How Your Profit Margin Compares To Your Margin Of Safety With Logan Fullmer

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If you just found a good deal but got stuck with legalities, you can’t miss this episode of Uncontested Investing! Logan Fullmer joins Tim Herriage and shares his journey from managing construction in the oil field to finding real estate success through discounted deals. Not too long after starting his real estate journey, Logan saw himself earning over a million dollars on a single deal! Tune in as he talks about how he invested in educating himself about property codes and researching case law and some insights into how curative title work and resourcefulness have helped him take calculated risks between profit margin and margin of safety and closing deals at discounted prices.

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How Your Profit Margin Compares To Your Margin Of Safety With Logan Fullmer

Thanks for stopping by. Logan Fullmer is with me. Logan, how are you?

I’m great. Good to see you.

It’s good to see you. Logan is someone I have been watching on social media. You are putting on these big seminars that aren’t typical seminars. It’s to teach people, which I find interesting. Why don’t you take a minute and tell people a little bit about yourself?

Thanks for letting me come. This is fine. I enjoy doing this stuff. It’s become part of things I’ve done over the last few years. You get busy working down in your lane and it’s neat to share if I know what else going on. Here I am. I do some educational stuff. I have been anti-guru, and anti-real estate education because there’s a bad name. I do have a very unique component to my business and it always blows people away. I’ve spent more and more time talking to people and giving advice on sharing information online. I’ve gotten literally hundreds of people asking for this content.

After a couple of years, I finally decided, “If I can do this, make a little bit of money doing it but deliver what is the best amount of information I can I will do it.” It’s curative title work. This is stuff nobody cares about, except for when you can’t close a deal. The title company says, “Where’s your Schedule C, so and so? You got to fix this.” It’s either simple. The title company might help. You got to call a lawyer or even the attorneys throw their hands up. That’s when I show up.

I’ve seen some of your deal numbers. We are going to get into that in a little bit. Some people are like, “Title work.”

Why do I care about the title? Do you want to buy property at $0.10 on the dollar? They care about title work.

Everybody cares at that point. One of the first things we do every week is what I call the bluff, the bottom-line upfront. What that is? I learned at the Marine Corps. I used to be brief generals. They always said you had to give them the bottle upfront in case there’s a mortar attack or they have to get up and leave the room because generals get busy. What I like to do is I’m going to give you about two minutes and tell the audience the most important things they should be doing, looking at, watching trends they should be following the most important things that in your mind people should be watching in real estate. Two minutes you are on the clock.

One of my favorite things to tell people is your profit margin is also a convertible margin of safety. I’ve never heard anybody say it that way but that’s how I think about it. When I go into a deal, what’s most important is to say, “How am I going to lose my money? How am I going to risk principle?” That’s the first rule. If I can measure all my risks, attach dollar amounts to them, and decide that I’m not going to lose any money, then I realize there’s an investment thesis here to build on.

From that point, we start talking about maybe making some profit? How’s that going to look? What are the risk components? Can we afford all these things? It’s looking at the margin of safety and the profit margin, which are the same thing. It’s profit when things are going well. It’s a margin of safety when things go bad. It operates together. I look at that with real estate businesses, other businesses through manufacturing businesses or other operating businesses we own now that it came from our real estate.

Are you an attorney?

No.

How can you be smart enough to do curative title work without being an attorney?

The way folks do that does a good job in formal education. I struggled in school big time.

That’s the most common thing for our guests.

I did badly in that format. I took seven years to get a Bachelor’s degree. I got bad grades in high school. I run into problems and didn’t like the answers to those problems. I have a bullheaded attitude of, “I’m going to fix this at all costs.” I had to learn as I got older that all costs aren’t always the answer but you can go deep. I spent the time paying lawyers to teach me how to read the Property Code, the State’s Code, the Tax Code, and the Probate Code and taught me how to research Case Law. Once I realized that’s where these answers would come from, that’s where I started digging. Every time I would have a problem, I would go figure out how to solve it and hire an attorney or attorney team and say, “I need you all to litigate this. Here’s how we are going to do it.”

You mentioned something earlier to me about the oil fields. Were you solving problems out there too?

