How to Strategically Finance Real Estate

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Real estate investing financing

Welcome to Get Real, the Real Estate Investing Show for the rest of. I’m Lynn Voss.

And I’m Douggie Houser. Yeah. No, not sorry. And I’m Judson Voss.

This week on the show, we are really excited that we are gonna have an interview with Wendy Sweet. She’s gonna talk with us about the duly mistakes of real estate investing.

And why are you looking at me like that? Because you keep turning your head sideways. Does it sound like Lynn’s talking in like a wind tunnel?

You set me up funky here, and then you put my notes off to the side. So what do you want me to do, . Sorry, everybody. We’re gonna have some technical difficulties apparently anyway this week we got Wendy Sweet with us and she is gonna tell us about duly mistakes that people make that prohibit them or make it difficult for them to get their loans financed.

And it’s, she’s got so much knowledge it, it’ll just blow you away there. There’s

a. Pretty cool interview this week. You’re gonna, you’re gonna be really excited about it. I think we should be charging for it, but, we’re just too nice. .

Before we get to that, let’s cover some of our main, our housekeeping.

That’s it. Housekeeping. Just a reminder. The website, www.getrealrei.com. And our email address is Get Real Show. Get real rei.com. Send us an email, check out the website. We’ve got the blog there. You can get the show notes. Get, just actually listen to the shows there. Or send us an email and you can send an email to me at Lynn at Get real re i.com and just, And let me know that you think Jud mean

She’s just selflessly promoting herself though. That’s

right. Because I wanna lose you and do my

own thing. Yeah, she’s trying to go out on a solo act, right? Yeah. I’m gonna, I know I’ll be sticking around because he doesn’t know how to set up the studio, so I’ll be right

that way. Yeah. He can at least be behind this scenes guy to get my mic ready and to yell at me when I turned my head to the side That’s right.

What did we get in mail this week,

honey? Actually, I, we got some mail and I appreciate the mail. There wasn’t anything we really wanted to talk about on the air. We responded. What we needed to respond to. And we love getting mail by the way, so make sure you send us a note, any suggestions you have, any questions you have that we can get an answer for, we’ll be happy to get ’em and put ’em on the air if it’s appropriate.

Otherwise, we’ll just send you an email when we get an answer. If it’s, more of a specific question for you and answer it that way. One thing though, that it did have this week going out on some of the forums that they have out there for Real Estate Invest. There’s some good ones and we got into discussion on one of the forums.

We had a threat out there about land and getting land rezoned, and it was a good conversation and I wanted to share that. This is not in any way my idea or my advice, but we have a friend that has been doing land for getting close to 35 years now, so he’s. A decent idea. You can’t do, you can’t go and develop land for 35 years and not go broke and not have any idea what you’re doing.

you’ve gotta know how to talk with the city officials too, because a lot of getting land rezoned depends on being able to No,

they’re the ones doing it to negoti, negotiate with them. Yeah. So the question the person had was, is how do I get land rezoned? I think it’s from industrial or commercial to reside.

And my suggestion was, this is what our friend told us was go, and this is crazy, okay? This is, there’s this whole creative real estate investing thing. Crazy idea. You’ve heard people tell you, I, I financed the house this way, and they got done with it. And you thought, I have no idea what they just said.

This is one of those wild and crazy ideas that, that he gave us here. He’s a wild and crazy guy. He said, Go down to the planning depart. And say, I’ve got this land and I wanna rezone it to residential. What do I need to do now? I know that. Wow. That

just totally blows me away. Yeah.

That seems like a crazy idea there, and you’re think they wanna do anything, but we have some property that we want to do the same thing with.

It’s actually already residential and we want to split it off and parcel it, but it’s in an older part of town, so we weren’t sure how that worked or anything like that. Yeah, try

to change one lot into three is really what we wanted to

do. We took his advice and Lynn went down there. I’d recommend if you have a wife, if it’s, or if you’re a partner and the partner’s female, it’s better to go down there.

Cause all the planning guys are male. Ah, please, . They’re always gonna help you out more if that’s just how it works.

You’ve watched Aaron Brockovich too much. That’s

right. So Lynn went down there and showed the sketches of the property and what we wanted to do with it and said, What can we do?

