BiggerPockets Podcast 116 with Nasar Elarabi Transcript
Link to show: BP Podcast 116: How to Quit Your Job Through Wholesaling, Flipping, and Taking Action with Nasar Elarabi
Josh: This is the BiggerPockets podcast Show 116.
Nasar: Well at that time I was too stupid to quit.
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Josh: What's going on everybody? This is Josh Dorkin host of the BiggerPockets podcast here with my co-host Mr. Brandon Turner, what up Brandon?
Brandon: Well how are you doing?
Josh: I’m good man; I’m good it's a beautiful spring sunny day enjoying life what about yourself?
Brandon: things are good I have had kind of a dry spell with buying rental properties in a while and I’m getting two next week so it’s kind of exciting. And my apartment complex refinance went through or goes through tomorrow so this was a very, very good week in many regards.
Josh: Wow does it hurt?
Brandon: What hurts?
Josh: Patting yourself on the back.
Brandon: Yeah my arm’s getting a little sore.
Josh: I’m just asking.
Brandon: It's been a, I’m going to leave a success story in the forums because I like to brag about it. And there is a QuickTip for everyone today is, leave a success story when you do something cool.
Josh: There you go.
Brandon: It makes people happy.
Josh: Awesome, awesome.
Brandon: But the real QuickTip we should probably get to right?
Josh: We should, alright today's QuickTip is on the topic of wholesaling.
Josh: So why don’t you give this one yeah, yeah go for it.
Brandon: Alright, So I wrote an article in it and that’s why we’re bringing this up. So there’s also a very, very good thread in the forums right now about wholesaling, about the danger of wholesaling actually in like the state of Ohio and a few other states they’re really cracking down on wholesalers. I wrote this article called, Is Real Estate Wholesaling Illegal?
You get to it at BiggerPockets/IllegalWholesaling. It’s just really important to know how you’re wholesaling and what you're doing because if you do it wrong you could end up with a fine and breaking the law which is very bad. So and it basically kind of surrounds around the concept of what is a broker and what do you have to have a real estate license to do and what don't you?
And there’s a lot of debate and a lot of discussion but anyway again read the article; if you are even remotely interested in wholesaling make sure you check out the article at BiggerPockets/IllegalWholesaling.
Josh: Yeah and it gives a really good perspective on the topic it's not going to give you the law.
Brandon: Yeah we’re not lawyers.
Josh: Yeah we’re not lawyers. You were almost…
Brandon: Yeah I almost went to law school but that's not almost the same right? I’m almost a millionaire, billionaire. Actually it’s that all the audience cares about.
Josh: Wow. Well okay. Can we go on, can we talk?
Brandon: Move on, moving on whatever.
Josh: Seriously wow. Alright guys today’s ProTip is, listen to the previous webinars you can check them out.
Brandon: Not just listen but watch the video webinars.
Josh: You can listen, you can watch we do webinars every week, you can check them out at BiggerPockets/Proreplay, that’s BiggerPockets/Proreplay including most recent one How to Quit Your Job Through the Power of Real Estate Investing so if you’re a pro member definitely check out that video and that's just another reason to check out BiggerPockets/Pro.
With that, why don’t we get onto today's show; today on the show we’re going to talk to Nasar Elarabi, he used flipping and wholesaling as a means to quit his job and he shares all about the struggles that he faced in doing that. He also talks a lot about how he's using these active investment strategies to build a rental property portfolio.
I know that that's the goal of a lot of our listeners so I definitely want you guys to pay very close attention to this one. Before we bring him in let's just get a quick word from today’s sponsor and get to the show. So, Brandon.
Brandon: Alright today’s sponsor is B2R Finance. B2R Finance is a new commercial lender offering loans specifically for rental investors. B2R Finance can help you unlock equity from existing properties so you can get cash out now. Cash out refinancing allows you to leverage your current investments to help you grow your existing portfolio.
B2R is an asset based lender which means your loan is based on your property's appraised value and cash flow, not your personal debt income and that is huge. It opens up a lot of opportunities previously not available to rental investors. So you need a loan? Call B2R Finance at 855-910-0227 or visit b2rfinance.com today.
Josh: Alright, big thanks again to B2R for sponsoring the show we really appreciate it. With that let's get to the interview, today's guest is Nasar, so Nasar welcome to the show man it’s great to have you on board.
Nasar: Thank you for having me on man I really appreciate it. But being on BiggerPockets podcast is like you actually made it in life.
Josh: You’re the doru man, come on we’ve made it by having the doru on the show.
Nasar: I really appreciate it though thank you.
Brandon: Yeah no problem. We appreciate, I see you around a lot; I see you on Facebook, I see you on BiggerPockets, I see you on other podcasts you’re all over the place, right like I know you’re always giving good advice and good stuff. So of course we had to get you on. I’ve been thinking that actually for like a year now like man we got to get you on the show.
So I’m glad we finally did. Let’s begin at the beginning because that's a good place to start. How did you get started investing in real estate; not how did you get invested starting in real estate that would be weird. Alright how did you get started?
Nasar: Well basically what happened was I was born and raised in New Jersey.
Josh: Oh man awesome.
Brandon: I thought I smelled something funny but I was thinking.
Josh: Just kidding New Jersey and Darren Seeger.
Nasar: So I was born and raised in New Jersey and a few years ago when I was 19, I’m 31 now but when I was 19, what happened was I overheard my father and his friend talking about the guy next door who flipped a house. And basically father and the friend were saying how the guy bought the house for $150,000 put $20,000 and sold it to $270.
Now me being 19 I was in the backseat calculating like whoa that’s $100,000 off of one house, I’ve got to get into real estate. So one day I was sitting on my porch and the guy who actually flipped the house pulled up and he pulls up with this brand new- whatever year it was- brand-new white Range Rover and this beautiful model woman hopping out the passenger seat.
Josh: So were they shooting a commercial or was this one of the dorus like hey we’re going to shoot a commercial here?
Nasar: No it wasn’t a commercial, but at that point at 19 I said I’m sold I’m doing real estate.
