How to Build a House Flipping Business (Full Course)

Here's everything you need to know about becoming a solo house flipper. If you're unsure what career you want to sink your teeth into, and you're considering becoming a real estate entrepreneur, but you're held up by things like, "How much money can I really make? How do I find money to take down a house? And what type of house should I take down? How do I manage construction and contractors? And what is the big picture of the house flipping business?" Well, then this video is for you. I've compiled everything you need to know to be able to grow a $10 million retirement over the next 3 years and make over 200 grand a year as you do it. And I know it works because I've done it. Now, I'm not going to put a lot of visuals out there because I've designed this course so you can listen to it as you're doing other stuff. Let me know if you make it all the way through. And just so you guys know that I'm legit. I've flipped over 300 houses. I've been doing this for the last 15 years. I own $25 million in real estate, 150 plus rental units. That's over a million dollars in rental revenue every year. I also own a general contracting firm. I have 20 active projects going on as we speak. And I manage those projects with no payroll, no boss, and no hammer except for at home where my wife's my boss and she makes me do things around the house. Now, I'm going through everything, guys. You can skip around if you want. I've made chapters so you can look at where you want to go. Like a lot of you guys might want to start with construction because I know that's the thing that scares a lot of people from starting is how to actually manage all of these guys. And so if you want to start there, go ahead. It does work better if you go in order. But I'm going to start with really my mindset on all this so you can see what the solo house flipper model is really about. And this is what it's about to me is it is all about freedom. Now there are four phases of freedom and they end with legacy. All right, I have notes here so I'm going to look at them throughout this whole course. Number one phase is being on your own. Basically being a small business owner, breaking free from being a sheep, you know, working for somebody else. You go out on your own. I remember when I first went out on my own, I was thinking, I don't even care if I have to clean up toilets every day as long as I'm doing it for my own. As long as the money that I make goes straight into my pocket. I used to actually manage corporate gyms and I would get the P&L every month. And I would just look at how much money I was making for them every month and it killed me inside. I just wanted to figure out how to do that on my own. So that's phase one. How to be on your own. remove yourself from being a sheep. Number two is financial freedom. Actually getting out of that rat race. Even when you go to be a small business owner, you are still kind of part of that rat race. You'll soon realize that even though I am maybe cleaning toilets for myself, I still have to wake up every day and I just have a real a different boss. You know, like Bob Dylan said, everybody's got to serve somebody. Okay, number three, the next phase is what I call balance. So, after you've finished phase two, financial freedom, and you've actually gotten yourself to a position where the money that's coming in is fairly passive, you basically get to decide what you do, when you do it, who you do it with, for how long you do it. That's what financial freedom is. You really stop thinking about money at that point. You go to sleep and you're not worried about your bills. Now, it's not necessarily passive income like everybody online talks about. Passive income is kind of a tricky subject. That might happen after years and years and years. And maybe for people that got lucky, there's like semi passive income. This stuff still takes work. And my guess is you're probably not here if you're actually looking for the my Thai retirement type of on a beach look. Phase three is balance. This is defeating the hustle culture. I say here 10x is the enemy. Not only are worried about the financial freedom, but you're also balancing your health, your family, your mindset. You know, I had this guy that I used to work with and he'd say, you know, there's three things. There's money, there's family, and there's your health. And you really, most people pick two. And I call BS. You can have all three. You have to balance. And that's phase three of freedom. Phase four is legacy, but not like most people think about legacy. Most people think about legacy like uh in an egotistical way, like I need to leave my mark on the world so people can remember me. Dude, nobody's going to remember you. Generations from now, nobody's going to remember you. And you really got to get that ego out of your mind. What legacy really means to me is I have one job in this world. One job and that is to raise good kids. That is biologically why I'm on earth. And I take that job seriously. So when I talk about freedom, what I'm really thinking is that I need to show my kids what it looks like to actually live in a free way. I don't care what they do. I don't care how they do it. I just want them to be untethered from people or society or any other influences. I want them to be able to look inside and say, "This is what I want and I know how to go get it." That's what legacy really is to me. That's my one job. There are four five actually ways that we go and achieve freedom. There are really the five core values, the pillars that I live by. You know, every company has core values as part of their mission. These are my core values and I think you probably share them with me. Number one is what I call the Mario rule. It is that when you play the game of Mario as a kid, you would pass a level or you would pass a checkpoint and if you died in the game, you would only go back to that latest checkpoint that you passed. You wouldn't go back to the beginning of the game. And the core value, the pillar is always thinking that way. Always thinking in assets. What is the thing that I can gain? And you can't take it away from me. At least not easy. You'd have to hard reset the game or whatever to go back behind that checkpoint. And same thing in life. There are certain things that you build that can't be taken away from you easily. Now, there's financial assets like real estate. And we're going to get into like why real estate is the best asset class that you can have. And this is one of the reasons by the way. And so that's financial hard assets. But there's also things like your health and your habits. You know, habits build up over time. The relationships you have with your family. That is the most important asset of all of them. That is the one thing that when everything is stripped away, it is the only thing that matters. You know, I've been in situations where things got really difficult for me from like a cash flow perspective really like had that feeling of overwhelm like the world's crashing down. And in that time, the only thing I thought is, well, my family still loves me. Everything else can be repaired. Also, I thought, "Oh, well, I have these rentals and uh as long as I don't have to sell any of them off, I'm going to be fine." Probably was a first world issue that I was dealing with, not actually world crashing down. And the final asset, guys, is skills. If you watched any of my stuff, you know that knowledge times experience equals skills. Once you have them, you are freaking unstoppable. That is the core of my philosophy. That's pillar number one. Pillar number two is what I call moneyball rules. You ever seen the movie Moneyball with Billy Bean? He goes takes over the Oakland athletics and he hires uh Jonah Hill who's like a mathematician. Mathematician comes in and says, "Well, hey, if you really break this down, it's all about people getting on base. You know, we don't need, you know, they got rid of like Jeremy Giani, I think is his name, home run hitter." and they said, "Well, we just need guys who have a high percentage of the ability to get on first base, whether it's by a base hit, a bunt, by a walk, because the more people we get on base, mathematically speaking, the more runs we'll score." So, it's base hits and bunts over home runs. When I was growing my real estate business, I kept doing bigger and bigger and bigger projects. You know, I thought that's what you do. You just take on bigger projects. You start with a cosmetic flip and then, you know, before I knew it, I was taking roofs off and building second stories and then building accessory dwelling units in the back until I hit the end of the line. Ran out of money. Actually, it was a situation where I thought the house would sell for a lot more than it didn't. Lost like 200 grand on a single deal. And all the while, I was watching this guy across the street named Glenn who he had bought a house by himself and he went in and he did the work. He brought some contractors in while he was doing the work. you know, just a few to do like a couple things. Like he didn't even change the carpet out in some of the bedrooms. He just cleaned them. He put in like some shaker style cabinets, cheap stuff while across the street I was doing like European style cabinets that cost me a fortune. This was in Colorado. So this dude's like growing weed in the back. He's wearing flipflops. He's doing some DIY work himself, doing some MIY, manage it yourself. and he made over six figures on that single flip in like 6 months. A year later, I took my lumps and lost 200 grand on this monstrosity of a build across the street. When I say monstrosity, it was actually uh pretty beautiful. Looked like a drug dealer's house. It was great, but I lost money, so who cares, right? Okay, that is the moneyball rule. We take base hits over home runs. Home runs ultimately will lead to a strikeout. Number three, the cowboy rule. This is my favorite one. This is the one that maybe matters the most, but I guess the way core values work is they all work equally. But the cowboy rule really comes down to my number one philosophy in life, which is don't be fragile. It is that you are not a damsel in distress. You are in control of your destiny. It's not the team that you built that is the problem. It's not that this that or the other factor is weighing on you and not allowing you to get what you want in the world. It's you that aren't getting the thing that you want. You need to work harder. You need to solve more problems. You need to face the music and gain more skills, gain more assets. Okay? It is all about you. And this leads to never have blind trust. We are leaders. We lead our organization. Okay? And that means that you when the clock is ticking down, you just know that you don't want to put the ball in somebody else's hands. I'm not saying that you don't want to build a great team of vendors, not employees. You want to have great contractors. You want to have all the admin vendors like CPAs and attorneys and all that. Like there is the picture of you're sitting around this round table with all your advisors but you are the one that is running the show. It's your ideas. It's your philosophies. It's your strategies. No blind trust guys. You are not the damsel in distress. Number four core value is the watcher. Tell you the biggest problem in my business all along is me and you're the biggest problem in your business. And you got to understand that we're all sinners. We're all going to make mistakes. We have to have the ability to think about it, look at ourselves, figure out how we get better, and have the accountability, the personal accountability to make ourselves better. Every day, I keep a journal. I write all the things that I messed up the day before, all the reasons that I was mad or upset, you know, let emotions overtake me. and I figure out how I can do it better the next day. This applies to business as well. What mistakes did I make and how can I get better tomorrow? If you get a little bit better every day, you will be unstoppable. Number five is the shopping cart rule. This one's really simple. You go to Walmart, there's the shopping cart returns. There are two types of people in this world. They're the kind that will go out of their way even if it's raining and they'll put it back in the shopping cart return because they know that if they don't, somebody else has to pick up the pieces for them. And then there is the people that leave it wherever it may lie. If you're not a shopping cart returner, get the hell out of here. What I'm really saying here, guys, is you can make money. You can create wealth, okay? But you got to do it in a way where you can sleep well at night. You have to be a good person. Otherwise, it's not going to be worth it. Okay, remember legacy. Phase four is legacy and what your kids see. That is the filter that I basically see everything through. How am I acting? Because actions are what teach my kids and what will teach your kids someday or you know kids that you already have. And that's really why we're doing all this. Okay. Now, we're moving to the next section. That was really the philosophy behind all of this. What a solo house flipper is. Now we're moving into what I call the foundation. Okay, there are uh really six different sections. We'll go through the the foundation and then the four controls of real estate. So each one of those and then we're going to go through the empire, which is really how you manage your organization as a whole. And then we'll finish with the steps, you know, the actual steps I think you should take. All right, the foundation. What this is about is understanding why real estate is the best. You know, I I think that a lot of people are in a situation where they're thinking like, oh, you know, I could do this thing. I could start this business. I could grow the business that I'm currently in. Or for myself, you know, I was in a corporate environment and I was doing really well. You know, I was in my early 20s. I was making well into the six figures. I was, you know, I got invited to go to like the Olympics and stuff like that in this fitness organization. I was an alternate. I wasn't actually a primary that got to go. It was the London Olympics way back in the day. But the point is, uh, you know, it's always tearing at achiever types like us, people who want to grow, want to do better. So, you're thinking about all these different things. And, you know, one of the questions is, is real estate the thing that I should sink my teeth into? Is it the right thing for me? And that's the foundation. I'm going to teach you why real estate is absolutely the best. I've thought a lot about this. I believe that it is the only path that makes sense. We're going to talk about why flipping and how house flipping is the catalyst to wealth. Okay? Because the truth is flipping is not the end goal. It's only the entry point. And three is why is construction the key? All right, all real estate investors actually have construction companies. I just happen to do it outright. You know, I own a construction company and a real estate investing firm. Actually, in this section, I'm also going to tell you about funding. I'm going to give you at least a brief overview of funding because I think that's a thing that people think about a lot. You get this far and you're like, "Okay, but how do I get money to do this stuff?" And some of you, you know, I know that you already have the money set aside. Maybe you're going to be a cash buyer, but it's still useful for you to know this because being able to do more than one or two requires you to understand the money game as well. And it's a lot simpler than you think. Here we go. First, the goal of this whole process is for you to become a full-time real estate operator, a full-time real estate entrepreneur. In your first three years, you are going to be able to grow a $10 million retirement. All right? And here's what that means, okay? It doesn't mean you're going to have $10 million in the bank. It means that the beauty of real estate is it appreciates over time and we're going to get into that but it appreciates over time and if you have x number of houses in the next three years over the lifespan of that mortgage a mortgage is 30 years mortgage will be paid down over 30 years. bank gives you money to buy that house. Over 30 years, it goes to zero. The price of the house, the value of the house goes up. And so over the next 30-year period, that that you set up in these first three years will be worth $10 million. Okay? And that's the way I think about everything is what are the actions that I'm doing today? What will they look like 30 years from now? And in the steps section, I'm actually going to go through exactly what you're going to buy and when, you know, the the whole timeline of this, just giving you an overview. And in those three years, 200K plus per year, that's four to five flips in most markets. Some actually you'd need to do less to to make that happen. And this is what I strive to do on a yearly basis. I try to add six to eight rentals. A lot of years, a lot more than that. And I try to do four or five flips a year at a baseline. All right, that's 200k a year in income. Plus, it is adding significant portions to my net worth. And finally, it's to steady out your cash flow. I basically I think there's three time horizons of money of cash. The first time horizon is like your grocery money, how you pay bills today. And then there's like a medium-term time horizon, which is like every under a year, basically 1 month to 12 months. That's your medium-term. And then there's the long-term wealth game. Long-term wealth, pretty simple. That's rentals. Medium is flipping houses. you know, every 1 to 12 months, you're going to have large chunks of cash, usually 20, 30, 40, 50 grand, sometimes even more. And then it's the grocery money. Now, that's usually a big problem in real estate is that grocery money is off the table once you give up the job or the business. But there are ways around that. And that is actually why I have a construction company. Two reasons I have a construction company. one is 15 years ago when I started I was like gosh the biggest scariest thing of all is construction like what if something goes wrong with the house and all that so I I knew that I needed to learn that first and I knew that I needed to learn how to manage contractors obviously that's why you guys are here cuz that's what you want to learn from me as well as the other pieces of the flipping business but the other reason for the construction company is that is my active income and I'm not talking about going out there to do jobs for other customers, which is something that I used to do, but I don't anymore. What I do is I as my real estate investment company hire the construction company. So, when I go and put aside money to do a flip or borrow money, which we're going to get into how to do that, but when I go to borrow money, one of the things I borrow money for is the rehab budget. you know, the acquisition price of the house and the rehab budget. And the bank doesn't care or know that the construction company is actually owned by me. And since I'm the general contractor and the project manager of the construction company, I get paid just as if this were Jeff, John, or James down the street, not my own real estate investment company. They pay me. I get to use that as grocery money. And that's how I even out the cash flow. And it's not only construction that you could do that for if you're a real estate agent or you go and get your real estate license. Well, you'd be able to go buy a house and when a real estate agent works as a buyer's agent, they get paid 2 3% of the sale price of the house right at the front end. So, you could get a little bit of money at the front. Also, when you go to sell it, you can get some money at the back end as a wholesaler. If you're a wholesaler, where you go find offmarket deals, which we're going to talk about a lot today, well, you get to put a assignment fee on it. And lenders are used to paying that assignment fee. This might not work with your first house when you go to get a conventional mortgage. Once again, we're going to talk about all that stuff, but a wholesaler 20k fee is absolutely normal in this environment. I've paid a six-f figureure fee to a wholesaler before. It was on an apartment deal, not a house deal, but a $20,000 assignment fee on a house deal is really normal. And what I do is through my construction company, I go out and get deals and I assign them to my real estate investment company with an assignment fee. So the construction company is making the income and I get to work out where that goes. That's how I even out my cash flow. Three horizons of wealth, three time horizons of wealth. When you start out, you need that short-term grocery money. That's why you go get a job. That's why maybe you start a business that is cash flow generating from the start. And eventually you're in a phase of life where you can start to focus on medium-term income like that from flipping houses. As time progresses, you're putting these assets in place and someday all of your grocery money actually comes from rent money and you no longer need the midterm. As you progress through your business evolution, you need less from over here and it starts coming from over here. It's a beautiful thing. And over here is a lot more passive than over here. But like I said before, nothing is completely passive. There are no free lunches out there, guys. Sorry to say. Whoever says there is, they're selling you something. Now, let's talk about why real estate is faking awesome. Seven reasons. Oh, nope. Eight reasons, guys. Number one is leverage. Okay, I was a kid. I was fat and my buddies would get on a teeter totter with me and it wouldn't work unless I moved up into the middle. All right? Because that's leverage. Closer I am to the fulcrum, the more leverage that little skinny guy has. Same thing works with housing. Leverage is being able to move big fat thing with little skinny thing. And how that translates into real estate is lending. Banks will give you money to go buy houses or other lenders will give you money to go buy houses. So little skinny guy, little amount of money can move big fat thing house with leverage. And why do banks give you money to buy houses or other lenders give you money to buy houses? It's because they know it's the safest asset class there is. Now just think about this. You got $10,000 and you go buy a stock with that $10,000 and you know stock market over the last 30 years has performed at like 10%. That's being pretty generous, but anyway, let's say that it has actually performed at 10% over the past 30 years. Okay, that $10,000 after 30 years will be worth around like 175 grand. Uh, I'm not a genius, by the way. I've done that math before. That's how I know that off the top of my head. And if you take that same $10,000 and go buy a house, which if it's your personal house that you're buying with a conventional mortgage, you could buy a $200,000 house with that $10,000, right? because you put 5% down. 5% of 200,000 is 10,000. So now instead of controlling a $10,000 stock with that same 10,000 bucks, you are controlling a $200,000 asset. So real estate doesn't appreciate as quickly as stocks do. Okay? More like they say 4.2% over the last 30 years. Uh, I mean, I'm more conservative than that, so I I'll think more like 3%. But anyway, if it is in fact 4.2%, that $200,000 asset at the end of 30 years would be worth Oh, I'm going to have to look that one up. Hold on. $200,000 house, 95% loan to value. At 3% that house would be worth almost $500,000. And at the 4.2 that $200,000 house would be worth 687,000. By the way, I'm using uh what I call the wealth calculator. We'll link it down below. This is just a little app I built cuz I like to count chickens, guys. I like to see that if I buy 10 houses this year for $300,000 a piece, that's the value of them. Let's just say, okay, 10 houses, three. So that's $3 million in home value, right? 300,000 times 10 is 3 million. Uh wealth at maturity after the mortgage is paid down and the appreciation over 30 years is 10 million bones, guys. By the way, that's how you get to 10 million. 10 rentals gets you there. How about that? At 300,000 a piece. And uh 300,000 is below the national median of a house price. So very achievable stuff. Uh just let the cat out of the bag. Don't worry. We'll we'll actually get to that further. Okay. But you get it. Leverage, right? You can't do that with stocks. I mean, I guess I think there are like loans that you can get for stocks and like uh those apps that give you money for Bitcoin and like, you know, make everybody go broke. Which leads me to the next thing about real estate. Why it is uh much safer than all those crazy things. First is history. Okay. Archaeologists dug up ancient Samaria, right? This is like pre-Bible stuff. Mesopotamia. That's the place. Okay. This is like where they invented the wheel. That's how far back we're talking. archaeologists. They dug up these ancient civilizations and they found these clay tablets that were basically people trading land profiting off building wealth from land has literally been around for thousands of years. So for something that's been around that long, why would I not believe that it's going to be around for the next 30 years of my professional existence? Maybe more than 30. My old man's like 70 and he's still kicking around working. So, uh, that's probably in my future. But anyway, the history safe bet, guys. And it's like when you look at things like crypto or whatever, it's not that I don't think they're going to work out or even like Airbnb. It's not that I don't think those things are going to work out. It's that when I have to compare what I'm going to spend my time on, the thing that's been around for thousands of years versus the thing that's been around for like a couple years, where am I going to sink my teeth into? Where am I going to spend my years? I don't want to go spend my years with something where the rug can get ripped out from under me. Next is the universality. It's universal. Well, real estate. Back in the fitness industry, don't know if you know, uh, it's just a sales industry. That's all you try to get people to buy things and you get really good at sales. And I always thought, well, uh, if I'm going to be good at that skill, which I think is like absolutely a great skill to have, we're going to talk a lot about sales today. If I'm going to have this one skill, why would I not use it on the biggest thing that everybody has to have, houses, right? Everybody lives in something. Most people live in something. For you guys watching us, most of the people around you are going to live in a dwelling, right? It is on Maslo's hierarchy of needs that you need shelter. Okay? Most people's shelter is houses or apartments, whatever. So why would I not spend my time on the biggest thing that everybody needs? It's universal. Number four is the control. You know, just think about stocks, guys. What am I going to do? Call Jeff Bezos and say, "Hey, you know, uh, I got an investment plan and, uh, I really need you to make these certain changes, right?" Ridiculous. Okay. But a house, if all the chips are down, literally everything goes wrong, which in my career, everything has gone wrong. I can drop it all. I can sell my truck. I can live in a sleeping bag in the backyard and with my own two hands, I can physically make that house look different and make it worth more money. Okay, that's not the strategy, but it can be done. There is no other thing that I can think of where I have complete control over the outcome. And I'm not a control freak. But when I'm spending my money, when I'm spending my time to grow something, I want to know that if all the chips are down, I can go do something about it. That's the beauty of real estate. Okay. Scale. It is the only business that I believe is truly scalable. And when most people think about scalability, they think, "Okay, well, if I uh hired some people, you know, to do these things and those things, you know, I'd be able to take on more, you know, I'd be able to thinking about a business. I could grow a bigger business. I could take on more customers if I had, you know, these people in place or these systems in place." And that is scaling. That is growing bigger. But most things are growing with you. Here's how real estate works. And most people think scale and they think, "Oh, okay. Well, if I can do one flip at a time, I can do 10 flips at a time. Not necessarily. It's more like this. Last year, well, let's go back even further. In the wholesaling days, uh, where I'd go, you know, direct market to people who might want to sell their houses, I would go in their house, look at the house, and I would say, "Hey, I can offer this much for for the house, whatever." It was like an hourong process. and I would get a house and you know off a house flip you might make 30 40 50 grand or you get a hold of rental. Well, last year I found people who owned 45 doors, some of them small apartments, some duplexes, triplexes, and I think there was a couple single family homes in there. And anyway, I found out that these guys were thinking about selling and I called them, never met him before. Called them up, had a 30 minute long conversation with them. I don't even think it was that long. By the end of the conversation, I was sent in a contract to purchase those 45 doors. Got the deal done and actually the whole transaction added seven figures to my net worth. That guys is scale. Here's the other thing. I have yet to set foot in any one of those properties. Have owned them for a year and a half, maybe two years now. That's scale, guys. And how do I do that? I send contractors there, property management. We're going to get into all that ultimate scale. Next one, taxes. The people who wrote the tax code are land owners. You know, land owners, homeowners, and every advantage is set up for you in the tax code to be able to pay less taxes, to be able to defer or eliminate them completely. And we're going to touch on that a little bit in the empire section of this course. I don't want to overwhelm you too much, but you you just need to know that that there is no better money to make from a tax perspective. Now, flipping houses is a little different. Your money is a sitting duck just like if you had a multi-million dollar business, but there are strategies that we'll get into. Okay. Seven is it's a twoin one. Shampoo and conditioner, baby. allin-one. Don't have to take the time to do two things. Two in one means that everybody should be thinking about the time horizons of money. The money that I make today versus putting away money in the future. What most people do is they have their job. Maybe they have a corporate job and their job offers a 401k or if it doesn't, they go out and find their own 401k. And the whole idea there is they're making their money today. They're shoving some of it aside for future wealth and retirement. But the beauty of well one other thing they don't know jack about that 401k. I mean some people get into like the whole stock thing or whatever but for the most part they're just like okay shove it in there baby. Hopefully when I retire everything's going to be okay. But they don't know the details of it. In fact, that's kind of the whole point that, okay, there's this stock guy or this financial advisor that deals with my money, so I don't have to think about those things. I can go focus my time on my career and ultimately that will put me where I want to be, right up in that rat race. But anyway, real estate on the other hand, I can do both things at the same time. All the skills that I am putting under my belt, all the contacts, the relationships that I built with contractors, with vendors, the knowledge that I have of the area, of the neighborhoods that I buy houses in, the banks that I get money from, the lenders, all of it. It is two in one. Those same things apply to me making money today through house flipping and holding rentals long-term. It is the same exact game, guys. The holding a rental and flipping a house is the same thing. Okay, we're going to get into the details there, but it there is one maybe two moves that are different from flipping versus renting. So, you're learning all the same skills and you got shampoo and conditioner. Love it. Great. Okay. And finally, last one. Is it is the only true freedom when you have a business? Okay. Well, first, let's rewind. If you have a job, you're in the rat race. You're the sheep. I don't care how far you moved up, unless you are actually getting percentages of the company. Not stock options. I mean like you get ownership of the company. Uh you are working for somebody else. You know, somebody else gets control where you're at when you're doing it. Even if you have autonomy in that job, at the end of the day, they can give you a call and say, "Hey, I need you to do this." That is not freedom. Now, I'm not saying there's anything wrong with that. And my brother works for the state and he's got his bennies and he takes his money and he goes home and focuses on his family, takes them on vacation. He's got a great savings and retirement plan. They probably own their house outright. You know, it's a good situation. Dave Ramsey, baby. And that's the life that makes him happy. And if that's what makes you happy, go do it for sure. I doubt you even made it this far in this video. if that is the thing that you're going after. But what drives me like we talked about before and the philosophy is freedom. William Wallace baby. So one is the corporate job obviously not free and then you move to being a small business owner maybe and I have owned different companies that I go and do customer work. uh a mechanical electrical plumbing company, obviously a general contracting firm. And if you're in it, you know that every move is filtered through, h I hope I don't get a bad review. And that sucks. You know that sucks when you go into a customer's house who is an idiot. They're unreasonable. and you know that there's a possibility that they might go hit you online and hurt you and they can. That is total power over you. And I hate that. Here's the thing with real estate. If I go buy a house from somebody and they for whatever reason don't like me, well, here's the thing. I know that they didn't go check reviews before they made the call and so I don't have to worry about that. I can be who I am. Okay. Once again, shopping cart rule, guys. One of the five core philosophies or five core values. You I'm not saying to be a bad person and you can get by with it. If you're that person, you know, get out of here. But I'm saying that if you trip up, say the wrong thing, you said something that offended them and you didn't know it, well, you don't have to you don't have to walk on your tippy toes here. If you are being yourself and it happens to make somebody mad, okay, well, I'll just move on. And then selling a house, it's not like there's Trust Pilot for real estate agents or buyers. Make a contractor mad. There's other ones. We're going to talk about how you go get new ones. There is no power over you. Only freedom to be who yourself. Only freedom to be who you are. And hopefully that is a good person. Now, let's talk about the four controls of real estate. Now, I mentioned before that when I decided to get into real estate, I could I can still think about the first house I was buying and I would think about, oh gosh, you know, like what if uh sewer line is bad or what if there's like foundation issues and what if this that or the other thing? And all those whatifs basically were what if the house is bad and I don't know what I don't know and something goes wrong. There was a little bit of like what if I can't rent the place or what if it doesn't sell, but I wasn't too concerned about that because people do that all the time. You know, the construction part of it seemed to be the specialty trade. And also, I thought, well, if I could control construction, I could uh make every house a deal. you know, thinking that that was the way that you made money in real estate is you get your construction prices down and then there's more margin for you to take home. And that's why 15 years ago, I went out to learn everything about construction, you know, and obviously the GC firm and all that stuff. That is absolutely my expertise. However, this is what I've come to know is that construction just costs what it costs. It's not like you can become a construction expert and all of a sudden a $50,000 rehab is only going to cost you $35,000 and you're going to be able to pocket that extra 15 grand. No, it doesn't work like that. I've gone through like every type of person that you could hire. I've uh hired crackheads which like seem super cheap. I remember this one dude is uh Kevin Flor and Kevin guy that was his name and uh I had bought this six-unit apartment building. It was brick on the outside and I mean three stories high and I had him come bid painting the exterior and I had already gotten like other bids. By the way, I didn't paint the brick. You shouldn't paint brick, you know, trends change. But anyway, I was thinking about painting the brick and I owned this property with partners and and they wanted to see what it would take to to paint the brick. So, I had gotten other bids and the other bids are like, you know, 12, 15, 20 grand because it's a three-story building. It's a six. I mean, it was huge, you know, right on a busy street, too. Great investment. And then I hire Floren and Payton Kevin to come in. Or I didn't hire them. I asked him to come give me a bid. 800 bucks, guys. 800 bucks. And I was smart enough to know that uh something's missing here. This is probably not a good idea. I even asked him is like so 800 bucks for the labor. He's like labor and material, baby. Okay. So, I used Kevin on a lot of stuff. I had him do, you know, rental style stuff. And I mean, cheap, cheap, cheap. I, you know, he would sometimes disappear for like a week to go smoke crack and go on a bender, but he would come back and he would get work done. And I at that time would buy a bunch of floors from probably China and I would store them in a warehouse. That way I was getting floors cheaper to put in all of these rehabs that I was doing. And I at one point had to store them at a house. And long story short, go in the house, all the floors are gone. Thousands of square feet. And that's when I realized that's how Kevin does these jobs for so cheap. He doesn't buy any of the material. He just steals it from other people like me. And now you see how construction just costs what it costs. Maybe it seemed like I was getting a job done cheaply until I got thousands of dollars stolen from me. So, it all evens out in the end. Construction cost what it cost. However, it is the defense and Super Bowls are won and lost by defenses. you have a $50,000 budget, the average person is going to spend more like $80,000 on that same renovation because change orders are going to come up. They're going to run into an issue that I call the mirage. They're going to misplay codes enforcement and grandfathering rules. They're going to have contractors that come in there, give them the black hole situation. All these things we're going to talk about, but construction is the defense. I set a $50,000 budget and I land that plane at $50,000 or like 55, but whatever. It's not the thing that takes me out of the business. But it is not the offense. I always used to buy houses off of the MLS. That's like buying a house off Zillow, buying a house off the market for those of you that don't know, through a real estate agent. And the thing is the market is the biggest market. Everybody goes there to look for houses. It's easy. You go online, you can look at all the houses for sale. And just basic supply and demand says that that means it is going to be the highest price thing that I could buy. But I always thought that wholesalers were kind of like shady characters and you know I shouldn't deal with them. I'll end up getting screwed over. But finally, I met this guy actually at uh my gym who was wholesaling some houses. And you know, he knew that that's what I did for a living and told me he had this deal. I went and looked at it and I walked into this house. It's boarded up. I walk around the back and there's like adult toys and the packaging that they came in around like the patio door in the back. Then I walk inside and there's like mattresses everywhere. You know, obviously people living in there. And then the highlight of it all is there's a human dump in the middle of the living room. But I bought that house for $21,000. And I mean, the renovation that I did on it was less than 30 grand. I basically had to clean the stuff out of there, take the boards off. I put some new floors on because the old ones were a little dirty. And you know, 30 grand, under 30 grand for this whole thing. Painted it all, you know, freshened up. By the way, I used Kevin the flooring guy. That's why it was so cheap as well. But but anyway, obviously I made my money from buying a house that was almost livable for $21,000. This thing appraised for almost $200,000 after that. Yeah, that's right. I still own it today. It's a rental. So, you realize that the offense is getting a great deal on the front end. Okay. Okay. So, the work, that's a section here, one that we'll get to here in however long. The work, managing contractors, managing construction, that's one of the four things that you control in real estate. That's the defense. And then the offense is the deal. Finding a great deal, closing a great deal on the front end. That's where all your money is made, guys. And most investors buy crappy deals. They think they're good, but they're only good in comparison to the other crappy deals that are on the market. Okay. Next control is the strategy. This is the second control. First first is the deal. Then we move to the strategy and then the work, which is the construction. So the strategy is all about setting up what you're going to do on that house. The scope of work and the budget. This is knowing what jobs, how much they cost, and how to group them in a way that is best to manage once you move on to the construction. And the strategy is hugely important. We're going to go through all of that. I have a lot of frameworks for how we look at houses and how we assess them. basically learn how to look at them through X-ray vision, the strategy, the work, and then there's the market going to sell the house. And I call this a control, but really the market is what the market is. Your house before you bought it, you did comps, you know, the after repair value. you got with a real estate agent or you did it yourself, which you'll be able to do it yourself after we go through all this. Figuring out based on other sales in that neighborhood, which will define what a neighborhood is, this house will sell for 350 grand. Uh, a range, it'll sell from 330 to $360,000. And I know that based on historical data, and that's what it's going to sell for, guys. there there is nothing that you can do to make it sell for more cuz the market is what the market is. You goldplate that sucker and it's going to sell for high-end 360. Maybe you push it a little bit, okay? But it's going to cost you a lot more than the amount of extra money that you would make to push it. The market is what the market is. But there are some psychological tricks that you can do to build a better filter in which people see it through. There's also getting the right real estate agents, the right strategy to market that house. And also in the market, you could flip a house, sell it to the market, or you could sell it to the bank in a refinance where you hold that thing. You know, one of the guys I work with, he calls it putting a flip on the shelf. And that's the right way to think about it. Every flip could become a rental. And every rental is just a flip that's sat on the shelf for it later to be sold. All right, that's the control of the market. And basically, these four controls, the way that I see it, sit on top of the foundation, which is what we're talking about right now. you know, the way to look at all real estate and flipping and construction. And over the top of all of that, like a rainbow, sits the empire. How you deal with yourself, how you set up your organization. Now, what is a flipper? That's the next subsection here. A flipper, I start by teaching you what I call the scale of livability. And I want you to visualize this because remember I'm trying to do this in audio form the best I can. And we might throw some pictures up here for people who are actually sitting and watching it, but this will work in audio as well. Okay, picture a neighborhood of sales. You know, the different sales in the neighborhood. Uh let's say this neighborhood, a nice house sells for $300,000. There's so if you're looking at a bar chart, the volume of sales over here at around $300,000 is going to be up and then somewhere right in the middle there's going to be houses for like 160 170 180 that you can see an uptick in the volume of sales right there as well. And then all the way over here to the left. I know I'm backwards if you're watching this uh because of cameras in the mirror image, but there's houses over here for like 50 60 maybe even $40,000 and there's an uptick of houses there. Some volume here, some volume in the middle, some volume over here on the right. And that makes sense. That is what most neighborhoods look like if you were able to look at that data. Those houses over on the right that are selling for around $300,000, those are your what I call the range of comps. This is what your real estate agent tells you they can sell the house for once it's fixed up or this is what you assess yourself once you know how to break down the after repair value of a house. But that is your after repair value. If you go try to go beyond that, it's called speculation. There's nothing that's sold for there. So you're going into no man's land. No bueno. In the middle here, that little hump, that is what I call the barely bankable houses. These are houses that are outdated. they're, you know, needing cosmetic improvements, but I call them barely bankable because they are livable today. They're just to the left of the barely bankable houses is what I call the threshold of livability. Okay? Banks don't lend on houses that are not livable. these barely bankable houses. I know that the mechanical, electrical, plumbing is all in good enough shape that I could buy the house with a conventional mortgage from a bank. That's what barely bankable means. And then all the way over here on the left, those cluster of houses, those are what we call bombed out houses. And uh well, that's just like the name sounds. You got to gut those suckers down to the studs and redo everything. And here's what flippers do. is they buy these houses to the left of the scale, either bombed out or barely bankable, and then they move them to the right on the scale to the range of comps to being a nice house. They fix it up. That's what flipping is. That is called forced appreciation. you with your own hands or your brain in the methods that I teach and your leadership skills are going to increase the value of that house through mostly construction. Now, later on, we're going to talk about the seven different types of flips there are. So, it's not only construction. There are some other strategies that I I want you to know about. It's not really what I teach. We're going to force value force appreciation through construction because there are two types of appreciation. I do want to say one thing though before that back to this line of livability. To the far left beyond bombed out is just raw land. So starting with nothing and this is the way that I look at things. We have this line of livable the threshold of livability right down the center. The distance you are away from that livability threshold is the amount of risk you're taking on. So raw land is as far from that line as possible and that means it's the most risky. Bombed out is closer to the livability line. And I know you're probably asking is there anything in between bombed out and livability? Yes, there is. We're going to talk about that once we get to the strategy section. But the point is here is also the risk index because a house that is sold before it becomes livable, you will take a massive haircut on. You will have to discount it deeply. So it's not like as you're renovating a house, it's constantly going up in value in a straight line. It's more like it's even, it's even, it's even, it's even. Now it's livable and it jumps up to the new value. Okay. two types of appreciation. Forced appreciation, which hopefully you understand right now. That's that uh force up in appreciation. And then there's market appreciation. I've also called this paid appreciation. And organic appreciation, you know, like content. And the paid appreciation is the forced appreciation. Now, organic or market appreciation means that if I buy a house today, in 30 years, it's going to be worth a lot more money because of inflation. But real estate investors or any investors don't call it inflation. We call it appreciation. Because when you own assets, you get to take advantage of that inflation. It is your hedge against inflation. house is going to become worth more if you buy anything and just hold on to it. But forcing appreciation allows you to do all the things that we'll talk about make money today while you're waiting for that market appreciation. So basically what you're doing as a house flipper is you are taking a house that's here, you're moving it up and then letting it coast in market appreciation. And so before you move it up, it's still, you know, take that jump up. It's like, uh, here we go. I'm working out. I'm getting stronger. I'm getting