BiggerPockets Podcast 032 with Will Barnard Transcript
Link to show: BP Podcast 034: Virtual Real Estate Investing and How to Find Great Deals in a Hot Market with Anson Young
Josh: This is the BiggerPockets podcast, show 34.
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Josh: What’s up everybody, this is Josh Dorkin, host of the BiggerPockets Podcast and founder of Biggerpocket.com. Happy to be with you guys today alongside – I’m actually not alongside but I’m virtually alongside my good buddy, Brandon Turner. What’s up buddy?
Brandon: Hey Josh Dorkin. How the heck are you?
Josh: I’m good.
Brandon: It’s a cheesy episode here.
Josh: Oh my God! It’s about to begin. We’ve got Anson on.
Brandon: We do have Anson on and he is not cheesy. He is hilarious.
Josh: Anson is a funny, funny dude. We’ll introduce him later but listen, everything’s good. Very excited to be back for yet another episode of the show. Excited that our development team on BiggerPockets is off of vacation and back working away making more cool things happen. Things are great. I’m very excited about the show to come.
Brandon: Me too. Definitely. I just got down with the Minnesota State Fair. I was there twice in the last three days and it was good. I’m on a little vacation to Minnesota and back home tomorrow.
Josh: For anyone listening I’ve actually put out a challenge to Brandon across the past week to get videos of himself chowing down on some deep fried butter or something else real state fair-ish and he totally wussed out.
Brandon: I took a picture of the deep fried candy bar booth or bacon or deep fried candy bar wrapped in bacon, something like that. I did not enjoy that. I just had a Pronto Pup and it was amazing. It’s like a corn dog. Good stuff.
Josh: If you guys are listening and you are going to a state fair we want a photo of you eating something deep fried and nasty. Send us your deep fried butter pics.
Brandon: Yes please.
Josh: Alright, on to the show here. Before we go and start the interview we are going to do our quick tip.
Today’s quick tip is unanswered post. If you go to the forums you’ll see, at the top of BiggerPockets.com/forums you’ll see a tab that says ‘Unanswered’. If you go there you will see posts where people have spent time asking questions and sharing their thoughts and these are people that are waiting for a response from you so please jump in, check out those unanswered posts because you can help your colleagues, make new friends and be a valuable member of the BiggerPockets community by doing so and hopefully you will jump in and make that happen. Quick tip, make it happen.
Brandon: Good tip.
Josh: For sure. On today’s show we have Anson Young as a guest. Anson is a flipper and wholesaler here in the friendly confines of the Denver Colorado area. Anson does some virtual wholesaling. He’s actually a licensed real estate agent as well. Anson’s been in the game now for eight years and as I said earlier he’s really a funny guy. He’s currently running the BiggerPockets unofficial meet up for the Denver area.
If you’re local you definitely want to link up with him and if you’re not local you still want to link up with him because he’s doing deals around the country now, virtually, which is awesome and which we’re going to talk about. Anson, welcome to the show. How’s it going man?
Anson: I’m doing well. How are you guys?
Josh: It’s very cool to have you here. I think you’re our first local, Denver guy that we’re interviewing so that’s pretty cool.
Anson: That’s good. I could be doing this from your kitchen table but phone call’s just as impersonal.
Josh: Exactly. I didn’t want my face that close to yours, next to my giant blue microphone.
Anson: Yes. I’ve heard about those things.
Brandon: Didn’t you and I do that, Josh? I don’t know what episode that was but we recorded from your kitchen table.
Josh: Yes. I was a little nervous as your mouth came close to mine every time somebody had something to say. It was really weird.
Brandon: Yes. We’re pretty classy. Alright. Let’s get into the interview here, Anson. Why don’t we start out with a basic question – what do you do? What kind of investing do you do?
Anson: I do mainly wholesaling these days. I’ve done flipping and wholesaling. Currently wholesaling and actually kind of revamping my flipping business to get back into it because that’s what I really like to do for stories involving that – we’ll get into them later – but wholesaling is primary right now.
Josh: Right on. How’d you end up getting into that? How’d you start out as an investor? What got you going?
Anson: As an investor I started out like a lot of people do. I got a gift of Rich Dad, Poor Dad. Whilst that gave me a good mindset I ended up reading it on the way down to Phoenix as we were moving, my wife and I, and right when I landed I basically started in with trying to get in with people who were doing what I wanted to do, which was just investing. I started with the book and expanded from there. I ended up taking a lot of crap jobs from investors and agents in order to get my feet wet, pay my dues and get started.
Brandon: Can I ask what jobs were those? Can we go into that a little bit? Because a lot of people want to know how to get started and I think that’s a good way to do it.
Josh: And doing crap jobs is a good way to get started.
Brandon: That’s a tweetable topic right there.
Anson: That’s right. I ended up doing just a lot of things that other people didn’t want to do. I was from running contracts to actually installing signs, paper work, BPOs. I did a lot of BPOs and valuation type stuff.
Josh: Were you an agent at the time or no?
Anson: Not at the time, no. But I got a good start with, basically here’s the MLS, I’m going to park you in front of it for eight hours, you’re going to do a certain amount of BPOs and you’re going to go out and try to find deals for us.
Josh: Real quick, tell everyone what a BPO is.
Anson: I’m sorry. It’s a Broker Price Opinion and it’s something that a bank will hire an agent to do to give their broker a price opinion on a certain property; whether it’s a short sale or an RAO.
Josh: Got it. So you’re doing these crappy jobs and then what?
Anson: So I’m doing these crap jobs and then basically I came into a source of deals, which was an RAO agent who’s a good friend of mine.
I had a deal but I didn’t have any money and I ran into another agent who had money but didn’t have any deals. So it was obviously a match made in heaven; we partnered up to do our first flip deal here in Denver and it actually worked out really well. We still partner on and off on deals even today.
Brandon: Can you tell us a little more about that first deal?