The guy was more than happy to help. He drew out what we needed to do, exactly where the lines had to be, what kind of lot space we needed on each side. How much

road frontage Yeah. Does each lot have to have by requirement?

And yeah and then we had some land across the street from that we had talked about.

It was actually residential. We talked about getting some type of commercial zoning, like a usage type of thing for it. Not rezoning it, but just doing so. And, he gave us his 2 cents as far as what he thought the odds were and all that kind of stuff. But it’s a, it’s, it seems simple, but most people don’t do it.

They are trying to find like a backdoor way to get this thing done. Go down there and talk to those guys because here’s the magic of it. We’ve gone down there and talk to ’em and say, You’re rezoning, same situation. You go down there and you talk to these guys and you. When it’s time to go to the planning committee meeting, you know what’s gonna happen.

You’re gonna walk in the door and they know you already. They’re gonna say, Hey, I recognize you. Yeah. And when it’s time to make suggestions and recommendations in front of the board, they’re gonna go and give some different recommendation than they just told you two weeks earlier. gonna, they’re gonna go in and say, this is what I told Lynn when she was in here two weeks ago, and this is what we thought was a good idea.

Right Now it’s got a pass or it’s got a better chance of passing. when it’s the guy who’s in charge. It’s his idea that he came up with how you’re doing it

because he has to answer to the commissioners, and so he’s gonna have to go with you or he’ll be at the same meeting. Yeah. And when he talks to them, they give him some credence because they’ve been working with him for years.

He comes to every meeting with different things to be rezoned or new subdivisions going in and recommendations and everything else like that. So they. They know what he’s talking about because they deal with him

constantly. Exactly. So that was a great piece of advice and I know a lot of people say yeah, that makes sense, but so many people think they’re gonna go and backdoor it.

And you just gotta remember you’re not Walmart , maybe you are. I’m sorry. If Walmart’s commercial land use, people are listening to this show, then you are Walmart, . Yeah. Then that’s real exciting for us because all of a sudden we’ve got people that know how to rezone land better than anybody in the world.

listening to us for advice. I guess that’s sad. More than exciting . But if you’re not Walmart, you’re not trying to hoodwink somebody on something and there’s not, and you’re not going

to anyway.

And that’s not how rezoning works. Rezoning the way it. As they go, and they’ve got a very specific set of guidelines, which is this rezoning in any way going to hurt the economic prosperity of the community, the health of the community, or a couple other things that a lot of towns have, And if it doesn’t, they can’t say no to you, as long as it is a responsible correct thing that’s not hurting somebody.

They say yes, so don’t backdoor it. Don’t go and get slick. Don’t go and spend all your money, personal opinion again here, and hire some attorney that’s gonna go in or am rotted in there. Go down there first and find out, Hey, can I do this? And their odds are they’re gonna say it depends, right? Which is what the attorney’s gonna say to you anyways.

He’s just gonna charge you 500 bucks an hour to say it to you, . That’s the first thing attorneys learn in school, by the way,

the, that two word phrase.

It depends. It depends. Yeah. And the second thing they learn is billable hours. Okay. Now I’ve alienated all the attorneys out there

like we have ’em listening in the first place.

Yeah. Like that .

I write ’em a check. They’re still gonna show up. It doesn’t matter. So anyways, that’s, it wasn’t our mail this week, but I thought it was a decent tip this week.

All right, move on now. What did we do this week?

What we did this week here? Here’s an exciting one. I hate to go on a negative note, but

We were working on an eviction this week. Yeah. It was not fun. It could have been a lot worse. It could have been. And here’s how it could’ve been a lot worse if

it had to go

all the way through, or if we would’ve done it. Oh yeah. That what had it, I guess I should tell you upfront, we, we didn’t have to go through the eviction sometimes we have very specific rules, and I recommend this for everybody.

Certain days of the month. Rent’s this late. You get a letter. Once it’s this late, they get a notice to, to perform or

leave. And in our case, it’s rent is late on the fifth and eviction proceedings start on the 10th because that’s what North Carolina allows us to do. So that’s our

strict rules.

