like this
    - The confident contractor has no problem
    - The guys with the attitudes is not the guy you want to hire

Rap-It-Up

Favorite real estate book: Rich Dad Poor Dad by Robert Kiyosaki
Favorite business book: Think and Grow Rich by Napoleon Hill
Most valuable web site for success (other than your own): Gmail
Favorite app: WhatsApp
Favorite quote: “Whatever you seek is seeking you.” Persian poet
If you lost everything – all your assets – and had to start all over, knowing what you already know, and you only had $1,000, what would you do to re-launch your real estate investing business? He would use the $1,000 for health and happiness, which surpass money in importance.

Where to Buy Joe’s Books

How to Reach Joe

Website: OurRealSuccess.com
- Check out where their seminars are and find out about their services
Instagram: https://www.instagram.com/joeariasinvestor/

IF YOU LIKED THIS PODCAST, we would love if you would go to iTunes, Stitcher, GooglePlay, iHeartRADIO and Spotify and Subscribe, Rate & Review our podcast. This will greatly help in sharing this podcast with others seeking to learn real estate investing as a means to achieve a successful retirement.

Check out our other podcasts at olddawgsreinetwork.com.

Get a FREE copy of our 3-Minute Rental Property Analyzer at olddawgsreinetwork.com.

Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com

bmanassero

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