Click Here to Sell Your House Fast

Close this search box.

Episode #32 – I Have Some Good News & I Have Some Bad News

Episode #32 – I Have Some Good News & I Have Some Bad News


Welcome to another episode of EarlToms podcast. Today we’re going to give you some good news and some bad news.

I’ll start with with the bad news, the market is about to hit a freefall, it’s already started, I’ve already seen it. I’m already taking part in of it. One example that I’ll give you is that about eight months ago, I had a seller call me. And he had a house that was basically completely beat sideways had a lot of clutter, it was gonna need $40,000 to $50,000 worth of renovation. And he said he couldn’t sell it to me at the time, because he was asking $25,000 for it. Which was too expensive for him the area because it’s mainly a section eight rental area in my market. So we didn’t come to an agreement at that point in time. But one thing that always tell everyone is that email, automated follow up, he wound up getting an email. And then he came back and called me again and said, Hey, I’m asking $9,000. So he dropped his price, basically $16,000 in a matter of, you know, eight months. But to cover myself, I went ahead and took a contractor that I work with all my renovations out there, because they’re more up to date on what materials are actually costing, because it’s actually gotten to the point now to where I’ve actually personally going to Home Depot and created a pro account, and started going through the store, scanning all of the barcodes to try to stay more current own the price changes. And what would have been a $40,000 to $50,000 renovation eight months ago, the contractor basically told me yesterday standing in front of the seller that it would cost $75,000. Today to do the renovation because of material cost. So we wound up basically offering $2,000 for it. And he’s actually considering it, I don’t ever pressure anybody to sign at that point in time. I do take contracts with me, but I don’t ever pressure someone to sell me their house. I like everyone to always, you know, have their own decision and come to it freely. But that’s the way that I do business. I’m not telling you to do business. My way. It’s just it is it’s just my way. But to give you an example, a sheet of plywood, you know a year ago was $15 – $20. Right now, it’s $11 for a 2×4. A year ago was $1.99 – $2.99. Something in that range. Today, it’s $11. So the inflation that we’ve had in the last three, four months has really accelerated cost of goods, whether that be gas building materials, you name it. They they came out with the with the stats for January all new construction. And a lot of people nationwide already had their mortgages set, ready to to move into a house and close on it once the once a neighborhood, you know, the new houses were built, and basically said that the builders walked away from the houses because they couldn’t they couldn’t get them built for what they had originally intended to sell them. And you can find all this information. It’s online. You know, some will say Google is suppressing bad information for a particular party. I don’t know if that’s true. I don’t care. I’ve seen the articles. The evictions and the foreclosure. And the forbearance moratorium expires on March 31. So, once those expire, if they’re not renewed, then you are legitimately falling off the cliff. Now, while that’s bad news, because you never want to see someone suffer. It’s not humane. If you get enjoyment out of seeing someone suffer. I would probably say you to go get some help somewhere. Because you, you need it, but it opens the door, in real estate to make a lot of money, do a lot of deals, because you’re going to have those desperate sellers, because I’ve already heard the desperation and some of the sellers voices that have been calling me in the last two or three weeks. It’s not a pleasant conversation. But it’s a necessary conversation because you’re still there to help. So even though it may be a bad situation, you need to make the best of the bad situation. But you also need to be realistic about what’s actually what’s actually going on in the world.

So if you’re not staying up to date on market conditions and things that are affecting the market, then you’re missing opportunities, because one thing that you need to realize and is going to have a very big impact on the market itself is what I said in some previous episodes is that last summer, we missed the real estate selling season because of the virus. But what wound up happening is, is because of a lot of those, a lot of that revenue, the forecasting that a lot of these retailers and companies dependent on didn’t happen on everyone always says Christmas season is the most important. It doesn’t even compare to the real estate selling season, because of the amount of money that is spent, whether it be plywood, two by fours, a couch, you name it, every single disposable good is in a house. So if you’re not turning over houses every year, then you’re really hurting the economy. So what’s wandering up happening now is you’re having that inflation take hold. And the Fed came out last week and said, we’re just gonna watch it, we’re not gonna do anything about it. So you know, until weeks a month, a two by four, maybe $20, I have no idea it might be five, but I doubt it’s five, it’ll probably be closer, you know, to the $20, then it wouldn’t be the five based on what’s going on right now.