Yeah. And we don’t change it for anything. No. Unless they’ve already made an arrangement with us that they’re paying on it and that kind of thing. That’s personal preference. What made this not so bad was we don’t do our own evictions, which means we didn’t truck ourselves down to the county courthouse, fill out all the paperwork and do everything, turn it in and do all this stuff, and then when they go and pay, we didn’t have to go back down to the county courthouse, get the dismissal notice done, and get it all taken care of.

Sometimes people do that and they spend half of their month worrying about this stuff. And I’ve learned slowly, but I’ve learned that if you spend your time focusing on the bad stuff that’s happening in your business, bad things happen in your business. Yeah. Yeah. Yeah. And when we’re focusing on the exciting stuff and the exciting stuff to us is looking at new houses, selling houses, that kind of thing.

Negotiating the deals. Yeah. Things that are making us money that then all of a sudden other good things happen in the business. Yeah. We get more deals than we can handle. Yeah. So we didn’t do the evict. It. We had somebody else do it. We’re real lucky here in the fact that we have a company in town called T ot.

T SOT does eviction management for large apartment buildings. Actually they do software. And what the software does is it does the eviction when it needs to, and it gets. Emailed out to an eviction attorney in town that actually takes care of everything. So we’re lucky that TS OT is here. They actually connect us up with an attorney, but you can do the same thing.

You can find out who an attorney is in your area that handles evictions. And when I say handle eviction, I don’t mean who’s an attorney in your area that’s gonna charge a $500 to go down there and fill out that paperwork. Our attorney charges are $35 because they do an electronic filing, and they file a whole bunch of ’em at once, and it makes it much easier and cheaper.

The net effect is exactly the same, right? The tenant gets the notice. You’re kosher with the law that you’ve started that proceeding so you can get it all taken care of and get your property back if need be in a timely manner. The difference is you didn’t did nothing yourself other than send a note to the attorney that says, Can you take care of it?

Now, one of the things you need to know with these services, they need to have a lease on hand. It has to be a written lease, has to be a written lease. And they usually, if you got an attorney that’s worth their weight, it’s gonna be a written lease that they look at and say, Okay, that’s good, because they don’t want to go for $35 and file this.

And have it be a bad lease that they’ve gotta go and tie up their time in court And then the judge throws out the lease and you gotta start over again and everything. You don’t want something like that. So find somebody that’s gonna review it first, but not somebody that’s gonna charge you a ton of money.

Somebody like we have that. They just do a whole bunch of ’em. They get it all filed for you. They do what they need to, and then if it goes to court, they handle that and they charge us for the court part of it.

The $35 fee is their processing fee, and that’s for reviewing it and doing their paperwork part to get it into court.

Yeah. The court costs, if it had to proceed separate, we would’ve had to pay that. But that is a, that’s standard. The courts always have their, Flat fees for doing any kind of filings. So we didn’t have to go that far. It was $35 for them to just deal with the headache of filing the paperwork.

Yeah. And knowing that it got done right. And they reviewed the lease and they did everything for that.

Yeah. And it’s just, it was just easy. We didn’t do anything. Our time was not spent dealing with that. Our time was spent doing other. that hopefully will make us money. So like arguing with contractors.

Exactly. . But we can’t hire an attorney to argue with contractors. We gotta, We can, We

gotta do that ourselves. We can, but it, they charge us $500 to argue with the guy that’s charging us $5,000 to do a project. So we don’t win

on that deal. That’s not a winning situation. You’re right. No, it’s a win.

But it’s not for us. No. For both of them. Exactly. Yeah. We do it that way. It worked out so much better. It’s just so much easier. Not stress free, but it’s a lot less stressful knowing that somebody else is taking care of it. This feeds into our last week’s, what we did this week. There’s a starting to be like a trend here.

Last week we hired a property management company. And we didn’t have to worry about that stuff. We’re very quickly learning to hone in on what we want to do and delegate the rest. And delegate the rest. And what we’re learning too is it’s not that expensive. We aren’t paying this stuff out of pocket.

We’re reducing our cash flow. And there’s a huge difference between the sale because we’re still getting cash flow. Yeah. We’re still getting our money. So anyways, that we’re learning just like everybody else. We’re how to work our way in there. And I’m sure that over time that’s gonna, that’s gonna pay off for us, that we can spend more time doing other things.