stronger. I'm getting stronger. Now I take some steroids. I jump up, but I keep working out. So I keep getting a little bit stronger. A little bit stronger. And over 30 years, I'm Ronnie Coleman. Wait, that's probably a bad example. I think that guy got some sad stuff. I think that the the years of the heavy lifting, it took a toll on his body. That's not what we want. We want to be like Arnold Schwarzenegger, the OG. Great. That's what flipping is. Why is construction the key? If I haven't made it clear yet, I'm going to tell you. It's the ultimate defense. You will absolutely without a doubt get screwed in your first deal or your first five deals if you do not understand construction. I promise you, I've seen it happen to so many people. You just don't know what you don't know and it comes and bites you. These contractors, they're not malicious. They are trying to run a business and I know what it's like. It is not a good business. Your back's always against the wall. They don't mean to bite, but you put a dog against the wall, it's going to bite you. So, you need to know how to see around these corners. The ultimate defense. Next is it removes fear. Like I said, first house I bought, in fact, first multiple houses I bought, I was really scared about all the things that could have. Could it have mold in it? What kind of damage would that have caused? I've heard about people having to redo sewer lines. I've heard about, you know, I mean, even roofs, things like roofs scared the crap out of me because it seems like such a big thing. Like, what if there's structural damage? Well, lucky for you guys, I've been screwed in every possible way, I think. And, uh, some of them have cost me really big. Some of them been at very sad, dark times for me. Uh, but I made it through, I think, and I've taken lessons from them, and I'm I'm trying to turn those lessons into uh content and education that stops you guys from running into the same things. When you know those things, it is such power in the game that you just know that you can go out and make money at will in this business that is so free because you can see around the corners. It removes the fear. Next is you get better deals. There are a lot of sleazy salespeople out there that go out and wholesale and get great deals. And I've heard them, you know, I've come in after them. I've employed some of them. You know, these guys get great deals because they lie, cheat, and steal, and they uh Yeah, I there's just opportunities to bring out the worst in human nature. And I and you know, it's it's a tough business. I remember this guy like pulls me into uh a nursing home, you know, like this deal. he's got a lead on this guy who was wanting to sell his house and he's in a nursing home and uh that was like the line for me like no this guy can't you know cuz I'd always tell myself well you know they it's an even thing you know they they have the decision to say no and uh I just happen to know more than them but the nursing home was like the line in the sand like that guy does not have even ground uh I am clearly in a better position position to make a deal. Not doing this, but knowing construction on the other hand is where the deals come from. Because when you're going to make a deal on a house that needs work, you're just given a bid. It is like pretty simple that it is here's the after repair value of the house. This is what I think I'm going to sell it for. Hey, do you agree that this is what we could sell the house for? Great. Okay. Well, here's what I think it's going to cost me to fix based on all the things that we're going to learn. I think that it's going to be a $50,000 repair budget. I'm an investor, so obviously I need to make a little bit of money here. Also, I need to borrow money. Here are all the costs put together. Based on all that, this is what I can offer you for the house. And if they believe me about construction, which you know, they're going to believe you if you know your stuff and have the scope of work builder and all the tactics that we're going to talk about, then it makes sense. It makes sense and it feels good, guys. Uh oh, I'm jumping ahead. But you're doing something that matters. You are actually adding value to the world. You're taking houses that are otherwise unlivable or ugly or in bad shape and you're making it better. You're putting families in these houses. You know, they're either buying from you or renting from you. And not only that, but you are giving some of the best people jobs. You know, these small business owners who, you know, it's just tough out there. and they have customers who are up their asses who are treating them like lesser people, you know, and back in Denver, I remember there were these guys that, you know, I subcontracted to, and this was when I was doing customer jobs, and this customer would make these guys who were uh immigrants, he would make them crawl through an egress window in the basement, like one of those ones with the wells around it. He would make them crawl down the ladder and go through the window instead of coming in the front door because he thought of them as lesser people. But he would let me come through the front door. Well, screw that guy. And ultimately, that was back when I did some DIY stuff and I DIYed that project in the basement so those guys didn't have to go through that crap. So, the point is here there's an intrinsic value. Those guys also after work we'd have some modelloo together and things like that. That is intrinsic value. And that's what the construction side brings you. Not saying you have to do that. I was younger. You get the idea. Robots and AI are a scary thing. That's probably why a lot of you guys are here is you're thinking that the industry that you're in is in jeopardy. And it is a really critical time out there. And the thing about flipping houses and holding real estate through construction is that it is so complex to do these things. In fact, most people don't know how to do it. and there's no good education out there for it. And that's the way AI and robots learn is by the information that's out there. But there is not information on how to deal with specific scenarios. And I'm sure someday, like way down the line, this will be figured out and there will be robots that come in and do a structural repair on a house based on whatever information. But for now, I'm not worried about that at all. I think it is the safest place I can possibly be when it comes to robots and AI. And I do not want to invest my time, my skills, my energy, my money into something where the rug could simply be ripped out from underneath me. And I just don't see how it's possible. New building, different story there. I think they're already building stuff out there. But taking a house that is less than livable or barely livable and making it nicer is something that is not being taken from me anytime soon. And finally, controlling your cash flow is the final reason that construction is the key. We we already talked about that a little bit, but b basically what I do is set up a construction business separate from my real estate business and my daily income comes from my active operating business. And depending on the scenario, sometimes when I go flip a house and sell it, there's no money for me to be taken because I have already taken it in other ways. you know, the business had to be hired for certain things. Totally legit. Now, there are ways to set that up in a legit way, and we're going to get to that in the empire section. I also on your first flip or your first couple, your first year, you don't need to worry about that. I'm just trying to show you the possibilities. Uh we're still talking about why real estate is the best and that this is one of the main reasons the the total control over everything. The total control over your life, your future, your freedom, your cash flow, your everything. That's it. I mean, it's the only job that I can see where I don't have to be in an office at any certain time. I can take my kids to school. I can be there for breakfast and bedtime. Guys, I have a lot of like high performing friends. No, I don't. I I don't know what I'm saying. I don't have a lot of them. I have a couple people that I know that have like good jobs that make multi-6 figures or whatever and they have to travel for work and it's like there have been opportunities that have come up to me where it's like you can make a lot of money by you know if we go do this venture together and the one thing am I going to be home every night to put my kids to bed and am I going to be there in the morning for breakfast am I going to be there for ball games if If I'm not, I'm out. And real estate gives me the ability to do that. Also, one other thing, if uh you're having a wedding or a party and you say kids can't come, I'm not coming. That's the rule. All right. Finally, uh before we move off of the foundation and into the deal, uh actually in most times I teach funding as part of the deal control, uh because you really don't need to worry about the money until after you've found the deal. We'll talk about that here in the next section, but I'm putting the funding right here because I think that's a a mental block for a lot of people is like, uh, okay, cool. I'm into this. I like the philosophy. I understand the foundation. You got me on the real estate thing, but how the heck do I find the money for these deals? Let's do that real quick. Multiple ways. And what most people think of when they're going to get lending for something is they're thinking about uh the bank. Honestly, the bank's like the worst way to get money for real estate initially. Let me explain. Here's how the bank works. A bank will give you 80% of the purchase price of a house. All right, this is not including a conventional mortgage on your primary residence. And it that that is like the biggest thing, by the way, guys. You need to buy a primary residence. That is going to be your first flip. Unless you already own one, you are going to get one. That's going to be your first flip. You're going to buy a barely bankable house with a 5% down mortgage because that's what you get on a primary residence with the conventional mortgage. So, you're going to buy this, let's say, $200,000 house, 5% down. You're going to put $10,000 down and you're going to live in that house as you renovate it. Not DIY. You'll do a mixture. Maybe you'll do some DIY things. maybe and but mostly we're going to be learning how to MIY manage it yourself act as your own general contractor. That's the first step. Okay. You can also get uh three three and a half% down FHA mortgage which is uh less than $10,000 for that $200,000 seven four 7,000. Yeah, that sounds right. 7,000. Okay. But that's not what we're talking about here. We'll get to the steps. A bank on anything other than your primary mor mortgage, your primary residence, they're going to give you 80% of the value. The same $200,000 house. You are going to have to put they'll give you $160,000. You'll have to put $40,000 down to buy that $200,000 house. E. Right. Yeah. Not only that, there's going to be renovation costs. Let's say it's a cosmetic flip and you have to do, you know, 20 $30,000 worth of renovations. Those are also coming out of your pocket. Yeah. So now you're in at like 70 grand. That sucks. And most people don't have that kind of money. If you do, great. That's a good route because bank lending is safer. You know, they give better rates, better amortization schedules. you know, they advertise the loan over a longer period of time, making your payments lower. It's a lot more manageable. There are also commercial banks. That was that was conventional. Commercial is a little bit different. Still around 20% down that you'll have to put. I some are a little bit less. Now, let's take that same house. So, let's say that it's a $200,000 house with a $30,000 cosmetic renovation. A commercial bank will give you 80% of the acquisition plus the renovation. Now, you're looking at $230,000. 80% of that is more money. I did put a calculator right here because I don't feel like thinking. Okay, on this you'll have to put $46,000 down total. That's 20% of the acquisition plus the renovation versus, you know, is like 70 or 80% with the conventional route. Still not that great. And I know that you guys have some cash, but the whole idea is I try not to use a lot of cash because cash is the oil of the business. You know, you run out of oil in your engine and the machine locks up. So, I'm always trying to have probably more cash than I need. However, it makes me feel good at when I sleep at night cuz I know that I can cover all the bills that I have and I can keep the machine going. Because ultimately the thing is that all these scary things that we're talking about, if you stay in business long enough, you're going to be able to see around all the corners. You know, that's the skill. When you have that kind of skill, you you can see around the corners. You can get yourself out of any hole. And the whole game then is just staying in business long enough to be able to see around those corners, staying afloat. That's why I always make sure I have more cash than I'm needed because without the oil of my machine, the machine will lock up and I will go out of business. That's why we borrow. And there's other reasons like getting your operating company paid for. It's limitless, scalable. Okay, I think maybe I should go a little bit further on that because I think some people do have the mindset of, you know, I'm going to do everything in cash and and I certainly did, too. There was a time in my life where I sold off all my rentals and I was like, you know, burned the boats with the credit and uh this was right after I did that $200,000 loss property. I still I did own rentals at the time. So, I was able to sell those, you know, pay off my debts to people. I had a hard money loan, which we're about to get into, you know, a private lender, let's say, and I paid them off, but I didn't pay off credit cards because I was my credit score was already shot. And I decided, I'm I'm going to do everything in cash. I'm going to buy houses all cash, do the work myself, or hire a few contractors. and you know it'll be fine. But then it was like well this is dumb because if one project gets stalled then I'm stuck. I just sit here and wait. I don't like that. And that's really where I restarted my construction company and all that. But the point here is that borrowing money lets you do more and it lets you do more without stretching yourself too thin. And basically cash is constantly eroding due to inflation. So you don't want to keep too much of it. All right. Conventional mortgage, commercial bank loan. And then there is the next which is hard money. Hard money loans. I know they sound kind of scary, like scarfaceish, but there's a humongous difference on how hard money lenders look at a deal versus how banks look at a deal. Remember, banks are giving you money based upon the costs, your acquisition price and your rehab or just your acquisition price in the case of a conventional mortgage. But what a hard money lender does is they look at the after repair value. Now, this is a huge difference. The hard money lender will say, "Okay, you're buying that house for $200 and you are putting $30,000 into it. Well, I don't care at all. What's it going to be worth when you're done? And let's say that house was going to be worth $300,000 when you're said and done with it." Well, they would say, "Okay, well, I'll give you anywhere from 60 to 75% depending on the lender, but let's let's just say it's on the high end. They're going to give you 70% of I don't need a calculator for this. 70% of the $300,000 after repair value. That's $210,000. Right? You get it? If you need to buy for 200 and then put 30 into it, you're all in for 230. This is absolutely overlooking other expenses you're going to have on there, which we're going to talk about in depth later. But they're going to give you the loan for 210. You're going to have 230 into it. Now, you're going to need to bring 20 grand of cash to the table as opposed to the 46 or the 70. Now, let's get a little bit better. Let's say that actually you found a house that was going to be worth 350 when it's all said and done. And then the hard money lender will give you 70% of 350, which is $245,000. And remember, you only needed $230 for that deal. Therefore, you have $15,000 extra. That is, by the way, a way more typical deal. And we're going to talk about that once we get to the deal section. But that is how people flip with zero cash in a deal. That's one of the few ways that you can flip with zero cash in a deal. It's all about the deal. You get it? That's hard money. There's also private equity, private money. This is like if your rich uncle gives you money to go buy a house, you know, you might pay them a percentage just like you would pay a hard money lender, you would give your uncle whatever 10 12% to borrow the $230,000 from them. And you know, further than that, there's private equity funds that people raise. I I really I don't like private equity, especially for you guys that are starting out. Uh this guy I knew, you know, he was a construction client. He was doing flips. You know, we used to do work for investors when I had the firm up and running. Now it only does work for me. And this guy flipped like one house and he kind of sucked at it. I mean, I think the only reason he made it is he let us do our thing on the construction. and he did this one flip and then he wanted to meet with me for coffee and talk to me about how to raise a private equity fund. And I'm like, "Dude, you shouldn't raise money from anybody. You don't know what you're doing. You're going to lead these pigs into a slaughter, you know, like that's not what you should be doing." And you know, honestly, I I sometimes feel like I'm not ready to have a private equity fund. I make mistakes all the time. I much rather would make mistakes and I'm the one that has to pay for them than signing up somebody to to have to pay for my mistakes. That's like a not a not a great feeling. So, I'm not going to tell you how to raise private equity, but if you want to do it, go ask your rich uncle for some money and there you go. And the other side of private equity is partnerships. One way is your uncle gives you $230,000 and you say, "I'm going to pay you 12% of that." So, $2,300 a month till I give you the money back. And then the top turns off. That's private equity. And then there's partnerships where you say to your uncle, "Hey, I'm going to buy this house and you know, I need you. I'm going to do all the work. I'm going to bring in the contractors. I'm going to find the deal. I'm going to get it sold for you. And you are going to fund the deal. You're going to bring the money that we need. And we're going to go in as partners here. And after the house is sold, there's going to, you know, I expect there to be a $40,000 profit. You and I will split it 50/50. That's the idea of a partnership. They're in it with you. There are lots of spaces in the middle there. You know, you might partner with another flipper and you guys work out, you know, you each put in half, whatever. There's lots of different ways to set it up. Partnerships can be great because you might partner with somebody who is more experienced in flipping and they just don't want to deal with the crap with contractors and finding deals and such. And so they're happy to partner with you who's going to go out and do the work and they trust you and they might be good mentorship for you. But mostly I like hard money because as you know in my core philosophy is uh I want to have the weight on my back. I want the mistakes to sting me and nobody else. And hard money lenders are set up for that. I mean, a lot of them are, you know, retired flippers who have some cash and they want to lend it to other flippers and, you know, they might be a mentorship for you and they're all over the place. You can find hard money very easily. That is the end of the foundation. We've been through the philosophy. We've been through the foundation. Now, let's get into the deal, which is basically the buy box. where you should buy it is how to actually comp. Comps find comparable deals that have sold your after repair value. Next is how to market for the houses like how to find them. So, not necessarily marketing, but who you're going to find those houses through or actual marketing and find them yourself. Then closing the deal. Sales. We're talking about sales. And this is nonsleazy sales. As I've alluded to, we're going to do it through the lens of construction, which is the ultimate power in real estate. Let's start with the buy box. This is absolutely the first domino in the real estate game. You have to do this critical first step. You have to determine what your buy box is. Otherwise, other people will not take you seriously. You go talk to a wholesaler and you're like, "Oh, well, you know, I'll take a little I'll take anything that's a deal." They're going to be like, "Not calling that guy because he doesn't know what he wants." You want to be a serious investor. You need to be serious about exactly what types of properties you buy. Talking to that same wholesaler or real estate agent or seller directly and you're like, "You know what? I buy houses in this neighborhood that is in this zip code. It's actually a census track that I buy in. We're going to talk about all that. And I only buy houses that are in between,300 ft² and 1,800 square feet. I buy two beds or three beds and I buy them that are in this shape. They're going to be like, "Oh, that's my guy." You ever see like the realators who like, "We only sell houses in XYZ neighborhood." Well, people in that neighborhood when they go to sell their house, they're like, "Hey, I should call that guy that's on the park bench or the urinal cake." If you ever seen uh what's that movie? I love you, man. That's the one. Got his face on urinal cakes. Awesome. Here are the factors. There are nine factors of the buy box. Number one is proximity. Basically, where are you going to buy? And here's where I'm going to rub a lot of people the wrong way is there's only one place to buy and that's MB I MB Y in my backyard. You think you're going to be a real estate investor that's out of state, you know, out of area investor. You're just setting yourself up for failure. All right. The people who do that successfully are people like me who have a lot of experience. They know how to see around the corners. They know how to set expectations for contractors. They know how to go out and find them. They can do it via a phone call because truly those guys can hear the experience on your voice. And you can probably maybe successfully do that. I think maybe if you made me do it, I would do it. But it's stupid. Why do that when I could just invest in my backyard? And here's the deal, guys. There are markets, even if your market is not good, which I'm going to explain to you exactly what a good market is. Even if my market was not good, within two hours of my house, I bet you there's a good market. And could I drive there once or twice a week, a couple hours? Yeah, certainly. I mean, it's my job. Or if it's not two hours, five hours, I go there once a week, whatever. If that's what I got to do, that's what I got to do. Or move, guys. I mean, I moved. I used to live in Denver. That market started to suck. Now we live in Tennessee, Chattanooga. Nothing wrong with that. It's your livelihood. We're talking about it's your freedom. We're talking about what makes a good market. Not much, guys. A great market is awesome. That's where, you know, just think about the US, the economy is appreciating. Okay? But inside of that there are certain geographical areas that are appreciating at a faster rate and some are at a slower because the US is of course an average. So somewhere like the Midwest might be not appreciating very well right now or maybe even going in reverse a place like California. Uh and then you have the Southeast that is appreciating at a quicker pace that makes up the average. So a great market would be, you know, you go to an a region that is doing better than the others. Inside of that region, you go to an area and inside of that area, you go to a city that is appreciating at a rate that is above the average of the hierarchy. That's a great thing, right? You have the market wins at your back. Earlier, we talked about market appreciation and forced appreciation. And it's great if you can be in a situation where you put the market winds at your back. That allows you to take some more mistakes. But it doesn't have to be that way. You could go to a totally stagnant market, meaning there is no market appreciation, totally flat. And you can still force appreciation, right? You are doing the construction like we talked about earlier and boom, you force appreciation into it. You make it worth more money and there's still margin for you to make a profit that way. You really don't want to count on market appreciation. That's really just icing on the cake in a house flip scenario. Now, no matter what, the market wins over time are going to be at your back just due to inflation slash appreciation. But in the short term during a flip project that might be six months or less, you're not going to take much advantage of market appreciation, especially in a stale market. And it should only be icing on the cake. Once again, one of the early flips that I did, in fact, most of the early flips that I did, uh, I thought I was doing really well cuz I was putting money in my pocket after the flip, you know, like one of the first big ones I did, I I pocketed over six figures. And that project took me like I remember I had a sign out front that said coming in the summer of 2016 or 17, whatever year it was. And uh, then it ended up being the next year that I actually sold it. It was 550 days of labor. I was doing most of the labor at that time, living on that job site. 550 days to do this project. And I made six figures. But at the end of the day, because I didn't know what I was doing, if I had done zero construction on that house, I still could have sold the house for around six figures more than just what I had bought it for that long later because the market winds were at my back. I got a great deal on the house on the front end. the construction didn't really do anything for me. And the point here is a lot of people get confused about market appreciation. It confuses them or tricks them into thinking that they're actually doing well when they're not. So the thing that you're really looking for is the ability to force appreciation. And here's what that takes. Is three good comps. That's it. If there are three good comps in a neighborhood, and we're going to talk about what a comp is here in a little bit, but if there are three good comps, it's a good enough market. You know that people are buying. There's activity, and you can analytically figure out if a house is worth flipping or not. Okay, there's really two prongs of location. Oh, I I read my notes wrong here. Factor one is location. Prong one of factor one is proximity that's in my backyard. Prong two is is it urban or rural. All right. Once again, it's math that it's s a science uh on whether you should flip a house or not. And it's based upon are there comps in that neighborhood. So urban versus real rural is always urban because in an urban community there are comparable sales. other houses that look like mine that have sold in that neighborhood and I know that if I fix mine up to look like those, it's going to sell for something similar to that. Whereas in a rural environment out in the country, well, there's no real comparison. There's lots of different factors that might play into it. This is like if you go like buy a Kia, a Kia, the vehicle, one of those little guys. Well, you can go to kellylbluebook.com and figure out exactly what that house is worth. But if you're buying like a 1940s hot rod, well, there's lots of different factors. Who owned it before you? You know, I don't know anything about cars. I don't know why that's the example, but you wouldn't know what it was worth. There's no Kelly Blue Book value for a collectible vehicle. It could be really great or it could be really crappy. I don't like guessing. I don't like speculating. I like to know exactly what that thing is going to sell for and the exact work that I need to do to get that to that shape. Next is factor two, the type of house. Single family homes, multif family, there's like commercial, small commercial, uh like could be apartment buildings, could be residential, or it could be things like offices. That's small commercial. And then there's uh big commercial, okay? Large commercial. There's also land. There's also condos and town homes. Those are different types of residential, small residential. Okay. What we're talking about, what our buy boxes, if you're following this stuff, is single family homes or small multifamily. That means two to four units. We're not talking about bigger stuff at all. Uh this is why this is the way that I look at real estate is McDonald's most people think of as a burger flipping company, you know, burger sales company and they're not. They are one of the largest in the world real estate companies and they sell burgers and fries and shakes to pay for the best slices of real estate in every town. That's what pays their mortgage. And I kind of see real estate as the same. The real play is owning the land because land is scarce. They're not making any more of it. Unless you live in Dubai, I think they're trying to extend the beaches there. But for the most part, land is scarce. They're not making any more of it. And scarce, you know, supply and demand eventually that pushes the price up. So, I'm trying to own as much land as possible. And the burgers that I use to sell to pay the mortgage on the land are rentals. And on a single family home, I get the most amount of land possible and the smallest structure. A multifamily, I'm getting a similar amount of land with a bigger structure, and the pricing of that is really around the income on the property. It doesn't feel as safe of a deal to me. And so I definitely don't teach anything more than small multif family because we're still in a safe position there if you know how to price it right. But mostly what we're talking about is single family homes. I don't talk about condos and town homes because you don't get a lot of land with those obviously big commercial, small commercial. There's other people who teach that stuff. It's not me. I also don't buy land because like we talked about earlier with the scale of livability that is as far away from the line the threshold of livability as possible meaning the most risk possible. So I also don't start with that. Now, you will hear me say throughout different content that, you know, maybe I do buy land and I do some new builds and maybe I do own some commercial properties and I do own some bigger residential stuff, some apartments, but that is not my base. My foundation was built off of single family homes that I control that are safe deals for me where I own the most land. It was after that that I decided, okay, maybe maybe I'll go do some of these riskier in my mind things. That's the type. Factor three is the property class. There's A class, B-class, C-class, D-class. A class is like the upper middle class, rich type of houses. Maybe the types of houses that you live in or desire to live in. And then B-class is like workingass. Those people shop at Walmart. Those are my people. Love it. Also, the types of properties I buy if you didn't get that. C-class, that's like section 8 tenants type of real estate. You know, not that you couldn't use section 8 for B-class, but generally that's how you would couple those things in your mind. You know, maybe some rougher parts of town. Section 8 is the play. And Dclass is basically C-class properties owned by slum lords. They're in C-class areas with C-class houses around them, but they haven't taken care of the house and therefore they're D-Class. Okay. Factor number four is the size. To make this quick, how many square feet are you buying and how many stories is it? You know, square feet above ground is different than square feet below ground. Basements aren't the same as above ground. Like there are people, for instance, who buy houses with basements because they're going to go finish them out. Not necessarily my strategy, but uh what size of houses are you buying? And I like to stay below 2,000 square feet on most properties that I buy, especially if it's going to be a rental. Basically, all the value is in the kitchen and the bathroom. Kitchen and bathroom makes a house. If you have a kitchen and a bathroom, you have a house. You could have a studio house, for instance, that has no bedroom. But that means that the most amount of value comes from that spot. So everything else is diluted square footage. On a rental, on a rental, I would want, you know, the smallest possible two or threebedroom I could get. For instance, I'm building a couple houses right now that are three bed, two bath, like,00 ft². It's small as I can get them because I pack the most value inside of those square feet. Whereas on a flip, you kind of want to go bigger because those extra square feet also give you cheaper per square foot renovation prices. So on a flip, I might be looking for something that is like 15,600 ft² all the way to 2500 ft². I've even bought bigger than that. But I always think about houses like there might be the situation where the house won't sell because the market is tough or whatever, which I'm running into some of that as I film this, that the house isn't going to sell for the price that I thought it would when I, you know, when I bought it, the market hasn't done as well. And so I'm putting that flip on the shelf like we talked about earlier, which means I'm refinancing it. In uh a year or so, maybe I'll sell it. The point is that any flip could become a rental. So, I don't want to get too far away from the ideal rental situation. That's why I don't usually buy houses more than like 2500 square feet. And also, every rental is a flip. At any point, you can sell them. Just a way for you to look at things. Next factor is the age. And factor five, age. and work level kind of go hand in hand. But let's just talk about the age real quick. There's really three different eras that I like to think about. There's historic, and this is like World War II and before, which is like 1940s and before, and then there's modern, which is anything after that to like the 1990s. And then there's new builds. All right. historic really has like inconsistent construction, which is great if you are really solid with understanding construction and knowing how to manage contractors, which you will be if you keep with me. But, uh, for now, for beginning, I try to stay away from those because you can really run into some odd situations. And contractors don't do well with odd situations. Odd situation means that you know you don't find in a book how to do it. You have to understand the concepts of how things are put together and from there you can deduce what you should do to fix this thing. Yeah. Right. Not great. But once you learn more and gain some intuition, you will be able to understand those concepts and then take advantage of that that great skill. Next is the modern era houses. We're talking 1950s if built with modern type of construction all the way to the 1990s. Really, anything even newer than that. The the new build is pretty simple. It's a it's a new build. And the reason that I don't buy those is because you usually can't get a deal on them unless there's something wrong with it. If you're getting a deal on a new build, it's because something bad is probably happening. So that that's why I don't buy those because we're looking to make a spread on the front end as well by getting a deal that has a little bit more risk involved, needs some work that we're willing to do to force equity into the property, force appreciation into the property. The modern era, that's our that's our uh our our meat and potatoes. They're consistent. They have reliable materials. The code books will match up. The information you can find online will match up. You'll be able to find pictures of the way things should look. This is like foundation construction that is done with concrete or CMUs, you know, like the blocks, not even like brick, you know, the earlier like historic stuff has like brick or cobblestone or whatever rocks they could find to patch up together. Uh, that is not what you want. You want like blocks and or like a solid stem wall. You want regular wood framing in a modern construction style, which if it's got that foundation, it will have that really just look at the foundation. If that's what you got, you're you're in the right world. Okay. So, next is work level. There's seven types of rehab, which I'm not going to go into now. We're going to get into that once we get into the strategy. But you are going to have to decide what type of flipper you want to be. And these to start, there's really two types that I'm going to recommend for you. But once again, we're going to get there. But that that is going to determine what types of property you buy, what what your buy box is. Then there's the style. So, we're talking like is it a midmod or a a bungalow? And the thing is, you know, when I was starting out was working with a realtor and they're asking me those questions. Do you want a midmod or a bungalow? And I'm like, what the hell is that? What the hell is a bungalow? And uh anyway, I still don't know. Point is, style not really important. The only thing I care about is does it match the neighborhood that I've chosen to buy in. If it's a funky looking house, it is an oddbird. And odd birds are not a mathematical equation. You can't say, "Oh, all these other houses that look like it sold for this amount. Therefore, this one will sell." It's just like buying a rural property. I'm not sure. Could go good, could go bad. That's speculation. I don't like to take risks. If I did, I'd buy some some cryptos. So, next is the price point. I always anchor to the median here. I'm not one to try to flip luxury houses, Aclass neighborhoods. Uh, that's not really what I do. I used to, and I I hate it. All right. The buyers are snobby. They'll pick you apart on the sale. I like to be right in the media. I like the the Walmart houses. I want to sell to like firsttime homeowners or secondtime homeowners, small families, uh, who, you know, they're like happy to get a house. And so it, you know, it feels good, too. Like the luxury or Aclass properties are just like, you know, not for me. And it's not as safe. Okay, that's a huge point is that you take the median price where I'm at. It's around $350,000, maybe 400 at at the high end of that median range. And I'm going to try to find houses that have an ARV of that in that range that those are the neighborhoods that I'm going for. And so then I'm selling to first or second time home buyers. And you know, the grade of material is not luxury. You know, we can do like LVP floors and we can do, you know, the shaker style cabinets, but you know, maybe something off the shelf from Home Depot, not some custom like European stuff with the soft clothes and the uh flush mounts and the blahy dah. I can do like budget quartz countertops and it goes well in those. If you go a little bit lower, you can even do like butcher block or for mica in C-class properties if you're flipping something that is below the median. Factor nine. Got to say it, but it's school zone. I don't think this matters that much. I mean, it does matter. It matters to the person that's buying your house, but the thing is that's already figured into the pricing based on the comps that you're putting forth on the on the house. So, I don't think you need to worry about this that much. However, there is one thing that you need to worry about, which is you do need to look at those school district lines. Now, we're next going to get into how to comp a house, how to find the ARV. So, you you'll see this a little bit more, but the one thing that you could run into is that you have defined a neighborhood. Okay? It's this circle, but then the school district doesn't have the same lines as the neighborhood. Therefore, you're using comps in the neighborhood. However, half of the neighborhood is in the school zone and half of the neighborhood is not in the school zone and that could skew your pricing. You get it? So, you do need to look at school zone for that reason alone. That's your buy box. And you know, this basically makes you a pro overnight because you are able to speak to exactly what you want. So, it makes marketing easier. Like we talked about before, it uh opens up your eyes in a way. It's like it changes your mentality on things. Like when you're going to buy a car, let's say you're buying a Ford Taurus. Do they make those still? I don't know. But you're buying a blue Ford Taurus. That's what you're thinking you want to buy. You've decided it. Now, when you're out on the road, you see nothing but Ford Tauruses, most likely blue ones, because it changes the way your brain works. And what that ultimately leads to is some sort of intuition. like you intuitively know what you want in a house. And I I like to think about dogs for some reason, but a lot of people say, "I'm going to be a real estate investor." And they think that all these types of real estate are the same, like I'm just a real estate investor. But a dog is not just a dog. dog is a dog. And a and a dog knows how those coons are thinking. They know what the coon's going to do before the knows he's going to do it. It's absolute intuition. But the best dog in the world can't hunt a squirrel for the life of them. And it seems like a and a squirrel are the same. Just like all real estate investing is the same. But it's not. A 3,000t house is different than a 1500 foot house. A bungalow is different than a midmod. No, it's not. That's That's actually not. I just wanted to say bungalow and midmod again. But you get the idea, guys. All right. Now, how do you figure out what that house is worth? Now, I want to say this before we get into that. You're going to need to comp some houses. Now, I think that it's a skill that can be learned pretty quickly, but the intuitive thing is very helpful. But the way you get there is that you don't try to understand every neighborhood. You decide what type of house you want to buy. You know, you kind of determine your buy box and then you go find the neighborhoods that you want to buy in and you focus just on those. So, you're going to pick like a few neighborhoods and build your intuition there and then grow from there. And that that concept is going to come up again and again when we talk about marketing and such. But it's all about the neighborhood. Everything with deals is about the neighborhood. Same thing with this ARV, the after repair value. Focus on understanding a neighborhood. Now, there's three rules for good comps. Number one is features, two is date sold, and three is proximity or the neighborhood. Perfect. All right. the features. And there's a whole checklist for this, by the way. I'm going to link up all kinds of crap in the description here. Or maybe I'll link one thing that has access to all the links. You know, that'll be cool if I can figure that out. All right. Features, square footage. All right. Comp. Let me let me backtrack a little bit. A comp is a comparable sale. All right. When appraisers go in to a property to figure out what it's worth, there's really a few different ways that they will appraise the property. Once again, appraise means underwrite the deal, figure out what it's going to be worth, find the after repair value. And the way that they do this is either the income approach, which this is what you would use on like an apartment building or even small multifamily. And uh maybe you've heard of the 1% rule for for buying rentals. Uh which the 1% rule basically says this. If the rents are $2,000 a month gross gross rents $2,000 a month, you should buy that house or that should be 1% of the purchase price. So a $2,000 a month rental you should buy for $200,000. One way that an appraiser figures out what a house is worth is based on the income approach and their mathematics are more advanced than the 1% rule, but that was just to give you an idea of what it means to appraise a house via the income approach. Next is cost to build. Basically, they take the land, they value the land, and then they say it would cost $200,000 to build the same structure that's here. Again, therefore, the house is worth or the property is worth the land value, let's say 30 grand, plus the cost to build 200 grand. House is worth property is worth $230,000. That's the the cost to build approach. Neither one of those are the approach that they use for assessing single family homes in most scenarios. In most scenarios, they use a comparable sales model, which is very simply you take other houses that are like it, that are comparable to it, what they sold for, and then you apply it to your subject property. Three other houses like it have sold for $200,000. That house is worth $200,000. Easy enough. So, when you're talking about the after repair value or comps, you're talking about the comparable sales method of appraising a property. Now, there are three rules for good comparable properties. What is a comparable property? What do you consider comparable? Right? The house that I own here in Chattanooga is not comparable, even if it looks identical, built by the same builder, with the same paint color, with the same age, with the same everything to your house in Minnesota. Hey, right. Uh anyway, it is not comparable because it's in a different neighborhood. So, three things that make a comp. Features, date sold, and proximity. Features. Square footage is number one. A 1500 ft house is not comparable to a 2,500 foot house. You should really keep it within a couple hundred square feet. 1500 to,700,500 to,300. I don't go far beyond that. If you have to squeeze a little bit, guys, we're going to get into on all of these things. Uh, fudging rules. Sometimes you can't find perfect comps that fit every one of these things. There are some rules that I abide by to fudge a little bit, but for now, the hard rules are, and there's some that we don't budge on at all. Hard rules are within 200 square feet. Bed bath bed and bath count must match. There's adjustments if different. So if it's a three-bedroom, two bath house, you are comparing to three bed, two bath houses. Carport, garage, pool, busy street frontage, those all affect. If you have a busy road that one house is on and the other one's on a quiet street on the corner, different style. Bungalow equals split level equals modern. No, it doesn't. Those are all different houses. This is where style comes in as important. But it is not how I consider my buy box. Let me explain this. Finding a neighborhood is how I determine my buy box. Inside of that neighborhood, there probably are specific styles of houses. The neighborhood is what determines my buy box, not the style. However, inside of that neighborhood, if there's one bungalow house and everything else is a split level, it is hard for me to say that that bungalow is a comp to any one of those square footed or any one of those split levels. Age of the build, right? A 1950s house is not equal to a 2000's house. Even though they're in the same modern era that we defined in the when we were talking about buy box, it is not the same. Lot size should be similar. You got a house on an acre versus a house on a tenth of an acre. Obviously, land is going to start to matter there. It doesn't matter in small amounts, but in big amounts, it will. Basically, if you have a second lot that can be buildable, that's when it starts to matter. the condition of the home. Obviously, got to make sure that you're actually comparing to fixed up houses. You know, the houses that have been flipped, have been renovated, are in the range of comps, not a barely bankable house that still needs cosmetic updates. And finally, basements and ADUs. Here's the thing, guys, on an appraisal, those don't add a lot of value. A lot of times I see people will say, "Hey, I have a 2,000 foot house here." And I'm like, "Oh, that thing doesn't look like 2,000 square ft." And they're like, "Well, yeah, well, it's 1,000 up and 1,000 down." And I'm like, "Well, the th00and down doesn't matter. We're counting above grade square footage here." Now, I have seen some people that will count a basement square footage as 50%. Uh, also ADUs, same thing. It seems like a value ad, but it doesn't it doesn't have the same value as your core house. Remember that. Don't be comparing them one for one. Date sold. That's the next section here. Okay. A house that sold three years ago is not a comp. You want to try to keep it within six months. Okay. In a really hot market where a lot of things are selling, I might even keep it less than that or hot or uh hot the opposite direction. If prices are going down, uh then you got to watch out as well. Obviously, maybe don't buy if prices are falling dramatically. Wait, wait till we get to the bottom. Okay, I'm not a real estate doomer. I'm not saying that's happening now, by the way. I'm just saying I if the situation should come up, okay, you can stretch this out a little bit in a stale market if you know for sure that 12 months ago the market was similar to where it is now, but you want to prefer 6 months or less if the comps are available. Once again, there's some fudging factors, especially when it comes to features, which we're going to talk about. Proximity, neighborhood, neighborhood, neighborhood. Get that in your head. All about the neighborhood. And there are three ways to define a neighborhood. There is the general feel of