But you have an opportunity. And that’s the good news. And what I’m going to kind of focus a little bit more own, because no one really likes, you know, bad news. But the good news is, is if you play your cards, right, and you’re smart about it, this is where you can really set yourself up, everybody was out there trying to do deals when you had a good economy, you can, you know, you don’t have to be political or anything like that. But if you can actually admit that under the last administration, it was a good economy, then you need to go back to economic school and, and look at things gas was low, inflation was low, prices was low. There was a lot of activity in the market, consumer confidence was at the highest recorded level since it’s been recorded. So that’s why you had so many people getting new jobs and the unemployment rate went down is because they were they were confident in the stability of their bank account. Now, all of that has changed. And whether that’s the new administration or hangover from the last administration, I have no idea I don’t care. But what you need to focus on now is how you’re going to set yourself up. Now when I first got into the investing slash wholesaling, was about 2009. So we were kind of coming out of the foreclosure crisis back then. And I took a lot of what I had learned as an appraiser and applied it, you know, to investing and wholesaling. just starting out so I wasn’t your typical wholesaler or investor just starting out already had a lot of real estate knowledge. I didn’t necessarily have the knowledge of how to do deals. But I had the real estate knowledge I had the foundation that I could build off of. So what I wound up doing was, is in some ways turning into the package person. You know, it’s good to do these one offs, that that’s your bread and butter that’ll keep the bills paid. I’m not telling you to avoid it. But what I would recommend everyone do is learn the package product. Because you’re about to give a good bit of them hit the market. I’ll have one last week call me, he’s still asking too much for it. But he’s throwing it out there. So he may be one of those that comes back in eight months, you know, and he’s realistic, you know, then but in right now he’s not. But what I’m getting at is, is how you set yourself up personally. Because it’s easier when you do packages versus one offs. And what I mean by that is, let’s say you get a seller that has five houses, you figure out a way to get the deal sold for three of the houses, or for the houses, to where one of those houses is essentially free, and you still put money in your pocket, as part of the deal.

So let’s say that you give a seller that this got five houses. And just for easy numbers, let’s say that he’s asking $250,000 for every house, I mean, from from the package. So you’ve got, let’s say, five houses that are occupied, they’re rented this and that. So now you’ve got $250,000, that you have to give to the seller. But to sell four of the houses, let’s say you go get $260,000 out of it. Well, now what you’ve done, if you put $10,000 in your pocket, plus a house that’s producing you income, I wouldn’t necessarily save go and do the houses that are vacant, because it’s going to cost you money to renovate them. And with the building material cost, right now, you’re going to spend a lot of money. So when you’re starting out learning the package part of it, it’s better, in my opinion, to get the ones that are already occupied, that are producing income. So that that way, the money that you have to spend on them is minimal. And in that way, even if your tenant only pays you for six months, there’s still six months worth of income. So even if you turned around and sold that house for $5,000, if they disappeared in the middle of the night, so be it, it’s still all profit, or you go in and you renovate it again. And you start collecting, you know, ran again, because it’s free, it was free to you, when you got it, you had no acquisition cost whatsoever for that house. Because what you wind up doing is putting your acquisition cost against that $10,000 that you had, that you left the closing table with, because you bought it for $250,000. You sold for it $260,000. So you left with $10,000 and a house, this is going to become easy to do, as the market comes, what I’m trying to remember, some of the deals I did.

