Think and Grow Rich
Think and Grow Rich
The Science of Getting Rich
The Science of Getting Rich

Matt Napier's Real Estate Warning to InvestorsSince the beginning of the Great Recession, there has been a debate on cash flow between real estate investors, many of whom learned some tough lessons when the Recession began (including myself). Specifically, the debate is: What kind of deals should you focus on and how is your money best used!? Should you focus on creating equity or focus on creating solid income and cash flow?

You may be saying that they don’t have to be mutually exclusive. While that is correct, many investors tend to focus on either building equity OR cash flow. To me, the decision of what kind of deals to focus on is made easy if you boil it down to one thing- how much money do you need right now to live the lifestyle that you are already living (provided it’s already a decent standard of living) and do you already have enough cash flow to live off of on a monthly basis? If you do not have enough to live off of, do NOT focus your efforts too heavily on equity build up. Instead, focus on cash flow (quick flips, wholesaling, and only rentals that will generate strong cash flow); investments that will put cash in your pockets within 1-9 months.

One of my mentors when I got into real estate investing nearly a decade ago, Del Hinds, who headed the SCREIA, made a point of continually telling me not to focus too much on gaining long-term equity, until I had enough to live on today. His famous words still haunt me- YOU CAN’T EAT EQUITY! I also had another mentor that swore to me, you better have a sure fire exit plan and back up strategy if it doesn’t work. I will explain that more in a minute, but for now, let’s talk about Del’s words. At the time, I thought that he just had a different approach to investing, but he was 100% correct. Although I’d built up a significant pile of equity in properties, that was slowly being squeezed out each month when the Recession hit and since I didn’t focus on strong cash flow from the beginning, the $100 to $150 I was making per property on gross rents (before expenses) barely covered basic maintenance and vacancies, meaning my true profit per month on rentals was close to zero.

This serves as a warning. If the economy goes into another recession (which is certainly possible given the lack of fundamental improvement in the economy and massive spending by our government) and you do not have more than enough cash flow to live on already and are focusing too heavily on equity, change your focus… FAST. Focus on wholesaling, rehabbing, and flipping properties, or if you do buy rental properties, ensure that you have at least 30 to 35% cash flow after PITI payments plus a 10% allowance for vacancies and a 10% allowance for repairs (I actually look for 50% net cash flow now). Just because there are enough properties with potential equity that we can buy all day long right now, don’t buy too many properties too quickly if the strong cash flow isn’t there, and if you’re choosing not to re-sell them right away. Your equity may get squeezed out and you may be stuck with a property that you can’t sell for what you thought, and then you’re holding onto properties that aren’t cash flowing well enough to make it worth your time. You’re one of the smart ones though; you know to focus on cash flow, and thus, you will be a successful investor.

Matt Napier

With nearly a decade of experience in specialized niches of real estate, Matt is considered a highly knowledgeable real estate investor in the Charleston, South Carolina area. Matt has dedicated himself to learning highly specialized skills which allow him to find high-return real estate investments for his clients and his investment company, The Napier Organization. His company offers high-return investment opportunities to select individuals and funds, secured by real estate. In his free time, he enjoys coaching new real estate investors on the technical details of real estate investing.


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Show Notes

Lamar Cannon is a real estate investor who loves to travel the world. He set up his business to allow him to do deals no matter where he is on the globe. His strengths are strategy, marketing and a strong mentality. He enjoys experiencing new cultures, trying new foods, reading, writing poetry and playing basketball.

In today’s episode Lamar and I talk about how he goes about determining which part of a city to focus his marketing on. He’s been investing in a lot of different cities outside of his home city of Austin, TX.

Investing in other cities forced him to develop a data-driven system to determine where to focus his marketing.

As a wholesaler (but almost equally as important for rehabbers), he wanted to determine which zip codes have the most action.