the neighborhood. Like seriously, if you drive through a neighborhood, you can sense that these houses are the same. You know, they look the same, they feel the same, they're connected. It's not like around a corner or something like that. that it's on the same street. You can tell it's a connected neighborhood. This is also why I don't like out ofstate investing. You just can't pick that up on street view like you can by being in the neighborhood. Next is the boundaries, major streets, railroads, parks. These are all things that separate one neighborhood from another. you go down to the end of the street and you got a, you know, two-lane highway or whatever that's uh busy with traffic, that's probably a neighborhood boundary. Remember, school zones we talked about, those usually follow the boundaries of a neighborhood. And then there's the final thing, which is like the secret sauce here, and I think this is how like Zillow and those guys assess neighborhoods, but it is the census track. you pull up a census track map and you will see the definition of neighborhoods and usually these things will stack up on each other. You got, you know, major roads, maybe some creeks or parks or whatever and you can see that those define a census track and you can see as you drive through it, you can feel that that's part of a neighborhood. So, go get your census track map, overlay it. That's probably your neighborhoods. Okay. One of the biggest mistakes you can make is crossing lines, saying, "Uh, okay. You know what? I'm I'm just going to I'm going to call this neighborhood a neighborhood or I'm going to call this house part of the same neighborhood, even though it's in this one over here." No, it's not. I've seen situations where uh there's like an area of Chattanooga called Northshore, you know, Northshore where the preppy people live and they can walk to places. Not my cup of tea. But anyway, there's Northshore, busy road, and then there is hillside. Is that what they call it? I don't know. Something like that. I think it's hillside. You got Northshore houses selling for a lot per square foot. You know, these are uh Aclass properties, highest priced in town. And then you have the other side of this major road where you can pick up a bombed out house for 50 grand. And you know, this guy came in from California. You That's what happens when markets are blowing up like Chattanooga is or was. uh people come in from Colorado, California because it's cheap. And anyway, you know, he's looking online and he's like, "Oh gosh, these houses are selling for $400 or $500,000. Uh picking up this one for 80 grand would be a sweet deal." And he picked it up and then he found out that uh it wasn't even close. The houses on that side of the street sold for like half of what the Northshore houses did. And I mean, literally, a stone's throw made the difference. So you got to watch out. Okay. Sometimes you can't find all the comps. So you got to do some fudging. And we talked a little bit about date sold and fudging. And uh maybe you heard this, maybe you didn't and what I was talking about, but proximity neighborhood is something that can never be fudged. Never fudged. Neighborhood. Okay. Date sold. If you know it was a stagnant market, you can expand that a little bit. That's like the first thing I would expand if I needed to. And then I would go into features. There are fixed amounts for each one of these. And I guess I will go through it quickly. There's a chart and like I said, I'm going to link up this chart, but basically here's what you were doing when you're comping a house is you're taking the square foot. You're figuring out the price per square foot of the house. For easy math here, let's say we have a house that we believe the ARV is going to be $350,000 and it's a 1,000 foot house. Easy math here. That comes out to $350 per square foot. If I have a house that is 1,200 square ft, I would apply that same 350 bucks a square foot to it. So, I would think that a house that was 1,200 square feet would sell for, let's say, 350 times 100 or 1,200 ft². That house would sell for 420. All right? And that's why you don't want to go further than 200 square feet, by the way. Then then the prices start getting wonky. As you get further away, you have to start to compress the price per square foot. Things get a little tricky here. So, you have to look at caps, market caps. For instance, on that particular example, a house at 1,000 ft sold for 350 350K. So, I know that $350 a square foot is what a house can sell for there. But the house at 12,200 ft² is all of a sudden worth 420. And likely there have been no comps in that neighborhood that have sold for that high. So I go look for my threshold, my cap. Maybe the maybe there was a 1,200 foot house that sold for 385. I'm not going to push my comp above that. You look for caps. Always look for caps. fudging chart on properties that are less than 500K. I also have properties more than 500K on here, but I'm not going to go through those because that would take too long and you're going to have access to the chart. But if it's a bedroom, you know, one the comp has three bedrooms and your house has two bedrooms and you have to fudge it because there's not enough extra comps, you're going to take off $10,000. Okay. So, the comp, let's just use our $350,000 example. The three-bedroom comp that you're looking at sold for $350. So, you're going to take 340, take $10,000 off of it, and then figure out the math. So, $340 per square foot is what I'm going to apply to my subject property. Bathroom, you're going to take off $5 to $10,000 depending on if it's a full or half bath. Garage, $10,000. Carport, $5,000. Pool $10,000. Uh, I try not to buy any houses with pool. If you're backing to commercial or on a hightraic street, $10,000. You're fronting commercial or a busy street, $20,000. Basement, ADU, uh, zero or 50% credit of the above ground square footage. >> >> Only apply one fudge factor at a time. Only use fudging when strong comps are limited. Don't use it because you're biased and you just want to make a comp work. Okay. There are a few things that make a house dead on arrival. To me, dead on arrival means uh not going to buy it no matter what. Most likely. Okay. in a flood zone. There are FEMA puts out flood zone maps, the hundred-year flood zone, and you have to get special insurance for it. You know, it makes the house cost less, but there's like a stigma to it. Okay, so first the insurance thing. Uh usually you'll have to or the buyer would have to buy extra flood plane insurance which ultimately devalues the house because if you have to spend more per year or month on insurance then you can afford less of a mortgage. Therefore it drives the price down. That's mathematically. But then there's the stigma that gosh I'm in a flood zone. Like is my house going to wash away? Maybe bad things will happen. I've uh I only know this because I bought houses in flood zones and it was bad for me. Like one house uh I got a call from the property manager saying, "Hey, there's some water issues in this house after like some days of raining." And I drove down there and literally the whole like area in which that house was in was underwater. And I saw my tenants canoeing to the front of the property. They were like literally to go into their house were taking a little boat and and uh the water had come up to just below the floor. So the floor was like a little bit damp, but had it gone a little bit further, it would have overflowed into the house. But I mean, new AC, you know, everything in the crawl space was screwed. Uh, that was a lot of rain, but, you know, 100-year flood plane. Uh, there was another situation where we were dealing with the city. It was in a flood zone. We were renovating the house, so we had to bring things up to current code standards and had to like hire an engineer to come in and and shoot some grades. And ultimately, we had to lift the whole house up. Uh, terrible situation. you'd definitely I uh say avoid flood zones unless you're in a neighborhood or area that has nothing but flood zones. Like if you're in Florida or like I think there's some spots in Louisiana or something that are like everything is in a flood zone and everything is built accordingly. Obviously, then you would be fine doing that. The the whole idea is buying in a flood zone when the main area, the main city you're in is not in a flood zone. Major easements or parcel restrictions. Listen, there's some of you out there, you know, when we get into the flip types, uh, you know, we call these white collar flips. They're really good at dealing with that legal and administrative thing. Maybe you're an attorney and you know exactly how to deal with parcel restrictions. You know how to deal with easements and zoning stuff and you can make a lot of money off of it. I'm not one of those guys. Uh I've had to deal with them kicking and screaming before. And here's what I know. They take a lot of time. I have to have things sitting there. It's something that's outside of my normal daytoday. So I have to think harder about it and stuff. Uh, and you know, it just eats up bandwidth that it shouldn't. Maybe there's money to be made in it. I know people who make a lot of money, but I want to focus on what I'm good at. So, if I have those types of issues, I avoid built into setbacks. That's another one. I've almost bought houses before that are literally built on the lot line. So there's rules in zoning where like a house needs to be built for instance o off the side of the lot maybe five feet some places are less some places are more and this is built inside of that setback and if you go and start messing with things pull permits and start messing with things they could come back and say hey you know you've done enough work here where you have to get this uh to current zoning standards and they make you like move the house. Yeah. Or like cut down on the house. Also, just to properly scare you about zoning, there are houses here that they changed the zoning to R1, which means residential single unit. And these houses were like duplexes and triplexes and quadplexes. You know, they were built as such. It wasn't like one of these, you know, DIYer uh trying to add some units where they shouldn't be. They were literally built as duplexes, but since they changed the zoning, as soon as you pulled permits to start working on them, they would make you convert them into a single family home. So, there's all these wonky looking single family homes, you know, where like there's two doors on the front and they had to remove the wall. It's a crappy situation. So, that's why I avoid the zoning restrictions. Next are what I call oddirds. All right? You know, we kind of touched on this with a bungalow versus midmod uh rural properties. It's it's basically things that have no good comparison. Unusual architect, irregular or steep lots, bad neighbors, there's like certain streets you go down and it looks like you turned into a third world country. There's tarps everywhere and like people have their junk all over the place there. You know what? I mean maybe like seriously uh domestic issues, domestic violence issues. Uh I had a house that I called a murder house that uh next door there was a lot of strange activity and later I saw that they got busted for having a humongous drug and prostitution ring. Always smelled a little weird over there. Uh, I called it the murder house because I went to do a turnover and there was a lot of blood in the house in a concerning very concerning way. Who knows? Oh, brings me to the next point. Stigma, scenes of crime or deaths or uh, you know, suicide. Sadly, th those things. I think there's certain places. I've never actually been in one of these places where you have to disclose that if there was a death in the house, especially like a violent death. And well, I mean, just think about it. If you were bringing your family into a house and you're like, "Oh, you got this this house over here, uh, that is a nice like, you know, Steepford family house, Pleasantville, Picket Fence, or you got this one right next door where somebody uh got killed via violent crime. Which one would you want to live in?" Right. Yeah. I I'm not really a ghost guy, but I would prefer not to have the the blood stained walls that I knew were there. Okay. Infrastructure uh nuisances like railroad tracks, highways, power lines. Bought a house one time that had uh power lines overhead, like they were way high power lines. And uh well, turns out people don't like those. they uh you know the tinfoil headers you know you got to watch out for that kind of stuff they say and that kind of devalued the property. All right the comping steps you got to have the ingredients here. Let's bake the cake. You are going to identify three to five comps using the rules the census track the size the the date sold. you uh are going to confirm that the comps are not DOAs, dead on arrivals or red flags, you know, the flood zone, all those things. You're going to break down the comps to ARV per square foot, right? 350 grand, 1,000 foot house, 350 bucks a foot. You're going to apply that ARV per square foot to the square foot of the subject property, the one that you want to buy. and you're going to look for any houses currently for sale that prove or disprove this analysis or put up fences. Uh the the situation that we ran into recently is actually a video I made. I didn't actually make this mistake. Could have very easily. But anyway, we had a house that if you broke down the ARV, it would have been worth like $400,000. But I was selling a house right down the street and uh you know I was selling it for $300,000 and it wouldn't sell. So I knew that a house couldn't be worth that amount. So you need to look through the neighborhood and figure out, you know, what's on the market currently and is it selling and also what's sold to make sure there's no top ends that you want to watch out for. So looking to prove or disprove what you've figured out. Okay, final mindset on the ARV. It's a range, not an exact number, so don't get too worked up here. Uh, play safe and conservative. All right, if the top end of your range is $360,000, don't use that as the after repair value. I mean, maybe you use it when you go to get the money for the the the fix and flip if you're using hard money, but you're not going to use that as your actual numbers to figure out whether you're going to buy or not. This is a a huge problem that people fall into is like every one of their numbers are stretched as far as they possibly can be and then if anything goes wrong, which I guarantee something is going to go wrong, uh then they're screwed and that's why people go out of business. Now, the marketing, how do you actually find these deals? All right, four real ways. real estate agents, wholesalers, direct to seller, and then there's like a grouping of other possibilities through real estate agents. This is probably how you're going to buy your first house. Uh because you're going to buy it with bank money and uh you know, banks and dealing with wholesalers isn't really a great way. Dealing with offmarket deals, it it's kind of tough. Uh maybe if you source the deal directly, but for now you'll probably get your first deal through a real estate agent unless we like do some advanced training and I can teach you how to do the direct to seller and get a bank loan because as we talked about earlier, direct to seller is where the deals are at. Okay? But through a real estate agent, there's basically three ways to get a good deal through a real estate agent. Be fast, be bold, or be strategic. Be fast means soon as a house gets on the market, you're the first one to give an offer. Okay? The whole idea of marketing and finding a good deal is about supply and demand. Being becoming a smaller market, putting a house out on the market for everybody to see, you know, Zillow or the MLS has the most demand possible. The demand is buyers. The supply is the house. The demand is the buyers and on the market you have a huge number of buyers especially in like a sellers market as they call it. You have a huge amount of buyers and you can demand a higher price because of that. There's lots of people who would potentially buy it. By being fast you become a smaller market. you leave the first offer and maybe you say something like, "Hey, I I'm only going to give 24, maybe even 12 hours if you're a dick, uh, on the offer and if you don't accept it, then I'm out." Okay? So, you you make some scarcity there. And the seller at that point has to be thinking, "Ooh, gosh, that price is low, but like what if nobody else comes and leaves me an offer? Maybe I should just take this one that I'm sure of. And that's how you get a deal by being fast. So, I know people who are like constantly refreshing. Is there anything that hit the market? Anything that hit the market? Two is to be bold. Okay. Houses that have been sitting there for a long time because they have issues. Nobody else wants to buy them. Nobody else wants to buy them. Market is smaller. The demand is smaller. Therefore, you can get the price at a lower price. Most of the be bold deals are two reasons. One is because the market is not so hot and people are a little concerned to buy uh in unsure economic times or the house is messed up and it needs work and people are afraid of that kind of work. And we're in the next section the strategy going to get into all that work stuff. And that that is how you get great deals no matter who it's through is because people are afraid to take it on. So be bold doesn't necessarily mean be risky. It means to ratchet up your skills in a way that you can easily be bold. Maybe being bold is just another day in the office. Three is to be strategic. Okay, there are strategies that I'm I'm not going to teach you, but I'll give you a quick overview. Uh, and I know they work because they've been done to me as a seller from other real estate investors who are a little more strategic or schemy. Here's what you do. You give an offer. I'm selling a house for $300,000. Somebody gives me an offer for 290. They come in fast, so I'm like, "Ah, fine. I'll take the 290." Then they start pushing out the timeline, you know, because as soon as you get a house under contract, that's only the first step. The next step is you usually have an inspection period and you do what's called an inspection resolution. So, you hire an inspector to come in, they find things wrong with the house, but but what the strategic person does is they keep pushing out that timeline like, "Hey, uh, you know what? We couldn't find an inspector. Could we push that out another couple days?" Okay, we can push out a couple. Oh, you know what? This happened and now we need to push it out a couple more days. All right. So now now I'm in a lot longer. I've been under contract for a while. I got my holding cost. I got, you know, uh people see that it's been under contract and then finally they do the inspection. They of course find things on the inspection and then they're like, you know what, instead of 290, we're really going to have to buy this at 270. And you're like, gosh, it's already been so long. Fine, whatever. I'll just take the 270 so I can now I have to go to the market because if you go back to the market then it looks bad and I don't you know I don't want to put that kind of filter on the house. So whatever I'll just take the 270. Let's go. Okay. And then the next phase in the the process is usually like an appraisal. the bank, you know, has to appraise the property and maybe they find things and but anyway, what the strategic seller tries to do is keep pushing out this timeline. All right, you keep pushing down this timeline because the longer that I have it off the market, the more cost of ratcheted up, the more that I'm willing to just whatever take it. So, they push it out as as long as they can, maybe stuff comes up in the appraisal and again price lower or make you go and do work, which gets you even further in the hole. Now, you're really committed to this deal. And then here's where the suckers get you is right at the end. All right, even though that contractually speaking, this doesn't work out. But like here's the thing is it does. So right at the end, day before closing, maybe two days, these people call us, you know, call my real estate agent, which is my wife. Sweet. Cool partnership. uh and calls my wife and says, "Hey, you know what? We're just going to have to back out." And we're like, "What? After all that, you got to back out?" And they say, "Well, I I guess we could do it at 240." And what do you do in that situation? I mean, you're pretty pot committed. Of course, you could kill the deal, go back to the market, but going back to the market, everybody's going to ask like, "Uh, what happened to this property? Why did it come back on the market? I saw that it was off for, you know, 60 days. And uh I don't think it was 240 though. I think it was 250, maybe 240. We would have said screw off, but but you get the idea. I'm kind of up against the wall. And there is the thing where oh well, I could sue them for failure to perform, but and not give them back their earnest money, but you know what I have to do to do that is keep the house off the market in that time. So, what do you do? I ended up selling it to the guy. What a jerk. You know, now if I ever saw that person again, saw their name come up, I would be like, not doing business with that person. So anyway, that's the strategic route. Probably told you too much. It's not really the route that we choose to go. There's other ways to make money in the business, guys. All right. Next is wholesalers. I told you the story about the human crap in the middle of a living room, which is sweet. Best deal I've ever gotten. Uh, bar none to this day, at least from a percentage standpoint. Bought bigger deals now that have been more profitable in a dollar amount of course, but yeah, a percentage body weight. That was a great deal. So, lots of wholesalers in your town. And what you should do is get on every list possible. go to your Facebook market or not Facebook marketplace but Facebook groups uh you know search online for uh we buy houses cash you know that that's their front-end marketing so usually these guys are going to have front-end marketing where they're trying to get the deals and then they're going to have back-end marketing where they're trying to sell to people like us uh also they're probably sending you mail if you own a house and you know call them and say hey I I saw this I I want to get on your buyer's list and or you know some of them are a little more advanced and they have online buyers lists. Usually not the types you want to go for, by the way, which we're about to get into. And anyway, get on all the buyers list you can. This is going to be good for you also in in creating your after repair value radar. You know, understanding what houses in your area are selling for. So, you want to be on all those list. And then you really want to Yeah. not go for the big guys. You want to go for like the smaller guys who are starting out in the business and you can really mean something to them. So every wholesaler basically has they have multiple lists. They have themselves. So some of them are buyers themselves and then they have like an inner circle is what we used to call it. I've sold I've hundreds of houses. So So I know how this works. Did a whole video where I'm kind of questioning the integrity of it too if you want to check that out. It's pretty sweet. People hate it. some like it. But anyway, so I know what it looks like on the inside. That's the point. We would either buy them ourselves or there's an insidider circle, like the inner circle. And these are the investors who like, oh, I know they're buyers and I know they're solid because the worst thing as a wholesaler is the potential of getting a house under contract and then losing it because the actual buyer didn't come through. By the way, I guess I didn't explain. Wholesaling is here's the process. Sorry if you already know, but I go to the home seller and I say, "Hey, I can buy this house for $100,000." And I get a contract to buy that house for $100,000. And then I go to investor B, Harry, and I say, "Hey, Harry, I got this house here that I'll sell you for $110,000." Now, I have never actually purchased the house. I simply have a contract to purchase it at $100,000. I tell Harry $110,000. Harry's like, "Yeah, great deal at $110,000. I'll take it." And then I have Harry sign an assignment contract. Basically assigning my position in the contract with the seller to Harry. So now Harry's taking my position. He's going to actually purchase that house for $100,000. But at the title company, they're going to split it up. They're going to give $100,000 to the seller and then they're going to take that extra $10,000 and give it to me as an assignment fee. So, I never actually take any of the risk. I don't have to do any of the work and Harry gets the house. That's what buying from a wholesaler is. I was the wholesaler in that scenario. Okay. You don't want to go with the big guys because they don't have hairy. they have like hundreds of harries. So always the idea of the size of the market. So when your uh market size is that high supply and demand you have a supply of one house one assignment contract and you got hundreds of harries. So the demand supply small demand big. Therefore you get to raise the price. So, it's not a $10,000 fee. It's a $30,000 fee, which I have had to pay before to get a deal. And there is, of course, the concept that uh well, you know, if still it was a deal for you with the $30,000 assignment fee, then why does it matter? It doesn't. That's right. I've told people that same thing. But when you see that $30,000 fee, it stings. Okay. And uh also, wouldn't it be better if instead of buying that house for $130,000, I bought it for $ 110? Same house. Yeah, way better, right? How do you do that? Okay, you find uh newbies. Okay, you find people who don't have a hundred Harry's. They only have a few. And then you make yourself the best one. You have your buy box, so you tell them exactly what you want so you seem legit and you go out of your way to make it really safe for them. When you walk through a house with them, you like beforehand, it's like, "Hey man, uh, who do you want me to be here? Am I like your am I your buddy? Am I your partner? Do you want me to act like the contractor? Do you want me to be your property manager? Or do I mean or do you tell them what I am?" you know, I I don't I don't care. I I want to make sure the deal is safe for you, buddy. And uh like I never miss a deal. I've never not closed with a wholesaler. That's what that's the type of lingo here. And there's only been actually one time ever that I had to back out of a deal and I bought hundreds from wholesalers. And so, you want to be that guy. That is the reputation that you want to have is that you are the sure thing for these guys. They don't have to worry about it at all. uh better yet, you know, you don't go do inspections and all that kind of crap. You're not going to be in an inner circle if you have to hire home inspectors and all that kind of stuff. All of those things add friction. They add the possibility for a contract to fall away. And the way that those guys make their money is through the contract. So, I want to find smaller time guys and become their number one guy. And I want them to not have that huge of a market. Ideally, they're guys that uh you know are going to grow and as they grow, they'll get more deals and I'll continue to be their number one guy. That's how you go find wholesalers. And once again, you need to define your buy box and uh only go for a few neighborhoods. And you don't want to know every wholesaler. You want to make yourself number one guy with a couple and grow from there. Next way is uh direct to seller. This is really the primary way that I buy deals and uh ultimately it's going to be the primary way for you because just think about it. All right. For one, this wholesaler gets a way better deal than you're going to get on the real estate market. Absolutely. Because the real estate market isn't going to see a lot of the really scary houses. You know, people don't list as many houses that need full renovations. They might list some outdated properties or whatever, but everybody wants to buy them. So, so you're always going to find houses that are better deals for investors through offmarket means generally through wholesalers, but these wholesalers are legitimately taking like 30 40k rips, you know, wholesale fees in in some cases. So, as soon as I saw that, I was like, "Well, geez, dude. Why uh why don't I just go find the deal myself? Can't be that complex, right?" Also, the same thing I said before learning construction. It is a little complex, but don't worry. All right. Well, here's how you do it. Pretty simple. We're going to do number one, pick a few neighborhoods, right? That's always the thing, the neighborhood. Pick a few. Focus. set up a home base. A lot of the competition you're going to have are out of town people who uh feel risky. Okay. The angle, the positioning that you have is that you're a local person with a local address, not a P.O. box. I got a local address with a local phone number and I am a local guy. And then we have a website, preferably with a picture of you looking all trustworthy and the noticeable town that you're in. You know, the background is something that indicates that you're in this town. That would be the ideal thing. But especially you, you're trying to build trust. A lot of untrustworthy characters in that domain. and uh you want to make sure that you're not one of them and you got your local phone number that is your home base. Okay. One note about uh the local number is make sure it's not a local number that's routed through something else. Like for instance, you know, we use VoIP systems and sometimes my VoIP system voice over internet protocol. So, it's not my actual cell phone. It's an app. And sometimes, you know, I'm in Chattanooga, and sometimes it'll route through like Sweetwater, Tennessee, which is north of here. And uh I always, you know, we'll get somebody to say, "Well, I didn't realize you were from Sweetwater." And I'm not from Chattanooga. Dang it. Okay. Uh might have to pay a little bit more for your service there. Or just use your real phone. You know, it's not going to be too crazy. Now you do outbound marketing. And now you got your homebase set up. You have somewhere to capture them uh or show them your trust. You either do mail and or cold calling. I know that sucks. And people will hate you for it, but the right people won't hate you for it. The right people will be happy that somebody came to take their problem off their hands. And uh yeah, that's tough thing. Uh, I think it's something that's good for people to go through and it's also way better if you can just send mail and um not have to deal with that. But mail costs money. You're usually going to pay anywhere from like 50 cents to $1.50 a piece of mail that goes out. So, you send a,000 pieces of mail. Uh, it's probably going to cost you $500 to $1,500. And a thousand pieces of mail isn't enough. you know, you're going to have to send thousands of pieces of mail. You know, when we were doing wholesaling, we were spending like $10,000 a month sometimes sending mail. Uh, sometimes a lot more. So, the mail is great. It really is. It's like the lazy way to market. You just send the mail if you get the messaging right, which you know, the messaging is right. Like the the messaging that you're going to find on the mail providers is going to be the messaging that works. You could make it a little bit better, but whatever. It works and the numbers work. You know, if you have to spend $5,000 to get a deal, $5,000 a male gets you a deal, sometimes less. Uh, that's worth it. You're paying the wholesaler 20 or 30 grand. Still worth it, guys. You know, it just it's kind of like with any entrepreneurial endeavor. You're kind of looking down a dark tunnel hoping for some light. And that's why a lot of people won't send the mail is because they're like, "What if I send $5,000 and nothing happens?" Sometimes it doesn't. You know, that's an average. Okay. But mail certainly works. Been working for a long time. It'll continue to work. However, you are going to get some calls that uh are not nice and you know, it might be hurtful for you sensitive folks out there. But remember, rule number three, don't be fragile. Should be rule number one. It is in my head. it just wasn't on the list. Talking about the philosophy here. Okay. Outbound, mail or cold calls. Some other possibilities to find deals. These are not really what I teach. Uh I have been exposed to them. That's buying foreclosures, reos, which are real estate owned. I don't get the name, but that's when the bank owns the property. They've they've repoed the house. And uh the and then tax sales. Okay, these are uh there's also pre-forclosures, but that that's basically the same thing you're going to do with direct to seller. Like you you will come across some pre-forclosures. That's before it goes through the legal foreclosure proceedings. And after the legal foreclosure proceedings, the house has to be auctioned. Uh at Rio's, they have to go through an auction process. and tax sales. That's when you have the person hasn't paid their taxes and the house gets auctioned off. Uh I'm not going to go into too much detail there cuz really like at these auctions there's you have to go down there with cash or checks or whatever and and you're you really have to know your stuff to do that. There's lots of people who are buying that are not going to, you know, they're buying because they have big firms and they don't need to make a lot of profit off of them. There are some great great great deals, but it's just it's a whole thing and we're not going to teach it here. Okay. The the way that we're finding deals is through real estate agents, wholesalers, or direct to seller. Primarily direct to seller, but not for your first one. closing deals, the non sleazy sales method. Yeah. You know, a lot of people get uncomfortable talking about sales and it's because the way that you see sales is that sleazy car salesman that you know just you got you had the picture in your head and you don't want to be that. I don't want to be that. No, nobody except for the soulless sleazy car salesman wants to be that cuz he doesn't even know he is that. You'll find a lot of those in this business unfortunately. And uh here's how you make sales without being sleazy. First thing to understand is good sales is not sleazy. Good sales is simply being a good deal maker. And a good deal maker does a good job of understanding what both sides wants and makes compromises that don't feel like compromises. win-win situations. And I know that it seems that uh the situation where you get a really great deal on the house and the other person uh doesn't, you know, they sell it seems like a win-loss deal, but it can be a win-win deal. And we're going to get into that. Okay. So, it's understanding what both sides wants and then putting together a deal. And uh luckily for houses, they're pretty much all the same. And uh the issue is this is kind of like the drilling for oil analogy is what I like to think. Okay. To make a good deal, you have to understand what both sides wants. And that's really the hard part is to understand what your seller wants. It's like backwards. They're they're not the buyer, they're the seller. to understand what they want. You have to like get deep in there and they're going to have this wall up because you're a salesperson. You know, you're the the buyer, but they know that you're trying to get a deal and all that kind of stuff. Like they they've dealt with your competitors and they have a bad taste in their mouth most likely. So, there's this protective guard that they have up already and you have to break through that and that's tough to do. And you know to do that you have to make them like you and trust you. And once you get through that then you're able to drill down for the oil which is like the real reasons that they're wanting to sell and then you're able to couple the benefits that you have like how you can make those things easier for them. And then you know you're drilling for oh you're bringing that to the top and then you know hallelujah it all shoots out of the ground. You get the analogy now. Okay here's what we're doing. The formula is your it's all about your offer to them and your the strength of your offer is equal to your value proposition times your authority and that's divided by the perceived effort that that person has. So let's start with authority, right? Value proposition times authority. You could be giving them the best offer or the best value in the entire world, but if you had no authority, it would be worth zero. So authority comes down to three things. There's rapport, trust, and expertise. Rapport is how well you vibe with them. How much do they like you? Do they feel good about you? Trust is how much they believe that you're going to do what you say you're going to do. And expertise is how much they believe you can actually physically do what you say you're going to do. That you have the skills or the resources to do what you're saying you're going to do. All right? That's authority. So you got to build that. Okay? And the cool thing is that you're going to build all this stuff in the same way. It's not like you do these things separately. But it's good to have the mental frameworks on what you're actually doing out there. Okay, your value proposition here is a list. I'm going to just go through the list. You've bought multiple other properties just like this one. Okay, so uh that takes away their feeling of that their property's crappy and it's not going to be part of your thing. You know, the the thing is I'm not making people feel shameful about their properties. Uh I I'll tell them, you know, I bought multiple ones just like you don't got anything to worry about. I've seen worse than this today, you know. So, don't don't worry about it. All right? You're an experienced investor. You can and will close fast or long if that's what they need. You can close on their timeline however they need that works best for them. You have a deep understanding of houses and what's needed to repair them. Okay? They got they don't have to worry about any of that stuff. That's the point. There's no hidden fees. You're paying title expenses. Uh you're the one buying the house with your own money. Okay? That's an important one. Wholesalers are not doing that. I will tell them the next person that comes in this door, the last person might have been a wholesaler. And what they're actually doing is that they're getting this house under contract and then they're going to call somebody like me who actually has the cash to close it. But in a lot of cases, they can't find a me and so they just have to call you back 30 days from now and tell you they can't buy it. Okay, I'm the one buying this house with my money. It's already lined up. Hey yo. Okay. However bad you think this house is, I've seen worse and I've smelled worse. Truth. I've smelled worse. You pay for all the closing costs. Yep. I already said that. Nobody has to see the house. Yeah. A lot of h a lot of sellers are like embarrassed at the shape of the house and uh you know like putting it on the market and exposing themselves to that is really embarrassing for them. Okay, so those are the that's the value proposition. So value proposition times authority over perceived effort. Okay, they don't have to do anything. All right, this is huge guys that they don't need to clean out their stuff. They don't have to do any repairs. there's uh you're the sure bet and there's not a chance that it's going to fall out of contract. I guess really that's a value proposition. I'm going to change my sorry bad notes. Okay. No inspections, no realators, no BS. You can close mobiley. Okay. Wherever they want. I'll bring a mobile notary. We can sign papers in a Hardies or a Wendy's, which I've done before. That's why I use that as an example. Especially during COVID, I was doing closings in some odd spots. And that's cool. You know, that's perceived effort is I'll come to you. I've signed in people's personal residences, brought a notary to them. We had all the documents. They didn't have to do anything. They just received a check. Okay? I handle all the title crap. They don't have to deal with any of it. perceived effort is very low, value proposition and authority is high. Now I have a very strong offer and that's why my offer might be better than somebody who's giving them more money. Okay? That's only one piece of the value proposition. Okay? So that's only one piece of the strength of the offer. You get it? That's how your offer is better. It's not all money and it's really not. It's really not. I've dealt with a lot of these deals. It's not all about the money. That's just one factor. Okay? And so when we talk about wanting a deal, you know, a lot of people go in there with this like salesman hat on and that it gets all weird and just they're like a different person. All right. I will literally say like, you know, what do you what do you want to pay for the house? They might ask me. And I'm like, come on. You know, like I'm an investor here. I want the house for as little as humanly possible, and you want to sell it to me for as much as humanly possible, but we're going to have to figure something out, right? Obviously, that's not going to work. And so, let's figure something out. And that's what we're doing. That's what good deal makers do is you figure it out. Here's the key, guys, to good sales is uh it's just being able to be honest and say things like that. You don't have to be tricky. Tricky is not good sales. That's sleazy sales. All right. The sale, the process, there is really four steps in this process. There's the intro, the walkthrough, the negotiation table, and the transition. The intro is all about authority, and it and it starts on the phone. All right. It starts on the phone, you know, either the cold call or the mail call in because they they'd call you and you're trying to build up remember rapport, trust, expertise. And you're also one of the ways that we like take that friction down is by saying the things like, you know, obviously you want to sell this house for as much as possible and I want to buy it for as little as possible. Like that's honesty that helps build trust and it helps break down some of those barriers. Another thing that uh often we talk about is like these other guys are going to go in there and they're going to be beating down the property. And I don't think that does anything good because I think that just brings that wall up. Like they expect you to do that. You got to be unexpected. You have to be unique. You have to be different. you know, uh, Jeremy Miner, he's like a phenomenal sales coach, um, all about the psychology of sales. You should watch him. Jeremy Miner is his name. Um, but, you know, he talks about how he would wear different clothes than all those people. He was a door-to-d dooror salesman, and, you know, the door-todoor salesman wore whatever door to door salesman wore at the time, and he would go in like shorts and a u whatever t-shirt and he would look different. Okay? So, you know, you retrain the brain. and you're something different than they expected cuz they expect the sleazy salesperson, okay? They expect you to be beating down the house where, you know, oh man, you got this wrong and this wrong. That's going to be this much. It's like the the bad contractor that comes in, you know, that say, oh, you know, we got this scary thing and it's going to be thousands of dollars more. Okay, that's what they expect. Don't be that. Uh, in fact, part of building authority, at least the rapport section is to vibe with them. And you vibe by, you know, matching energies, matching uh, good emotions. And so I say things like, I love this neighborhood. Oh, this is a really great h. I could see how this looked. I mean, you guys probably really enjoy this house. Uh, you know, I love this thing. I love that thing. Uh, I'm highlighting the good with the house. Okay, that's the intro and it's short. 