Anson: Absolutely. It was an RAO that I got under contract and then I went and we partnered up with this other agent who was just bringing the money in. He’s a very good handyman type, he can do A to Z with construction – probably not the crazy electrical stuff or any of the from the ground up construction but he can do full rehabs.
We went in and bought this place for $80,000 and we ended up putting in about $14,000. So it was kind of a lipstick rehab; it didn’t need anything crazy. He did all the work and I came in and helped. I probably messed up a few things when I came in and helped – I’m not handy at all. Then we ended up selling it for about $144,00 and obviously we did OK on it. It was a great match.
Brandon: Nice. I think the partnership idea when flipping houses is an awesome idea. I think a lot of people try to flip houses and they want to do it on their own the first time because they think they don’t want to split 50% of their profit but I think it’s a great idea; I’ve done it a number of times. I’d say half of my flips I’ve done have been with a partner of some kind.
Anson: I agree. That one was more of a 70/30 arrangement.
Josh: I was going to ask.
Anson: I didn’t do any of the work, I did find the deal, and I did help sell it. At that time I was an agent already so I did help sell it. Obviously just bringing a deal shouldn’t get you 50% of the money unless your partner’s comfortable with that. He did most of the work so he should get most of the money. And 30% of something is better than nothing.
Josh: So he managed the entire project as well?
Anson: He did. Absolutely.
Josh: That’s not bad. You got this first deal off the ground. From there did you guys continue to do deals together or did you go off on your own? How did that flow?
Anson: The next deal that I found was a pretty thin deal and so what I ended up doing was I wholesaled it to him and he went ahead and put his own money in and fixed and flipped it on his own. I went on, found a private money partner to fund my next three deals. So I did the next three on my own, without a partner. I just did the private hard money route and went from there.
Josh: So you said it was a thin deal but he went ahead and did it anyway. So you wholesaled it. Did he end up making any money or was it a deal that in retrospective was a crap wholesale deal that a more experienced flipper may not have taken?
Anson: That’s not how I roll, Josh.
Josh: Not calling you out or anything. I know you wouldn’t do that today of course.
Anson: Of course. It was still a good deal. It was just too thin to split 50/50 we felt. So with his money involved it was better to just pay me $2,000 or $2,500 for it. He went on to make good money on it so I don’t feel too bad for him.
Josh: So what was it $2,000 or $2,500?
Anson: It was a while ago. I believe it was $2,500.
Josh: I’m just kidding. That makes sense. In this case you’re working with the guy, there’s a deal, there’s definitely money to be had, however just splitting that opportunity wasn’t necessarily going to work. I think it’s a good point for listeners that sometimes a deal is still a deal but it may not be a deal if you have to start slicing it up among other people.
Anson: Exactly. That’s correct.
Brandon: I did a flip last year and at the end we made, combined, $15,000 but then we had to split that so we got $7,500 and then pay taxes on that. I think I ended up with under $5,000 by the time I was done. And that was exactly that thing. It was probably too thin. I probably shouldn’t have partnered on that one. It was still $5,000.
Anson: It’s a lot of work for $5,000.
Josh: So how are you actually finding these deals, Anson?
Anson: I am an MLS guy from the beginning. It’s my roots from where I started. I’m an MLS junkie as it were. Pretty much everything has come from there, that I’ve done so far, except for a handful of off market stuff.
Brandon: Do you find that drying up now?
Anson: it is getting a little thinner, however we’re still finding decent deals. You just have to know how to dig for them and you have to dig a lot deeper these days.
Josh: You’re finding these on the MLS?
Anson: Yes sir.
Josh: In the city of Denver?
Anson: In Denver, yes.
Josh: Right on. At what address? Just kidding! I’m not looking for deals in Denver or anything like that.
Anson: But if I was-
Josh: That’s great. You’re still digging there. You’re not doing any direct mail or any kind of marketing then?
Anson: I’ve been testing direct mail. I see the advantages of off market and I’ve done test marketing starting last October and just trying to find what exactly I want to do there. I’ve been reaching out on BiggerPockets to try to find what’s working for other people and try to mimic that so I don’t have to reinvent the wheel or anything. There’s a lot of really good direct mail guys there so it’s a great resource to tap into for sure.
Brandon: That is the popular thing right now, direct mailing. I keep talking about it every show and I haven’t actually officially started it yet but we’ll get there.
You said you’re buying in Denver; are you doing any work elsewhere or is it just Denver?
Anson: Denver is what I’ve been working on mostly. I do have MLS access in a number of different areas like Phoenix. I lived in Phoenix for a couple of years and I understand the areas really well and have been looking for deals on and off there.
Thanks to partners and friends and agents and kind of just networking I do have MLS access in a number of different cities and have been doing sporadic deals here and there. I’m trying to nail down how I want to best utilize that.
There’s only so many hours in the day so I think I’m going to have to bring in Vas or something to help. If I’m going to build a business around it there has to be a structure there. Right now there’s not a structure. I understand that I can find sporadic deals there and sell them but the volume isn’t huge. It’s not impressive, let’s say that.
Josh: Right on. Let me ask you, how important do you think it is to fully understand an area, understand a neighborhood before you start scouting for deals?
Anson: I think it’s pretty important. I’ve found that if you do have MLS access the easiest way to find what’s hot is to search cash sales in the last six months, find a really hot area that has a lot of cash sales and then you have a pretty good baseline of where investors are buying in that neighborhood.
If they’re buying 3/2s for $100,000 and then you go and search the same areas for FAJ sales or conventional sales when these things are all fixed up and you see if they’re selling for $200,000 let’s say you have a pretty good base line of a neighborhood.
Doing BPOs for a long time I understand that you’re not going to cross any major streets, you want to stay within that subdivision if possible and you should have a pretty good base line. Investors are buying for $100,000, they’re reselling for £200,000. You know pretty much that if a deal comes on for $100,000 or $95,000 or $90,000 that you better jump on it because it’s likely a good deal.
