Top 10 Takeaways - Podcast 422 with Amanda Young

BiggerPockets Podcast 422: From W2-Job Single Mom to Flipping Real Estate Rockstar with Amanda Young

Hosts @Brandon Turner and @David Green and Guest Amanda Young

1. YOUT NEED GRIT, NOT MONEY, TO SUCEED IN REAL ESTATE. I did not have a lot of money to put into these deals at all, but I have a lot of determination and grit.

2. BRANDON AND JOSH WERE MY FIRST MENTORS THROUGH THE PODCAST. They taught me all the language I needed to know, different strategies, different ways to invest. One show talked about going to local REIA meetings. So I got myself plugged in to one that was about an hour away. From the REIA meetings, I learned a lot more ways to invest and strategies, and I was also able to get plugged in with other investors and I learned a lot that way as well.

3. YOU NEED COURAGE TO BUY YOUR FIRST PROPERTY. Now, mind you, when I bought my first property, I was a single mom and I didn’t have a lot of money. I got a lot of backlash. I got a lot of, are you crazy? You don’t have a man in your life to help you. You’re a single mom, what are you doing? And I said, “Hey, I have this dream, I’m going to follow. I’m not going to let anything stand in my way, I’m going to do it.”

4. PROBATE DEALS CAN BE PROFITABLE. I won a list of probate leads at my local REIA. I got a call back from a lady in Michigan and she had a home here in Spring Hill. Her father passed, so it was a probate. I was able to negotiate a subject 2 deal. She wanted 6,500 cash and I took over her $42,000 BOA loan on subject 2 financing. Subject 2 is taking an existing loan over that’s not in your name. I didn’t even try to negotiate her down because it was such a good deal. I do that a lot. If a seller comes to me and says, this is what I want. And I’m like, you know what? I can make that work.

5. YOU NEED A LAWYER AND A 1031 EXCHANGE COMPANY. I ended up selling my probate deal to a tenant for $85,000 and rolled it into two cash flowing rental properties with very little money out of my pocket. I also delayed paying tax on my profits by utilizing a 1031 exchange. To do this, qualify for a 1031 exchange, you have to own the property for a year and a day at minimum. I had to hire a lawyer for all this and a 1031 custodian. So you need to set up basically, it’s like an escrow company that handles the funds on your 1031 exchange. And then you’ve got 45 days to identify your next property and 180 days to Close. The money actually does have to go from closing to them. It doesn’t ever actually go to your account or in your hands. It goes to what they call a custodian and they sit on it until you’re ready to purchase your next property.

6. YOU CAN AVOID ADVERTISING YOUR “SUBJECT TO” DEALS WITH A LAND TRUST. You can put property in a land trust named after the person you purchased the home from in a subject 2 deal. So this way, on public record, it’s not obvious that ownership has changed. I also went to the bank and I opened up a checking account in a fictitious property management name, so property management of whatever. And then I wrote all the checks out of that account. So when the bank received those checks, it said property management company so that they wouldn’t be flagged like, oh, this is coming from a different person other than who owns the house. If the bank does say, you bought the property, you got to pay us back, you still have options. You could secure a bank loan, a private money loan, or just sell the house. You could also bring in a partner. There’s a lot of options.

7. DRIVING FOR DOLLARS STILL WORKS. I like driving for dollars. So primarily all my deals are off market. I find them mostly driving for dollars and knocking on doors. I also encourage people to let everybody know what you do, let them know what you’re passionate about. And I tell all my soccer mom friends, I say, listen, you give me a lead I close on, I will take care of you voluntarily. I will make it worth your while. When I’m driving around knocking on doors, I go to the neighbor and say, hey, I got $500, if you can give me their information and I close on that deal, I will give you some money. I loos for bad roofs, tall grass, trash everywhere, unkept. I’ll go look in the windows, if it’s all old, if it’s 1970 or ’80 original, I want that house. I found a for sale by owner sign written in pencil and I'm like, oh, that's opportunity all over! I’ll mail a letter. I’ll knock on neighbor’s doors. I’ll skip trace them. I’ll call them. I’ll call their neighbors. I’ll call whoever I can get ahold of. And from there I’ll negotiate the deal.