75% of the whole deal is the walkth through. Okay, so now we're in the walkthrough. I've earned I've started to break down some of those barriers. I'm able to using that analogy start drilling for oil, deepening our relationship. Now, in the walkth through, that is where I'm going to break down some of these things, but I want to do it indirectly with them. I want them to not feel like I'm personally attacking them or their house. So, I take the position as the construction guy and and this is all legit, too. That's the cool thing about it is what I'm trying to do is figure out how much the rehab is going to cost. All right? Because I already know what the ARV is, the after repair value. And so, the only other thing I need in the formula is what's the rehab going to cost. And so, I usually walk through with them and I go through the things just like I was giving a bid in construction. and I say, "Oh, you know, we got this issue here that's, you know, I'm gonna have to add that to the budget." I'm kind of writing these things down. And actually, what I do is I go with my GoPro or some kind of video camera and I say, "Hey, you know, u being assumptive about the sale is, you know, if this all works out for us, uh, I want to make sure that I don't have to get in your hair. You know, that's like a really big thing for me is that I don't have to bother you and I don't want to have to come back in here and do a bunch of inspections." And so what I always do just on this first walkthrough is I I take a video of all these things and I kind of talk to myself so I can plan out things later so I don't have to get back in your hair. So if you don't mind, I'm going to bust out my video camera. And then I'm like talking to the video camera as I'm going through. Hey, I'm going to have to do this drywall. Oh gosh, we're going to have to do floors. Uh looks like we got a little leak up there. Okay. And all along I'm also like legitimately taking notes on what we're going to have to do and a lot of it I'll I'll come back to my computer later and fill out the scope based on the video. Okay. But they're hearing all this and you know all the while I'm also talking to them not about the house necessarily because I'm doing all that indirectly. I'm really asking them about them because remember the drilling for oil. We get past the barrier, you know, break ground by the authority. And then we need to drill and you drill by asking questions. We're we're trying to understand why they really want to sell this house. What is really driving them? Why are they not selling it on the market? Why why do they not want to work with a real estate agent? Have they dealt with other wholesalers before who did them dirty? Uh, do they need to sell really fast for some reason? Do they need to sell really slow for some reason? Are they embarrassed by the house? Whatever it is, that's what you're drilling for because that's what you're going to use when we move to the next spot, which is the negotiation table. So, the walkthrough is really you doing a bid, building a scope of work, and building more relationship with that person. And now we get to the negotiation table which you know I guess the name is kind of dark there but it's you know uh not dark but like like it's this big thing. It's not like you've already done all of the work. What you want to do now is simply do the math. Okay. So we sit down at this point. We know the oil. We know what is driving them. And we know what the rehab budget's going to be. By the way, we got uh a whole, you know, I call it flip a rhythm like algorithm uh that builds a scope of work quickly for different project types, which we're going to get into once we get into the strategy. and we are sitting down with them and what I want to do now that I've built this rapport. Okay, at some point I want to know where I'm working with on numbers. So after I built trust with this person, I'm just going to flat out ask in conversation, how much do you want for this house? Okay, so I have like a good reference point. How much are you want for this house? And I'm telling you right now, 99.9% of the time, if you've actually built authority here, they will tell you. Okay? If you haven't, they'll say things, well, I don't know. What are you wanting to buy the house for? You know, uh because they don't trust you. They don't, you know, you haven't built authority, you haven't built rapport, you haven't built trust, and you haven't built expertise. So, uh you now you're in a harder position. But if you get the price up front, then you kind of know what you're working with and you might adjust your numbers based upon that. Now, let's get into the actual numbers. Here's where they here's what I do is I figure out what they think the ARV is. Okay. All right. So, now that they've they've told me what they think the house is going to sell for, and by the way, uh this is another calculator that I built. All this crap is free for you guys. It's called the flipping calc. I know it's awesome the name and I bring this like this. I show the person this as I'm doing this. Okay. So, uh what do you think the house is worth? And that they'll tell you you know what what do I think it'll sell for after it's fixed up? Oh, I I think like $300,000. Okay, I agree. You know, I I do think that I I agree with you. Um, and okay, so after going through this this house, you know, the different things that I I made my video about, here's my construction budget. Remember, once again, we have an app for this. Uh, it's $52,500. Okay, now I put this in the flipping calc. Okay, ARV $300,000 and I think the rehab cost is going to be 55,267 cuz it will spit you out an exact number like that, by the way. It's pretty sweet. I know. Okay. And based on that, here's my acquisition price. Okay. I I'm showing them this 1590 53. And I don't even say it usually. I just, you know. Okay. Uh, and just so you guys know, uh, how this calculator is made, I'm sure you've heard of like the 70% rule. Uh, actually, no. Give me a second. We're going to I'm going to tell you about all this stuff, how that that comes about, but let's get through the sales process. Okay, the there you've probably anchored them. This is probably like the lowest price. You know, you start with the lowest price and then you're going to work yourself up and I'm going to show you how to do that with the calculator. But the uh sometimes they'll agree right off the bat and sometimes they'll deny it. Okay? And then you want to figure out what it is. And I'll just tell you right now, it's the price. Okay? That's that's why it's not any of the other things. It's just the price. They thought they were going to get more for the house. They're going to tell you it's something. I don't know. You know, I want the thing. And uh this is a question I always ask. Okay. Now, you I've been doing this for a long time. So, uh I bought a lot of houses and I know that I hear you, but what you're really saying is that you don't really like that price. So, what what would that have had to say for you to say yes right now? What would have made the deal for you? Okay. And usually they're going to come out with a number uh 180. Okay. I got to think about that one. Okay. Then I go rerun my numbers. Kind of kind of not really, you know, because I already know my numbers. Uh, but I'll work my numbers a little bit to see like legit there's a 20 grand difference between what they want and what I can give. So, what would I have to tweak to make that work and am I comfortable with that? Because truly my numbers are conservative at the start. You know, we got a lot of things built in on the flipper rhythm scope of work. There is uh a contingency built in. There might be a little bit of juice built in. And we're going to go through uh the flipper rhythm app uh once we get to the strategy. And you know on the flipping calculator I have my rate of return is is uh you know conservative. Some of my numbers are conservative. So I have a little bit of room here but I don't want to go too far guys. You don't want to go too far. So you want to have your top number in mind. Don't bend too far here. But also remember you're probably getting a better deal here than you're going to get anywhere else. So, don't get greedy either, okay? You can make a good living on uh buying houses at at reasonable prices and then managing construction well. All right. Anyway, we're going to go back and forth. We're going to agree upon a number or not. Okay. Um but here's where you're probably going to have to do a little bit of sales, which is building in some scarcity. Okay? Because in if you've done everything well, it's probably going to be a situation where they say something like, "Well, I need to think about this." And unfortunately, as reasonable as that seems, this is the reality is they need to wait because there's a wholesaler coming in five minutes after you and they are going to get the deal because they are trained. Okay? They're going to whatever. They'll beat your price. They don't care because they just need to get it under contract and they're going to send it out to their list of Harry's as we called it and they're uh you know either somebody's going to take it or they're just going to call Becky the seller and say uh hey I need to get this for less. You know, here's uh I you know, I know we said 170 or 180, but uh I could do it at 170 and you know, Becky's going to be in the situation where it's already been so long that she'll probably agree to it or she'll be back to square one. But either way, Becky got screwed. And uh that's what's going to happen if you don't push a little bit here and create some scarcity, some urgency to make that deal. And I know it sounds weird that oh my gosh, like really you uh make these deals on the spot for a freaking house? Yes. If I go on that appointment, I am leaving with a contract or that deal is out of my pipeline kind of. At least that's the the thought. We'll still follow up afterwards, but anyway, uh not much. Like for real, it's kind of like if I don't make the initial sale, I'm probably not making the sale for the most part. And I know there's probably people out there say, "Well, follow-up's where we get a lot of our deals." Okay, fine. Whatever. Uh, you got your strategies and I got mine. So, here's what we do is uh, and this is legit. Once again, sleazy lie. Uh, we're not lying. I'm being dead serious that I only have so much money to buy houses with, okay? And so do you. And uh, I'm only buying one. So, Becky, that's fine if you want to wait and think about it. and all that, I totally understand. But the deal is, I'm going on my next appointment and if they say yes and we shake hands on a deal, I'm going with them and I'm not going to be an option anymore. And I really love this house. I really love I I really enjoyed the time with you and you know, I know you want to sell this house because you you know, you just hate having to deal with it and you uh you know, all the oil reasons. you're bringing those back up. And uh I just hate to miss that opportunity. I'd hate for somebody to come in. I know how this works. I'd hate for somebody to come in here after me and uh lie to you and convince you to do this thing and then you end up getting screwed. I mean, it's right here for the taken. You said 180. I can do 170. Let's freaking do it. Okay. And that's, you know, you're coming back like that. you're always re-emphasizing the oil, the the uh real reasons for the sale. And then she says, "Well, you know what? Yeah, let's do it." Cool. You got your contract. You sign the contract. She signs the contract. And then you uh got to got to do the transition, as I call, which uh behind closed doors, I call it peeing on the tree. Okay? Like a dog, you know, they go and they they mark their territory. You got to mark your territory. Okay? Yes, you have a contract with them, but I like to get that thing to title so freaking quick and have people calling them to make it real right away. Because before it was you and Becky in a living room signing a piece of paper, but as soon as other people start reaching out, that's when that's when it feels real. That's that's marking the territory. Okay. And so basically the second I leave there I call the title company which you know I have uh virtual assistants that I use uh to to do this stuff. So I would send it into them and they would get the title company working. Uh we are not on this course going to talk about streamlining and automation for your business. Not adding employees but adding other vendors like VAS but that's not a for today thing. And uh anyhow, mark the territory. There you go. Flipping calculator. Let's talk about that really quick. 70% rule. This is how most people make offers on houses, and it's like a pretty foolproof way, but I always like to know where things come from and use those tactics. So I used to like do this long form math on every deal uh where you know it's a little bit complex because you have to like solve for the acquisition price using a formula that includes the acquisition price you know because really what you're trying to figure out what the ultimate formula is is all of your costs for buying the deal like your acquisition price, your rehab price, your points on the loan. So if you get uh a loan generally you have to pay points upfront like origination fees and then you have interest rate over time and then you know how much time have you own the property. Let's say you own it for 6 months and it's a 12% interest rate. Well that means that you have to add 6% half you know half of the year half half the 12%. Uh and then you have other costs like closing costs you have utility costs things like while you're holding the property. So, you figure out in all those costs plus your profit, like what you want to put in your pocket on a deal, and that equals the after repair value of the house, let's say $300,000, minus the cost to sell the house because you got real estate commissions, you got closing costs with the title company, um all that kind of stuff you have to subtract from the ARV. Okay? Now, generally, if you just take the 70% rule, which says if the ARV is $300,000, 70% of that is 210,000 minus the rehab cost. Let's say it's 50,000, uh 160 is what I should pay for that. That's the 70% rule. And and it works out. By the way, we basically did that math for this deal, $300,000 ARV and we were at 1599, but the rehab cost was a little bit higher, so it would have been like 160 165. Uh, so like right on. And but I like to tweak things, right? So it's not just the 70% rule. Uh, this calculator, what it does is it figures in all of those things and it's going to tell you how much cash you actually need, whether you're bringing it or buying it. It's going to tell you what your profit in dollar amounts is going to be and what your anal annualized return is going to be. You know, if you make uh 15% profit on a flip, but it only took you 6 months, your annualized return then is 30%. You know, because that's what it would be if you stretch it out over the year. But anyway, in this calculator, if you click down to advanced, you're able to change the rate of return percentage, which is your profit. So, let's just say, you know, I have it preset. I have all these numbers preset for you guys. But if I wanted to get more profit on that deal, I would have put in a rate of return of 20% instead of the 15 that I have preloaded in there. So, I want to make 20% profit, $46,000, and that would bring the acquisition price down. So, as I'm anchoring to make an offer, I might lower that. I might increase that rate of return, therefore lowering my acquisition price just to start at a lower number. So that way, you know, had I come up with 150,000 instead of 159 in this sales example, okay, Becky would have went back and she probably wouldn't have said 180. She would have said a lower number. That's how the anchoring works. The so the but the danger with anchoring is that if you anchor too low, you blow all of your authority. You know, you can absolutely shut the deal off for good if you start with too low. Uh too much of a low ball is hard to come back from in those situations that require a lot of trust. So, you got to be careful there. Don't get greedy. Once again, that's the sale process. Uh, I thought about adding a little section about uh closing the deal, you know, like the final stretch, the title and the closing. But guys, if you've gotten this far, like you're going to figure that stuff out. It's pretty simple. You're going to send it to a title company. There's going to be some things that come up, but you know, lots of different factor. They'll they'll guide you through it. The title company wants it to close. uh as long as you want it to close and the seller wants it to close, it's going to get closed. So, it's really focus on the relationship and just do the work that you need to do to make the thing close. Now, we move on to the strategy. Let's start talking about this frigin house. This will be fun. I'm going to give you a broad overview of building a scope of work. And you know, I usually use scope of work and budget interchangeably because it's like the same thing in my head there. You know, scope of work is just the jobs that you're going to do and the budget is how much it's going to cost. Um, and really I think of the scope of work also in the order that I'm going to do it. But anyway, I'm going to give you a broad overview of a scope of work. I'm going to give you what uh the seven types of flips that there are. Then I'm going to show you how to figure out pricing quickly with the flip rhythm algorithm that I built for you guys. And then we're going to go through how to structure those in a way for project management using Larasa is my construction company using the Larasa systems. It's basically a system to organize things to make sure that you don't do jobs out of order. And this is really how I convert a quick scope of work into a project management system. Okay. And then we're going to go through some things on financials uh in the in the project. Okay. So the strategy is setting up for the work. All right. The the work is actually getting contractors in there to do the the job. But the strategy is quite possibly much more important that this is what I'm actually going to do to the property. And this is where most people make the mistakes. It's not actually in the contractors where the mistakes are made. The mistakes are made in knowing what to get them to do. Because the thing is that contractors don't know jack about what a real estate investor needs. They don't know what you need. They don't their vision is not the same as yours. If it was, they would be doing this. You know, most contractors, if you ask them about flipping, they have bad stories about it because they don't know what they're doing. Okay? They know how to implement things that somebody else give them. Okay? Even a GC, which we don't hire GCs here. We do what we call MIY, manage it yourself. And we're going to go through all that and how you actually work as your own general contractor. But anyway, uh maybe you do someday, okay? But even a GC like they're not designers, you know, if you want something designed, you need to go hire a designer. If you want uh floor plans, you need to hire an architect. If you want uh a GC to do structural stuff, better hire a structural engineer. They just follow plans. Okay? You need to make the plan. You're the visionary. you are the leader on a project. And that's what the strategy is about is making sure that you lay out a phenomenal vision and then set it up in a way that you can manage it well because you'll also be doing the managing. Welcome to the solo house flipper. Okay, broad overview of a scope of work. The scope of work comes down to four sections. There's safety and liability. There's bleeding. There's the baseline. And then there's the big three. No matter what type of flip you're doing, no matter what you're doing, if you own a house, you need to start with the safety and liability. You you really uh don't want to be in the situation where you are a piece of crap. You know what? What separates a slum lord from a smart investor? You know, a lot of people look at investors like if they own section 8 or something like that and they're like that, this guy's a slum lord. You know, he doesn't he doesn't paint the cabinets and he doesn't put the drawer inserts in. What a piece. But here's the thing that separates a slum lord from a smart investor is that a slum lord does not care about safety and liability. Okay? They uh would allow and it's not just the liability of, you know, getting sued if something goes wrong. It's like just what if somebody actually got hurt? you know, we had uh next door uh at uh another office that we have. It's more like warehousy. And there was a uh I had a Christmas party over there with like everybody brought their families. This was back when I had like big crews and such, so there was like 50 guys that all brought their families and stuff. And I'm like, you know, I brought my family and we I was being introduced to everybody's families. And so I was really trying to focus on that and you know my wife was there and so she was taking care of our kids because she knew that I needed to do that to you know build rapport with people and such. And anyway so I'm talking to this guy meeting meeting his family and uh Spana that's one of my children my oldest daughter she's like probably five maybe four at the time and I kind of like hear subconsciously saying hey dad what's this? Daddy what's this? and uh you know I'm not really thinking about it and it was some kind of like dad instinct where like I I somehow knew to like swat her hand out of the way as she was reaching for a full phase electrical panel that was wide open because I'm a freaking idiot. I thought that I like safety proofed this place knowing that family I like I spent a lot of time safety proofing this thing but there was like one junction that was open and she was like reaching for the main line man and uh yeah I swatter her hand out of the way right I mean it like ruined the whole party for me I'm like uh not like an emotional guy you probably get that and I don't I don't really get off track easy but uh that ruined my whole night. I couldn't stop thinking about the fact that if she would have grabbed that. I mean, it still kind of makes me uh cringey, but uh anyway, safety and liability, guys. Like, do you really want to be in the situation where some kid gets hurt because you're a greedy little bee, right? Don't be smart about it. Okay, cool. So, safety and liability, that's first. We're talking fire alarms, carbon monoxide. I got a whole list here, by the way, going to be linked up. Glass, any broken glass. Uh, egress. Egress means that there's like actual window sizes that are egress, which means that a fireman can get through them if the building is burning and get a kid out of the bedroom alive. That's why uh, you know, you'll hear people out there saying, "Well, to call it a bedroom's got to have a closet." No, sure doesn't, but it's got to have egress. It's got to have a way to get in and out by a fireman to get kids out safely. That's what egress means. Rails, stairs, uh, you know, uh, a big one is like railings. Kids can fall through railings. I always think of safety and liability as kids, by the way. Um, but anyway, railings have have certain rules like they can't be further than 4 in apart. Uh, you know, if a 4-inch ball can fit through them, uh, then it's too large, which is the same size as a child's head, I think, is where that comes from, guys. Uh, you don't want some kid to fall off a balcony because the railings aren't long enough. You got to have rails up and down the stairs for old people, you know, so they have something to grab onto so they don't get hurt, fall. Uh my mom fell walking up a ramp the other day and there was no uh no railing on it. It was also 50° and she said it was because of the ice. I don't know. Whatever. Decks they uh if they're above I think the code is 30 in off the ground. Uh you have to make sure they have railings so people can't fall off. All right. Make sure that stuff is uh good to go. Locks. So, this is on like windows and doors. Make sure they can lock garage doors. Make sure they have working sensors so they can't crush people. Like on Scream, the movie with the white masks. That's how one of them gets it. Guy takes the sensors off. They smash him in the door. EPA issues like mold, asbestous, and lead. Uh, here's the thing, guys. All right. Everybody freaks out about asbestous. I'm going to get some comments on this. probably not because the commenter didn't make it this far into the video. But uh I've like watched videos of people eating asbests sighting because asbestous is not as dangerous as they say it is. The rule and this is like EPA stuff here guys. I'm not like making this up. This isn't me being a cowboy. This is uh this is legit. I've done houses that have full asbestous sighting. And the rule is it's not a problem unless you disturb it. And disturb it means breaking it to where those small particles get up in the air and people can breathe them in. So what we'd have to do on these houses that had full asbesus sighting is you would just put plywood over them. Like you'd wrap them and that was a legit thing to do, not a once again cowboy thing. It's a that's how you take care of it is you put something over the top of it so you don't have to disturb them by pulling them off. So your house might have asbests in it. Too bad. Okay. uh mold as best as lead EPA issues. Uh make sure they're taken care of, guys. You got to make sure that basic mechanical, electrical, plumbing standards are met, that code standards are met. If you have uh junction boxes that are open, uh for instance, or you have uh let's just exposed or frayed wires, loose or unprotected outlets, switches, fixtures, stab lock, breaker panels, and other known fire hazards. There are uh these breaker panels, you know, like the switch box, the circuit breaker box, uh that are just known for starting fires. Like if you have a stab lock, uh or there's another one, Pacific something that like basically they know it's going to start on fire. So So you got to replace that thing, man. Okay. Uh proper GFCI, FCI um knob and tube or fuse panel. Those usually require upgrades. I'm not going to go through the whole list, guys. Plumbing. Uh, make sure everything drains, no water leaks. HVAC, make sure the heat's working. Heat's got to be working. Okay. Um, extra structures, if they're dilapidated, which most extra structures are, you know, I can't tell you how many sheds I bought that had to be torn down or boarded up. Just make sure kids can't go out there and uh get hurt. Okay. Uh and also then structural damage which we're going to go through uh let's do it right now a mini structural course. Basically it's like this. And by the way I've done like whole structural master classes. So you can go click on one of those. We'll link it up. Think about the very bottom. Start at the base. It's like a Jenga game. All right. If you pull from the bottom uh more stuff falls. So, uh, if the bottom weakens, everything above it starts to weaken as well. So, let's start right at the bottom. You have a footing. A footing that sits in the ground. Uh, the depth that it sits in the ground depends on where you live. For instance, in Chattanooga, they only need to be 12 in underground, whereas back in Colorado, they need to be 3 feet underground because the frost line is different. Uh, there the ground freezes much lower because it gets colder, pretty warm. here in Chattanooga. And so you dig down and you put a footing under the ground. There's rules on the footing, how like wide they need to be, how tall they need to be, and it that's based upon the soil that you have in your area. Uh different types of soils are going to take pressure differently. Okay? So, uh, ones that don't take pressure very well, you have to have a really wide footing. On things like, uh, if you're building on top of a mountain and you find the bedrock, you don't really need a footing at all cuz that is a footing. Get it? Cool. Okay. Footing. On top of footing sits the foundation wall. That's like the brick or block or uh solid foundation wall that you see if you have a basement. It's that that wall is the foundation wall that's sitting there. And uh on top of that sits the floor system. Okay. So on top of a on top of a foundation wall, you're going to have a ledger board and then you're going to have like the floor joists that sit on top of that. On top of that, we're going to have subfloor and then uh around the perimeter, you're going to have the walls that go up that hold a ceiling joist and then the rafters that make the roof. All right, that's those are the structure components. Hopefully that didn't confuse you. I just I do want to tell you one other thing. So, obviously the exterior walls, they all sit around this foundation, you know, that sits on footings that's inside the ground. You know, the the foundation wall itself will protrude above the ground because you don't want to let the earth hit the the wood sighting because it doesn't do well with earth. Okay, that's the exterior. So, I think that makes sense. But then there's also an interior foundation in a lot of situations. So, let's just say your house was 40 ft wide and you got these floor joists that are running from side to side. Well, for a floor joist to be able to take that long of a span, 40 ft, they would have to be like super deep, specially made, you know, they'd basically be all beams. That light shut off. They would basically be all beams. themsself. Okay, you don't want that. That would be terribly expensive. So, what you do instead is you put down the center of this 40 foot span, you would put uh peers with a beam on top that then cut the span of the floor joist in half. Okay? And generally, if you did that, then you would have a wall above that down the center of the house that was also loadbearing, structural. Okay? And these peers that would be holding the beam underneath the foundation, well, they would also have footings. Okay? But the reason they would be peers, you know, which is just like a column, I'm sure you've seen them before, just a column that goes up, uh, since they're peers instead of being a solid foundation wall like is around your perimeter. Because a foundation really does two things. It holds stuff up. It's structural and it's weather resistant, so it stops like pests and weather from getting underneath your house. Obviously, if we're already underneath your house in the crawl space, we don't need the uh the weather protection. So, instead of full continuous walls, they can just be peers. Fun fact is a lot of older houses, you might notice, used to be peer and beam. houses used to be built that way to where you could just throw a rock uh from one side of the house underneath to the other side and since have been filled in with block and that block in the middle a lot of times doesn't do anything structurally. It's just there to hold the weather out. Ha, you learned something new today. Hopefully that's not the only thing. All right, so that was like a little structural uh mini course. You got to have the structure right because if you don't uh well then you have a dangerous house and worse. There's really three things to note when it comes to structural issues with the house. There's the is it bleeding? Okay, which is the next step here that we're going to talk about. Bleeding means is it getting worse every day? Okay, we're going to talk about the things that make it worse every day. So, is it bleeding? Is it safe? Meaning, uh is whatever damage that's done to the structure potentially going to fail and hurt somebody. Okay, that's all part of the safety and liability. And the the third is is it ugly? So, you can actually stop the bleeding from a house, making sure it's not getting any worse. and you can make it structurally sound and it can still look like crap. You know, it can still look like all cracked up and stuff, but you've replaced it. Like take for instance, uh you know how I told you about the pier and the beam situation with the filledin wall in between. Well, the filledin wall might have gotten really damaged, but it's not actually doing anything structurally. So, you might make the choice, well, I'm not going to fix the ugly cuz I don't care. And it's not doing anything structurally. It's not getting any worse. So, let's keep the cracks. Let's just make sure those peers are good. Right? That's how it could be ugly. It's Halloween today, guys. So, I don't know if I'm going to be able to finish this all in one shot because I got to take the kids trick-or-treating here in a couple hours and we still got a ways to go. We're at the beginning of the strategy. Okay. Uh, so structural could be a safety and liability issue. And I'm going to go through a list of the signs of structural damage. Okay, there's foundation issues, cracks in the foundation walls, settlement cracks, leaning or bowing foundation walls, moisture in the foundation, uh, wall cracks and shifts, cracks in the interior walls. We're talking about the wood structure of the house. Diagonal cracks at the corners of like windows and doors in the drywall. Uh bulging or bowing walls. You know, the wall you can tell is like the disformed. Separation of walls from the ceiling or the floors. Okay. Uh when things start shifting, you know, usually when you drywall a ceiling to a wall, you make them continuous where you can't see the joint. If you can start seeing the joint, uh, that's because things are moving. They didn't build it that way. Uh, floors, if they're sloping or sagging, bouncy or springy. I like to do the bounce test on every house I buy. You know, that's where I literally bounce to see if it feels right. Uh, bulging or boowing. Oh, sorry. Cracks in floor tiles or or concrete slabs. That means something's moving underneath. Uh, gaps between floors and the baseboard. Same thing. You know, the baseboard trim on a house is put on the floor, you know, uh, on the wall. It's nailed into the wall at the floor level. So, if you start to see bigger gaps forming underneath the baseboards, it's because things are moving. roof and ceiling issues. Sagging roof lines, ceiling cracks, water stains or leaks on the ceiling, exterior signs, cracks in brick or stonework, chimney leaning or separating from the house. Oh, the light went out again. We we'll fix it soon. Uh gaps between exterior walls and other elements. Gaps between exterior walls. Oh, yeah. Gaps between like the exterior walls and the windows or the doors. Gaps are bad. Shouldn't be any gaps. Okay. Uneven or sagging porch or deck. Misaligned roof gutters. Basement crawl space issues. Wet or da d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d basement shifting or cracked basement walls. Rotting beams or joist if you can actually see them in the crawl space. Sinking or tilting support columns like the peers. Okay. Uh water drainage issues. Uh well, we're we're about to get into that. That that's all the bleeding stuff is what we're about to get into. Now, um I have this list for you guys. I I have like all these walkthrough questions that you should be asking to help build your scope of work. All right. The structural, which is one of the safety and liability issues, is caused by bleeding. Okay. Um, it's caused by usually the bleeding is water intrusion is what we're talking about. And let me just get the other things out of the way. There could be pests, you know, like termites or uh powder post beetles. Um, those are a potential cause of structural damage to your wood framing if they start eating that stuff up. And but you can get pest inspections done and they're usually pretty obvious. And uh another type of pest is the prodyer where uh somebody that you bought the house from thought that they were uh a builder. You know, I'm not talking about like somebody who DIYs some crappy trim and cabinets. I'm talking about somebody who thinks they're a builder. You know, like framing up new walls and stuff. And you can usually tell that like, uh, that wasn't, that room's not built like the rest of the house. Uh, what happened here? Okay, those can cause structural issues or they're, you know, like somebody who thought they were going to remove a wall between the kitchen and the living room and they put undersized beams in and you can tell that it's like sagging. Um, that happens all the time. So, you definitely need to be able to look for those signs and know to look for those signs. Usually it's like once you know to look for the signs you can see them pretty easily. Okay. But otherwise 99% of structural issues are caused by bleeding in the form of water intrusion. So let's go through this. Here's how water is meant to hit your house. Houses are designed to take on water. Water. Let's think about it's raining and the water hits your roof. And the water goes from the roof into a gutter. And that gutter drains into a down spout that then the down spout shoots the water away from the house. And the house is the the ground is graded in a way that that water continues to flow away from the house. That's basically how it's supposed to work. And uh a house, you know, water hits the siding. And uh you know the only real reason that it would be hitting the siding is because it's water is slanted because usually a house has an eve. Okay. The gutters sit on the edge of the roof and that is 2 feet 3 feet away from actually the siding. There's the eve that's in between them. The eve of the house. Okay. So that way water that's hitting the roof is not actually flowing down the siding. it's flowing into the gutters. Okay? And uh you know, houses aren't if you sprayed a water hose on your siding right next to your window, it'd probably find a leak is what I'm saying there. It shouldn't technically, but usually it would. Okay? Pretty much water that pools anywhere is going to be a problem. All right. So, here's the thing with uh my buddy Brad. He lives in St. Louis and he had to go on a work trip one time and he came home from this work trip and he like went to open his door and it wouldn't open and he's like what is going on, you know, finally like forces his way into the house and he sees like the drywalls cracked and the door was like jammed up against the floor and the like cabinets are open and they won't stay closed. They kind of like open and all the doors are sticking. All right. The house had like shifted in the few days that he was gone and he recalls that he was talking to his wife and you know they had a one of those like Costco pools in the backyard and uh they have a hill like out the back of their house and so Brad when the kids were done with it would you know siphon and drain that pool down the hill behind their house. and his wife called him when he was on this trip and was like, "Hey, I got to drain the pool. Uh, so how do I do it?" And he's like trying to explain to her how to siphon the hose down the or siphon the pool. You know, you get the siphon started and then send the hose down the side. And anyway, yeah, just like you right there. U if you're married, you understand. She didn't listen to any of that. And uh she just pulled the plug. So hundreds of gallons of water, maybe even thousands. I don't really know how many fit in these pool. uh drained at the back of their house, hit the whole back of their house and just torched it. You know, it it made the ground sping wet. So, the house was able to sink. That's how everything got skewed in the house. Now, most structural problems don't go down like that. It doesn't happen all in a thousand gallons at one time. It happens slowly over time from this rain issue. Okay. So let's just go through the list. This list is in my head. I think it's also here. Yeah. Yeah. Yeah. Okay. First is topical ground issues. A yard should drain away from a house. Drain away. Positive drainage means it is higher at the house and goes lower away from the house. Therefore, water is able to by gravity drain away from the house. But if you're on a hill, the sloping is negative, right? It's coming right towards the house. Now, uh you may dig out in a way to grade it to where it hits, you know, the hill stops before it gets to your house, hits some kind of drainage to where it goes around the sides of it. Uh, but if that is not in existence, if there is any sort of negative drainage towards your house, then water is hitting your house and you are ultimately going to have the same issue as Brad did. It's just going to take longer. And also, if your gutters aren't working correctly, let's say they're all clogged up, uh, and they're spilling over the sides of the gutters, then they're saturating the ground next to it. Same problem as Brad had. Okay? So, literally cleaning out your gutters could solve thousands of dollars of damage. Another one is pooling. So, uh HVAC systems, air conditioner units on the outside, uh or a window unit, they have condensation lines where they, you know, drain water from the condensation that's made. And sometimes those are like pointed out directly by a house and they saturate the ground. same problem as Brad had in just smaller doses. But that's how structural damage happens to your exterior foundation. That's water that's coming from the outside. Uh but water can also come from the inside. So, you could have water lines underneath the house that burst and they're uh you know damaging the exterior foundation from the inside out. You can also damage the interior foundation, the peers and beam that are in there. And that usually happens when the floor gets or the ground gets super saturated, super wet. this water that's coming in not only comes and hits the foundation wall, but it also gets into your crawl space and then starts to uh to make those peers sink in the ground. So, you know, when you walk into a house and it's got wavy floors, well, if it's sunk on the outside, the exterior foundation, you'll have a hump in the center. And if it's lower in the center, it's because you have water issues on the inside of the house. Uh usually via some kind of interior drainage issue or a combination all of the above, which also happens quite a bit. Now, the only way to fix that is you had to stop the bleeding. So, usually you have to do some regrading of the yard, maybe put in some French drains, then you have to hold up the house for the bad section and take it out and rebuild it. All right, that's why structural work costs a lot of money. There are options with like helical peers and stuff like that uh to a helical pier is basically an augur that you drill down underneath the foundation and it's got a jack at the top and pushes it up. Um, that's what people will do on exterior foundations a lot of times. Uh, we usually do the option where we hold it up and just repair it. Uh, all right. That is water on the top of the ground. Here's the problem. There's a house that I bought uh that like it was on a huge hill, but it overlooked the whole city. So, I thought it was going to be like a beautiful property. Uh, and it was. It had a great view. Okay. But the thing is, I could not stop water from getting into this basement. And I tried everything. I mean, I did like a tiered retaining wall system to where, you know, water would come down the hill, it hits this retaining wall, and then, you know, the water is stopped by the retaining wall, goes into a French drain that goes around. But then I had multiple tiers of that. So, if it got past that first one, it would hit another retaining wall, then another one. All of them had French drains. They had like new gutters on the house. I regraded everything to where everything would flow nicely around the sides of the house. Still water in the basement. All right. Thousands of dollars of work. Water still in the basement. And I basically thought all was lost. Like I'm just going to have to call this basement nothing. Even though we had like renovated it, all that kind of stuff. And uh you know, even at that, the house would sell for nothing because water's you know, seeping through the walls and such. Okay. So finally one day Tommy I think is who it was guy it was digging a a trench for a sewer line and he's like dude you got to see this. I'm like what? And he's digging this trench. He's a few feet down underground at this point. And literally if you look down this hole there was running water. Like it looked like there was a stream underneath the ground. And that's when I realized that a hill like that works as a sponge. So this is like in the middle of spring when it's raining a lot. And so it's just like saturating the ground and it's ultimately like a stream all the way down that hill but a few feet underground. And so then your house is basically in that scenario like a rock in the middle of a river. And you know, the water always wins. And that's what was happening. Like this house was literally getting pushed down the hill from this stream. And uh how do you fix something like that? Weirdly enough, the option is usually just let the water in. And that's where these like complex interior French drain systems come into play. I'm going to tell you a little bit about it, but mostly what I'm telling you is if you see a house on a hill, don't buy that thing. Okay. But uh this will be a good education for you is here's how you do it. You let the water come in. So the water's going to come through the wall. You know it's going to come through the wall and you cut the floor all the way around the perimeter and you put a a French drain system in. So water comes into the wall, it hits some sort of barrier, you know, like some sort of uh water barrier, waterproof barrier. So, it comes through the wall. It's on the back side of that barrier. And it goes flows drains down into that French drain that you built. And that French drain all drains into a sump pit, which is a a hole in your basement floor. And inside of that hole is a sump pump, which you've probably heard of. And then uh the water that gets in there is pumped outside of the house and around safely. So how do you get rid of interior underground water is you let it come in and then you pump it out. So that way instead of your house being like the rock in the middle of the river, it's kind of just a part of the river. You're working with nature there. Cool. That was fun. Right. That is the foundation. Then on top of that sits all the wood structure, the floor system and the the walls. And you can have a lot of issues here as well. Uh most of the floor issues are actually structural issues with the foundation, but there are floor issues where for instance uh whoever built it use undersized floor joists or the floor joists have start to erode over time. Maybe they've been eaten by termites. And in this situation, you'll either have to reinforce the joists that are already there, usually by uh putting another one next to it, or you have to cut the distance of the span. So, let's say, you know, that whole example where let's say it was a 40ft span, you would put a pier and a beam system down the center. Well, you might put two more to cut the span even more. So that way it can uh you know be the right size for a shorter span. The floor joist be the right size for a smaller span. And then on top of the floor system sits the walls. If you have siding and windows that aren't functioning correctly, water will get inside behind the siding and it will start to rot the walls as well. Remember everything above uh gets damaged as well. Also, if a wall starts to get damaged and starts to dip, then the ceiling joist and the rafters that sit on top of that will also start to to move and that's where you get some of this cracking. Okay? And then, so you always want to look around siding and windows. That's where water will get in a lot of times, you know, where the siding meets the windows. Uh there's a lot of waterproofing you need to do when you're building that a lot of people overlook. And then look around your bathrooms uh and your kitchen where there's water, you know, where water comes in. Uh there's a lot of times leaks. So look for soft walls and floors around there. And then you have your uh roof. Roofs leak at um specific points usually, you know, where something protrudes through the roof. So, if I have if I have spotting in the ceiling, you know, if I see dark spots in the ceiling, uh, indicating water issues, uh, I know that it's probably going to be where a chimney goes through. It's probably going to be like where one of the vents shoot through the ceiling. That's that's the first place I'm going to look because those have to be flashed. That's the waterproofing method in a certain way and and it just fails over time. And so, look for dark spots in the ceiling and stick your head up in the attic. Look for like blackening around the the rafters and the ceiling joist and then you'll know that the water's coming in. If water's coming in, that is bleeding. You need to stop the bleeding before you do the structural repairs. Okay. Scope of work, safety and liability first, then signs of bleeding. Now we have the baseline. Boom. Boom. That was a baseline. All right. uh baseline is a combatant to what I call the HGTV dilemma. Now, anybody who's starting out in real estate watches these HGTV shows where they make these houses stellar, like the the one scene that I can remember has because I used to like do reaction videos to the HGTV shows because I think they're stupid. Uh, but they have a lot of copyrightiting rules, so they always shut them down. Uh, anyhow, this one scene that I really remember was uh the guy uh Tarmac or whatever his name is is talking to his wife and they have like two bathrooms and they're going to do this design challenge and uh I'm like, this is idiotic. They're like spending so much money on these nice tiles and these like fancy light fixtures and all that kind of stuff. It's so unrealistic. But this is what gets people thinking that that's the way you flip houses. It's like uh my design hobby. And you know, I'm going to do this room this way and this other room this way. I'm going to do this uh this theme on this one. And that's cool. Fine, guys. If if that's really what you like to do, but that is a hobby. That is not the business. Okay? That can be part of it if you want to, but it is not part of the business. And the business is the thing that makes you money, by the way. Okay? I used to do some beautiful houses and then finally I decided I wanted to actually make money doing this and you can probably find pictures out there of some of the first houses I did. So here's what the HGTV dilemma is and we we alluded to it earlier but let me just say it outright. We have this scale of livability and the range of comps is what you're trying to get the house in. And you're doing construction comps. You're looking at the houses that sold and you're looking at what shape they're in on the floors. Is it LVP or hardwoods? The paint, is it one color? Like some people in class C houses will paint the walls and the trim the same color so that way they come in and spray and get it out. Or is it a two-color system? Is the trim like builder grade or is is it upgraded? You know, is it like the cheap stuff that you can get with six panel doors that are holo core or is it the nicer like solid doors with um you know a nicer like craftsman trim style? Is it um are the fixtures like the the plumbing the faucets and the tub faucets and the light fixtures? The cabinet poles, the cabinet hinges, the door knobs, the door hinges. Are they upgraded? Are they like expensive and heavy feeling or are they kind of light and chinzy? Are they chrome or are they like black matte? What about the What about the cabinets? Are they the cheapest? Are they just like painted cabinets in place? Are they the cheapest offtheshelf at Home Depot? You know, the ones that have like the old style on them or are they the shaker style that are nice? Are they even further than that where they're like inlaid and soft clothes and e are they European style? Okay. Uh countertops, are they for mica? Are they butcher block? Are they hard tops like granite or quartz? Are they something else? Don't buy that house. Uh okay. What about tubs, showers? Are they just inserts? Are they refinished old tubs and showers? Are they tile? Are they tile with an accent? Are they tile with an accent and a glass shower door? Okay. What about the appliances? Are they older? Are they uh white or black? Or are they stainless steel? Or are they black stainless steel? Or are they whatever else is new and expensive when you're watching this video? What about the siding? Is it original? Is it vinyl? Is it fiber cement? That's like the hardy board. Vinyl is like the, you know, stuff you see on all the the basic houses. All right, those are the main design things. All right, so I'm looking at all of the houses that have sold in the neighborhood, and I'm picking the baseline, like the lowest denominator of uh the finishes that they put in this house. A lot of you are going to get concerned that you're like cutting corners or something like that. For one, cutting corners is like saying that you're doing a certain thing and then uh not doing it and hiding the fact that you didn't do it. That that's what cutting corners is. Cutting corners is not strategically saying, uh yeah, I'm not going to replace those cabinets. I'm just going to paint those crappy ones that are there. Uh you're not hiding anything. Like it's obvious that that's what happened. you're uh being smart about the money that's spent because money spent on anything other than what gets you a good return is silliness. What What are we doing here? It's not a hobby, guys. It's a business. Okay, but there is a way that we're going to upgrade. So, the baseline gets us into the range of comps at the lowest level. Now, we are going to push further in to the range of comps, maybe to the top level, but we're going to do it with the minimal money possible. And we're going to use a method called the big three, which is basically more psychological than physical. I guess it's physical, but you'll see what I'm saying. Now, this is my belief based upon experience is that people decide whether they're going to buy the house or not within seconds, milliseconds of showing up to that house. Okay? And if they have made the decision that they're not going to buy that house, that they don't like it, there is not anything. You could put a a threestory high waterfall in the middle of the living room. If they've already decided they're not going to buy it, it ain't going to sell them. By the way, I've done a two-story waterfall inside of a house. What an idiot. It looked sweet, though. By the way, it's not as good as you think. Uh, it was really difficult to build and basically it was impossible to keep the water on the wall. So when we turn it on, it just kind of spray, you know, just like some some uh specks of water would always be shooting off of the wall into the into the room. So then, you know, uh the first thought was, oh, I'm going to put some laundry detergent in it so that way it sticks to the wall better. Didn't work, but it made then the water slick that hit the ground. And then the next move was, okay, well, there must be like on the tiles, you know, little nubs that are making the water shoot off. So, we uh we had to like angle grind, you know, grind the stuff off. So, that's like a a um a tool that you plug in. So, it's electrical, but the thing is you couldn't