Josh: Can you use that then? Say if I said let’s wholesale some houses in Fairfax, Virginia. Can you literally find someone who’s got the MLS access, jump on and start doing a similar search – cash sales in the last six months – and find deals and opportunities that way? Does that just work or do you have to have boots on the ground to really have a good idea what we’re dealing with?
Anson: I’m going to say the first one. I’ve got it to work with just doing it virtually. Obviously having boots on the ground you have a more intimate knowledge of areas and there’s a lot of people who live and invest there who say I won’t invest in this street for this reason. Obviously I wouldn’t know that from a top down perspective just on the MLS from my office in Colorado.
But that said I’ve had it work virtually for a few years now. Having the experience of doing a couple of hundred BPOs every year for a few years has given me the experience to say I know what I’m looking for just based on the raw data. Every now and then you’ll get something really strange where if you did have boots on the ground you would know that. But coming in from virtual on the internet, you may not know everything, but I think the raw data doesn’t lie and if you see forty sales in the last couple of months in an area that are all cash you can pretty much bet that that’s a hot investor area and somewhere that you should be looking.
Brandon: That makes sense. You mentioned virtual. I guess that’s where the term virtual wholesaling comes from. Why don’t we touch on that a little more since you have more experience on that than most of our guests who have been here. First of all maybe give a broad definition – what is virtual wholesaling?
Anson: It would be wholesaling in an area that’s different from the area where you live, from where you normally work. If I work Denver, virtual wholesaling would be properties in Phoenix or Dallas or Fairfax, Virginia, as Josh said – somewhere other than where I live and work.
Brandon: I’ve often thought about doing some virtual wholesaling myself because my area’s very small. I don’t live in a large metropolitan area and so I kind of feel like wholesaling would work but on a very small scale. If I wanted to take it up a notch I could go look in Seattle or Denver or whatever.
Josh: No you’re not allowed Denver. And it’s kind of your own fault. You live in a town with six people.
Brandon: There are 3,000 in my town I’ll have you know.
Anson: Since you have 3,005 cats it out numbers the population.
Brandon: I probably do have 3,000 cats that roam through my yard every day. Wow I get made fun of about my cars even by the guests now. This is awesome. I know Anson has cats. He’s a cat guy as well.
Anson: I wouldn’t say a cat guy. I possess cats.
Brandon: Crazy cat guy. Is that better?
Anson: That’s it.
Josh: Can we get back to the show guys?
Anson: When I realized I had a wholesale deal in Aurora, which is the same city I live in, and I didn’t even get in my car to go see it before I sold it, I pretty much realized – it was one of those aha moments when I figured if I can do this and it’s fifteen minutes away I can do this pretty much anywhere. Now obviously I know my area a little bit better but I’ve gotten it work in Kansas City, Arizona, Georgia, so it can work anyway as long as you have – for me MLS access is the only way to go. I couldn’t imagine doing it off Zillow or Red Fin or anything else.
Josh: What about those people who don’t have MLS access? Do you have any tips for those guys?
Anson: I feel very bad for them. No, I think there’s definite ways to get access. I can’t rely on data from those other sites that might be missing a lot of things. I would say that you can baseline some things off of Zillow or Red Fin.
I think you had a guest just recently, maybe two episodes ago that uses Zillow for their Iphone, something like that. To me that would be data that I couldn’t 100% trust.
But there are ways somebody could get MLS access, whether it’s partnering up with an agent, becoming an unlicensed assistant to an agent, basically networking and showing value to those agents in return for something that I think is priceless – direct MLS access.
Brandon: I don’t have direct access to MLS but my agent is only a text away so that’s a good idea. If you can get a good relationship with an agent – I probably text him ten times a day when I’m in hunting mode. That’s a suggestion too – bother your agent a lot.
Anson: Absolutely. I think that can work. I’ve never found an agent that’s reliable enough to do that for me but if you have that guy then that’s just as good, I think.
Brandon: Hopefully we can teach some more agents that way. This is a perfect transition; a couple of weeks ago I wrote a post called The Real Estate Agent’s Ultimate Guide to Working with Investors and it’s the longest blog post I’ve ever written by far. I think it was 9,000 words or something like that. Epic post, I thought it was pretty good.
The whole thing was listen, real estate agents, this is exactly what I wish every real estate agent knew about how quirky and weird we investors are. I think we’re different from normal homebuyers.
I made this guide. Hopefully there’s some agents listening and with 1,200 listening to this show right now hopefully a good chunk of them are agents. So check it out: BiggerPockets.com/agent Check it out.
Anson: I’ll have to read it.
Brandon: You will.
Josh: You should. Anyway, you were transitioning to the agent thing but I wanted to go back just for a second before you completed your transition and talk about the neighborhoods that Anton’s looking at and also the properties he’s looking at. How does he find out? How does he see them? Is he just relying on pictures on the MLS? Again in terms of neighborhood is it just let’s find a neighborhood where we can find tons of cash sales?
Anson: It’s mainly looking for a hot activity. In order to get an idea of what you’re getting into, my favorite way, especially virtually – I’m not licensed in that state I’m working in most likely so calling up the listing agent direct and having them write up your offer goes a long way. But you can also utilize – pictures will only tell you so much. I’ve had good luck with finding field vendors who do this kind of work for RAO agents who just go and take a crazy amount of pictures, a crazy amount of detail in their reports. Pay them $20 or $30 to go and vet a property, make sure I’m not getting into anything crazy and go from there.
Josh: Got you. Do you care if the neighborhood is a blue collar, white collar, more dangerous neighborhood? Does it matter?
Anson: I wouldn’t go anyway crazy dangerous. Usually they are blue collar neighborhoods. They’re either first time buyers or maybe the next move up neighborhood. I haven’t got anything that’s white collar, $500,000 stuff. Most of it is in the hundreds somewhere, if not buy in $80,000 and resell for $160,000. Nothing too much above $200,000.
