347: Developing Your Real Estate Investing Action Plan for Maximum Success

SHOW NOTES FOR EPISODE 347: DEVELOPING YOUR REAL ESTATE INVESTING ACTION PLAN FOR MAXIMUM SUCCESS

Real estate investing can be the best way for the average person to build wealth over a short period of time.  But without a solid plan it can be difficult to achieve your goals.  In this episode, successful real estate investor and entrepreneur Nick Disney shares how he was able to meet and surpass his goals by creating a simple real estate investing action plan that is both easy to implement and sustainable over a long term.

What You Will Learn

• How you can utilize multiple different investment strategies to grow your real estate portfolio and cash flow for the long term
• The importance of knowing your “why” before you even begin a real estate business
• Why Nick changed his strategy from just building a rental portfolio to multiple streams of income
• The four key real estate investing strategies most effective for growing massive cash flow
• How he can make any deal a good deal
• Why Nick spends much of his time focusing on creating “win-win” scenarios
• The best sources of capital  influx
• Why focusing your plan on the 2 to 3 main obstacles can help you achieve your goal faster
• The four important steps for keeping your plan simple and achievable

About Our Guest

Nick Disney

Nick Disney is the owner of Sell My San Antonio House, a home-buying company established in San Antonio, Texas in 2009.  His work revolves around his passion for helping people who can be seen not only in his profession but also in his work being a mentor to other investors.  Through focus and execution, he has grown his real estate holdings from nothing to a portfolio valued at over $3 million, and he believes that others can do the same.  Nick specializes in the topics of cash flow, real estate investing, self-development, entrepreneurship, and small business.

More About Nick

• In 2009, Nick was working full-time in sales and enjoyed his job but felt he wasn’t reaching his full potential
• Wanted more freedom to chart his own path
• Read Rich Dad Poor Dad by Robert Kiyosaki
• He wanted the freedom that comes from creating sustainable long-term cash flow through real estate investments
• He started focusing on single family homes for rental real estate
• Wanted to ultimately acquire 100 rental properties
• After the first couple of properties, he felt that how he would accomplish his goal for financial freedom
• Continued to build his rental portfolio
• But as time went on, plans changed
• He continued to pursue his goal but his strategies hanged
• And, while he still pursues to create more cash flow, he is now accomplishing his goal through a variety of strategies:
  • Rental properties
  • Owner-financed notes
  • Wholesaling
  • Flipping
• He tried to keep it simple
  • Determine what your monthly expenses are
  • Know how much you need to cover your expenses and then surpass that
  • He wanted to create long-term methods to keep that cash flow going.
  • Besides rental properties, he found that note investing could also help generate regular cash flow

Finding the First Properties

• He started asking people he knew if they knew other real estate investors or realtors that could help him find properties
• He found out his barber was both a real estate investor and Realtor
  • He helped him find his first rental property in San Antonio, fix-it up and get it rented out
  • He helped Nick find a couple more properties
• After the forth property, Nick took off on his own and started marketing for his own properties

Changing Strategies

• He got his feet wet
• Felt he wasn’t finding enough good deals fast enough through the system he had
• He saw how a lot of the more successful investors around San Antonio were marketing to generate more leads
• Continued working with his barber/investor/Realtor as well
• He not only generated more deals, he generated better deals
• Also, by going direct-to-seller, he also found that it wasn’t as competitive as the properties he found MLS
• It was during the recession
  • More deals available
  • Less investors
• He had a little bit of his own cash
• Borrowed money from people he knew
• Set-up seller financing with a long-term note so he could pull the cash back out of the deal
• On his first two properties, he went with conventional bank financing because he had a good job and had no problems qualifying for financing
  • He had properties that already had tenants and the banks saw little risk

Broader Marketing Efforts Attract Different Types of Deals

• Started out focusing direct mail marketing efforts on “absentee owners”
• Then, he later created a website – SellMySanAntonioHouse.com
  • Directed his marketing to anyone motivated to sell their home fast
• As he broadened out his marketing efforts, he started to encounter people with situations outside the realm of what he was initially looking for in both types of properties and situations.  He got:
  • Low priced houses
  • Expensive houses
  • Properties didn’t necessarily meet his “rental property niche” criteria
  • He was seeking rental properties that were like the first ones he bought because they were working out well:
    • 3-4 bedroom
    • 2 bath
    • Located in certain desirable parts of town
  • But he thought, these properties might meet someone else’s model
• He began to see that, as some of the properties he was encountering were not what he wanted as rental properties, he thought of how could he could still turn those situations into other types of deals (he didn’t want to waste his marketing dollar).  He still sought a way to monetize the deal in some way

Re-Engineering His Original Business Model

• He found that his rental properties required more work that he first anticipated
• The extra property management effort was robbing him of valuable time he could be using to generate more cash flow
• He found that for some properties that would not work well as rental properties, he could still generate passive cash flow by creating a owner finance transaction
  • He would buy a property that was not necessarily in a good rental area
  • Fix it up
  • Sell it with owner financing to someone who:
    • Perhaps didn’t have the full 20% down payment
      • He looks for around 10% down – doesn’t want the deposit too low or the buyer is not as motivated to succeed because the deposit is non-refundable
    • Didn’t necessarily qualify for conventional bank financing
  • He would still get the cash flow from the monthly mortgage payments (sets payments up with a third-party company that services the loan on a regular basis)
  • Can can charge a little more interest (10.9%)
    • Tries to keep the monthly payment about the same as local rental payments
  • Nick gets the cash flow but without the headaches of having to manage the property
  • His goal is to set up every buyer for success – so they don’t default on the loan
    • Carefully screen and qualify the buyer through a third-party experienced loan origination company
      • Look for “red flags” on their application
        • Previous foreclosures
        • Evictions
      • Get a person that has the best chances for success
• Nick still buys rental properties but he also has note income
• The combination works well
• He also has the equity with his rental properties that can help