No. I was trying to make a living. I had mediocre jobs. A buddy of mine from college. I was in a tough spot in life trying to figure out what was going to X. He calls me and said, “Do you want to come and make $100,000 a year?” That’s more than double that I ever made in my life. The next Monday I was there with my bags and my truck abandoned life.

I spent five years working out there. That was a life-changing experience for me. I started managing small projects and large $20 million, $30 million, $40 million, and $50 million construction projects, infrastructure construction, pipeline, and stuff like that. That was a huge deal. That’s how I came from the oil field. I started doing real estate shortly thereafter.

I see land development and building houses. You are kicking office there in San Antonio. Talk about evolution. You came out of the oil field and all of a sudden over $100,000 with the real estate. Talk about evolution and progression.

When I was working in the oil field, early on in life, I inherited a little bit of money. I thought, “It was great. I’m rich. I’m going to flip some houses and do some cool stuff.” I didn’t do a good job with it. I ran out of all of that money. At that point, I’m like, “Crap. I have to get a job.” I hadn’t worked in two years at that point. It was those listless things.

I get a job in the oil fields and start making real money but I’m earning at this time. I remembered how fast it went and I thought, “I’m scared. I’m going to lose this again. I can’t let that happen.” I’ve lived in the RV in the main camp and literally say everything after paying my taxes for two years, I didn’t spend a nickel on myself but I started to see some growth.

At that point, I thought, “I don’t want to risk this capital.” That’s why my investment thesis had never resting principle, which is what a lot of the Wall Streeters have as their number one rule was so important to me because I have been poor before. I will be poor again, so I can’t raise my capital. I started to look for opportunities and got a couple of rented houses. They did good. I would go work for 2, 3, or 4 weeks in the oil field. I would come back to San Antonio because that was the big city that was near me. I would come work there. I found these little vacant lots are selling for between $3,000 apiece. You could get it to house up to $20,000 apiece.

I would go work for a month, month and a half, come back, buy some real estate and go work for a month, month and a half, come back. I got to the point where I had a couple of dozen of those. I had invested about $300,000. That’s about all I had made. I was able to save in those five years. I got a call from this realtor. The real oil field is certain to get shaky 2014 range.

This realtor calls me and says, “My client was already $200,000 for that lot.” I’m thinking, “I will get $300,000 in all of them.” I’m about to get my original investment almost back. That also tells me the market has moved. I didn’t have a clue. I have been laying pipelines and buying. I’m not even looking at the market. I’m buying this stuff knocking on doors. That was the big game-changer that said, “I’m onto something here.”

You probably end up with $3 million or $4 million with real estate. You are like, “I will get my $300,000 and it’s protected. I’m not going to lose it.”

It exactly did what you said. Not too long after, I started going to do some flip houses and foreclosure auctions. I’m going to my office in the oil field business since I moved to the office in San Antonio. I go in there and shut the door. I’m looking for real estate deals, calling title companies like doing work. I have to go have a meeting for the oil business and come back. One day, this guy that I hired to help me, was so aloof to what was going on. They came in and had him fire me. That was when I thought, “I sold that lot. I got a couple of bucks. I can live for two years without making any money. Let me go try to make a living in real estate.”

What are a couple of things we are going to talk about next?

We are going to talk about curative title work and folks want to get good deals, good market, bad market, whatever. What are you going to do when the market changes? All this stuff doesn’t matter if you have figured out how to buy property at extreme discounts. Everyone is telling me, “What happens when the market crashes, what are you going to do?” I’m not getting anything. I can’t sell these properties for a 100% fair market. I will sell for 80% but if I’m buying them for 30% or 40%, nothing changes in our business.

You told me that I could buy houses for $0.30 on the dollar. Inflation has been a little wonky lately.

I don’t look at the dollar now because that discount doesn’t matter.

Let’s talk about, Aunt Mary leaving the house to Susie and Jane. Aunt Mary was married five times and nobody can tell us who owns the house. That may be too complicated.

That does happen.

After many years in this business, we’ve seen it all but there are a lot of deals that you hear about. You are so busy with other things and we tend to walk away from them. Why don’t you lay the groundwork for some things that people can maybe be on the lookout for that would tell them there was an opportunity there.

