Jason Bramblett Real Estate Talk Show. 

Live Saturday's at 9:00 AM on 94.5 FM WPTI

Expert insight into today's Real Estate Market.  Serving High Point, Greensboro, Winston Salem and the 35 cities and towns surrounding. 

 

 

Oct. 5, 2019

Home Selling Options

Jason Bramblett Real Estate Show Podcast 

Click here for link to podcast

Jason: Good morning, Triad. Hope everyone is doing fantastic on this wonderful Saturday morning and also the start. Well, we have been talking about it for a while. The start of the fourth quarter it is here. It is go time. The greatest quarter in all of business. The quarter that actually will make or break you is right here. And so, as we head into the end of the year, as we head into that fourth quarter, remember this one here also carries the greatest amount of distraction. Of course, we've got all the wonderful holidays that are coming which can throw your business sideways if you're not paying attention so that the state at the same time it is also the greatest opportunity. It really separates planned action from reactive action. If you have a plan you are your 95% ahead of pretty much everybody out there because most everybody is going to be reacting to what is going on, reacting to what has happened in this quarter. So by far the most exciting time of the year, not only from business, but of course, hey, all these distractions are fun. You have Thanksgiving coming up and also don't forget Halloween, but we've been looking at Halloween since Easter it seems like at most of these places. Even Costco put out Christmas before Halloween and I hear there's an uproar out there over that.

Keith: I saw it this weekend. It is everywhere.

Jason:  It's everywhere it is it is. It is pretty soon to be the greatest time of the year all the time. Used to be you had to go to Myrtle Beach in order to get the 365 days a year Christmas store, but it appears that it is now everywhere. So what we're going to be doing we're going to be breaking down action steps, really digging into some of the principles that will ensure that you have great success not only in your business, but also at getting your home ready for sale and really just something I've used over the last 20 years to ensure that the results that we want are the ones that we're going to achieve, and the best way to do that is to make them obtainable first and then measurable, make sure that they can be tracked and they can be conquered and that way,   every single day what you want to get done. So we do this every quarter. However, I found that it's really compounded exponentially right here in the fourth quarter. Grab your pen and paper we're going to dig into that today. You can always give us a call the office at 553-0796 or go to Jason Bramblett dot com on the top right corner. You have that little email icon, shoot us an email, and if your question is worthy of being shared on the show, I will gladly do that or if you just want to rant you can do that, too. We love all emails, good, bad, indifferent.  Believe it or not, we do read them all and we do make adjustments based upon your comments and so things you want to talk about on the show, but also ideas that well, maybe you just, I always find there's no dumb idea if you're thinking about it, there's probably a couple other hundred people out there. So just ask the question and you may be doing a great thing and helping your fellow listeners.  So joining me, of course, Mr. Keith. How you doing today? Everything good?

Keith: I'm good. I'm healthy. Finally, yes.

Jason: Yes.

Keith: Yes, got rid of the crud.

Jason:  Got ride of it.  It is it is early this year. It is early this year and the more people I'm talking to are already, well, actually I'm already hearing some people that have struggled with the flu a little bit already.

Keith: I don't think I had the flu, but whatever I had was not pleasant.

Jason: Well we conquer and move on right?

Keith: You've touched on something last couple of weeks, but this is the one thing that has really interested me. So, we talked about the traditional person puts their house up. They have people come through. They do all of that, but that's not for everybody. What if, you've talked a little bit about if you want to sell your home, but you don't want to go through the preparations. You don't want to go through the showings. Maybe you're moving for a job and you've got to do it in a hurry. I'd love to hear a little bit more about that. Because we've touched on it, but to me, it's a little different than traditional.

Jason: For sure. And the traditional is we operate under the assumption sometimes in all business that everybody wants the same product and not everybody does. If think about if you go to a restaurant if everybody just had the same chicken, well, they wouldn't be very many restaurants for one thing, but it certainly wouldn't be any, we love that variety. We love options and so why not with sales? So there's no rule, saying in order to sell your home that you have to have it listed you have to have all these different people coming through and  there is more than one option out there and that's one thing that we've done. We look at each situation, and we've got three options really that you can choose from in getting your home sold and some of them out there, yeah. Okay, we have the traditional route. Just like most everybody. We come out with a plan. We're going to bring the public through your home. We're going to do, get as many people through the house in the shortest amount of time, which should increase the demand and increase the pric. But that does not necessarily work for everybody. And then we've got investment companies and then we also invest in properties as well. So there are many avenues that we have out here of corporations that are looking for properties that they want to buy and hold and keep them in their inventory. They'll keep them as a rental property or whatever and then we also have a holding company as part of our division that we do the same thing. We buy homes for rent and keep that as adding to our future portfolio. So there are options out there. But,\ we can look at every single one to see which one fits you because one thing that I can sense a lot of owners get frustrated with is they think it's just one size fits all and there certainly are other options out there. You don't have to just have a hundred strangers coming through your house.

Keith: Well, you mentioned investment.  Now clearly the point of investment is to make money. That's why we invest our money. So are these significantly discounted prices or they aggressive in some cases? How does that work?

Jason: We look at every single angle as to what fits the owners plan. Is it discounted? There's two different ways in which you make money in buying homes. It is you buy them at a discount to turn around and resell them. So that's one type of investor. There's another type of investor that buys based upon future cash flow. And so they will they will pay a different price for the house because they're not needing to see immediate return. They're looking for a long-term plan, a long-term return over 10 years 15, 20 years. The price they pay is significantly different than that guy that has got to turn that profit. Say the next 60, 70, or 90 days. But what we really look at is what fits the sellers plan and what fits our clients plan. We've got we've got owners that they've got paid for homes, so maybe they owe nothing. They can they can really sell it at whatever price they want. It makes no difference.  We have some owners that would take anything for their house, but they have this one little problem. A mortgage, and so they can't just sell it for whatever they can get because they are upside down. We are starting to see that again in certain price points where owners that have bought in recent years bought at say a higher price. Something has changed in their in their life, in their plan, or whatever and now they want to sell, and their values have dropped back, and they just simply do not have the equity to be able to be able to sell. Everybody's in a little bit different situation, but what we look at is what's the priority for the seller? What's the purpose in, it really just come in with a simple what we say common sense we have to look at, okay, if you want the highest price with the least amount of hassle, okay, there's a plan for that. If you want the highest price and don't care about the hassle, okay, no problem. That's probably leaning more towards the traditional path. But we've also got   owners that have, I don't like to use the word neglect. Let's just say deferred –

Keith:  Stuff happens.

Jason:  Yeah, they've deferred some maintenance. If we got some money that's a got $40,000 worth of repairs that need to be done to their home because a deferred maintenance and updating, he also, most owners realize that whoever buys that house isn't going to do all that trouble and all that aggravation for free. Even if it's just a home buyer that's going to move in the house. Everybody expects to be compensated something for their time. So if you had a let's just say it was a $200,000 home that needed $40,000 worth of work, most people don't look at that and say well if I drop the price $40,00 everybody's happy. Maybe, but not necessarily. Most people really look at that as like, okay, that's just the cost to get it to zero. What about my time, effort, and energy? What about the 1800 trips back and forth to Lowe's? They want more than that even. So depending on how many years and how long you've deferred that maintenance, and we've seen it to where, sometimes, hey life happens. One of the spouses passes, and the spouse that's remaining just doesn't have the bandwidth to be able to deal with that. Maybe they did not deal with managing the house at all. And or maybe they weren't left or there's not enough funds left in the estate or in the retirement or in the life insurance to fix or maintain the house. But maybe the house is paid for. The other thing is we have a lot of folks that have paid for homes, but they have no income, or they have a very, very small income because now they're retired. Banks typically don't like to look at small income when they're looking at doing a loan. And so you may have a paid for home, but you cannot even borrow a dollar against it to make the repairs and so you're kind of stuck. Tthen the other thing, too, is we look at what is the trade. If you're going to go through all the effort and energy of updating the home, ae you going to get a return for your efforts or is it just to get back to zero. Every single one of those things we look at, and there's a system for each one of those things and that's what we've worked on for over 20 years is developing a process and a system that makes sense for that owner because not every single plan,    me coming out there and just slamming a sign in the yard, and like I said, having a couple hundred people come through your house that may be good for some but not good for all and so we've created programs and processes there that, I do not want to say it fits everybody, but we certainly do our best to come up with a plan for every single situation out there. So, if you think of this way, if your house, as I was saying say it's worth, $200,000 in you've got that forty or fifty thousand dollars in deferred maintenance, does it make sense for you to spend the money make the corrections and reap that reward of getting the house sold or does it make more sense, or does it make more sense just to lower the price? If you look at the net result of the two, it could be the same. That's what we're going to figure out is is a $40,000 discount equal to putting $40,000 in the house, or if I put $40,000 in this $200,000 example now is the house worth $225,000? Well, if it is, then you're being rewarded for your effort of basically $25,000. But maybe you don't want. Maybe that doesn't matter. Maybe you don't care. Maybe you just want to get the house sold. We have a plan for that. We have an option for that. And so, we're going to look at what best suits you as the owner but really your lifestyle and where you are. And sometimes it's I have a willing owner, but they don't have capital. Actually, we have this situation right now. We got a very willing owner that will do anything. Unfortunately, their retirement income does not allow them to really take on any debt and they have a paid for house. So, we're going to partner with them to come up with a strategy in which we're going to fix up the home to help them get it sold and so it's going to work out great for both parties, but that's an option and that's just not something that every single real estate company or agent can offer. Somebody's got to have the money to do it. Right? And so that's going to disqualify a certain number of people right off the bat. Just as it does with this particular owner. They don't have the capital to be able to make those improvements. So the good thing is we know what people are looking for. We know what the consumer wants and so another reaction we get sometimes, Keith, I'm sure you would never, you couldn't even imagine this, but people don't want to paint because they're afraid they'll choose the wrong color or they don't want to put carpet in the house because they're afraid they'll choose the wrong color or they do not want to change the countertops because they're afraid they'll make a bad decision. But that's what we're here for. We're selling hundreds and hundreds and hundreds of homes a year. We have a very good, I guess, idea, if you will, or know what's popular with the buyers and what they're looking for because we're talking to hundreds of them over and over and over again every single day. So we know what the trends are. We know the color profiles. We know what's the buzz words and what's the key words. Typically, I look at it and say well you probably couldn't make a bad decision because orange definitely is not in style.

Keith: That burnt orange style of the seventies?

Jason:  Yes, and the laminate countertops in the $400,000 house doesn't work so much these days.

Keith: The beautiful thing is, and my wife and I talk about this is we know a lot of things about a lot of things but you don't go out every day and buy a house. You don't go out and sell a house. It's a very specialized thing. So the fact that you guys have so many different options, so many different ways to go and you're experts at that, the average person doesn't know what you know. They just don't because how many times do you buy or sell a home? If you're lucky, two, three times in your life. If you're lucky five or six, but still it's not something you do every day.

Jason: Yeah, one of the things that I coach our team every single day is I say look guys, you got to think about this. Our client has either never done this or they haven't done it in ten years.

Keith: It's different.

Jason: And it is different today than it was 10 years ago there. You may have had some success maybe 15 years ago, you sold your home by owner and you thought oh, well, that was a breeze. Totally different market. There's been, I don't know, probably a thousand lawsuits since then. Every single form in the real estate business has changed 100% in 15 years. Everything has changed.  Lending rules completely different.

Keith: Just the last couple of years.

Jason: Absolutely. And so, there's a lot of moving pieces to that and so, at the end of the day I find people either value what you do or they don't. Everybody's got their opinion of whatever and it's great. And if you, I've yet to meet anybody retire wealthy because they sold their home themselves. So but maybe there's one person out there. I did read, I do study Warren Buffett and I did notice that one of the things that is not on his list was I got it to where I'm at because I've sold so many of my own homes by owner. That's not one of his top five money-making strategies. Right? Or he sold his car himself. No Warren Buffett became a billionaire because he did billionaire things.

Keith: Right.

Jason: And not saving money here and there on trivial things if you will. But again, as you said, everybody's got their own opinions. And while we're letting you collect your opinion, we're going to take a quick timeout. We are going to come back. We got some more things were to walk through, some additional principles to for you to get ready to succeed in the fourth quarter. So we'll be right back to you listening to the Jason Bramblett Real Estate Show.

And we're back. You're listening to the Jason Bramblett Real Estate Show. So before the break we were talking about digging in and looking at different systems and processes. And so if you're just looking for options, and you're not really sure maybe which one, or maybe you didn't even know there were options when you go to sell your home. Maybe you thought the traditional way is you just call a real estate company like ours and it's one-size-fits-all. And we wanted to talk about today that it is there is more than one strategy out there and there is more than one process. So if you don't like the idea of the traditional real estate sale and you would like to take a look at other options, we have three to four different options for you to look at outside of just our standard traditional way in which we sell homes. So if having strangers through your house is not for you, we understand. That's why we created a system for that, and a process. So we've got something for, well we believe something for everybody. And we also recognize that not every plan and every system is for every single owner.

Keith: So you were mentioning fourth quarter. It is unlike any other time of year. You've got so many distractions. You got the holidays, you've got changing seasons, so many different things. Can you talk about some principles specifically during fourth quarter to be successful?

Jason: Absolutely. I won't get too psychological here for you, but there is some definitely science behind this and in studying some of the masters all the way back to the early 1900s, one of the things is really learning how to master your mind but also master that subconscious. The cool thing about, if it was a wonder of the world in my opinion your subconscious mind would be like the number one wonder of the world because the amazing things that doesn't know the difference between a lie or truth. It reacts in whatever you've programmed in there. Right?

Keith: It is what it is.

Jason: It is what it is. So if you tell your subconscious mind you're the greatest thing that ever was the walk to earth, eventually you walk around like hey, man, I'm awesome. But the downside of that is is if you always have a woe is me and a poor, poor pitiful me party, then unfortunately your attitude and your posture and all that stuff starts to kind of work that way as well. So whatever it is that you're feeding it, it will work itself into attempting to justify the information in which you are giving it. And so if you want to be very successful, you have to believe that in the way in which you believe it is you put more good in your day then bad.  I think I've shared this a couple times but one of the things that I did to really made a huge, huge impact in mind entire life is about 18 months ago, I decided that for the very first two hours that I wake up  I will not pick up my cell phone. And so I just won't deal with any negativity within that first two hours. And so, I'll do know do exercise and read something positive and get in the right frame of mind and that way when I pick up that phone if there is something there that I just don't really want to hear, read, or see, whether it be on a social media feed, it be an email, whatever it is, I am in the proper mindset to be able to handle that and handle it positively.  I just look at it okay, this is feedback in which we need to make a correction change and or oh gosh, Trump did something stupid again, whatever it is. Right? Whatever it is that's coming at me, my frame of mind is totally different because I'm prepared for it. Prior to 18 months, you hit the news feed and it doesn't read the way you want, and then you look at stock and it's not where it should be, and then you open up the email and the first thing you see is such and such got in trouble and so and so passed away. It's so and so are getting divorced.

Keith: Your day is shot.

Jason: Yeah, it's not a great way to start off the productivity. If you have never thought about that, and the other thing, too, is some of you just quite frankly are flat-out addicted to your telephones and just break the habit. That is all it is. It is nothing more than a habit that you've created, and I know some of you will say, well, my phone is my alarm clock. Well, they sell them for like $2. Go buy a stupid old school, dumb alarm clock, and you'll be fine.

Keith: Use your smart speaker.

Jason: Use your smarts speaker. Yeah tell Alexa, Siri, Houdini, whoever it is you need to tell when you need to get up, and I promise you they will do it assuming that they have power and the battery is not dead. But anyway, putting more positive into the start of your day is huge, and that is what you need to do. So work on that every single day, alright, and get that information in there. So you're listening to the Jason Bramblett Real Estate Show will be back next week right here on Saturday. You can check us out at Jason Bramblett dot com.

Posted in Radio Show
Sept. 28, 2019

Are you self sabotaging your home?

Jason Bramblett Real Estate Show Podcast 

Click here for link to podcast

Jason:  Good morning. You are listening to the Jason Bramblett Real Estate Show.  I hope everybody is having a great weekend. Are you ready?  Well, we have been getting you ready for the past couple weeks on our little series on getting the house ready, but today we are doing a deep dive, going deep. Making sure that you have got everything ready to go to get your house sold whether it be now or in the future.  We are going to dig through, give you some detailed, ready-to-go lists, so that way you know every single step of the way and what they need to do now. We are all about making the burden easy, making the burden light, and how you do that is by being prepared.  How do you eat an elephant?  One bite at a time, and that is what we are going to do. We are going to dig into today and take that step by step. Or you can do it the way you want.  Wait, do nothing, and then run around like a wild person, kicking the dog, beating the kids, the wife is screaming at you. That is not any kind of fun way to get the house ready to sell.  And here is the other thing. It is not necessary at all. So guys, do me a favor. Have your wives listen to the radio show today. That way we will take the first action plan which is getting you prepared for the honey-do list that we have got coming and what we are going to talk about.  Basically it is coming up with a plan, and we are gong to work our plan, and we are going to start with the end in mind. It is key to set those things in place. You can plan to do nothing.  Nothing is still a plan by the way. It is just not a really good one. So we are going to walk you through that step by step, and then we re going to talk about pricing. We are going to talk about where you should put the money and then prioritizing everything out for you. It is not for everyone what we are going to talk about. And if it is not for you, that is okay. We have a plan for the person that just does not, the I do not want to do anything seller out there. Hey, we have got you covered as well. We are going to dig into that.  But you have got to understand.  There are two different prices in real estate. You will get a different price by doing nothing.  Just like with everything. Convenience comes at a price. It always does. You pay at the convenience store, the gas station, the restaurant, on vacation, and even when you go to sell your house convenience has a price and we do have a plan for that.  So don’t you worry.  Joining me today, Mr. Keith in the studio, and he is here. We are going to be lighting up the board and making everything happen.  Good morning to you, sir.

Keith:  Good morning.  So let’s jump right in, Jason. All right. We talked about getting ready for the fall. We have got the leaves picked up. We have got the lawn looking good. The gutters are clean. Nobody fell off the house. We are good to go.

Jason:  Even better.

Keith: What is the next step?

Jason: Keyword do not fall off the house.  Definitely. So most everything we are going to talk about today is probably in an area of the house that you do not go to that often. We are going to talk about basements and crawl spaces and all that.  Here is what I want to do. I want to hit the big-ticket items.  And what I say by big ticket items, these are basically the deal killer.  These are the things in which when a buyer discovers these problems with your home, the likelihood of them moving through the process to closing is almost zero. The other thing I look at is I always approach repairs or things that come up in two ways. The first way is if you were not selling this home, if we just discovered this, is this something that you should get taken care of.  Meaning we found a little problem that is going to be an extremely big problem if we do not do something about it.  The second thing we look at is is this something that is going to come up again and again no matter who the buyer is? Buyer A finds the problem, doesn’t like it, walks away. You do not fix the problem. Buyer B knows about it, but Buyer B does a little further investigation and they say, you know what, I do not like it, and I am walking away as well. What I am looking for is the repetitive thing, and I am looking for the thing that is only going to do more damage to your home should you not sell.  Some of these items will prevent your house from selling at all. Therefore, you are still going to be stuck with the house, and if you do not fix it, well, you may be stuck with a bunch of repairs and or ashes if you do not do anything. Right? It could be nothing.

Keith: Yeah.

Jason:  Some of you that only repair that we can come up with is road flare and five gallons of diesel fuel.  I do not recommend that.  Everything can be fixed. The problem is everything costs money. The number one deal killer of all time, 100%, 22 years’ experience, thousands and thousands of transactions, the crawl space.  If there was an Achilles’ heel to a house, it is the crawl space.  Why?  Well, you typically do not have dinner there. Right?  It is not a place you visit often. It is dark, damp.  It is spidery. It is whatever it is, and most people just od not want to spend a lot of time there, but it is the place that we need to go look. It is the place that we need to go check out. It is certainly not the place that fun happens. That is for sure.  Just in the past two months, we have three major issues discovered on properties that really would have been deal killers had we not been able to discover them during our pre-inspection. Termites and then termite damage. Mold, mildew issues, all kinds of things. But between the three, it was just about $40,000 in damage. A lot of money.  Oh, and by the way, if it discovered as termite damage, guess what? Your homeowner’s insurance does not cover it.

Keith:  The instant when we bought the house, we were sweating.  We had no reason to think there were termites. We were sweating for the termite inspection because if we had heard the word termite one second, we were walking away that second.  We were not going to mess with it. We just would not.

Jason:  Right.  And there are a lot of folks out there just like Keith. It proves two points. One, that is just a non-negotiable for Keith.  The second is most people do not want to inherit your problems.  Why do insurance companies not cover termite? It is considered neglect. You have not maintained your home properly. Termites are not like ravenous dogs. They do not do the damage in 30 seconds. It takes years and years of time to do that much damage. So therefore, the insurance companies look at it look, if you have not cared to address this problem two, three, four, or ten years, we are not going to be the bearer of, we are not going to fix your neglect essentially.  Now, I am sure there is some insurance company out there that would sell you some type of policy, but it is going to be a policy before the problem happens.  There is not a retroactive.

Keith:  Right.

Jason:  That is called do it yourself.  Essentially what you are saying is I am self-insuring my home against termites when you do not have a termite contract. So you need to get into the crawl space and check it out thoroughly. Now, inspecting for termites is a licensed activity in the state of North Carolina. So you, the average homeowner, may not have clue what you are looking for. This is where you want to spend anywhere between $70-150, whatever those guys charge to come out and do a thorough investigation and inspection. Get in touch with them.  Hopefully, you have a contract, and therefore, that makes it easier. But if you do not, this is something you definitely want to check out before the house goes on the market. It is one of these non-negotiables. The other thing is that if a buyer is getting a loan, guess who else is going to have a problem with the termites?  The bank. They typically do not like to do loans on houses with extra guests in them.  Right? They want to loan the house to people and not to termites.  Therefore, they typically want to see a report. Certainly all your government-backed loans.  So your USDA, FHA, and VA, 100% of the time require this. They want to see that report.