Yeah. And you might not have T OT in your area, but if you talk with other people that do a lot of rentals, they will be able to tell you what services in your area do what ts O does here. You just need to ask a few people. Like I say, find somebody that does a lot of rentals and they’ll be able to help you out with.

Exactly.

So now Lynn’s gonna have the website of the week for you. And almost all the website of the weeks are either, like free information or something like that. This is actually a service you paid for, but I wanna let you know is worth it. Yeah. Before we say anything, when we say this is a good website, we’ve used them before and this is our personal opinion, is that we would not tell you about this if we didn’t a hundred percent believe in the service.

And Larry, the gentleman that runs that company and does the. They do an awesome job for what to pay for.

All right, so without further ado, the website of the week this week is dead leads.com.

Dead leaves like the thing, dead. Things that fall out the tree they rake or something?

No. Dead lead. L e a D as in dog.

s.com. What’s dead lead? What’s a dead lead? Dead lead is say you’re out. We always refer to it as driving for dollars, but driving your neighborhood and you see a house that the grass is four feet tall, the gutters have fallen off, a couple of windows are busted, you know that nobody lives there cuz that’s just not the presence of any kind of activity.

And when you try to go through the courthouse records to see who owns the property, you can find them, but they’re still showing the address of record as that house address right. You wanna find the owner of that property so that you can try and negotiate a deal with them. See, take it off their hands.

Discounted price, of course, because there’s obviously gonna be some repairs, but you wanna try and find this owner. The last known address is that property address, right? Dead leads.com. You go there, you’re, you’ll have to set up an account with them and it’s real easy to do. It’s really just name, address, email, that kind of thing.

Okay. , you tell them the property address, the person’s name. Actually you don’t, You tell ’em the person’s name that you’re looking for, and the last known address, which would be the property address, and they go and do the leg worth. I think it, the last time I remember checking it was $25. Yeah, 24 95.

20 24 95 for them to do a search. And I don’t know what they search or how they do it, but they usually say, give us 10 days. And it’s usually within a day and a half, you’re getting an email back with eight pages of tracing this person’s history for like up to 20 years. It just blows your

mind.

It’s and the key to this service Larry, the gentleman that, that runs the company, there’s some of these searches they do, they’re called skip traces. Skip Trace, Yep. Yeah. Where they go out and they, they find people for. Some of ’em do these things electronically. Larry doesn’t do it electronically.

There’s an actual person there. I’m sneaking suspicion. Larry’s the actual person, it goes out and actually does the search for you and puts that information together. He’s got one other awesome thing, and that is if Larry can’t find meaningful information for you to find that person, he doesn’t charge you for it.

I thought you had, I thought you did charge it for it. According to this website, I can ask him again. It says, Okay. He says, If you’re not happy with the information, I get you no

charge. Okay. Okay. That might be something new since the last time I was there, but I, It’s awesome stuff. You just wouldn’t believe that they would be able to trace this person back.

To childhood

practically. Yeah. We had one house that we looked at that Lynn was real excited about wanting to get and drove by it every couple weeks and she’d say, I want, I wanna find out about that. So finally she went and called Larry up and had him do a skip trace@deadleads.com for it and went back through to find out and the lady had passed away and but he had all of her family members information and their phone numbers and all this kind of stuff.

Because some, it’ll be like possible relation and it’ll list some names of some people with some names or maybe they shared addresses at the same time or something. But yeah, so

it went back through this whole thing and. , he actually helped us go back through and find out who owned the house and low and behold, the person that owned the house was the city.

Yeah, the city. And there’s a whole bunch of things. And that they foreclosed on it, I think, because they had to go out, cut the grass for two years, cut the grass,

and the taxes hadn’t been paid for eight years

and yeah. And so the city did it not. Now the funny thing is Larry does such a good job. The city didn’t believe that they owned the house.

Oh no. We had to use Larry’s information. We

had to take months. It took months for the city to figure out that they owned it. I had to call once a month and it’s are you sure? It was the acquisition people, they have cities have real estate people too. Yeah. And I just was like, Oh, come on.

We, because dead lead dot dead leads dot com’s information we were able to say to the city, No. You guys own this thing and here’s why. You, we know you own it and told them so that they could get it. It was pretty amazing, right? So that, that was an awesome thing. The service has always been worth it.