Brandon: Are these bank repos or are these motivated sellers or what?
Anson: A good portion are RAOs. Some are estates and lately a lot of them are short sales even though the market’s picking up and getting those under water people, getting their heads above the water.
But a lot of them are short sales, which are one of my favorite things, mainly because I view it was a time machine. It’s called the Short Sale Time Machine. Basically once you lock it up and then whenever it gets negotiated at the other side the market’s changed. Even lately things that we locked up in October last year are coming through finally and coming through at October 2012 prices and here we are with 2% appreciation per month, which doesn’t sound crazy but it’s a really nice little time capsule where it comes out the other side at a better value.
It could go the other way if the market was taking, but then you still have the option to walk away thankfully. We’re going to keep the 2012 prices.
Josh: Nice. So using the Short Sale Time Machine method in a hot market is kind of a hot little tip there I think.
Brandon: It is and it’s patented. No I’m just kidding.
Josh: $997 I’ll tell you full details what you need to do.
Anson: What was that website?
Josh: It’s FillJosh’sPockets.com
Brandon: That’s awesome. I’ve never heard anybody say that before. You’re kind of blowing my mind right now. It totally reminds me of the options in stock trading. If you’re wholesaling these and they are bank repos or short sales I thought people say you can’t wholesale a bank repo. How are you getting around that?
Anson: You absolutely can. Some of them will tack on a deed restriction, which means they try to tell you that you can’t sell it within three months for a certain price. This is mainly a Fanny Mae thing. But a lot of times that’s 120% of what you bought it for so a lot of times – I’m not a greedy wholesaler – I will just take $5,000 to $7,000 to $10,000. I’m not looking for the home runs all the time.
A lot of the time you can skate under the radar of those deed restrictions by having your exit sale prices lower than that deed restriction is. Or there’s land contracts and LLC sales and all kinds of ways to do ultra net closings for the wholesale deal.
Brandon: Are you doing double closings?
Anson: I mainly am. I will do LLC transfers with people whole I know and trust and deal with on a regular basis.
Brandon: Let’s talk about that. What is an LLC transfer?
Anson: I get a contract or I can a property under contract with my LLC. It will likely be a brand new LLC that I’ve set up. I get it under contract, find a buyer. Instead of doing a double close where I go and close it and close with my buyer I basically sign over the LLC to that buyer in exchange for an LLC transfer fee, call it whatever you want, but you’re basically selling the business to somebody else with the intention that you have a property under contract with that business. On the day of closing they walk in and they are for all intents and purposes the owner of that LLC at that point and they walk in and close it and you walk away with your fee and they walk away with the property.
Josh: How are you funding the deal? Obviously you need to fund the deal upfront in order to make the initial acquisition.
Anson: This all happens whilst the property is still under contract. So it’s a literal zero money out of pocket type deal.
Josh: OK. So you’re doing this prior to close?
Anson: Yes. Prior to close.
Josh: Got it. So they’re the ones who actually sign the closing docs. They’re just transferring over whoever’s in charge of the LLC, correct? So the new person in charge of the LLC just signs the closing docs?
Anson: That’s correct. At that point they are the managing member of the LLC and I’ve hopped off the LLC with my transfer check in hand. Now they’re the owner so they walk in and close the title.
Brandon: Nice. That’s cool. You said you only do that with people you trust. Is there a reason for that?
Anson: First of all it’s kind of hard to explain to people who haven’t done it before. I haven’t got around that hurdle. It’s a headache. It’s easier to double close. People who you trust, like a lot of other wholesalers have said on your show that my list might be a couple hundred people but I really only deal with three to five people and those three to five I’ll do LLC transfers all day long with. The rest I might have to do a few deals with them before I can fully trust them to do that kind of deal.
Brandon: For those that didn’t listen to our BP Podcast [Inaudible]]31:06] with Jerry Puckett can you explain really quick what a double closing is?
Anson: Absolutely. I’m the buyer. Let’s say it’s an RAO. I go in and I’ll get it under contract, I’ll find somebody to sell it to – another investor. I’ll go in and close it for say $100,000 and then the same day I will close it with the investor that I have it under contract for $110,00 let’s say. So there’ll be two closings on one day and I’ll walk away with the difference between the two.
Brandon: And the title company takes care of that whole thing right?
Anson: They do, yes.
Brandon: Do you have any trouble finding title companies willing to do that? I know that’s a common question in the forums all the time. How do I find a double closing friendly title company?
Anson: I see that question all the time and I honestly in anywhere I’ve worked I’ve never found one that won’t do it. It’s a very common transaction. Unless your investor buyer is using a conventional loan - that throws a wrench in the works. If it’s all cash I haven’t found a title company that won’t do it.
Brandon: You’ve just got to ask for it I guess.
Anson: Yes you’ve just got to ask. Just say do you do same day closings for a couple of closings? Many times it’s a yes and many times you can get a hold open fee on your title, save some money when you’re transferring titles.
Josh: There’s a nice tip.
Anson: I always ask for the hold open. This might just be a Colorado, Arizona type thing, West Coast thing. We don’t deal with real estate attourneys or anything.
Hold open is where you basically just pay the difference between title insurance. If you bought for $100,000 and you sold for $110,000 the title insurance on the first transaction would be say $1,000. But on the second side you’re only paying for $10,000 of title insurance and not $110,000 worth. So the hold open’s really nice to save money, especially when you’re flipping or wholesaling. You save money on that second sale whether you’re selling to another investor or to an FAJ buyer who’s buying your rehabbed house.
Josh: Very cool. How are you finding cash buyers in these areas? You’ve got your deals, where do you find the buyers?