do it with the water off because then you didn't know where the nubs were. So, you had to do it with the water on. And so basically we were getting shocked the whole time we were trying to get these nubs off. Didn't work any of it by the way. It made it better, but it wasn't perfect. So don't put in a twotory waterfall. You probably already knew that. Okay. So you can't sell a person who is unsold from the start. And the vice versa also works that a person is going to make a buying decision very quickly. And you are going to then spend the rest of the house, you know, thinking about them doing a walkthrough on the house. They they pull up to the house and they see this house and they love it. Oh my gosh, that's beautiful. It's got that that quintessential look that I'm going for. And then they walk through the front door and they're like, "Oh geez, the kitchen that I hopefully can see from the front door and you know this open layout. I love it. I love it. I love it." Now, the rest of the walkth through is not about wowing them anymore. It is about not unselling them. Okay? That means that if I have a bathroom that's in the back half of the house, it is going to be renovated in a much different way than if I had a bathroom that was right upon walking in the front door. If I walk in the front door and I can see a bathroom, I'm going to give that a different treatment than the one in the back half of the house because the first few things they see, the big three are the things that sell them on the house. Okay, I'm always going to do some kind of curb appeal. And this goes beyond just landscaping. This does not mean I'm going to spend a bunch of money on landscaping. I'm going to be smart about my landscaping. I I mean, I put a budget of like 500 bucks for landscaping. You just got to tidy it up. But then I'm going to have this curb appeal line item that is usually me doing something special. This is where you can put your design hat on. And I'm going to do like maybe put up some wood shutters. Maybe I'm going to po or I'm going to wrap a post in wood to uh you know give it that look. I'm going to do uh a couple things on the front of the house that make it really nice. Build an awning. Maybe something. And I put like a $1,500 budget here to to give it this curb appeal because I really want people I really want to create the filter in which they see the rest of the house. So think mailbox, house numbers, entry door, garage door, entry side windows. Guys, uh there was one house that I did where you pulled up and you pulled up to the side of the house, right? And not the front of the house. So, I didn't spend any time worrying about the front of the house because the first thing they were going to see was the side of the house. So, I had like shutters on the side of this house and nice landscaping and uh you know, I think we even did new siding just on that side of the house. Now, this is where you guys might start thinking, "Oh, corner cutter. Uh you only did new siding and windows on the front of the house, or in this case, the side of the house where they're going to see." Yeah, absolutely. Go look at some new build houses out there and you'll notice that uh some of them will have like hardy siding, like really expensive nice siding on the front and then the sides will be like vinyl sighting. They do it too guys. There's two pieces of every job. There is the utility and then there's the cosmetic. For instance, like a roof, okay? Uh there might be a roof that's 15 years old, but it's still doing its job of keeping water out of the house. So, utility good. And so, I'll send people up to softwash the roof to make it look cleaner. I've even dabbled with painting a roof, which uh that one didn't stick. But the point is, if it works, if it stops water from coming in, the utility is good. So, the rest is about is it ugly or not? They'll get worked up. Okay, that's uh curb appeal. Okay. Uh and then what do they see upon opening the door? Hopefully they can see a kitchen and you can put a little bit more into the kitchen. Uh I I really like them to have a view of the kitchen. Uh or, you know, maybe it's maybe the feature is simply LVP floors that run nicely. You know, you're probably going to put in floors anyway, but it doesn't have to be a lot. We don't have to get crazy here. Most of it is in that curb appeal section. But but anyway, on those three items, you're going to go a little bit above and beyond the baseline is the point here. That's the scope of work, guys. You got safety and liability, then bleeding, which usually causes the safety and liability issues in the first place. You got the baseline, and you have the big three. Let's move on to the seven different ways to flip a house. And uh we're going to go through all of them and I'm going to tell you really what we're focused on in the solo house flipper model. And uh that was uncomfortable. The thing that you got to remember is the scale of livability, the livability index that we talked about earlier. Okay? So let me remind you. We got in any given neighborhood, there's houses that sell. Over here, I'm going to be backwards on my on my hand, but over on the right hand side, there's a cluster of houses that sell. Right around the center, there's another cluster. And all the way over on the left, there's another cluster. This cluster on the left where houses sell for, let's say, in a given neighborhood, $50 or $60,000. Well, those are your bombed out houses. Those are the ones that need to come down to the studs. And then on a one in the middle, those are what we call barely bankable houses. These are ones that are outdated but livable. Like the mechanics are in a good situation, meaning the mechanical, electrical, plumbing, probably not very many structural issues. These are called barely bankable because a bank would give you money because they are on the right hand side of the threshold of livability. They are livable houses. Okay. And then the far right, those are your range of comps. These are the prices of the houses that are that you're trying to sell. You know that you flip a house, you're trying to sell them for this range of comps. Let's say in this neighborhood it's, you know, whatever 330 to 360 and the barely bankables are, you know, just under 200 grand. All right, that's the scale of livability. And what you're doing as a flipper is basically you are in most of these seven strategies is you're moving a house's condition from the leftand side to the right hand side. Therefore forcing appreciation through construction making it worth more money. But there are seven types of flips and it's mostly about where you start and where you end on that scale. Let's start with the cosmetic flip. This is also known as the lipstick on a pig. And basically uh the good thing here is it's on the right hand side of the line of livability, the threshold of livability. So a bank will give you the loan. This is like what you see a lot of times on HGTV. This is an outdated house with good utilities, good mechanics, and you are taking a house from barely bankable, and you're moving it to the range of comps. That simple. Okay? You're going to buy the house for, let's say, 180, 200, put like $30,000 into it. We're going to get to our scope of work budget calculator here in a little bit. And then you're going to sell it for 300, 350, uh, whatever the range of comps in is in that neighborhood. Okay, that is a cosmetic flip and the, you know, usually it's like 15 bucks a square foot for renovations. That's what people are going to tell you that use the price per square foot model. Uh, we don't and we're going to get into that. There's a good reason we don't, but uh to give you an idea. So thousand foot house 15 uh 15,000 probably more than that more like 20 bucks a square foot. Okay. And next we have a gut flip. These are the easiest to understand. Uh the gut flip is you move a house from bombed out all the way to the range of comps. Gut means that like literally you take all the drywall off and in a gut you got to redo the mechanical, electrical, plumbing. Uh there's the whole concept of the quick six, which we're going to get into, which is mechanical, electrical, plumbing, structural, roofing, sighting, and windows. You're going to have to redo basically all of that in a gut flip, moving from bombed out to the range of comps. Next is what we would call a full renovation. Okay, so this is where I introduce one more one more range of houses and it is just to the left hand side of the line of livability, the threshold of livability. It is called the slum lord range. And I call it the slum lord because these houses should not be livable, but the slum lord lets people live there. All right. It's got safety and liability issues. You know, some of the quick six need a little bit of work to be safe and but the slum lord doesn't do anything about those. So, it's not really a livable house, but people are living in it. That is generally a slum lord house just to the left of the threshold of livability. So, a full renovation is where you buy a slum lord house and you move it to the range of comps. All right. Uh, we're going to get into the scope of work stuff. So, let's just move on to what I call a landlord flip, uh, or a safety and liability flip, where you move from slumlord status only to the barely bankable status. This is what you would do on a rental. Usually, you're not going to flip a house this way. You would flip it to rent. Next, you have what I call the builder's flip. So, we're adding another space here. All the way to the left hand side of the scale of livability. Before bombed out, you have just raw land. Nothing is built there. You have to build from scratch. Now, the builder's flip could of course be a brand new build from ground up. Or what I really mean by it is doing an addition on a house. So, you have the house and then you're going to add whatever a 500 foot addition or like back in Colorado, we used to tear the roof off, build a second story. That's not what we're teaching here, but that is what I consider a builder's flip. Now, a builder's flip usually happens in conjunction with one of these other types of flips. So, the house that's existing, let's say it's 1,500 ft², you might apply a full renovation flip to the house that's existing, plus a builder's flip, plus adding, you know, a 5 to,000 foot addition off the back. Next, you have what I call a gray collar flip. But before we get into that, I want to say a couple things. First, I introduced the full renovation and the slum lord bank of houses. These are kind of the biggest issues that happen on any renovation. And and this is really what catches people, especially new people who just can't see around those corners yet. Okay, you think you got the full renovation where you're buying a slum lord house, so you buy it at the price tag of a slum lord house. Remember in the in this neighborhood you had uh barely bankable houses are selling for like 180 200. So the slumlord house might be selling for like let's say 80 to 120 whereas the bombed houses were like 50 to 60 grand. Okay. So you're buying a house thinking you're going to do a full renovation. You're going to buy it for around 100 grand. Put like a $65,000 into it and go sell it for the range of comps prices of 300. But you get in there and the issues are worse than you thought. The mechanical, electrical, plumbing needs some more work and uh you end up having to tear off some drywall and then you end up having to tear off all the drywall. And this is where you have the issue known as the mirage where you bought it for 100 to 120 which was the slum lord pricing but you have to take it to the left on the index down to bombed out by gutting it. And now you have to do extra work. You have to now do the demo. You have to do the drywall repairs. Usually once you take drywall off there are grandfathering rules that get applied to you like okay well now that the wall is exposed there's certain things that you need to bring up to code. See the way the grandfathering generally works is if something was built to code at the time it was built they will grandfather it into the newly adopted codes. However, if you expose it and start messing with it then you're going to have to bring it up to current codes. So, when you have to gut a house, you get exposed to a lot more construction. That's why uh a gut costs more than just the drywall that you have to demo and put back up. Insulation is like a for sure. Uh the those houses almost always have insufficient insulation in the walls and the ceilings. So, you have to redo that. That's a given. That's why once we get into flipper rhythm, uh you'll see that we automatically add that stuff. And that's how the mirage happens. Happens to a lot of people. the the mirage happens in more than just you buying the wrong way because you see if you had known that you would have bought it at 50 or 60. So it's not bad to buy this house where you have to end up gutting it. It's bad to buy it at the slumlord price when you have to take it all the way back on the scale to the bombed out. You should have bought it at that price. That's the point here. You should have bought it at that price minus the cost of demo. That's problem number one. And problem number two is the HGTV dilemma. All right, on the right hand side of the scale of livability is speculation. Moving past the range of comps, I know we've talked about this already, but moving past the range of comps, trying to sell a house for more than any other house ever sold. That's called speculating. You're in no man's land and ain't going to happen for you guys. Speculation, gentrification, all the same stuff. See, this works on HGTV because you know those guys, they're not making their money from flipping houses and like maybe they do sell the house for more than anything else is sold because it's an HGTV show. Like do you think that a realtor who's listing that house isn't going to say this house was flipped on HGTV. It's freaking awesome. And so you might want to go buy that house and it may give it some extra value. You're thinking, "Oh well, if it was on an HGTV, I'm sure they did stuff right." Uh, and like truly they don't need to make their money off of the house. They're making their money because you're watching the dang show. Okay, so that's the HGT HGTV dilemma, trying to over renovate a house. And then there's the host that I call it, uh, which is basically choosing the jobs that you're going to do, the finishes that you're going to do based on this filter of, well, if I were living here, I would want X, Y, and Z. Well, you're not living there. like these are not the houses that you're going to live in. Okay? Don't get in that mindset. It's the baseline. What happened in the neighborhood? That's what you want to do in your house. And uh then there's one more which is to give a mouse a cookie. The to give a mouse a cookie dilemma problem. I read my kids uh bedtime stories. One of them that's popular in my house is to give a mouse a cookie. And it basically goes that this mouse wants a cookie and they give him a cookie. And when he has the cookie, he needs some milk to go with it. And after he's had the milk, he needs like a towel to wipe his mouth. And after he's had the towel, it reminds him of the blah blah blah blah blah. Okay, this happens in renovations all the time that you decide that you're going to put in new LVP floors. You put in the LVP floors next to the older trim. The trim looks bad. So, you're like, "Well, I'm going to paint the trim." You paint the trim, now the wall looks bad. You paint the wall, now the cabinet that's next to that freshly painted wall looks a little bit old. And then the countertop and the backsplash. You You get it? Give a mouse a cookie. Generally, you'd be doing all those things anyway. It this usually applies to more one-off things like the exterior. You do some landscaping, then all of a sudden you see some other things. You get the point. You have to set your scope at the beginning and prevent yourself from doing this. It takes willpower. Remember, core value number four, the watcher. You got to watch yourself because you are your biggest enemy. Final two types of flips is the gray collar flip and the white collar flip. Gray collar flip is a sales flip. There's basically two different things here. Whole tailing and whole sailing. We talked earlier about what wholesaling is. Basically, I get a contractor. I get a contract with the seller for $100,000. I go over to Harry, a investor with cash, and I say, "Hey, Harry, I got this house for $110,000." He says, "Okay, I'll take it." He gets assigned your place in the contractor in the contract with the seller. Sorry, we're at like five or six hours of filming right now. My brain's starting to dysfunction. Now, he is in your spot. At closing, you get the $10,000. That's a gray collar flip. You did not do anything to that house to make it more valuable. You didn't do any work. You did no forced appreciation. You simply made money by arbitrage. Another version of that is wholesaling. And the difference here, I like wholesaling a lot better, by the way, but wholesaling is when you would go to the seller and you would say, "I'll buy this house for $100,000." And then you would actually buy the house for $100,000 with money that you either borrowed or your own money. And then you would go and sell it to Harry. So, you've actually bought and sold the property. You've taken possession of the house. On a whole, there might be like a little bit of money you'd spend. You might take a little bit of the scary out of the house. You might clean it up. You might do, you know, some handyman repairs, spend like under $5,000 on it. That's a wholesale. And finally, there's the white collar flip, which we talked about earlier when we were talking about debt on arrival type of houses. And this is basically buying a house. You have to have a specific set of skills here, but you buy a house that has zoning or easement issues. Maybe you want to split the lot that you buy a house that's got a second lot attached to it and you split the lot into a separate address and then you sell the lot, keep the house or sell them both separately. Uh there's a property management play. Let's say you buy a house that is rented for a,000 bucks a month and then you buy it, you get your property manager to go in there or you do this. uh you get the rents increased to 1,300 a month based on income. That house is more valuable to an investor. They'll pay more money for it. That is the property management play. Those are the white collar types of flips. Not what we're teaching here. I just want you to understand the seven different types main types of flips before we get into building a true scope of work using the flip rhythm algorithm for scope of work and budgets. Now you understand the broad view of a scope of work and you also understand the different flip types. Now what we do is force appreciation through construction mainly. So cosmetic, a full renovation and a gut is really where we're going to be spending our time. In the future, you'll get into some landlord flips on properties that you already own or if you're going straight to a rental, but that's not really where you start. you're going to start with some flips. Therefore, let's really focus on those three, maybe a little bit of landlord flip. Now, you need to be able to put together a budget quickly because when you go to buy a house, generally you're competing against a lot of people and you don't have time to pull contractors in to walk through that house with you to give you a full bid. And truly, you can't trust a contractor's bid anyway because they don't have the same vision as you. A lot of mistakes are made because the real estate agent relies on the contractor to put together the scope of work, like whatever the house needs. And that is not how it works. You are the leader of your organization. You need to put together the scope of work and tell them what to bid on. Otherwise, trouble happens. But you need to be able to do it quickly and accurately. Now, there's really three different levels of putting together a scope of work. There's the deal analysis. That's when you're trying to decide, should I buy this house or not and for what price? And then there is the underwriting process. This is where you would fine-tune that scope of work. Make sure you didn't leave anything off. Basically, the deal analysis, you're going under contract at a price based upon the rehab. And then in the underwriting, you're saying, "I confirm that. I'm good with that." And now, you rarely want to go back on what your original price was. This isn't like a normal step in the process. You're just confirming because there are times that, you know, because stepping out of a deal once you've made it hurts your reputation, your relationship capital in the world out there, whether you're going through a wholesaler or even if you're going through direct to seller and you want to back out of a deal, it still hurts. I mean, you you don't want to do that. If anything, it's, you know, going back to the shopping cart rule, which involves being a good person. When you get a house under contract direct to seller and you back out, uh, you're really screwing them over. And you only want to do that in a really bad scenario. You find out later that there's a humongous mold issue or uh, you know, termite issue that's going to cost $20,000 extra. that that's those are the things that you're going to find in underwriting. And then there is the project management. Now you turn your scope of work into something that can be filled by subs and managed. What we're talking about right now is the deal analysis. And this is that whole app that I built, the flipper rhythm as I'm calling it at this point, which basically is going to break down the jobs that you need and the prices for those jobs based on the flip type. Now, I want to get some first principles, some definitions out of the way here. There are jobs, as I refer to throughout this whole course and throughout all of my teachings. Here's the hierarchy. There's a project that's 123 Main Street. And inside of that project are jobs like put in LVP floors, interior paint. And that's what I mean when I say jobs. Most jobs have three options. you know, when you walk through a house, you have you can keep that thing as is, you can repair it, or you can replace it. That's built into this system as well. On this app, every job and price begins at a standard price that I've preset for you. There are sliders on each one to bring the severity up or down. Example might be for the cabinets in the kitchen. It's a oversized kitchen and then I want to increase the severity just a little bit because obviously in a bigger than normalsized kitchen I'm going to spend a little bit more money. This is one other thing to understand as you're listening to that. Cabinets in the kitchen for instance are a unit price. And you could sit there and think that uh well, isn't it like done by the box? Like isn't each thing like 200 bucks or 300 bucks so I could add it in there, you know, very detailed? That's not what this is about. And in fact, I really never get to that type of detail here because managing a construction project isn't as clean as it seems. I remember in my construction company, I hired uh I hired a guy to come work with me and we were going to go bid a job together. I was going to teach him how to bid a job. And you know, I go out to the job. I'm looking at all the things that need done. And then we go back to my office and we're going to put together the scope of work. And I'm just like naming off the jobs that need done. You know, we need to kitchen cabinets. We need to put in the floors here. and he's like, "Okay, where do I find the price sheet?" And I'm like, "Uh, well, let's just call the the cabinets this and and we'll call the the flooring this price." Of course, we've gotten more detailed since then, but the reason for that is that I know that the contractors that we're going to sub to, they don't have standardized pricing. They end up paying guys by the day. You know, the guys that work for them, they pay them by the day. Their price for that specific job is the perception that they have of that job of how difficult or complex it's going to be. And so the pricing is about getting in the ballpark, you know, getting close enough to where it makes sense. And then the pricing, the plane gets landed by your project management skills, which is what we're going to talk about in the next section, the work itself. And so it's okay that it's not a defined thing because if you think about it, if it were so defined, how long would it take to do a bid? You know, I'm talking about going, if you go back to the deal section, I'm talking about literally I'm putting together this scope of work as I'm walking the house with a potential seller so I can hand it to them at the end and say, "This is what I can pay for your house." So, I can't go I'm not going through there with a measuring tape because I'm walking this house with them and I'm trying to work on building the relationship capital so that way I can get to the root cause of why they want to sell. If I'm thinking about making measurements and uh putting together these calculations, how could I possibly do that? Well, and again, even if I did, would it matter? Because that's not how it works when you start contracting the projects. And I'm saying this to reiterate over and over that guys, I know you're type A's out there. I know that you're the achiever type and you want to have this thing perfect, but don't let that be an obstacle for you getting going. That is the key here. Just get going. Get a price and let's go with it. Severity calculator. If it's like obviously much different than the norm, but if it's around the ballpark of the norm, let's go, baby. Okay. There are uh also at the bottom of this app, you're going to find actual house information like the square footage because this is based on square footage or unit pricing and then also uh bathrooms and half baths. A half bath is a bathroom that doesn't have a shower or tub and uh because that is figured into the calculations here, but I've tried to make it as simple and quick as possible. So, there's four banks of jobs on every house renovation. There's the quick six, which this is what defines the flip type. This is really the the thing that sets the tone for everything else. There are the auto ads. These I add to every project I've ever done. They automatically get added. Name pretty much says it. And then there's the replacements. This is the the design on every project. And we kind of went through that when we were talking about the scope of work. You know, these are the baseline items basically. And then there are the extras. These are the most common oneoffs that you'll have on any project. And for each one of the flip types on the extras, I have it defaulted to zero because I don't want to add those unless I have to. HGTV dilemma. Give a mouse a cookie. Remember these things. You don't want to go too far. You want to do what is necessary to get yourself to the renovation level, the finish level of the competing properties, the comparable properties. And here's the enemy, okay? There are so many people out there that teach these price per square foot models on how you price a rehab. If it's a cosmetic type of rehab, which we've already defined, it's, you know, whatever 20 bucks a foot, 20 bucks a square foot. So, you know, 1,500 square foot house, that's going to be 30 grand for a cosmetic renovation. And a full renovation is going to be like 35 to $40 a square foot. And a full gut is going to be 80 or 85 bucks a foot. You know, I've I've heard those out there. But there's a humongous problem with that. And I'm about to show you the the quick six. These are the first things that I look at. And and this is in correlation, by the way, with like the safety and liability and the bleeding section when I was telling you about the broad picture of the scope of work. That's that's pretty much what the quick six is, but it's a little bit more honed in. And I leave some of the things out because we're about speed here. Okay? is I'm just trying to reiterate that the scope of work, safety and liability, bleeding, baseline, and big three. That's the broad view of all of this. Everything fits within that view. And the deal analysis, quick budget, and scope of work with the quick six, the auto ads, the replacements, and the extras. This is how to quickly within that world put together a budget. Okay, a quick six is what figures whether you're going to have a cosmetic full renovation gut or landlord flip. And these are the first things that I look for when I'm walking through a property, walking up to a property. I'm looking for these things. Or if I'm looking at a property on Google Street View, I'm looking to see if I can see signs of these quick six items because I can apply that to the rest of the house. Here they are. Mechanical, which is HVAC, electric, plumbing, structural, roofing, sighting, and windows. Those are the things I'm looking for. And this is built into the calculator here, the app. But if I have a if I have to do nothing to those items, if I can see that everything is working, uh there's no the HVAC's working, the electrical is in fine order, plumbing's in fine order because somebody's living there, it's all working. If there's no obvious signs of structural damage, which we talked about earlier, if there is no leaks in the roof, if siding and windows have no obvious leaks or problems, then I know I have a cosmetic flip on my hands. If I have a little bit of work to do with some of those, maybe some repairs for um let's say there's some outlets not working or one of the bathrooms is down or um maybe I can see some leaking on the roof. Well, then I probably have a full renovation on my hands. Now, if I walk in and I see that all of that stuff needs replaced, I have a gut on my hands. And now, this is where things get a little tricky is that if I have, let's say everything is in pretty good shape, but I have electrical that needs replaced because there's an old fuse panel, there's, you know, the electrical prongs in the wall are twoprong instead of three. There's uh obvious like DIY work that is done, knob and tube wiring throughout the house and I know that I'm going to have to replace that. Well, you're probably not going to get away with rewiring a house without gutting it or if there's some structural issues to the wood, I'm going to end up having to take the drywall down. So, remember the Mirage, even if it looks like an almost livable house, but those things have to happen. That is going to require me to take the drywall off. And now I am absolutely in gut territory because remember the grandfathering rules. You open that stuff up and you start messing with it, then you're probably going to have to do more. Now this and that is where so many people get in trouble. I know I've said this. I know I'm reiterating it, but guys, contractors are trained to do all of those things. That's what they're going to be wanting to do. And they're going to automatically start pulling that stuff off. I have been in so many situations. actually just one a couple months ago where I had this whole plan on how I was going to be able to not take the drywall off because I knew if I took the drywall off it was going to end up adding $50,000 to the job because I was going to have to then rewire everything. I was going to have to redo the plumbing. I was going to have to reinsulate everything. It was going to open up this whole can of worms. And I hear you out there that you're saying, "Oh, well, you know, you should have probably done those things anyway." You know who's commenting on that is uh people who never succeeded as flippers. They are new builder ititis contractors out there that think everything needs to be absolutely fresh and brand new and if it's not it's wrong. That's not true. The city code enforcement would say that's okay. And I think that should be my barometer. I think that codes enforcement, people who enforce the codes inside of the code book are the ones that I should be listening to, not these people that probably failed as flippers. But anyway, hired this contractor to come in and do the work. And, you know, I probably bunched up too many jobs for them to do, which we're going to talk about what I call subjunking in a little while, but bunch up too many jobs for them to do. And then I went to the job site one day and found out that uh they tore off the drywall and I was like, "What are you doing?" And you know, there is all this story, but the really the story came down to one of their guys tore it off thinking that's what it was. It was a miscommunication. Happens all the time in construction. And it literally cost me 50 grand. Came in I had to uh I had already passed mechanical, electrical, plumbing inspections. And then I had to recall them in and they made me rewire everything, redo all the plumbing, brand new. I mean, it was exactly what I thought about 50 grand. Had to redo all the insulation. And that's why you have to be very careful when you buy these houses that if you have to do some of those things that require the drywall to come off completely, uh, you are in gut land. That is the type of flip it is. even if it looks like a totally working house. If that drywall is coming off, you're on gutland. Okay. So, that's why the quick six is so important because as soon as I add those things in, you can uh you can see if you're using the calculator, if you click on the gut flip, it's going to automatically add all of those things, including drywall, including insulation, and including demo because, well, you're going to have to do all those things if you have a gut flip on your hands. And as soon as I get to that point, I automatically add around 70 grand to the project. And you see why the price per square foot model uh doesn't play out so well is because well what if I had a full renovation which I call a repair of each one of those items but then I have one that I have to redo or maybe two that totally throws off my price per square foot model. So, I want to be not too detailed where it takes too much time, but detailed enough to where I can put in those one-offs. And the biggest problem that happens to me on these projects, it's happened so many times to me, is that I basically walk through these jobs as I'm about to buy a house, and I'm I'm adding it up as I go. I'm like, "Okay, mechanical, I'm not going to have to do anything. Uh, electrical, I'm not going to have to do anything. Pl I'm good there. I'm good there. Oh, I'm going to have to add 1,000 bucks here." And I'm basically going through the list as I walk through and then sometimes I'll buy a house and then I'll be like, "Oh, you know what? I forgot to put apply I forgot to go through appliances on my list." So that's, you know, three grand. I forgot uh that I was going to have to do, you know, whatever it is. What this allows you to do is make sure that all the chips are staying in front of you. And that's uh a um core practice of mine is just to make sure all the chips stay in front of me. I don't want to be a snow plow. You know, the snow plow drives through the chips and they're all shooting off to the side. I want to keep them all in front of me. Now, a couple more notes as it relates to the quick six in conjunction with the flip types. On a gut flip, I'm automatically adding replacements for every one of the items. It might be a situation where you buy it and one of them is good or maybe you just need to do repairs on it. Maybe maybe you have to gut the interior, but the roof was still in working order. And you then just click down, change that from replacement to repair. I always put uh a little bit of a budget on there for some repairs because you'll find like little leaks and uh you want to make sure that you keep a budget for that. And then on a full renovation, I put repairs on every one of the items just so I have some budget for it. I even put a repair budget for drywall, but I do not put insulation and I put a small budget for demo because I'm most likely going to have to tear stuff out when we get further into the replacements. You'll see that well, we do mostly replacements on a on a full renovation. Now, this is an important note on the full renovation on the quick six is that you'll notice it automatically adds a small repair budget for mechanical electrical plumbing and even these other things. And even if I think that I don't need the budget, I will probably leave it in there anyway just for some some extra room because let's say that I get through the project and I didn't need to do, you know, four of the quick six, but for plumbing I had to do a full redo, 9,000 bucks or something like that. Now I have that extra budget inside the quick six. So I I definitely keep those budgets in there for a full renovation once again, even if I don't think that I need to do them. And then on a cosmetic, some of them are added. Most of them are just asis. We're not going to do anything. And the ones that are added, I have them all the way down on the severity calculator. So it leaves a little bit of budget for the same reasons. On a uh landlord flip, you're going to have the same as like a full renovation. You're going to have a repair budget for all of the quick six items because if you remember the landlord flip is all about doing the safety and liability and bleeding items. So, you have a nice stable rental, but you're not really worried about cosmetics here. That's the quick six. And if you get that right, you are going to mitigate a lot of the issues. A lot of the fear goes away. If you have these items and you've prepared for them, you're in a really good situation. And honestly, guys, I know you think of like a gut flip and it seems risky. We've talked about how like that gets you better deals and all that kind of stuff. And there's a part of me that is like, well, a gut flip is actually maybe the least risky because I've already decided I have to do everything and I've budgeted for it. So, what else could happen? Whereas with a full renovation, for instance, it's all about the mirage. Like, what if I bought at a full renovation price, but it actually ended up being a gut? That's what gets me in trouble. Or a cosmetic that ends up moving down the scale of livability. That's those are the things that really catch you. A full renovation, you have or excuse me, a full gut, you have different issues because we're going to have to face contractors and and managing them appropriately, but you're going to have to do that anyway. That said, I really do like a full gut. They do take longer though. uh you are going to have to go through codes enforcement and all that kind of stuff which of course we're going to talk about. That's the quick six. It really determines what type of flip it is. Now we have the auto ads. These are things that I basically do on every project. Flooring, interior paint, hardware and fixtures. This is like cabinet poles, cabinet hinges, door knobs, door hinges, light fixtures, plumbing fixtures. I think that when people go to buy a house, there is a certain feeling of, oh, you know, that feels right. That feels like the house that I'm going to live in. And I think that that is some sort of intuition that can be tracked to certain things. I think that feels right is comes down to a few things. one is that cohesive feeling where it is, you know, all the the fixtures match. It's all black matte or it's all satin nickel or stainless steel. And I also think it's not having paint on the hinges or the little things that make the job seem a little crappy. I don't think they can actually put their finger on what it is that makes that feel right. But I think it's those things. So hardware and fixtures I add to every project. I want them all to be congruent throughout the house. And also on LVP floors, I want them to run through every dang room because I think that the difference between having a collection of rooms and having a house is floors that flow between the different rooms. So, it's a big thing for me that I want no transition strips in between bedrooms or, you know, from a hallway to a bedroom. No transition strip. I want the floors to run through hard uh or excuse me, landscaping basic. I put a budget for landscaping on every project. This is not like a it's not a hardcaping like we're going to do stone walls and stuff like that. It's like put some mulch or some rock around to make it seem inviting. We talked in the big three about the curb appeal. This is just part of curb appeal. There's a handyman budget that I add to every single job because uh going back to the intuition thing. Almost every flip is 95% done. And it it's like a a thing that happens that you've been looking at the project the whole time. The contractor's been looking at the project the whole time. And you know it seems done to you because you saw it from 0%. And getting that last 5% done is something that makes all the difference. And it is the hardest thing to get done because you've probably already paid the contractors and and that's not really a mistake. It's really a inability to see around the corners and that that's okay. That like comes after years of of managing these things. And so there's just going to be a little bit that still needs done. It it even happens to me. I I definitely miss, you know, a contractor gets done with their grouping of jobs and I I'm like, "Yeah, that's good." And I pay them and then I realize after everything is done that, ah, shoot, you know what? There's still like, you know, this, that, and the other thing. And uh, so I add a little bit of budget there. Also, usually because I'm doing multiple projects, I'm able to call the contractor that did it to come back. Uh, but I still put the budget on there. Okay. Construction clean. We're always going to have a construction clean to do after a project. Uh, the auto ads, they get added for every single one except for the landlord flip because a landlord flip doesn't really have cosmetics. It's about safety and liability and the bleeding. Now, we have the replacements. This is how most people see projects. And I know that in the scope of work broad picture, we went through these items. And I just want to say a couple things about it. That you certainly want to be in the position where you can repair as opposed to replace. This is all about the construction comps that you're doing in the neighborhood. If you can repair, repair. Otherwise, replace. The presets that I have on here are for a cosmetic. They're going to be mostly set at repair except for kitchen countertops, backsplash, and appliances because there's not really an option to repair. You either replace or keep it as is. on a renovation. We have most of them set to repair or excuse me, most of them set to replace except for gutters and trim and doors are going to be repairs. And then the gut, we're basically replacing everything cuz in a gut, you're going to take all that stuff out of there. And then the extras, these are framing modifications, which we try to avoid because of the whole grandfathering and opening up the can of worms. You just once you build a new wall, that wall is going to need electrical to go through it, maybe plumbing. Uh it might change the mechanical throughout the property. it. Uh if you're removing walls, we get into structural things and you know, maybe you have to move wires to to open up a wall and you're subjecting yourself to scrutiny that you probably don't want. And again, it's not scrutiny like you're trying to hide something and cut corners. It's like that stuff was working well because when it was built, it was built correctly. It's fine. But if you start messing with things, then you need to bring them all up to code that is current. And just because it was there and it's old does not mean it's wrong. In fact, in a lot of municipalities, knob and tube wiring that freaks people out. That scares scares them to death. Everybody thinks, "Oh, knob and tube, I'm screwed." Well, it is actually fine to leave knob and tube in there. It's when I start trying to connect to it that uh I get in where I have to tear it all out and restart. I mean, literally, not me saying it. Codes enforcement. Oh, this is fine. You didn't touch it. Asbestous freaks everybody out, but it is standard to not tear it off. In fact, tearing it off and getting rid of it is more dangerous than just covering it. That was the rule. When I did these huge projects where we would take the roof off, build a second story. The rule was in Denver, Colorado that you need to put plywood over it. You need to cover it. You need to hide it. Okay? That sounds like cutting corners things. It is the rules. Okay? So, we're not doing anything shady here. I'm just saying if you open up a can of worms, you're going to get what you deserve. And I see a lot of this happen to investors. And we used to do work for just investors. And they would always be asking for these things and I'm like, "No, no, no, no, no, no. We do not want to do that. And just one more note on this. Back in Denver when we were doing this stuff, I would see builders who, you know, this was like when I was newer to the game, so I didn't quite understand how it all worked. I would see builders who would like tear down a house that was there and they would leave like one wall. And I'm like, what are you doing? You're building a new house. Why would you leave one wall sitting there? And it's because that one wall made the difference on whether it was an existing structure or a new structure. a new structure had all kinds of different codes that they had to deal with, whereas the an existing structure could grandfather some things in, use an older set of codes. And the point is that that is like a huge part of the game is navigating through the codes correctly. And contractors don't care about that. Why would they? And in fact, if they tore down that wall, they get more work. Okay? And I'm not saying that contractors are like nefarious like that. I'm saying that most of the habits that you have, you've uh learned for some sort of reason. Uh in a lot of cases, pain has caused you to take on these habits. I uh work out every day because the pain of being uh immobile has moved me to those habits. There is no pain that has caused the contractor to not do those things. So, he's going to do those things. That is going to be the natural move. It's you as the leader of your organization that needs to stop those things from happening and understand the consequences. That's why we're here. That's why you're here. Thanks. framing modifications, decks, fences, garage doors, shower doors, tree removal, cleanouts. By a hoarder's house, you're going to have a cleanout. I I bought a hoarder's house that uh you know, there's two types of hoarders. There's the hoarders that have uh old food and hoarders that just collect everything. This was fortunately for me not a food hoarder, so it wasn't that disgusting. But walking through this house, I mean, there was everything in it. And uh I kid you not, I found peeppholes throughout the house and like weird letters between family members. And uh the oddest thing, dude, is that as I was moving stuff out of there and throwing them in dumpsters, there was a couch underneath all this junk. And I'm like, "Okay, that's cool." And then we're pulling more junk out, pulling more junk out. And then we finally get to the bottom and there's like a pair of slippers at the bottom of the couch. Like somebody just sat down in the couch and then just somebody threw some clothes on there and somebody threw some more clothes. Maybe the guy I mean I it looked like somebody had just been sitting there. Also inside of the closet I found 500 bucks or might have been more than 500 bucks. I don't remember how much cash it was but that was sweet. Only score I've ever had like that. Those are the extras. Uh one more drainage. A lot of times if you have bleeding issues, it's going to lead to drainage like we talked about. So I I've left that note on there going to be obvious to you if you need to add drainage. So So that's the flipper. That is how you get a quick budget. This is great for underwriting. I'm serious. These are the tools that I use to go buy houses. And if you break it down to its basics, it really does come out to the price per square foot model. So I'm not saying those guys are liars. I'm just saying that I like some option for some variability if I need it. And you guys, since you're not having blind trust to other people doing it, you're going to hop in there and change things as you need because you are the leader of your organization and you don't have blind trust. Boom. Scale of livability. I put that on there because I love the scale of livability. So, when we change the flip type, it just it changes the scale. Uh there's some advanced metrics in here. Let me explain those because it's an important concept. First is financial contingency, guys. I've been doing this for 15 years. I make mistakes all the time. Okay? It's not going to go away. You can't be perfect here. You have to be prepared to roll with the punches. That's what a great really business owner does is you are going to face so many obstacles. You have to be um mentally resilient and you have to have builtin systems to be able to roll with those punches. So, a financial contingency. Every project I do, I add at least a 10% financial contingency, which means that if I think the project's going to cost 50 grand, I put $5,000 10% or 50 grand aside because I know that things are going to come up. We might open a wall, find something new, I might have put something on the budget where I just didn't quite understand what it was going to take. I didn't think through it enough is usually the case, you know, being uh hasty and I just can't get uh the bid to work. So, I have to pay a little bit