So next in the crawl space, water. Here is the best rule of thumb.  There should not be a drop. Again, sometimes folks, well how much water is acceptable. None.  Nobody wants water in the crawl space of the home they are going to buy because it is only going to lead to problems down the road. I had a person one time that went to see their house, and there was like six inches of water in the cellar-style basement.  And I said, well, you have got a real problem down here. We are going to need to get this addressed.  She said, oh, no, no, no, that is a wet basement.  I was like a what? She goes well when we bought the house, they told us this was just a wet basement.  That is how it was designed that way. I was just like maybe somebody can educate me, but in all the years I have been doing real estate, I have never seen a house designed with a river flowing through it on purpose.

Keith:  That does not sound right.

Jason:  It does not sound right, and it was not right. Unfortunately, it was very, very expensive to convert her wet basement to a dry basement.  You should have a vapor barrier down. If you see dirt in your crawl space, you do not want to have that in today’s world. You want to go get some plastic. I think the code is a standard six mil or greater in thickness that you want to cover all the dirt.  Why?  It keeps the moisture down in the crawl space but also in the house.  How do you know you have a moisture problem? If you go into your crawl space and you have insulation under there, and it looks like a cave. So basically it is kind of stalagtited down, it looks like of creepy and eerie and weird. That is the moisture. It has gotten so heavy it is starting to shred the insulation, and it is making it fall because of the weight.  If you see that, you have a moisture problem. You may not have a very big one. You may have a horrendous one, but you definitely have one that needs to be taken care of.  But that water vapor collects weight over time, and it will make that insulation fall down. Sometimes the crawl space ends up being kind of the catchall for everything like extra little wood pieces and projects and stuff and storage.  It should not be. You want to make sure that when you are selling your home that there is no debris under the house, especially wood products.  Why? Termites. Again, they are attracted by those things, so you do not want to store extra firewood under the house. You do not want to chuck 2x4s and those type of things down there. An acceptable thing maybe in the crawl space may be if you had an extra bundle of shingles from the house. You wanted to keep them out of the sun and dry. You leave them in the crawl space. Most things do not eat shingles. Other than buzzards. I have found out over the years that buzzards have a partiality to landing people’s roofs and tearing the tar shingles off.

Keith:  If you have got a buzzard in your crawl space, you have got a much bigger problem.

Jason: This is true. We may need to check the house very thoroughly.

Keith: There are some issues there if there is a buzzard there.

Jason: But true story. I did go to a home one time, a vacant house, and there was an owl laying dead on the kitchen floor, which made no sense at all because all the doors were locked.  The only thing that we can guess is he came in through the dryer vent somehow. The vent of the dryer did not have a cover on the outside of it, and presumably maybe he was finding some prey or chasing something in the house, but he got in, but he never got out, and unfortunately, he had his last days on the kitchen floor there.  Perfect. Looked like he just stuffed out basically.  It was very interesting.

Keith:  That is odd.

Jason:  Not something you see in most homes. But I have seen a lot of things that you do not see in most homes as you can imagine after going in almost 3000 properties in the last 20 years.  I have seen some very interesting things.  Yeah, some great things. Things in which I do not ever want to see again, too.

Keith:  Even for the pre-inspection.

Jason: Very much so. Very much so. These things need to be corrected prior to selling. You want to get all these things out of there, and buyers are not looking for crawl spaces with swimming pools in them.  We want to make sure that there is not a water issue.  You may go down there and there is not water now, but if you know there is water from the past, and you can typically tell that because water will leave a line on the brick, on the block, and you will be able to tell that there was water there. A trained professional certainly will. Now, once you discover water, now we need to figure out where in the world it is coming from.  The two biggest culprits for sure are the downspouts and the vent wells. Check your downspouts. I cannot tell you how many times, think about brick and block. It is porous. If you take a cinderblock and you pour a cup of water on it, it will not run off.  That brick absorbs 100% of that water. If you ground is dumping hundreds and hundreds of gallons of water against your crawl space, which is probably blocked, all it is doing is absorbing that water until it cannot anymore. Where does it go? Path of least resistance. Right into your crawl space. So you think about a good rain storm. There is going to be hundreds of gallons of water coming off your roof, right down your downspouts, and this is where we see the issue.  The other thing is over time, your landscape builds up, which gets it above the level of the vent wells that are going into your crawl space, and now we basically we have, it is almost like taking buckets of water and just dumping them into your crawl space.

Keith:  It is amazing to me. Every single show we do goes back gutters and downspouts. You do not think about that off the top when you are in your house.  You look at all these other things. But so many things go into those two things.

Jason:  It does. Well, if you think about the common things we do in a home, most people do not like hey, it is raining cats and dogs. Let’s go outside.

Keith: Right.

Jason: When we are we outside.  When it is beautiful, sunny, dry, warm. It is not raining. Not raining, nothing going down the downspouts. So we walk around our home in dry conditions and we are like everything is great. Well, when we get 2 ½” of rain in an hour and a half, go outside and see what it looks like then. That is what we miss. That is the visual that we miss, and typically after a great rain storm, we are picking up whatever, leaves, sticks, whatever it is in the yard, and most people do not have the first thought in their head is I should look at my crawl space and see how much water got in there last night. It is not even on their radar. And it is just years of that just being out of sight, out of mind. Because we do not go outside when it is raining, we do not see those effects, but you need to look when it is not raining.  If there is 2” gap between your downspout and the piece that is going into the ground, gravity, yeah, the water will fall, but it will not all just make it in there. So you want to make sure everything is connected. You want to push the water a good ten feet away from the house to make sure that it is not flowing toward the crawl space.  Then, of course, the vent wells are notorious issues, and typically it is just because landscape over time, it breaks down, and most of us do not go strip all the pine needles and pine bark, and everything off. What do we do?  We just throw more on top. Right?

Keith: Yeah.

Jason:  Over time, it builds up and it builds up, and now our landscape, which was way below grade when the home was built, ten years later, now it is three feet above or three inches above, I should say. And now it is just pushing water right back into the crawl space. So those are simple things that we want to look at. We are going to go take a timeout. Go pay some bills.  When we come back, now we are going to dig into some other issues.  The top five list of problems when you sell your house.  You are listening to the Jason Bramblett Real Estate Show. We will be right back in just a minute.

And welcome back to the Jason Bramblett Real Estate Show. So we are digging into all things that could possibly go wrong with your house. The deal killers we call those. The things in which buyers typically cannot get over when they are buying a house, and that is why we take the time to do pre-inspections on all of our homes to make sure we get right. We have a philosophy within our company to be proactive and not reactive because well, proactive we have control. We not only control what is going on. We control how much things cost. And when you let the buyer find out, they control the costs, which costs you, as the owner, more money because you are in a reactionary state. Anytime you react to something, I will assure you it always costs more in the end. There are lot of emergency room trips that have been made because of reactions to situations. Right?

Keith: When it comes to the surprises, they are typically not going to benefit you.

Jason:  Most of the time for sure, no. That is for sure. We are going to dig into a few other things, but you are listening to the Jason Bramblett Real Estate Show. You can give us a call at the office any time you would like. It is 553-0796.

Keith: All right. So let’s run down.  We talked a little bit about the water in the crawl space, and those are huge, huge deals, termites and all of that. But there are a couple of other big, big things to look at when you are selling your house. What are those couple of, those four, five things that are really important?

Jason:  One of the things we look at are systems and things that have moving parts. Water, obviously is moving, but it does not have an engine.  The crawl space does not have a motor, an engine, and so the other big things are the things that wear out.  Heating and cooling systems definitely in the top five. We see that time and time again where owners, they just do not have these things checked and cleaned on a regular basis. You should have your heating and cooling system serviced on a service contract and have it checked out once per year. If you do not, you are either just shorting the life of that system, or you are delaying a major repair down the road typically. Because things can be fixed sometimes before they completely wear out to nothing.  Right?

Keith:  Right.

Jason: It is kind of like brakes on your car. You have to put new brakes on or you really, really should put new brakes. And this is why the government does not take your word for it, and you have to get your what, inspected. Now, your HVAC system would only hurt you more than likely should something go wrong, and that is why it is not mandatory. When you are in your car on your road endangering the lives of other people, they would like to make sure that the minimum standard is met, or you lose your license. Right?

Keith:  Right.

Jason:  Your license plate is revoked. Your car is on the road illegally. You need to turn in your plate and walk is essentially what the government is saying. Why did they have that standard? Because they know when citizens are left to their own, some citizens anyway, they will defer maintenance of their car forever.  And that is why we have minimum standards. If we had minimum standards for many systems on our homes, then we would not have near the issues that we have when we go to sell them.  If there was a regulation where every single year you had to have the crawl space, roof, windows, heating and cooling checked every single year or your taxes tripled, whatever. Make up some penalty. I will promise you we would have some of the best maintained awesome in the world.

Keith:  You would uncover 90% of the problems that come in inspections.

Jason:  Absolutely. Selling your house would simply be here are my keys. It is absolutely amazing. Have a great day. But we do not have that system, and therefore, just like your car, your home has systems that need to be checked out. Your water heater is another one. It is certainly in the top five. We typically see where water heaters are way past their expected life.  Yes, they are still heating the water kind of, sort of. But they are full of rust. They have corrosion. There is a TRP valve that we have on these things, which is basically a safety valve in which you are supposed to, it is supposed to keep the tank from exploding or causing harm.  But there is also supposed to be pipe that is extended off that. 99 times out of 100 we do not see that, and it is another safety precaution that was omitted.  That is something we see that comes up all the time that comes up in inspection reports. Just as you would have your water heater checked out, your heating and cooling, if you switch these things, you need to make sure you get a permit for the work that is being done. This is a top priority. Banks today are looking into these things to make sure if a system is changed out in the municipality where you live is a permit required.  You cannot say it is not acceptable to say well I hired a plumber. I thought he got a permit.  The responsibility of the permit falls on the property owner, not the person you hired. The person you hired can do all of that for you, 100%, absolutely, but it is the owner’s responsibility to make sure that it happens. So you need to check with your county and or city and see if you need a permit.  We have got an extensive list of things that we are going to continue to go through. But you can always call the office at 553-0796. Go to Jason Bramblett dot com. Shoot us an email if you have got a question or you need to get a jump start on that list. Everybody have a great weekend.  We will be right back here next week.

Posted in Radio Show
Sept. 21, 2019

Are you ready to move?

Jason Bramblett Real Estate Show Podcast 

Click here for link to podcast

Jason: Good morning, Triad. You are listening to the Jason Bramblett Real Estate Show. My tongue is moving, but my vocal chords are not evidently.  So hope everybody is doing okay today. Going to kick off the real estate show.  Going to dig into a bunch of different things that have to do with getting your home ready to go here in the fourth quarter. But before we do that, it is full-court press time as well.  If you are wanting to move by the end of the year, it is time to get serious.  It is time to really get that punch list of items ready to go, and we are going to help you with that.  The great news is all the part-time, no-time agents in the Triad are headed back to their winter jobs.  What will be nice going forward is the people that are actually in the marketplace selling homes are the professionals, the people that make the transitions and transactions very simple, easy because they know exactly what to do. They have been through the ups and downs and sideways of the real estate market.  So this is an excellent time to get just a great amount of service at the highest level dealing with some of the best real estate agents in the marketplace. We have got very serious buyers that are out there this time of year. Folks that are ready to move. Typically, the tire kickers and those types of folks have kind of moved on.  Their season is over and now we have folks that are very serious. They are ready to move in, and of course, the sellers are ready to go as well.  Folks that sell their home typically this time of year do need to move for whatever reason.  Downsize, upsize, and maybe they are relocating out of the area, but these are folks that need to take action. So we have the right buyers, the right agents, the right sellers.  It is the perfect fourth quarter, and it is ready to get started. We are kicking off our wintertime fourth quarter advertising blitz. You will start to see us all over the place again as we do every year.  I may even put the, what is the theme, I am back, if you will. I may put that out there this year.  Anyway, joining me in the studio today, Mr. Keith is here today pushing all the buttons, making everything happen, getting our message delivered out to all the folks here in the Triad. Really some neat things that we are doing in the northeast. We are investing a lot of money in that area of Jersey, upstate New York, Baltimore, Boston, and the DC area.  Why, you ask. You are a Triad real estate company.  Yes, we are, but there are over a million people that will be making the migration this year.  Through the demographics that we have tracked, the real estate companies that we work with in that market, we know for sure a million people are going to retire.  Empty nesters moving to the South and good old South for them is North Carolina.  And so we want to attract as many of them as we can to the Triad area. And of course, more buyers hopefully means more money for your house.  Right?  Create that supply and demand.

Keith:  Absolutely.

Jason:  That is what we want. So lots of great things happening as we move to the fourth quarter.  So be ready, get prepared, and we are going to help you do that today. We are going to walk through all those things. You can get in touch with us at the office. Hit Jason Bramblett dot com.  You can always click on that email icon there. Shoot us a message or give us a call, 553-0796.

Keith:  So I know this will make you happy. Last week we were talking a little bit about how to get your house ready and the right things to do and kind of the wrong things to do maybe if you are looking to sell.  We got a ton of response to that, Jason, so I knew that would put a smile on your face.

Jason:  Yes.

Keith:  So we got a lot of questions about that. I wanted to see. We got one email in particular wanted to see if maybe we could get your help on. It is from Jim and Nancy, and they want to know what to do.  They say, Mr. Bramblett, we listen to your show on 94.5 WPTI every Saturday. You mentioned spending money in the right places, and we would like to have one of your associates come visit their home. The question is is it better to sell a home furnished or unfurnished? Thank you, Jim and Nancy. That is a great question because I do not know the answer to that one, so I am curious.

Jason:  You just went through that experience. You know the answer for yourself.

Keith:  Yes, for us it is furnished. We preferred being, it allowed us to kind of picture the way that we could possibly set the home up. That was for us.

Jason: And I have had folks just like that.  They go through a house and they are like hey, can they just leave everything because it is perfect. Right?  You have those from time to time.  First of all, let me say thank you, Jim and Nancy, for listening every week.  We appreciate that, and we appreciate you taking the time to email us because really it is your questions.  It is your show. We want to deliver thought-provoking information that really kind of challenges you, the listener and our client, to ask questions.  So we appreciate that because guarantee if you are thinking the question so are hundreds and hundreds of others, and we just need somebody to raise their hand. And you are helping your local Triad folks when you do that. It is really an opinion of what is right and what is wrong or what is better. The interesting thing with Keith’s perspective is furnished. I will be honest with you. In 22 years of experience, it really does not matter. You are going to isolate one segment of the population no matter what. So statistically, this is not my number, this nerd folks that have nothing better to do than figure out stuff, but I am told through this nerd colony that puts out these numbers –

Keith:  Love the nerds.

Jason:  Yeah, love the nerds.  About 60% of the public cannot really visualize their stuff in somebody else’s house. So whether that is vacant or you have left it furnished, they still struggle with that. And the rest of them can to a degree or fully can. Some people can just see it. I have an amazingly gifted daughter that can do lots of things artistic, and she will visualize something in her head, and somehow, her pen, paintbrush, marker, whatever it is, just does exactly what that vision is.

Keith:  Not me.

Jason:  No, it is not me.  It looks very much like Stick Man. Hers not so much. There is just a certain population that is right-brain-centric, and they have that great visualization, but most, 60% according to all the little nerdy actuary people out there that do all these numbers say 60% can’t, and it would not matter if the furniture was there or if it was empty.  If it was empty, they cannot visualize their furniture in the space.  If it is furnished, they cannot visualize your furniture gone and new furniture in. So everybody has got a little different flare on that. We see that it does not make that big of a difference. There are just, no matter what, certain groups of the population and segment, no matter what you do to the house, stage, not stage, whatever, they are just not going to be able to see past it. Really what it comes down back to is financially what can you do. Or what do you want to do. Some folks have the ability to be able to sell their house empty. They can move out, leave a clean slate, or maybe they do leave it furnished or staged, if you will, but that is not everybody.  Not everybody can do that. Some folks cannot move to the next home until they sell the home that they are in. Owners also have folks that do not want the general public just walking around looking at their stuff. We do have that as well. So we do have some folks that choose to sell the home vacant simply because of privacy.  They just like their privacy, and they just do not want anybody coming through. They just do not want to deal with that. So financially, there is really no right or wrong answer. It is just pretty much what are you as the owner able to do. Some people can have no issue with taking that on and just being able to move out of the house, and either leave that home staged or just sell it empty. It really does not matter. But there is that kind of false perception out there that, for some reason, empty homes sell for less, and I really have not seen that.  Now, there may be certain price points where that could be true, but for the most part, if someone is financially able to leave the home empty, they are probably financially not really strapped and have to make a rash decision either. Sometimes we see that they had to leave for reasons that they did not control, and of course, that may put a hardship on there. But the good news really at the end of the day, Jim and Nancy, you can really do what makes you feel comfortable in that. It can be, if you do not want people in your home, and you do not want them kind of checking out your stuff, you can sell the house vacant. No problem. Or if that does not bother you, which obviously there is a proportion of people out there that do not care, we sell those homes every day. So you could certainly leave it furnished. It is really a decision that the owner has to come up with.

Keith:  I think that is really good information.  Because I will be honest, in this world of the HGTV and the flipping and everything, you always see them stage homes and do all of that.  To know that is great if that works for you but is not absolutely necessary, that is really good information.

Jason:  Yeah, well, there is also a difference between you will notice that on HGTV those are very professionally staged.

Keith:  Yes. It is not my stuff.

Jason:  Yes, it is all new. It is typically a furniture manufacturer’s in stuff.  Like hey, we want to sell this stuff. I bet if we put in on TV and make it look really awesome, people will come to our store.

Keith:  It is a win-win.

Jason:  It is a win-win all the way around for sure. And they have a production team and they have designers and your average homeowner is not going to invest the thousands of dollars for all those trained professionals to do that. Now there may be some houses that warrant that.  You look at a builder’s model home. They invest probably over $100,000 easily in a model house. But look how many times they are able to reuse that home to sell 50, 60, 70 houses.

Keith:  Right.

Jason:  It makes mathematical sense.  Everybody has got their own spin on that. But it would be awesome, Keith, if we could just take the whole real estate experience down to 23 minutes of reality TV. Right?

Keith:  That would make it easier, wouldn’t it?

Jason:  Definitely.

Keith:  So it has not felt like it really until the last two days or so, but believe it or now, fall is about here. Are there some things that homeowners should be doing if they are preparing to sell in the fall?

Jason:  Yes, absolutely. So we are in North Carolina, so what is the number one thing?  It is the battle of the falling leaves that we will be entailing here big time. So it is going to be in full swing in the next couple weeks. If you are thinking about selling now, this is something that you really need to stay ahead of. Not attempting to create a part-time job for anybody, but a well-maintained yard makes a huge difference. If you look for little things that help you stand out, well, if your neighbors, let’s just say, maybe slack a little bit off on the maintenance of the yard during this time of the year, you can really make your yard stand out and really stand out from the crowd. This is where an occupied home probably would trump over a vacant house because if you are living in the home you can daily, 15-minute activities to keep the yard up. If it is vacant, they may only be hitting it on the weekends. So if I have a Wednesday showing, and Keith’s house is immaculate and amazing and the yard is kept up, and then I go over to Jason’s house, and he has not been there in two weeks, and the leaves are eight inches tall and I have to try to even find the sidewalk to get to the house, so those can all be obstacles that we will be dealing with for sure definitely in the next 60 days. Make sure the paths to the home are clear. Make sure the gutters are empty. Now, you know my rule about the gutters. If you question whether it is a good idea to be on a ladder, let’s not. It is not worth it.

Keith:  Do you notice gutters come up a lot on this show?

Jason:  Yes, they do.  It is amazing how many times I get phone calls that say hey, we cannot show the house. I am like okay, what is wrong.  Well, so and so fell off the roof because he was cleaning the gutters or fell off the ladder because it slipped off the deck, off the curb, whatever it is. I am not going to argue and say that climbing a ladder is a skilled job or profession, but if you are in a hurry and on a ladder, those two things typically do not go well together. You just need to stop and think and maybe have somebody hold the ladder for you, which would always be my recommendation.  But really my recommendation is spend a few hundred dollars, have somebody professional come over and clean the gutters. I know it is hundreds of dollars that seems to be just a waste of money, but with today’s medical rates, I can assure you that one trip to the ER will pay for a lot of years of gutter cleaning. Not only that.  The pain of whatever you may go through.  We have had some really bad falls where people we know that had some bad falls just doing things they normally do not do and maybe just not thinking through all the processes of hey, what could happen if the deck is a little wet and the ladder falls out from under me?  It may be only six or eight feet tall, and you may be six feet tall, but that two feet makes a difference.

Keith:  Yeah, it sure does.

Jason: Two foot on a 200-pound dead drop, it is going to hurt, and the deck is not going to give. You are. Right? And so it is not going to feel good.  So just use wisdom out there and hire somebody. We have got some amazing fall colors coming in. There is going to be some phenomenal opportunities to buy plants at the farmer’s market.  Right here, go to the Piedmont Farmer’s Market, they have got an amazing display of fall options out there. Potted plants, different things, and then of course, just take advantage of the opportunity of what is in your yard.  Enhance those colors, use those things.  And they do not have to be really expensive things because obviously, they are not going to last, but it certainly will make some great color pop on the front porch, through the walkways and those things. If we can help give you some insight that is what we are here to do, and that is what we would like to do. So we can definitely help out with that. If you need us to do a walk-through, just give you some ideas. We have got photos. We can show you anything.  Of course, our good friend Dr. Google is right out there for you as well, so you can always put something in there to help you with design and those type of things. We are going to do this. We are going to take a quick timeout. We are going to go pay some bills. Stay tuned. We are going to dig into the next steps in getting the house ready to sell in the fourth quarter.  We will be right back.  You are listening to the Jason Bramblett Real Estate Show.

And welcome back to the Jason Bramblett Real Estate Show. So before the break we were digging into fourth quarter, what to do, how to get ready, how to get that home in condition and or presentable using what is around us, which is our fantastic North Carolina fall colors.  Of course, we will be right there to help you through that. We can send one of our associates out to help you with that process.

