A wise man once told me…
“The less I do, the more I make.” (my mentor, Ron LeGrand)
Well, I took that to heart.
But it wasn’t just him that I learned this from.
Even Robert Kiyosaki, author of Rich Dad Poor Dad, told the story of how his Rich Dad gave him some similar advice many years ago:
“If you want to be rich, you need to be lazy. And if you want to be REALLY rich, you need to be incompetent, too.”
It’s An Amazing Time To Be Alive
The internet has changed our lives in ways many people never could have imagined.
Old Way: Remember when you had to actually go to the library to research something for your term paper, and look things up in encyclopedias, and keep all those little 3×5 index cards with your notes and citations and stuff?
New Way: Now we just go to google and access the sum of all human knowledge at our fingertips.
Old Way: And do you remember when we had to actually go to a store to buy something we wanted? Drive to the store. Physically find the item in the store. Look at it. Pick it up. Try it out. Bring it to the cash register. Buy it. Take the paper receipt.
New Way: Now we just click a few buttons on amazon and it arrives at our doorstep a few hours later.
Old Way: And do you remember when we had to actually go look at houses, visit with sellers, estimate repairs, make offers, plunk a wad of cash down to buy it, borrow money from loan sharks…
Driving for dollars. Direct mail. Networking. Bandit signs. Cold calling. Texting. Ringless Voicemail…
Focus on just one or two markets, preferably your local market, compete with every other Tom, Dick, and Harry Wholesaler out there, work with a realtor, build up a cash-buyers list, go to REIA meetings…
Man, that seems like forever ago.Yes, we’ve come a loooong way in the house-buying business.
New Way to Buy & Sell Houses For Profit:
- Place a tiny little ad online.
- Property owner in some random town from across the country sees the ad and calls you.
- Read the script to them.
- Get contract signed via email.
- Sell the deal.
- Receive wire into bank account.
I’ll be totally honest here. It’s actually kind of boring.
It’s gotten so systematized that the business basically runs itself now that I’ve delegated pretty much everything to one good assistant.
Am I rich?
Eh… I guess some people would say so, but it doesn’t feel like it.
I had this idea in my head of what it was going to be like when I reached a certain level of success, but now that I’m there, it’s kinda like, ok, what’s next?
Case in point — my wife just confirmed I was going a little crazy when I told her I wanted to pay over $3,000 to go to Vegas for a 3-day seminar where I could learn how to make money in sports betting using statistical analysis and the phases of the moon to predict outcomes.
Sounds like a joke, but I’m dead serious. I might still do it. We’ll see.
Anyway, I digress…
Back to the real reason you’re here — to learn how I flip houses over the internet in random towns I’ve never heard of before.
Now, you’ve probably heard of “virtual investing” or “virtual wholesaling”. In fact, my friend, Cris Chico, coined the term “virtual wholesaling” probably 10+ years ago.
So the idea of doing a deal in a remote location isn’t what’s so new here.
The new idea is that instead of picking maybe one or two remote markets to do deals in, now we just target basically the whole country.
Actually, there are about 15 different states that are best to target.
What this has done for us is:
- Essentially eliminates competition from other investors and wholesalers.
- Allows us to deal only with the MOST motivated sellers (skim the cream off the top of the entire U.S. housing market).
- Enables us to do more deals with less hassle, and less hustle.
Of course the flip-side of it is you have to be ready to do a deal in middle-of-nowhere Texas or somewhere if the opportunity presents itself.
But let me ask you — if you had a $30,000 check waiting for you RIGHT NOW in a town that was 1,700 miles away from you, but you had to get there by the end of the day to collect it, would you figure out how to get there ASAP?
I hope you say yes.
The good news is that you don’t have to actually GO to that town to get it. We do everything over the internet now (kinda like how we buy nearly everything else over the internet now, too. Thank you, Amazon).
In fact, we just picked up a deal in Ty Ty, Georgia that we’re planning to turn around and sell for a tidy $45,000 profit.
Have you ever heard of Ty Ty, GA?
I hadn’t either. I had to look it up.
Maybe I’ll go there some day.