Anson: I’ve been finding them mainly through- I’ll find the cash buyers in that neighborhood, and I’ll start there. I’ve had good luck with, if I’ve a 3/2 in that area I’ll go find other guys who have closed 3/2s in that area and I’ll hunt them down through tax records, I’ll cold call them. I haven’t really done the mailing thing yet. That’s a last option for me. I’ll cold call them. I’ll say, ‘You bought 123 Main Street. I have 126 Main Street for $5,000 less than you bought yours for. Do you have any interest?’
A lot of times these guys who already have a rehab going in that neighborhood will jump on it because they can save some costs rehabbing two houses right next to each other or down the street from each other. That’s my main way of finding those virtual wholesale type deals when it comes to local Denver stuff. I guess I have three to five main guys and I don’t really need anything else.
Josh: That’s awesome.
Brandon: So Anson, if you have MLS access are you saying, because I’ve never had it, are you saying you can look up who the cash buyers are that bought a 3/2 in that neighborhood? Is it that simple as plugging in some numbers?
Anson: It really is. Instead of searching for active sales you’d be searching for sold properties within a certain time frame. You can even narrow it down to bedroom, bathroom. You can narrow it down to square footage. Pretty much – two stories in that subdivision sold and it will pull them all up. There’s a tax record option on all the MLSs that I’ve seen.
Sometimes they don’t update right away, they don’t update for a couple of months but generally it’s the best resource to find those in an easy to read manner – it’s all right there on your screen, a nice grid of maybe 30 homes in your area. You know what you’re working with at that point.
Brandon: That’s cool. I’m going to call my agent right after we get off this call. I’m going to make him look that all up for me.
Anson: That’s great. I’ve done it for other investors here in town. They say, ‘Hey. Can I see all the cash sales in this area?’ It’s literally a 30 second thing and then an email and then that’s it. For me, anyway.
Josh: Good. I think we were going to talk about agents and then we jumped back to virtual wholesaling. I think maybe we should jump back to working with agents a little bit. We’ll see where the road takes us. And yes by the way for everybody listening we do have a map of how we’re going to do these calls and we know where we’re going but when things get interesting we just go off on tangents. It’s real life and that’s what we do.
So you’re an agent. Let’s talk about that. Did you decide to get your license because you knew you were going to get into real estate investing or did you get your license because you wanted to be a sales person in the real estate space?
Anson: I’ve always – I got my license about two or three years after I read Rich Dad, Poor Dad the first time, always with the intent of using it for investing. I did try the residential real estate thing for about eight months kind of in a crisis of ‘I have it. I might as well use it to sell to friends and family and strangers’ and found out very quickly that even doing it on the side wasn’t for me. It was, ten houses on a Saturday with people who are nitpicking over wallpaper just wasn’t for me. I decided to go in and do purely investing at that point, always with the intention of using it for investing.
Josh: Got you. I was an agent for a whole in SoCal and I had a similar feeling. It didn’t work and too much battling with potential clients, although I worked with an investor and that was fantastic. Being an agent who actually worked with an investor who actually knew what he wanted and knew what he was doing was probably the most fun part of my job.
Brandon: So Anson, this is coming from the perspective that I just wrote this guide, what do you think as an agent, someone who’s been an agent and worked with investors, what makes you happy or annoyed to work with an investor?
Anson: It makes me happy when they know what they’re looking for. They know their exact areas and their exact formulas for what they want to purchase and they can execute that quickly. So if I do bring them a house I can get an immediate answer because we work in an immediate type market. Even when a market’s bad jumping on deals you have to be the first one there or have the best offer.
Going to the annoying side, it’s very annoying when guys don’t have their stuff together or they’re very slow to respond. I like working with pros who know their rehab numbers. They might have to do a drive by or a really quick walk through. They don’t need to get ten investors or ten contractor bids in order to make a decision.
Obviously everybody has to start somewhere but those guys who can execute quickly and then don’t make me run around for no money, ‘Hey can you comp these ten properties?’ and they’re not planning on closing on anything with me.
For an agent that’s very frustrating and probably why I don’t work with as many investors or almost any anymore – just because most of the guys have their group of agents that they work with. I don’t need to work with investors to make a living but a whole lot of new guys will ask me, ‘Hey. Can you do these hundred things?’ And I know at the end of the day they’re not going to pull the trigger. For an agent that can be very frustrating.
Josh: What can a new investor do? Hey I’m brand new, I’m fresh, I’ve done my studying, I know how to analyze properties. How can I get started approaching an agent? What do I need to say to them? What do I need to bring to the picture here to not piss of every agent in town?
Anson: That’s a great question and one that I think about pretty often, especially when I’m fielding newer guys who are looking for that kind of help. Knowing exactly what you’re going after helps. Time is of the essence. I can hand you five deals and if it takes you a week to get back to me they’ll all be gone and you’ll have wasted your time and mine.
I would say have your stuff together, have your money lined up, have your contractor lined up to get in there pretty immediately. Because when you are ready to pull the trigger you have to do it pretty quickly. I know that’s a lot of steps for a new guy, especially financing and contractors and having everything lined up to go, but if you’re talking about MLS deals you’re usually talking about things that we need a decision on within 24 hours or less. Pretty much any offers that I blast out that are new properties on the market and within an hour or two on market. Whilst that’s completely unrealistic for a lot of new guys you definitely have to have your stuff ready.
If you bail out because you didn’t have your financing ready or you bail out because of your three contractors, two didn’t show up, you’re going to piss off agents pretty quickly.
Josh: Really quick for everybody listening this is the BiggerPockets podcast, show 34. If you want to keep up with the show notes go to BiggerPockets.com/show34. There you can ask Anson any questions you have. He’ll be there to answer them for you. So definitely be sure to check out the show notes and of course we’ll point to any resources on the show.
Anson, you talked about doing those BPOs. For anyone who’s potentially interesting in doing that, how does one do that? It does seem like a great opportunity to start learning how to analyze potential properties, how to get a feel for a market.
Anson: It really is and it’s more – when I started I was working in an assistant type scenario, where I was assisting an agent and then I got dumped with a bunch of BPOs and learnt how to do short sales and stuff with those crap jobs.