8. GO AFTER HOMES THAT NOBODY WANTS. On one of your podcasts long, long time ago, you had somebody on there to say, go after the product that nobody wants and that everybody else is scared of. And for me, that was sinkholes, nobody in my area invested in sinkhole homes, nobody wanted them at the time. So I ran a full page ad in my community newspaper and said that I bought sinkhole homes and that I was a sinkhole specialist, but I had never bought a sinkhole home. That got me a ton of leads and I was able to purchase quite a few. I buy them for 50 cents on the dollar or less, and I repair the sinkhole. I have it pinned or I have another engineer come along and retest it and see if in fact, is there a sinkhole or not. And if there’s not, we get a new engineering report, which supersedes the old one from the fraud and the flag is removed and now the house is just like any other house in the neighborhood. And now once it's repaired and once it's remediated, the ARV is exactly the same as any other house in my community. In fact, sometimes they're even more desirable because in my area, it's almost not, do you have a sinkhole? It's when are you going to get a sinkhole? A lot of people would rather have one that's repaired so they do not have to deal with it in the future. It might be a sinkhole, might be asbestos, it might be lead based paint, it might be bad tenants that need to be evicted. This might be one of the biggest opportunities we have over the next 6 months to a year.

9. COVID PROOF YOUR TENANTS WITH MULTIPLE SOURCES OF INCOME. I have a phenomenal property manager. She is absolutely amazing. She is incredibly smart. What she has done is she has put in place tenants who have multiple sources of income and we’re not talking about both of them, we’re talking about just one of them having multiple sources. So if COVID takes one away, we can still pay rent on their other sources of income.

10. WOMEN CAN WIN IN “A MAN”S WORLD”. Flipping is still “A man’s world” of dealing with contractors and all that. You can’t let it stop you. I combat that with education. I know what I’m talking about. If I don’t I ask a lot of questions and I speak to a lot of ladies. A lot of ladies come up to me and say, gosh, I wish I could do what you do. I don’t know where to start, I’m not confident. It’s such a male dominated industry and I just want to say, but use it to your advantage. I love to be the underdog and be underestimated, so there’s a lot to be said about being underestimated and going in and beating the boys out. I love doing that, sorry. So ladies, it’s great. Especially with negotiating, twice now, twice that I know of, I beat the boys out in negotiations, not because I had more money. The first one, I was the lowest bidder by 10 grand. The second one, I was the lowest bidder by $17,000. And it was only because I went in there, not a heavy hitter. I didn’t go in there aggressive. I went in there and I figured out exactly why these ladies needed to sell their home. It had nothing to do with the money. So if you could just use that to your advantage ladies, you could really, really make it in real estate. And I really wish that a lot more women would come and get into the business.

* Bonus Takeaway - KNOW YOUR MARKET. I just know immediately. I know what my buyers are looking for, I know what’s going to sell in the market. Every day I look at what has sold. I look at what finishes were put in, so I know what that neighborhood needs to have, as far as the rehab. I think it just comes from experience. When I first started and I still do this. When I first started, I would drive around. I’d pop into other people’s rehabs. I did not know these people, I didn’t care. I just knock on the door. Hey, what are you guys doing?

* Bonus Takeaway -PARTNERS CAN BE FANTASTIC. I brought on a business partner. She and I now flip together. You have more capital, more brains, and it is so much more fun to do it with somebody else. So one of the local REIA meetings, she showed up, she is a realtor. She showed up and just said, “Hey, I’m here, I want to learn. I want to invest myself.” So she and I just hit it off. It’s the best way to find a partner. I really think so. It’s like, do a deal and then do another one, then do another one, see how it goes.

* Bonus Takeaway - I LOVE TALKING TO PEOPLE AND ENCOURAGING OTHER LADIES. I’ll provide my email in the show notes so they can email me if they like. So please reach out. And you can find me on Instagram. And I also run my towns, local REIA. So you’re welcome to come to our free meeting once a month. What I also do is I do onsite rehab meetings. So when I purchase a property, I’ll do a onsite before, I won’t touch it. I’ll have everyone come through and look at it. And then I’ll do a post onsite meeting where after I’m done with the rehab and we have the appraisal back, I’ll have everyone come walk through and I’ll provide exactly what I spent where, and I’ll share my contractors and other people that I’ve used to rehab the house and I’ll show them exactly what the numbers shook out to be. What did I make, where I had to spend my money and did the deal go well or didn’t it? So you guys are welcome to come to that as well. I am also looking for private money lenders, so I can scale this business a little bit more than what I have. So right now that’s really what I need is some private money lenders.