Josh: Nice. That's awesome. So how did that work itself out, I mean you’re 19, did you start then, did you do just kind of do something else for a while and then get into it? How did it eventually happen?
Nasar: Well basically I don't know about you guys but with me when I was any age before 26 I pretty much knew everything.
Brandon: Yeah, yeah.
Josh: Oh yeah I know nothing now but I knew everything back then.
Nasar: Right yeah so I was the same so I was Vice President of the World until I stepped down from that position and that’s when I started making progress in life. However so at 19 when I first found out about this cool real estate thing, the first people that I asked how to get started in real estate is people who don’t do real estate.
Brandon: That makes sense.
Nasar: Yeah so I went to my father and I asked him how do I get started in real estate and he said, “Hey look I’ll send you to my friend who repairs credit and you can get started in real estate and he’ll help you buy a house,” because at the time they were like the no dark rooms.
Nasar: So what happened was I was in college and I was working and in the meantime I was just fixing up my credit because that’s what I thought that you had to do. So I was an undergrad and I was about 24 at the time, and I watched the Flip That House shows.
Nasar: And I was studying those okay, so that was my course right.
Brandon: I took the same course.
Josh: I’m a little worried about what happens next.
Nasar: So studying the Flip That House shows and the HGTV, studying all those shows I knew all the characters’ names by heart, first and last names.
Josh: Well that makes you qualified to buy real estate by the way.
Nasar: Correct, that’s what I thought. So me and my friend we came up with this idea and we said, “Look, man let’s go flip a house, all we got to do is buy the house, get us some contractors and we can make a whole bunch of money.”
Josh: Oh yeah.
Nasar: Right, so and just for everyone listening, buying a house after watching Flip That House is similar to performing open-heart surgery after watching ER okay, so it’s the same this, so I just want to warn everybody before I finish this story. So we did everything wrong in the book. Fortunately we were able to sell that house for $7000 loss a piece.
So we lost 14 grand, $7000 a piece loss that we were able to sell the house fortunately we got lucky because that house in ’07, and we sold it ’08 and then that’s when I had my degree so that’s when I just moved down to Charlotte North Carolina.
Brandon: Okay so your first deal you ended up losing money and you said about seven grand a piece between you and your partner so you lost 14,15 grand somewhere in there?
Brandon: Okay that the sucks but that is I mean that’s an expensive education but some people go and spend 20 or 30 or 50 or $100,000 on some boot camp or training course to try to make that. So you did what you did you learned from it and maybe we can talk about that; what did you learn from it? What did you do wrong? You said you did every mistake in the book, what did you do wrong?
Josh: And tell us really quick as you do that like tell us the numbers on the house if you don't mind; purchase, sale, you name it.
Nasar: Okay, alright so now I don’t remember the exact numbers all I remember is the loss about it but I don’t remember the exact numbers because we purchased it in ‘07 so is about eight years ago.
Brandon: Yeah that’s alright.
Nasar: I couldn’t tell you the exact numbers, however I know that we spent- I think we bought the house for $160,000 but spent $30,000 into it, and we paid the mortgage for we had the house for about eight, nine months. So we paid the mortgage for that long and we ended up selling for $210 or $215 or something around there. And then of course the realtor convinced us to give him a bonus's on top of his 2% commission.
Josh: On top of his 3% commission.
Nasar: Yes the reason why he said we should put the bonus in there because the house wasn’t selling. And being that the house wasn’t selling so it meant we might have to offer more incentives to get the house.
Josh: So you should pay the realtor more money because they can’t sell the house?
Nasar: Correct, now yeah you’re not correct. And then he added when we did the bonus, mysteriously he popped up with a buyer the next few days.
Josh: That’s a story. Well that is a technique that I've used in the past but I give it to the agent who brings the buyer right so I've done that a few times and I don’t know if it actually has worked because it’s hard to tell it’s not like you’re doing-but I have done that where I’ve offered seven or 8% commission total. But I offer my agent only the three.
He normally gets an offer four or five to the other agent and then the one time I did that my agent brought a buyer and got the whole entire thing also. But anyway okay so you did that, you paid all the money he brought a buyer any other..?
Josh: What else did you mess up yeah?
Nasar: Alright so basically what I did, instead of going in the house and going to the get on the ground to find a good deal myself, I went through a realtor. And I later learned from Robbie Kiyosaki not to trust salespeople or listen to rich people so.
Nasar: So the realtor told me that this was a great deal and at the time being I knew everything I thought the only way was to buy a house was to get a bank loan and go through a realtor. So we paid too much for the house.
Josh: So you listened wholeheartedly I mean let me back it up; at this point you didn’t know how to evaluate a deal, you were kind of going on trust that the real estate agent knew how to evaluate the deal was going to put you in a good deal?
Nasar: That’s correct.
Nasar: Isn’t that what happens on TV?
Josh: A) that's what happens on TV and B) that’s what a lot of amateur real estate investors do and let me take this chance to kind of say what I need to say about this which is …
Brandon: I hear a rant coming.
Josh: No it's not but inherently real estate agents their job is to help you be successful. And we love agents; agents are great I've got an agent who is helping me buy a house right now. He’s amazing the guy knows everything backwards and forwards, he’s brilliant okay. Those are the guys you need to work with.
The guys who if you’re an investor or you’re thinking about becoming an investor, you want to make sure that the real estate agent you work with those real estate investing. Just going to some old investor out of nowhere is not going to work for you. So we actually put together this thing Agents’ Guide to Working with Real Estate Investors and it's amazing.
If you’re a real estate agent and you want to check out this guide it's BiggerPockets/agentguide, a-g-e-n-t-g-u-i-d-e and it literally spells out the basics of real estate investing, it spells out what investors are looking for the psychology, things like that and it's extremely helpful to anyone who's a real estate agent but again…
Brandon: And also that should be up on Amazon by this point too. We’re recording this interview little bit a few weeks ahead of time and that's on the slate to be up on Amazon in the Kindle Store so look there too.
Josh: Anyway so that’s my rant, not every agent is bad but not all agents are educated enough to be an advocate for you and to have your best interest because they fully understand investing and our goal is to try and help that a little more. So sorry to cut you off I thought it was kind of important for listeners to kind of hear that.