Usually, the best opportunities are for me when someone is talking about a deal that they tried to sell multiple times. Realtors will call title companies. I get local judges, attorneys, anybody in the real estate field, and wholesalers. They said, “They had been trying to sell this forever and they can’t.” That’s usually the calling card for why can’t they? If I can solve the can’t, then I got something there.

What are some of the reasons they can’t?

I call those unresolved orphans to states. Judgments and liens that are showing up on Schedule C, the title commitment. You’ve got breaks in the title chain. When you bought your house, let’s say that deed didn’t get recorded but you went and sold it before they are doing the way they did title insurance, all that now. You gave a deed to the next guy and now he owns it. That’s missing a deed. There’s a break in the title chain. That’s got to be resolved. That’s another one. You’ve got unreleased mortgages, deeds of trust, security instruments, and things like that. Those are huge.

Let’s talk about that. If someone owned a house, let’s say before the ’08 financial crisis, and that lender is no longer in business, how do you track those people down?

I stumbled across this because I was irritated one day. No one could give me the answer. I figured this out a few years ago. I got on Google and fixed the problem literally on Google. A lender had made a loan. We thought it was transferred but there’s a transfer filed in the land records when the ’07 and ‘08 crash deal happen. I looked him up on the FDIC website, a Federal site, and it looks like their assets were forfeited. They were not assigned to a new lender.

What that means is the bank is out of business. I don’t know why but assets weren’t assigned. There’s no one that can make the claim for that unpaid mortgage. There’s no person that can make that claim. I take that, print it out, take it to the title company and say, “You should feel comfortable writing title on this because you will know that no one will ever complain about that mortgage because they are forfeited in 2008.” They are like, “I will take it on Schedule C.”

That’s got to be like a shady title company. It’s not Fidelity or one of the big guys.

Think about this. A lot of people miss this part. The title company isn’t about risk. It’s about a known risk that’s happened in the past. Every other insurance we have is about formulated, calculated, potential kinetic risk. A guy got a DWI. He might get another one. Jack is right up. We know what the risk is here. We know there’s a break in the title chain. We are not getting sure of that because someone would probably make a claim on that.

You are ensuring the past, not the future.

It’s more known. There are more facts. When you are telling me, “This bank has been forfeited for fifteen years.” Do you think someone is going to open that bank up, go find the fifteen assets that they screwed up on and come sue you fifteen years later? That isn’t happening. When they realize there’s no risk, it’s all right.

We find 123 Lender XYZ. Do we go all of a sudden start searching the title records for every lien they still have and start chasing those houses?

That’s an interesting idea. I’ve not done it that way.

Let’s talk about 3 people who inherited the house and 2 who want to sell it. How do you fix that if one says, “No, I’m staying here forever?”

I normally find that the toughest meanest person is the one that ends up in the house if you are in that situation. They throw everybody out and say, “Get lost.” Not often they are the most responsible. They are not usually paying their taxes on time. They are not maintaining the house. It’s rare that you find a beautiful palace, all paid up, and the person was one-third. It doesn’t happen like that. You have a lot of problems.

Usually, you have legal issues. You’ve got titled problems, delinquent taxes or deferred maintenance. When that happens, there’s a section in the Tax Property Code Section 23. It’s partition real property. That is an absolute right in Texas. The judge will order that to be sold. Even if it’s homestead, even if it’s not, for whatever reason, there’s no protection to permit Section 23 for selling it.

If they are heirs, if it’s not two people who made me go buy a house together, we are co-tenants. If it’s air co-tenants or Section 23 A of the Property Code that was amended in the last few years and that’s under the Uniform Partition of Heirs Property Act, that’s a partition of heir’s property. That one has a little bit more steps but it’s still an absolute right.

You will still sell it. If you were to buy interest from a couple of people, go to the last person and say, “Let’s work this out. You have been taking advantage of them for a long time. Let’s cut a deal.” 70%, 80% or 90% of the time, you can cut a deal. The other 10% and you follow lawsuit. The judge will sell it and you will split the baby.

We can’t be splitting babies on the show, Logan. I go to the heirs’ numbers 1 and 2 which are reasonable.

They are probably frustrated because they have been beaten up for a long time.

Do I get a deed from them? Do I go to a title company? What’s the step there?

