UNIN 12 | Fix And Flip

How You Can Fix And Flip Around Market Shifts And Why Local Flippers Are Crucial To Solving The Inventory Crisis With Kurt Carlton

  The state of our economy today is an open book and we see the hit everywhere. But how has it been in the real estate space? Specifically, how has it been in the fix and flip niche? In this episode, Kurt Carlton, President and co-founder of New Western, talks about market shifts and the several factors affecting the real estate market. He also shares insights on what the current inventory crisis is really looking like. Tune in and learn more about initiatives for fix and flip developers and how you can battle inflation and hustle your way to the top. — Watch the episode here   Listen to the podcast here   How You Can Fix And Flip Around Market Shifts And Why Local Flippers Are Crucial To Solving The Inventory Crisis With Kurt Carlton Welcome back to the show. Thanks for coming back. I am joined by a good friend, Kurt Carlton. Kurt, thanks for stopping by. It is a pleasure. Kurt, take a minute, say hello, and tell a little bit about you and New Western. We operate a marketplace for investors to find houses to rehab. We do it in 20 states and we will be in probably 10 or 15 more. We are expanding rapidly. A lot has changed since 2008, but we have been doing this since 2009. I remember when you started and it seemed like bad timing to me, but I am very impressed with what you have done and the marketplace you have developed. I want to get straight into some content here. The first segment is Bottom Line Upfront. What I do is I give each guest two minutes. When I was in the Marine Corps, I used to brief generals. I always said, “You do not bury the lead. You give the general the most important information up front in case mortar shells come in.” What I am going to do is I am going to give you two minutes to talk to the readers and pontificate about what people should be thinking about, what they should be looking at, any data that is interesting to you that you are watching that you think people should watch. Things you think they should be doing or maybe some things that you have seen in the market that you think people should not do. Bottom Line Upfront, go. There a couple of big things. It is getting exciting again. Inflation is the big one. That is what everybody is looking at. Nobody seems to share the opinion on how to measure it, but it is here and it is big. Warren Buffett famously said in 2012, “The biggest hedge against inflation is the 30-year Fannie Mae mortgage.” It is a perfect defense against inflation. Even though rates are higher, you can reset your mortgage rate if rates go down through a refinance, as long as your financial condition stays the same. You cannot repurchase a home again later, if the price increases. I do not think that there is a future where home price appreciation starts to go backward rapidly. Inventory is at such an unhealthy low number. It would be unreasonable to think that you are going to lose home value. I think we will be just fine on homes. That is very much separate from a lot of the other concerns in the economy. I think what is different in this potential recession that we are going into now is, in the past, we did not have as much warning and the Fed did not do as well in giving us a warning ahead of time. They did not communicate as well. When a recession or these issues were nigh upon us, they had to react. What they are doing a really good job of is communicating so that the market can understand where we are heading and can slow down before they need to raise rates. I think that is already happening. We are narrowly looking at a soft landing as opposed to a hard landing, but we will see. I would continue to buy real estate. I would certainly leverage fixed-rate mortgages and debt whenever you can. That would be my advice, given the lack of inventory we have now. You brought up the dirty word, Fed. You said they are doing a good job. You may be the only person I have heard say that, but you are right. They have given us a heads up. Interest rates have doubled, but they have doubled from not even the bottom of the basement, like under the basement, under the foundation piers, down into the Earth’s crust. You brought the crystal ball segment of the show up earlier. Do you think that still rates could still go up? The idea is that they will continue to increase. If you saw it in 2018, we had the same issue. Rates went up and then they reversed it. Who knows if that is going to happen? The inflationary pressure is different than what it was in 2018. Nobody knows where we are going to go, soft landing, hard landing. Your teeth are on the edge. If you push too far, it is like a chain reaction. Everybody goes. I listened to Ben Bernanke in 2008 about how that was potentially avoidable, which I am not sure I believe. It was right before he handed us a signed book and all that. Maybe he was trying to save us. Everybody complained so much. They drove it to happen. Nobody knows, but what is different than it has been in the past is the Fed does a lot more forecasting about what they are going to do. That allows the market to react. It allows the slowdown that we need to slow down inflation and the labor costs that need to happen. I look at this more, real estate-wise, moving towards normalization and not moving towards a recession. It is inserting