extra. That's okay. These are budgets that I'm setting for myself and I'm going to through project management try to hit those, but I'm not going to ask a guy to do a $5,000 job for $3,000. If I missed, I missed. It is what it is. is like I don't want the guy to not get paid. That's a great way to not have contractors want to come work with you again. And I hear a lot of that out there and it it really pisses me off. Like these guys are trying to make a living. Uh you working with them and helping them make a living is what is going to keep them around for a long time. So So don't be that guy. That is not how you make your money in this game by taking food off of other people's plates. You make your money by being smart. That's what we're talking about here. So add a financial contingency. If the deal doesn't work with a financial contingency, it's just a bad deal. You got to get a better deal. And then I do I have uh one that's the juice is what I call it because the way that we're doing this is that this will make your rehab budget that you will then plug into the fliin that we introduced earlier. And remember, in sales, putting down an anchor is a smart move because there is a likelihood that your first offer is not going to be taken. So, if you offer too high at the start, you're in a bad situation. You're now like, you don't have a backup offer. And most deals end up with a back and forth. Therefore, I sometimes put a little juice on the rehab costs so I can start with a lower anchor. It's that simple. And maybe some of you have seen the video I made about wholesaling and how I'm kind of I have like uh mixed feelings about the wholesaling and I've wholesaliled 300 houses. So, I know. Anyway, the one thing that I say in there is that if you are buying a house yourself, there is no such thing as too good of a deal because you're about to take risk. I tell the story about how uh I bought this house uh through a bird dog that we had hired basically like inside of the wholesaling. I hired a guy to go get deals for me. And he um is, you know, we had the training where you take pictures of the whole thing. And anyway, bought this house, seemed like a good deal. get to the house. There are 400 tires in the backyard and it is ridiculously hard and expensive to get rid of those tires. And also the renovation ended up costing me more than I thought. Anyway, all in all, ended up losing money on this like great deal or at least breaking even. Um, and the point is at the beginning it seemed like gosh, I'm getting that house for a steal. No. Uh, I mean lost money or close to it. That and that is the risk you take when you're going to buy a house. So, I think that you can't get too good of a deal when you're buying a house for yourself. When you're wholesaling it, you know, murky territory, guys. I go through that whole thing. Uh, I'm not sure that like the main problem that I had personally with wholesaling with which a lot of people do is that if I'm not having the intent of buying it myself, it puts me out of control of being able to actually get that deal closed and I'm making a promise to these people that, you know, I'm going to buy this house for a hundred grand. I and and they might like have moved out. I've seen situations where they moved out and the wholesaler has to call and say, "Oh, hey, we're not buying it." because they couldn't find somebody to buy it. That's some h tough stuff, guys. Okay. And then there there's the property setup on there, which we talked about. That is the way that you figure out quick pricing. That's the way that you analyze a house. You look at a house and you figure out what you're going to have to do basically and you figure out how much it's going to cost to do. But now you need to transform that budget into a project management tool and system. And that is where the Larasa that's my construction company laassa systems came into play. I needed to, you know, at the time when I had scaled up, we were buying, I mean, so many houses. And so I had built a crew, you know, we had 40, 50 guys that worked on our construction. I mean, like W2 employees. This was before the solo house flipping days. This is probably the reason for the solo house flipping days. But man, people would make so many mistakes. And you know, contractors do this, too. So, this isn't just because of the employees. It just like uh exponentialized the problem, but people would do like crazy things like there would be drywall that got done and then it'd be like, okay, now we got to do electrical. And I'm like, what? Like, you got to tear the drywall off to do electrical, man. Uh people would do, you know, that's an extreme example, but this is moving upstream. you would be downstream and then you'd realize you have to move upstream. And I had to have a way to stop that from happening. So I built these systems for people who didn't understand project management. You know, a lot of these guys were out there and they knew how to do a thing. You know, they might know how to do the things, but they couldn't see the big picture. And that's why I created these phased systems. And I mean, uh, I know they're great because I know a lot of contractors in town who use them now, uh, because it helps put things into perspective. It's six phases. There are blocks inside of the phases. This is how we set up any project from the start. So remember the hierarchy. We have projects. One, two, three, Main Street. Okay, one project, one, two, three Main Street. And then inside of that, we have phases. There are six phases on every project and it is straight up like a Gant chart. There's phase one, you complete phase one and then phase two, you complete phase two, then you move to phase three. There is no overlap between those things. Inside of each one of those phases are blocks. Okay, these are groupings of work. And generally the blocks on the inside are an interior block and an exterior block. Except for phase 4. By the way guys, I know that listening to this is a little bit tough because there's lots of information here. Uh we have an air table database with all this stuff in it. I got sheets. We have this all in the downloads. Just listen to it and then it will help you when you're looking at it. Blocks. There's an interior and an exterior in most of these phases except for phase four which is where most of your replacements are happening. And then there we have broken down the blocks to a kitchen block, a bathroom block, an interior carpentry block, and then an exterior carpentry block. And the point of these blocks is that I can adjust my critical path. In project management, there is the concept of the critical path which is basically the longest route of dependencies for me to get the project done. Dependencies are like paint can't be done before drywall gets done. Paint is dependent upon drywall being done and floors are dependent upon paint being done because you don't want to put floors down and then paint because then you'd have a situation on your hands where you would absolutely have spray on the floors. And throughout these projects, almost always the interior stuff is going to be your critical path. That's certainly going to take the longest. Usually, you don't have a lot to do on exteriors of these houses. And therefore, I can use what I call audibles. And I'm going to get to that in just a second. But inside of these blocks are jobs like flooring, LVP, or interior paint or drywall or electrical rough in or uh mechanical. And those jobs sit inside of the blocks that sit inside of the phases and they never change. So phase one always has the same two blocks in it. It's called tabularasa. That's one block. And the other block inside of phase one is called the grounds. And we're going to get into what each one of those means. And inside of tabularasa the block there are jobs like structural repairs like framing like demo like cleanout. And those jobs are always in phase phase one block tabularasa. See what I'm saying? That's how it always sets up. It's the dummy proof system. In phase three you have drywall floors and paint. But in phase two, you have mechanical, electrical, plumbing. So you cannot be in a situation where you go upstream, where you have to go upstream because you're going to finish phase two before you start phase three. So you can't be in the situation where you put the drywall up before you did something that you needed to do inside of the wall. By the way, tabularasa is a play on the Latin word tabula laza which means a blank slate. And that is the whole idea of this program is that building houses new is really attractive to people because you can be really systematic. It's like, okay, you go and get the land right, but after the land's right, it's the same build every time. You put in footings, you put down a foundation wall, you do the framing, then you put, you know, the siding on, you put the roof on. Now you go and do electrical, plumbing, mechanical, you know, it's same thing every time. You can be totally systematic about it. You can use the same plans, the same people, the same order, the same management system. That's totally attractive. I wanted renovations to be that same way so I could uh systematize these all these guys out there working. And that's what phase one is all about in this program is that the interior block of Tabula is all about getting the demo done, the clean out, do any structural repairs you need to do, get the roofing either repaired or replaced to make sure that you stop all the bleeding. And then the grounds block inside of phase one is all about getting the grounds right, stopping the bleeding. You're trying to make sure that the drainage is right. You're trying to make sure that the water slopes away from the house properly so that way any of the work that you're doing in the upcoming phases doesn't get damaged by this and you are at tabularazza. You have a blank slate. You are ready to treat the rest of the house as if it were a new build. That is the whole concept of this phase system. By the way, I have also built a visual that will be in those downloads uh to where you can see kind of like the steps in a visual per chart type of pattern. So that's phase one. Phase two has the blocks of the gauntlet and the utilities. The gauntlet is mechanical, electrical, plumbing, and insulation if needed. And the reason I call it the gauntlet is because on a gut style flip uh or even a full renovation where you've had to pull permits to do all these extra things you well you've have permits and you have to go through a bunch of codes inspections for mechanical, electrical, plumbing, insulation and you have to get a rough building inspection and uh it's the gauntlet. I mean, on some projects, this takes weeks, months to get through. Uh because, you know, on the some of these old houses, there's lots of different things to deal with. And then the utilities, this is the exterior type of block, is things like underground plumbing in the yard. Uh you know, like your water lines coming into the house, maybe your sewer line going outside of the house. Uh if you have underground electrical or overhead, there's some things that you need to do on the uh in the yard on the land of the house to to get this right. The street cuts, sometimes you have to tap into a city sewer. Okay, those are the two blocks of phase two. Once you get through that, you're going to be through all the inspections. So then it's like when the game starts, you know, blue skies ahead, baby. And so phase three, I call the pregame. That's the interior block. And the exterior block is the replacements, okay? The pregame, that's drywall, paint, floors, basically because after you're done with all of those things, then it's all the install, all the pretty stuff, right? The uh once you have that done, you kind of have a a canvas ready to be painted. It is a note here that there are some municipalities that you guys will be in that do require one more inspection on the drywall. They look at where you put the screws on because that is actually part of the structure. So if you had to do a lot of drywall, make sure your city doesn't have an inspection for that. And then the replacement block on the exterior. This is like if I was doing brand new window and siding, if I was doing brand new set and gutters and all that kind of stuff, I put that in phase three as opposed to the exterior repairs in phase 4. These are different. You know, remember that if you look if you go back to the flipper rhythm, the scope of work, there's repair or replace options. If I'm doing replacements on those items, I'm doing them in phase three because if I don't, things are going to be held up. And usually if I'm doing full replacements, I have different contractors that I'm bringing in than if I'm just doing repairs. Now, phase four is where I get into the good stuff. Kitchen, bathroom. These are the blocks. Kitchen block, bathroom block, interior carpentry, exterior carpentry. And you know, we're going to get into the different contractor types, but most of the time I'll have the same contractor do all that crap. So, I have less moves. But that's like the whole lazy project management moves that I do. I literally call it the lazy project manager because I'm I'm trying to do as many as little moves as possible. That's pretty straight up. Whether you're repairing or replacing, you know, the those blocks are for the kitchen and the bathroom are right there in phase four. The interior carpentry, same thing. And then exterior carpentry. If I'm not doing the replacements in phase three, if I'm not doing brand new siding and windows and such, which I very rarely do, by the way, then I'm doing it in in the exterior block, the exterior repairs. And you know, the reason I set it up like this is because most of the time, once again, you're going to have the same person do those repairs on the exterior as the repairs on the interior and probably the same as the kitchen and the bathroom. Unless you want to get really crazy, then you can split out those blocks, have a different contractor for each one, and you can get wild. Okay, phase five. This is the trim out and the landscaping. Trim out on the interior. That's where you start putting it all together. That's all the hardware and the fixtures that we've talked about before. This is your, if you have pulled permits, you're going to have to do an electrical final, mechanical final, plumbing final. You're going to put in the appliances here. I also usually start out with the exterior paint here in phase five because I want to do that and the landscaping as close to the end as possible because, you know, people are like bringing stuff in and they might nick stuff and I really want that outside to look great and there's nothing that really stops me from doing it that way. You know, there's nothing that gets in the way. And one other note, in this block, I have insulation blown in in the ceiling. Basically, there's two ways to do insulation in the ceiling. One is that you put like the strips of pink stuff that you've probably seen, uh, and you hold them up there and then you put drywall underneath them that holds them into place. Uh or you have drywall done and finished and painted and then you come in with a and blow in loose pink stuff or you know there's other types. It doesn't have to be the pink stuff. That's just the most standard because the drywall is already there to hold it into place and that's way cheaper of a way to do it and the most standard way to do it. So there is the blownin insulation in the ceiling in this phase and block. And then for the landscaping block, this is the landscaping general that we talked about. And then there's like pressure washing if you're going to do that. Uh there's a roof clean. If you have like a mossy roof or a dirty roof, it doesn't mean you need to replace it, guys. There's like on all of the quick six items, there is the utility part of it, the is it working, and then there's the pretty part of it. Does it look good? Okay. So, it's not a bad thing to clean the roof to make it look prettier. It is as long as it's actually working. So, roof clean, uh, concrete general, just in case you need to put some stuff in there. This is where like the extras like fencing would be, uh, tree removal, you know. And then phase six is just one block and it's the finale. This is the construction cleanout, cleanup, and the handyman punch list that we talked about. Now, I want to talk about audibles. This whole system is set up to be foolproof to make sure that you don't get yourself into a bad situation, but it's not necessarily the most efficient way to manage a project. There are situations where it might make sense that a job that's in phase five, for instance, be in phase two on this particular project. Here's an example. Building a new deck would be part of the replacement block. Building a new one. A repair would be in phase four, by the way, but um exterior block. But building a deck is generally in phase three. However, there would be times where, you know, we bought a house where the deck on the back was like in terrible shape and, you know, like dangerous, but it was like far superior to bring material into the back than it was the front. It was like on a hill and if you wanted to bring material in the front door, you would had to have people walk up the hill cuz you parked in the back. And so we audible the deck build into phase one because I wanted to get that built first. So that way I had I was able to let people walk up the deck, put stuff in the house, and it made for a much more efficient project. That that is an example of when I might do an audible. Okay, another example of when I might do an audible for subchunking, which is basically the idea of lazy project management and efficient pricing project management. I want a contractor to have as many jobs as they can have because if I group up a whole slew of jobs with this one contractor, well then I have to be on the job site way less. you know, we agree upon one price and I pay, you know, I pay them at certain points that we preset, but it's way less work than if I have those same groupings of jobs done by four different contractors. Then I have different meetings, different phone calls I have to have. But if I have one guy, it's like one guy I need to talk to, uh, you know, once a week or whatever. And so I always try to group those things up. And then on the other hand for him, he's got work lined up for weeks to come and so he feels safe and he likes that and therefore he'll give me a better price for all that work. There's like the Costco the you know uh bulk pricing that happens. So I'm always trying to bulk things up. A and with that said, then I might let's say phase three and you know like whatever either move move all the items from phase three into phase 4 because I'm going to have this allarounder contractor and we'll talk about the three different contractor types, but I'm going to have them do all the blocks of phase four and I'm going to have to have them do the drywall repairs and I'm going to have them do the painting and the flooring. And so I either move all those items into phase four or move all the items from phase four into phase three. It doesn't matter. Nobody's checking your work here. Just the point is those are all together now. And so now I have one less phase is basically what's happening there. That would be an example of an audible that I would do, which that happens on almost every project. It's rare that I actually do six phases. I might have six phases that I do on a full gut, but like if I'm doing a a cosmetic, I'm basically going to have everything audible into uh phase one and I'm going to do like I'm going to get all the way through mechanical electrical plumbing right there. And then I'm going to have everything else audible into one more phase. There's only going to be two phases. get through mechanical, electrical, plumbing and then have one person go do the rest of the stuff and way less checkpoints for me. That's how I run 20 projects at a time is that I have way less checkpoints than the average person. And it's okay if you bunch it right. We're going to talk about all that, but but it all starts with this phase system that I can see where things are in my hierarchy. I can see where they are in the per chart. A per chart is, you know, I keep doing this thing, but you know, a block and then that block has to get done before I move to this block and that block has to get done before I move to this block. And, you know, don't get too worked up about all this stuff. It's this is for you to help you see the big picture better. It doesn't have to be perfect. It it's it's to build frameworks for your brain to see these things. Now, one more spot that an audible might come up is a change order, which we're going to talk about in the work section. How you manage a change order, but from a systems perspective, that is another audible basically uh you know, it's different. is a change order, but you're just adding a job to the to the structure or moving a job or you're adding to an existing job. You know, whatever. You thought that drywall was going to be 3,000 bucks, but they added you ended up having to demo another room, so you had to add more drywall. That's a a change order. or you didn't have drywall on your list and then you found out that oh, we're going to have to take that room down to the studs and uh do some repairs and then put new drywall on. So, obviously, you need to add drywall. So, your your scope of work is changing throughout the project. Once again, we start with a blurry vision and hone in as you go, one phase at a time. And that's why I like to chunk these things up into phases because I can focus on that one phase at a time and it it really takes the overwhelm away because I am only worried about that phase. I'm worried about the order of the jobs that happen in that one phase. We get to the end of the phase and then I pay whoever. I check their work. I pay whoever. And now I'm sure that I'm ready to move on to the next one. And we have checklists for the end of every phase. Yeah. A pre and post checklist. It's going to be in the in the links here. But these are the things you need to check before you say, "I'm ready to move on to the next phase. That's the hierarchy. That's the order. That is how we set a scope of work up to now be ready to manage a job. Now, the jobs menu lives inside of the Larasa system. The the phases and the blocks inside of blocks are jobs. But I have a whole jobs menu. And this is really what the quick six calculator, the flipper rhythm calculator is based upon. This is the more indepth version, which you're going to need this to actually fulfill your scope of work and manage projects. I'm not going to go through line by line what jobs are in each one of these blocks. I think you already know the basic ones, but I want to go through the columns. I think that is a really important thing for you to understand the different things that we're keeping track of inside of the jobs menu. First column is whether these are repair repairs or replacements or there's an option for others. But you'll see on the little info tag that there's explanations of each one of these. But remember in the jobs menu, unlike the flippo rhythm app, uh there are different jobs for repair or replacement. Quick budget and flipper rhythm. Here we're actually building a scope of work. So, there is an electrical rough in which is different than the job of an electrical repair. Electrical repair, I'm going to preset at like 1,200 bucks. Whereas a electrical roughening is a dollar per square foot model. There's a dollar per square foot to rewire a house. And then you also would have to add in that scenario a new panel and a new meter. And inside of the jobs menu, there are videos for each one of these jobs that explain how they work in that way. And there's also a whole like separate jobs menu course with a rundown of each one of these things. Now, there are pricings. There are different types of pricing. There are, let me go through them here. mandays, which is like the key to figuring out what a job should cost. Okay, at the end of the day, every job breaks down to man days, man hours spent doing the work plus material plus usually a reasonable markup. You know, that's the profit that the business owner makes equals the cost of the job. And I know that some people give bids and some people break it down this that way or the other, but it all at base comes down to man hours spent. They had to pay these guys this amount or they do the work themselves and they want to be paid this amount. whatever tricks and tactics you have to break it down in a different way. It all comes down to that. And this is important for you to think about because this is how I break down anything that is confusing. Any job that gets confusing to me, I just start thinking how long is it going to take and what is that guy worth per hour and what's a reasonable markup for the person to take? And you know really like prices don't change from one region to the next. It should all be about the same because people make about the same amount of money. There are different markups in different places based upon supply and demand. For instance, it is much more expensive here where I'm at to do stucco than it is in Florida because there are a lot more people that do it there. And uh so the prices have gone down at an hourly basis. There's a lot more labor force to do those things. There's a lot more people with those skills here. There's not as many people with those skills. Therefore, they can they demand a higher price. But it all breaks down to man-h hours. So just think about that when you ever get confused. All right. So some of the jobs on the jobs menu I have broken down into man days. Uh for instance, framing, you know, I don't break framing repairs down or framing interior down into like a linear foot pricing. I break it down into mandates. And the mandate formula here is including price. Once again, these aren't perfect. These are to set budgets for yourself to be able to work against. Uh for instance, the mandays cost different per mandate than it does for a mandate for cleanout because obviously uh a lesser payment per hour for the guys plus there's less material in a cleanout. There's uh no material in a cleanout other than dumpsters which are figured into the mandate price. By the way, mandday is an eight hour day. you know, a day of guys working. Okay, that's what a mandate pricing unit is. There are budgets, budgets that I set like the handyman budget. I set, you know, 1,200 bucks for a handyman budget. Uh that way I have the budget worked in. There's unit pricing, uh like a HVAC unit cost, you know, whatever, eight or nine grand. That's a unit price. There's a square foot price. The house is uh 1,100 square ft and it's five bucks a square foot. 5,500 bucks for the house. There's a linear foot pricing model which is uh you know this wall right here is a 12T wall. So there's 12 linear feet of trim on that wall. There is uh squares for roofs. So just the way that pricing is done on roofs is not by the square foot. It's done by the square. And a square is just 100 square feet. I know it's it's stupid but that's the way it's done. Like if you go to buy shingles, they're going to sell it to you in squares. And uh roofing contractors are going to price things in squares. So they're not going to say, "Oh, there's 2200 square feet of roofing." They're going to say, "There's 22 squares of roofing." And that's how the pricing is done in here as well to match. And then there is uh squares for siding as well. We have plumbing fixtures. So, in the uh flip a rhythm, I break down hardware and fixtures to a uh just like a price per square foot for quick budgeting. However, in the actual jobs menu, I break it down even further. So, I I look at plumbing fixtures and there's a price per plumbing fixture. There's a price for electrical trimout. there's a price for, you know, hardware like doorork knobs and such that is separate just uh because I might be having different people do that. Remember that the jobs menu and the Lorasa systems are more about a detailed scope of work that I can use to manage people. Okay, there's windows as a pricing unit. There's square foot for a deck. There is door count. There is square foot for concrete, linear foot for a fence. Okay, once again, getting more detailed. Now, in this jobs menu, there is the pricing units. There's the standard price per unit. And uh I know that these things may throw somebody off because they got a roof done by somebody sometime that you know, like I just can't find pricing this way. Guys, I I don't know what to tell you. I see people say that all the time. And weirdly enough, this pricing always gets me in the ballpark. But it gets me in the ballpark. Dang it. Uh, a price is not real until I have a bid in front of me that says it's that price. It's because we're chunking jobs together. So, I might have 10 jobs that I chunk together and give to a contractor to give me a bid. And all those jobs together, say $12,000 according to my numbers. And then that's what I'm working against. contractor gives me a bid and he said, "Well, it's going to be 13,000." Oh gosh, man. Am am I missing something here? Uh, you know, like I don't want to underpay you for sure, but you know, what am I missing here? And that's how I use these things. That's how we manage. We're going to get into the project management. Uh, job notes. So, there are job notes and use notes. Job notes mean this is how I use uh or this is what I expect from this job. Whereas use notes are this is how I use this job in this system. And then there's the fear tax. We're going to get into that in project management. Okay. But in in here I just have it coded as low, medium, high, or extreme just to to be careful about it. But we'll get into what it actually means. Contracting method. Same thing. We're going to get into that. And then uh quick scopes. So, this will match our app, cosmetic, renovation, gut. Uh, there's even like addition or new on here. Uh, going with the builder's flip. If you were doing an addition, I want you to be able to build the scope out. And these are quick scopes because there's actually a view that is uh just those jobs put together. So, that way you can uh, oddly enough, make a quick scope. Also in here there's the banks, you know, the auto ad, the quick six, the extras. Just so you can put those things together, all those ideas together. This all breaks down, guys. Uh remember the whole template, the whole broad way to look at this scope of work is safety and liability. You got to fix those things otherwise you're a piece. Then you have to stop the bleeding so that way worse safety and liability issues don't happen. And then you do the baseline and you prevent yourself from uh becoming in the HGTV dilemma which makes you a speculator and you are constantly thinking about the scale of livability as the risk index trying to stay as close to that line as possible. And then you have the big three which is the psychological way that you increase the perceived value of the house and and the actual value of the house. And uh really that guys the big three is the difference between a flip and a rental. I probably am not going to do the big three on a rental whereas I would on a flip. And that's it. Okay. Now we're officially ready to move on to the work. And here we go. In the work, we're going to talk about our main methods to do this. The MIY method, uh the different types of contractors, how to profile a contractor, how to recruit or scout that contractor, and then we're going to talk about my lazy project manager method. Uh there's nothing about you guys that's lazy. Nothing about me that's lazy. But the method is because I want to preserve as much as my bandwidth as possible. Always 8020 baby. Uh the fear tax and change orders, the black hole, how I avoid those things or if I find myself within them, how I how I battle my way out. Uh a couple things to caution yourself about. I'm going to go through my 18 rules for managing contractors. Uh some things that you just aren't going to think about until you think about them. I'm going to go through things you shouldn't expect from your contractor. You know, the expectations are skyhigh. However, there are certain things that you need to let them go on. Codes enforcement. what you got to deal with. Uh the guy that just called me yesterday, uh he was doing a project and got a stop work order from the city and they shut down his whole project. And uh you know, we're going to talk about what you do with that kind of stuff. And uh starting with the whole concept of managing contractors is about relationship capital. And I call it relationship capital. I'm sure you've been introduced to this concept before, but think of my relationship with this contractor as a bank. You know, and a bank you have withdrawals. You take money out and you have contributions. You put money in. And my goal is to always be building my emotional savings account with these contractors. Because over time, if you're able to work with people for longer, they start to understand your way. Like we just talked about all these systems and such. What if the contractors that you're working with start talking in the same ways? or if they understand that you always want this done this way. And it just makes so many less conversations, so much less confusion have to happen throughout because communication guys is so difficult. And as good as you might think you are at it, as good as the systems you have, uh even if you are able to hand them exactly what you want out of everything, it's just not going to work out every time. It never does. And so the longer I can work with a guy, the more honed in we get. Now, there are downsides to that as well, like uh sometimes you start to have price creep and such, but we have tactics for all that good stuff. So, relationship capital above all else, it solves a lot of problems. So, you got to get it out of your head that these guys are bad. They're bad because things are hard. Uh and they might be bad because you're bad. Now, that doesn't mean that we're not going to hold ruthless accountability to the expectations that we set. You do not lose relationship capital by holding accountability to something. You lose relationship capital by holding accountability to expectations that were phantom expectations that you never set. You just thought you set them. And so, we are very clear about expectations that we set. Therefore, we can hold ruthless accountability. But relationship capital, think about that. My I think about how strong is my relationship with that guy? What can I do to improve it? Because that's what I ultimately want. Which leads me to the real methods that we use. The MIY method. All right. There are a few different ways that you can go manage a job. You could uh do a job DIY, do it yourself, which I'm not saying there's anything wrong with that. That is not what I'm teaching. That is how I grew up in this business is I did a lot of things myself so I could learn them. I felt like I needed to do them myself to be able to manage other people to do them. That's not necessarily the case. I don't believe that anymore, but I definitely did. Glad I went through that for years. I went through that. But there's a big downside that, you know, you can't really scale up. And I'm timid when I say scale because that's not necessarily what we're trying to do. But scaling and being able to have balance with your personal life and family life kind of go hand in hand. The the same things that allow you to scale allow you to live with freedom like we've talked about in our philosophy. And diying doesn't really do that. DIYing means that everything stops if you stop. And that's not a great model. It is a great thing to have in your back pocket. I do suggest uh especially in hard situations that you do some things like if you got to do the paint, if you got to do the landscaping, if you have to change out hardware, like those are all things you can do with just some elbow grease and you don't even have to have skills really. And I've had to do those things when times got tough for sure to save some money on the budget or whatever. I mean, don't be shy about that. There's no harm in making mistakes. I make them all the time. Okay, that's DIY. Uh, and then there's like hiring a GC to come in and do all the work. And that has clear downsides if I haven't highlighted them already. But they don't understand your vision. They are going to lead you into situations like the Mirage. Uh, they are going to cost way too much money. there. You know, you're paying them 20, 25, 30, sometimes more percent depending on uh, you know, what type of GC you've found. And, uh, you no, screw that. You know, I want I want a fish, baby. Like, I don't want somebody I don't want somebody doing all that stuff and I don't even understand what's happening because what if something goes wrong, which it will, uh, then I couldn't pick up the pieces. I want to know how to fish. I want to control the fish. So the next option is miying manage it yourself which is the option that we use. That is us being the general contractor. Okay. So clear advantages here is is one I save that 20 to 30% markup on everything. Everything's cheaper. And also like we talked about earlier when you start your operations company you can get paid as the GC and then you have the relationships with all of the contractors. These are the skills guys. These are the skills that will allow you to just do whatever you want. If you know how to do this stuff, you take all the fear out of the game. This is what I'm talking about is becoming the GC of your project. That doesn't necessarily mean to go get licensed as a GC, but it could. Okay. Uh there are a few different ways to do this. You could All right. One, there's like the primary residence loophole. This this is what I'm talking about right now is how you work as your own GC. Uh like technically speaking, you get like the broad picture. What we're doing is we're bringing in the contractors and managing them. We're setting up the project. Okay. But now, like more technically speaking, how we do this legitimately. So, first is the primary residence loophole. Uh, this has been a thing in every municipality I've ever worked in. Uh, I'm sure there's municipalities out there that don't allow this, so make sure you check. But the primary residence loophole uh here for instance and in Colorado, I could as the homeowner act as my own GC. I could go pull a homeowner's permit. Now underneath that, I would have to hire like a mechanical, electrical, plumbing person to come pull permits under there. We're going to get to that when we get to codes enforcement, but I could pull my own general building permit as a primary homeowner. All right, but of course that ends quickly on your first flip. That might work if you're doing a a primary residence flip, which we'll talk about the steps in the future here. Okay, so the next thing is you can go get your GC license. This is another option. That's the option that I chose to took to take. And uh you know it might seem like a lot but hey listen it is an open book test because the the whole like truly you go in there with a stack of books and you can use them all and because the idea is that a general contractor doesn't know all these codes like you might have seen me stumble on things earlier. Is it like uh the deck has to be 30 in off? If it's more than 30 in then I got to do the rails. I don't know. I look it up and that's what they expect from you. And that's why it's an openbook test that they expect you to not know the stuff but know where to look for the stuff. And there are all kinds of like study guides online. Listen, I the one that I found is these people would like this company had people go in and take the test, memorize all the questions that they could memorize and put them down on a piece of paper. So you're basically taking these practice tests that are the exact questions on the test. and well that makes it really easy to pass the test. So you could absolutely do that. There's some other things like you have to be able to show show some experience and such but uh it's easier than you think guys. Okay. Uh now we have the next option after get your own GC license which for the long haul is the way to go guys. Uh, but there's a uh also a limited or restricted GC license that is easier to get than the full-on GC license. And you don't need a full-on one. You're just doing your own flips here. And then there is the consultant option, which I really like. This also used this option is basically you find somebody who is a GC and you uh pay them to be your consultant. Now, there's legalities here. All right? So, I want you to be careful about how you talk about this and how you actually perform it. But just think about this. If you came and hired me as a GC and you said, "Hey, uh, listen, I want you to be the GC on the job. I want you to pull permits and I want to work for you. I want to be your number one subcontractor." Uh, okay, sure. And what would be wrong with that? It's just like me hiring anybody else out there as long as I have like the legitimate insurance and stuff. Uh, I can go hire you to go do the job and you work under me. And if I let you do all the work and maybe I just come and check to make sure that things are ready for inspection when they're ready. What's wrong with that? That's exactly what I do with anybody else I hire. So that's the consultation method which this also works for getting bids guys that uh if you came to me as a GC okay obviously you're I I don't do this for people uh so please don't come to me cuz I don't want to do this takes too much time but if you came to somebody like me who's a GC and you say hey can I pay you 500 bucks to give me a bid for this job I'm not going to give it to you okay there's no way you're winning this project but it would help me to understand what needs to be done and how much it's going to cost. So, I'll pay you 500 bucks to give me a bid and tell me what needs done on this project. Great. That is very valuable for you, by the way, especially when you're just getting started out. Uh, and you know, so this is you got the legal coverage, you have the mentorship, you got the permits, and you've also in that case logged experience for the future if you want to go get your GC license. Okay, three types of contractors. This next thing, there's three types of contractors. There's specific job contractors. There's allarounders which graduate to handymen. And then there's the laborer. Okay. A specific job contractor are like a plumber, an electrician. A company that does nothing but siding, does nothing but roofing. They do one thing basically or maybe a couple things. These are um you know, you see them on billboards or whatever. I mean, not all of these guys have billboards. We're going to get into this in profiling, by the way, but okay, that's a specific job contractor. And then there's an all-arounder. These are guys, all-arounders are guys that will do the flooring. They'll they'll do the carpentry. They'll put in the cabinets. They'll do the tile. They'll take out the trash if that's what you want them to do. They do everything. And these are like the meat and potatoes of this game, guys. Those are the guys that we're looking for when we get to the recruiting section. Uh that is really what makes up our pipeline of contractors. And then uh these guys graduate to like a handyman. You know, a handyman is kind of somebody that can do everything pretty well. Uh but they're more expensive than an all-arounder. And then uh there's a laborer. A laborer has no skills, you know? Like I mean they might have like general bluecollar skills uh but they are only as good as the direction that they're given and the management that they're given. Now there are times for laborers because they're cheap. You know you just pay them an hourly rate generally or a daily rate but you got to tell them what to do. Like you either have to have a person to manage them or manage them yourself. And uh well, not usually ideal. You you might hire some kid to go uh clean out a house or something like that, but then you got to think about the insurance. And so uh which we we'll get to all the insurance when we get to the empire section of of this course. Okay, those are the three different types. Now, if you go back to the jobs menu, you'll see that I have like the usual type of contractor that you would hire for a specific job. Okay, let's go to profiling. All right. Yes, we absolutely profile these contractors before we go talk to them. Okay. And let me just I'll give you the the TLDDR. Too long, didn't read. Yeah. Uh is that if they got a big truck, if they have a billboard, if they are wearing a polo, I am not hiring them. They are not your guy. Okay. Basically, it comes down to I want a guy in a a white work truck or van that is not brand new. It is not wrapped. It is not jacked up. It's not fancy. They might have, you know, but but on the other hand, it's not like a rust bucket. It is um you know, because those guys are like living off a shoestring and eventually that bust and it's your ass that'll pay for it. That's my crackhead example, by the way. Uh, so they're like there to work. They might have like one of those stickers on the side that has their phone number. Okay, th those are the good ones. Th those are the ones you want. You want a guy that is leading a crew or is working by himself generally like leading a small crew is what you want and they are leading it. So, they're in that truck. And then, you know, like the works by themselves guys can be good. Uh, they're usually probably a little bit more money because they have, you know, their hourly rate or whatever. And then you have the other side that like this guy's got multiple crews and uh, you know, he's running a business. No, he ain't, dude. He sucks at it. I guarantee it. He sucks at it. He's overpriced because he hasn't figured out how to cut his cost down. He's bloated. He's got an office. He's got all this stuff that you're paying for. He's got his marketing budget. Uh it is so tough to manage these guys. They're making mistakes out there. You know, it's like the the good guy starts a business and he thinks that everybody that he's going to hire like thinks like him and works. They don't. And it's tough to manage. Uh I certainly failed at it. And uh I think that it'd be rare to find somebody that has has figured out how to do it and is not charging an arm and a leg for it because if that guy figured it out, he needs to be charging for it. And that's not who you can hire. Okay? That's not going to make sense for us. I have a whole spectrum here of like what you would look for. And there's basically uh a low tier, a middle tier, and a high tier. I'm looking for the middle tier guys, not the low tier because the for certain jobs I might look for low tier and for certain jobs I might go for high tier if I really didn't know what to do or like needed it done in a specific way, but most of the time I'm not. So, let's just go through some things that will help you clarify what tier they are. Here we go. Price, low tier, dirt cheap, middle tier, fair to good value, high tier, premium pricing. I'm going to stop telling you the tier and just go through the thing. Speed to start, immediate or same week, one to two weeks out, four to eight plus weeks out. Got a waiting list? High tier. Not my guy. Speed to complete. Slow due to lack of crew or poor planning. Moderate, usually somewhat on schedule, fast and efficient, full crew. Quality and scope discipline. A low tier, inconsistent, skips steps or improvises off plan. Middle tier, consistent, follows scope with some oversight. And then high quality work strictly follows scope. These are like the billboard guys, the high tier guys or the billboard guys, uh the neighborly companies. You pay for it though, okay? And they're honestly not as great as you might think. communication style. Low tier, sporadic, reactive, disappear for a week at a time. Sometimes, uh, middle tier, responsive, practical, these are your guys. the high tier, proactive, systematized, especially their sales team. Reliability, risk, low tier, high risk, middle tier, generally dependable, minor issues, and then uh the high tier is low risk, of course. Uh vehicle rusted, messy, no signature. Middle is white vanner truck, magnetic sign, high-end branded wrap, clean trailer, high uh jacked up trucks, crew structure. We talked about that. Googleability, this is an important one to look at. Obviously, the low tier guys can't be uh found anywhere. They they have no record. Uh JJ Luna, baby. All right. And then you got middle tier. They're like searchable by name only. Like if you dig hard enough, you might find those guys online. And then uh the high-end guys are top of Google reviews, ads, they got it all. Main marketing method, uh low tier guys, uh begging, that's their method. Uh middle tier guys, you know, they might have like cards. They I got a card in my truck, man. Uh referrals, repeat clients. Referrals are dangerous. We'll talk about that. Um, and then the high-end guys, ads, SEOs, they have a CRM, you know, they're using Hub HubSpot. Um, tools and gear. Low-end guys don't even have tools. Sometimes they're borrowing them from me. Uh, middle tier, they own tools, decent organization. High-end guys, commercial grade, systematic. uh clothing. You know, the middle tier guys have like work wear on, paint stain, like they have drywall on their pants, man. They have calluses on their hands. The high-end guys are sending a salesperson in a polo. Okay. Sales tone positioning. This is an important one. Low-end guys are desperate. They'll beat any price. You know, this is uh way earlier Kevin flooring guy example. 