Brandon: Yeah, I think people rely way too much on their agent I mean I had an agent I’ve said this before on the show but I had an agent at one time tell me like he was giving me a hard time because I was offering too low on properties, and he said I was responsible for the eroding economy.
Josh: Oh nice.
Brandon: I should offer more because that would help the economy turn around and like yeah, most agents don't know what they're doing when it comes to real estate.
Josh: Yeah and bad agents get people in trouble like partly important also then I mean this guy is in a property that granted you didn’t know how to evaluate a rehab, you didn’t know how to estimate the costs, you didn’t know how to do anything. So you had no place doing what you were doing right. But that agent was part and parcel to your failure. They played a role in you being a failure because they weren’t there to help you.
Nasar: Yeah and I agree with you Josh but I learned to take ownership and responsibility it was fault; it was all my fault, I knew everything and I was too good to read a book to learn about real estate investing because Flip That House taught me everything.
Josh: Yeah no, that makes sense.
Brandon: Do you have any of those tips for people who are in that stage of their life like when you were young and you thought you knew everything maybe in their early 20s. And they want to get into real estate. A pretty good chunk of our audience are the younger people. What kind of tips could you give them to go forward?
Nasar: Slow down, just slowdown, learn and focus on that one thing that you want. A lot of come on BiggerPockets, a lot of people approach me they want to learn about wholesaling or just focus on wholesaling. Don’t focus on short sales, don't focus on being a realtor, don’t focus on rehabbing just focus on wholesaling.
And just be able to just learn about that and ask questions and find all those successful investors in your market and hang out on BiggerPockets at your spare time. So it’s the things like that that usually separate the people who actually get things done and the people who don't.
Brandon: Love it.
Nasar: And another thing that I did wrong that I want to talk about is always pay attention to the comps like to close sales, not with first sale. But the close sales, that first dealt I totally ignored the close sale and my partner had acted as a realtor. So she told us well, you- she’s like, “Well look, I can probably sell for about $225 because this comp’s around $220 closed, now had a friend who just got his license.
Notice I said, friend. So my friend walked in and said, “Man I can get you $280,000 for this thing, man this is beautiful.” So he said, “Oh this is going to be an easy sale, you know what I’ve got somebody…”
Josh: Or $350.
Nasar: “Looking for a house right now.
Josh: Whatever you want to hear I’ll tell it to you.
Nasar: Right so he did that whole thing and now at 31 I know not to use that word ‘friend’ so loosely. So of course he did not perform, and we didn’t sell the house obviously and after him went with another agency called Foxton which is located in New Jersey. And they actually under at that time because they were paying their realtors a salary they were giving them little green mini-cars; the mini cooper cars that have Foxton all over.
It was a New Jersey based company I think it was in a few other states but they went out of business. So Foxton ended up selling their listings to Center21 before they went under because they had all these agents on salaries paying, for gas, paying cardinals and all these other things and real estate just wasn’t selling at that time.
So with that being said, we got with this other agent and we ended up selling the property less than what my ‘friend’ told me; than what my friend’s aunt said that she can get it for. But we did start to list and price at that but we ended up getting less but we got rid of it and I was happy.
Josh: Right on, right on.
Josh: Alright man so lots of lessons learned, don't trust friends, don’t trust your aunt’s judgment. So no offence to your aunt who is listening, it was nice to meet you I apologize in advance. So you get to this deal, you’re down 7K probably, you were a young kid at the time, I'm sure that was a hit.
Josh: So how did you get back into it? I mean a lot of people would say, “Oh man, I’m a big fat loser I can’t do this I’m out.” What got you to get back in and then what did you end up doing next?
Nasar: Well at that time I was too stupid to quit.
Nasar: So yeah.
Brandon: That’s the title of this how right here.
Josh: That is the title of the show, awesome.
Brandon: So yeah I was too stupid so I moved down to Charlotte in 2008. So I said to myself, “Well the market is bad at least that’s what the news is saying, so this is not a fix and flip market, this is more of a buy-and-hold market. So let me go buy some rentals. So 2008 I bought a rental, the traditional still using those realtors and things like that. Bought one in ’08, bought one in 2009 I tried to buy a third one in 2009, but my debt to income ratio was too high.
Nasar: So I was stuck like, “Oh man my real estate investing career is over with two houses; what am I going to do now?
Brandon: Can I jump in; I’m going to explain that real quick for those people who don't know what debt to income is real quickly. So basically banks have like this requirement of they’ll allow you let’s say a 40% debt to income which means that of your total income the total amount of debt you have can't go past that percentage.
Might be 30, 35, 40, back then it was like 50. And then they have like a higher debt- what’s it called- anyway there’s like an upper and lower debt to income, one includes the mortgage one doesn't. But anyway so it's a number that basically the more debt you get, the more rental properties you get the harder it is to get more rental properties.
It’s a problem every investor eventually faces when you're trying to buy conventional mortgage like real estate through conventional mortgages because every mortgage adds to your debt. And pretty soon that creeps up you might be at 30 then 35 then 40 then 45, 50. And I mean today I can’t get a conventional loan from a bank no matter what I want to do because my debt to income is way too high. So that's why people eventually go into other avenues or more creative finance so anyway back to you.
Josh: Hey Nasar really quick and I want to get back to you but there's an important question that comes up. You’re talking about buying these rental properties, told me lost $7000 on this property you were a kid, were you working? How were you getting money to actually pick up these rental properties what were you doing?
Nasar: Okay so in 2008 I moved down to Charlotte and got into banking and for those who don't know Charlotte is the number two biggest banking city behind New York City. So I got into banking but I started off like $10 to $12. What it was I had some money saved up before going to Charlotte I had some money saved up previously due to my mother passed at a young age.
And I had money saved up from that. It wasn't a lot I pretty much made horrible decisions and it got really, really low whereas I didn’t know what I was going to do at one point because when you’re making $12 an hour or so in a call center, you got two vacant properties and you got to get them fixed. So it’s like oh my God what am I going to do? So I mean things got tight.