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Wholetailing: Flipping Real Estate With No Money With Travis Johnson

  Have you ever thought about flipping real estate deals but don’t know how to do it? You’re not alone. Travis Johnson, a successful house flipper in Minnesota and author of the Seven Figure Flipping Book, learned how to flip real estate the hard way. With no books or training when he first started, he did everything wrong and took financial losses. Today, Travis shares his experience on how to get involved in flipping real estate deals with no money, wholesaling strategies, and treating real estate investing as a real business. Tune in! — Watch the episode here   Listen to the podcast here   Wholetailing: Flipping Real Estate With No Money With Travis Johnson Welcome to the show. With me in this episode is Travis Johnson. Travis, how are you? I’m very good. Thanks for having me here. I knew you from a mastermind but why don’t you take a minute to tell the reader a little bit about yourself? I’m based out of Minneapolis and the St. Paul area of Minnesota. I started investing part-time in real estate in 2001. I went full-time in 2016. I built my business from the ground up and doing quite well at it. I do a lot of rural investing. I also do a lot of the metropolitan where all the other investors are at. I like to start these episodes with what I call the bottom line up front. When I was in the Marine Corps, they always told us we had to tell the general the most important thing as soon as the briefing started in case he had to leave the room. Take two minutes. Talk to the reader about what you think the most important things are that they need to be paying attention to or doing in this market. That’s a pretty broad question that you’re asking me to answer but I can best answer it in regards to interest rates having a huge play. Over the last couple of years, interest rates have been fantastically low. When you purchase a house, if you had another contract and there was delay after delay, it didn’t matter. The values kept going up. It was an easy extra payday. Now, you have to pay more attention to interest rates going up. If you’re buying a higher-value house, you have to pay attention to that. The main point I would say is to pay attention to interest rates but also get out there and do stuff in regards to investing because wholetailing, which we can dive more into the show, is working well and will continue to work very well in the near future. I also have my little secret strategy as to how to invest in the rural market. We’re going to talk about wholetailing and rural markets. I love the interest rate conversation. It’s one of those things that I’m always having but let’s go back. What is a wholetail? How I define wholetailing is actual wholesaling. That’s where you get a property under contract with a motivated seller and then you’re going to find an investor that’s going to want to buy that contract from you on an assignment basis. You’re wholesaling it from the motivated seller to the end cash buyer and you’re making a fee in between. On the wholetail side of it is retail. If you take the retail side, you’re selling it to the consumer. It’s someone that’s getting a bank loan typically for the property. The property has to be in lendable condition. All the safety issues are taken off the table. Not having a collapsing deck is a good example but it is move-in ready other than it probably needs updates. That’s a good way to look at it for wholetailing. If you can do the actual wholetailing and eliminate the wholesaling part knowing that you’re going to capitalize very fast on turning around your wholesaling to a cash investor but it’s to an end-user or the person that’s going to cash you out on the retail end, you would make huge margins on your deals. How does that work? Are you charging full price? Is there a discount? What do the numbers look like? In the last couple of years, it has gone through the roof that what I thought was well over retail for a nice house. That’s what wholesaling was getting. Now, the retail price is going even higher so it’s back-filling. That’s how it works in regards to that. For me, the better answer is, for example, a house all fixed up was worth $150,000. It’s move-in ready. The paint colors are neutral. The carpet is in. The hardwood, floors are done. Everything’s fine about the property. I’ll wholetail it for $150,000. I’ll probably sell it for about $130,000 or $140,000. There is a slight discount underneath but you’re hardly doing any of the work on the inside. The nice thing is you’re getting this thing on the public market. Yes, MLS.   For some people that wholesale or assign properties, part of their problem is they can’t test the public market to get the maximum price. You’re going to have to take title to the property. There’s no way around it. Is this an inner-city thing? Is this a rural thing? Where do you find this strategy has the most bang for your buck? I’ve been fortunate to be very successful even in the rural markets. I’m doing that strategy a lot but if you want the biggest return, go to the heavy metropolitan areas where it’s a dense population. You’re going to make insane numbers doing the wholetailing strategy. How long have you been doing this? I’ve been doing it full-time since 2016 but investing part-time since 2001. What’s been the best part about it for you? The financial freedom and flexibility with family schedules. We have four kids. Being flexible with school schedules and getting everyone where they need to be, that’s what

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