331: From $39K to over $50 Million in 9 Years! Finding Off-Market Properties with Data Mining and Equity Analysis

SHOW NOTES FOR EPISODE 331: FROM $39K TO OVER $50 MILLION IN 9 YEARS! FINDING OFF-MARKET PROPERTIES WITH DATA MINING AND EQUITY ANALYSIS

There are still great real estate deals out there for those who know how to find them.  Find out from today’s podcast guest, author, tech genius and successful real estate investor Liran Koren, how he grew his real estate business from $39,000 to over $50 million in just 9 years using data mining, scraping and equity analysis to find amazing deals overnight.

What You Will Learn

• Finding great high equity off-market properties by accessing free online public records
• Being an investor – not a spender
• How to find you competitive “edge”
• Knowing your strategy before you buy
• How you can use technology to access online data to find valuable “diamond in the rough” properties
• Why your time is your most valuable asset
• And why YOU are your most important asset
• How effective delegation helps grow your business faster

About Our Guest

Liran Koren

Liran Koren is a real estate investor, coach and author of the best-selling book entitled The Ultimate Step By Step Guide To Finding & Investing In Off-Market Real Estate.  Liran is an avid equity hunter investing in commercial and residential properties when not advising real estate fund managers.  He’s also the co-founder and president of US Quality Homes LLC, but enjoys a good Cross Fit workout or traveling anywhere new just as much as crunching data.  Liran also dabbles in leading online real estate investing workshops when he has the time.  He says he’s just a regular guy, who started investing without any formal training in real estate, without any special insider connections and with nothing more than $39,000 in savings that he scrapped up.  But by mastering the unsexy grunt work of data mining court records and analyzing equity, he’s flipped over 1,200 off-market properties in the last ten years.

More About Liran

• Came from the tech/computer world
• Since he was little boy, always wanted to be in computers
• When he got his first computer, just couldn’t stay away from it
• Also loves sports and exercise – very competitive
• Served in the Israeli Army (was an IT manager)
• When he completed his mandatory service, he left Israel for London
• Three days after his service in the Army ended, he was working in London
• Was an IT manager
• Was a consultant for a bank
• Very ambitious
• While most of his army friends traveled and did other fun things after the army, Liran went right to work
• He wanted to succeed
• He knew time was short and he had to do them fast
• He didn’t sleep for the first 8 months because he was afraid he would be late for work
• He had two guiding principles:
  • Nothing was impossible
  • If someone else could do something, so could he it too
• He spent a lot of time investing in himself – acquiring value
• After two years, he wanted to move to Florida

Moved to Florida

• He moved from London to South Florida
• Opened his own computer company
• Provided support service to various companies for 5 years
• Helped other companies to be successful
• Saved every bit of his money that he could
• Didn’t know what he was saving for but knew he had to save
• He was also very frugal (his dad taught him that)
• He’s not a spender – he’s an investor
• Invested in stocks – Ford Motor Company
• Bought a car that didn’t work for $400
• He fixed it for $600
• Used it to drive to to his service assignments for 2 years
• Money is good when you know how to use it – an instrument to create wealth

Started Investing in Real Estate

• 2009 recession
• Real estate was coming down in price
• He knew it was a good time to invest
• Bought a property on-market
• Made decent return on investment
• Didn’t feel like he was an investor
• He went to his first live auctions in Broward County, Florida in 2009-2011
• 300 properties were being auctioned every day
• For regular investor to buy a property in auction it was very risky – it was difficult to know what they’re buying (no time to research the list of 300 properties)
• To make a good decision he needed access to data
• You bid in cash and had to pay in full
• You can’t make mistakes
• He saw others doing well – He asked himself, “What do they know that I don’t know?”
• He knew that if he bought a property, it had to have equity – buying it at discount it was safer
• With so many properties being auctioned every day, there was no time to check out the properties!
• How could you know the condition?  Was it a good or bad deal? What is it worth?
• Knowing how to know value is one of the most important metrics in real estate

Finding His Competitive “Edge”