Josh: Yeah got you right. Thank you. And thanks I mean that’s how helpful it gives people context like hey this guy magically bought these properties maybe he got, what did he do, how did he pick up these rentals? So that explains it. So you’re talking about picking up these rental properties and then you were kind of repressing I think?
Nasar: Progressing and then the bank punched me in the face.
Josh: I think they like doing that.
Nasar: Right so they like doing that and I know Brandon just explained debt to income and let me just say this, they’re not paying me to say this; but Brandon Turner’s book, Investing With No Money Down explains everything I’m actually listening to it on audible.com right now.
Brandon: Look at this guy.
Nasar: So it explains everything. So pick that up if you’re new it really explains that I'm not getting paid to say that.
Brandon: Thank you.
Josh: Awesome, thanks man.
Brandon: Yeah I appreciate that.
Nasar: So all of that being said being that I got punched in the face by the bank, I was lost I hated my life at the time because I was only making like $12.50 and I took a call center. And I don’t know if you guys ever worked in a call center but the call center it was just horrible.
Brandon: Yeah I have a lot of friends that did it and they said it was the worst job ever.
Nasar: Correct okay so alright yeah. So that pretty much explains it and sums it up. So me being young and knowing everything I went in there and I used to display my frustration with basically saying, “Hey look, I need to make $40,000 because I have this college degree and the world owes me this. I need to apply for supervisor position I need to be in another department. I need to move up in this company, damn it my name is Nasar you guys got to pay me!”
Josh: You needed to have some humble pie man.
Nasar: Right so I was the guy who definitely wasn’t going anywhere in that call center. So with that and this was like the Wachovia headquarters.
Nasar: Alright so this was their headquarters so there was a lot of room for growth just I didn’t get any of it. And if I go bottom out and one day I set up a meeting with the site director and by me setting up this meeting with the site director and I tell people not to do this now you never return to your job you're an entrepreneur. Never do that.
So I told my job I was an entrepreneur because I liked learning things the hard way. So he recommended a book called Rich Dad Poor Dad. He said, “Man you should read that book,” and because I told him what I was doing and I told him my goals, I didn’t tell him my corporate goals, I told him my actual real estate goals which was pretty stupid.
But he recommended this book called Rich Dad Poor Dad and that book changed my life. And this is the thing that stuck out to me in that book; it said just because you own four houses does not make you a real estate expert. You have to learn about real estate before investing in real estate. Just because you own some stocks does not make you a stock expert.
You have to learn about stocks before investing in stocks. So I had to put the book down and realize I missed a step. And I never actually learned about real estate, because I knew everything.
Josh: By the way.
Josh: That's why BiggerPockets exists. I too was too stupid to quit, too stupid to know I was too stupid. And I went and bought property without doing any of the work, I was like I’m a smart guy, I could figure this out. And that's why BiggerPockets exists today, is because I realized holy crap I am so wrong. I'm so stupid and I need help. And now we’re helping millions of people. So it's a beautiful day.
Yes and I joined directly after that and I found out about being called wholesaling that you can actually wholesale houses where I was told without money or credit and I was like, “Wow this is awesome!” and the way I found out because I went to the first meetings, I stood up in the room and told them, “Hey look I want to sell my houses that I own.”
“I can't buy anymore houses, the bank said that my debt to income is too high I need help so if anybody wants to buy these houses because I want to buy more,” and somebody said, “That’s only a problem if you want it to be a problem. None of us can qualify for a loan.” Then he took me to the corner after the meeting and taught me about this thing called wholesaling and creative real estate and I was hooked at that point.
Josh: Nice, that’s great. Okay so fast-forward from then to today I'm guessing you've done a whole bunch of deals how many deals have you done thus far?
Nasar: Somewhere between probably close to 100 not quite 100 since then, since 2010.
Brandon: That’s awesome. And what were those are they all wholesaling or?
Nasar: Majority wholesaling and some rehabbing and I’m a landlord now too as well, a better landlord.
Josh: What does better landlord mean, I mean besides the fact that you didn’t know what you were doing, what makes you a better landlord than you were?
Nasar: I evaluate a deal to make sure that it makes sense on the frontend before I buy. And I follow a method that the way I buy my deals are cash, my rentals, I picked up two last year, my goal is to pick up four this year and I’m doing a lot of- the bulk of my business is wholesaling and rehabbing. So the way I buy my deals are cash owner financing is subject too.
Nasar: Where owner financing is subject to I would only it if the rent is at a minimum 200% of the mortgage payment. So if that mortgage payment or owner financing is 350 with tax and insurance, that property needs to rent out a minimum of $700 for me to take that on.
Josh: Okay, got you. So your strategy here is work a job I’m assuming at some point you quit your job and you…
Nasar: No I got fired.
Josh: Oh you got fired for being an entrepreneur?
Nasar: No I got fired because I couldn’t do the job and I was really stupid.
Josh & Brandon: Oh okay.
Brandon: When was that?
Nasar: September 2012 they fired me.
Brandon: Okay and was that the last time you had a job I mean did you go full time after that?
Nasar: That's correct, I had a job and it wasn’t one of those surprise fired, I knew I was going to get fired I couldn’t do the job and they gave me a lot of chances. And they finally just cut the puppy string and realized okay let’s get this guy out of here. The way it happened I told them I needed some time off because my grandfather died.
And I had to go two and half away from Wimbledon and I guess they said, “Hey how about just not coming back?” they called me in the room and they fired me but I knew it was going to happen eventually because I really couldn’t do the job. But I did have like a sexy job title; my job title was Policy Review Analyst. So yeah I got a lot of women because of that.
Josh: Was that new, nobody knows you didn’t even know which is why you got fired side so.
Nasar: Right so I didn’t even know what you did so that’s why I got fired so with that being said I got September 2012, before I got fired I turned down two job offers because a friend of mine I was talking to her and she said, “Nasar, you’re only going to be 29 once, you can always go back and get another job.” And that pretty much confirmed it. I said, “Yeah I’m going to sit here and let these people fire me and I’m going to go full time in real estate.’
Nasar: And that’s what I did.
Josh: So it sounds to me I mean you’ve got a plan right?