Being an assistant for an agent isn’t the end of the world. You actually get paid for learning a lot of this stuff. I’ve never shied away from that, I think it’s a great experience. You can do that.
If you’re already an agent you can find RAO surveyors who are giving out BPOs in your area – whether it’s Bank of America or Wells Fargo or any of those companies that do those fee BPOs – for money, usually for $50 to $100 you can do this BPO. So you’re getting paid to learn valuation.
Over the course of doing a few hundred of them you’ll first of all you’ll hate your life but you will be glad that you did it because you’ll know areas and you’ll be able to take an MLS system and use it for your own purposes. You know exactly what you’re looking for and values come so much easier.
Josh: Awesome. We’ve actually got a bunch of links on our resource page at BiggerPockets.com/rei that point to resources like RAO banks and things like that. We’ve got the original RAO bank list that’s got all that stuff. You can go on there and do some research and reach out to these guys if you want to do that.
Let’s jump back one more time, jumping around to the topic of flipping. You said that you started out by flipping and mainly went to wholesaling. Why did you do that?
Anson: It was a handful of deals into it and I had a great GC – General Contractor – or so I thought. He did an amazing job for three properties and then moving on to the fourth he decided, and it was a completely legitimate company, they had store fronts and were doing a lot of commercial jobs for McDonald’s and these big build outs, so you couldn’t get more legit on paper than this guy.
I get a call from one of my friends on New Year’s day. He said, ‘Hey. If you have any materials at this guy’s warehouse you better go get them because the feds are going to come in.’ I think they seized him on a tax thing. They weren’t paying their taxes. That guy ended up walking away, going to California with probably about 20 investors’ money.
Thankfully that job of mine was pretty close to being done – it was about 90% done. I did have to go in and clean up and got a lot of threats for leans on my own house because he didn’t pay my guys and I had to go in with my own money and fix these deals and of course it was all money that was lent so my private money guy was wondering what the heck was going on. But it wasn’t just me that got burnt. It was me and about five other guys that I personally know and easily ten or fifteen other guys in town. It was a big operation and it shut down over night.
At the same time I had deals that I wasn’t interesting in flipping so I was wholesaling them. So I was thinking to myself this was easier money with a lot less risk and I wasn’t really ready to date any more General Contractors. I’d had my heart broken once and wasn’t ready to get back out there so to speak. It’s one of those things. You get burnt and for a while you’re just hesitant to jump back in.
Josh: Did they ever end up busting this guy? Did he go to jail?
Anson: No. He’s still in California. I think there might be a couple of guys that are looking to get in a class action suit or something.
Josh: Tony the Bone Breaker is looking for him somewhere.
Anson: I hired him. Brandon, you ready to go down to California?
Brandon: I’m ready. Let’s go.
Josh: Nice. I’ll tell you what, I had somewhat of a similar experience with a property manager actually. What they had done was, the story is they didn’t love all the clients they were working with and they wanted a way out. So essentially they shut down their business and they opened up a new business in a new name and took on all the clients that they wanted, except here’s the thing; the clients they didn’t necessarily want, they held on to their security deposits and rent and all sorts of stuff. It was crazy shady.
I got ripped off until I started blogging about it, writing about it and pressured them to pay me back. The power of BiggerPockets came through on that case, which was great. But there’s a lot of shady people out there and unfortunately there’s not a lot you can do to protect yourselves against these kinds of crazy things happening. You can protect yourself against a lot of stuff but sometimes bad things happen. There’s just not a lot you can do.
Anson: Absolutely. You can have the best contract in the world with your contractor but if they decide to walk your only recourse is court and even then you’re just going to end up settling with their insurance company for pennies on the dollar of what they owe you. I’ve seen that happen just recently with a friend of mine. It’s hard to find the right guy and even when you find the right guy he might not be the right guy. You’ve got to do your due diligence and do your best.
Brandon: So what are you going to do differently? You said you want to get back into flipping?
Anson: It’s really what I love most about real estate. Taking a piece of junk and turning it into something really nice. This time – I was just handling drawers from my private money lender, handing drawers over to my GC and he was handling everything – or so I thought. But this time around I’m kind of mentoring with a friend of mine who’s teaching me how he’s doing business.
I never think that you’re done learning. I’m always happy just to jump in with somebody who I respect and they’re doing a great job. Kind of doing what I want to do and learning from them any way I can. I’m kind of relearning the whole process of materials, doing all the materials ordering myself, kind of being a GC where you’re handling all the subs, doing payroll, basically in charge. You have much more control over the process.
That’s what I’m in the process of right now – resetting my brain on how I’ll be running the business moving forward and learning hands on from another investor on what to do and what not to do when you’re running that kind of flip business. It’s been invaluable. You’re never done learning and so I’ve kind of jumped back into the student thing and I’m never ashamed to say that I’m learning all over again.
Brandon: You say you’re never done learning and that’s one of my favorite things about BiggerPockets. There’s always someone smarter than you on pretty much everything on BiggerPockets. No matter what you want to learn about there’s somebody who’s experienced it and been through more than you have.
If I could just encourage everybody on that note to jump in. Even if you’re a pro, jump in and you could probably learn from other people things that you don’t know. I think that’s huge.
Brandon: Also, I might as well throw in here, you talked about estimating the costs and planning the budgets and all of that good stuff with the flip. I might as well mention to people that if anyone out there is working on the same thing you should definitely check out our house flipping calculator. It’s at BiggerPockets.com/calc. You can play around with the numbers and see what your potential profit is going to be.
Anson: Yes. I’ve played around with it as a wholesaler and a flipper and it does great work. I’ve used it on presentation style things. You did a great job on that. I hate to be Mr. Plug Guy but I think Jay Scott’s books are great. Ever since I met him. I want to be him when I grow up I guess, is what I’m trying to say. I think he’s done a great job with turning flipping into a scaleable business. That’s the goal. Onesies and twosies are great but if you want to leaunch into a business.