I tried to buy those through title companies early on when I encountered some of these problems. The title company will not insure undivided interest. They only insure a whole interest. The problem is you have to buy for cash and get title insurance. In our office, we do ourself a lot of times. We have some attorneys that do it for us. It’s an opinion of the title, your name, and your title abstract. You are going to issue your opinion and title, who the owners are, and why. You are buying that way. You are not getting title insurance.

You got to have some cash to do this.

That’s an interesting point. You can’t use debt for these kinds of deals now.

As the Executive Director of RCN, I don’t like those deals.

I will tell you what you would like once I’m done with these, I go sell them and they are insurable. I would say 8% or 9% of the buyers are buying ranches, commercial offices, and flip houses from me. They are all coming for debt, every one of them.

Let’s talk about judgments and liens. A judgment for a credit card, how do we take care of that?

The first thing I do is look at it and say, “Is this the exact same person?” Just because it says John Rodriguez that might not be our John Rodriguez. Half the time, those will come off by the seller signing an affidavit of an identity saying, “That’s not me, different number, different Social, whatever,” that’s half the time. Another time, we will look for errors or mistakes on it. Sometimes you can get a strip that way. Those judgments and liens usually only hold up for about ten years.

Title companies put those on your Schedule C but I always look at the date it was recorded first. The first thing I say is, “This is fifteen years old. Remove it.” I’m like, “Why didn’t you put it in the beginning? There are a lot of deals I find that are clean but titles put that crap on there. Someone calls and says, “This deal is a mess. It can’t sell. Do you want to buy it?” I’m like, “I want to buy this,” because I see it right there.

I’m guilty of that. They send me Schedule C. I see a lot of junk on there. I don’t even look at the source documents.

They will come off that way. Another thing is once that thing is a couple of years old, those creditors will take pennies on the dollar except Toyota Motor Credit. If they are reading this, they should be proud to have incredible debt collectors. Nobody settles with them but everybody else will settle for a good deal.

I heard Amex is that way too.

I haven’t done much with Amex. I don’t know. It wouldn’t surprise me.

I was telling you earlier about that house I bought in San Antonio. We had bought it and there was an old lien. It was a mechanic’s lien on a roof. They are out of business. I can’t find them. It was one of those nondescript names. It was like Tim Smith, “We can’t find Tim Smith either.” How do you get those to go away?

A lot of times on something like that, those aren’t expensive. Most of the time, those are going to be default judgments. You are going to find yourself a $2,000 petition. I wouldn’t go into spending a ton of time making it strong. I get a Statute or Case Law. I don’t know whichever one it is for that cause of action. Follow the thing. You will probably get a default judgment that cost you $3,000. It will take you 3, or 4 months to get it because of the timeline. You are going to have to be an alternative service, which is a publication by citation probably. Sometimes the title company won’t want to insure a non-personal service judgment, a default judgment. They won’t insure it for four years after the judgment because there’s the timeline statute.

You know it. You can’t remember.

They can appeal to that. Sometimes, with the title, you will wait four years. Sometimes the title company looks at the facts and says, “They have been out of business for five years. You did good service. It’s fine.”

What about when everybody is getting along and they want to sell but there’s the black sheep of the family that no one can find? What do we do about that case?

I will ask myself that a lot. I got guys beyond my office now. That’s how we find those dudes or gals. We found people under bridges and in shelters. We found people in Peru, Canada on vacation or Switzerland. They are everywhere. You have to do some serious resource digging, but that’s usually the linchpin. That’s the last person. Everybody else is ready.

We’ve done deals for twenty owners and they can’t find the last guy. I go ahead and tell him, “I’m going to spend some heavy resources. I’m going to be hiring two private investigators in Peru to go find this dude.” You all think he’s there. If he isn’t there and they got to go to Guatemala, we are paying people over there. This can get expensive.

That’s where I make my business case. This house is worth $100,000. We all know that. We have all been trying to sell it for $80,000. It didn’t work. “I’m going to give you $30,000.” “I’m sorry. I might only give you $20,000,” but I don’t know what’s going to happen on this. I give him $20,000 cash. I will buy their interest and go looking for that dude.