Josh: Your overarching plan and correct me if I’m wrong is this, I’m going to wholesale, I’m going to flip property so I’m going to be an active real estate investor who’s working a new job which is flipping and wholesaling. And I'm going to take the funds from that whatever I don't need to kind of live and survive and plough that into rental properties.
Is that kind of a fair assessment of what you're trying to do here?
Nasar: That’s a fair assessment of what I’m trying to do here now but it didn’t start like that.
Josh: Well sure.
Josh: Okay and do you see that, kind of looking at the big picture right you said you’re 31?
Josh: Alright so I mean if you do that for the next X number of years you’ll have a sizable portfolio probably bringing in enough money where you not necessarily needing to do the work part; the wholesaling and rehabbing potentially shift gears at that point. Is that kind of what you're thinking long-term?
Nasar: That's correct and hopefully within the next three years I’d gained the position that I don’t have to work as hard to find a deal because when you’re wholesaling and rehabbing you live deal to deal. Especially just starting out, I was wholesaling an average of three deals a month. I’m blessed I’m the go-to guy here in Charlotte so a lot of people bring me deals.
So with that being said I averaged about three deals a month but after like last month I probably made about $22,000 last month in January.
Nasar: However this money I haven’t made no money, I just got a deal in the contract yesterday that someone brought me in, I got to get that sold so that I can create the check this month. And that $22,000 yeah it sounds good but I got hard money payments too.
Josh: Nasar I love that you’re talking about this I love how open you are about it because I think a lot of new investors are like, “Hey, I could do this I did a deal I’m going to quit my job and I’m going to go ahead and become a wholesaler or rehabber or whatever it is. And you said it perfectly; this is a month-to-month thing. This is a deal to deal thing.
I've talked to guys who’ve been doing this for a long time and they said the same damn thing; it's a deal to deal thing. It’s a job and is for some reason like this month you couldn’t get any good deals; you don't get food on the plate potentially if you don't have money backed up.
So there is a lot of risk in just saying, I’m going to quit my job and I'm going go and wholesale full-time or I’m going to flip houses full time unless you have no a good amount of money, kind of sitting in the bank to kind of protect you.
Nasar: That’s it, correct; that’s correct. I mean wholesaling is rough and you have to be good at money management because you don't know when your next deal is coming. Of course we like to think that we’re going to get the next deal the next week or the next month, but sometimes it doesn’t happen like that.
Josh: But you knew when you are 24, 26, 19, that money was coming right? I mean it was coming period; you didn’t even have to think about it.
Brandon: So I want shift gears not even shift gears not even shift gears I just want to like expand on this topic of quitting your job a little bit because there’s a lot of people listening to show who have terrible, crappy dead-end jobs that they don’t like. And a couple of weeks back I did a webinar on how to quit your job here on BiggerPockets.
It was a popular webinar, very popular probably the most popular I've done just because it was on that topic of the thing people hate their jobs and want to quit. So maybe you can kind of shed some light on the idea of like when should somebody consider quitting their job and do you think wholesaling is the best path to do that?
Nasar: Alright so wholesaling is not a good fit for everybody. We have to evaluate your skills and personality to make sure that wholesaling works for you. Because I know a few successful investors that accumulate a lot of rental property because that was their strong point or they had access to money, or they were good at negotiating great terms.
And they would just build up this portfolio until it was big enough so they left their job the right way. That was my plan but of course God’s plan was different so it didn’t happen like that.
Nasar: So with that being said wholesaling is not right for everybody, I know some people who quit their job for rehabbing they just started rehabbing. It just depends on your situation because what it takes to be a successful wholesaler, everybody doesn’t have those skills and everybody is not willing to do what it takes.
Brandon: And what are those skills and what do you need to do to be good at wholesaling?
Nasar: Selling, negotiating and marketing. And when I say let’s tap on that marketing.
Nasar: You have to keep having marketing out consistently. I sent out 1800 postcards in January to close a deal for February, and I have got no deals from that yet. So that happens.
Josh: Thank you for saying. Again something that we haven't talked about like you have to have a final going from last month to the next month like a lot of people think, “Hey I’m going to market till I get that deal then I’m going to stop marketing,” and wait, then things are going to dry up for you. You can't stop marketing. You always have to be marketing if you’re going to be a successful wholesaler isn’t that right?
Nasar: Always, always and that’s what I was going to say next, I can’t go in a corner and put my head down in the corner because what happens if I do that and I get the usher send me home and my butt is left in the air? So people will take advantage of you so you don’t want to do that, you have to keep it going. So I have to get 2000 postcards out and maybe I might get something in February.
But just to get my March pipeline starting to get ready. And sometimes I might have whole run deals until the seller just disappears off the face of earth I can’t get them no more. That happens. So wholesaling is not a right for everybody, I think that you need to study each niche to make sure that this is something you want to do. And this is something you’re willing to strive and struggle for to happen.
Brandon: I wholeheartedly agree, I say that all the time like when you’re trying to get into real estate obviously we talked earlier focus, right the one thing focus on the one thing you want. However before you can focus you have to know what you’re going to get into to be able to focus on. So for that reason people who haven't read it yet, check out the BiggerPockets/UBG.
That’s the Ultimate Beginners’ Guide To Real Estate Investing, it’s just a guide we’ve put together for that very reason is you need to look at the entire picture at least from a 10,000ft view and then decide what you want to get doing and then focus and then focus more and then focus more. And I’m huge on that one.
Okay so we talked about keeping your pipeline filled I loved that. Maybe we can expand on that a little bit. You mentioned direct mail, you mentioned postcards. Maybe you can kind of share your strategy and what’re you doing with direct-mail?
Nasar: Direct mail basically I’m just sending out postcards to [Inaudible] [37:27] on a list, I go after code enforcement, I go after delinquent tax, just going out different lists and I alternate it up. So with that being said and I said majority of my deals come JV. I do like three joint ventures, for those who’re not familiar with the term JV.
I do probably three deals a month on average and maybe like one or two of those deals somebody else might bring me.
Brandon: That’s cool I mean how does that even work as a wholesaler like both from the perspective of you as the wholesaler and the guy you’re JVing with I mean if I'm a newbie wholesaler how I find you, how do I work with you and then at the same time for you how do you find me?
