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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