Yeah. Granted is $25, if you make $20,000 on a house, so you make $19,975 instead. Maybe you charge another 25 bucks to sell the house later and you make up your

difference. Yeah. Or you negotiate with your contractor to get ’em to do something for $25 less. Yeah. It’s an inexpensive service when it gets you the information that you need so that you can go out and make that awesome deal.

Yeah, and

maybe sometime we’ll get Larry on to explain how this works. He has some other services too, at. So now I don’t know if that’s new stuff or not. He’ll actually go out and find the property for you and he’ll acquire it too.

I, that was new the most recent time I was on there. Yeah. That was a new service that they were offering.

Yeah. So he charges a certain amount of money and he just basically goes out, buys the property or gets it under contract. That assigns the contract to you to take over the house though. It’s like

he goes out to make that first contact and see if it’s even

doable. Yeah, it was a pretty cool way to do it.

Okay. Then we’ve talked way too long and we’ve got a nice interview with Wendy Street with just a ton of information. Yeah. So let’s get Wendy in here. We’ll get into Wendy here now.

All right. We’re here today with Wendy Sweet. She’s the Vice President of Financial Help Services and Investor Rehabs Incorporated. How you doing, Wendy?

I’m doing great. How are

you? I’m real good. We’re gonna talk to Wendy today about the 12 dead, and I’m gonna have to count these too, the 12 deadly mistakes that investors make that keep it hard for them to get a.

And Lynn was reminding me earlier that she looked through the list and she knows at least three of them that we’ve done. And I think that’s just because we haven’t done it enough that we haven’t made the other nine.

That’s right. .

Now the first one I see in here, I’m actually a little puzzled by, it says, Don’t list your house on the mls.

And I’ve always been told that if I’m gonna sell a house that has to get on the. .

It really, it depends. That sounds like an attorney answer, doesn’t it? Yeah. But listing a house on MLS is, can be very detrimental to you if you ever need to refinance the house. And what I mean by that is if you are trying to sell the house, It doesn’t sell.

You find either a lease purchase person to put in there or you’re going to lease it out. You’ve decided to lease it out. Your option now is you wanna get outta that hard money line if that’s what you’re in. Or if you’ve paid cash for it, you wanna get your cash back out. The only way to do that, of course, is to refinance it.

Lenders look at these loans. And they see that it’s been listed on mls, cuz the appraiser has to tell them, they’re thinking if it’s been listed on mls, you’re still trying to sell it. You’re just trying to refinance it so you don’t have to pay the high interest until you sell it. They make money off of keeping a loan for at least a year.

Yeah. And if they think you’re gonna sell it, they know you’re not gonna keep it and they don’t wanna do your loan for you. So we’re very limited to the amount of lenders that we can send loans to that have been listed on mls. Those lenders that you can get ahold of that will do it are gonna charge you some premium interest rates.

Gotcha. Okay. So it’s just something to try to stay away from. You gotta be really sure that you’re trying to sell that house.

Okay. I understand what you’re saying. So obviously that’s a big one because you can’t really get, you can’t back down from that. You can’t fix that mistake. Can you tell us another

another thing that I think a lot of mistakes that people make is they go after houses that are what I like to call functionally obsolete. And those are the houses that are really good deals, functional, obsolete. Maybe you’re having to walk through a bedroom to get to the den or the bedrooms to get to the bathroom, or The rooms are very choppy, or it might be the smallest house in the neighborhood or the largest house in the neighborhood.

It may be the only four bedroom house in a two bedroom neighborhood. It may be a one bedroom, one bath house. Everything’s based on comps. When you’re trying to do a refinance or a purchase, everything’s based on the comparables that the appraiser can pull on that. And unless you have houses that are very similar to this particular house, You’re not gonna get good cops.

They have to have been sold within the past year or less, and they have to be within, They like to have ’em within a one mile radius. Most of the time they’ll allow you to go out to a three mile radius, but they’re really trying to stick within that one mile radius. So if you’re gonna have a difficult time finding cops to make proof what that house’s value really is, lenders aren’t gonna wanna.

So you gotta be really careful about the functionalism of that house. Okay. And can it be fixed? Gotcha. Okay. Is it a functional thing that can be fixed? Can you change that from walking through the bedroom to get to the bathroom? Is that something that can be fixed? If not, it may be one you wanna pass to somebody else.