On second thought, probably not.
So obviously, we’re talking about a whole new business model from the traditional real estate investing business.
I call this new model…
The “Flip-Skimming Method”
I don’t know, it was the best I could come up with, alright? 🙂
See, because you’re skimming the cream off the top of the whole U.S. to find the best fli-… oh never mind, you get the picture.
And don’t get any ideas, I’ve already registered the domain name. Haha
Now, there’s a few key components to doing this.
And they really boil down to three key shifts you need to make in your mindset about real estate investing in general.
Ready to dive in?
Ok, here we go.
Shift #1: The house really just does not freakin’ matter.
I know this is going to really mess some of you guys up. Especially if you’re coming from the fix-and-flip crowd, or any other kind of “conventional” real estate investing.
But one thing I’ve come to realize after doing a great number of deals is that the house itself has very little to do with the outcome of the deal.
It’s all about the financing on the house.
And when I say “financing”, I mean the numbers. The economics.
Because even if you’re dealing in “all cash” deals where there is no actual financing involved, well in my opinion, even “all cash” is a form of financing (albeit one of the least advantageous forms of it, but we’ll get to that in a minute).
Remember that movie, The Founder, with Michael Keaton, it was the story of Ray Kroc and how he built McDonald’s to the empire it is today.
Well there was a scene in that movie where Ray had a paradigm shift which finally made his business skyrocket.
And that was when he realized what business he was really in.
You see, Ray thought he was in the hamburger business. But in reality, he needed to be focusing on the underlying asset, which in his case was the real estate.
Similarly for us as real estate investors, when we stop focusing on the hamburger, I mean the house, and instead start focusing on the underlying asset, which in our case is the financing, then our business can start growing exponentially as well, just like McDonald’s.
Houses are hamburgers.
The money is in the financing. Whether it’s all cash, or no cash. It’s all about the financing.
Because think about it — who’s got all the big skyscrapers downtown?
And what game are the banks playing?
The financing game.
They care not about the house.
They care about the financing. Flows of cash in and out, stretched out over really long periods of time, or transferred and moved around in really short periods of time.
And so if the house doesn’t matter, because the house is just another hamburger, and the real money is in the financing and the economics of the deal…
Do you really need to go see the house anymore?
And if you don’t need to see the house anymore, and you’re not going to move into this thing yourself, and you’re just going to turn around and re-sell it soon after you buy it, then…
Does it really matter where the house is located?
Are you following me here?
Because if it doesn’t matter where the house is, then all of a sudden you can make money on deals no matter where they are.
This opens up the entire country for you to do deals.
You can basically “skim the cream” off the top of the entire U.S. housing market, and only do the deals that are the absolute highest profit and lowest hassle.
I’m telling you, this is probably the mindset shift that’s had the biggest impact on my success that I’ve had in my 10+ year career in real estate investing.
Because when you can do a deal in middle-of-nowhere Nebraska, and still make money by simply making a few phone calls or putting up a few online ads…
Then all of a sudden you can take yourself out of the local hustle and grind altogether.
Because nobody else is doing this.
The entire conventional world of real estate investing — wholesaling, landlording, rehabbing — is stuck in the old way of doing this business LOCALLY.
Meanwhile we’re over here doing more deals with less hustle, less hassle, and less drama, all across the country.
Ok I think you get the picture here. Let’s move on to the next shift you need to make…
Shift #2: Don’t EVER hunt or chase deals. Let the deals come to YOU.
I don’t know, maybe you’re already doing this, but I doubt you’re taking it to the level you need to.
You see, there are basically two ways you can get deals –
Brute force or magnetism.
Brute force is what most investors do.
Cold calling, direct mail, door knocking, networking, making offers, calling realtors, etc etc.
It’s like pushing a wet string up a hill with your nose.
Imagine spending weeks and months walking through every single neighborhood in your target market and knocking on every single door and asking the owner, “would you like to sell your house? Let me make an offer to you.”
Sounds ridiculous, right?
Even if you only knocked on the doors of home-owners you’ve identified as possibly being “motivated”, it’s still relying on your 1:1 efforts.