Josh: And how do you split the deal? Fill that in.
Nasar: Alright so let me give you a deal that was done and this is slam dunk deal. So being that this is a slam dunk deal these don’t happen all the time. So someone in another city he’s in New York, he does marketing here in Charlotte. And once he gets to dealing the contract he brings me the deal so I can find a buyer.
So we found this deal for $80,000 and ended up selling it for $95,000 in his hot pocket in his neighborhood so we split it $7500 a piece. And the way we do it with this particular individual he puts both our names on the contract. So there’d be my entity and his entity on the contract and we both sign off on the assignment and everything. And then the attorneys have two checks for us.
We started doing it like that because when we were setting up the joint venture agreement some attorneys would say, “Oh no we will only pay it out to who’s on the contract in the assignment. We’re not paying out to who’s on the joint ventures.” So to eliminate that and the attorney could send two separate wires or I pick up check and he’ll get a wire.
That’s basically how it works and a lot of people in my market they’ll see me at the rear, get in touch me on Facebook or my blog or YouTube and they'll say, “Hey I got this deal working you want to work with me on it?” I say, “Yeah sure let’s do it.”
Brandon: Nice and I think that is such a smart way for newbie wholesalers to get started because there’s a lot of skills that you said you have to be good at. Was it sales marketing and…?
Brandon: Yeah sales, marketing and negotiation like those are the skills that you have to develop over time. So if you have them when you get started, which I can guarantee most people don't have them when they’re getting started why not work with somebody who does? I think that’s just fantastic advice.
Nasar: And that’s how I got started. I worked with a serious investor a woman here named Lori, great individual, taught a lot about the business, and I worked with her. When I was at work, she would go look at the properties she would talk to the buyers, she will find the buyers and that’s how I got started.
Brandon: Love it.
Josh: That’s great.
Brandon: It’s just like that thing I always say right it's better to have 50% of a great deal than 100% of no deal, right like partner up with somebody. Who cares if you’re giving them half the profit? Who cares if you’re giving them 90% of the profit if you’re learning and growing and you can get more next time? So yeah I love partnerships love it.
Josh: What’s interesting I've talked to a couple of people and it's always funny because it often happens that at some point somebody gets greedy a little bit, like hey you guys have done a bunch of deals and all of a sudden somebody is like, “I’m going to do this all on my own I don't need you anymore.” And it's always fun when you hear that story.
And the guy who kind of got greedy oftentimes ends up failing on their own because it turns out that they actually needed the other person because their skill set was one and the other person brought this different skill set altogether. So it's kind of cool that partnerships tend work to complement skill sets as well.
Hey guys really quick this is show 116 of the BiggerPockets podcast, definitely be sure to check out the show notes at BiggerPockets/Show116. I’ve got quick question I want to take you back a second. You mentioned you market to code enforcement and delinquent tax amongst absentee landlords as well. What is code enforcement, how does that work code enforcement leads and delinquent tax leads those as well?
Nasar: Well code enforcement leads the way that works is in my particular city and it varies city by city, and my city is online. So the people who have city violations and those violations could consist of the grass is too high, a tenant reported them because they’re not maintaining the property well. It could be a neighbor reported them because they had a hole in the roof that is messing up the neighborhood.
So things like that and what happens, the city of Charlotte put those people they send them letter to correct them and they put them on this particular website stating that they have an open cold case. So I market to those people.
Brandon: Fascinating I wonder if my area has that I’ve never looked and yeah I’m going to have to look into that so that’s very cool which of course mean it makes sense because those people probably there’s a good chance they’re going to be motivated to sell, because they don’t have the money to fix the place up or they just don't care.
Or they’re out of the area and they’re just forgetting about it and whatever so you can come and offer them, “Hey can I solve your problem for you and buy this property from you,” and you can do cool stuff so I love it.
Josh: That’s great. And what about the delinquent tax?
Nasar: Delinquent tax is people who don't pay their taxes. So they might be into buying, they might have inherited some property and they have another situation, or they probably just don’t care and they’re just not paying the property. However these people you have a higher chance of motivation because something is wrong there that they’re not paying their taxes.
And the city does a lot of the marketing for you because they create a sense of urgency because the city is always trying to foreclose on them; the city is trying to fine them and things like that. So the city creates the urgency for you so when you market to them and they actually call you and you buy the house they’re happy.
Nasar: You just relieved a lot of stress from them.
Brandon: Yeah I love it. Hey how do you do your- I mean you mentioned postcards are you doing letters and postcards then how do you do them; do you print them yourself or you hire a company to print them for you?
Nasar: I outsource now because this year I don’t like to do anything under like 2,000 pieces. The reason why they’re 1,800 is because the list only had 1800 names but I don’t like to do anything under 2000 pieces a month to make it worth time. However I just outsource it to click2mail.com.
Brandon: Okay yeah I never used them but I’ve heard people that used them and had good success there. Cool okay well and shifting gear before we head on to the Fire Round one thing that I talk a lot about here on the podcasts and the webinars and on the forums, blog whatever is becoming a person of action; something just gets out there and takes action and does it.
And this is a major problem with wholesalers, wannabe wholesalers and wannabe flippers right is they’re very excited about it; they love the idea of getting into the wholesaling. And then they never take action they never actually do it. But you’ve kind of always struck me as a person who is like the opposite of that.
You always take action you seem to be an action taker. So I guess my question is do you have any tips on people who’re struggling with that; struggling with taking action and getting out there and actually doing something with their life?
Nasar: Alright I mean yeah and thank you for the compliment but yeah and Les Brown said sometimes you have to jump off the roof and get wings on the way down. And that’s literally just how you have to do it. You’re going to learn more doing it than reading the book. You’re going to learn more doing it than messaging Josh and Brandon on BiggerPockets asking them how to find a motivated seller.
Josh: I don’t know about that.
Brandon: Well I agree 1000%.
Josh: Don’t blow up my PM please.