Logan, it’s time for the Money Minute. You are going to look straight into the audience’s eyes. You are going to tell that younger Logan, that Logan had to go to the oil field. You are going to spend 60 seconds teaching, telling or sharing with him what he needs to know now and what needs to do differently. Let’s go.

Logan and everybody else out there who’s in the exact same spot that I was when I went to the oil field to try to figure my life out. What’s important to know is everything is going to be fine. You care. You are a hard worker. You are very interested in this and going to work. You are going to do everything they tell you to do. You are going to be a servant, helpful, care every moment of the day, and not going to argue and complain. You are going to learn to do exactly what it is they want. What’s going to happen is they are going to start to get better self-esteem.

You are going to start to learn how to operate with other groups. You are a start save money because you’re not going to be an idiot with your money. As you get through that process, you are going to grow exponentially here. Along that way, you are going to be making the stride and becoming the man that you always thought you wanted to be or who you were but you didn’t know it. You are going to become that person. That’s why we go to the oil field or any other place like it.

That was a special time because I was nervous, worried, and lost self-esteem. I made some major mistakes in life. That was the one time when nobody knew who I was. I showed up with my shirt tucked and got this new haircut, no more spikes. I covered up my tattoos in long sleeves. I said, “Yes, sir. No, ma’am.” I’m going to do whatever these people say or what they want.

It’s like you went into the Marines. You are like, “Yes, sir. I’m here.” I did exactly that. I was there for four and a half years. I started at $80,000. When I left, I was making $200,000 a year. It was a manager-level position and was drunk. He would spend his retirement before I’m through the oil field. That was a life change. I’m sure in the military, they like different manners.

It was such an adaptation phase from having someone to tell you what to do all the time and that money was coming every other week. They don’t teach you how to pay your bills. My credit went in the dumpster. The two years out of the Marine Corps were the worst for me. I was trying to get back. I tell my kids that all the time. We are going to get rapid-fire in a minute. It’s important that everybody out there knows you don’t have to know where you are going. You have to be going somewhere.

I tell people all the time, “What do you think is the best advice and whatever?” I don’t even know where I’m going sometimes. I know that I will wake up in the morning and I don’t know what’s on the activity list but I go do a lot of stuff. I stay busy and work hard. I think things through and try to effect change in our companies. It keeps getting way better.

My son went and played college football, dealt with some injuries, decided he wanted to transfer to Oklahoma State and thought about walking on but he started flying because he thought he would be interested in it. He loves the idea that you only have to work ten days a month as a pilot. I don’t want my kids in real estate. This business is hard. It’s done a lot for me and my family but I want them to be a more fun manager-type mindset. I want them to learn that making their money works for them quicker than I learned how to because I’ve spent the first 35 years trying to make that bag.

Trying to make it and figure it out. I tell people all the time I have been the guy that was at the AT&T store and waiting for it to open. I go pay my bill to get my phone turned back on. That was the two years out of the Marine Corps. They don’t teach you to pay your bills. I liked what you said, believe in yourself, and keep moving.

It is going to be all right. A lot of people don’t know that until it is all right.

All the success stories have a failure in the way. I told my son, “You are on a journey. You got to decide where you are going and start going. You may be heading towards San Francisco. You may get to Denver and go to Jackson Hole. You may get to Jackson Hole and decide you are going back to Chicago.”

I like that you are supporting him on that now because when I was a kid, nobody told me like that. I had to figure this out by my mid-30s. What’s neat is you are telling him that. At least, he’s got the concept and the care.

We spent a lot of time in our twenties beating ourselves up because we think we may see those people that we look up to and they’ve got it all together. I tell them all the time, “You don’t want to be me. You want to be where I am now. You don’t want to ever go through what I went through. You want the easy button. Life is not a commercial. Rapid-fire, what’s the biggest mistake in the business?

The biggest mistake in the business is not giving enough respect to risk. There are several times when I lost massively. I lost $54,000 on one deal. I lost another in smaller but those affected me hugely. I’m glad I did it. I’ve learned a ton but I didn’t respect the risk. I was looking at the profit. I forgot about the risk.

What is the most you’ve ever lost in the deal?

I lost $54,000 on one deal, $70,000 on another, and $80,000 on another.

I don’t trust anyone. Whoever sits in that chair and says, “I’ve never lost one.”