Gotcha. Like the one I saw today that was listed and said, Unique floor plan, that’s probably gonna be one I wanna.

That’s like when you see the pictures of a real pretty woman. And then when she gets old, they say that she goes from exotic to bizarre

I haven’t heard that one

before. You gotta be careful about that. Keep that in mind.

No I see another one on the list here is being in the wrong.

Yes. There’s a lot of people who are getting into investing and they just wanna get some deals going. They just wanna buy a deal. They wanna to, to jump out of the, in, into the frying pan and get right into the business.

They don’t actually sit down and figure out what their goals are. If your goal as an. Is to get quick cash in the bank. You’re probably going to buy houses, fix ’em up and sell them really quick. Which tells me you need to be looking in a neighborhood that’s a retail, a neighborhood.

We’re actually getting ready to refinance a a couple that just brought a house to us. They’ve had it listed on mls. They can’t sell it and they can’t understand why. Where is it? It’s in a war. Okay. You’re not gonna retail a house in a war zone that’s a rental area. So you wanna

look and see the mix of ownership Exactly.

Before you get into that deal.

Exactly. You’ve gotta make sure that the neighborhood fits what your exit strategy is. , right? Your exit strategy is everything. So you’ve gotta make sure that neighborhood fits whatever your exit strategy is. So if you’re planning on renting property, then buying a rental neighborhood.

If you’re planning on retailing it, make sure it’s in a neighborhood that’s gonna retail quickly. Okay? More easily. Okay.

That makes sense.

It don’t make sense until

Yeah, until you pull the trigger. I know. I’ve got

it .

And we’ve told people that too. It doesn’t matter how many books you read and how many tapes you listen to until you go out and do it and decide you’re gonna forget 50% of all that good advice.

That’s when you really. Sometimes you, at least I need a little pain before I actually go and do something

like that. . I like to try and avoid the pain, but one of the luxuries I have of being in the business I’m in that I, see so many loans come across my desk when so many deals come across my desk, is that I see these mistakes made every day.

By people that have the best intention and have gotten so, so much education under their belt. I, myself make these same mistakes and I preached. And I still make the mistakes. Yeah. One of the things that I tell people not to do is never buy more than one property at a time. I went out and bought three at the same time, and felt the pain from it.

One of the deals I ended up losing money on because I couldn’t get to them all. Yeah. You gotta practice what you preach.

Yeah. The very. House we bought, we actually bought two of ’em at the same time. You know that because you lent us the money. I remember it very well. I sure did. No, we got lucky that they were pretty easy projects and they’re easy to manage, but it was, we didn’t need to do that.

It could’ve left a much better taste in our mouth afterwards. If

we would’ve tasted it. Could’ve had much more sleep,

right? Yeah. Yeah, one of these days. In one of these days I am gonna get some sleep too. . Speaking of the neighborhoods your partner, Larry, gave me some pretty good advice one time he said.

the best way to tell if it’s in the wrong neighborhood for you, go out there and park there at 1130 at night. And if you decide you can’t stay there very long, maybe you need to figure out another neighborhood. Yeah,

that’s a great idea that’s a great way to look at it. Yeah. That’s a great way to look

at it.

Now, another thing here, and this one’s also confuses me, is cutting repair costs. Because I’ve always been told the way that we compete or we’re competitive is by getting it at the lowest.

That’s exactly right and you wanna get it at the lowest cost, but repair costs are what they are. Okay. That’s not a gray area.

It either needs to be fixed or it doesn’t. And it truly depends on what your intention is with that house. You’re not gonna fix it up exactly like you would need to if you’re gonna rent. Rather than if you were gonna sell, If you’re gonna sell it, it better be in topnotch premium condition. Okay.

Rentals. There are a few things that you might be able to get away with. Maybe you won’t have to replace the windows right now. Something of that nature. Maybe you can paint the cabinets instead of replacing them if you’re gonna rent it out. But what I see a lot of people doing is they will come in.

They’ll look at a house, they’ll, send the contractor out there. Okay I gimme a price, I’m getting all this fixed. The costs come back and they’re like, Oh, I can’t afford all this. Instead of tiling this bathroom, we’re gonna put linoleum in it. Now, depending on the price range of the house, tile versus linoleum may make the difference whether, how quickly you’re gonna sell that.