Keith:  All right. So we have got a couple of ideas for the fall.  What if, so let’s say I know that I am going to be selling next year.  I am not ready to do it maybe this fall, but I know I am going to be doing it next year. What things can I do to kind of get out in front of it?

Jason:  Absolutely. So it does go back to the yard because what you do now is what is going to really pay off in the spring. We have some pretty good shifts of heat and sun and all these different things in the south. We do have the four seasons. So grass and trees and shrubs grow best in not a 99-degree summer day because everything gets burnt up. So really now, heading into fall and the next couple weeks as the temperature starts to drop, this is really the time to get ready for spring. October, I am told, is the best month to go out there and sow new seed, overseed your lawn. This is where you can get the companies to come out and do the aeration and overseeding.  You want to get some of your pre-emergents out there for setting that stage to keep all the, my good word for weeds is guck.  Just get the guck out of the yard, whatever it is.  And some of you will, if you have ever had this professionally done, you do not realize how much grass you do not have until you kind of put the right stuff out that kills off all the guck, and you are like wow, I did not realize all these things were weeds. They were just green. So two things.  It is time to get the glasses checked out.  Right? It all blurs to green after 50 feet.

Keith:  It does not matter.  It could not rain for 4 months in a row, and that weed will continue to grow, yet all of my grass will die around it.

Jason:  Absolutely.

Keith:  But it will keep growing.

Jason:  It will. It is amazing. I have thought about that, Keith. I think we should just switch.

Keith: Have weeds instead of grass?

Jason:  Yeah. Get rid of the grass.  If we could just tame our weeds to be consistently the same color, they seem to be the hardiest for sure, but everybody, I should not say everybody.  Most people love that fresh look, especially in the spring.  You get that deep, rich, green color throughout the yard. So now is the time to do that. Pruning the plants and all that will come in the later colder months, but now is the time when you set the stage to really plan what you want this yard to look like in the spring. It may not be that you need to spend thousands and thousands of dollars. Seed is not that expensive. You need to get a good quality seed. I will say spending the money for a better quality is a good thing to do. You can hopefully spread it yourself if you choose to, but there are certainly many, many landscape companies out here that can help you. We have got several that we can recommend to you, but new trees and shrubs, these are the things you want to get ahead of and get started on.  The temperature is going to be in primetime here very soon. So if you need help, obviously you can give us a call, 553-0796 and we will get you in touch with our vendors that can help you out.

Keith:  You touched a little bit about this, I think a week or two ago, but let’s say I need to sell my house, but I just do to want to go through the preparation, through the public coming through, but nonetheless, I still need to sell it. You touched you have a process to handle that situation. Can you expand on that?

Jason: Yeah, it goes back to the one size fits all. A lot of real estate companies have one option. List your home. Sell your home. That is not always the option or the process that every owner needs or wants. There is no rule out there saying in order to sell your house you have to do X, Y, Z and get it listed with a real estate company and put it out there for the whole world to see. That is just the process that has been developed over years and years and years and things.  But we have systems that are outside of the traditional realm of sales. We have got investment companies that we work with that buy homes daily, and of course, we have a holding company in which we also purchase houses to add to our portfolio for rental and investment down the road. So we can look at every single option and really just see what fits your needs and your plans.

Keith: So when you hear investment, just me, the first thing that jumps out is super big discount. Like it is not going to be a good offer.  Are these offers aggressive?  How does that work?

Jason:  Right. People think investment. They think hey, make money.  Right.  So we look at every angle and what is going to fit the owners. That is the key. We have got owners that have, I have got one right now that has a paid-for house, but it needs about $40,000 in upgrades, but he does not have any income. So there is no way he is going to get an equity line or any type of loan because he just does not have any income to qualify for a repayment of the loan. He does have a tremendous amount of equity in the house. But for him, selling a home is a priority. And here is the one thing he does have.  He does have common sense.  He gets this.  He understands that the house needs $40-50,000 in upfit, and he also understands that people are not going to work for free.

Keith:  Right.

Jason:  So he gets it. For him, this is a perfect option because he cannot do what needs to be done. He understands it. It is always the best fit for everybody, but he realizes that somebody is going to pay. Right? And the people, if somebody is going to take the risk and buy my home and put $40-50,000 into it with the intention that they want to get rewarded for their time, effort, and energy.  And the risk.

Keith:  The risk. Right.

Jason:  And he understands that. So for this owner, it is a perfect opportunity, but not for all. So if you are interested in getting your home outside of the traditional way, give us a call. 553-0796 or go to Jason Bramblett dot com.  We will be back next week.  We are going to dive into this a little bit more.  Everybody have an awesome and safe weekend, and we will be right back here next week. You have been listening to the Jason Bramblett Real Estate Show.

Posted in Radio Show
Sept. 14, 2019

Don't Defer The Maintenance

Jason Bramblett Real Estate Show Podcast 

Click here for link to podcast

Jason:  Good morning and welcome to the Jason Bramblett Real Estate show.  I hope everybody is enjoying their Saturday morning, getting all your honey-do list of things taken care of.  Maybe doing a little yard work or yard prep or whatever it may be.  Inside, outside, just be careful if you are on top of the roof.  I always hire someone should you be in doubt.  In the studio with me today, Mr. Keith joining me, pushing all the buttons, making everything, and we are in the super cool studio.

Keith:  I do not know if it is super cool.  It certainly has mood lighting.

Jason:  It definitely has mood lighting.  So if my voice is a little calmer it is because the mood has changed. The lighting has changed, and this is a much more calming studio that the other. It definitely is a more relaxed chill version of the radio show now for sure.

Keith:  I agree. This is kind of like my home studio, so I appreciate that.

Jason:  It has the feng shui, so it is perfect.

Keith:  We will turn the furniture.

Jason:  There you go.  That is right. That is right. So I hope everybody had a good week. We are going to dive into all things real estate.  Getting ready for Q4 is quickly approaching. October is almost here. So we are going to get into that. Just like everything we do, being proactive in getting everything in position to get ready for the fourth quarter is key, and that is what you should be doing if you are running a business.  Remember your household is also a business, so you can get your fourth quarter goals together for your home, your household, your kids, your plans, your life, whatever it may be. Before we do that, we still have got to wrap up the third quarter here, and it is just about ready to go.  What we noticed is that 2100 people actually did not get their homes sold in the Triad area, so we are going to talk a little bit about that. So for whatever reason in the second and third quarter, about 2100 failed to get their house sold. They expired off the market or came off the market according to the Triad Multiple Listing Service. Hey, there are a lot of people out here that we are talking to that maybe you have experienced this.  We unfortunately have one house that we did not get closed in that amount of time, so that is a failure on our part. 99% of our folks, but there is that one, and one is still not acceptable.  We want a 100% close rate. That is always our goal is to make sure that every single person that hires us achieves that goal of getting the home sold. But it seems every year, Keith, there is just that one anomaly out there.  It just drives me nuts, and sometimes you just cannot put your finger on it. It is always a different circumstance. Last year it was the most ordinary home. Great subdivision, and every single thing in the world we threw at this house did not stick. This one this year was a very unusual home. Not that that is an excuse, but unusual requires an unusual buyer. So it makes it a greater challenge, which I am perfectly up for. We get some unique stuff.  Actually, I enjoy unique and different because everything becomes so kind of ordinary, if you will, with your standard subdivision type homes. So we get these challenge houses, which I love. This one here was a borderline residential commercial piece of property, so anyway, I think we will still assist that seller in getting it sold.  It is just going to take a little break right now.  But we are going to dig into and understand what may have happened differently to help these 2100 people get their homes sold.  That is, of course, with many, many different companies, all different cities, all different counties, and we are just going to dive into it because they all have something in common other than not being sold.  They also have something else in common we are going to dig into and get that.  So grab a pen, grab a paper. Whatever you have.  Obviously, if you are driving, do not do that.  Just go to Jason Bramblett dot com.  Click on the blog and you can catch all the shows. We have even transcribed them for you real nerdy folks out there like me that like to read stuff still so you do not even have to listen to my voice again.  You can just skim through the notes and look for all the misspelled words.  And we use this wonderful software that does this for us, but its English is a little different than mine.  And sometimes, I read that and I am like what in the world is this computer trying to tell us here? But it is about 99% accurate, if you will.  It is probably better proper English than I normally have actually on the radio.  You can go to the website, fact check us there if you would like as well, check all those things out.  It is Jason Bramblett dot com.

Keith:  It is like when you are texting and it fills in the words for you.  And it is not really the words you wanted.

Jason:  Yes, yes.  And it is always all the good words.

Keith:  So obviously, you would have preferred to have 100% success rate. That would seem to be your goal. But I would say that 99% is hitting it out of the ballpark pretty far. Now, I am going to assume the 2100 homes that did not sell, I am going to assume they still want to sell. They just for one reason or another just did not happen. So with your success rate obviously, you are going to be able to help them. So what should they do before giving you guys a call if they still want to sell this house?

Jason:  That is a qualifier observation there for sure is do they really want to sell.  There are a certain percentage of folks that I think, the old saying is everything is for sale at the right price.  We have some people in the community that kind of just put their house for sale every year, I think.  Why not?

Keith:  If I get it, I get it.

Jason:  Yeah, if I get it, I get it.  If I do not, whatever. But that is not most of the people.  Most 2100 of those people do not do that. The first thing we want you to do actually is to call us even before you do anything because what we are finding is a lot of times the first step is to have that phone call, and most of the fails come down to really simple changes. So if we can spend some time with you in the home and walk you through that to make sure you are getting your home in the right position to sell. This is not a derogatory statement to my fellow agents. It is just a factual truth.  Most real estate agents do not sell enough homes to have a clear good gauge on what the public or the consumer want. Let’s face it.  If 90% of the agents in the Triad have only sold say six homes by October, so by the end of Q3, they have only sold 6 houses, think about what you do for a living. Could you be really good at it if you only did it 6 times in 10 months?

Keith:  Yeah, no.

Jason:  It is very difficult to have a pulse or have a true understanding. Most people would not hire the brain surgeon guy that kind of does it every other month.

Keith:  Six a year.

Jason:  Yeah, you kind of want somebody that has done some volume.  You would kind of like to know when you go see the dentist, you do not want to be the first guy he does the root canal on.  Right?  You would kind of like to know that hey, you did this a time or two.  The same thing is true with sales especially in real estate.  There is just a certain number of sales you need to do to have a clear understanding of the market, to have a clear understanding of really what the buyers are telling you and what the buyers want. Some owners are not going to be willing or they are going to be unable to make the proper changes that really the public may be demanding.  Let’s just say out of the 2100 half of them would not do what it takes. Just for whatever reason.  It is just maybe they do not want to.  Financially whatever it is. That is still a lot of people that more than likely really could have got their homes sold had they just had a step by step coaching process through that. So we have a very, very simple, paint-by-numbers, work right along with you system. It works within any budget or no budget, and the key is what we look at is the budget and the timeline. What is the goal of the timeline? What is the purpose of the move? Is there is a budget or is there not a budget to make the things happen that we need to help you achieve your goal?  Then what it really comes down to, our success is really around our systems we create to reach that goal. We have some folks that need to sell extremely quick. Some that are three or four months, and we have some folks that approach us and they want to build a home and I really do not want to move for nine months until my other house is ready. That is a different marketing plan. I am big on not recreating the wheel.  You guys probably know that by know after 12 years on the radio. I stay pretty consistent with this is what works. We improve the foundational systems that we have, but we also just keep it really simple. After 22 years of doing this, we have developed a system and a plan that is proven and that works over and over and over. I see most people fail, not only in real estate, but also just in most things because they have no plan. You have got to make preparations. You have got to have an action plan. If you do not have an action plan, you are just slinging things against the wall.

Keith:  So let’s say I am one of those 2100 people or maybe I am just looking to put up my house say in the fourth quarter or the first quarter next year, you have talked about this plan that you guys have got, give a little sneak peek.  What are some of the steps that go into that?

Jason:  This is the most difficult part of the plan.  Step one, call us. All right? So give us a call at the office, 53-0796, or go to Jason Bramblett dot com.  In all seriousness, step two is we really need to come up with a detailed marketing plan and strategy.  So that is what we are going to do. We can either meet you at our office or at your home. We need to explain to you exactly what our marketing system is and walk you through that.  You have to have clarity and have to have an understanding of that piece. One is to call. Two is we are going to go through and share with you our specific marketing plan. Once we have one and two done, now, step three is we are going to create an action plan that actually really specifically works for you in your timeline and your goal and we want to exceed your expectations in that, whatever that may be.  We also create a written accountability plan, so that plan is really good and it is signed by both parties. The broker that you are working with within my company is also agreed to and signed off by me and you. So it is accountability both ways. This is what we are going to do, and we have expectations of what our sellers will do as well. So if Keith calls me and says hey Jason, I want to get the most money in the shortest amount of time, and I love your plan and it is great, but I only want to show my house on Tuesdays at 6.  Yeah, that could be a problem.

Keith:  Yeah.

Jason: So we have limited significantly the opportunity time, so we will have a clear communication and we will have an agreement. This is what we are going to do for you, and this is what I need you to do for us. Have the home available. When people come through the home it needs to be in a certain condition of presentation. You have got to beat the teenagers up. Right?  You have got to make sure the rooms are clean and all these different things.  But we do that to ensure that we have a good two-way street of communication.  That is what we are looking for. We want to make sure that everybody is on the same page and we want to create that clear communication path. Then we move into getting the home prepared and getting it ready to go. Whether it be staging. It may be some painting. It may be whatever, but it is a simple paint-by-numbers system, and we are going to help you get the house ready to go from day one. That way as soon as it is ready when the right buyer walks through the property, the presentation of the house is exactly what is going to appeal to the most amount of people. When you think about your home, you think about it as very personal.  In order to get the most money, we have to start thinking like a retailer.  What do stores do that want to get the most people through the door?  They create a trap, or they create an ambiance, or they create whatever it is that attracts to the most people, which brings the most people through the store.  Right? And so that is what we want to do with your home. We want to create a system, an ease, a convenience of being able to get in your home.  People like convenience. They like to go do and see when it is convenient for them, and we need to create that path. So this could be anything from simply hiring a professional cleaning service to come through the property to get it prepared to a complete remodel of the house. We handle everything in between.  This is where really experience comes in and making sure we are spending money in the right areas of the home.  It is of no value and unfortunately, we see this way too much where owners have been coached or instructed or whatever they have done, and they have spent thousands and thousands of dollars in areas that made no absolutely no sense whatsoever.  It is almost going into a time warp if you will. We have had folks that have had the house completely repainted yet a color that was in style five years ago and they still have tattered Berber carpet.  There is not enough continuity of the change.  So yes, you have fresh paint, but it is out of date, or you sometimes you do it yourself we need to talk about that. We have done many shows on that.

Keith: That is scary.

Jason: We have talked about the difference between painting and schmearing color on the wall.  Okay?  There is a difference. But when you do not do things in the proper order or if you do not provide a product in which the public agrees to, likes, wants, whatever, it is going to cost you more time and money down the road. Either by having to redo it or you never get that second chance to make that first impression. That is the key thing. We want to make sure we get it right from the very beginning. That way we do not ever miss an opportunity with folks coming through the door.  So we want to make sure we get it right from day one. That is key.

Keith:  You talk about that first impression.  I have got to tell you we just looked at 20 different homes in a month’s period. I hate to say this but within the first 60 seconds in the house, we walked through the door, and my wife and I could look at each other and go, yep, no, just on little stuff.

Jason:  Right. It is kind of like when you meet somebody, what do they say?  First impressions, that is key.  When you go to apply for a job, most employers or HR people are pretty much making a quick judgement decision within the first five or ten seconds. How you presented yourself and how you communicated yourself in that first ten seconds really sets the stage. Is this going to be procedural or am I really interested in this candidate for this job?  It is the same thing with your house. They walk through the door, and that first 60 seconds is going to determine how long they are going to stay. Are they going to be there for 62 seconds?  Are they going to be there for 25 minutes? Those are all things to think about. Keith, let’s go do this. Let’s go take a quick time out. We will go pay some bills. We will be back here in just a minute.  You are listening to the Jason Bramblett Real Estate Show. Do not forget to visit our website, Jason Bramblett dot com.

And welcome back to the Jason Bramblett Real Estate Show. Before the break, we were digging in, talking about having a plan, getting it set up properly, making sure that you have got that first impression set.  Folks we work with, we talked about remodeling, but we work with folks that have no budget, $1,000, $10,000, no limit, everything in between, and every single home has its own specific story that it needs to tell, and that is what we are looking for. That is what we are going to help people figure it out as they come through and check out your house. Do not get hung up on the numbers.  The first step, as we said, is make the phone call.  Give us a call at the office, 553-0796, and we would love to set up that first appointment with you.

Keith:  Now we are ready to get to the next step. What type of investment am I looking at making if I want to get it sold and get it up with you guys?

Jason:  It could be just as simple as cleaning yourself. It is interesting. I find that people clean like they paint. Sometimes they do not know how to do that. Even though you think that cleaning is just kind of a natural thing.  It is not.  I will promise you, having been in thousands and thousands of homes, cleaning is a gift for some folks. Here is the thing. Most people can recognize if they are good at it or not. So if you are not, it is nothing to be embarrassed about. That is why we have professional cleaning companies.  You can get most homes cleaned for a few hundred bucks. It is not a crazy, crazy amount of money.  I had a 5,000 square foot home cleaned from top to bottom for $350.  So you are not talking about a week’s pay here by any means.

Keith:  I just had this discussion with my wife.  There is a difference between cleaning the house on a Sunday, doing the bathrooms and vacuuming because you live in the house and getting it ready for other people to critically come through.  That is two different kinds of clean.

Jason:  It is, and no question about it. It certainly is.  It could be several hundreds of dollars depending on updates and things we are looking at.  But again, we know we work with zero budget all the way to unlimited. We have had sellers spend $10,000 to get their home ready to sell.  However, one of the key elements we look at when we are spending or investing that type of money is what is the return versus the risk. So if I spend $10,000 on this property, is it going to make a difference?  That is one of the key things that we look at. Now you also have to understand that you do not get typically 100% return on anything. These are not my numbers. You can go to all the big box home improvement stores on their websites.  They actually have probably one of the most robust detailed data entries that I have ever seen because they track every single thing that goes in and out of those stores.  And also because they install so many of them.  They track the before and after result.  Typically what you are going to see is somewhere between a 50-80% return on your money that you are going to get back. If you invested $10,000, it’s probably going to get you about $8,000 of it back, but you are not going to lose the whole ten grand.  Right? You will lose the whole ten grand, and then it is no longer in your bank account. That story will be true, but you should see a good portion of that returned to you when the house sells. So the first thing we want to know and the first answer we want to figure out is does this make sense?  If the owner is going to spend one dime on the house, is there a return there, and we want to make sure that that money is spent is going to be in the areas that is going to give the greatest return.  And sometimes that answer is no. We have gone into homes that have been so far out of date, had deferred maintenance for years and years and years, and truthfully, it just made no sense to spend a penny. It was just let’s price it accordingly and move on because everything opened up Pandora’s box to the next issue. In some of those cases it made no sense. We still have people and owners in the Triad that are underwater still from 2006.

Keith: Wow.

Jason:  If you think about that. You bought your home in 2005. You paid the most money you could possibly pay, and you still all these years later cannot get to zero. It is true for a lot of the communities in the Triad. We look at all those things.  For that owner that is already upside down, it may not make any sense to do anything to the house for that particular community, but we need to know that.  We need to know that data.  The good thing is we have that data. Then we have all kinds of other situations.  Job loss, family situations, and it may not make sense for you to put money into your house. We have a situation right now where someone lost their job. The house needs some work. They had a tremendous amount of equity in the home, but they do not have any cash.  So we were able to step in and actually our company made the improvements for them, and we are going to get reimbursed at closing. So that is an option that we have for our owners in the Triad and our listeners here on the radio show. If you want to get more information about getting your home sold, go to Jason Bramblett dot com.  You can always give us a call at the office, 553-0796. Everybody have a fantastic weekend.  Be safe out there.  We will see you next week right there on the Jason Bramblett Real Estate Show.

Posted in Radio Show
Aug. 31, 2019

RE Investing Episode 8

Real Estate Investing: Episode 8

Jason Bramblett Real Estate Show Podcast 

Click here for link to podcast

Jason: Good morning, Triad.  You are listening to Jason Bramblett Real Estate. Hope everyone is doing great today. We are live in the studio, doing all things real estate. Digging in, diving into selling, buying and well, we have been talking about investing for several weeks.  We are going to continue our series in real estate investing, digging in a little bit deeper. Going into some of the questions that we have been getting via phone, email, all those things.  Keep those coming. You can go to Jason Bramblett dot com. Click on the email icon there. Shoot us a message, and we will be more than happy to answer your question. But also, if it is a question in which we know there may be some folks out here that have the same question, we are going to fire that off out here on the radio and get that in. We have just been selling like crazy in the Triad, which is awesome. Another great month has been conquered, and we are very thankful for all the families and clients that use us throughout the entire Triad region.  We do service about a 70-mile radius from the center here of Greensboro. Mecca, if you will. So if you took a circle, drew it around the airport, go out 70 miles, that is where we are. Except that would take you to Virginia. We do not work in Virginia, but we have some fantastic partners that we can set you up with in the Virginia market. We are going to dig into the nuts and bolts and just go a little bit deeper into our investment strategies.

So last week, just to recap, we talked about the failed landlord experience and how that is, it is one of those things, what is the saying, it looks good on paper. Right?  That is the key.  Looks good on paper. Sometimes when you get into the experience, it does not necessarily go just the way you had thought. We had a lot of people give us a call and say hey, I am that guy, I am that gal. We bought a rental two or three, and it was a lot different than what we thought. So we are helping some folks through that.  Whatever it is. If you are in a rental situation where it just did not pan out the way you thought, we have got multiple options. Some of those properties, we are going to help them manage. We do have a property management division of our company, and they just simply need some help. Some of those we are actually going to buy and take over the property 100%, and there are a few that actually we will sell.  They decided it is just not a good fit period, and they just want out, and we are able to help them do that as well. It is just, there are always options. So we know in real estate it is not one size fits all. You have got to have multiple layers and multiple options out there because just selling the house sometimes is not the right answer. Sometimes it is we need to look at it from a different viewpoint. So we have the ability to be able to do that. You can touch with us at the office. It is 553-0796 or go to Jason Bramblett dot com.  Joining me in the studio today, Mr. Keith is pushing all the buttons, making stuff happen, and we are going to go a little deeper into our conversation on real estate investing. It is good to have you with us today, sir.