I think his books on both estimating the cost and his main book are great at laying out a foundation of how to do that. You don’t have to reinvent the wheel, you just have to find someone who’s doing what your’re doing and model.
Josh: And those you can find at BiggerPockets.com/flippingbook. We’ve got those available for sale. And Anson did not get paid – by any means whatsoever.
Last question before we move onto the next section of the interview here and that’s mistakes. I know earlier on you talked about ‘I’ve got stories’ and clearly you do because the contractor story was a whopper. What other stories, mistakes, any crazy stuff that you’ve been through as you’ve gone through your investing career?
Anson: I’ve done the classic wholesaler mistake when I was a newbie and I didn’t understand rehab costs all that well and I’ve shot out deals where there was just dead silence on the other end and when I called for some feedback from a friend and they were like, ‘Man you’re way off. The more that you do this the more people won’t take you seriously.’ I think everybody does that at one point. It’s just learning the business.
I then took very seriously ARV, repair value. Obviously you have to be buying a deal for someone else to buy it but if you’re off on your other numbers the next subsequent deals that you send out will just fall on deaf ears because people won’t take you seriously anymore. I’ve made those mistakes. I’ll own up to them and say from then on I paid very close attention to exactly what I was sending out so I’m sending out the best product and build a reputation from that and hopefully.
Josh: So don’t market and pitch bad deals.
Josh: There you go.
Anson: I know you guys talk about that a lot. It’s very accurate. It can destroy your reputation over a few months if you send out those deals all the time.
Josh: Let’s jump into our fire round.
Josh: That was scary, Brandon. And Anson, thanks for participating.
Anson: I can’t do the falsetto quick tips that you do but I’ll lend to the growly voice.
Brandon: I hope that people in their cars while they’re listening to this podcast, I hope they do it aloud with us because that would be really funny. If you do you should make a Vine and send it to me on Twitter or something because that would be fun.
Josh: The BiggerPockets quick tips and fire rounds are going to be coming in from everywhere. In fact here’s a challenge, if you want to do it on your own do it and we’ll sample your recording and we’ll add it to a show if it’s good. So if you want to participate jump in and help us out.
Brandon: That’s a good idea. Alright, first question of the fire round. Again these all come from the BiggerPockets forums so if you have a question jump in the forums. You’ll get probably lots and lots of answers from people and you might get chosen, your question, to be on the podcast. Here we go. Number one, do you have any tips for finding good deals on Craig’s List?
Anson: I’d say volume is your key. I’ve only done a certain amount of it but the more consistent you are with volume and then follow up with people who do respond the better you are.
Josh: What do you mean by volume?
Anson: It would be like emailing pretty much everybody that you can that meets your criteria. So if you’re looking for landlords who are wanting to get out email pretty much everybody or call pretty much everybody you can that fits your criteria. It’s a numbers game like direct mail.
Josh: Got you. Right on. Next question: would you invest in a property with a well or septic tank versus say city water?
Anson: I don’t have much experience in that but as long as the septic reports come back and the well reports come back OK I think that you’re OK. But then again pretty much everything is on city water where I normally invest.
Brandon: How do you show someone who is eternally pessimistic the advantages of investing in real estate?
Josh: This is a personal question from Brandon.
Brandon: No I saw this in the forums. I love this question.
Josh: His cats are pessimistic.
Anson: Well Brandon, this is would I’d do Brandon, I would definitely – pretty much it’s a numbers game. If you can show somebody solid numbers of why it makes sense to buy rentals and pay them off or buy rentals and have your tenants pay them off and show them over the course of time – I don’t think that numbers really lie.
If they’re arguing against logic and real hard numbers then it might not be someone that you can convert. But if you can show somebody a 20 or 30 year chart of ‘Hey. If I buy this many rentals for this long then we’ll see this kind of return and then at the end we’ll see this much cash flow.’ If somebody is still pessimistic about money then I don’t know, I guess I can’t help them.
Josh: Logic prevails.
Anson: Logic prevails, that’s right.
Josh: Right on. So what’s the smartest way to invest in real estate if you do have money?
Anson: If you do have money I would say if I came into $100,000 overnight I would definitely leverage that and buy as many buy and holds as I could with that money. So instead of buying two free and clear properties I might try to buy ten leverage properties. That would be my personal way to do it. It just makes sense to me that if a renter’s paying your debt service then you’re pretty much moving ahead in the game.
Brandon: What about some more abnormal types of properties, unconventional town homes or duplexes. Would you wholesale anything like that?
Anson: Town homes yes. They’re usually deeded on their own and depending o the area they can go pretty fast to a buy and hold type guy who doesn’t want a lot of maintenance on the exterior they’d rather pay the HOA or whatever.
Condos I kind of shy away from. The HOA on buildings can, if that number jumps too high it can just be double your costs. I stay away from those and I stay away from rural properties only because there’s not as many buyers looking for those as I’d like. I’m looking for the hotter areas.
Josh: Right on. Don’t buy in 3,000 population Brandonville.
Brandon: That’s only in my town. I live outside of a larger town, Aberdeen.
Josh: A larger town that has 3,500 people.
Brandon: It’s like 35,000.
Josh: To all the Aberdeen listeners we respect you, we really do.
Anson: You have a big town.
Josh: You guys have a Starbucks. I know Brandon is always there.
Josh: A two Starbucks town. One traffic light and two Starbucks.
I’m bashing Detroit and now suddenly Aberdeen. Oh my God, I’m going to get hated.
Brandon: Hate mail from everywhere.
This is the birth place of grunge, Aberdeen. Nirvana.
Josh: Last question, Anson. Bookkeeping: what tools do you use? QuickBooks? How do you manage your bookkeeping?