That’s not true but I’ve done that. I’ve also made over $1 million on a single deal. It’s gotten to the point, those three deals. One of them happened early. Two of them happened in 2021. There are litigation strategy deals that got to the point where I could still win them. I knew I was going to have to bury a ton of capital. The biggest problem was more of my time.

I walked back up to the table and said, “I’m sorry. I picked this fight. What I got out of this deal, I’m going to give to you all. I’m going to give you all those other taxes. All those are things that I paid as a gift and I’m out.” They were blown away. They still can’t figure out to this day why this business decision. My dollar per hour is plummeting. I had great deals sitting here on my desk waiting.

Too many people don’t value their dollar per hour, time or value of money. Another thing I would like to talk about and you just said it. A mentor once said, “Tim, sometimes a good deal is getting out of a bad one.” Often, we can’t swallow if we made a mistake.

You’ve already made the loss. The loss has already happened. It’s on your books. Even though you haven’t entered it yet as an accrued loss, it’s there. The difference is you need to realize it quickly so that it won’t grow anymore because it continues to grow. The quicker you realize it, the quicker it stops growing on you.

One of my favorite sayings in this business has always been, “You can’t rehab your way out of a bad buy.” We want to keep pouring money into it. You may get out of it or you may break even. What opportunity did you miss?

It’s great content. A lot of people talk about it but rarely do people truly practice that. I’ve started to look at everything I’m doing, “What’s my dollar per hour here?” I’ve started doing that in the last few years. I was starting managing multiple companies and it’s allowed me to affect money in a much faster, more efficient way. If it’s not important, I take it on my list. Until somebody sends me a notice, I don’t care.

One of the most impactful statements anyone has made on my business mindset almost from a point of validation was, I was in Manhattan one day, having drinks with one of the gentlemen from Blackstone. It was when I was running B2R Finance. I asked a question. I don’t even remember the question. I remembered the answer. He goes, “Tim, we know we can only be right 70% of the time. The key is to acknowledge when you are wrong and stop doing it.” There’s so much power. They are the smartest people on Earth. I’m amazed at Blackstone. I give them all the credit in the world but they are like, “We can’t be right all the time.”

The whole thing and I loved the culture. It was like fast executioners of even their own ideas. As an entrepreneur, we have these squirrel moments and like, “I’m going to start selling water bottles.” Five minutes later, you are like, “No, that was stupid but I own 7,000 water bottles now.” Go give them to the homeless shelter and be done with it. Let’s wrap up. Tell the audience how they can do business with you or get in touch with you?

You will find me on Facebook under @LoganFullmer. On Instagram, you will find me as @The_Real_Estate_Junkie. I do have some links to some of my education, and some of the curative title work stuff, I started producing instructional videos on that. You can find those there. If you have problems, contact my real estate office. We started looking at other stuff but mainly Texas, call the office and ask for one of the partners.

There are guys who will get on the phone and talk about your problem and figure it out. We are not like attorneys we are going to charge you for every moment. What we will do is if it’s an easy solution, we will tell you the answer. I don’t care. We love doing this and are serving folks in so many different ways. We will help you. If it’s a situation where the business case warrants that we should be involved, we will tell you. We want to make you an offer for that position or participate. We will tell you right then too.

You’ve got resources now and a deal partner. I appreciate you driving up for this. I can’t think our guests enough for their time and energy. If you are reading, pay attention to this man, follow what he says. Be nice to yourself and believe in yourself. I’m reminding you your network is your net worth. You have been growing both. We will see you in the next episode.

Important Links

• Logan Fullmer
• @LoganFullmer – Facebook
• @The_Real_Estate_Junkie – Instagram

The following podcast program is furnished by RCN Capital LLC.  The information provided is for general educational purposes only and does not constitute any legal, tax, financial, investment or other professional advice. The views, thoughts, and opinions expressed of any speaker are the speaker’s own opinion and do not represent the views, thoughts, and opinions of RCN Capital LLC.   No information contained in this episode should be construed as financial, investment or legal advice from RCN or any individual, author, host or guest. You should always consult a financial advisor before investing.

• Curative Title Work
• Discounted Properties
• Insurance
• Judgments And Liens
• Property Codes
• real estate