Keith:  Thank you, I am excited to be in my new home.  Thank you to you guys for all the things that you did with us and my wife and getting us in that new home.  It was a great experience.

Jason: Good deal. Good deal.  Yeah, Keith, is one of our new clients from one week ago. Right?

Keith:  Yeah. Closed last Thursday.

Jason:  Closed last Thursday, and it is a whirlwind. His muscles are bigger today.

Keith:  I am sore.

Jason:  All the fun stuff with moving.  The first thing he said to me is I am sore in places I did not even know could be sore. Right?

Keith:  That is absolutely true. I was listening to the show the other day. You were discussing dead money being money that I have saved and maybe even invested, but with the current market and everything it is just not really doing anything for me. You talked about being able to partner with you. How is that money secured so I know that that money is going to be safe?

Jason:  Absolutely. Just to kind of recap. Dead money, what is dead money?  Well, whatever.  Maybe you have got a hundred or $200,000 just sitting around in a very low-performing account. It could $50,000.  It does not matter.  The money is just not doing what it needs to do. Dave Ramsey is one of my mentors. He has got a great program of helping folks get out of debt, and one of the things that he teachers, one of his foundational things is you have to tell money what to do. If you do not, it just disappears.  It just leaves. Money without any kind of plan it just vanishes.

Keith:  Especially now.

Jason:  Yeah.

Keith:  It is cray.

Jason:  It is. It is. It is just like pixie dust. Especially when you buy a new house. If you do not tell the money what to do, and you do not have a plan, all those little trips to the Lowe’s and the Home Depot and these other places, it adds up.

Keith:  $7 at a time.

Jason: That is right. That is right. Before you know it, $700 is –

Keith: That is right.

Jason: Because you probably will make 100 trips.  It is amazing.  Really what we are looking at is savings account rates.  .000025 nothing. Even if you have money sitting in a CD, maybe you are committed for 6 months, a year, 18 months, whatever, you are still looking at 2%, maybe just a touch over. It is still dead money. Even at 2% you are not even keeping up with inflation. So you are basically, if you are very fortunate, you are getting to zero, and zero is not a good number. It is not a good number.  We have many ways that we secure our investment partners. So all the funds that we, we really just follow the process the banks do.  It is pretty simple. We do a promissory note. It is for a certain period of time. Most of the time it is eight months. Some projects may go a little bit longer, but we keep right to the eight months. We record a deed of trust that is your security.  It securitizes that note to the property just like all the banks do.  It really is the exact same method. I am all about not creating the wheel, Keith. It is out there.  It is simple.  Real estate has been around a long time. Why do something different?

Keith:  Well, there are so many things out there that are difficult to understand, so that if you make it simple enough that everybody understands what they are getting into, that just makes it a whole lot easier.

Jason: Absolutely.  It is just a very, very simple process. So now you have a securitized lien, a deed of trust against the property. Then what that prevents us from doing is anything with that property as far as a transfer goes without you being 100% cashed out of the deal. If we sell the property, obviously whoever buys it does not want to have you tag along just like the bank doesn’t. So when you sell your home, the mortgage is paid off.  The bank is paid off. That deed is cancelled. They get their money, and it moves onto the next owner.  It would be the same way with us. Or if we refinance the property. So a lot of properties we keep in our portfolio.  We will buy them, rehab them, fix them up, rent them out, and then we will refinance our investors out of those.  Or we even refinance ourselves out of the deal. We put our own cash into every single deal that we do, just as the bank, so that deed of trust would go away.  You get your money back, and then you have options. You can go put it back into the dead vault or you can reinvest it with us, which many of our investors do. Some of them have been with us well over ten years, and we just keep that partnership going.  It makes sense.  They love real estate, but they do not like the phone calls at two o’clock in the morning when the toilet backs up or whatever it is. So we have a whole entire division that just deals with that kind of stuff, through our property management company. Maybe this is something you might be interested in.  If it is, you can shoot us over some information. We are happy to share anything we can with you. Go to Jason Bramblett dot com.  Again, click on that email icon. You can shoot us a message or give us a call.

We have had many, many folks, a lot of our investors are past clients and listeners just like you.  People that have been with us on the radio for over a decade now on the radio, talking about real estate in the Triad. We have developed some friendships with great folks out there, and it is just another vehicle for you to be investing in, what I love about it, too, is you are investing locally. With the stock market, and not to say that it is a bad thing, but it is very intangible. You cannot drive by Wall Street and see your investment. You can see a building, but you will not see your investment. And a lot of times that money is not reinvested in the community that you live. We buy property in every single city in the Triad, so you are helping promote and prop up and keep going our local economy, which is always a good thing to do. It is doing pretty well right now.

One other added protection we do is attorneys handle everything. We pay for all the legal fees. You have no costs in that. We take care of that. We do not touch the money. The money goes straight to the attorney just like the banks do. They do not pass it to the buyer and then the buyer passes it to the attorney. Right?  They want to make sure they just kind of cut out that little trail, so money goes from the bank straight to the attorney, you get a house.  It is the exact same with us. We do not touch the money either. That is just an extra level of security. That way they have one person that goes straight to the trust account in North Carolina, and that attorney is responsible for that money to make sure it goes exactly where it is supposed to, as agreed by all parties. Just like all the big banks do.  So again, we have not recreated the wheel. This has been around for as long as real estate has been around to be honest with you. So we just utilize the tools that are there, and this allows us to fix a lot of things. One great thing about that formula is it is nothing I created. It is just something, like I said, that has been in real estate forever, and a lot of real estate investors, everybody from Dave Ramsey to Robert Kyosaki to all these different well-known people out here that are in the real estate world, it is a formula in which they use, and hey, why recreate the wheel.  Right? Just follow the proven system.  That just makes life easy. Right? It is kind of like sit ups.  If you do them, you will get abs.  If you do not, you will not.

Keith:  Well, you mentioned the local thing.  I think it is also nice because I can actually know where my money is.  Sometimes unless you are really, really smart or really financially educated, you can invest in certain things and not really know kind of what it is. It is this enigma, and you just kind of sit and look at the newspaper every day and hope your money went up.

Jason:  Just up and down and up and down and up and down.  One thing I do like about real estate is the constant.  We do not buy anything for the short term.  Even our flip properties we approach them as we will keep it as a rental should we need to.  Really a lot of times now, we look at it as we will keep it as a rental first, but does it make sense to actually resell the property.  Sometimes it does, but a lot of what we do we are looking at holding those assets for a certain period of time. So who would do this?  Who would want to do this?  One thing that is interesting is about 30% of Americans want to sell their home but they do not want to do it the traditional way. They do not want to call a real estate company, put a sign in the yard, have their home and all the photos put all over the world and the internet. Right?  Because that is how we get the word out. And just for many reasons that does not appeal to them.  Maybe they are a private person. They do not like strangers walking through their house, whatever the case may be. 

And there are some houses out here that simply will not qualify for bank financing due to lack of maintenance. We have run into situations where it is a couple that have run into financial struggles and all they have been able to do is keep up with the payment but not keep up with the maintenance. That is okay for probably a short period of time, but when you do that for a decade, it becomes issues.  And now you get a home that may not qualify for most traditional-type bank financing, which is where we can step in. We can pay cash for the property, and we do not have those hurdles. They could be that they are physically just not able to do the things that need to be done to a house. One of the largest segments of our population, the Baby Boomers, are getting older as everybody knows, and probably some of you are feeling today. They are just not able to keep up with the things like they used to be able to do. We find that these folks are great candidates for our program in that they want to sell, but it is just exhausting to them to think about getting the home ready. Getting the home in a condition in which they may want to appeal to the masses, if you will. They have a tremendous amount of equity in their home, and they would just prefer the convenience of selling the house, having one showing, one person come through it, and be done with it.

Some of them are hoarders.  We have a few of those out there, too. It is interesting. I have been in some homes where this has certainly been a circumstance that we have run into.  They know it, and they are embarrassed, and they do not want anybody to know. That is fine. It is your home.  You live the way that you want, but we can help you in that situation. We have looked at homes. It does not matter the price range. It could be $150,000 or a million five. One of the largest homes in Greensboro in one of the most, I guess, prominent subdivisions in Greensboro was actually featured on Hoarders.  Amazing, amazing property. It has been a few years back, but it was one of their episodes, and the person that owned the home was just that.  This house was completely slam-packed with stuff. And it was a massive home.  So it really does not matter. 

The economic status, the price point, none of those things make any difference. It is just simply some folks get into a situation where they like to collect things. But they realize that is not going to appeal to just anybody walking through the home, and they do not have the energy really to go back out there and empty it out and do what needs to be done. Maybe you are one of these heirs that have inherited one of these properties because that does happen a lot.  We deal with a lot of estates, and almost all of them have some element of this, and we are able to step in there and just really help out the heirs.  A lot of them do not live here. They are out of state. They are out of the area, and they just do not have the local connection and time it takes to deal with getting a home ready when they are living in whatever Texas. So we are able to step in there and help them through that process.  It really does not matter to us what the situation is. We do have a solution for every single one of them out there. It is one of the benefits to being in business for 20 plus years is we pretty much have seen it all.

Keith:  Well Jason, I have some questions about some of these things you were talking about. Do you want to take a quick break and then come back –

Jason:  Yeah. Let’s do that. Then we can hit a fresh topic right out of the break.  That sounds good.

Keith:  That works.

Jason: And welcome back to the Jason Bramblett Real Estate Show. So we are digging into all things real estate investing today. If you have any questions, you can give us a call at the office at 553-0796 or go to Jason Bramblett dot com. Click on that email icon and shoot us your question right over.

Keith: You were talking before the break. You were talking about 30% of people would prefer not to sell their home through the traditional route, and I can tell you from experience that about a year ago, the house that I was renting at the time was up for sale. I just remember that we wanted to do right by our landlord, but you could be out in two hours. Somebody coming through. It did not matter what you were doing. I was joking that all of our stuff is still on the internet and will be on the internet for the next 10 years. There are a lot of different people that would have an issue with that, I would think. I am shocked that it is not higher than 30% to be honest.

Jason:  Yeah, it is.  It is growing actually to be honest with you. It is interesting. With social media and video and everything that everybody does online that says hey, look at me, right. People are actually getting more and more reserved about that now. So I do not know if it was, maybe some of the excitement of that is starting to wear off.  But it is amazing the stats and the statistics of what we see.  You are exactly right. There are many, many other reasons that people want to just sell their home. A lot of times it has to do with what we talked about.  The maintenance.  Simply, the traditional way of selling is not the best route for them.  It could be that they financially just do not have the money to do the repairs or get the property fixed up or whatever. Some people just want to be done with it. They just love the fact that look, I know that I am going to get a different price than opening the home up to the entire free world to get to the highest bidder, but I am okay with that because I just do not want to have that experience.

Keith: Convenience.

Jason: And convenience. It is the bottled water.  You go to the gas station. You buy a bottled water for $1.50 or you can go to the big box store and you can buy 50 of them for $3.  Right? So you pay for the convenience of getting your gas, walking in, having that glacier cold ice water in that perfectly contaminated plastic bottle. Right?

Keith:  Yes.

Jason:  Yes, that is what some folks would say.

Keith:  It is cold though.

Jason: It is cold, and it is right there.

Keith:  It is easy.

Jason:  It is easy. Absolutely.

Keith: We pay for convenience all the time.

Jason: All the time. Fast food, everything. It is all convenience.  We have purchased many homes, all shapes, different sizes, whether they are in perfect condition, in horrific condition.  It really does not make any difference. We have some folks that have a perfectly fantastic property. They simply just like their privacy, and do not want folks walking through it. That is perfectly fine.  It is one showing to us. We will make an offer. If we have got a deal, we will move forward.  We will close, and actually the great thing is you can actually pick when you want to close. Close anytime you want.  It does not matter. We do have one requirement. You do need to leave when we buy the house.  That is still one of the requirements. But outside of that, if it is maybe, maybe it is something where you need to close quickly. But what we find is a lot of times, people really do not really need to close quickly.  They need to close in 62 days to make everything work out perfectly for whatever is going on in their life. That is very easy for us to do. Convenience is certainly something that we recognize that the public wants, our clients want, and we are there and ready to offer that. So we can definitely help you out.

Keith: So just to be clear. So if somebody wants to sell their house the traditional way, you can absolutely help them out. This is just another service that you can offer and a value that your group can offer to somebody.

Jason:  100%, yes, that is correct. We still sell homes every single day. Our goal is always to push on the top dollar through using our home-selling system, and yeah, this is just one arm or one option that we have. There are a lot of companies that do not have the ability to do that. That is one of the benefits of us not being a franchised cookie cutter-type business that we can actually adapt and change and move much quicker than some of the more traditional real estate companies simply because well, we can change the rules.  Right? We can change with the client and service the client where if you go, let’s just say to McDonald’s, and you go down there and I do not think they have one on the menu, but maybe they do, and you say hey, I would just like to have a Philly Cheesesteak, it does not fit their franchise model.  Right?  No, we do burgers, we do fries, we do shakes.  This is what we do.  And there are real estate franchises and companies out there that they do not have these other options because that is just what they have. Right? But maybe you need something different.

That is where we have the flexibility that, you guys have heard me for years on the radio talking about our guaranteed sales program. Simply it is our corporate relocation program, if you will. I did that for a decade, and again, not trying to recreate the wheel, but I observed corporate relocation properties sold for more all the time than the traditional real estate sales companies were selling them for. I would look into it and say what in the world are they doing that helps them achieve a greater value for the house? And really what it came down to was the preparation and the steps in which they basically put out there to get the property ready to go to where they had buyers that would walk in with really great confidence knowing they were buying a great house and they knew exactly what was right and what was wrong with the property. The great thing about the re-lo companies is they had never seen the house, and so they had to do a bunch of investigative work to figure out what they were selling.  Right?  They got that information typically from us. We would share it with them, and they said okay, now let’s just be transparent. They would just share what was right and wrong with the property with the consumer, and they would pay more because the element of surprise was removed. You can do that, and a lot of people do this with a home inspection. Right? You buy a home. You get it inspected. From the buyer’s standpoint, that is a very smart move, and we highly recommend it. From the seller’s standpoint, you should actually get that done first because if you do not, now you are in a reactionary mode to anything that may come up. And when you react to things typically it costs more money.

Keith:  That makes perfect sense because it might be cheaper to fix something yourself as opposed to have it found out in inspection and then have to barter back and forth with –

Jason:  Either bartering or maybe with something very, very simple, but let’s face it. I do not know Keith. I do not know what his abilities are.  Even though it is a 5-cent washer that any human being could fix, I do not want to trust that because when the house floods, it will not be Keith’s home anymore. It will be mine.  So I want a licensed, quality plumber company or whoever to go over there and do this. So going from a 5-cent washer and a $7 trip to Home Depot, now we are at a $200 plumbing bill, and it costs the seller more money. These are things that we looked at and we adapted into there. So if you would like to get more information about selling your home, you can go to Jason Bramblett dot com or be one of our investment partners, click on that email link icon over there.  Shoot us a message or give us a call, 553-0796.  Everybody have a safe and wonderful Labor Day weekend, and we will be back here next week.

Posted in Radio Show
Aug. 24, 2019

RE Investing Episode 7

Real Estate Investing: Episode 7

Jason Bramblett Real Estate Show Podcast 

Click here for link to podcast

Jason:  Good morning, Triad.  I hope everybody is doing well.  Survived the storm last night.  That was something else. I tell you what. It got serious down in our area for sure. So hopefully, everybody fared out pretty well. Today we are going to dive deep into the real estate investing topic we have been covering.  This is episode four for you guys that have been following along.  And of course, if you do not have time to make notes, jot it down, whatever, you can hit the website, Jason Bramblett dot com. Click on the blog, and we have got the audio saved there for you as well as a written version, transcription of the show. So you can follow along and read along, whichever you want to do.  Fact check me. Whatever.  You just check it out.  It is there on Jason Bramblett dot com. Hit that blog site, and it will take you right to it. So just to recap. We have walked through several things. What to buy, where to buy, how to buy.

Mikell:  Okay.

Jason:  All right. Just kind of walking you through the whole series here.  How to actually evaluate the opportunity to see if it makes sense to purchase the property, and then how to structure the purchase. Not only is the house the right fit, is the financing the right fit, is the property condition aligning up with the price, does the property condition line up with it being a rental home, does the location line up with it being a rental and or a flip property. So we looked at all those different things. Now we are dealing down in how to be involved in real estate investing if you do not want to be the landlord, if you do not want to be the one out there doing the work and flipping the property. We talked last week about taking your dead money, money that is just sitting around doing nothing, and how to get that moving. Dead money for us is just money that is sitting in a savings account earning basically nothing, and or is maybe in a CD that is earning 2% on a good day if you are lucky.

Mikell:  Absolutely.

Jason:  The downside with that is it is locked in, and of course, there are penalties for unlocking it. So most people do not want to do that. They want to have the freedom of flexibility and not tying that money up. But essentially, they do not also want to put it in the traditional stock market retirement accounts because then you can lock it up for a long time, and there are some very hefty penalties depending on the type of product you put it in, you may not be able to get that money out for a very, very long time unless you make a considerable donation to our lovely IRS.

Mikell:  That is very true.

Jason: They would love for you to do that. Desperate times call for desperate measures, and when you look who is the recipient of that, the IRS fares very well in an economy that tanks and people panic and pull their money out of stuff that they should not.  The tax consequences are severe. So you can end up with a situation where you are making a really nice donation of 30, 40, and 50% of your money in taxes because you unplugged it too soon, or you came out of the, basically you broke the agreement that you had by cashing out of the product, and it is going to cost you money.  So dead money again for us is just money that is sitting in a savings account, checking account, and you do not know what to do with it.  You do not want to put it in the market. You know that you do not want to be a landlord, and you know that you do not really want to do all the fixup. So we have got a place for you. What it looks like is this. We take your dead money, and we acquire real estate.  We rehab the property, and upon completion or eight months, so our terms are always eight months. Whichever is sooner we will cash you out at 100% plus whatever our agreed upon interest is, which right now, I think is about 7 ½% depending on the deal that we are doing. So if you had $100,000, you would get $7500 in interest, and that would be either when the house is sold or refinance.  A lot of the properties we keep, and we do not sell them. We do not flip the properties, but it is a really good tool in which if have got the capital and you want it to move, we can help you do that. So it is a way to become a real estate investor without having to do all the heavy lifting, if you will.

Mikell:  So they can get that within eight months?

Jason:  Yes.  We are going to cash them out in eight months no matter what. Whether the house is sold, not sold, it does not matter. They will be cashed out in eight months.

Mikell:  With the interest?

Jason:  Yeah.  Exactly.

Mikell: That is amazing.

Jason:  We keep it very, very simple, and we create a lot of opportunities.  It creates opportunities for us. The reason why we do this is because the bank never can move as fast as we need them to move.

Mikell:  Absolutely.

Jason:  Opportunity typically comes with pain, and when people are in pain, they want it over, and they want it over quick. Most banks that we deal with, and we deal with a lot of different banks, they simply do not have the speed in which we need them to move at. That is pretty much, that is nothing bad about the bank. It is just their product does not line up with our timeline. So we have to use cash, and we have to move quick. That is why we convert it later to a more long-term financing. We will refinance ourselves and the investor out of that property or out of that product. It is a fast-moving world, as they say. Speed, when you have issues, well, I will give you an example. We have people that do not plan for foreclosure, believe it or not. In America, when you miss a payment, if your payment is due on the first, they do not throw you out on the second.

Mikell: No. They give you a grace period.

Jason: They do. Then even after, they do not throw you out at 30 days. They typically do not throw you out in 60 days, 90 days, 120 days.  We just bought a house that they have not made a payment in three-and-a-half years. So the bank –

Mikell:  Really?

Jason: -- yeah. Your deadline of when you are going to be moving is pretty well known.

Mikell:  Their credit has to be terrible though.

Jason:  Oh yeah, their credit is destroyed. Absolutely. But it is not a surprise date.

Mikell:  Okay.

Jason: But yet, we have some folks that contact us and they will say hey, it is Monday. My foreclosure is on Friday. Can you help me out? Well, yes, we can, but I cannot do that with a traditional bank. There is no way in the world I can set up a loan process with a traditional bank to be able to buy a property or contract a property on a Monday and close it on a Friday, but if I have the cash, I can do that. Actually, I can close very, very quickly. And then we can switch it over to some other kind of long-term financing.  But we have a lot of people that contact us for, and it is not just us. I am sure they are contacting many different real estate companies, and there really is not much that can be done with that kind of short notice. These folks did not get seven-days notice. They have had months of notice.

Mikell:  Absolutely.

Jason:  They have just procrastinated for whatever reason to make a decision until they actually have to make a decision.

Mikell:  I think it is denial.

Jason:  It is for sure. It is. For whatever reason, they think if they stick their head in the sand and it will all go away.

Mikell:  Absolutely.

Jason:  It does not.

Mikell:  Nope.

Jason:  It only gets more intense. You will leave. I promise you. They will send the sheriff or the highway patrolman –

Mikell:  Unfortunately.

Jason:  -- and they will change the locks, and you will not be in the house any longer. It is just the reality. That is what you agreed to. You agreed to give the house as security for the loan that you took out. And when you stop paying your obligation, the bank has the right to recoup their asset to sell it to get some of their money back.  Hopefully. Typically, they get a good bit of their money back. Sometimes, wow.

Mikell:  Sometimes the bank does lose money.

Jason: Oh, there is no question.  Absolutely. Sometimes they should in my opinion. But just because your creative loans that you come up with, but in the most part, if the situation is correct, where the buyer told the truth, the lender gave a good product, okay, everything being equal. No three-card monte on either side.  All right?

Mikell:  Okay. Okay.