The most I’ve done in a single day of basic, basically double close, assign whatever you want to say, is 13. Two different times in the same day. Now, if so bigger packages, but I had to go back and draw from them, you know, every two weeks or a month or something like that. But same day, same closing, I’ve done 13 twice. And I think I wound up keeping three of the 13 houses on each deal. So when you’re putting these together, you’re not necessarily keeping the one that is the best. Now you can if the numbers, you know allow for it. And it makes sense to an investor, you can actually keep the best sometimes, you’re typically going to get the middle of the road if not the worst house out of the packet. So I’m not saying that you need to, you know, buy five and sell for every single time. Sometimes they’re just better to pass it all the way through. But when you come on those opportunities to where it makes sense to hold a house 2, 3, or 5 out of the package because you can get it sold and still put money in your pocket. That’s what you want of doing. So there was one time that a seller had three houses. One of them was occupied, two of them were vacant. So I wound up selling the one that was occupied and I kept the two that were vacant, and I made 20 something thousand on the sale of the house. That was shocking. apart, so I had enough money to go in and basically get one of them somewhat renovated, to get it to produce money coming back in and in the form of rent. So you have to make sure whatever, if you, if you get five houses in and you have an idea, I want to keep one of these, you need to make sure whichever one you’re going to hold back, you hold it back from the very beginning, you don’t throw out five houses and say pick four, you don’t give your your buyer an opportunity, you know, pitfall, because they’re not going to do that. When you give the buyer a choice, you’re basically killing your deal. Because they’re gonna have all this to think about as a puzzle. How do I put it together? Do I want all five? Here’s all you know, these are the four I won’t and then they go do their inspection. They’re like, No, I don’t want this one. Let me go back and get this one. It just causes too much headache. So you, if you if you know, you can get four of the five sold for a higher price than once you’ve got them under contract. So you can make money plus keep a house, you just put those four out there and say, Hey, here’s four houses for $260,000. You know, let’s move the clothes. Let’s get him. So it’s, it’s easy to do. But what I would what I would tell everyone to do right now is whenever whenever you know you’ve got a seller that’s calling you, you always ask Do you have any more? Just ask that question? Do you have any more that you would like to sell, you’ll be surprised right now. What they’re doing is they’re selling the ones that are the headache firms, they’re just trying to free up some cash doing their very best to hold on to what they have. But they’re not going to be able to, they’re not going to be able to keep it and going after a short little polls, to deal with my dog. But to make sure you are able to put enough money in your pocket to be able to do those deals and handle any type of we’ll call it renovations repairs, whatever it may be, that is going to come even if you buy a rental house that’s already got a tenant in it, you know, the toilet may break, the site may leak, the roof may leak something may happen to where you need to actually spend some money on it. So you want to put a little bit of it, you have to make money at the closing table to be able to do these in the right way. Or either they’re going to come from your normal operating of the business, and it’s going to be an unexpected expense that you weren’t necessarily prepared for. So it’s going to wind up coming from your marketing dollars, your SEO, your ability to pay rent, whatever it may be. So if you can actually do a deal to where you can keep a house and put put money back in your pocket to kind of handle those expenses, if they show up, then you don’t need to do it. My model is, in these times is for every two houses that I sale, I want to keep one that’s the goal, it doesn’t always happen. But that’s the goal of what I actually try to accomplish. Because if I can sell two houses, and keep one, then I know I’m getting them under contract for the right price. And I’ve got a happy investor that’s buying from me and they’re basically funding my ability to be an investor as well without me having to go get loans and these things, you know, that’s that’s how you build your, your cash, and your rental portfolio or your flips or whatever it is that that you decide that you want to do. It’s, it’s not if you have the mentality of I’m just going to wholesale, I’m going to go get my $5,000, $10,000, $20,000 a deal. And that’s all I’m going to worry about. You’re never going to build any wealth, you’re not going to do it because the dollar fluctuates the dollar is always going to be worth less be worth more people now that actually have money, this inflation is irrelevant to them.