Creating a Business Plan That Will Work

• Start with a goal
• If you don’t know your goal, ask “Why am I doing this?”
  • His “why” was because he wanted financial freedom
  • He also wanted to give his family the life he felt that they deserved
• Next, he asked, “What does my goal have to be in order to accomplish my “why?”
  • Your goal may be 3 houses or it may be 300 houses
• If you really know why you’re doing it, it will
  • Help you find your goal
  • Help you get past the “hiccups” that are going to happen, that happen to everyone
• The best thing you can do when putting your plan together is to really “keep it simple”
• Then break down:
  • What are the biggest needs?
    • One or two things standing in the way, more than anything else, of having you really accomplish your goal
  • Find the 1-3 major things that are the most important
    • For him, it’s usually:
      • Money/capital needed to purchase the properties
      • What is necessary to increase deal flow
    • Then, he spends the vast majority of his time working on those two things
      • It’s not just “get more deals,” it’s “how to find a motivated seller”
        • Find a property
        • Identify the “win/win” scenario
        • Answer, “What’s the best thing to do with this property?”
          • Is it a great rental property?
          • Would it make a great note?
          • What if it doesn’t fit either case scenarios? Then…
            • Wholesale it (you can assign the contract – no cash required)
            • Fix and flip it (requires up-front money)
            • You will get a chunk of cash that you can use to acquire long-term rental properties or acquire more notes
      • If it’s about the money/capital goal
        • Everyone runs out of money at some time.  How can you get more?
          • Private money
          • Establish good banking relationships
          • Mortgage companies
          • Can use equity in properties you own
            • Purchase other properties
            • Establish bank line of credit
        • You need money to
          • Buy rental properties from owners
          • Buy properties at auctions
          • Pay things down
          • Flip properties
          • Rehab expenses
          • Marketing
• He has to always keep in mind his MAIN GOAL – INCREASE CASH FLOW

Biggest Mistake

• He would have started raising more capital and gaining access to capital a lot sooner
• The first 10 long term properties ate up a lot of his money
• He ran out of money
• Couldn’t scale up as fast as he would have liked
• Hadn’t build up:
  • a network of private lenders
  • relationships with local banks
• He got stuck

Worst Deal

• House he bought on the southwest side of San Antonio
• Someone else had found the deal and asked him to pick it up
• He got a little too confident in judging the property
• The seller had shown the other person the inside of the property but Nick had not seen it and there were no pictures
• Nick only saw the property from the outside
• Bought the property without going in
• Thought he was going to be fine
• Went inside after he bought it and it was a lot worse than he thought
• It was difficult to re-sell the property
• Took six months to sell it
• Still made money (a few hundred dollars) but it wasn’t worth it for all the time and energy it took
• It taught him:
  • Stick to your own rules and criteria
  • Do your due diligence
  • Remain humble
  • If he does those three things he’ll have less headaches in the future

Biggest Success

• Being able to grow the cash flow past his first goal ($2,000 per month)
• Increase it more and more
• Created effective systems
• Created financial security for his family

Advice for Old Dawg’s Looking at Real Estate Investing

• Step back and ask yourself, “What’s my whole vision of what my real estate investing should look like? And how’s that going to affect the rest of my life?”
• Do a combination of rental properties and owner financed notes
• To be very passive, be a private lender to a good investor.  You make good returns on your money and it is a very passive.  Many lenders are former or current real estate investors.  They make good returns and it is extremely “hands-off”
• Creates “win-win” situation – Investors are able to do more projects while the lenders are supplementing their income in a very passive way, while still protecting their hard earned money
• The money is secure because it’s backed by real estate
• Ask yourself:
  • What do I want it to look like?
  • How active do I want to be in it?
  • How is this going to affect the vision I have for the rest of my time or the rest of my retirement?

Current Business

• He had a mentor that told him she would stop when she reached her full potential
• He’s like to reach $50,000 in monthly cash flow

Rap-It-Up

• Favorite real estate book: Rich Dad Poor Dad by Robert Kiyosaki  and Build a Rental Property Empire: The no-nonsense book on finding deals, financing the right way, and managing wisely by Mark Ferguson
• Favorite business book: Deep Work by Cal Newport
• Most valuable web site for success (other than your own): BiggerPockets.com
• Favorite app: Dropbox
• Favorite quote: “Start from wherever you are and with whatever you’ve got.” Jim Rohm
• 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?  Buy some business cards to make connections with people. Buy stamps, paper and envelopes.  Buy some gas for his truck.  Drive around and learn the areas I want to invest in.  Find the people that are the most active in the area and make connections.  See how you can add value to each person you meet, whether investor or home seller.  It will add value to your business.  And then go from there.

How to Reach Nick

• Website: https://www.sellmysanantoniohouse.com/
• eMail: Nick@SellMySanAntonioHouse.com
• Phone: 210-201-6644

This show was sponsored by SMARTMOVE

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