Jason: All things being equal, then yeah, the bank certainly has the right to come back and take that asset.  They should. They do all the time, as a matter of fact.

Mikell: All the time.

Jason:  So with investing, what we are looking for in properties, we will get into that a little bit here.  We are going to talk about that. Some of our opportunities just do not work with regular bank financing. So we created an opportunity for people that want to be in the real estate investment side, but they do not want to do any of the legwork. They do not want to be the landlord. They do not want to deal with all the stuff, so that is where we step in and take care of that.  But they love the fact of having their money in the real estate market and actually seeing that grow. We have got investors who have been with us for over a decade. They understand our process. They understand how we work. It is usually very, very quick, very, very simple, and we are always looking for opportunities. So we are going to talk about that.  Foreclosures, estate sales, probate, tax sales, all those things that, those are all the opportunities we look at out there.

Mikell:  I can only imagine. It is like you said. Jason, this is a product that is tangible. You can see my sweat equity. You can see the finished product. You can see the process.

Jason: Absolutely. Absolutely. It is not always a foreclosure type of situation.

Mikell:  Absolutely.

Jason:  Some people look at foreclosures like that is the only way to –

Mikell: Make money in real estate.

Jason: -- well, whatever they think their perceived deal.

Mikell:  Okay.

Jason:  It is amazing what the word foreclosure does to the psychological processes of people.  Just because it is a foreclosure does not mean it is a deal. We have had a lot of people over the years contact us about buying one, and we take a look at their financial situation, and it is like you are not set up for this. You do not have the means to be able to fix a home up, and depending on, a lot of times the product that they are looking at, it really is, they are not getting it at the right price. They are going to put $20,000 into it, and by the time you figure out what they pay, what they are putting into it, it is retail.

Mikell:  Okay.

Jason:  Basically, they are getting right back up to where the market is. They are not getting any equity or any benefit to doing all the work. So you might as well just go buy a house that is already to go. But there is something in the brain that triggers I got a deal with the word foreclosure. I have seen more people overpay for properties, buying foreclosures, thinking that they were getting a deal because the price was lower than the subdivision average.  But by the time you factored in what you put into it, sometimes you paid more than the house you could have bought down the street.

Mikell:  Absolutely.

Jason: Do not get tricked into the word foreclosure because it does not mean deal. It just means the house is foreclosed on. That is the only thing it means.

Mikell: Gotcha.

Jason:  Whether it is a deal or not, that is to be determined. We buy a lot of failed rentals. There are a lot of landowners out here or property owners that thought they wanted to be in the real estate game and just made really bad decisions.  They have a good house, but they made some really poor decisions. They typically rented it too cheap. They did not have enough cashflow, and then when something goes wrong with the house, what they do to save themselves is they defer the maintenance. So every single year the house keeps going in a downward spiral until where it is so bad nobody will even rent the house.  We see that over and over again. There are some landlords out here. I think it is a strategy for them where they just defer maintenance until the house is trashed, and then they just sell it and go buy another one and do the same thing over and over and over again.

Mikell:  That is terrible.

Jason:  It is not really a good business plan. I have never really figured out the logic or the math in that, but we classify some of those folks as the term slumlords, and that does not necessarily mean they are in the bad part of town. I have seen them in some of the nicest areas in the Triad, and typically what it is is a desperation. They have got the wrong tenant in there, and or they rented the property too cheap because they could not hold out to get the right person, and if you cannot do that, then definitely real estate investment is not for you. If you have to buy a home, fix it up, and you have to rent it in a very, very short amount of time, you do not have what we call patience money to find the right tenant then, and not only find the right tenant, but have multiple options of great tenants, real estate investing is not for you.

Mikell:  You do hear the saying that some money is better than no money. So you are saying do not feed into that.

Jason:  Some of those folks, if we had them talk to us on the radio show they would say that statement is false in that sometimes some money is the only money they ever got. When you have tenants meeting you and they have a big wad of cash, and they want to advance pay rent two or three months, I know that sounds like you won the lottery, but guess what? That is probably all the money you are ever going to see. Then you have to wonder why do they have cash. Do they work for tips or do they just work off the grid? You want to make sure you are in good selection with the people you have coming to rent your home because it is your asset, and you want to protect that.  Now the hat shifts, and you have to think not only like an owner, but a property preservation manager, and you want people that are going to take care of the property. There are some fantastic tenants out there. We have some great tenants. We have folks that actually take care, in my opinion, they take care of the property better than the previous owner did.

Mikell:  Wow.

Jason:  They keep up with it, and they treat it as if it was their own house, and they just have that pride of I am going to leave this better than what I got it. Now, you do have the other side of that where you have people that just they stay until it is so bad that they do not even want to live there anymore, and then they move. Again, patience money, you can weed those people out pretty quick.  That is a lot of what we see, and we buy a lot of these type of properties. Sometimes we cannot even make the math work. We just had a lady call from a small town outside of Winston and the house was rented out of desperation, rented way too cheap, and she has no money to fix it up.  Got some major structural issues, and it is a sad situation. She needs the money to pay the mortgage, and she is probably not going to be able to do that for much longer because the house is probably in such a condition now it really should not be rented. So the tenant probably just for safety reasons needs to vacate the property.

Mikell:  You have to think about what are you doing with those rent payments. Some of the proceeds need to go back into the house.

Jason: Absolutely. You need to create what we call it a sinking fund. But basically all the properties that we own, we set aside a portion of the rent every single month for stuff.  Emergency fund. Whatever it may be. Roofs do not last forever. Water heaters do not last forever.

Mikell:  No.

Jason:  You have got two choices. You can plan for those things knowing they are going to happen.

Mikell:  Or you can get a loan when they happen.

Jason:  Or you can get a loan or you can go to Mr. Visa or Mr. AMEX –

Mikell:  There you go.

Jason:  -- which really is not a good financial plan. If Visa and AMEX are your backup, that is not a plan. That is a reaction, and reactions typically do not work out well.  They are very, very expensive. So you want to have a plan. You want the property to work for you, and you not work for it. There is a big difference in that statement. You need to make sure that you are setting yourself up. It is just not only the bad tenants sometimes. Sometimes it is bad management. Some people do not need to manage property. They cannot even manage their own household. So you have got to have systems in place and processes in place to protect your asset, but also to make sure you are taking care of your tenant. That is your responsibility as a landlord to provide safe housing. Now you will have some people who will work against you in that, and then there are means that you have legally that you can take to fix that. But it all comes in, it is selection up front, and it is choosing the right person. Let’s do this. We are going to take a quick timeout. We are going to go pay some bills because hey that is the responsible thing to do. But we will be right back. We are going to dig into a few more and talk about security and your money. We will be right back with the Jason Bramblett Real Estate Show.

And welcome back to the Jason Bramblett Real Estate Show. We were digging into the dos, the don’ts, the hows, and what not to do. Do not get yourself in a desperate situation. I see a lot of times folks forcing deals, and that is the worst thing you can do. When you want to buy a house so bad, you want to be a real estate investor so bad, that is when I see most issues really kind of –

Mikell: What do you mean forcing deals?

Jason:  Force the deal. When you are financially not ready to do it.

Mikell:  Oka.

Jason:  You either financially do not have the funds or you do not have the discipline.  It is like Kenny Rogers. You have got to know when to hold them and know when to fold them.  Right? Unfortunately, I see too many people get caught up in the hype and excitement.  A lot of these seminar things you go to that are in these hotels, and they get caught up in stuff that just mathematically, if you stopped at looked at it from about a 30,000-foot view you would know it is not going to work.  But they get too close to the deal, and they get too emotional with it. I think that is one of the things that has been beneficial to me with real estate is being able to remove the emotional piece out of that. Because everybody that is selling their home is emotionally tied to it.

Mikell:  Absolutely.

Jason:  I am able to come in and help them get past that, get past themselves, and look at it very much from a mathematical process.  We tell a lot of people no. You should not do this. You should not buy, and you should not sell your house. We have a lot of folks where it just does not make sense.  Some of them still do it; they just do not do it with us. We just do not participate in stupid if we can help it. I do not want to be associated with that. So we will tell people no, and we will walk away from the deal, whether they are buying or selling. That is pretty rare in our industry because most people will sell anybody anything. We just do not sign up for that.

Mikell:  Let me ask you a question. Say someone wanted to rent their property, would you help them basically be their landlord as well? Say they wanted to rent, and you get a percentage, your company gets a percentage?

Jason:  Yes, we have a property management division of our company. We do full property management services.  Carolina Rental Management is our rental arm of that, and yeah, we absolutely take care of everything. So you could own a property and still not have to deal with anything. There are decisions you have to make, but as far as the how to and the tenant selection and screening and all that, we do all that.  Check backgrounds, everything.

Mikell: The reason why I asked is because you said a lot of the people were taking rent that was not what they needed to. It was too cheap. You are someone who will not settle.

Jason:  That is true. But most of those people do not use our services either.

Mikell:  They should. They should though.

Jason: If not us, they should use a professional property manager. Most people have a problem with the word no, and when somebody calls, everybody has got an excuse for everything. Some people are just too soft.

Mikell: Absolutely.

Jason: And they should not be landlords because you can get yourself into a situation where you get taken advantage of.

Mikell:  Yeah, they put the kids in the story.

Jason:  Absolutely.

Mikell: And I am having a hard time.

Jason: Absolutely. Like is about hard times.  That is exactly right. You are not the government. Now if the government allowed me to hook my printer up to the printing press and just print my way out of my problems, I would be happy to let anybody stay anywhere they wanted as long as they wanted to regardless of whatever excuse Mama has.

Mikell:  Not a problem.

Jason:  But we do not have that luxury, and so we have to make good business decisions. Sometimes tough love is good love. We have to help some people through their problems. We approach everything with a plan. My property manager, Elizabeth, is phenomenal. She actually sits down with people and will help them work out their finances.  Help them get a budget established if they need to.

Mikell:  Awesome.

Jason:  Some people never had that education.

Mikell:  Absolutely.

Jason:  And they will do it, but somebody just has to tell them and give them a guideline. We can help them through that. Well, we were talking about money, investing, and obviously when you put up money, you want some type of security. Right?

Mikell: Right.

Jason: Everybody wants some type of security. The security you get in the stock market, I do not know what that is. I guess if you can push the button fast enough and sell fast enough, you do not lose as much. Right?  You can have a perceived security in that you can invest in things that typically have a lower return, but they are also more secure. You could also just leave your money in the bank. Right? That is pretty secure.

Mikell: That is very secure.

Jason:  It is FDIC-insured up to $250,000. It does not do anything. It just sits there and looks at you, and it is pretty secure.

Mikell: And that is comforting for some people.

Jason:  It is. It is. Security in our situation is what we do. It is just the same thing as the banks. We secure everything with a recorded deed of trust in the county where the property is at. If you give us $200,000 to invest, it is going to be a secure lien of trust against that property, and then we will not be able to do anything with that property until you are cashed out basically. So we cannot refinance the house, and we cannot sell the home until you get all of your money back. That is a public record recordation in the county, so it is about as secure as you can get. Of course, if we did not pay you back, you could always foreclose on the house because that is what a deed of trust lets you do. Then you would have a really good deal on a house because I only buy houses that make mathematical sense. So it is a good deal for everybody. If you would like to get more information, you can go to Jason Bramblett dot com. Next week we are digging deeper into how to get into real estate investing.  So everybody have a great weekend.  We will see you next week right here on the Jason Bramblett Real Estate Show.

Posted in Radio Show
Aug. 17, 2019

RE Investing Episode 6

Real Estate Investing: Episode 6

Jason Bramblett Real Estate Show Podcast 

Click here for link to podcast

Jason:  Good morning, Triad.  I hope everyone is doing good. It is one of those wonderful, ridiculously humid August days. It is going to be, what, 200% humidity pretty much.  Hot, 90 plus, but if we did not have the weather to talk about, some days we would not have anything to talk about. Right?

Mikell:  To complain about.

Jason:  There you go.  Complain.  It is always too something. 

Mikell:  Yes.

Jason:  It is never too perfect.  That is for sure. I have been in some very perfect climates before though.  For me. Now everybody has got their own temperature.  Right? So me and my wife we are about five degrees variance.  It is not too bad. It is better than 20 for sure. We can deal with five degrees.  We are digging into the real estate investment series that we have kind of been going through the past, well actually, this is show six of the real estate investing. Today, we are diving into really the nuts and bolts of the how-to. Not so much in the how to get the house ready and all that, but the money side of it. How does this math work?  How does this thing come together? If I have some money, what should I do? I am thinking about being a real estate investor. I am a real estate investor. I am out of cash. I need more cash. Where do you get cash? All those types of things. You have heard the acronym OEM, other people’s money.  Well, we are going to talk a little bit about that.  The risk, the rewards, and all those things in between. If you have a pen and paper, grab it.  You want to make some notes.  If you do not, do not worry about it. We will podcast this show up to our website. You go to Jason Bramblett dot com, click on the blog, and you can listen and read all at the same time.

Mikell: Awesome.

Jason:  So it is there for you. The only thing we do not have is my smiling picture, but you can probably google that and find it. So if you need somebody in front of you while you are reading it, hey, there you go.  You can find me out there. Just recapping over last week and kind of where we are so we have some context. So last week we ended with talking about dead money. Dead money is money that you have sitting in your account that is doing nothing for you. You basically are earning than 2% on this money. Okay? So it is just sitting there.  More than likely it is .00025. You know what I am talking about if you get that check for six bucks in your interest account.  It is not exciting. It hardly will get you a, what is the biggest drink they have at Starbucks?  Grande? Venti? Something like that.  Whatever. Extra large. How about that?

Mikell: I just say large when I go.

Jason:  There you go. There you go. Just a large drink over there. But what we want to do is figure out ways to get that money moving so it is not sitting in that dead account and it is just sitting in there staring at you. The downside with dead money is that sometimes it disappears.  Dave Ramsey talks about this.  If you do not tell money what to do, it will figure out where to go on its own. Sometimes you end up with some cash and then well, 90 days you look back and it is like where did that go? There is no Bentley sitting in the driveway. Right?

Mikell: Not likely.

Jason:  And it just sneaks away. So you have got to purposely tell this money where to go, what to do. And just to be clear, we are not talking about equity.  We are talking about cash. So this is not money you can get your hands on through a HELOC. Okay. That is other people’s money, all right, just to be clear. That is borrowed money. That is not what we are talking about. We are talking about dead money, actually cash.  And for some of you, we probably are talking about cash in your little safe, or under your mattress, or in a coffee can in the backyard. Do not put a survey flag by it. But you get the idea. So what are we going to do with it? We want to get this money moving. We find that there are people that just do not want to be in the market because, depending on the type of account you put it in, it can tie it up for a long time.

Mikell: It can. And actually, to get that 2%, you are going to need to tie it up.

Jason:  Oh yeah, absolutely. You are not getting that sitting in a savings account.

Mikell: No.

Jason: At least none that I am aware of. I will not ever say never. There may be one person out there that is doing that, but it is probably in a CD which has got a time commitment to it. Let’s dig into the example. So let’s just for easy radio numbers, let’s just say you have got $100,000 sitting in the bank. Okay. Just to make the math easy.

Mikell:  That you do not need.

Jason:  That you do not need.  It is extra.  It is I have tapped out everything I can do. I am still investing in my SEP or my Roth or whatever it is, but now, maybe I sold something.  Maybe I inherited $100,000.  Whatever it is. You have got $100,000 sitting in your account, and you do not want to put it into a market, or you do not want to tie it up, but you are ready to start investing.  You want to get that money moving because that .00025 interest rate is not exciting.

Mikell:  Not at all.

Jason:  So the target is we need to find a property that we can buy, and at the end of the day, it needs to end up being somewhere in that $130,000 range or more, but let’s take in radio numbers, and we will the math easy. Let’s just say I can buy it, fix it, and at the end of day, it is worth $130,000 when it is rented.  And that is what I am looking to do.  I am looking at buying and holding this property, and so really where you need to be on the price is somewhere in that $75,000-$80,000 range.

Mikell:  Okay.

Jason:  Now, some people will say, Jason, it is a seller’s market. It is ridiculously hot. Houses are selling in hours.  There is no way you are going to find a $130 or $140,000 house for $75,000. Well, you are not going to find 100 of them.  But you do not need 100 of them.  You need one.  That is all that we are looking for. I can assure you there is one out there.  Somewhere in America. It may not be right here in your backyard, on your street, or in your city, but I would imagine somewhere in the Triad there is a house that you can pick up this way. I can assure you there is one in North Carolina somewhere.  I will promise you there is one somewhere east of the Mississippi.  Okay?

Mikell:  Okay.

Jason:  There is a property out there in which you can do that. You cannot do it with all of them.  And we are going to talk about this in the show and why people sell and why people sell the way that they do.  You are thinking like a retailer.  You are thinking of the person down the street that lists their home, puts it on the market, and they got the most money. That is not what we are talking about here.  We are talking about folks that are selling for lots of different reasons and different ways in which to find these properties.  And we are also talking about buying a home that is not in good condition.  Okay? So we are going to buy the home at a discount because it is in not great condition. It is not retail, if you will. And for our radio example, let’s just assume it needs $25-$30,000 worth of work. So we have a purchase price of 75 and just to make it easy, you are going to put 25 grand it, so all in 100% is hey, magically, $100,000. Which is exactly what we have.

Mikell:  Okay.

Jason: All right. Let’s say we get that house rehabbed and even with the $25,000 worth of work we got that done. It looks great. It is beautiful. It is ready to go. It is in the right place, the right location, and we get it rented for $1300 or $1400 a month, which is very doable to do on a $130-$140,000 home. You can typically rent it pretty easily in our area for 1% of whatever that value of the house is.  Now, what I want to do is to go find a bank partner that can cash me out of the property. You can do that through what we call a cash-out refinance. Most banks will do it somewhere 75-80%. So if they did it at 80% and the house actually appraised for $130 or more, you would get 100% of your money back. You would get all of your $100,000 back. You would have a tenant in the property paying $1400 a month, which would more than pay for the mortgage at $100,000 with today’s interest rate.  You would actually be making money and actually have some cashflow, and then you would have your money back, and you could go do it again.  All right? And because now I have my $100,000 back, I am ready to go find another property and do the same thing over. There are some banks that may not do it at 80%.  Maybe you do not have a proven path.  You do not have any experience, and they are going to be a little bit apprehensive maybe. Most of them will do 75, so at the worst-case scenario, if you had $100,000 in it, and you were only able to get, let’s just say it was worth the 130, you can only do the 75% of the value. Well, you have got $5,000 of your dead money invested in a property that is worth $130 or $140,000 with a renter in there that is probably cashflowing somewhere between $3-400 a month.  So in a very, very short time, like in the first year, you will have your $5000 back.

Mikell:  So Jason, let me ask you this question. Your tenant pays you.  Do you give some of those proceeds to the bank now?

Jason:  Oh yeah, you are making a payment.

Mikell:  Okay.

Jason:  In essence, your tenant is paying for your house.

Mikell:  Okay.  Gotcha.

Jason:  So we are using the tenant’s money, and we are paying the mortgage, the interest, the taxes, and hopefully, if we did everything just right, there is a little bit left over for us, for Pampers.  Right?

Mikell:  Right. Right.

Jason: For whatever it is we have. Now, that formula works no matter what the price point. I just did $100,000 because it was simple, easy radio math. But it works if it is a $200,000 house, a $150,000 house, or a $7 million apartment building. It makes no difference.  The math works. You can force appreciation in certain products by buying them in not so perfect condition. You cannot do this if you are paying retail, but we are not talking about paying retail. So you could buy a $7 million apartment community. You could put $3 million in it. Now you have got $10 million invested in this property, but because you fixed it up, you are able to charge more in rent.  And now you are thinking your $10 million apartment community is now worth probably maybe 13, 14, 15 million. Whatever the case may be, and you can refinance it out and get all your money back and go do it again.  Now, some of you will say that is just great. I am just short I do not know $7 million. Well, right. Exactly. You have got to crawl first, and then walk, and then run, and then sprint. You can exponentially build on these numbers. You may never be able to do the apartments, but it does not matter.  You could do it with a duplex. You can do it with single-family homes. You can do it with a six-plex. You can do it with a ten-unit apartment building. You can do it with anything really that is basically you can buy right, rehab it right, and rent it.  And then refinance it out. That formula works all the time in every single city, in every single town in the United States.  I do not know if it works outside the country based off what I know about investing outside the country. I would not necessarily say you should do that with all your money or the money that you have. I have heard some stories where certain governments of certain countries liked your idea, so they just took your stuff.

Mikell:  Oh wow. 

Jason: Well, they do not have the same rules we do like private property rights.  America is unique in that you actually own the property and you have a deed.  In certain countries, you may have the illusion that you own the property before the government takes it back because it is theirs. This formula is not mine. It has been around for decades and decades and decades and decades and forever.  Probably ever since there was something built. This is a very tried and true formula. This is not Jason Bramblett Real Estate formula.  This is just a formula that works in the industry. It worked in 1910 when the Rockefellers and all these folks were in business. It worked in 1980. It worked in 1970, and it still works in 2019. As long as there are people renting property, this formula will always work. So whether it is residential, actually it works in commercial, and as we talked about multifamily or apartments, it works in that really, really well. The key is it has to be rentable.  Does it work on land?  Probably not because most people will not pay that much to rent land.  It could potentially in certain locations, bigger cities. If you go into the Chicagos and New Yorks and some of the bigger cities, you will find that some of the buildings, although you may think that one person may own it, but typically not.  One person owns the dirt, who rents the dirt to the person that owns the building. The person that owns the building rents the building to many, many different companies, and sometimes even those companies within those rentals sublease to other companies like Regents would be a perfect example.

Mikell:  Okay.

Jason:  They rent 5000 square feet. They break it up, and then they do little office rentals to multiple people.  Perfect example of subleasing. So there are lots of ways you can slice up real estate to create value.  It is not a one-size fits all type of business. There is lots of creativity within real estate.  The great thing I love about real estate is it is tangible.  You can touch it and feel it.  You can burn it to the ground if you want to. You can rebuild it. You can bulldoze it. You can do whatever you want with it because it is a tangible product. We have folks sometimes that will call and tell us hey, we want to sell this land, and to justify their ridiculously high price they want, they will say, hey, you do know, Jason, they are making anymore land.  In theory, that kind of sounds right.