This is the essence of “outbound marketing”.
There is very little leverage in that, or no leverage at all — even with direct mail, which I know some of you are thinking is leveraged (it is, but only slightly).
The opposite of brute force is magnetism.
Magnetism is when you engineer systems that run without you to attract and disqualify home seller leads all on their own.
This generally involves letting the world know what you do, and letting them respond by raising their hand and saying, “I’m interested in doing business with you, let’s talk.”
This is the essence of “inbound marketing”.
Now, so far, nothing too earth-shattering here. Inbound vs. outbound marketing.
But let’s take it a step further.
When a home-seller responds to one of your marketing messages or ads, most investors and wholesalers say, “ok let me put some numbers together and make you an offer and we’ll see if you want to accept it or not.”
If you’re truly using magnetism instead of brute force, this is totally backwards.
Instead of making offers to sellers, let the seller make the offer to YOU, and then you tell him whether or not you’re going to accept or not.
This is called a “Reverse Offer” strategy.
Because the easiest way to get numbers on a deal that work for you, is by politely and subtly letting the seller know that you’re ready to walk if he doesn’t give you a number you like.
You’ve probably read the book Never Split The Difference by now. If you haven’t, I highly recommend it.
The big takeaway from that book for me was this:
Negotiation is the art of letting the other person have your way.
In other words, whatever numbers you and the seller arrive at, the seller has to think that it’s THEIR idea.
So how do you do this?
By asking the right questions, in the right way, in the right order.
Another thing my mentor, Ron, taught me was, “What comes out of your mouth determines what goes into your bank account.” (Write that one down.)
If you go verbal diarrhea and start asking the seller if he’d take $X for his property, or if he’d do this or that, you have killed the deal because you are essentially BEGGING.
Begging is probably the single biggest deal killer of them all.
And you won’t even know when you’re doing it.
If you’re saying a number first, or you’re explaining or teaching the seller something, or you’re asking if they’ll do this or that, you are begging. Period.
Instead, we simply ask the seller, what’s the least you’d take for the property? Is that the best you can do? So you’re saying if I don’t pay you that amount, you’d rather not sell to me?
Or if it’s a seller finance deal, what’s the least you could take on the monthly payment? Is that the best you can do? So you’re saying if I don’t pay you that amount, you’d rather not sell?
Are you starting to see a pattern here?
Of course there’s a little more to it than that, but I think you get the gist.
We ask questions to get the seller to make an offer to us, and we tell the seller yes or no whether that’s going to work for us or not.
We don’t come back with counter offers.
We just tell the seller we can’t do it, and let them negotiate against themselves, right there on the phone.
In other words, we basically force the seller to make an offer to us, instead of us playing the game their way and having us make an offer to them.
You have to remember — YOU are the one who’s doing a huge favor for THEM.
They’re the ones with the problem.
You’re the one with the solution.
You need to engineer your entire business to utilize what I call the “White Coat Effect”.
They are the patient with stage 4 cancer coming to you for help.
You are the doctor with the miracle drug that can save their life.
Why on earth would you put up with any crap from them, or play the game their way?
Now that doesn’t mean you shouldn’t have a good bedside manner. There’s no benefit to getting argumentative or rude.
But that doesn’t mean we have to cow-tow to how they want the deal to go.
For example: we don’t write up the actual purchase agreement until we know it’s going to be accepted — I’m too lazy to do a bunch of paperwork for no good reason.
We don’t put more than $10 earnest money down on ANY deal so we’re not putting anything at risk to help them out.
We don’t put any less than 90 days to close so we’re not operating against short deadlines.
We are the ones in charge from start to finish.
Is this starting to make sense now?
If so, then let’s move on to…
Shift #3: There’s more than one way to skin a cat.
I mentioned in Shift #1 that “all cash” is probably the least advantageous form of financing.
Well, to do an all-cash deal, you know you need to get a big discount, right?
You’ll hear it all the time from the conventional real estate world:
“Every good deal starts with a deep discount.”
Let me illustrate…
Would you ever buy a $250k house for $300k?