Nasar: But so you just have to take action and I gained a lot of respect from like lenders who lend money because they’re actual hard money lenders. The real guys who lend their own money, they only lend to select few people, if you’re not in that select pool they’ll just tell you, “Well I ran out of money I don't have any funds because they don't know you.
And I’m starting to get into that club and the reason a few of them said they like to deal with me because they said, “Hey look man you actually get out there and do it. There’s been people coming here 10+ years to the RIYA and organizations, 10+ years and they're still asking, how do you find a motivated seller; when we sat in the same seminar five years ago.
Nasar: And they’re still asking the same exact question but you’re out there just doing it. So people respect action takers because it’s not a lot of them. So my advice to people just get out they just do it, just like Nike said Just Do It!
Brandon: There you go.
Nasar: You’re going to mess up; you’re going to make mistakes I still make mistake.
Josh: Yeah should get off the pot.
Nasar: There you go, straight like that.
Josh: I mean that’s it. At some point you can keep talking about making something happen but yeah it's okay for a little bit of time to talk and talk and that's fine. But at a certain point, A) you’re going to lose respect amongst your peers, you’re going to lose respect amongst your colleagues and like you said at the RIYA.
Like if you’re that guy who keeps going to the RIYA and keeps saying, “Hey I’m going to do it one day guys I’m going to do it one day,” and all the other people the people who have cash who’re looking for somebody to give their money to, the hard money lenders, people who want to partner with somebody and they see that you're the guy that just keeps talking and hoping and crossing your fingers it’s going to happen or finally getting the nerve to do it.
Once you get there, they’re going to say, “Yeah but man you're so nervous about doing that I mean it’s going to take us forever to close on whatever it takes us to close on. I don't trust that you can deliver because you have demonstrated to me that you don't have the nerve to step it up.”
Josh: So that's so key and you use the name The Doru right and that’s what it is man you do it, do it, do it; that's beautiful.
Nasar: Yes and Josh let me just say something please I’ll try to be brief.
Josh: No, stop speaking.
Nasar: So back to 2012 I was doing well wholesaling I keep my monthly expenses extremely low. So I was doing we wholesaling so I had a nice amount saved and with that being said I came across a slam-dunk deal. And I wanted to rehab it. So called up three people and said, “Hey look, you want to partner with me?”
And two of them turned me down one said yes. And I didn’t bring any money to the table, all I had to do was bring the deal and oh yeah I paid $500 in earnest money and paid to record the contract downtown because I had go through the probate process, but he said man why we wanted to partner with you because you’re out getting it done and you’re an action taker.
And we’re watching you, we know that wholesale is not easy and you’re like one of only full time wholesalers in this city that actually wholesale full time. So we want to help you transition into rehabbing and we ended up making $91,000 on that deal.
Josh: That’s great, that’s beautiful.
Josh: You said something fascinating there, for everybody who’s listening to the show, there's a whole hell of a lot of people that are trying to take your money away from you and sell you on the dream of wholesaling full-time. Hey the doru this guy the doru that guy they’re going to sell you on the dream of being a full-time wholesaler. But obviously he’s exaggerating a little but I’m sure there’s more than you wholesaling full-time in your city.
Nasar: Yeah only a few of them.
Josh: But there’s only a few and I guarantee you that's true regardless of what city you’re in. This is not-wholesaling is not an easy thing to do and not a lot of people can do it in a manner by which they become a full-time wholesaler. It really like I mean I've been talking to investors for 10 years through BiggerPockets I know very few full-time wholesalers of all those people. And there's a reason for it; it’s not easy. So thanks for sharing that story.
Brandon: Love it. Alright I moving on to the;
It’s time for The Fire Round.
Brandon: Alright today’s Fire Round is sponsored 99designs where you can get a professionally designed work for your real estate business. It’s exceptionally fast and affordable so you get dozens of designers to compete and deliver you the best design plus it's 100% guarantee that you’ll love it from logos to websites to car wraps and more.Definitely head to 99designs.com/BiggerPockets to get a $99 upgrade of services for free so again check them out and 99designs.com/BiggerPockets.
Josh: Yes good stuff, big fans of 99designs.
Brandon: Yeah. Alright first question of the Fire Round what type of contract do you use when you wholesale properties? Is it like an assignment or double close?
Nasar: I always do assignments. So I do a contract with the homeowner and the assignment with my buyer. People used to say I used to make extravagant fees somebody had problems with the fee we were making, let’s not do business let’s just go our way. So I like to do assignments I only double close if the buyer requested because of his lender. He might say, “Look I'm not making assignment fees then I’ll do a double close.
Brandon: Okay good enough.
Josh: Got you. Alright what are your best suggestions on how to find distressed properties or motivated sellers?
Nasar: Look at your budget and if you can spare $100 or $200 a month, I would say go after direct mail. Direct mail because it’s going to give you the most bang for buck because at 42c or 40c a postcard you can tap a lot more people and potentially get in the deal.
Brandon: Love it. Here’s a kind of a cool question, should I save my money to first get out of debt or save to get my first deal?
Nasar: That’s definitely a good question.
Josh: That is a good question.
Nasar: My personal recommendation to get a deal.
Brandon: Okay, cool.
Nasar: And I say that because depending on your area, depending on your chance I mean that deal sometimes can be $2000 and I’ve seen some people do as high as $40,000 on their first deal. So it varies.
Josh: Or you’ve seen people lose $7000 on their first flipping deal.
Brandon: There you go.
Josh: I’m just saying man, there’s a chance to lose money too, right I mean?
Josh: For real and it’s important Brandon harps on that lot is odds of you making money in your first deal aren’t that great.
Josh: But you can prove that by doing the education part and learning and …
Brandon: And that's why I say partners, you can improve it dramatically by working with someone who has a success rate already.
Josh: Yeah. Last question for the Fire Round Nasar what is the single best piece of advice you would give to a newbie?
Nasar: Focus, follow one course until successful. It sounds so simple but if you follow, that you will have a better real estate investing career and longer than the next guy if you focus on it. I didn't start off when I learned about career in real estate, doing wholesaling rehabbing and landlording all at the same time. I did wholesaling, then transitioned into rehabbing. Then got some money to start thinking of rentals but I had to focus on one to get to the next.