Mikell:  It makes sense.

Jason:  Yeah, but then you call DH Griffin and then he just removes whatever is on it, and then all of a sudden, guess what? I just recreated some new land.

Mikell:  Okay.

Jason: So you can get rid of stuff. Mother Nature sometimes does that. Right?

Mikell:  Right.

Jason:  She will come through and just wipe out a whole block.

Mikell:  Yeah, unfortunately.

Jason:  So you cannot necessarily make the dirt, but you can sure remove what is there and start over again. So you can kind of make new land. So the numbers simply really do not matter.  Whether it is $100,000 or $50 million you have sitting, if it is dead money, it is dead money, and you want to get that moving.  There are ways you can do that within the real estate world that does not tie up your money for a long period of time. Then you can cash out, start over, and redo that. We are going to do this. Let’s take a quick timeout because I am going to dig into some more numbers, and I want to make sure I have plenty of time to run through that without a commercial break. So grab a pen, grab that paper, come back.  You are listening to the Jason Bramblett Real Estate Show. We will be back in just a minute.

And we are back.  You are listening to the Jason Bramblett Real Estate Show. So before the break we were talking about the numbers, the math, and how to do this, and how do I take my dead money that I have in my account, put it into a property, and then how do I get it back so I can do it again. Because a lot of people think well, if I paid cash, I am stuck. Well, no you are not stuck.  There are instruments out there in the lending world that can help you get your money back. So you can do a cash-out refinance, which is what we were talking about, which would allow you to get your $100,000 back so you can go do it again. It will allow you to get your million dollars back so you can go do it again. It will allow you to get your $10 million back so you can go do it again.  Again, the zeroes do not matter. It is the formula that works.  Now, of course, you cannot do this with a 219 credit score.  Right?

Mikell: Right.

Jason:  You have to have some income.  Right?

Mikell: Right.

Jason: Because the bank, just because the math works on the deal, if you have got a 580 credit score and it is some shady income, probably not going to work out so good for you. Right?

Mikell: Right. And if you have repossessions or anything else like that, it is not going to be good.

Jason:  Right.  There are still some qualifications. It is not a magic pill here. It is just the formula works, but you also still have to have other responsible things within your credit.  Right?  So you cannot just do this, and do not get mad at me if you go over there and you have a 522 credit score and no job and they will not give you your money back.  Right? Well, they will not even do the loan. So you need to know that going into it. Right?

Mikell:  Absolutely.

Jason:  They may give you a $5000 loan on your $140,000 house maybe.

Mikell:  Maybe.

Jason: But you are not going to benefit from this program. So you do need to have some income and some credit to be able to do the refi. Here is the great thing. You can know all that before you do anything. Go to the bank and talk to them. Say hey, I heard this crazy guy on the radio who said I could do this.  Can I do this? They will pull your credit.  They will look at your financials, and they will tell you yeah or no. No way. No, we would not even loan you $10, or you may go there and find out that they would do this as many times as you want.

Mikell: Right.

Jason: So everybody is going to be a little bit different. But you do not have to go out and do it and then find out. Go find out first, and then come up with your plan. Here is what I wanted to get into. Some of you own rental property and you are just not cut out for this.  Some people are like hey, I do not like confrontation, and I do not like dealing with people. I do not even like people. I would rather own a cactus. Right?

Mikell:  I know people like that.

Jason: Absolutely. So this may not be for you. Being a landlord may not be for you. Now, if you buy the property right, you could hire someone. It is going to cut into your cashflow, but if you follow our system and formula, you probably could actually do that and still be okay and still have that covered and have somebody there. But there are some owners that we talk to or some investors that have this money sitting in this account, this dead money, and it is really in this category called no headaches, meaning yes, I am earning nothing. My money is dead, but it does not bother me. It does not talk to me.  It does not give me any kind of conflict. It does not tear up my house. It does not do anything.  It just sits there. I look at it. It looks at me, and nothing happens.

Mikell:  That is a fearful mindset though.

Jason: It is, but sometimes it is through bad experiences that they have had.

Mikell: Absolutely.

Jason:  They are paying the price for that.

Mikell: Absolutely.

Jason:  As long as you are okay with that, leave your money where it is. And this probably is not for you. If you do not want to deal with people or tenants or all those type of things, it is not going to work. But what we have come up with and what we have been doing for 15 years or longer, we have clients, we have sold their home, and they are like hey, Jason, I really do not need this $300,000. What should I do with it?  I really do not want to put it in the market because I do not want to tie it up. I need to keep a little bit in case of an emergency, or I need to put it in something short term.  Most of the time what they would do is they would go put it in a CD, and they would probably earn whatever the rate what was.

Mikell:  The 2%.

Jason: Yeah, the 2%.  Whatever it may be.  You tie it up for a year for 2% or something like that. They wanted to get a little bit better than .00025, but 2%, which is not really exciting because 2% basically is zero.  Especially when you look at the inflation rate. So it just makes you feel better.

Mikell: And then you have to pay taxes on the one that you gained.

Jason:  So the 2% just makes you feel like you are actually doing something, but realistically it is zero because inflation is definitely at least 2% if not more. So you could actually be going backwards. What you want to do is get that money moving. We have partnered with a lot of our past clients and real estate folks around the Triad and actually all around everywhere that have dead money that they want moving.  They want to be in real estate. They just do not want to do it. So we have a system within our holding company where we actually buy properties and do just this.  We have partners that come alongside of us. They provide the capital. We provide the knowledge and the purchase and the headaches and deal with the tenants and all that, and we buy the deal, and then we cash them right back out very quickly.

Mikell:  Okay.

Jason: So they are in and out of the deal. They are earning somewhere between 7-15% on their money, and we keep the terms very, very, short. It kind of looks like this.  You have got dead money sitting in this account, and you want to do something with it. So we take the money, we go buy a property, we rehab it. Upon completion or in 8 months, whichever it is, typically what we find is it is a little faster than 8 months depending on the disarray of the home.

Mikell:  Yes.

Jason:  I had somebody call me the other day and gave me some really interesting adjectives about the home that they own.  I think that one might take a little longer than 8 months.  I had to look up some of those words to see what they were talking about.  So they have some problems over there. It is everything from we have had some that are $30,000 in structural issues. We have actually had to pick the house up, yank the foundation out, repour new footings, put a foundation back under, set back the house back down and start over.

Mikell:  Do you stay away from those type of houses?

Jason:  No, we love those type of houses. So if you have one that is really bad, if your house is leaning just a little bit to the right, we would talk to you.  Absolutely. There is really nothing that we will not look at. We do buy some that are just simple paint and carpet. That is just not that big of a deal. But most of what we look at are houses that have been neglected or not maintained or sat vacant for years or whatever the case may be. Our investors are tied into the property with us for about 8 months, and then we cash them out, and then they can keep going.  They can go to another property with us. They can just sit on the sidelines for a while. We have owners that do all kinds of different things.  I have one particular owner, every time they do a house, they go on vacation. They do not need the money.  It is dead money. The money moves. They earn say $15,000 in interest, and they go on a really sweet trip every single year. That is awesome.

Mikell: That is nice.

Jason:  It is great.  Works great for us. It works really, really good for them. I think they are actually getting the better end of that deal because I have look at some of the places they have gone, and they are really nice. But this is money that is moving for them that they are not having to do anything, but they are earning interest, and they are earning some experiences, some really cool things they are doing with their life.  Instead of this money sitting there dead, they are taking interest and living life and enjoying themselves.

Mikell:  So for the people who do not want to go to that bank route, they can just call your office and talk about that partnership?

Jason:  Absolutely.

Mikell:  Awesome.

Jason:  Yes, you can go to Jason Bramblett dot com. Shoot us an email. We will get in touch with you. We will walk you through all this. It is very secure. It is very safe. We do everything with attorneys. We do everything with a deed of trust, so you have a very, very secured position. We have been doing it for a very long time, so it is something we can walk you through many different options and many things we have done. But maybe you own a house that qualifies for this. It is kind of rough. It needs some love. Maybe the tenants were not so nice to you. We would love to talk to you about that as well. So next week, we are going to dig further into this. Everybody have a phenomenal weekend.  Stay cool out there and stay out of that humidity. You are listening to the Jason Bramblett Real Estate Show, and you can visit us at Jason Bramblett dot com.

Posted in Radio Show
Aug. 10, 2019

RE Investing Episode 5

Real Estate Investing: Episode 5

Jason Bramblett Real Estate Show Podcast 

Click here for link to podcast

Jason:  Good morning, Triad.  Hope everyone is doing fine on this Saturday morning.  Get your sunblock and your coolers full of ice because it is going to be hot, hot, hot today.

Mikell:  That sounds amazing.  Sunblock. Cooler full of ice.

Jason:  Sunblock or just stay inside.  Either one.  If you are going to stay inside though, I have got some homework for you today. How about that?  We have been talking about real estate investing, and now we are going to dig into the next stage of that, and that is the how to.  The nuts and bolts. How to break it down. What is the formula? Where to start? How do I begin?  Who has got my money, and where in the world can I go get some and all that stuff?  So we are going to dig into that to get you started.  If you have been following us along, and there have been several thousands of you, it seems, following us along, which is awesome. 

Mikell:  Awesome.

Jason:  Thank you for that.  Keep sending in the emails.  Go to Jason Bramblett dot com.  Shoot your questions over. We have had some great engagement and questions and things I had not thought about that we are going to dig into and share with you on the air. So if you will go grab a pen and paper, if you are driving down the road, hey do not worry about this thing is recorded, and you can hit the blog site later today and take a listen. So we are going to dig into evaluating the properties, but also evaluating the money, which is important as well. I tell our new agents. You have got to explain to people so they understand. The most expensive thing about buying a home for most people is not the house. It is the money. The mortgage is the most expensive part of buying a house. Right?

Mikell:  Absolutely.

Jason: You have got to make sure that you got that right and you get the right type of loan for what your family situation is.  Recapping, just to kind of look ahead.  Where have we been and where are we going. So we talked about why should you invest, why real estate is good, and there are lots of things to invest in.  I love real estate because I can touch it, feel it, see it, drive by it, and I cannot do that with Wall Street very easily.

Mikell: No.

Jason:  I can go to Wall Street, but I really cannot touch the paper I own because it is just kind of in the Cloud.

Mikell:  And it is really not paper.

Jason:  It is really not. It is just your name on a piece of paper, fakey paper.

Mikell:  There you go.  Like you said, it is in the Cloud.

Jason:  You are on a ledger somewhere. How about that? It is like bitcoin but just not as cool.

Mikell:  Absolutely. There you go.

Jason:  There you go. We talked about you bought your first house. You are living in it. You have converted maybe your first home into a rental property, which is what we suggest because typically the first property you buy is perfect for a rental.  You typically bought it in an area that you want to live and other people want to be there, too.  It is not a mansion; therefore, it makes sense to rent it. Right?

Mikell:  Absolutely.

Jason:  All these things make for really good rentals. Now here is the rub for house number two. If you have the discipline to not move up, and this is a challenge, but if you can keep the discipline to stay in the same type of property, now you can take your owner-occupied self with a new owner-occupied loan, converting your property you are in now to a rental and buying your next home. Why is that a good thing to do?  Well, owner-occupied homes you have to put less money down. They are also easier to qualify for because you are going to live there. So these make it very easy to enter into that. If you do that, let’s just say every couple of years, in ten years, you can acquire five, six homes pretty easily that way.

Mikell:  Last week you were saying that for an investment home, you have to put 30% down?

Jason:  Every bank is different, but typically –

Mikell:  Around that.

Jason:  Yeah, it is somewhere between 20-30%.

Mikell:  So you save a lot of the down payment?

Jason:  Oh yeah, absolutely. Absolutely.

Mikell:  Oh, okay.

Jason:  Interest rates are more favorable –

Mikell:  Okay.

Jason:  -- for owner-occupied properties. Investment money or investment properties typically have a higher rate, so you have converted, so when you bought the home it was owner-occupied, and that loan was fixed.

Mikell: Absolutely.

Jason:  It was a guarantee by the bank that said hey, we are going to do this, and we will not change your interest rate. Well, when you move out in two years, three years, four years, whatever it is, and you go buy the next property, that loan is still fixed.

Mikell:  That is true.

Jason:  It is true.

Mikell:  That is very true.

Jason: Okay?  It is a way in which you can enter the real estate investment world very affordable.  It is a step-by-step thing.  Now some people say that is going to take way too long. Well, it is a marathon, not a sprint.

Mikell:  The way you just described it, people do not get into the fixed mindset where you have to be rich to get into real estate --  

Jason:  Oh absolutely.

Mikell:  -- and do that process.

Jason: Well, we are going to show you how to do it with no money.

Mikell: Awesome.

Jason:  Even better. Right?

Mikell:  My situation.

Jason:  So we are going to see. This is not the seminar dudes rolling around in the hotels.  All this other people’s money garbage and all this stuff.  Okay. There is a right way to do it, and the right way to do it is through relationship. We are going to talk about that today and dig into that. Some of these other people’s money, they are out here using AMEX at 19%.  You do whatever you want. To me, that is beyond my risk factor.

Mikell:  Yeah.

Jason:  I have this other, some people call it spider sense. I just call it common sense. It is beyond my common sense to do those things. But I know people who have bought homes on their AMEX. Okay? To each his own.

Mikell: That is not the first time I have heard that.

Jason:  It just depends on what your threshold of risk is. Okay?  Some people have a real high tolerance for risk. I just keep it real simple. I figure if I keep it simple, simple is just the right pace for me.

Mikell:  I like that.

Jason:  The other thing nice about simple is it is very duplicatable.  If I was going to be hey, the best way to buy a house is to get your AMEX card and buy one. I just lost like 99.99% of you.

Mikell:  Absolutely.

Jason: Because it is not, it is such a small amount of people that will do that. It is just a risk you do not need to do. So we have converted house one. Now we have house two. The discipline is not moving up. That is the thing.  Most people want to change. They want more space, bigger house, next step.  Right?

Mikell:  That is hard.

Jason:  It is hard.  Anyway, if you can do it and keep that discipline, you are in there.  But let’s just assume hey, it is life. You are not going to listen to me. You are not going to do that. Because Mama is like no, we are not going to do that.

Mikell:  Absolutely. That is exactly what I was thinking about.

Jason:  I want another bedroom.  I want a bigger yard. I want this and that.  That is real life, and that is the real deal, and husbands, you are just going to lose.  And do not even go to her and say Jason said.  No, no, no, no because that is not going to work either. Here is the big thing. That is not an option.

Mikell:  Okay.

Jason:  So how do we get the money? Right?

Mikell:  Right.

Jason: So now that is not an option.  How are we going to get the money? How are we going to do this? You have got to start saving. Right?  You have got to figure things out.  Down payment money for these investments. There are lots of ways you can do it. I will share with you some of the ways that some of the people that I have coached over the years. I had a young gentleman that worked for UPS. He said I am going to be a real estate investor. I drive neighborhoods all day long. I see all these amazing opportunities on my routes. I have no money though. How can I do this? I said well, you look like you are physically fit. You sling boxes all day, man. You are in great shape.  What I would do is I would go buy me a self-propelled lawnmower, a big old tank of gas, and the neighborhood you walk in, I would just go to your neighbors and say I have got a phenomenal deal for you.  I am going to cut your grass so cheap you cannot say no. And guess what? They all said yes. And he ended up cutting about 30 lawns. There probably was not even 90 houses in his neighborhood.  He had 30% of the market share.  Most of them were side by side, so he could just cut them all at one time.  Bought him a, not a landscape business. He did not go get a $16,000 zero-turn mower. I think he invested about $1000 in a really good quality Busch or self-propelled mower –

Mikell: Okay.

Jason:  -- and he walked the lots and walked the yards and cut the grass very, very simple, and he charged $35 a week or whatever it was.  $35 every time he cut it. Now, I know all my landscape friends are saying yeah, that is the problem is we have got people undercutting us.  Look, he is looking for an opportunity.  He is willing to do something that most people are not willing to do. His reward was in one summer he earned enough money to have a down payment to buy his first rental.

Mikell: Wow.

Jason:  And then we taught him how to snowball that. So he was able to cut those 30 or 35 lawns for a whole entire summer.  Guess what? He does not have to do it anymore. He just went in there and ripped the band-aid off and busted it out and did it.

Mikell:  I may have to do that.

Jason: If you live in a neighborhood that has got a couple of hundred houses, you do not need all of them. Basically, his rule of thumb is if I can walk the mower to the yard, that is who my target client is. I am not driving all over town because that is time, money, and energy.

Mikell:  Absolutely.

Jason:  Just right in his yard. Right in there, and he just said hey, would you like to take the summer off.  I will cut your grass.  It is $35, and most people were like yeah.  He was very clear with them.  This is temporary. I am only doing this to save money to get a down payment.  Next year, you are on your own.  Cut your own grass. Hire somebody else. Whatever you want to do, but he had a goal, and he hit it, so he could be done. What do you do?  I do not know.  In that case, he was cutting 30 yards at $35. The guy is making almost $1000 a week, and he saved his money really quick.  Now did it take him a lot of time? Absolutely. Did he work probably some 16 and 18-hour days? Absolutely.  He probably worked every Saturday and every Sunday for 10 or 12 hours.  Absolutely. But guess what?  He only had to do it for a short time, about 90 days, and he does not have to do it anymore at all.

Mikell:  Wow.

Jason:  What else could you do though? Uber, Lyft. Right?  You could do those things. I do not know what they pay or what the money is.  I am just saying those are ideas.  You could wait tables. You could work at a really nice restaurant, make a couple hundred dollars a night. You could find a side job in whatever field you are in.

Mikell: Absolutely.

Jason:  Maybe you are a plumber or an electrician or whatever. Here is what I know for sure. If you want it bad enough –

Mikell:  Absolutely.

Jason:  -- the how always shows up.  100% of the time. If you want it bad enough, the how is always there.  The opportunity will be there. If you do not want it bad enough, it will seem like work. And it will be no fun, and it will be a pain. But here is the thing. If you pay the price now while some of you who are listening that are young, you will not have to do this stuff when you are old.  I will promise you. He is not going to be cutting his grass when he is 60 years old and retired.  He will have somebody doing it for him. Why? Because he has paid the price now to leverage his time to buy assets that create what we talked about several weeks ago – passive income.

Mikell:  Absolutely.

Jason:  Money in which you earned that you did not have to put any effort in to.  Or your put effort into it a long, long time ago, and the benefit is there forever.  The great thing about rental property, unless it burns down, it will pay you for the rest of your life.

Mikell:  Right.

Jason:  And the cool thing about that is you have other people paying down your investment for you, and so it makes it really a sweet, sweet thing.  All right. So you pay the price?  Is it worth it? Absolutely.  If you are a young person, and you have got a little bit of, I do not know, muscle behind you or just youth.  You do not even have to be young. If I had today, for whatever reason, if real estate did not go the way I thought it was going to be going in the future, if I needed to, I would go buy $1000 push mower and make it happen.

Mikell:  Absolutely.

Jason:  You just do what you have got to do. But you do not want to be in that have-to situation.

Mikell: No.

Jason:  It is better to be in the I choose-to situation. The have to’s are no fun. Earning money is much better than borrowing money.  Now you could skip steps and you could borrow the money.  Everything that you do different from that is going to be a higher risk.  Hence the word OPM – other people’s money. That is what a lot of the seminar guys like to talk about because what do they realize? The audience that is in front of them does not want to work. They want to just take the easy route.

Mikell:  Absolutely. No sweat equity.

Jason: No sweat equity.  Exactly.  Yeah, because sweat equity has this word that they call sweat. It takes effort.  Right?  They would rather just talk about it –

Mikell:  There you go.

Jason: -- then go out there and do it. So you can leverage it with other people’s money.  The best place to start, in my opinion, is with people that you have relationships with.  Typically, this is friends and family and those people.  Well, it is not your friends. Your friends do not have any money to give you. It is your family, which is okay, but you have to make sure that the relationship is clear.  Because now it has changed.  It is not a mom and dad relationship.  It is either a partnership, but when you owe people money, as Dave Ramsey says, you become slave to the lender.  Right?  That is from Proverbs, if you guys want to look that up. But when you have that indebtedness to them, the relationship changed. It does not change with an institution. The big bank out there?  Their relationship with you is not emotional.  It is transactional.

Mikell: Absolutely. 

Jason:  We are going to give you this if you do that.  When you stop doing that, we take your stuff back.  Right?

Mikell: Exactly.

Jason:  That is not the same way it works with mom and dad because there is this crazy thing called, well most of the time, love in there.

Mikell:  There you go.

Jason:  And they care, but that is where relationships can get kind of screwed up, too. So you have got to be careful. You have got to set the right boundaries, especially the closer the people they are to you.  A lot of the homes that we sell every year in the Triad are from broken relationships, and a lot of times it is broken businesses, where it was a family business and then finally, it just imploded.

Mikell:  Oh wow.

Jason: And a lot of times it is because the right boundaries were not set within that relationship of hey, you are my brother or my sister, but in this situation in writing here is what each of us do. There are no clear lines, and it ends up just going not in a good way.  What do we do?  We sell the properties because there is a dispute about whatever it is. Let’s do this, Mikell.  Let’s take a quick time out. We are going to go pay some bills, and when we come back, we are going to talk about who has got your money because it is out there. And we will dig into that.  We will be right back. You are listening to the Jason Bramblett Real Estate Show.