That, that, so those little things can make a difference. The other thing is I can tell you I’ve got a lot of people that will get a loan based on doing all of these other repairs, and then when they get in and they start making the repairs, they only make about half of them. They go to refinance the house

And low and behold, when the appraisal comes back to show that whether or not the work’s been completed, half of it hasn’t been done, and that the house comes back at a lower price than they thought it would be. Yeah, that makes sense. So they’re not gonna get the money out of it that they wanted to, you gotta finish what you start right

now.

That, that shouldn’t be confusing. I hate to say this in case the contractor that I work with listens. Yeah. . I always tell ’em when we go in and they gimme the bid, I always say things like, Wow, that’s way too much. What are we gonna have to cut out of there? And because we have good contractors, They’ll always say maybe you can cut this.

And I say, Okay, let’s cut that. And they say, You really don’t wanna do that though, because it’s gonna be hard to sell the house. and I’ll say I don’t know what else to do. And I’ll say let’s see if I can lower the price for you. Yeah, , that’s a different situation. . .

Much different situation. Any good investor should do that.

That’s a great way to do it. Make them feel bad for it. Be a little careful about that too, and understand that if you’ve got a good contractor, I gotta plug people on your team. You’ve got a good contractor and they’re doing a good job for you, pay ’em what they’re worth. Yeah, Ev, everybody should be success.

Successful in this business. And I see a lot of people making mistakes by trying to get an appraiser to, to not charge them full price for the appraisal or, really get their contractor to come in at a lower price. He’s gonna use a different subcontractor to get it done and the quality’s not gonna be there.

There all kinds of things you need to really, be careful of what you’re gonna cut and when you try to.

Yeah. Okay. Now another thing on your list is off of those subjects a little bit, is maxing out your credit cards. And I assume you mean don’t max ’em amount?

Yes. We’ve got several people that will come in.

They’ll do the hard money loan or maybe they’ll pay cash Yeah. For their property. And when they go to refinance that, low and behold they have put the charges for the repairs on the credit cards. Okay. 30% of your credit score. Is counted by how much available credit you have on your credit report.

And if you’ve got a credit card where you have a $10,000 limit and you’ve gone from owing zero on it to now owing $7,500 on it, your credit scores are gonna drop. And what does that do for you when you go to refinance it? You’re not gonna qualify for the kind of one that you were hoping you were gonna qualify for because your scores are lower, pay higher.

Your, Yeah. Your interest rate’s gonna be higher and you may get hit on the loan to value that you can get, instead of getting 80%, you might be limited to 75 is that you can get Wow. That’d be even worse. . Yeah. Which could mean you’re not gonna get the cash to pay the credit card back. Okay.

Yeah. In the first place. So you need to avoid that. And one good way of getting around that Judd, is to make sure that credit cards that you do get them in your company name. You can get a Lowe’s card in your, in a, in on a business account. Okay. And a Home Depot on a business account that will not show up on your credit report.

No, I didn’t know that. You sure can. I’m writing that down. When you start an llc, this is in some of Tom K’s information. I don’t know if you’ve heard of Tom Kish. That’s k i s h. And in fact, Larry interviewed him on Brain Pick a Pro on our larry goss.com. You can get on and listen to his interview there.

But one of the things he talks about is how to get credit in your business’s name. Now, when they qualify you. Your credit, they will pull your credit scores to qualify you, but they won’t report it on your credit report, and you are held personally accountable for it. Okay? But again, it’s not showing up on your credit report.

And the way to do this is as soon as you start up an llc, the secretary of state of your state sells your information. To all these credit card companies. Yeah. And you’re gonna get in the mail several applications for credit cards. Fill ’em out and send them in. At least send in one or two. I wouldn’t send in any more than one or two, and you’ll be surprised at how much credit you can get extended to yourself.

Cool. That’ll do it online. Okay. He says, Don’t do it online. Do it through the paper application, and you’ll get a much higher a much higher limit.

I’m gonna stop throwing those things away. I

have to say it’s true. I’ve done it myself, and it works. Okay.

I’m gonna give that a shot. I’ve never thought about that.