800 bucks to paint that huge building. The middle tier guys are like curious. They want to work with you. Like you can feel that. They're uh you know, they're working men. And then the high-end guys are like confident, selective, almost like uh you know that girl that's trying to play hard to get. That's that's what it is. Like I don't know. You know, I might have room for you. We'll see. We got a waiting list. Yeah. Screw you, man. Okay. Uh, email address, the email address for a low-end guy is like big dog 420@aol.com or none at all. And then, uh, you know, the middle tier guys will probably have like a a Gmail or YouTube like their company name atgmail.com. Obviously, the high-end guys have a branded thing. Okay, that's it. That's the profile. Now, there are some non-negotiables that we need to go through and and we're going to go through like the scouting steps and like how how you uncover these things, but uh what you need this is these are qualifiers, non-negotiables that you have to have before you hire these guys. General liability insurance, you need to have a workers comp insurance or they have to have a exemption from the state. They need to provide these things for you. Not initially. We're going to get to that. But they need to have a license if required. You know, if they're a a an electrician that requires an an electrical license because you need to go pull permits, they they need to have that. Obviously, they need to have a valid work status, a legal ID. They have to uh you know, if they're a business, they have to give you a W9 or a business entity. They have to have a business entity set up. And if they're working as a sole proprietor, if they're working as themselves, they need to be able to provide you some kind of legal work status. They got to be legit, guys. Don't It's not worth the risk. Okay? All right. Now, I got this whole list for you. Once again, going to be linked up. Got a lot of links that I'm going to have to manage here for you guys. That is the profile. Now, how do you go approach these guys? How do you scout them? Uh, but before I guess let's talk about where do you scout these guys from. All right, the um where is number one, Home Depot or Lowe's. That is exactly where I find 90% of the contractors that I work with. And remember, you know the profile, so you know who you want to go talk to. And the main thing is that you want to make sure you're talking to the business owner, not one of the workers. But I mean, you'll make mistakes there, but gosh, there is just a look, and it's hard to explain, but the guys who are business owners have a certain intent about them. Uh, you know, one way to know for sure is when they go to load up their materials in their vehicle, if they're uh working hard to get them in there, they're the business owner. The time is money. Okay. Uh, then there's specialty stores, like specialty supply houses. This is where you're going to find most of the specific job contractors, guys who, you know, just do mechanical. They're going to be at a mechanical supply store. They're probably not going to Home Depot. Wish they were because I'd rather hire the guys that are going to Home Depot. By the way, the specialty shops get a little snoody. You know, people have uh the new builderis. They get a little fancy and uh you know, they got to have a specific part to do something and you know, you don't need that. It everything gets the job. If they're selling it in the store, it probably is okay. It's probably going to pass code requirements. What is the reason for going above and beyond? I have none. they've been marketed to. Okay. Supply stores, we have um you know, just a general ABR, baby. Always be recruiting. So, gas stations. I mean, this is where I pick up a lot of people is somebody pulls up to the gas pump next to me and they have a white van with their magnetic sign on the side, ladders on the top, drywall dust on their pants. I know what they do. I know who they are. I introduce myself. Hey, man. I got a job going on. Oh yeah, never mind. We're going to get into the how here in a second, but gas stations, lunch, be careful there. You don't want to disrupt people when they're trying to take their break. My kids pickup line at school. I'm serious. Always be thinking about this. Know the look. Introduce yourself. Next is driving for dollars contractor style. You know, driving for dollars is uh when you're out looking for houses, you know, you look for the houses that have overgrown lawns or whatever. Well, be out looking for the ones that have work going on. Why? Because you see the white vans or the white work trucks on the outside. And you know, this is a little bit of a touchy subject because contractors are like the strength of your business. The better contractors you have in your pipeline, the better your business is going to be. And so, people are pretty protective. Even though they're vendors, technically, subcontractors, it's like, you go talking to this guy, I'm going to be I'm going to be pissed. You know, you're you're getting on my turf. And uh that is how people think. So you need to be careful on this one. I don't like to be uh that guy. However, so if I know that it's a an investment house that somebody's doing, I'm not going to go talk to those guys. Uh that's kind of rude. But on the other hand, if it is a residential house, for instance, uh my neighbors, they were having some work done and I was watching the contractors that were working over there and I was like, "Dang, they're good. That would be good." Those, you know, they fit my profile exactly. So, I uh took my kids over there and introduced myself and, you know, got them on our list. And um yeah, that resident, that neighbor, like they're never hiring contractors again, but the guys that you know, the amount of houses they're able to buy is absolutely correlated with the contractors they have working in their pipeline right now, that's a little bit of a different story. Touchy subject. Do what you want. Uh Facebook groups, not websites. You know, once again, if I can find them easy, uh that means other people can and they've paid money to be found easily. and they're going to pass that money on. But like a lot of guys will go in on Facebook groups and they'll say, "Hey, I'm a handyman." Okay, cool. Uh, you know, and those guys are out looking for work. I want people out looking for work. And then, uh, so another one is Thumbtac or others like it, but Thumbtac is a good one because people can get on there pretty easily versus things like, uh, Angie's List and like what was the other one? Home Advisor or whatever, you got to there's like a process to get into there. And so, you know, it's just like building a website and paying for marketing. If if that is happening, that th those are getting passed on. I want the guys that want to work with me, okay? They're they're out looking for work and they're going to be happy to work with me because I'm going to give them lots of work and I'm going to be good to them. I'm going to be worried about building relationship capital. You know, that's that's the difference, guys, that some of these guys just want to work and they want to know that they can put food on their plate. Uh the guys that are, you know, putting up billboards and websites and such, uh they're trying to grow a big business, which is great. I love that. That's great for them. But that's just not the type of guy that is going to work well for me on my job site. It's just not going to work out well. And I know it because I've tried it. Referrals, but be careful. Just like we were talking about, okay, if you're if you're an investor acquaintance refers somebody to you, why why would they be referring that person to you? because the growth of their business is directly reliant upon that contractor or their group of contractors. So, it can't be a good one because you wouldn't do that. You just wouldn't. So, you got to be careful on who is referring him. Now, if it is like an HVAC guy referring an electrician, that could be a great referral because that guy's not going to want to muddy his name with a crappy electrician. He might be thinking, "Oh, I hope they hire that good electrician because it'll make my job easier." Great. That's a good referral. Your homeowner buddy that got one project done on his house refer somebody. Great. That could be a good one. A real estate agent could give you a good referral because, you know, it's in their best interest to have good referrals to give because if they give a bad one, it muddies their name. And then one advanced strategy is license lookups. a general contractor, a you know, mechanical, electrical, plumbing, uh, in pretty much every municipality has to have a license. And every state has to have a license to do what they do. And you can look up those licenses. So, if you're really looking for an electrician, you can go look up all the licenses around you and you can start cold calling them. And, and I've had to do that before. Uh, and you know, one other note on general contractors, there are people, just because they have a general contractor's license doesn't mean they're acting as a general contractor. There are people out there who are more like allarounders who have a crew that have gotten their general contractor's license, so they can do things like roofing and and stuff like that. Um, so so those exist out there as well. So a general contractor might be a good way. But the way I would do it when I do this is I you know get all the electricians that are in uh you know my area and then I start looking like how hard is it to find them online that that is exactly how how old is their license you know or are they um I'm profiling I don't know what to tell you do it works all right how uh okay on the advanced license lookup you're going to cold call them Uh otherwise uh this is the how the uh approach. If you let's say meet somebody at Home Depot or the gas station uh you are going to introduce yourself guys 2025 I know everybody wants to text everybody or whatever. No, you need to have your presence known. Uh tell them what you do. So uh hey what's going on, man? Like what kind of work do you do? Oh, drywall. Yeah, duh. Um cool. Well, let me tell you what I do. Okay, notice here I'm not like grilling him about what he's doing. I'm just using that as the opener. I'm framing like what we're doing here. I'm I'm asking him about work. I'm signaling that, hey, uh I'm probably a guy that hires you. Okay. But I don't need to grill him about, well, what do you charge then, buddy? Uh what kind how good are you? I I'm turning it to me. I'm saying, oh, okay. Well, hey, this is what I do. you know, I'm I'm an investor and uh gosh, I'm always trying to look for good guys. It looks like you guys are out there working and uh I really I've been um looking for a new guy for drywall. You know, we have some jobs coming up that I need somebody good on and um you know, we work really hard to treat our contractors well. Uh we work hard to pay people fast. You know, that's what we do. I'm an investor, been buying here for obviously I'm watching what I'm saying because you're not going to be able to say the same things that I would say. Uh but you know, you can't say I I bought a 100 houses here and I want you to be part of our mix. You but you also don't want to say, uh, hey, I've never flipped a house before, but I'm thinking about doing it. So, you want to let them know your intent, which is, "Hey, I'm about to close on a house as a real estate investor, and I was actually looking for somebody to do drywall. I need to have you buy to uh give us a bid to see if it works for you." Okay, cool. So, now you've set it up. That that doesn't mean that you need to bring them to bid a job right away. If you have one available, you might do that to um you know, mark the territory, so to speak, to lock it in, but most likely you are not going to have that right away. Uh you're just constantly building your depth chart. Okay? Think about it like a football team. A football team doesn't just have the starting quarterback. It's got the second string and the third string just in case the first string gets hurt. And so, you're always doing that, guys. You're always uh looking for contractors. It is like second nature to be looking for contractors for me. And I keep a CRM, a pipeline of these contractors in each different, you know, here are all the roofers that I have. Here are all the all-arounders. And the all-arounder list is super long. Got that, too, by the way. The CRM uh that I can share in the in the links. And the likely scenario is that you're not ready to hire them right away. So, you get their phone number. You know, you've let them know what your intent is, who you are, and then you get their phone number, email. They probably don't have email. And you go put them in your CRM, and then you're going to follow up. So, what I always do is lock it down like in the next day or so by saying, "Yo, I'm that uh big ugly dude you met up at Home Depot, and just want to make sure I had the right number here, and uh you know, I'll I'll be getting you to come out and look at a job soon." Okay. Now, now you've locked it in. And then basically, you just want to keep it warm u by, you know, every few weeks or whatever, maybe send out a text or whatever. And, you know, depending on where they sit in your pipeline, like if I have a first string quarterback, okay, I'm going to reach out like once every few weeks to make sure I keep that one up there. Whereas, like the third string guy, uh, I don't really follow up with them. I just have them on my list and if I ever need to warm it back up, I'll I'll do my best. And a lot of times if I have to do that, you know, I have to go further down the list because those guys aren't available anymore, which is fine. The point is I've been building that list. I have hundreds of contractors in this list and that is the strength of my business. I know that if something goes wrong that I have it. I remember when I just moved out here, it was kind of daunting to figure out where I find all these contractors. And so, always be building that list. It gives you a lot of strength. We are ready to talk about the lazy PM method. All right, you got a job or a project. Your scope of work is made. You have properly chunked up the jobs, right? You've done the audles to move these things into phases that makes the most sense right now for you to sub things out. Okay? And remember that what I'm trying to do is have the minimal amount of steps that is safe for me. Okay? If I bunched everything up into one, there's a lot of things that can go wrong. I don't want to trust the management of somebody else. But if I've grouped things up safely, like if I group together kitchen, bathroom, exterior, and interior carpentry, well, it's pretty safe. There's not a lot of upstream downstream that can happen. And even if I group together a phase three with drywall, paint, and floors with the phase 4, well, I mean, for the most part, people know that they're going to put the drywall on first. And honestly, it doesn't matter to you. All right, this is important. It doesn't matter to you because you're getting a bid from these guys, okay? You're uh very rarely, if never, and I'm not even going to teach you because this is an advanced strategy, very rarely going to do a cost plus or an hourly situation. you're only going to take bids and you're going to take these bids and uh so if they did things out of order within this chunk, the subchunk that you give them, it doesn't matter to you because you're only paying based on the outcome. So, if they put the floors in before the paint, which would be a no no because you will absolutely overspray onto the floors and then they go and do just that, which happens all the time. Doesn't matter to me. It sucks because it probably hurts our relationship capital a little bit. So, I try to avoid these things, but if it does, it's like, "Hey, sorry, man. I can't pay you for that until you clean up the floors." And uh therefore my goal is to chunk up as much stuff as I can while still avoiding any major issues. And those are my expectations. Okay? I set expectations with these guys and then when they're ready to get paid, I go hold the accountability. That I mean that's it in a nutshell. But what does it look like when they come out to look at this chunking of jobs? I show them written, you know, this is this is what I'm having you bid today. And then we kind of walk the project together. And I ask them, you know, I I treat them as the expert that they are. Even though I I am teaching myself and I'm being the ultimate visionary of this project, I am allowing them to be the expert and say, you know, oh, you know, I I suggest you might do this like, hey, what do you think of my scope of work here, Mr. Contractor? And through that, you may adjust your scope of work some. But now that you've agreed upon the scope of work, here's what you do. First is the verbal. So, you know, you've talked about the scope of work. You change the scope of work in written form. And then this is the key is we also do media. I'll have my phone or a GoPro or something like that and I'll say, "Hey, Mr. Contractor, I just want to walk the job with you and let's just go through the scope so we can make sure we're on the same page." And literally, I walk with them. So, uh, you know, here we're doing the trim this way, you know, like we talked about. And remember, don't do that door right there. There's a door over here. So, this is easy for me. And uh dang it. Remember that if you paint the hinges, I am going to make you scrape the hinges. I hate when people paint the hinges. And I want you to be careful that you know I'm I'm giving you the drywall and the paint and the floors and just it's happened to me so many times that uh people overspray onto the floors. Just please do the paint before you do the floors, man. So you don't have that problem because I'm gonna be a stickler on it. Okay. You see how I am like setting expectations here and I'm clarifying the scope of work. The better expectations you set, the more ruthless you can be in accountability. But anyway, uh that is the three ways that I set the expectations for the scope of work. And then I'm going to ask them to give me a bid based upon that. Okay. So, he's going to go home and he's going to come back. He's going to he's going to give me a bid and he's going to probably call me or whatever. Um, and he's going to say it's $10,000 for that house. Okay? They're probably not going to send you an email. And if you guys have fancy project management systems that you bought or whatever and you think that you're going to get your contractor on it, I'm telling you, stop it. Stop it. It is not their job to do your admin work. You do the admin work. Let them give you that bid. however they like it. You are going to take the admin on you. If you have your fancy systems, that's great. I love systems. I I really do. But just I do the work for my system. I let them do their work for their system. I want them to focus their effort on doing what I want on my job, not on my systems, okay? Not my tech, my tech stack. All right. They send me this price. Probably going to be on a phone call, maybe a text message. And now I'm gonna say, you know, if I like the price, if I don't like the price, I'm going to start questioning like, oh, hey, so, um, you know, if it's high, I'm going to say I I'm sorry, but you know, I I was I actually budgeted less than this, am I missing something? That's always the question. Like, I'm I'm asking like it's my fault, not theirs, okay? Because they're going to be sensitive about that kind of thing. And then if it's way too low, I'm like, you know, I don't want to say that. I don't want to say, geez, man, this is like half the price that I expected. Uh, I just want to make sure that the scope is right. Okay. So, once I get the price to acceptable for me, I if I can, if I can't, obviously, I have to get a different bid. >> >> But if I can get the price in an acceptable way to me, what I do next is I send them that video and that written scope of work. And I say, "Hey, I just want to make sure that that is including all the stuff that we talked about." I'm assuming it does, but I just want to make sure. Okay, good. Confirm. And notice I do it in these steps. I don't do all that up front because I want to remove all the friction that I possibly can. I don't want to make things tougher. The more friction that I add, the more price I'm going to add because the friction I add up front, they're going to assume that that applies to everything that we're going to do moving on. Therefore, they're going to apply pricing based upon it. You get what I'm saying? If you're hard to deal with, they're going to they're going to give you the hard to deal with price. I know I would. Okay. After they have approved that, then you want to get a pay schedule. Once again, step by step to remove friction. I want to get a pay schedule. Okay. So, for one, this is the most important rule you are going to learn about managing contractors. Okay? You need to know that whatever white collar management you've done, whatever leadership training you have done, it does not apply in blue collar land. It's like prison rules, guys. And it's not a bad thing. It's just you're uh dealing in a different world. And the power in this game is absolutely the paycheck, the money. The money is the power. If you give away your power, you you will get run over. Okay? I don't I don't care what you think about that. It is just the truth. That means that I am never going to be behind on the money, which means that I have paid for more job than has been done. I'm always ahead on the money. Okay? So, I'm going to ask them for a pay schedule, but if they want money upfront, I'm not doing it. Absolutely not doing it. Never will. Never will. Okay. So, here's what but but you know, Ross, I need money for materials upfront. Okay. Well, let's set up a an account at the pro pro at the Home Depot proes and then you can get materials, call it in, and I'll pay Home Depot directly. Okay? And you want to be careful there that you don't become the material guy on the job site. You, you know, you're not delivering the material there. They're going up to Home Depot, Proesk, and getting what they want. And this, by the way, is like an extra management tool for you that you get to see what they're buying beforehand. The way it works is they like go up to the cash register, they have all their stuff, and you can you get sent a text usually that you confirm the stuff and you get to see everything that they've rung up. So, like sometimes I'll be on there, I'll be like, "A power aid. Uh, I don't see how that fixes my house." Um, you know, what's this? you know, a common issue. I don't want to I'm trying to think of an example that won't throw you off too much. Let's just say it's uh countertops. You're getting countertops put in and you're like uh you know they're for mica countertops which are the um you know C-class like lower grade property uh type of thing, not a hard stone. And you look at it and you're like white for mica dude we're doing black for mica. What are you doing? Why are you buying this? Okay, this happens all the time. All right, now back to the pay schedule here. So, I'm asking for the pay schedule and I'm making sure that I'm always ahead of the money. And you know, I tell these guys that like the ideal thing is that you know, you get everything done before I pay you. Like we wait till the end because that uh quite honestly is uh better for me being lazy that I don't need to come to the job site to check things because I always come to the job site to check things before I pay you money. Therefore, uh the less pay periods the better for me. However, I understand on the other hand, uh well, you might not want to wait until the end. And uh I will I'll cut up the pay periods and as small as you want. I just won't pay upfront. So, if you want to do every Friday, fine. But we need to set what needs to be done before you get that payment. Okay? The actual jobs, not it's not time worked. It's actual jobs done, uh, portions of the jobs done. So I, you know, we could say after the flooring is done, I pay you. After the paint is done and I check it, I pay you. But I won't pay you until those things are done. Okay? That's how the pay schedule works. Now, if you've agreed upon price and pay schedule, boom, now you have an accepted bid. Now, the whole conventional wisdom of you have to get three bids. Yeah. Okay, I go back and forth on this. I never get three bids because I know my pricing and I think that you need to get there. However, and and I would have told you from the start that, you know, no, you never get three bids because you're just wasting two people's times. That's BS. But a lot of you guys just aren't going to know the the scopes. you're not going to know exactly what you're looking for and and you really can't be expected to on your first goound or even you know your first five goarounds. You're just going to keep learning things and there truly are situations where you know you get two bids for 25 grand and then a third one comes in at 15. I I mean prices can vary that much. It really can because different contractors have different ways to do things. They perceive jobs differently. some they're perceived as scarier and more complex. So, three bids does go a pretty long way, especially on like your first flips where you're dealing with new contractors. I think it is a good idea. And it's later on when you've been dealing with the same contractor over and over where you want to avoid that if you can. There are situations where you're going to need to do it, which we're going to talk about. There's also, like I told you, the consultation method where you could actually pay somebody to come give you a bid with them knowing that they're not going to get hired. And there's one more issue at play is like the time to hiring. A lot of times these guys are like looking for the next job to get started on and so you want to strike while the iron's hot. Okay? you're not uh you're it's not a commercial job where you're getting a bid and then hiring somebody a month later. A lot of times the pricing they're giving you is because they're ready to start a job and they're giving you that pricing thinking they could start on Friday. So be cognizant of all of that. But if you're hiring them, make sure to set the expectation in three ways. Get the bid, get the pay schedule, and make sure they have that video of what you agreed upon. And those are your expectations. The clearer you can set the expectations, the better. Being a a-hole is all about mismatch of expectations. Okay? When you go to hold accountability to expectations you haven't properly set, it is being an a-hole. Now, there's two things that uh I always think about is the newlywed nagging method. Okay? When when you first get married, it's like, uh, you know, hey honey, uh, are those are those dishes dirty? Oh, you know what? Yeah, I guess I will. I guess I guess I'll go do it. You know, that's like the nice nagging method. Uh, you're always uh, you know, did the milk get left out? Oh, yeah. Yeah. Yeah. I guess I did. Yeah. Can't get mad about that, right? uh whereas uh later it it's not so nice uh sometimes. And that the newlywed nagging method is what you want to use with contractors. Okay? Uh you don't want to outright berate them berid them about things that they've done wrong. You just you know it's always like a question like you know I I don't understand how this stuff works. Uh, is that uh paint supposed to supposed to be all over the trim like that or do you guys like come in later? Is that how it works? Do you do all that stuff first and then then come in? You get the idea, guys. Don't be don't be a-holes, okay? And then there's the 007 method, the micro spying. Okay. Uh, part of the reason that these contractors are going to want to work with you is because they like the autonomy that comes with working for a investor that has um, you know, lots of jobs potentially and they kind of like, you know, as opposed to a homeowner who's like sniffing around everything and emotional and stuff, you you kind of let them be. And so if you start to turn yourself into a homeowner and you're there every day and like um you know doing the nagging thing, um it's going to get annoying for them and you know they'll probably finish out that one job, but they're not going to want to work with you again, at least at that price. You're going to start increasing your prices. Uh the change orders that potentially come up are going to start to get heftier for you. And so micro spying as opposed to micromanaging is like I want to walk through there to make sure things aren't going completely wrong. You know, things that can't be undone. Like one of the examples that we just ran into was uh you know, scraping popcorn ceiling and uh then they painted it. Okay. But once you paint over a drywall repair, uh it's kind of like in stone. like it's not easy to fix that. The the paint kind of seals it in so you can't just sand the drywall down anymore. And so things like that I want to avoid happening because using our methods here, you would be in the situation where, you know, the contractor would get done and they would ask for payment and you would come in and say, "Uh, dude, it sucks that you painted over the drywall, but that's not going to be acceptable, man. Like it looks like crap." And so you're going to have to fix all that. And like the situation to fix that would be basically skim coating the entire ceiling and repainting it. Skim coating it means like put a thin layer of drywall mud on and and redo the whole thing. And and so that that job would probably be more than you actually paid them for everything else or at least it would be close to it. And so two lessons there. One is that uh you got to be careful when you're paying people because if they make a mistake, that mistake could cost more for you to go hire somebody to come in and fix it. So that the being ahead of the payment, but in anyway, going back to the micro spying is all about trying to avoid those things because yes, I could hold them accountable and I would. However, it's going to damage relationship capital there when you start like running into situations where you're um costing them multiple thousands of dollars totally rightfully, but it's still going to it's still going to damage your relationship. So, you want to avoid those situations the best that you can. Okay. If things are like you like them, you need to pay quickly. that is your responsibility and I mean like really go out of your way to pay them quickly. Uh I will try to within 24 hours of approving a job have a check in their hand or you know like usually the way it's going to go down is they're going to say hey I'm done with that thing and I'll have to go out and check it. So I'll usually meet them at the job site and say oh okay that's acceptable and I have a check with me and I want to do that within 24 hours. I want to go out of my way to do that. So that way I can take care of that guy. Remember, they're trying to put food on their plate. Uh, and and if you give them an easy route to be able to do that, not easy meaning they get by with stuff, but easy meaning that they get work done and they know there's a paycheck for them at the end, not some like runaround like, "Okay, I'll mail you the check or, you know, uh, whatever it might be, because that's what everybody else does to them." Okay? So, I want a better price from these guys. I really do. Uh, but I want to earn the better price by making other things easy for them. So, like the actual I make their business cheaper for them to run because I make everything so much easier for them. I allow them to always have surgeons at the table working as opposed to running around doing all this other crap trying to pamper me and make me feel good because, you know, I have emotions about the trim or whatever. No, I'm not doing any of that. They don't have to run around for their payment. I'm coming to them. I'm not making them do admin chores like other people might do. I'm I'm letting them do what they got hired to do, which is give me a good result on the expectations that I set in the job itself. And if I let them focus just on that, I have earned my discount because it's actually cheaper for them to do the work. All right. And here's how I do it. whether you want to do it via a system, you know, software system or by hand. And a lot of times I do things by hand. I like to write things down in a journal. I keep a journal both like personally and for business and for project management. And I just write down the jobs you or the projects that I have and then the jobs within the current phase in the order. Okay. So I'm uh you know and I do it every week. So I got one 123 Main Street and we're on drywall right now. And you know after drywall we're going to do paint and then floors and then you know we'll be to that next pay period. And just I like to keep it fresh on my mind. And then I write down any admin tasks that I need to do to make things continue. Oh, you know, got to talk with Jeff, got to uh blah blah blah. And you know, when we get to the empire section, there is actually like a more softwaredriven way that I like to keep track of this stuff, but uh you know keep track of my own stuff. Once it becomes an admin thing, it becomes a task that I need to do. You know, there's a separation between the project management, the jobs that need to happen to move that project forward, and then things that get pulled out for me to handle as part of my getting things done. All right. Now, project costing. You need to keep track of your expenses. you've set this blurry vision, blurry budget that you are working against and now you need to make sure you're landing that plane. And it could be a simple spreadsheet. Uh we call it the invoicing notes because this was built for like when we were invoicing clients and such, but we still, you know, invoice to the real estate holding companies. The basic thing that you need to do in conjunction with QuickBooks if you're using something like QuickBooks is uh we categorize everything as a contractor expense uh supplies or material and a like other equipment and rentals uh category. So three categories and uh those are my costs and I categorize them. you know, when I pay somebody, I categorize it. And in the invoicing note spreadsheet, I also put in, okay, uh Jeff gave me a bid for $5,000. It's not in my QuickBooks yet because I haven't paid it, but I put it in my spreadsheet, so I know that that's coming. So, I can for forecast whether I'm staying on budget or not. Okay? And then at the end of the project, at the end of each phase and at the end of the project, you want to go over your budget to make sure that you're in a good position because you depending on how you've gotten your money and uh the tightness of your budget, you might alter what you do down the line based on going over a budget early in the game or vice versa. So uh and that is in those checklists that I was talking about earlier is uh updating your budget at the end of every phase. All right, let's talk about change orders, fear attacks, and black holes. Earlier I told you about the real formula for what something should cost is manddays plus material plus a reasonable markup equals the cost of that job. What the fear tax is is you take that and put a multiplier on it. That is the fear tax. You basically take your mandays plus material and then you take your markup 10x it uh or 5x it on a smaller fear tax item. And what the fear tax ultimately comes down to is it comes down two ways. One is you take a job like structural damage. Okay, that is a a ripe for fear tax because you as the customer just don't know like you don't know what it is. It is a just a dark scary thing and contractors know that they can charge. You know, a structural job like that costs 10 or $15,000 and that's how they price it. Okay? And they may not even be applying the fear tax knowingly. It just might be that, oh, well, I've seen jobs like that get charged 15 grand, so I guess I'll charge 15 grand. Uh, you know, they're not the original ones that put the fear tax on. they just learned that that's what you should charge for something like that. Or on the other hand, they may be scared of the job and they're like, I don't really know what to do here or uh that I'm not sure what it's going to take and so I'm just going to expand the price so that way uh no matter how bad it gets, I'm in a safe position. That's ultimately what the fear tax is. So how do you break through the fear tax is that you provide clarity for what the job is. Okay, take this structural job as the example. Uh it's a bathroom. I go into a bathroom and all the floors are soft and soggy because uh water's been dripping. and they come and say, "Oh, it's going to be $10,000 to um to do the bathroom, you know, the the structural repair." Okay? And so then I start looking at it and I start I start thinking about how to break that down. So we'd be doing demo. Okay. And after the demo is done, I'd have to replace the floor joists and then I'd have to replace like the subfloor and the flooring and then I'm done. Okay, that's it. Right. Those four steps. I'd actually I'd be thinking out loud like this uh with the contractor. So, yeah. Demo floors. Well, I don't get how it comes to 10 grand. Is it Am I missing something here? Uh what do you think? You know, all right. So if I was like if it was just demo and repairing the floors, what would you charge me? Okay. So basically what I've done here is I've reframed the job. All right. Well, for one, I've I've broken it down to to simplify it. And so if they're if the fear tax is because they're scared of what it is, all right, I've just clarified things for them so that you know it might they might understand better and feel better about it. And if it's like just the price that they give for something like that, I've reframed it in a way that gives them the opportunity to give me price based on the the tasks that I just laid out. Just like you know a uh sewer line replacement is well you dig a trench and then you put in new pipe and then you fill the trench. It's not a sewer line replacement. Sewer line replacement has a heavy fear tax but trench new pipe fill trench has less of a fear tax on it. See what I'm saying? Okay. And so now that I've reframed that job into three separate tasks or four separate in the structural example, now I've given them the opportunity to change the price because I can't just I can't just say, uh, same job, 10,000 bucks, like it's going to be that high. I don't want to do that because then I put myself in the situation where if I were him, I would if I thought that I was going to get haggled with on every job, I would then always come in high. So that way, you know, I had room to haggle be haggled down. Uh you definitely don't want to start that trend. So by breaking down the job like that, I've reframed it into a different thing that he's given me a bit. It gives him an opportunity to lower the price without looking like a jack. A jack a you know uh I try not to cuss in these things because my kids might see it someday but maybe they don't want to give me a better price and in that case I will say something along the lines of yeah you know that's not going to work for me and it is like the oddest thing I got this other crew that uh has done some jobs for me and I they must specialize in this type of thing because they're able to get it done like at a really good price. So, uh, you know what? Don't worry about this thing, this, you know, change order that you've brought up. Uh, I'm going to handle that. You just do the original scope that we agreed upon. Okay? Those are the two ways that I deal with change orders. Either try to reframe it, give them an opportunity to change the price. Uh, or I bring in a different crew. Okay. And now that that is the change order with the fear tax. uh the change order itself, you just have to verify what needs done. There are going to be things, guys, that come up. All right? There are going to be times that you open up walls and you find termites or whatever and it's just got to be dealt with. Um, you know, there as you get better at assessing projects, you'll almost have X-ray vision on a house and you'll you'll see more of those. And the truth is, you can't really trust your contractors to find those things because there is no motivation to find all of those little things. And and honestly, I know how it goes that like you just get in a rush on things and you know, you uh don't look closely enough. So, there's going to be change orders that come up and you just got to deal with them. You know, it's not like it's not your contractor being malicious. It could be and you need to watch out for those things, but uh for the most part it just sometimes they come up and you need to make sure that you uh put a financial contingency in your budget to be able to deal with them and that you don't get taken by those things because there are contractors out there who their whole strategy is to get a an initial bid accepted so they get in there and once they're in there they start giving higher and higher pricing on change orders and they find all kinds of things and so you got to watch out for that. Okay. So remember, the power is in the money. And uh make sure you always look at a job before you pay for it. And uh we kind of touched on this with the whole drywall uh popcorn ceiling removal example, but 50% complete is not necessarily 50% paid. The filter that you need to look through making sure you haven't paid ahead is what would it cost me to have somebody new come in there and do this the rest of this scope of work because that is the amount that I need left on the job on the budget for it. Uh and so 50% done doesn't mean 50%. Because you might have this scope of work and like what do you think they're going to do first? They're going to do the easiest stuff first most likely. So all the easy stuff is now out of the way and now the more complex stuff is at the end. That takes like a higher paid guy to do inside of their crew or more of their personal bandwidth. And so if you had somebody else come bid that just that portion, uh they're going to give a higher bid because you know every crew has like the laborer guy and it's like okay I can bring my crew here. or I can have the laborer guy do this easy stuff while I'm focused on doing this other stuff. And so, uh, if you've taken out all that stuff, it it's going to cost more than the back 50%. And also remember that guys give pricing based upon the bulk of work that they get to do. So, if you've taken away some of the bulk, then you've increased the price on this other half. So, 50% is not 50%. Now, here's uh a list of the 18 rules for managing contractors. We've already hit a lot of them, uh but I want to go through just a few here. This is uh there's basically like four sections. There's the bidding section. There's etiquette, management, and strategy. Uh the bidding. So, a confused bid gets confused pricing. This is the whole fear tax thing. uh if they're if they're confused or it seems complex and what they're going to do is going to have fear tax on it, guys. So, it's your job to simplify. Okay? Dirty jobs get dirty bids. If there's dog crap everywhere, it reeks in there. It's uh got bullet holes. This happened on a project of mine just recently. Uh anyway, I mean, just think about being the contractor. What What do you think you're going to do? You're going to walk in there and be like, "Oh, this is just like that uh cushy cosmetic project I just did." No, you're going to be thinking, "Oh, this is gross. This is terrible." And it's going to expand the amount of work that needs done. It is going to have a multiplier on it. And it's not even like a nefarious thing. It is absolutely human nature. So, dirty jobs get dirty bids. I have literally hired cleaners to come in and clean a project before I had it bid. I've done uh cleanouts and such before I had people come bid. I have gotten some scary items out of there before I've had contractors come bid. Uh so, you know, think about that. Get Costco bids. We talked about that. Um okay, so let's move to etiquette. Uh be a politician. Be the mayor, not the foreman. All right. These guys are going to have crew members. They might even subcontract to somebody else to do the work. You only talk to the guy that you're paying. Okay? The guy that you set the job up with. The other ones, you're there to shake hands and kiss babies. You do not talk about work. If they come and ask you, you know, the crew guy comes and ask you, "What should I do with this?" you say, uh, we're going to have to do that through the guy, you know, whoever the guy is, because because I don't want it to be pointed back at me that says, you know, and this happens. This is a common play. Oh, well, I thought you talked with Freddy and uh, you know, he said you told him to do this and then you're like, you know what, I did say something to that guy. That's not what I meant, but I see how you got there and yeah, you got your out, buddy. Um, so don't give outs like that, you know. Don't let those kind of excuses happen. So, shake hands, kiss babies, be the politician, not a foreman. Okay? If you get in the situation where you need to pull a job, it is burning a bridge. Okay? And this is the uh perfect time to talk about the black hole situation. This is what the black hole looks like. And everybody goes through it. You either have or will go through it. This is where you get a contractor, they accept a bid, you accept a price, they get started working, and then all of a sudden they're like not showing up to the job, and you're like, "Hey, man, what's going on? Oh, well, you know, I I'll be back there to do this, that, I'll have it done by Friday." And, you know, they just keep getting just enough done to where you're not like, I got to fire this guy. You know, it just keeps showing. It's like the uh you know it just keeps doing just enough for me to hang on you know but that that's the black hole. It's like it's not 100% poof they gone you know the whole ghosted thing. Ghosted is easy because then it's just like okay let me get a new contractor. It's when they just keep kind of holding on just a little bit. Uh all right so you eventually need to nip that. And the way that you do it is simple. You pick something that is like totally reasonable to do. Let's pick flooring as an example. Um, and you might have to text them because when people are in the black hole, it's really hard to get a hold of them and such. They're dodging. Um, so you might just have to send them a text that says, "Hey man, you know, like I'm sorry. I really got to get this project moving. Um, and I want to set reasonable expectations for you here." And so I'm saying like by next Friday, I'm talking like 10 days from now, I need the flooring done. I need that portion of the job 100% complete and approved by me. Otherwise, I'm going to have to let you off the job. And you know, I I don't want to burn any bridges here. We'll settle up on pay and such uh for what you have done. And uh but yeah, if it's not done by Friday, I'm going to have to cut the cord and then, you know, stick to it. But you notice like I didn't do this through anger. I didn't like set, oh, you got to have this done in 12 hours or I'm firing you. Okay, that's not reasonable. That's not going to give him an opportunity. You know how that's going to end. But sometimes you can kickstart a guy by doing this. Okay, you get them back on the job, focused on your job, and you make sure you have uh you know, you're in the win on the money. Uh it will motivate them to come back, but sometimes you got to cut them loose. That happens for sure. Okay. Etiquette. Uh watch out for loose lips. Okay. you start uh you know walking through the job site and you start thinking about things you know like oh you know what I'm thinking about uh you know the the bathroom there actually I'm wondering if we do you know these tiles instead of that or instead of refinishing that tub I was thinking about doing tiles here's what is happening in the contractor's head when you're doing that like you think you're just talking with your buddy you know like you made friends with this guy and you're kind of just thinking out loud about the different uh options and stuff what he's thinking is, "Oh, this guy's trying to get some free work out of me." Okay? Uh any words like that. They're thinking you're trying to get some free work out of because everybody else does that to him. Okay? And so, uh watch your mouth. Loose lips. Don't have them. Okay? Uh because they they're going to get they're going to get freaked out about it. All right? The management, uh be ironclad, but don't write a contract. All right? This is uh goes against conventional wisdom for sure because they're contractors. Shouldn't they have contracts? Well, what are you going to do with a contract? Honestly, like these guys, it it's not like you're not hiring a big company. Uh they're like a small business, one-man shops, little crews. If you have a contract and you go and sue them, what are you going to get? Like they got nothing to give you. You're just going to waste your time. You're not going to do that. You shouldn't do that. It's silliness. Um, and you need to protect yourself from getting screwed in a really bad way that would cause you to have to go sue somebody. And so, you're going to be ahead of the money the whole time. What's the contract? You know, if you manage it right, the contract doesn't matter anyway. And all it does is add so much friction that's going to raise prices for you. So, here's my contract. sent you the video and the written scope and you texted me the price. We're good. Okay, that's what we agreed upon. I've seen just deals go really wrong with the the contract thing. I All right. Be the bank fast payments. Sure payments. Like seriously, I've had uh there was this HVAC contractor that I used to work with and he'd like run up his bill to like 65 grand. I remember uh you know across different jobs and then he'd come in and uh you know come get his check. I'm like what are you doing dude? It's been like months. Why don't you just get your payment after every job? He's like well it's like a savings account you know like I know I got the money there and I can get it but and I have like multiple contractors that do this surprisingly and uh I hate it because it makes my accounting difficult. you know, I have to like keep track of all this stuff. But a great sign that they see me as the bank, okay? They trust that they're going to get the money. They can save their money here like a bank. That's who you want to be. The law of power. Always have the money. All right? We talked about all the management stuff. Uh let's talk about a little bit of strategy here. Um you need to mitigate your decision points and inspections. We talked about that. You need to keep them on their toes. All right. The downside of the relationship capital, there a lot of upside, but the downside is is if you start taking your eye off the ball, the price will start to creep. Why wouldn't it? Put yourself in their shoes. So, you got to keep them honest. You got to do some misdirection. So there are times where I start feeling like the price is creeping or I don't even have to just every, you know, few jobs or whatever, I'll just deny a bid because I want to make sure they know that it's not automatic. They need to work for it. All right, these are all the things you should expect from a contractor, but I want to tell you a few of the things that you should not expect from your contractor. Okay, five things. One is they don't have the vision. Okay, they're they don't I know we've touched on that. Uh I the one of the early projects I did with a actual general contractor is I told them, you know, I'm an investor and I want to flip this house and you know, I want to basically like look like a flip house, you know, like I I thought that was a look. And gosh, dude, I got such a terrible terrible renovation done. It was like there's like these beige 18-in tiles, the ones that are like at the end cap of Home Depot. And then, you know, that's what he used on the floor in this kitchen for Micah countertops. He used 12-in of the same beige uh tiles as the backsplash. 