• Every investor needs a competitive edge or have a skill or advantage that others did not have
• He knew, if he could know the value of the 300 properties to be auctioned each day, then he would have an edge or advantage over his competition
• Because of his computer background, his “edge” was being able to data scrap the public records on the 300 properties to determine the equity and quality of each deal
• His computer was running 8 hours a night, scraping data, going portfolio by portfolio, into the MLS,  into core logic, into comps, into pictures of the comps, etc.
• He started coming to the auctions with comprehensive data on Excel spreadsheets, with pictures, on all 300 properties up for bid and he knew which were the best properties and which were not
• If you were to manually calculate the value of a property based on available online data, it would take you 30 minutes per property, not including seeing pictures of the property – he could evaluate all 300 properties, with pictures, in just 8 hours!
• Now, at the auction, he would only focus on the most lucrative deals
• It was very easy now for him to scale because he had a system

Before You Start Buying

• Define your capacity – what can you purchase?
• Next, define your niche
• Then focus on the metrics for your niche
• You need to put emotions aside and look only at the numbers and the equity in the deal
• Normally, people buy properties, collect income and, over time, they build equity, but what if the market goes down?  Then investors become “speculators”
• He doesn’t buy as a speculator, he buys based on fact – he buys at 30-40% discount in today’s market
• What he does:
  • Move in 4 months a flip
  • Or keep it for income
  • Or he can use a 1031 exchange to move it without capital gains

Develop a Strategy

• You need a strategy!  It’s not just about the income
• What if you want to grow? Or you run out of money?
• At the auction, it’s difficult to scale up
• However, it’s easy to scale quickly when you buy properties at auctions with equity because you move your money quickly
  • If you buy a property at 30-40% discount, an $80K property can be sold quickly for $130K — list it at a price it can sell quickly!
  • How to scale quickly:
    • Buy & sell 3 properties
    • Next time, buy & sell 4 properties
    • Next time, buy & sell 6 properties
    • Next time, buy & sell 9 properties
• Outside of the first property he purchased, all others were off-market!
• He’s not a property shopper, he’s an opportunity shopper
• He’s not restricted as an investor to single family, duplex, only 10% equity, etc. – he can go into condos and 55 plus apartment communities or any kind of product —  AS LONG AS IT HAS EQUITY!
• Equity is the key!

Where to Find Properties With Equity

• The best place to go to find great off-market properties is public records – the “docket”
• He generates his own leads
• He has a scraping tool that goes every single day to the public records
  • He goes to the first foreclosure notice, but all you can get is the case number
  • So how do you find out what the property’s worth, how much the person owes? Is it under water or does it have equity?
  • He scans the public documents into PDF
  • Then, he converts them into OCR
  • Create a scheme
  • So he can determine if it’s a good deal or a bad deal
  • He can do this for thousands of leads a day
  • He can convert 50 hours of manual labor in 30 minutes with automation

Writing His Book*

• For 9 years he was a “behind the scene” type of guy
  • Simple man
  • Didn’t buy expensive things
  • Worked hard
  • Came home, eats and works out
• So, after 9 years of successfully implementing his unique tech-driven real estate investing business, he decided to share everything he has been doing in a book, *The Ultimate Step By Step Guide To Finding & Investing In Off-Market Real Estate, to give back for his success
• He though, “If they are interested, then they will benefit.”
• He’s not a motivational speaker, just a guy that wants to educate people on the right way to invest
• He just wants to help people to succeed

Find Your Niches

• He does different things with the properties he has
  • Buy n’ flip
  • Buy ‘n hold
• He even has a property management firm that manages properties for out-of-country/out-of-state investors
• He believes an investor needs to know their strategy before they buy
• Focus on your niche, become successful and then replicate it
• He finds problems and then finds solutions for those problems
• Example:
  • You want to focus on probates
    • You know this is a good niche because you know anyone who files probates wants to liquidate their property
    • You next need to concert that lead
      • Ask
        • Is this probate a property?
        • Who is the petitioner?  The decision-maker?
        • Who’s the attorney?
      • You need to compile the data before you can make an offer
    • His scraping tool will go into the public records and the specific case associated with that probate
    • It would look for the specific download, find specific phases and import the data into an Excel spreadsheet
    • The spreadsheet would contain owner’s First Name, Last Name, Property address, zero connectors, value
    • Then, you can manipulate the data
      • If you get the representative’s name and address, you can get their phone number
      • If you can get the property address, you can get the mailing address of the owner
      • If you can get the mailing address, you can get the family address as well
      • You can find out how much money they owe the bank
      • The data actually tells you the story of the problem
      • So, when you call, you can immediate address the person’s personal situation
      • You can then import all the data into a CRM (Customer Relationship Management) software and keep all your activities in the same area – phone calls, emails, text messages – all centralized
      • This also allows you to delegate
    • Then, you need processes to convert those leads into deals