Josh: Makes sense.
Nasar: I couldn’t study all three at the same time.
Brandon: Yeah because people just get confused and overwhelmed and then they never do anything and spend all the time planning and so great.
Josh: They’re non-doing Dorus.
Brandon: They’re non-Dorus yeah. Alright time for the world famous;
Brandon: Alright Famous Four, these questions we ask every single solitary show, all 114 before this I think we’ve asked this question. What is your favorite real estate related book and why?
Nasar: I’m sorry man I know you guys heard this nine million times man.
Brandon: That’s okay.
Josh: And you talked about it already man.
Nasar: Yeah Rich Dad Poor Dad man it changed my life.
Josh: Fabulous, fabulous.
Brandon: Me too.
Josh: Yes I knew that was coming. Alright how about business book?
Nasar: Alright business book is more of a personal development book but it changed my life. It made me take ownership and personal responsibility for my life. It’s called You Can Make It Happen by Stedman Graham.
Josh: I’ve read that’s Oprah’s step-in.
Nasar: That’s correct yes.
Brandon: Cool I did not know that, how would you know that Josh? I don’t know, how do you know these things?
Josh: Come on man I know these things.
Brandon: I don’t know these things.
Josh: I’m wiser than my years, my years are getting up there so.
Brandon: Yeah they are.
Josh: Yes wisdom comes with age young man. Alright Nasar what about hobbies, what do you do for fun?
Nasar: As far as what I do for fun, I don’t really have fun too much.
Josh: I don’t have time for fun.
Nasar: Yeah and I kind of want to change that. So you can basically say like for fun I really enjoy reading now so reading and learning more about business. I do vacation so I do that and I’m a foodie so I love to eat.
Josh & Brandon: Nice.
Josh: Yes I do food for fun as well, love it.
Brandon: Alright my final question of the day; what do you believe sets apart successful real estate investors from those who give up or fail?
Nasar: The process. I say the process because as someone who is and I got this from Episode 100 when you interviewed Josh and that was a great podcast.
Josh: That was probably the best of all of our shows definitely; I’m easily the best guest that you guys have had on the BiggerPockets podcast.
Brandon: I don’t know about that.
Nasar: So with that being said, one thing that Josh said, we all know that he said I don’t think he knows that he said but it took…
Josh: I don’t know what I’m saying man!
Nasar: Alright so we go to BiggerPockets and we look at BiggerPockets where it is today, we don’t think about 10 years prior when Josh was struggling to run that site. We don’t look at that. We don’t look at those things but what we want to do, we just want to come on Josh’s site and say, “Hey look come to my site it’s just like BiggerPockets!” that’s what we want to do.
We want instant results. So the people who’re ready for the process and ready to deal with the process, those are the people who’re going to succeed not the people who want to quit their job in 30 days. Not the people who want to make life changing money in 90 days, it just doesn’t happen like that. So let’s say like the Irish person comes to me.
Let’s say they’re 27 years old and they’ve been making bad choices for the last five years. So you didn’t get in that situation overnight. But yet you want real estate to magically change your situation in 60 days because you really need some money. Those are the people who normally don’t succeed and the people who’re ready for the process and what’s going to happen and ready to sacrifice and struggle to get what they want those are the people who’re going to succeed.
Josh: Yeah and unfortunately and I hate this stat and we try and work on this and it’s a fake stat but it’s still a stat right like 90% of newbies fail right.
Josh: And whatever it is. What the real number who the hell knows but who cares, the point is…
Brandon: I heard that like 65% of stats are made up.
Josh: Here’s the point, the point is odds are those people are looking for quick out. We know when they come to BiggerPockets they’re probably going to fail. We know that and we try our best to see hey how can we build this platform, how could we improve what we do to lessen the odds of somebody failing if they come to us?
And that’s what we try to do but at the end of the day you have to be there mentally. If you’re saying I’m going to do this in 30 day you’re going to fail because the odds are you’re going to fail. You really need to take a longer approach. That said you’re also by the way one of my favorite guests because I’ve never had something I’ve ever said quoted back to me in a positive light. So just for that I love you man.
Nasar: Thanks man, I love BiggerPockets thanks man.
Josh: Thank you. So hey, listen before we let you go, where can people find out more about you, where can they obviously can find you on BiggerPockets, you got a website, you got a YouTube channel, talk about that stuff.
Nasar: Yes, you can go to my blog at realestatedoru.com that doru, d-o-r-u because I actually do this business, you can actually go to youtube.com/realestatedoru, find me on Facebook and Twitter under Real Estate Doru and on BiggerPockets under Nasar Elarabi.
Josh: Fabulous. Hey man listen keep doing, keep doing it. Thank you so much for the time, thanks for being a part of our community and keep being successful and it’s nice to see you all grown up and doing things not so stupidly anymore. It’s beautiful.
Nasar: Yeah feels good too.
Josh: Yeah it does. Alright Nasar thanks so much man.
Nasar: Thanks for having me on.
Brandon: Alright thank you.
Josh: Alright guys big, big thanks to Nasar Elarabi for coming on the show, lots of really cool stuff it’s awesome to hear his story. The guy is just passionate and really enthusiastic and it was a great interview.
Brandon: It was a great interview that guy I like him a lot because I mean like his whole name like the Doru right like he’s such an action taker and he’s always pushing people to go out there and do something. Don’t just think about it, don’t talk about it, don’t plan it all the time just do it, do something out there.
Josh: Make it happen.
Brandon: Make it happen loved that.
Josh: The Doru!
Brandon: The Doru.
Josh: Yup, yup. Alright well guys thanks again for listening. Definitely if you love what we’re putting out there please jump on iTunes and leave us some feedback leave us reviews and ratings on iTunes definitely helps us. Get the word out and on that check up out on Facebook at facebook.com/BiggerPockets, Twitter twitter.com/BiggerPockets.
And if most importantly if you’re not active on BiggerPockets please jump in and create a free account today at BiggerPockets. create a profile, get in there engage connect with the community start to make friends and start to make connections and get out there and make it happen. So that’s all I got for you today thanks for listening I'm Josh Dorkin sign off.
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