We get ’em all the time. We have a couple different corporations and, they’re constantly coming in the PO box.

Yeah. And take one and just fill it out and see what happens. Now while we’re talking about credit and mentioning credit I, let me mention. Thing about closing credit accounts on your credit report.

I’ve talked about how 30% of your credit score is based off of how much credit you have available to you. A big percentage of that 30% is also longevity. How long you have had those accounts? All right. And they would much rather see an account that you’ve had open forever and ever at a zero balance than if you were to close it out because the longevity gives you.

It makes you a valid credit person. They are thinking, Hey, look, they’ve got a good long history. They’ve got all this credit available to ’em for this amount of time, and they’re not using it. Great discipline on these people. Let’s give ’em good scores. Okay? That’s the way they’re looking at it.

Okay, so

it said, The old on the American Express card, when it says since whatever year, it’s supposed to make everybody feel good. It actually does. That’s

right. Okay. It really does. It makes the credit score. See, there is something valid there. , . It does, it works. And it’s something you should take advantage

of.

Okay. Now the next one we’ve got a problem with because I I’m playing hooky from work today, and I see you on there quitting your day job, which I’m not quitting by day job. Cutting it short, weekly

quitting your day job is all about the timing. Okay. There’s a lot of people that think they can get into investing and that they’re going to buy houses and become a landlord so that they can quit their day job and they think they can do that by cash flowing a hundred to $150 a month off of 10 houses.

Okay. It doesn’t really work that way, and I know that you’ve been in the business long enough ju to know. Not the case. Yeah. That $150 cash flow that you’re getting off of the, house ends up not really being $150 because you’re gonna have vacancies and other repairs when they move out, and it really cuts into your profit.

So it’s not as much money as people think it is when it’s coming in. And people wanna quit their day job if they’re buying and reselling properties, cuz you’re, you’re getting 15, $20,000 with every house that you sell. That’s great and that will keep you going. But the one thing you need to remember is unless you have been doing what you’re doing in that business for two years, you will not get a loan.

You won’t qualify for loan. You’ll have to go in as what’s called a no doc, which. I don’t have a job. I don’t have any money. I’m not gonna tell you how much money I’m gonna make. I want you to qualify me just because I have great scores. Great scores. You’ve gotta have at least a six 80 or higher. In most cases.

You’re gonna have to have a seven 20 or higher. And then you’re gonna be paying premium interest rates, very high interest rates to get those types of loans, and they’ll also cut your loan to value. If you can prove your income or prove that you have a job, which is a stated income, you qualify for a hundred percent.

All day long for a non-owner occupied property if you’re a six 80 or higher. Higher. Okay. If you’re a six 80 and you’re a no doc person, we’ve got one lender we can send that to get a hundred percent. Most everybody else is gonna do it. 90. Okay. So you’ve really gotta be careful about that.

You’re really gonna hurt yourself in qualifying for loans. You’ll have a little bit of cash in the bank, but certainly not enough cash to pay cash pay, Pay cash for all your deals, right?

Yeah. Okay. So keep the job, at least until you’ve been doing this for two years. Two years,

that’s the magic.

Okay. And then you can go crazy after that and get as many loans as you want

That’s exactly right. And being in the business means, from the first day you closed on your first house. Okay.

So it’s not, you don’t have to be it full time and somehow get the money. It’s you’re doing a part-time for two years and then you’re good to go. That’s exactly right. Okay. That makes sense.

And I think if anybody has the discipline that they can last for two years doing it part. Did they deserve to be in it. Yeah. And going full time is probably not that bad at that point in time. That’s the truth. .

That’s the truth.

Okay. Wendy, we’re gonna take a break here cuz we’re running a little over on time and ask you to come back next week and finish off the second half of this.

Sure.

We’d be happy to. Okay. Appreciate it. Thanks.

Since we had to cut Wendy’s short there this week, I just wanted to let everybody know Wendy’s contact information. You can tell from talking to her. She’s very helpful. So if you have any questions, anything like that, just give Wendy an email. It’s Wendy Financial Help Services dot. And that’s also their website.

So they can go over there and check out all the different loan products. Their website is awesome. Yeah. But Wendy at Financial Health Services and she’ll answer whatever questions you might have. And that’ll do it for this week. So until next week, remember, get real.

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