 The Importance of Delegation

• To become successful, you need to learn how to delegate
• A lot of people don’t know how to delegate
• You need to learn how to delegate
  • Give tasks to people who can do better than you
  • You cannot do everything
    • You should only do the things you can do better than everyone else
  • You shouldn’t be doing everything yourself
  • Time is an important asset
    • Should you not be doing the job of a $15 per hour secretary?
    • You should be using your time to bring in $40,000 deals
  • A good manager knows how to pick the best people for each task
• He was a real estate investor who was not managing his properties well
  • Wasn’t getting the highest rent
  • Not getting tenants placed quickly
  • The owner/investor is too emotionally tied to a property
• He his own property management company so he could hire people that can do property management well

His Software was Created to Save Time

• His software accomplishes tasks in a fraction of the time a person would take to do the same task
• He has full-time development team to support the software
  • Very customized and dynamic
  • Programmers work directly with the client to customize the software to their specifications
  • They create software that the client can use themselves

Biggest Mistake

• When started in real estate he was focused on finding properties and flipping the properties
• He wasn’t looking at the tax consequences, things like deferring capital gains with the 1031 Exchange
• In the beginning, he was too busy managing his own properties
  • It was good that he cared for his tenants
  • It was bad because he wasn’t that good at managing the properties
  • It was also bad because it took time away from finding those prized properties, the “diamonds in the rough” or, as he calls them, “the candies”
• As a result, his income producing properties portfolio was not performing well enough
• He started too fast and didn’t take the time to focus on his business

Biggest Success

• When he looks at success, he doesn’t look at it in terms of how many properties you have or your net worth
• He looks at his success more in terms of knowledge — the amount and quality of knowledge you have acquired
• Money comes and goes but your knowledge you can always take with you
• He also sees that his biggest asset as not the properties but instead, the biggest asset is himself
• People are always the biggest assets
  • Their time
  • Their values
  • Their expertise
  • The way their connect value with each other

Good Niches

• Liran recommends the following niches for investors:
  • Probates
  • Baby boomers

Advice for Old Dawgs Interested in Real Estate Investing

• Focus on income producing properties
• Avoid managing the properties by yourself – hire a good property management company that has
  • The expertise
  • The knowledge
• Don’t work for your property, have your property work for you
  • If your making $1,000 a month from a property but you’re working 15-20 hours a month working on it, you’re not “investing”
  • It should be headache-free
• You also need to purchase attractive properties that you can liquidate when you want

What’s Ahead for His Business

• He’s not a planner – he’s a spontaneous guy
• It’s hard for him to schedule for next week
• He’s very picky about the people he chooses to partner with
• Money is not everything in life
• Therefore, he associates himself with people who are good
  • People who have the same approach, vision, code of ethics as himself
• He is partnering with several companies
  • Acquired a management company that has over 1,000 properties under management in Florida
    • Has a great partner with the same vision
• His objective for the next 10 years – choosing the right people
• When you choose the right people, success comes along
• His objective now is to give!

Rap-It-Up

• Favorite real estate book: Doesn’t have a favorite
• Favorite business book: Principles by Ray Dalio
• Most valuable web site for success: Public Records and Dockets
• Favorite app: Bumble
• Favorite quote: “A friend in need is a friend indeed.”
• If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? He would do the same thing as he does today.  He does not need money.  He can get into deals without money.  Just use his current knowledge.

How to Reach Liran

• LiranKoren.com

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