Well what if I told you the seller was willing to let you pay him off over time at a rate of $1/mo until paid?
How about now?
If you don’t say yes… well, I don’t know. Maybe there’s hope for you, but probably not.
So not only is the idea that “every good deal starts with a deeply discounted price” patently false, it’s probably severely hindering your success.
You see, most motivated sellers out there today simply don’t have enough equity to give you a big enough discount to make the deal work as an all-cash deal — wholesale or fix and flip.
So what do you do, just throw the lead away?
You gotta be able to handle any lead that comes your way.
My business partner, Jeff, and I call this skill “Transactional Engineering”. (We’ve got a whole podcast and youtube channel on this stuff, you can look it up later.)
Ok so if you can’t get a big discount on a property, either because there’s not enough equity, or the seller just wants too much and knows he can get it because the house is in perfect shape, what do you do?
You use what I call “Equity Injection” strategies.
These are all the creative financing tactics like seller financing, lease-options, subject-to, etc etc.
The tactics themselves don’t really matter much.
The point is that they allow you to “inject artificial equity” into the deal when you can’t get equity any other way.
Because when you sell a product (including houses) with financing built into it, you automatically increase its inherent value simply because it now comes with financing.
So now, even if you have to pay full market value for the house, if you can provide great financing terms to your buyer, you can mark up the selling price of the house higher than what the market would pay without the financing.
In other words, buy it for market price, sell it for OVER market price.
Now obviously, if you want to sell something with built-in financing, you need to be able to get built-in financing from the original seller.
There are a lot of moving parts to this if you don’t know what you’re doing — interest rates, amortization schedules, down payments, balloon payments, discounted notes, etc.
It’s a deep subject, one we can’t really get into in this article alone.
But you should know…
There are ways to DRASTICALLY SIMPLIFY this whole seller financing thing.
And that’s what you have to do if you ever want to get seller financing from a seller — you have to make it extremely SIMPLE to understand.
Because a confused mind says “no”.
As an example, when you’re negotiating the interest rate and the monthly payment and the amortization schedule, you can do all of that without ever saying the words “interest” or “amortization” or anything.
“Mr. Seller, what’s the least you could take on the monthly payment? Is that the best you can do? (If they give you a number you like…) Ok Mr. Seller, we’ll pay you that $X amount every month until paid.”
Now if the seller says yes to that last statement there, what have you just done?
You’ve just negotiated a principle-only, 0% interest loan with no balloon payment, i.e. no shortened deadline by which you have to pay them off in full.
I do want to make something abundantly clear here –
This is not about just doing seller financing or “terms” deals all the time.
This is about being able to take the deal whichever way it needs to go.
This is what allows you to monetize approximately TWICE as many leads as the wholesaler down the street, which lowers your marketing cost per deal, increases your profit, and puts you on the fast-track.
That being said, I’ll admit that these kinds of “terms” deals are my favorite. Because seller financing on anything makes it more attractive.
Because then you can REALLY move into the financing game and set yourself up some pretty sweet deals where you get a big chunk of cash now, monthly cash flow without being a landlord, and then some back-end equity to boot.
Are you starting to see this, yet?
This business really doesn’t have to be so difficult.
If you can embrace these three key shifts in your thinking and the way you look at real estate investing in general, then you really can turn this business into the dream business you’ve wanted it to be all along.
Ok at this point, I hope I’ve at least opened your eyes to the possibilities a little bit here.
I’ve been in the real estate investing world for a good 10+ years, and personally,
I think this is one of the best times and biggest breakthroughs we’ve had in this business in a looong time.
Because only now is the technology and the infrastructure and the culture itself getting to a place where all this is even possible.
Most investors complain about these big venture-capital-backed home-buying companies coming in like OpenDoor or Zillow Offers, etc.
But man, I am so glad these companies are out there now.
Because all the millions of dollars they’re spending on marketing and advertising has gone a long way in legitimizing our industry of professional home-buyers in the minds of the public.
Back in the day, everybody just thought we were scamming people.
Nowadays it’s all over television and it’s a full-blown career for some people. Crazy how times have changed, right?