But people like me or you that you know need to go fix something at our house. What should have been $100 in materials is now $200 – $250. So now can we actually even afford to do and that is where the markets heartbreaking. And you start seeing foreclosures show up people losing their jobs because you know, the raids in the corporate tax. And no matter how you feel about that, the less the tax of people and corporations, the more money they’re able to put in their pockets, and the more they’re able to enjoy their life, the more they’re able to do. So if you raise taxes on people or corporations, they can’t, they can’t make it, they can’t put as much money in the bank every month. So they’re going to be stressed out, they’re not going to be able to hire someone to fill a position or they’re not going to be able to do a renovation, it’s always it’s got a triple a trickle effect to it. But people that have money, they could care less, they just they look at it as an opportunity for them to make even more money. And that’s why you’ve seen the difference in the middle class is because you have a very big transfer of wealth. That started after the foreclosure crisis, when you know, the the current medical programs you call it came out. I mean, just for an example, when they first came out, I was paying $200 a month for a private policy. I’m over $600. Now 10 years later, for no reason whatsoever, I go once a year, I’m a pretty healthy person. So for me to be over $600 a month, just to have insurance and only go once a year. And I’ve done that for about the last 10 years, you would think that they would have some kind of, I don’t use my insurance discount. But you don’t get that when it comes to health insurance. So that’s an extra $400 – $450 out of my pocket every single month, just to have insurance. Now, you can argue everyone does deserve to have, you know, medical care, you’re never gonna hear me say that they don’t, I’m not smart enough to figure out how everyone could have medical and good medical, not VA medical, that would be a Medicare for All. Because if you want to figure out how that works, just look at how the VA functions. So anytime the government controls something, they pretty well destroy it. And that’s just, you know, that’s an argument for another day. But that’s the, you need to look right now with the market as as the whole, you need to start doing some research on how you’re going to start marketing, for packages, how you’re going to start approaching a seller that has a package, and then how you’re going to turn around and fit the package to a buyer for more money and be able to keep a house, that way, you can go ahead and start building your own wealth, get you a solid foundation, because if you start having rental properties that are producing income every single month, now that that mentality of Oh, I’ve got to go do a deal, I’ve got to do a deal, I’ve got to do a deal. You know, you still need to have that because it brings more money in but now you have a little bit more peace because now you have, you know, five houses that are rented for $1,000 a month that you know, you know, you’ve got five houses with $1,000 a month coming in.

Now what I always do with mine is I run my the rental part of the business on 30% occupancy, because I will never have 70% vacant. And then that way 30% goes to the managing the running the expenses, things like that. So let’s say for example, if I get $10,000 in every month on rent, only $3,000 of it is used. It’s almost like they tell you to put you know, have a savings account and forget it’s there. So $7,000 of that $10,000 is forgotten like it’s not even there. It’s kind of like a rainy day fund. Or I use it to build more money to where if I come across another house, I can go buy it. That’s not going to work for everyone. But if you get into that mentality of you know, hey, I’ve got $10,000 coming in on rental income. So I’m gonna run that part of the business on $30,000 $7,000 you know, goes into the piggy bank and then when you turn in, you know If you think about it, you know, in easy ways, in seven months, you basically have $50,000. So, you know, a little over a year, if you’re saving $7,000 a month, all for that, you’ve got $100,000, that’s what’s going to give you the long term success.

So right now, with the market breaking, you go ahead and kind of get your mindset to where these packages are going to be the difference in setting yourself apart, and setting yourself up for the future. Because it’s, it’s going to wind up being easy. If you do it the right way. To get you some long term generational wealth that you can pass on to your kids or, you know, whatever your goal may be, this is the time the where it happens. Because when the prices are low, it’s easier to move properties, kind of do sleight of hand with sales prices, and stuff like that. So it becomes a, you know, if you’ve got $1,000 rental, but you can sit there and turn it, turn it over to another investor for $60,000 instead of 100 they’re still going by that. So why not hold one of them back yourself because you know, they’re still gonna buy it at $1,000 a month on, you know, $60,000 purchase price. Now, I hope, I hope that made sense to everybody, the it’s the good news and the bad news.

But like I said, this is a, this is a point in time that you need to prepare, because you’re gonna have some very uncomfortable conversations that you haven’t had in about 10 years. If you’ve been in a business, you know that long, but the ones that can get through it are gonna be the ones that you know, they are the ones that that really set themselves apart. I wouldn’t focus too much on this is a $50,000 house but I can only make so I can only give you $25,000 for it, because I know I’ve got to turn around and sell it. You know, for $30,000 to be able to keep on don’t focus on that focus on the package, let it work itself out. Because not you don’t need to keep a house with every single package that shows up the packages that you need to keep a house in, they will present themselves to you without you actually having to do a lot of negotiating or anything like that to be able to get them to that point. So with that, we’re gonna we’re gonna draw to a close for this episode. If you if you want any more information about how to grow your business, you can head over to to With that, we’ll see you in a couple of weeks with a new episode.

Thanks for listening

Episode #32 - I Have Some Good News & I have Some Bad News

Sell Your House Within 7 Days!!!

So what do you have to lose?

Give us a call at 205-715-8201 or fill out the form to get started.

Sell Your House the Hassle-Free Way