12-in tile, you know, like 12-in tiles. Uh I mean, it just looked awful. And the thing is, the flipped houses in that neighborhood were like granite tops, shaker cabinets, you know, nice floors, like subway tile backsplash, stainless steel, like you you can see it. They just don't know, man. They don't know. You need to set the vision. Uh, two is for them to be at the job site daily. These are not your employees. These are subcontractors. Now, through strong management, it's almost like their employees. Uh, but you do not demand their schedule. You de you could demand their timeline if you'd like to. You could demand that, hey, uh, phase three needs to be done by Friday the 13th. I don't know why I picked that date, but you could demand that, and you could hold them accountable to that. But it you hold them accountable to results, not the steps on how they got there. I want clean dishes. I'm not going to tell you how to clean the dishes, though. That one hits a little home for me. All right. Be a home inspector. I do not expect them to be a home inspector. There are home inspectors that you hire and uh especially on houses that you buy off of the MLS. You can absolutely get a home inspection company to come in and they'll give you a list, pages of a list that uh say all the things that are wrong with the house. Uh it's not uh by the way all-encompassing uh because they don't they're not builders. They're not, you know, codes enforcement. There's an absolute discrepancy between codes enforcement and a home inspection that you get done by a home inspection company on your house. So, don't expect those to be all-encompassing, but absolutely don't expect your contractor to be a home inspector. They're not going and, you know, checking all the outlets. They're not crawling through the crawl space. They're not looking uh they're not looking for things. They're looking to have a scope of work given to them that they can bid. It is not on them to build the scope of work. They will build a scope of work for you, but it's not going to be exactly what you want. So, don't expect them to be a home inspector, and don't expect them to cast your vision for you. Don't expect them, number four, to be an engineer or an architect. All right? If you really want to go change floor plans and such, well, for one, go find somebody else to mentor you. Uh because I'm not about that. That that's a can of worms. Okay? But if that is what you want to do, you got to get an architect to do that. What are you are you really going to have a GC write up your floor plans? Like that's not what they do. They're not an engineer. Like truly, if you want to remove that wall between the kitchen, you need to have a structural engineer come in there and say exactly what to do. You got foundation problems, you got to have a structural engineer come in there and do that. Okay? or if you are the owner of the house, the investor, you can set the scope of what you want done. Okay? Uh but don't expect that from a contractor. They will mess it up. Absolutely. It's not on them. Be an admin. We talked about that. Don't expect them to be an admin. You're asking for trouble. You're creating friction that uh you're going to pay for. Okay? Might not be directly, but you're paying for it. I promise you. All right, let's talk about codes enforcement a little bit. This scares a lot of people. Certainly scared me. I remember uh starting out that there we like plastic off the windows and you know put black plastic on it so they couldn't see in because they might see that we're doing work even though we were only doing cosmetic work and that doesn't need uh permits per se. And uh you know like to the point where I I I remember in uh Colorado, it might have even been St. Louis, uh, seeing like one of the city trucks go by and I hit the floor like I was doing a burpee, you know, so they couldn't see that there were people in the house. And I think that a lot of people get freaked out about this kind of thing. So, let me tell you how it works. Okay, every municipality is going to have different rules. Um, you know, but basically, if you're doing major construction, you're going to need to pull permits. Definitely if you're adding square footage, if you're refinishing a basement or like adding an addition outside the house, you even want to pull permits because, you know, then you can change the records that say um you know, the the square footage of the house, the the actual tax records can be changed. Now, I'm not a boy scout, okay? You do what you want. Uh but there are pros are benefits to pulling the permits. There are also cons. Okay, so if I am doing a cosmetic renovation, I'm definitely not pulling permits and you don't need to pull permits to do a cosmetic renovation. U and definitely some people push the line quite a bit. And I'm telling you that if you push the line too much and they come in there and catch you, you're going to pay for it. Okay? and the contractors that you hire, you know, depending on who you hire. Um, some will want to and some won't want to pull permits. So, you need to make a decision on this. But for the most part, if it's cosmetic, you don't need them. Like legit, you don't need them. And if you're gutting that house, you want them, okay? You want to make sure the stuff in the wall gets inspected because whoever comes to buy that house is going to uh see it and they're going to want to see that there's permits done. And if you're even if you're not, honestly, you want the work checked from these guys unless you really know what you're doing. So, uh if you're hearing this out there, if you're taking drywall off, go get some permits. Now, there is a little bit of a gray area in between. doing a full renovation, you need to do a little bit of electrical, you know, repairs or whatever. You be the judge, guys. And then, uh, but technically speaking, you should be pulling permits for those things. But here's how it works. You pull a general permit over the entire building. A general contractor pulls a general building permit. And then they will need a licensed mechanical contractor, licensed electrician, like a master electrician, and a master plumber to come in and pull permits underneath that. And then there's usually if you're, you know, doing any sort of building, there'll be like a a footing rebar inspection. There'll be a a foundation inspection. And then there'll be, you know, you actually frame everything. And then but you don't necessarily get it inspected quite yet cuz you have mechanical, electrical, plumbing come in there and they each do their thing. They each get a rough inspection done and then you get a framing inspection done with with the idea being that you know the plumber might come in there and like tear up your framing uh trying to cut through for pipes. And so that's why framing gets done after mechanical, electrical, and plumbing roughs get done. And um most municipalities have an insulation inspection. So after the framing gets done, there's insulation and then there's like a rough building inspection. Usually the framing the framing inspection usually happens after the insulation. I kind of framing and and rough building inspection are the same thing. So if there's an insulation, it will happen before the framing. I, you know, I'm saying this back and forth because it's kind of like you can do it either way in most places. Some places might be anal about what order you do those two in, but whatever. Just figure it out and then do it. Not that complex. And then some municipalities have a drywall inspection as well. Now, that's how it works on like a new build. But on a gut, for instance, uh you would do the same thing. You would gut all the stuff out. You would do a a mechanical electrical plumbing and then you'd have to do an insulation framing building inspection and then drywall inspection if it was that kind of place. On like a full renovation, you would do things in the same order. Cosmetic, you're not going to need them because it's cosmetic work only. My buddy uh the guy that called me, he just got a stop work order because he finished out a whole basement with outpulling permits. You know, this is the downside of trying to be a a cowboy. Once again, not a boy scout, but uh you know, look out for your own good intentions here or your own uh results that you want. He got a stop work order, so he's having to pull permits now on a basement that he already finished. And I almost guarantee you they're going to take them they're going to make him tear those walls down. You know, he's going to have to open up the drywall so they can see the work that he did inside of the walls. you think about the cost here. So, if you're opening things up, if you're covering things up, guys, it's a really bad idea to try to be a cowboy. All right? I know that there is a lot here, okay? And quite honestly, we're probably only touching the surface of how uh deep the work and the project management goes and really in understanding construction. And you know, that's just going to happen over time. We will uh I'll keep pumping out videos about those things, getting into more details so you know what to expect and you know really behind closed doors we talk more about exactly what you say to these guys and the exact steps and you're going to learn over time. I know it seems overwhelming. You know it is. It's a lot and you will do your best learning by getting in there and getting some experience. You are going to make mistakes. I make mistakes all the time. Uh, real estate has a lot of space. If you get a great deal, it basically fixes all the problems. So, you get a great deal and you're going to have runway to make those mistakes. But don't let the complexity of this stop you from getting started. You will get through it. You will get the house renovated and you'll be ready to take it to the market. And that is our next section is the market itself. Now, this will be quicker because the market is what the market is. You can't make a house worth more money. However, there are a little bit of psychological tricks we use to get the most out of things. And I say the market is what the market is because it's like if a house if you've comped a house and it's going to be worth 350, you're just not going to get 380 out of that house. However, you might be able to get 360 out of that house with some tactics and the right real estate agent on market strategy. So, so let's start right there with finding the right real estate agent. Here's the truth. Actually, I want to back up. For sale by owner, a lot of you guys want to do for sale by owner. Uh we're going to talk a lot about like putting filters on houses. That's the psychological tricks that we're talking about. And like the ultimate filter to put on a house is a for sale by owner. It says, uh, I'm cheap and this house is cheap and you can get a great deal. That's what it says to people and you will get priced accordingly. Okay? And there might be strategies to make that work really well, but it's like gosh, we're focused on so many things. Let's not focus on that. Okay? There's there's ways to do this that are that take a lot less bandwidth. However, there are these like list with freedom options that I've definitely used in the past and it might be a good option, you know, if you don't have a lot going on. Now, later we're going to talk about the all-w weather approach, like the few things that you really should focus on all the time. But for now, the list with freedom, let me just tell you about that quickly. It is basically for sale by owner. It makes it look like it's not. It's a program that you buy. you basically like pay a flat fee to this actual real estate brokers. Like that's a company list with freedom and you you get to do all the work is what it comes down to. Okay? But I don't suggest doing any of that stuff. I just want you to know it's out there. What I suggest doing is finding the right kind of real estate agent. Okay? Most real estate agents suck and they don't work. They don't they're not worth being a real estate agent. They're not worth the commissions that are paid. However, there are some that are absolutely worth it. Uh, you know, bulldogs, pit pitbulls that are going to go fight for every inch for you. Like, a lot of them, they they're they're more worried about what other real estate agents think of them than they are worried about getting the most for you. And it's kind of like the system is set up for it to be that way because they get their commission from you like once usually as a seller. Of course, as an investor, they're going to get multiple. So, they might treat you a little bit better than the normal person, but otherwise, they're rubbing shoulders with these same real estate agents all the time. And so, they want to look cool to their group. You know, they have like the awards that like who sold the most and such. Like, those are the people they're trying to impress. uh status games, baby. So, watch out for that. You want somebody who's actually going to go in there and fight for you and not worry about it. And those are rare. And also, like, just because they're a real estate agent doesn't mean they know jack about the real estate market. Like, they just they're marketers, you know? They know how to list houses and um not even try to get the most for it. So, so don't be asking your real estate agent for flipping advice. They don't know. there's like the only way they know is if they're actually a flipper, which uh you know, great. That that could be a good hookup for you. Okay, so you got to find a real estate agent that is actually a real estate agent. They're not they're certainly not all created equally. They um and you got to know what to expect from them. Your expectation for them is marketing. Listen, I I bought this house that I was going to I was going to renovate the house. had a double lot. I was going to renovate the house and I was going to build a house next door. Double lot. You know, I worked with this real estate agent to find the house. And the minute I bought the house, I went and I had some people remove the trees that were on that extra lot so I could, you know, get going on the building a new one. And sure enough, as soon as I remove those trees, I look up and there's like huge power lines overhead and you can't build underneath power lines. And I was pissed. I'm like, I wanted to sue the agent, you know, like that. This is what I went through being a novice that I am or was. Uh, and yeah, I wanted to sue this guy. You know, I call lawyers and stuff to like figure out I I say like lawyers like I got all these people like I I think I reached out to a lawyer that I knew to see if you know what we could do here. And and basically, uh, the answer is, uh, he's a marketer. like he it's not his responsibility to tell you there's power lines or easements or whatever. Like maybe a good agent would uh look those things up and advise, but most of them have no clue. Like he doesn't know. How would he know? It's not their responsibility. This always goes back to, you know, the philosophy, the cowboy rule. You're not a damsel in distress. You are in charge. You are the one leading. You do not lead with blind trust. You don't trust those guys to know those things. That's on you. Okay. Now, marketing, the market filter. We're going to help them with marketing because not all of them are very good at it. This is what I call the digital introduction. Okay. The and and first remember in the strategy we did the big three. This is how we uh put a bow on things basically. But now we need to accent those things. We need to highlight them in the digital introduction. So, think about how somebody's going to come see your house. It's not like they're going to drive by your house and see the sign and come in. I mean, maybe a couple people will or whatever. And it's not like it's your agent doing open houses that sells your house. Like, I've never actually seen a house sold from an open house. What I see is agents getting other clients out of an open house, which is cool. But, >> >> uh, okay. So, somebody is looking on Zillow or their agent has sent them listings and the first thing that they're going to see is the pictures. The the pictures have to be awesome. All right? So, think about how much work you did in the big three to think about how somebody's approaching the property. you know, like how they're pulling up, how they're walking through like the curb appeal, and then they walk through the front door and they see another couple things that are great. Well, you want to make sure that the pictures represent that. Okay? You want them to walk through the pictures just like they're walking through the house. And you want to design the house in a way that makes that appealing. And you want those pictures to be high quality. All right? Everybody's got a a cut rate photographer. It makes a difference here. Make them prolook. like they don't have to be fancy, but you know, comps here, guys. The ones that are looking good online, you want them to be uh of comparable value to those pictures and you want them to be in the right order. So, you don't necessarily need to add every picture, okay? Not every closet needs to be added to this. You are trying to present the property in the light that you want because you want to start to create this filter, this, oh, I love this house kind of filter before they ever even set foot there. So, there are the photos and now we have the pricing. That's the the next thing that they're going to see next to the photos. Maybe the first thing really. Okay. Everybody's inclination. You've worked really hard on this house and so you know the $350,000 house. Well, what if we price it at 360? The market is what the market is, guys. If you overpric price a house, here's what happens. The house sits on the market. Okay. Uh longer than the average days on market. If the average days on market, that means from when a house got listed to when it actually goes under contract and sells. If the average days on market is 60 days and yours has been sitting there for 70 because you overpriced it, people are going to start asking questions. What's wrong with this house? Does it have other issues? And even if it doesn't, it's going to make them look with a magnifying glass when they go to look at the house, and they're going to find things cuz there's always things to find. You want to avoid that type of friction. Now, I've heard it said that you can't price a house too low. I don't know, honestly, guys. cuz I've never had the the kahunas to price it really low, but not too high is definitely the way to go. If you have to on the scale from too high to too low, you definitely want to lean towards the too low scale. Otherwise, you're going to be in a situation where that filter gets added. So, price it right. Uh, next is the copywriting. All right, there's the the description, the listing details or description that you have to write. And I see these lazy agents putting welcome to 123 Main Street. What does that do guys? Copywriting is writing in a way that motivates somebody to take an action. And the action in this scenario is twofold. One is to book a showing and two is to create the filter through which they see the house. So there's this whole thing in copywriting and marketing that is uh benefits over features. You know, a bad description says all the features of something. Uh got new stone, got new LVP floors. Those are features. And benefits is what it does for that person. All right. Extreme examples would be things like um makes you look better than all your friends, makes people jealous of you. You know, these are things that people actually want from a house. Could brag to your friends about all the cool things in your house. Could drink a beer on the huge deck in the backyard. Right? Those are more benefit related. So, you need to write your listing description in a way that entices people to feel the house and what it's going to be like to live there. Not just welcome to 123 Main Street. We got this, we got this, and we got the other thing. Use Chad GBT can help you out with all that kind of stuff. But and now that you know what you're looking for and make sure that your agent isn't doing that and you want a little tip on finding a better agent, go look at their listing descriptions and you'll see how good of a marketer they are and uh how much they give a crap. Now, I'm not saying that if they do the 123 Main Street, they don't give a crap. They might not know. They might just be bad marketers. All right. Now, uh, one more thing on the digital introduction is the agent has the opportunity to almost write, uh, directions on, um, how people like come to the house. Okay? And remember, in this big three, we're trying to set up like how people approach and walk through the house. So, you want to think about like what door you put the lock box on and where you put the lock box. Uh, like we've even put the lock box like not on a door because we wanted to make sure they pulled up in a certain way. There was like uh in this specific scenario, we had a we had a house that we were selling. It was like a a wholesale situation. So, it was uh more like a landlord flip. But anyway, one of the highlights was that it had a brand new HVAC unit. Everything else was kind of crappy, but anyway, it had a brand new HVAC unit for whatever reason. And so, we put the lock box over by the HVAC unit. So, that way the first move that these people had to make was to go to the HVAC unit. So, they saw that that HVAC unit is brand new. We started to create the filter. You see, um, obviously that's an extreme example, but if I want them to go through the front door, I want to make sure that the lock box is on the front door. If I want them to pull up to the front, I want the listing details that the agent puts in to tell them that like make sure you know that you pull up to the front, that's where the lock box is. Um, you know, parking in the back is it's tough to get out or whatever. You know, whatever entices them to approach the property in the way that you want them to approach the property. Next is the walkthrough itself. We have this thing called the market kit. Now, don't get too hung up on all this stuff, but uh some smell good stuff. You know, Glade plugins, uh not candles cuz you don't want to burn down the place, but uh make it smell good when they walk in. There's um more than just visual senses here. The blue stuff in the toilets, I like that cuz it makes it seem sterile and clean. Uh daylight through the doors. Make sure that when doors are shut, you can't see daylight to the outside. If so, there's like little um threshold stuff that you can buy to cover that. Um have a Swiffer in your market kit. You know, make sure the place is sweeped up nicely. Get rid of co cobwebs. WD40 for the hinges. If you got creaking hinges and such, that's not a good sign for people. Uh drawers. Look in the drawers in the kitchen and the bathrooms. Make sure there's not crap in it. Contractors, whatever reason, there's always crap in the drawers. Uh and hinges. Make sure there's no dang paint on the hinges. And just a quick note about the final 5% on a project. I know I hit it earlier and maybe the market is not the right place for it, but this little handyman budget, just know that you've been looking at this project for weeks or months and you remember what it looked like at 0% done. Therefore, at 95% done, it looks great to you. Okay? But all that person sees when they walk in the house for the first time is the 5% you didn't do or the 1% that you didn't do. So, um, don't allow things to be undone. Now, I'm not talking about the whole to give a mouse a cookie dilemma to where you keep wanting to do more jobs. I'm talking about making sure the jobs that you did choose to do get buttoned up. All right. Next is pricing and negotiations. Don't be scared here, guys. All right. Uh, yes, deals fall through because people get cold feet or whatever. And and what I'm talking about is, you know, there's different stages after a house goes under contract. House goes under contract. Then you have a inspection. They get an inspection done. There's an inspection resolution. They ask you to fix things or ask for money off because of the things the home inspector found. And then there's an appraisal. And then there's a closing. Those are the main contingencies that happen. So, you have the initial negotiation like the house was listed at 350 and they come back and they say, "I'll give you 320." Okay. Well, uh, my general belief is that the deals that fall through is because those people didn't want the house. If somebody wants a house, they want a house. like they almost they were prepared to pay the listing price when they gave an offer in the first place. Unless it's an extreme lowball and they're just trying to get a great deal. But if they want the house, you can push a little bit here. Now, you might give a little bit. If they come back at 320, I might not say, "Oh, 350 or nothing." I say, "Oh, you know, the lowest I can go is 340 on this thing." All right. Don't just take the price is what I'm saying. Now, this is an important thing with pricing and negotiations. is that you would think with the agent, you know, you're talking through your agent that's talking through their agent. So, you can't really negotiate directly with the with the buyer, which is kind of the whole intention here. But if you convince your real estate agent of something or if they're a good agent and they convince the buyer's agent, then that will in turn affect the judgments of that person. Okay? The the buyer. And so you got to give a pitch here. All right? Why why you can't accept that price? You know, we just got so much into it. We're already going to lose money at this price. It is worth it to do those things. And on that topic, it is worth it for the especially in a in a tough market uh for the agent to call the other agent and uh almost give them a pre-our of the house like, "Hey, make sure you look at this thing and this thing and this thing. You're really going to like this thing. Everybody's been um raving about, you know, the the kitchen or whatever. make sure you don't miss this whatever because it gets that in their head and think about the buyer's agent. They like to, you know, seem like they really know what they're talking about. So, if you give them some information to hand their client before they go, they're definitely going to tell the client that. You know, you're you're selling them to sell the buyer. And that's what you want. And that's really how you think through negotiations is you're thinking about convincing that other agent and they will go and convince the the buyer. Same thing with the inspection resolution. You know, you don't want to give a hard no, but you you want to play some hard ball. Okay? Uh depending on the the heat of the market. In a more buyer market, you might have to give a little bit more. And and in a sellers market, you'll be able to push. you might not fix anything because you know somebody else is coming. All right. Finally, in the market section here, just a quick thing here. You know, mostly talking about house flipping, but as we've discussed, there will be scenarios where you hold the house and you give it to a property manager or you property manage it yourself. I do not suggest this. You need to focus on your next deal. you need to focus on uh building your business. And so if you are going to hold a house, you need to go find a property management company and you need to use the same rules that you use to find contractors and hold accountability. You know, you have your monthly, you'll get your monthly statements, look over them, and ask questions. And that's as deep as I'm going to go with property management for now. And uh now we're ready to manage your business as a whole. This is the section called the empire. All right. There's really three main sections here. Managing yourself, the vampires, and inflation or excuse me, and the vendors. Inflation is one of the vampires. Dang it. Gave it up. All right. Manage yourself, guys. Uh one of the biggest vampires of all is going to be yourself. and the damage you can do to yourself. Uh that's okay. We all do it. But first, I'm talking about your money, okay? Uh you need to cut your expenses, especially early in the game. All right? You're going to make some money flipping. There are good profits to have. And a lot of people, you know, they just go and blow that money when they get it because it's well, there's a lot a lot to deal with. But the goal is to ultimately own rentals and just the more disciplined you can be around your own finances, the faster and easier the path is going to be for yourself. You should have a budget. You should keep your budget. Sometimes you'll mess up your budget, but that's all right. the it's like um if you start counting your calories, all of a sudden your calories intake will start going down because you realize, "Oh my god, I didn't realize that thing had 5,000 calories in it." The bloom and onion. I thought it was an onion. It's a vegetable, right? Same thing with your budget. Just watch it. Keep track of it somewhat and it'll go down. You'll stop going to the gas station or whatever you might do. Next is keep a journal to help keep your head straight. Guys, any business you're always like thinking I mean I know that I am and in talking to you guys I know that you think this way as well. You're always like planning out is this the best move? Is that the best move? It feels like there's so many steps and just as soon as you write it down it all of a sudden everything has clarity and it's never as complex as it seemed to be. So write down, you know, I always have like a monthly goal uh that derives from a quarterly goal and then that monthly goal I cut down in, you know, each week we I go and set, you know, my intentions for the week and then every day I go and uh make sure I know what the one thing I want to complete today is or the top couple things I want to complete today. And I really think that is a superpower if you have clarity on what you want to do. And then this leads to the next thing, the GTD method. David Allen, I got the probably got a copy of that book back there. But um really changed my life that you know, you I think that the best business owners just have a great ability to keep things in their head and uh act upon them automatically prioritize. They're very effective people. The thing is, you don't need a great brain to do that. Uh, I'm not very smart, but I think I get way more out of my brain than most people because of the GTD method, which basically is here's the simple version. The the book in a nutshell is all the things that come to your mind, capture them into something, whether it's actually written or, you know, I use to-doist, the software app, and I just write everything down, everything that comes to mind. Oh, I got to make the video for eight hours about the thing. Okay, put that down. Uh, gota call Johnny about the drywall. Write that down. Got to do the dishes when I get home. Write that down. And then you at some point in the day, maybe multiple points in the day, you go in and decide how to act upon those things. That's the simple version. And there's a lot of like rules about how you go through those things and like you know projects that you put them in. But the simplified version is make sure you capture everything and then make sure you look at everything and decide what to do about it. Easy enough. Look at uh GTD getting things done by David Allen. It a great book like I said changed my life that because then the point is your brain is not meant to be dealing with all of those things. It's meant to be doing what brains do. great, which is problem solve and and plan and all that kind of stuff. So, use it for what it's good for. Uh, this business, just like any other, I know we've touched on this before and the core philosophies and such, but it's going to be tough, guys. Every business is tough. Um, get through the obstacles. Those are skills that are getting created. It's worth it. Those skills will carry you very far. Don't let the obstacles crush you. And finally, in managing yourself, just remind yourself, you're the guy. You're the guy. There's nobody coming to save you. There's no contractor. There's no vendor. There's no real estate agent. There's no wholesaler. There's no none of them. None of them coming to save you guys. It's you. You're the one. All right. Vampires. Three vampires. litigators, tax collectors, and inflation. All right? People will try to sue you when you have money. That will happen. I've been sued. It sucks. Anybody can sue anybody for anything. You have to protect yourself. But on all of these, don't get worked up. I remember when I started all I I thought about all the LLC's and the CPAs and the bookkeeping and the uh man I got to do this, I got to do that and the other thing. Here's the reality. You don't got to do crap until you have something to protect. You got to have something to protect before it's worth any of this. And these minor things are the thing that stop most people from starting. So don't let them stop you. Okay, I'm going to simplify all this and I'm not a lawyer. I'm not an accountant. So, I just want to push you in the right direction. I'm not giving you like ironclad advice here. Okay? Legal, pretty simple. If you set up an LLC, you separate the company from yourself. Now, if something bad happens in the company, as long as you've followed the rules of officially separating, like having a separate bank account and not comingling funds and things like that, look up all the rules. But don't get freaked out by the rules. But if you've separated and something bad happens there, it doesn't pass through to you personally. That's the whole concept of uh companies. You know, the reason like these companies were started in the first place is uh when you know, ships used to go out to sea and take cargo, like a bunch of the ships would sink. Like we're talking like way back in founding father days or maybe before. I don't know. I'm not a history buff. But, you know, these ships would sink. So, like everybody's like, "Well, I don't I don't want to do that because if I take the ships out, then I'll lose everything plus some." And so they set up these corporations to where they could basically uh compartmentalize the losses in just the company and then people felt safe enough to go out there and actually uh ship goods. That's the way I understand it. I'm not a history guy, but you get the idea. It is so you can compartmentalize your risk. So you set up an LLC separately and uh you know the thing to remember is uh rich people don't hide money, they hide ownership. Okay. And then uh one more part of the legal is insurance. like you get a builder's risk policy on the houses that you buy to work on. And then if you're holding them as a rental, then you get like a a regular insurance policy for a rental, which is going to be cheaper than the builder's risk policy. And there you go. Insurance is your first line of defense. Next is the IRS. Again, tax collectors, don't worry about your taxes until you have something to be taxed. All right? And it is true that house flipping is uh taxed at a pretty high rate. It's short-term capital gains and you know there's the whole thing about the dealer status and the blah blah blah blah blah. But who cares? You know, if I make 40 grand on this flip and I have to pay a heavy percentage of that in taxes, I'm getting skills. Okay, get me in the game and then we'll over time learn how to mitigate those things. But here's the thing. People have to pay a lot of taxes because they're making a lot of money. Cool. Great problem to have. And you're in the right place because as we talked about early on, uh, well, one of the greatest parts about real estate is the people who wrote the tax code own real estate. So, they set a lot of things up in your favor for holding real estate long term, which these steps that may cost you early on uh, are getting you in the position to be able to hold longterm. So, great. All right. In inflation, that's the final vampire. Basically, if you sit money into an account that is not interestbearing, over time that money becomes worth less because inflation is happening. Things are getting more expensive. So, it's money cash sitting there is not an asset for you. However, cash is the oil in the machine. And if the machine, your business runs out of oil, it locks up and stops. And the whole game, guys, is staying in the game long enough to learn from your mistakes, to be able to see around corners, and then the rest is history. And so, don't be too scared of the inflation thing. Like, don't let these spreadsheet warriors get you concerned about, oh, well, you should have that money invested. No, you should have that money ready to oil your machine. I always have, you know, I'm too conservative about those things probably, but 15 years later, still in the game. All right, so don't get too freaked out about that, but also keep making sure that you're investing in assets, which is real estate. Finally, the vendors. Uh, you have heard everybody and their mom talk about you got to build a great team. You got to build a great team. That's that's what real estate's all about. I don't think so. You know, I don't think that's what it's about at all. I think you need to build great skills. I think you need to build great leadership skills, great profiling, intuition, and recruiting abilities because I've been through lots of different contractors, real estate agents. Not anymore because my real estate agent's my wife and you know, well, I have beliefs on that kind of thing. So, I guess I'm stuck with that real estate agent. But anyway, contractors, wholesalers, lenders, uh, been through a lot of them, guys. All right? It's not about the team. It's about you. You make the great team. So, don't get worked up about it. You're going to run through them. Uh, and they're not the one that are going to make and break your deal. And I know that's against popular opinion. I do think they're important, but they're not the whole deal, okay? So, stay focused. Uh, these are the ones that you need. You need contractors. We know that. Wholesalers, if you're buying through wholesalers, lenders, people who give you money, obviously banks, yes, great. But, you know, like here's the deal. Lenders make money by giving people money. And a lot of people feel like they have to be on their knees to these guys that like almost like they're doing them a favor by giving them the money. They're not. You're doing them a favor by being a a customer that is good and can pay the bills. They like that. They want that. They want to find people like you that are are good and paying the bills. So, you're actually doing them a favor. That's the business for them. Real estate agents, property managers, if you're uh ready to hold rentals. And then there's the admin types, which once again, don't get worked up until you need them. Attorneys, CPAs, bookkeepers, insurance brokers. That's the empire in a nutshell. Now, let's move to the steps. This is like the first five years of your business. I think that you should absolutely start with your primary residence. Everybody should flip their personal house. You're going to do it with a conventional mortgage. uh you're going to be able to put 3 and a half or 5% down to buy a house that is livable today and it needs some updates. You're going to MIY that house or even maybe a combination of DIY as you live in it. This is the safest possible way to flip your first house. And uh conventional mortgage, you won't be able to sell it until you've owned it for at least a year. So, it's not going to be a fast flip. You're going to have time. You're going to have control. You're going to be able to make mistakes, which you will, but like even if you over buy on that house, you're going to have to pay to live somewhere anyway. It's just like replacing your rent with a mortgage. And all these idiots who say you should rent and invest the difference. Well, that's stupid because at the end of the day, I don't have an asset that is a house. I And I'm not going to get into that in this course, but that's dumb. It's all based upon that you're going to be so disciplined that you take the extra $300 a month that you're going to have and invested in this certain specific thing. Nah, lock it up, baby. Set yourself up with a forced savings account and then in 5 years uh you'll have all kinds of equity and then be able to do whatever you want. That's cool, too, right? Okay. Primary residence with a conventional uh could be a house hack. You could buy a duplex, uh, live in one side, rent out the other ones. You're going to do MIying or DIYing on this. Uh, and then you're going to flip a couple houses. All right. Once you get through that one, you're going to go get a hard money loan or if you have the cash or, you know, partner with somebody, private equity, and you're going to do a couple flips. you start gaining your skills, gaining your skills, and then you're going to move to holding one. All right? And we didn't, this was about house flipping, so we didn't really get into like how you refinance it, and we didn't go deep with property management, but basically, instead of selling it to the market, you're going to go to a bank or a DSCR lender that are very uh prevalent now. They're all over the place. And they're going to take the loan that you had or the cash that you had in that deal and they're going to refinance you out of it. And then you have a a long-term fixed rate mortgage on it. Great. You put a renter in it, move on. Okay? And then basically from there, it is as simple as you have the goal of holding rentals until you need money for cash flow. Then you flip it. If I have the money, I hold. If I need money, I flip. It's that simple. And I might wholesale a couple as I'm going, but remember the rules that I have with wholesaling is I'm only going to wholesale a house if I would have bought it myself. So, I might make some extra cash that way. I got a house, I'll flip it, but you know, this guy over here, he'd pay for it before I have to do anything. That is fine with me. But if he falls through, I'll be able to go buy it. Okay? And there you go. Keep renting. Unless you need the cash, then flip it. And unless you need the cash differs from one person to the other. You might want to make 200, 250k a year. So, you might want to flip four, five, six houses every year and then uh only hold a few rentals. I, on the other hand, am more focused on more rentals. You got to choose what you want. I I can't tell you what you want or need personally. Next is the all- weather approach. The four things that you should be focused on. All right, this it's complex. It's overwhelming. I get overwhelmed, too. You know, we talked about the journaling and all that to try to keep your brain focused, but here are the things that you can always come back to. You always know you need to focus on these four things. Number one is finding great deals. Put your effort into getting better deals and it solves basically all of the problems for you. Number two is project management. Play defense. You got to play defense. And these are the things, by the way, that you personally should be doing. Even if you do decide to go grow a team or something like that, these are the things that you should really have a heavy hand in. Project management, okay? Managing the contractors. Next is leveling up the vendors that you work with, especially contractors and wholesalers and any of the other vendors. Is your It's not like, "Oh, found a contractor. I'm good to go." No, I'm always looking for the next one. always looking for the next one. If I have uh an attorney and I meet a new attorney, uh maybe I start looking at moving somebody in or at least I have a second string quarterback now. And finally, guys, smart scopes of work, the strategy. This changes everything for people that the thing that gets people in the most trouble is they set up the job like an idiot from the start. They were screwed before they ever even set foot. to set a contractor set foot on that job site. So, really focus on making better scopes of work and that will make a huge difference for you. Okay. Finally, early on in my career, going on an appointment to buy a house and I'm meeting with this guy, changing his name here, but it was something like this. Pretty hilarious. Bubba Hicks. And I look him up before I go to his house to go on this appointment with him. And the dude owns 50 houses. And you know, like in these systems, you can look up like their mortgages and such. No mortgages. 50 houses outright in cash. And I'm like, "Oh my god, Bubba Hicks is going to teach me a lot. Can't wait to go on this appointment. Of course, I'm going to try to buy his house, but um 50 houses in cash." I go to this appointment and it's like, you know, 5:00 is when the appointment starts. And I'm like, "Where the hell is Bubba?" You know, he's not here. It's 5:10. And then I look out and I see this HVAC van out in the parking lot or in the driveway. And finally I go up and I'm like, "Hey, uh, do you know who Bubba is?" Oh, I'm Bubba. And I'm like, "No way." The dude in like an HVAC technician van can't be Bubba Hicks, the guy that owns 50 houses outright in cash. We go on the appointment and I try to negotiate to get the deal, but I'm kind of starruck because Bubba is like, you know, rich as f in my eyes at the time uh in my career. And anyway, I didn't get the house cuz I sucked. And he uh afterwards, I'm like, "Dude, you know, I had to look you up and you own 50 houses in cash. Like, teach me." And he's like, "Oh, well, you know, I guess about 30, 40 years ago, my neighbor said they wanted to sell a house, and they said, you know, whatever. I wanted $100,000 for it." And I went to the bank and said, "Hey, will you give me $100,000 to buy this house?" And they did. And then I put a renter in it. And uh well, you know, I just used the money that the renter gave me and I paid the mortgage with the renters's money. And then, you know, another neighbor wanted to sell their house. And I went to the bank, asked that they'd give money, and then I put a tenant in that one. And then I took the money that they gave me for rent, and I paid the mortgage with that. And then, well, I just did that like 48 more times. And then after 30 years, all my mortgages were paid. And guys, that's how simple it is. Everybody makes this game really complex. Grab assets, put tenants in it to pay for it. And the way that you get yourself in that game is you learn skills. And you learn skills through flipping. Flipping allows you to get cash at will by the construction company operating company strategy. You can get cash today and every time you do this, you get better and better. A lot of people get wiped out early because they uh don't have courses like this to look on and they get flustered by the obstacles that they face and quit. And if you stay in the game, I promise you, you'll be able to make money at will. You'll be able to be like Bubba Hicks and own 50 houses outright in cash if that's what you want. I hope you made it to the end. If you made it to the end, guys, let me know. Pretty awesome. I know this is going to be a long video. Uh, I've been trying to keep uh track of how long. Apparently really long. And I'm going to have to get out of here because I'm going to get in trouble if I get home late. So, thank you. See you later.