And welcome back to the Jason Bramblett Real Estate Show. So we have been digging in all things real estate investing. And why real estate investing?  Well, it is pretty much all I know. The other stuff I call the other professionals, and they have got shows on here, too.  Some of them are actually very, very good at what they do. Is there a right way or a wrong way?  A lot of it is just choice.  Does it all work? I think a lot of it does work. It is about having the right team behind you and the right product.  Why real estate for me?  I just like a tangible product.  To me, it is just something about driving around and seeing what you own.  It is just what I have always enjoyed. We have talked about the benefits of owning real estate and so from a leverage of your time and money and creating passive income, now it is like okay, that is great. I am already working 14 hours a day. Unless I get paid for sleeping, there is no way I can make any money.  Okay, so now we are looking at partners.  Other people’s money.  The best partnerships are the ones that you have the best relationships with.  All right? You are not going to typically walk up to a stranger on the street and say, hey, I want to buy a house. Do you have $100,000?  Right?  No. They have institutions for that.  Banks. But banks sometimes are not always the best place to start. Sometimes the best place to start because you have never done this before is with family or friends or relatives or whatever. The interesting thing about America is there is about $3 trillion sitting in savings accounts in America. It is ridiculous.

Mikell:  Oh wow.

Jason:  Idle money that is doing nothing.

Mikell:  Oh wow.

Jason:  So it is a lot, a lot of money.  People have got $10,000, $30,000, $75,000, whatever it is just sitting in savings accounts, and most of it is earning .0025 in interest.

Mikell:  If that.

Jason:  If that. Right?  So that means basically most people are getting like five bucks a year. 

Mikell:  Absolutely.

Jason: That is about it.  Because of that you can create a huge opportunity for that money to be shifted and to be used as a partnership in real estate and pay a much, much higher rate of return for those people that have that money parked, that is just sitting there. My first rule, and I think it should be your first rule, that money needs to be parked.  It is excess money of that person you are talking to. They are not going out and borrowing that money. So the first thing I have when somebody comes to me is we get a lot of people every week to say hey, we want to be a partner with you. We want to invest. I want to own real estate or I want to be in the real estate world, but I do not want to do anything.  Okay. They want to be a passive partner.  We have that opportunity to do that. If you have got 100, 200 or 50,000 or whatever it is sitting there doing nothing and you want to be in the real estate business, but you do not want to do the real estate business, well, we have an opportunity for you to work with us in one of our businesses. That is outside of our sales company. The reason we created that is because we had lots of people who would sell their home and one of the things they would always ask is okay, I have got this $300,000 cash, what do you think I should do with it? They had no plan. They just sold a property. They own another one free and clear, or they do not ever plan on owning again. It is like what am I going to do with this money? And so, we help create an idea, an opportunity for them to invest, invest in real estate and be a partner with us. That is a different conversation. We are going to walk you through that later. But right now, you need to look at the relationships you have with the people that you have, and typically, this is family.  Again, you need to have a good agreement with them, a clear understanding. I would suggest it is in writing.

Mikell:  Absolutely.

Jason:  Even if it is with your mama. It does not matter. Put it in writing. Whoever it is, and that way everybody is clear, and we are all on the same page. But it needs to be idle money, and it needs to be not loaned. Okay. Or they are not borrowing money.  I do not want to go to my mom or dad or friend or whoever it is and say yeah, hey I have got $100,000 equity in my house, I will do a HELOC and pull that money out.

Mikell:  No.

Jason:  You are not a good partner because if something changes in your life, and you need that money for an emergency, it is also difficult to get cash out of real estate quickly. It is not what we call liquid. It can be liquidized really fast, or sometimes fast, but there is a word in real estate that we use when we need to sell property at a discount, and it is called cheap. You do not really want to be involved in that. Right?

Mikell:  No.

Jason:  If I need to move something quick, the way that I do that is I have to exponentially discount it to create huge, massive opportunity to get people there that can cash me out quick.  Because I cannot get the highest price in the shortest amount of time.  Typically, if it is an emergency situation.  So we do not want partners that have to borrow money to be involved in our transactions. We want people that have idle cash that is doing nothing. The other thing, too, is you do need to check with a CPA and there are rules about all this stuff. You do not need 100 people with $5000 and then you do not want to put all that money together because now you are dealing in government stuff.  Okay?  This is simple relationships of one person, maybe a friend, a family member, and you are in business and partnering together.  This is not you creating a real estate investment trust with hundreds of strangers that you have never met, and you are going to dump all the money in one big pool and see what happens. I will tell you what happens.  Bernie Sanders is what happens. Right? And he is sitting over in Buttner in North Carolina.  Not a good plan.  Okay?  It worked for a little while for old Bernie over there, did I say Bernie Sanders? Bernie Madoff.  All right?

Mikell:  Okay.

Jason:  Sorry. Wrong Bernie.  Maybe.  No, that is a different show, too. But anyway, you have got to be careful in how you do. So there are federal laws that you need to apply.  You cannot just dump and pull people’s money together without being, have the proper credentials behind you.  Okay?

Mikell:  Okay. Okay.

Jason:  It can be done. You just need to do it legally. You cannot do it legally on your first house.  Okay?  You are not an institution.  There are regulations that you have to follow, and therefore, you are simply looking for a partner.  One, probably somebody close to you, a family member or friend, and you are creating an opportunity with idle money in which they do not know what to do with. And it is cash sitting in a bank account somewhere. That is the perfect person that we are looking for. Because if they are only getting .0025 on their $60,000 they have sitting in the bank, and you come to them and let’s say you plan to flip a house, and you can pay them X amount of percent for X amount of months that it is going to take you to flip that property. It creates the opportunity, and it allows you to do that.  Or maybe you are going to do a buy and hold situation where you are going to keep it as a rental. Now, you can pay them a certain percent. Whatever you guys agree on.  There is actually no regulation. You can charge whatever.

Mikell:  Okay.

Jason:  Or they can charge you whatever for the money.  Then maybe you are going to pay it over a period of time.  Maybe you are going to borrow $60,000, and you will pay it over five years, three years, ten years. It is whatever you guys agree to.  Then you want to amortize that out so they are getting interest and principal every single month. Just like you would with a bank.  Right?

Mikell:  Right.

Jason:  Same type of situation. So there are different ways in which you can do that whether you are going to hold the real estate or you are going to flip the real estate, and all that is up to you.  We are going to dig into more of this next week and talk about the type of product, the type of loans, how to set these up. Not only how to set it up once, but how to set it up for 100 properties, over and over and over again. So you are listening to the Jason Bramblett Real Estate Show.  You can hit our website Jason Bramblett dot com if you have got questions. We will be back here next week.  We will see you then. Everybody have a safe and wonderfully cool weekend.

Posted in Radio Show
Aug. 3, 2019

RE Investing Episode 4

Real Estate Investing: Episode 4

Jason Bramblett Real Estate Show Podcast 

Click here for link to podcast

Jason:  Good morning, Triad.  Hope everyone is doing wonderful today.  We are going to be jumping into all things real estate as we have been doing for the past several weeks, but also digging into how about a little golf today.  How about that golf tournament we have got going on?  Got a headliner, Mr. Jordan Speith, in the house.  So welcome to the Triad, sir. Hope everything is going lovely at Sedgefield. Outside of firecrackers and thunderstorms and I do not know, what, 14 inches of rain since the guys have been here.  All in all, a pretty fun tournament. Hope you guys go out and check it out.  I understand they have got lots of tickets and lots of opportunity to go out there and support the Triad, but also support the golf and the tournament.  It brings lots of great opportunity and business to the area, so hope you guys can do that. But we are going to continue our series of real estate investing and jumping into that.  So what you want to do is grab a pen, grab a piece of paper.  We are going to dig in. Where we left off last week was talking about turning your home into, the home you are in now, your first home, into your first rental property. We are going to talk a little bit more about that, walk you through step by step.  In addition, a little bit of discipline, too, because it takes discipline in order to achieve some of those goals.

Mikell:  Absolutely.

Jason:  So discipline over time is a very good thing. Most people do not like the word discipline, Mikell.  They think discipline and punishment sometimes –

Mikell:  See, that is where my mind went when you said that, so okay.  Punishment, okay.

Jason:  I think you are the same camp with a lot of people there.

Mikell:  Absolutely.

Jason: But it is not necessarily true, and it does not have to be punishment.  Good discipline over time can end up being a great thing.  Some of you guys have disciplined very well, sitting on the couch, eating potato chips.  And the results, well, look down.  It is right in front of you.

Mikell:  There you go.

Jason:  There you go.  Right?  And there are other disciplines that you can get into that will reverse that goal.  Or reverse that pouch in front of you.

Mikell:  That does not sound fun.

Jason:  Yeah, I know. The great thing about the discipline though is once you do it for a while, it becomes like breathing.  You do not think about it.

Mikell: There you go.

Jason:  It is just getting into that day-to-day habit and making it happen.  It is a challenge.  Not everybody is cut out for that.

Mikell:  Absolutely.

Jason:  It is something that is a practice. It is actually an intentional practice that you have to do in order to develop that discipline. All right.  You have got your pen.  You have got your paper. Let’s do this thing.  We have got the benefit of turning that first rental, or I’m sorry, your first home into a rental.  One of the biggest things is how you bought it.  The financing.  You have had, with an owner-occupied property, you have had multiple options in which to buy. You could have bought it with cash.  You could have done a 100% loan, meaning you put no money down.  You could put as little as 3 ½% down, 5 or it is unlimited after that.  Most people fall in the 3 ½-5% camp.  That is typically what they put down on their first home.  You cannot do that with investment properties. The banks, for the most part, want somewhere between 20-30% down on investment properties, and most people say well, why? A lot of folks think it is to reserve the game field for the rich in that the rich are the only ones that could come up with the 20-30% anyway.  Therefore, the rules are written for them.  Well, kind of.  Really the rules are written for the bank. The bank realizes this – if you have two homes, one of which you live and one in which you do not, the likelihood of you not paying on the one you live in is a lower probability.  Right?

Mikell:  Absolutely.

Jason:  Therefore, they, by assumption, believe that hey, they probably will pay for the one does not, they do not live in and does not hurt them first. Right?

Mikell: Absolutely.

Jason:  Well, psychologically, I guess, if you will, they also figured out if they get 20-30% of your money, it will make it much harder for you to walk away from that property losing that money that you put in.  So if it was a $100,000 house, that is thirty grand. 

Mikell:  And that is quite a bit.

Jason:  That is quite a bit.  $200,000 house, now we are talking $60,000.

Mikell:  Sheesh.

Jason: Most people, not willingly, will not walk away from $60,000.

Mikell:  I am not sure if I know anyone who would.

Jason:  I do not either.  Let’s face it.  If I dropped a briefcase of $60,000 out on I-40, somebody would probably stop and pick it up.

Mikell:  I would wreck my car.

Jason:  Absolutely.  There would be a lot of car wrecks.  By the way, it is not out there, so do not go looking. The other thing is that is the psychological piece.  The second piece of that is if you put, let’s just say you put $30,000 down on $100,000 house, and the home is worth $100,000. If things really started to go south, and whatever job change, loss, whatever it is, if you needed to sell that home, you are also in a position to be able to do that.  I think most people would agree you could pretty easily sell $100,000 home for $90,000, if you had to. Right?

Mikell: Absolutely.

Jason:  It is a bargain.  It is savings, and so you could get out of the situation and the bank still is okay and you actually will be okay.  Yes, you would take a $10,000 loss, but you would not take a $30,000 loss.  So you could actually get out of that property.  If they allowed you to do 100% loans and something happened with your primary income and you needed to unload that house and you had no savings.  Let’s say you needed to do the same situation.  You needed to do the $100,000 house at 90.  It is still a bargain, but if you owe $100,000, who is coming up with the $10,000.  Probably nobody.

Mikell: That is true.

Jason:  Because you did not have any money to put down to begin with.

Mikell:  Absolutely.

Jason:  That is the logic behind why the bank does what they do. So you think about those things, and there are always methods and reasons to the madness, and that is just a little insight of the psychological piece and also the math piece. So they are going to reduce their risks.  They are going to get that down payment from you, but the benefit in converting primary to rental is that you are able to buy it under owner-occupied terms. Check with your mortgage company. There are certain loans that require you to stay in the property for a certain amount of time before you can convert to a rental property.  You cannot use a primary home loan for a rental property.  That would be fraud.  Okay? I have seen it happen, and it is not smart to do that.

Mikell:  I have witnessed people trying to do that as well.

Jason: There are no secrets, guys. The banks today are very savvy. When I started in this business, you made your loan application. If you could do what you said you were going to do then, nobody ever checked behind you. Now, all the way up to, sometimes the final hours before you close on a home, someone is checking behind to see if everything is exactly the way in which it was when you applied for the loan.  One big thing they check, just by the way, is that you are still employed with the company in which you said you worked with when you applied for the loan.

Mikell:  Absolutely.

Jason:  I know that seems like a no brainer.  I know that seems like well, Jason, you have got to be kidding me. What idiot in the world would try to buy a house without a job?  You would be surprised.

Mikell:  Well, things change every day.

Jason:  Every day.

Mikell:  Unfortunately, and especially with employment.  So you never know.

Jason:  And some of those are not by their choice.

Mikell:  Absolutely.

Jason:  The bank is going to check.  They are going to check your credit, and then they, in the past ten years, they have snuck this other little thing in at the closing table, and it is basically your application again, in which you are signing off saying everything that was true when I applied for the loan is still true today or better.  Then they are having you sign it one more time.

Mikell:  What would change?

Jason:  Well, in this case, it could be that maybe you did not switch companies, but you changed jobs within the company.

Mikell:  Okay.  Okay.

Jason:  Perhaps you were full-time and now you have been RIFed down to a part-time position.

Mikell: Okay.

Jason:  So those type of things.  Or just flat out do not have a job. That is another one. Or you did something really smart and you went and leased that Rolls Royce. Yeah, that is going to show up on your credit, by the way.  Do not do that. Also, just while we are talking about things that can sabotage your sale or your purchase, okay, so if you go to the big box stores that sell furniture, and you buy furniture and you, so you are going to move in on the 30th, so on the 15th you go buy the furniture, but it is not going to be delivered until the first, and you think you are okay. If you are financing that, they probably pulled your credit, and if you have purchased with a later delivery day, that could mess up your debt-to-income ratio. Right?

Mikell:  Okay.

Jason:  Because it is credit. It is money that you are borrowing.  Even though the furniture is not going to show up until after you own the home, it very well could be that those ratios now put you in jeopardy of not even buying the house.  It is not a good thing to have your washer, dryer, refrigerator or all your new living room and bedroom stuff show up to a house that you do not own.  You do not want to do that, folks.

Mikell:  I am sorry. That is funny.

Jason:  Think about those things. Then, of course, that begs the question is do those people really need to buy a home at all. You have to make that determination for yourself. Mortgages have a seasoning period.  At the end of the day, make sure you check with your bank too, that you can turn your property into an actual rental based upon what we are talking about today. But most of the time, you certainly can. Every mortgage is different.  Of course, if they have special terms in fine print, you want to read all those things, too.  There are other options that you have that maybe if you do not have the down payment money, but you like the fact of other people paying for your stuff.  We talked about this before, but roommates.  Roommates can be very good.  I know that there are folks that have maybe had mom or dad help them purchase a home. It is really mom and dad’s rental property, but the intention is, basically what they do is mom and dad conned you into this.  Hey, we are going to buy this house for you while maybe you are in college, and then you can get people, roommates, and they will pay for it –

Mikell: Absolutely.

Jason:  But really the truth of the matter is this.  You are the cheap landlord for mom and dad who own the house.  Right?

Mikell:  Absolutely.

Jason: At the end of the day. It may be, just may be, if you take care of their asset and do not turn it into a frat house or whatever those things, you know what I am talking about.

Mikell:  Absolutely.

Jason:  Maybe they actually do give it to you one day. Potentially.

Mikell:  If you earn your keep.

Jason:  If you earn your keep. That is right.  That is right. So maybe it is a good test.  Roommates can be really good. I know situations where folks that own, actually they own the house, and they have roommates, and the roommates actually pay 100% of the payment for them.  That is not for everybody, and if you are married and have kids, probably not a roommate situation is going to work out real well.  Do not go to your wife today and say hey, I heard this guy on the radio. He had a great plan. You know that extra bedroom we have?  We are going to rent that out.  You did not hear that from me. Okay?  Do not throw me under the bus with your creative ideas here.

Mikell:  Oh, darn it.  I was going to try it, Jason.

Jason:  I know. I know.  Trust me, if you want to stay happily married –

Mikell:  Key word.

Jason: -- do not go with that option.  But if you are single, it is something you are looking to diversify a little bit, you can do that.  Another one is a duplex or a quadplex or something along those lines.  One building that has multiple units in it. It is kind of the same situation as roommates.  You are all under the one roof, but you have each have your own little part, your little condo part, if you will.  Something like that.  It can still work in that way, and the really cool thing about anything multi-family in the duplex, quadplex, anything like that is you actually can still get an FHA loan.

Mikell:  Okay.

Jason:  This is an interesting thing. So this is an exception to the rule in that you can actually buy a four-unit building, and as long as you occupy one of the spaces as your primary residence, you can purchase that with a minimal down payment. You do not have to have that 20, 30% to put down. You can actually put down 3 ½%. So you could actually buy a four-unit building, have three of them be rental, and you live in one, and you can actually reduce your down payment.  Now the downside in the Triad is we do not have a lot of those to offer. There are some out there.  One thing I would say is be careful of the zoning. There are some of these that are for sale. They were really big houses, a lot of times, in downtown areas. So maybe in Winston, Greensboro, High Point, and they have converted them to a duplex, quadplex, triplex, but they are not legally zoned for that type of housing.  So they are really a single-family home in which somebody has illegally –

Mikell:  Okay. Okay.

Jason:  -- converted to multifamily.  Okay. So just because it is what it looks like, it does not mean it is a duck. Okay?  It may look like a duck, but it is not a duck. It is a chicken.  So make sure that you check the zoning because you could buy a mess.

Mikell:  Gotcha.

Jason: Or you could buy something that nobody knows really what is going on, but with the change of ownership very well could make a difference, and then maybe somebody that does not like what is going on there notices and then all of a sudden you really just bought yourself a house when you thought you were buying a triplex.

Mikell:  Okay.

Jason: Double check that.  Do your due diligence. That is the key.  Check everything out. Make sure it is legal. Make sure the zoning is correct, and then just be truthful about everything because could you buy one that is not legally zoned. It happens every day, but some people get caught when the bank goes out and they do not like the fact that you have not represented truly what they have collateralized.

Mikell: Absolutely.

Jason:  Okay?  Makes a big difference.  All right. We are going to take a quick time out. When we come back, we are going to dig into more multifamily. Apartments.  Man, apartments are an amazing source of income. So do not go anywhere.  We will be right back.  You are listening to the Jason Bramblett Real Estate Show.

And welcome back to the Jason Bramblett Real Estate Show. So we are digging into all things investing. Of course, we are also talking about real estate investing as well. So a couple things we have talked about is keeping that first home that you purchased, turn it into a rental.  We have talked about duplexes, triplexes, and quads and all these other things.  And now apartments.  Apartments are, in my opinion, one of the most superior investments that you can make.  The downside with apartments is it does take considerably more money to get into this particular step in the real estate investment world. But the cool thing about that is now you have basically, let’s just say you have one roof or maybe you have multiple roofs in multiple apartments, but you have a lot of people, paying for your investment. So you are well-diversified within each building that you own. So you may have 10, 20, maybe even 100 people that are contributing to paying down this debt for you. Not only are they paying down the debt, more than likely, if you purchased it properly, you are also earning some income along the way. Now with apartments comes greater investment, greater risk, but at the end of the day, the risk assessment on it is much, much better than owning single-family homes.  The downside with single-family homes is they are scattered.  It is very rare that you just buy everyone right down the neighborhood.  So you have got one here, one there, and one everywhere. If I own twelve single-family homes, I have 12 roofs to take care of, 12 properties with lawn maintenance, all those things in 12 different locations.  If I buy one apartment building that has 12 units, I have got one roof, one location –

Mikell:  That is true.

Jason:  -- limited number of lawn maintenance. It is not 12 times.  That is for sure.  So from just a time standpoint, a risk assessment standpoint, it is far superior to have all your ducks as close as you can. Now if you own 100 single-family homes, different story because you are probably not the one out there doing it.

Mikell:  No.

Jason:  You employ people this time to do that.

Mikell: Absolutely.

Jason: But when you are getting started and you have one here and one there and one there, if you are like me when I started, all my properties, none of them could be in the same place, in the same city, for that matter. So they are scattered all over the place. You have got to run from this town to this town to this place. Apartments alleviate a lot of that.  So it is great to have them there. It gives you really tremendous cashflow in the apartment business.  If you look at some of the wealthiest people in America, they own apartments.

Mikell:  Absolutely.

Jason:  They own hotels.  They own commercial buildings.  They may own single-family homes, but they do not own hundreds of them most of the time.  They have converted to something that consolidates their map essentially.  I am sure there are people out there that owns thousands of homes, everybody has got their own desire to do whatever. I am just saying from a time standpoint having everything in one location is superior. The downside, capital.  You have got to have some bucks, man.  Apartments are not cheap.

Mikell:  Not at all.

Jason:  An apartment building in our area is about $8 million.

Mikell:  Okay.

Jason:  So you do the math on that, you need some jack. That is it.  You need some money.  Let’s just say, we will make it easy math.  If it is $5 million dollars, you are going to need about $1 million cash to be able to put down to borrow because one thing that banks do not do in the apartment business is 100% loans.

Mikell:  Okay.

Jason:  The other thing they do not do is they do not finance them for 30 years typically.  There are some lenders out there that will finance them for 30 years.  I typically find them on the west coast, and I think maybe that is because well, an apartment building on the west coast maybe $100 million. Simply because of the cost of living.

Mikell:  With renters though how soon is it easy to pay it off?

Jason: Well, some of that depends on how much you put down. Of course, location, occupancy, rent, how much you are getting and all those types of things.  But apartment buildings cashflow very, very quickly. Most of them that I have looked at have anywhere between an 8-12 year payback period –

Mikell:  Okay.

Jason:  -- depending on the location. So you think about that. If you today had like just make it ten years, if you had $5 million, if you were able to borrow $5 million to buy an apartment building, in ten years’ time you have $5 million equity, meaning you owe nothing.  If you sold the place, well hopefully you would sell it for $8 million. Right?

Mikell:  Absolutely.

Jason: If you would ever want to, and that is a decision you have to make. Some of these things, the money coming in is so nice, why get rid of it.