Anson: I manage it by giving everything to my wife who was a bookkeeper for a long time before she stayed at home with our son. She uses QuickBooks. But I’ve done a better job lately of doing a better job and plugging everything in, keeping receipts and that way it’s a lot easier for my bookkeeper then to do their job if I have everything organized. I don’t have time to do it all myself but QuickBooks seems to be the standard of what everyone uses.
Josh: Fantastic. That’s great. Cool. Closing up here, why don’t we heat up this famous four.
Brandon: Alright. The first question of the famous four is what is your favorite real estate book?
Anson: Rich Dad, Poor Dad was a good foundation but not much meat in that book. I think Millionaire Real Estate Real Investor by Gary Keller was probably the one that turned me around of how the game is run and planning with the end in mind so you know how many deals you need to get how much money you want. That’s a great book.
Josh: And that’s a great tip by the way, planning with the end in mind and starting from your final numbers and working backwards.
Brandon: Both those books and a whole lot of other ones are on our list of the 20 best real estate books ever. We’ll link to that in the show notes.
Josh: Check them out. Favorite business book?
Anson: I’m going to be kind of a Brandon guy and say the Four Hour Work Week changed my mindset.
Josh: What’s wrong with you guys? I haven’t read the book admittedly but my God. It’s like a cult of Four Hour Work Week people.
Anson: This one’s for Josh, because I can never have one favorite; Crush It by Gary Vaynerchuk.
Josh: OH MY GOD IT’s CRUSH IT! CRUSH IT, CRUSH IT, CRUSH IT! NOW! CRUSH IT! CRUSH IT! YES!
Anson: Wow, excited.
Josh: That was my Gary impression.
Brandon: That is how he talks, yes. I like that book, Crush It was awesome. I recommend that to everyone.
Josh: I haven’t read it either but the enthusiasm exudes from it.
Brandon: You should read that one, Josh. That one is you to a tee.
Anson: I think it is.
Brandon: It’s the opposite of the Four Hour Work Week. It’s the hundred and 90-hour work week. He’s insane. We’ll link to that in the show notes also. Everyone should read it.
Anson: Hanging out with my family. We take our son on adventures and we’ve been hiking a lot lately. We did our first fourteener two weeks ago. Also I play guitar and bass, most recently in a band that travels for conferences and conventions and stuff like that. It’s a lot of fun.
Josh: Nice. Rock band. I’ve seen Anson’s pictures in the mountains. They’re awesome. He is definitely making me a little bit envious of his adventures there. So if you’re friends with Anson check out his Facebook pictures. They’re awesome.
Last question, and since Brandon always asks this I’m going to see if I can get it right. What sets apart those people who really excel and exceed and thrive in the field of say wholesaling and flipping versus those who end up ultimately disappointing themselves and their wives and failing miserably?
I’m just kidding. Everybody tries things and some things aren’t for everyone but truthfully what does set apart those guys who kick backsides versus those who may not do as well?
Brandon: It’s not a new answer for your podcast but consistency. I’m going to try to frame it in a different way. One of my early mentors said you’re either consistent or you’re nonexistent. And that is so true for what you’re trying to do in this business.
If you’re an MLS guy you need to be making offers every day. If you’re a direct marketing guy you need to be consistently hitting your target market. It doesn’t matter what your strategy is. There’s 10,000 ways to skin a cat in real estate but if you’re consistently pursuing a worthwhile strategy you will do a thousand times better than somebody who is scattered or who is a start stop kind of guy. If you’re just consistently hammering it you will do OK, you’ll be just fine.
Josh: Nice. Two tweetable topics in one statement.
Brandon: I was going to say I expect every single person who is listening this to go to the show notes and click the tweet button next to that quote and go tweet it or share it on your Facebook wall, because that was good.
Josh: Alright Anson. Great answers, great insight, lots of really great tips along the way. We definitely appreciate you adding a bit of quirky flavor to the quirky flavor that is already the Brandon and Josh mayhem show of BiggerPockets.
Anson: You’re very welcome. Thanks for having me. I’m sorry that it’s the end since you had to scrape the bottom of the barrel to get me.
Josh: This is the last show.
Anson: This is it. You thought Wilson Arts was the last show but this is it. 34 and done.
Brandon: No we’ll keep going. We’ve got lots lined up.
Anson: You guys are doing great. Thanks so much.
Josh: Alright guys that was show 34 of the BiggerPockets podcast with Anson Young. I definitely want to thank Anson for taking his time and joining us on the show here today. Lots of cool tips, lots of great feedback. Always stuff that I know I learn something every show.
Brandon: My mind has been blown.
Josh: Mind blown, which is great. Thanks again to Anson for that.
For those of you listening again you can definitely jump in and interact with Anson through his profile, which is linked in the show notes, or just ask him questions about the show or anything else you want to in the show notes at BiggerPockets.com/show34. Otherwise make sure you’re following us on Twitter at twitter.com/biggerpockets, Facebook at facebook.com/biggerpockets. Were on LinkedIn, we’re on G+, we’re on Pinterest, we’re all over the place, so definitely make sure to follow us elsewhere and share us, share our articles.
Brandon: Hey Josh, can they follow us on Myspace?
Josh: You know, MySpace is now owned partially by Justin Timberlake I believe and I think he was trying to make it relevant again as a website and if Justin Timberlake is listening to the show we’d love to have him on, but MySpace I think is really all music focused once again and I don’t think so. We’re not there.
Brandon: I don’t want to leave you now, I’m looking at the other half of me. Sorry, good song.
Josh: Was that Mirrors? That was pretty good.
Brandon: Yes I’m pretty talented, JT.
Josh: It’s a hot jam. Anyway as I was saying, it’s time to get out of here. Thank you for listening. Make sure you rate and review us on iTunes, check out the show on iTunes and then rate and review us there. Come back to BiggerPockets and hang out with us. There’s a lot of great stuff happening. We’ll see you around the neighborhood at BiggerPockets.com. That’s it. I’m Josh Dorkin, signing off.
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