What he does is goes to ListSource.com and generates a list based on the following criteria:

1. Entire City (and surround areas)
2. Single-Family Houses Only
3. Last Sale Date within last 6 months
4. 99-100% Equity (shows most likely was cash buyer)
5. Absentee Owners (most likely investors bought)
6. Companies Only (filter to filter down further to make sure getting investor buys)

This is how he gets the data he wants for free…

On the last page right before checkout, you can preview your data and filter it by zip code. All he’s really interested in is the count of the matching transactions so just the record count per zip code will tell him which zip codes have the most investor transactions.

How cool is that?

Another filter he uses from time to time to determine great areas for wholesaling is the foreclosure rate for the zip codes. The more foreclosures, the more likely it is that the area isn’t being served well by investors as the houses aren’t being bought before foreclosures are happening…LESS COMPETITION!

For someone like myself that does mostly rehabs, I wouldn’t focus as much on foreclosures, rather I’d include price ranges that are near the city’s media home value as that will be the where the biggest pool of buyers is.

All in all, we shared a lot of great info in this episode to help you determine where to focus your mailing and claim your target farm area.

Links

Lamar Cannon Facebook
Lamar LinkedIn
Lamar Instagram
ListSource.com

Please Rate and Review

This is my simple request: If you enjoy the podcast and look forward to hearing a lot more episodes, I would be very grateful, happy, beholden and otherwise indebted to you to rate and review the podcast on iTunes.

It’s your choice and I do not want you to feel at all obligated. But I’d love it if you would subscribe and leave a rating and review.

Ratings and reviews allow the podcast to be seen by more people, which will help me achieve my goal of helping as many others as we can to get started in the house flipping business and change their lives.

Click here to rate and review our podcast! :)

Not sure how to leave a rating and review? Click here to view the instructions (it only takes 2 minutes)

How to Subscribe to the Podcast

There will be a brand new episode every single week, so be sure to subscribe and receive each episode as it’s released.

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The post Episode 39: [Marketing] How to Determine Your Target Farm Area w/Lamar Cannon appeared first on Flipping Junkie.

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Show Notes

Melissa and I generate all of our deals almost entirely from marketing to motivated sellers. When I got my first call from my motivated seller marketing I froze….

I actually threw the phone to her for her to answer! She fumbled through it but we learned a heck of a lot from that first call.

It takes time to build up confidence when talking to motivated sellers. These 15 questions that I cover in this podcast episode will help you trim the time to develop awesome motivated seller talking to skills.

It’s important to go into each phone call from a seller with these 4 goals in mind:

1. Determine if a deal is even remotely possible (focus on what is owed… not what their asking price is)
2. Determine how motivated they are
3. Build rapport
4. Schedule an appointment immediately

The 15 questions talked about the podcast episode are presented in the order they should be asked. There is a reason for their ordering.

The biggest focus is on building rapport and getting information about their situation that they wouldn’t give something that is just hitting them up with questions without being conversational.

Enjoy the episode and be sure to down the PDF checklist of the 15 questions to make sure you ask them in the correct order.

Download The 15 Motivated Seller Question Checklist

Get this form and print out several copies to keep on your desk for when motivated sellers call. You’ll be glad you did.


Recommended Books

Links

Websites built with the years and years of experience talking to and working directly with thousands of motivated sellers baked right in.

LeadPropeller Real Estate Investor Websites

Please Rate and Review

This is my simple request: If you enjoy the podcast and look forward to hearing a lot more episodes, I would be very grateful, happy, beholden and otherwise indebted to you to rate and review the podcast on iTunes.

It’s your choice and I do not want you to feel at all obligated. But I’d love it if you would subscribe and leave a rating and review.

Ratings and reviews allow the podcast to be seen by more people, which will help me achieve my goal of helping as many others as we can to get started in the house flipping business and change their lives.

Click here to rate and review our podcast! :)

Not sure how to leave a rating and review? Click here to view the instructions (it only takes 2 minutes)

How to Subscribe to the Podcast

There will be a brand new episode every single week, so be sure to subscribe and receive each episode as it’s released.

subscribe
iTunes Subscribe on iTunes Stitcher Subscribe on Stitcher

The post Episode 38: [Marketing] What to Say to Motivated Sellers w/Danny Johnson appeared first on Flipping Junkie.

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