Mikell: And that is what I was thinking about when you said most of the wealthiest people own apartments because people do not want to buy their apartment. They want to buy houses.

Jason:  That is right.

Mikell:  You fall in love with the houses even if you are renting it and you want to stay there. 

Jason: You do, but there is always a need for apartments.

Mikell: Absolutely.  Absolutely.

Jason:  It is always a stepping stone. We have built 9000 apartment units in Greensboro in the last 7 years.

Mikell:  You said built?

Jason: Yeah.

Mikell:  Wow.

Jason: These are new.

Mikell:  That is incredible.

Jason:  That is a lot.  I do not know what Winston-Salem’s numbers are, but I would speculate that they are probably somewhere close and probably at least 5000. So if you say 10,000 in Greensboro, five, that is 15,000 apartment doors with 15,000 people that are renting.  Now, some of those have traded up.  They went from a class B property to a class A property, a nicer property.  More amenities and those types of things.  That is usually what people are looking for.  It is interesting. Sometimes we have folks that are building and we sell their home before they are done, and they decide I am going to take the summer, for whatever the reason it just happens to be the summer a lot of times, and we are going to rent this apartment, and when our house is done, we will move in.  We will do a three-month lease and whatever. And almost 100% of the time, when they have owned a home for 10 or 15 years and maybe they are building a new one, they call me and they say hey, do not hurry on the house.  We are kind of enjoying the apartment life in the fact that we have got a pool we do not have to maintain. We have a lawn we do not have to cut.  Actually all we have to do is just come home, cook dinner, relax.

Mikell: That is it.

Jason:  Do not have to worry about pulling weeds.

Mikell:  Maintenance is taken care of.

Jason:  Maintenance is taken care of.  Almost every single person, we had one lady that moved into a hotel for a week and stayed for three months.  She was like this is awesome. I wake up. Breakfast is ready for me in the morning. I got Wi-Fi, coffee 24/7. 

Mikell:  This is the life.

Jason:  This is the life.  There are always new people.  I love talking to people. This is great.  There are new families.  I have breakfast with different people every single day. She was like this is great. I do not care if I ever buy a house again.

Mikell: Wow. But living in a hotel is expensive.

Jason:  It is expensive. It is not for everybody.  But in her situation, it was not only her housing, it was her entertainment, a good portion of her meals.  Right?

Mikell: Absolutely.

Jason:  Her fitness. They had an exercise room.

Mikell:  They do.

Jason:  They have got a pool. They have got a hot tub. So it is her spa. So you start putting all the amenities together and you go this is not too bad.  Now, you cannot have any stuff. That is one downside with a hotel. It is still a hotel room.

Mikell:  That is very true.

Jason: You are not having plants and all those types of things, but anyway, so it is not for everybody. But it is interesting. Folks that transition, they kind of like the fact of no responsibility for a while.

Mikell: We all do.

Jason:  Absolutely.  Absolutely.  Go to Jason Bramblett dot com.  You can get more information.  We have investments out there.  If you are looking for apartments, we can help you. If you are looking for a rental property, we can help you.  And we will be back next week.  We are going to dig in more investing in real estate.  You are listening to the Jason Bramblett Real Estate Show.

Posted in Radio Show
July 27, 2019

RE Investing Episode 3

May 13, 2019

Real Estate Investing: Episode 3

Jason Bramblett Real Estate Show Podcast 

Click here for link to podcast 

Jason:  Good morning, Triad.  I hope everyone is doing great on this Saturday. Last Saturday of July, I believe, if my calendar is correct.

Mikell:  Yes, it is.

Jason:  It is it.  Well, hey, more than halfway through the year.  It is crazy.

Mikell:  It is scary a little bit.

Jason: It is.  School is getting ready to start –

Mikell:  Yes.

Jason:  -- pretty quick here. I know my kids are going to be sucking up as much of the summer that is left as they possibly can.  I hope you guys are enjoying this beautiful weather and enjoying North Carolina.  So we are going to dig into our series.  We have been talking about real estate investing and where to put the money but also how to get started.  Last week, we talked a little bit about passive and earned incomes. So earned income was something that you did to actually earn the money.  Most people would call that job. And then passive income is something that you really were not involved with.  You did not have to do anything and money came into you.  There is a term out in the business world they talk about.  They call it mailbox money. Right?  It just shows up every month, which is a great thing, but it is also something that you want to strive for.  You want to create and leverage yourself, your time, and your energy to create this passive income.  That way, you are not physically out there having to do all the work and do not have to work all the way until they put you in another place.  So that is what we want to do.  We want to create that passive income with our investments. We talked about creating a spring of income, income that is coming in every month.  It replenishes itself, and it is something that just continues all the time.  So this week we are going to dive in a little bit deeper. We kind of set up what different types of investments there are and how they pertain to real estate.  So where to do we start?  We touched on this just a little bit about making your first home your first investment, which typically, this is really a discipline thing is what this is.  The first home you buy, normally, is set up pretty much perfect for rental, and typically because you are not buying a 6000 square foot house.  You are not buying a $400,000 home.  There are always a few anomalies out there, but most folks are not. Most folks are buying pretty close to maybe what they have been renting or somewhere in that. So the discipline comes in that is in keeping that house. So in America, we have come up with this system where we buy a home, we keep it maintained.  Hopefully, it gains equity.  We go to sell that house. We take that equity and we go buy a bigger, better deal. A bigger, better house.  The problem is all we are really doing is exchanging equity, and we are really not gaining anything.  You have increased your debt normally because you bought a bigger home.  So you may have only, we will just use an easy number since it is radio.  You had a $100,000 mortgage on the first house, and then you doubled to 200.  Well, you just doubled down on your debt.  Right?

Mikell:  Right.

Jason:  So whether you carried the equity for your down payment or whatever it is. So you are really not gaining a lot in that you are just swapping out your equity. And then we are going to talk a little bit about what is good and bad about doing that and what is good and bad about equity. Now, there certainly are other benefits to buying a bigger home.  One is keeping Mama happy. That is for sure.

Mikell:  That is most important.

Jason:  Yeah, there are lots of other things in life outside of having rental property.  Keeping Mama happy is good. And I get that, but it also comes back to that discipline of what I am attempting to do for the long term?  It is the little decisions that we make kind of early in the process that set us up for success down the road.  So it is the little daily habits that have the massive huge scale as we go down the road.  Typically, those snowballs keep gathering snow. They become bigger. The habits you create now, if you keep them throughout your lifetime, typically can turn out well.  You can also develop some really crummy habits, too.

Mikell:  That is right.

Jason:  And those keep you in the ditch as opposed to getting you out of the ditch.  Not that you are in a ditch now. Hopefully you are not if you are driving your car. If you are in the ditch, it was not my fault.

Mikell:  Do not blame us.

Jason:  Do not blame us.  Do not blame us. You have maybe swapped up in house and you now you have created this additional liability.  This is where the argument lies is that your home is an investment.  And we have talked about this.  It is an investment, but the acid test that we did last week is whose investment is it?  If you want to find out really quick, if you have a loan on your property and you stop paying it, you will find out quickly that it is no longer your investment.  It actually is the bank’s investment.

Mikell:  Absolutely.

Jason:  What the bank has done is created passive income.

Mikell:  Absolutely.

Jason:  I am going to loan you money, and you are going to send me money and interest.  That is passive.  They are not really doing anything.  There is no physical activity.

Mikell:  No sweat equity.

Jason:  No sweat equity there. Right?

Mikell:  None at all.

Jason:  So that is what you want to do.  If you really want to get excited when you go to buy your home, in two different ways. We used to call it the Truth in Lending, but it is basically your closing disclosure.  If you look at the numbers, there are two on there.  Most folks think that the buying of the house is the most expensive thing in the process.  It is actually the loan, and so if you look at the closing statement, you will see two numbers. One is what you are paying for the house and then one is what it is costing you. Those numbers are different.  Right?

Mikell:  Okay, okay.

Jason:  Now, it is not near as dramatic as it used to be when I started because the interest rates are so low. You look at money is so cheap right now.  You can borrow a lot of money for just a little bit of interest.  Fifteen, twenty years ago, and there are folks that are listening that can tell you about the good old days back in the 80s when interest rates were 16%.  You bought a $100,000 home, and you ended up paying four hundred grand for it.

Mikell:  Wow.

Jason: The cost of that money was ridiculous.  Now it is ridiculous in the other way.  It is really, really cheap. Now that does not mean just go borrow all you can. There are lessons to be learned there.  Make sure you can pay for what you borrow or have other people pay for what you borrow, which is a better idea.

Mikell:  Absolutely.

Jason:  The lie being told is your house is an asset.  Your house is a liability unless it is generating income.  Now, I have not figured a way to get my kids to contribute enough to the housing allowance to really turn that into a profitable thing. Some of you may have and you need to write a book. We can all learn from that.

Mikell: There you go.

Jason: But there are ways in which you can do it. You want to make sure that you have got the right vocabulary and that you are using the right terminology. So assets, a lot of real estate people, lenders, real estate agents, all of these folks out there will tell you that your home is an asset, but if you look at it on a balance sheet, not so much.  Not so much.

Mikell: Not so much. It is definitely a word that is thrown around a lot.

Jason:  Absolutely. Well, the term is you do not want to throw your money away.  Stop paying rent and throwing your money away. 

Mikell:  Okay. Yes.

Jason:  Okay. Maybe, but sometimes paying rent is smart money in that depending on financially where you are in your life, the great thing about, let’s just say $1000 a month rent.  At the end of the year, all you have lost is $12,000. It is 100% guaranteed.  You will not lose any more than that.  If you agreed to pay $1000 a month, and you paid $1000 a month, you have $12,000 gone.

Mikell:  Sure.

Jason:  If you buy a home, there is no guarantee of that.  Yeah, my mortgage payment may be $1000 a month, but what if my $250,000 house goes to $200,000.  What if the asset that I have or I thought I had, that I paid 250 for because I was excited about it, kept Mama happy, the market shifts and now all of a sudden, it is only worth $200,000?  Where is the $50,000 going to come from if I need to get out of that deal?  If you do not have the $50,000, you are stuck with two options:  stay and get over it, or you are looking at two other options which are, well three, I guess.  You could turn it into a rental.

Mikell:  Okay.

Jason:  You could do nothing and walk away, and it is the bank’s problem.  Or you could do another process called short sale.  So there are things you can do, but almost all of those are negative. Right?

Mikell:  Yeah, absolutely.

Jason:  So this is why we do not ever want to buy investments based upon equity appreciation, and we will dig into that.  But if you stopped paying your mortgage you would find out whose asset it is.  This is not a show in do not pay your mortgage. Not a good idea because you do not get to stay typically.  You can stay for a little while, but you do not get to stay for very long.

Mikell: And then your credit is ruined.

Jason:  Yeah.

Mikell:  It is not good.

Jason:  It is not good.  It is not good. So you can also gain equity in the property.  That is different than an asset. So you are gaining equity.  If you really want to look at what real estate is, the home that you are living in, the right, I think, mindset to have is it is a really, really crummy savings account. That is what you have created.

Mikell: Okay.

Jason: You have a shelter, which is, we all need shelter.

Mikell: Absolutely.              

Jason:  All right. And then you have created a really pretty poor savings account in that you are paying down principal, so it is forcing you to save money.  Every single month you make a payment, unless you have an interest-only loan, you are paying some principle down. So it is forcing you over time to pay that debt off.   All right? So it becomes just pretty much that.  A really poor savings account.  What you do not want to do is get to the very end and then all you have is that paid-for house. There are many, many people that we help in the Triad that that is exactly what they have.  They get to that retirement age and they still need the money, but all their money is in their home.  So they get into a situation where they are physically maybe not able to work any longer, not able to bring in income, and so they need to sell their home. Surprisingly, most of them do not want to do that because they have been there for 20, 30, or 40 years.  It is home.  It is the nest.  They do not want to get rid of it, but they have no choice because they do not have any other type of passive income, money coming to them.  Let’s face it.  Social Security, although it is something, it is not enough –

Mikell:  Absolutely.

Jason:  -- for most people to keep their head above water or to live.  You are not going to Aruba on Social Security more than likely.

Mikell:  Not at all. 

Jason: You gain some benefit of owning a house in that you have some tax deductions, which those typically are debatable.  None of that is good, bad, or indifferent.  I am just not attached, so I will leave the tax guys up to that. But you are creating a savings account, which is not bad.  Now, if you did that with your first home, let’s just say it was a 3-bedroom, 2-bath, 2-car garage, a very rentable home in our market for sure, now you can flip that property into becoming an investment and now all the math changes.  Instead of you paying for the house, now we have a tenant paying for the house. Now, it has actually become a true asset.  Other people paying for my stuff.  And if the house is paid off, then it is pure profit. If there is still a loan on it, then they are paying your debt plus profit.

Mikell:  Absolutely.

Jason: Which is not a bad thing.  So why we do not want to hedge on appreciation is because we do not have control over it.  It is kind of like putting the money in the stock market and thinking you are going to control what it does. 

Mikell:  I love that.

Jason:  One person does not do that.  Right. Yeah, one person does not matter.  The same is true with real estate.  If you hedge only on appreciation, there are too many factors outside of, you cannot control.  If the market drops $50,000 and you were hedging on $50,000 in appreciation to do whatever it is you wanted to do in your life, you just lost.

Mikell:  So Jason, let me ask you a question.  Say I buy a house.  I finance it for 15 years and I want it to become an asset. I want it to become a rental property. Tell me what do I do, where do I stay now.

Jason:  Right.

Mikell:  If you can explain that next process.

Jason:  The benefit of the owner-occupied home and loan is it is less money down.

Mikell:  Absolutely.

Jason:  Right.  So what you have to do is, typically what happens is in that first home, we start to make more money.  Right?  It is that entry-level house. 

Mikell: Okay.

Jason:  And so hopefully, my income is increasing. All right?

Mikell:  Okay.

Jason: And what I have to do is save my down payment for the next home outside of that.

Mikell:  Okay.

Jason:  I cannot use the equity.  Right?

Mikell:  Absolutely.

Jason:  I need to save it because I want to keep the equity in that because I want that thing to be paid for someday.

Mikell:  Exactly.

Jason:  Or at least paid for by somebody else.  So what I want to do is save that money and then hopefully, I qualify for whatever the next loan may be. A five or a ten or a three-and-a-half-percent-down loan, which is a lot better than an investment property where you are putting 20-25 or 30 depending on the bank and all different situations. So it allows you to move into another property by converting the other one to a rental. All right? So that is what you have to do.  You have to have that discipline.  You have to have the income.  You have to be able to do that. It is not attainable for everybody.  So just as there is a certain percentage of homeowners that do not need to own a house, there is also a percentage of people that do not need to be landlords. Okay? 

Mikell: I understand that.

Jason: This game is not for everybody.  If you do not like that risk or you do not like that upkeep or whatever it is, then probably real estate is not the right vehicle for you.  Maybe it is annuities.  Maybe it is stock. Maybe it is whatever. I do not know. That is your choice, but there is a product out there that you need to put something into to ensure that you have some passive income down the road. The downside of being a human is these bodies do wear out eventually, and we do not want –

Mikell: This is true.

Jason:  -- to do all the things that we were able to do when we were young, and some of you I know are in great shape. 100 years old, running marathons, awesome.

Mikell:  Vegan.

Jason: Vegan. Whatever it is.  Whatever you are doing.  That is great, but it is probably a choice in which you want to do, and not a choice in which you, well, you have no choice. It just has to be the way that it is. As we age, I am finding out that my body does not want to move or do the things that it did 25 years ago.

Mikell: Okay.

Jason: I am using some wisdom and discipline thinking if it is this way now, in 25 more years, I probably will not want to be doing what I am doing today to earn money. Right?

Mikell:  This is true.

Jason:  So you have to have that plan.  We are going to dig into that. We are going to do this. We are going to take a quick timeout. Grab your pen.  Grab your paper. You are listening to the Jason Bramblett Real Estate Show. When we come back we are going to talk about some of the reasons why we would want to do this. Why we want to invest outside of just getting old and tired.  We will be right back.

And we back.  You are listening to the Jason Bramblett Real Estate Show.  So we have been talking about real estate investing.  Basically been setting this up for a couple weeks just to make sure you understand the process.  There are a lot of decisions that go into creating investments, and you want to make sure you create the right kind of investment. A lot of what we are taught unfortunately growing up going through school is not exactly 100% accurate with what, it is not that it is not accurate.  It just does not meet up with a lot of your goals that you may have for creating passive income.  If you want to get a job, school is a great thing.  If you want to become wealthy, not so much.  You might want to start switching your education and learning from wealthy people.

Mikell:  Absolutely.

Jason:  Wealthy people do not do a lot of physical activity for earned income, but they own a lot of things that pay them money. So that is what we want to share with you and show you there are ways out there that you can do that. We talked about our first home becoming our first rental. Typically that is a 3-bedroom, 2-bath, maybe it has a 2-car garage, maybe it does not. You should at least have three bedrooms and 2 baths. We find that 2 bedrooms homes typically have one bath. A lot of them were built in the 60s. They really do not appreciate at all. Most of them just ebb and flow with the market.

Mikell:  Okay.

Jason:  The other thing is rents are typically lower because the homes are smaller. So the floor plans are different. They are not exactly what people are looking for today, so if you are going to invest, invest in a 3-bedroom, 2-bath would be our recommendation for sure.  Then what you want to figure out is okay, the other products that are out there. Condos and townhomes. Condos and townhouses can actually be very good first-time investment properties.  If you started in a condo, you may want to consider keeping it. The only rule of thumb I have for that is you need to make sure it is managed well. Right? Because that is something you do not control. One person in the HOA, so one owner of one condo in a 100-unit building does not have 100% control.

Mikell:  Right.

Jason: They have 1%.  Right?

Mikell: Right.

Jason: They have one vote.  That is all. If the other 99 are idiots and they keep changing things and raising the costs, it is going to affect your investment over time. So what I look for is a well-managed HOA and below market or below normal HOA dues, what you pay every month. So my benchmark is kind of $130 a month or less is what I look for in investment properties.  I like condos and townhomes because if during that transition when the tenant moves in and out, I do not have to worry about the exterior maintenance. I do not have to worry about getting a landscape guy over there.  If you are a do-it-yourself person, you do not have to schlep all the way over there with your lawnmower and cut the grass and do all these things.

Mikell:  That’s very true.

Jason:  You can, of course, pay someone to do that, but it raises your costs.  I find the transition in townhomes, condos to be much simpler to keep the property up. Properties that are vacant unfortunately go down really fast.  It does not take that much time. If you leave a house vacant, you would think well, nobody is there. Nothing can happen.  Well, there is stuff there.  It is just typically things you do not want like spiders and stuff that take up residence.  A vacant home can go down in value or just down in maintenance really fast if you do not stay on top of that. We are not attempting to create another job for you, right, where you are pushing a mower around all the time. So you may want to take a look at condos and townhomes.  Again, they need to be well-managed.  I look at some of the HOAs out here, and we have got the same exact product. A two-bedroom, two-bath condo in one area of town and the dues are $219 a month, and then in a different area, it could be right down the street, and those are $140.

Mikell: Wow.

Jason:  What is the difference?  It is the management.

Mikell: Okay.

Jason:  Or lack thereof, I should say, of management, which increases those things. The other thing, too, let’s face it. Not all tenants are created equal. Sometimes they quit mowing the grass before they move. The yard ends up looking like something you do not want to deal with. It takes a lot of time, energy, and effort.  So condos and townhomes can be very good long-term investments.  Now, they do typically not appreciate as much as single-family homes. But again, what is our goal in the investment?  Are we buying appreciation or are we buying cashflow?  I am always going to move first to cashflow. Appreciation is basically the gravy. I will take appreciation, but I am not going to hedge any of my bets on appreciation because again it is too big of a number in which I have no control over. If the real estate market crashes today, you will have no control of your equity unless you sell, cash out as fast as you can. And then you have a whole bunch of money with what to do with it. Right?

Mikell:  Right.

Jason:  And typically what happens is people sit on the sidelines and they wait to find the bottom.  The problem with finding the bottom is nobody knows where the bottom was until the market starts to go back up. Right?

Mikell:  That is true.

Jason:  It is a lag measure. So it is nothing you can predict because it lags the real reality of the market.  We do not know the market has rallied until it has rallied.  Right?

Mikell: Right.

Jason: And we have metrics there.  We do not know the real estate market has improved until well, it has already improved.  It would be nice if we could just set an appointment and say, on August first it is going to be the bottom.  Everybody buy that day and we are good to go.  It just does not work that way.

Mikell:  That would be awesome.

Jason:  It would be awesome. Probably the returns would not be as great because there would be predictability in that.  There are lots of ways in which you can look at investing in real estate.  The key thing is to have a plan and to actually do some studying.  Read. The great thing about real estate is that it has been around forever, and there are hundreds and hundreds of books on it. Many, many people, you probably know people that own real estate, and it is a great way to learn.  Get out there and talk to people that have actually done what you want to do, which is always a good thing.  That way you are kind of not the guinea pig.  Right?  Because most people do not like to be the guinea pig.

Mikell:  Not at all.

Jason:  As you get out there and you start talking to people you will see wow, there are more people than I thought that actually owned real estate that are investors. Again, we want to buy for cashflow long term.  You cannot necessarily live on appreciation long term because it does not keep happening.  Appreciation is a one-time thing.  I only get the benefit of it when I cash out of the investment.

Mikell:  Right.

Jason: Now I have the cash, but unfortunately what we lack with cash a lot of times is this thing called discipline.  Right? And we have big pile of cash and no discipline, and then we end up with no pile of cash.

Mikell:  That is very true.

Jason:  Lottery winners prove this theory all the time. How do you win $140 million and not only be broke in three years, but bankrupt? You actually owe money.

Mikell:  Worse than you were before.

Jason:  Worse than you were before. There is always an exception, but for the most part, that is how it works.  So we want to have a cashflow plan. Next week we are going to dig into getting that cashflow coming to you every month, creating that passive income. Tune in next week. You are listening to the Jason Bramblett Real Estate Show. You can go to Jason Bramblett dot com for any questions and or to search for houses.  We will see you next week.

Posted in Radio Show