Let’s be honest: It can be tough to find a great deal in today’s competitive real estate market. If you find yourself in that situation, you are going to love today’s show! Today we hear from Lauren Hardy, a house flipper and wholesaler in the highly competitive Southern California market who overcame a rough beginning to scale her business to several deals a month. You’ll love Lauren’s honesty about quitting her job too early and her straightforward approach to finding deals, evaluating a market, and creating systems that allow her to work and live a full life. And grab some scratch paper — this is definitely one show you are going to want to take some notes on!
Click here to listen on iTunes.
Listen to the Podcast Here
Podcast: Play in new window | Download
Subscribe: iTunes | Android | RSS
Watch the Podcast Here
Help Us Out!
Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it!
This Show Sponsored By
We just wa
nted to give a shout out to our podcast sponsor on today’s show: RealtyShares. RealtyShares is a crowdfunding platform that allows you to invest in professionally managed properties without leaving your living room!
Learn more by visiting RealtyShares.com/biggerpockets!
Fire Round Sponsor
A huge thanks as well to our Fire Round sponsor MACK.
MACK Investments is the nation’s longest tenured turnkey operator with over 38 years of combined experience, with its fully vertically integrated operation in the US’s most diverse economy, Chicagoland. With over 2000+ homes under management, we serve over 300+ investors across 11 different countries. Homes are priced below 200 thousand and will generate a guaranteed CAP averaging 9% that can be leveraged to achieve returns in excess of 20%.
Learn more by visiting MACKinvestments.com.
In This Episode We Cover:
- What to do when you hail from an expensive location
- How Lauren got started in real estate
- Her very first deal
- Why she loves condos
- Things to consider when investing in condos
- How she quit her job — and failed
- How she spent $25,000 — and got no deals
- Lauren’s tweaks to her direct mail marketing
- How she scaled to 2 to 3 deals a month
- How Lauren’s business works
- How she uses Podio to make her processes easier
- How she estimates rehab costs
- What exactly cash for keys is
- Flipping shows vs. flipping in real life
- How she funds her deals with hard money and private money lenders
- Where is she going with her business
- How many hours she works in a week
- And SO much more!
Links from the Show
Books Mentioned in this Show
- Rich Dad Poor Dad by Robert Kiyosaki
- Tax Strategies for the Savvy Real Estate Investor by Amanda Han
- Building Wealth One House at a Time, Updated and Expanded by John Schaub
- The Compound Effect by Darren Hardy
- The Entrepreneur Roller Coaster by Darren Hardy
Tweetable Topics:
- “I love what I do, so it doesn’t feel like work.” (Tweet This!)
Connect with Lauren
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly!
- Actionable Advice for Getting Started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
41 Comments
Sorry if I missed it in the podcast but when you said that you were getting too many calls to handle on your own it made me wonder about how many postcards you send out a month?
Hi Chris! Its not so much the amount of calls but the work after I get the call that I need help with. Specifically, determining the ARV, repairs and making offers. I mail 30K cards a month.
Great Podcast! Would you mind breaking down the numbers as they travel down from your mailings in terms of from the 30k postcards per month:
1.
Sorry got a little hot on the enter key,
1. How many calls does this generate.
2. From these calls how many offers are generated.
3. From the offers how many deals are accepted.
Really impressed by the volume of your mailings.
Hey Lauren, I know that you said you’ve scaled up to 2-3 deals a month now; how many calls are you getting from the 30k postcards a month? I would think that many mail pieces would be bringing in a lot more deals monthly. I’m asking as a newbie who’s trying to get a good idea of direct mail response rates in our local market.
Sorry, I just realized that Bryan already asked the same question haha
What she is explaining is what sophisticated investors do in competitive markets, not just CA. We change our target markets often, however, you have to have a model, we routinely change our geography, ARVs, and marketing verticals. This is the future of real estate investing and by future I mean, this is how the business works today. If you are hoping to pick up a “few” deals with a simple DM campaign you will be sorely disappointed.
Right on Jason!
Jason, what are marketing verticals?
Lauren/Brandon/Josh….of all of the 181 podcasts, this is the one I have been waiting on. I honestly was getting really bored with the same old guests “Oh, I’ve been in the business for 20+ years,” “I’m 23 years old and I’m buying houses because my parents fund my deals,” “Yea, I’m purchasing homes in my area for $30K and making $80-$90K per flip; and you can do it too in your market!” Lauren has shared tips that is very specific to flipping in the LA area, and has only been doing this for 4 years. Very motivational! I’m definitely putting these tips to use!
Lauren, I do have questions for you. And I’ll try to keep them short; and will totally accept short answers (because I think the comments are going to blow up).
1. If you research and find key zip codes based on absentee/corporation owned properties purchased in the last 6 months; what lists are you buying in those key zips? Absentee, Pre-foreclosure, owner-occupied, etc?
2. How were you able to obtain the condo assoc telephone numbers? Are you knocking on their doors?
3. I know the answer to this question will vary based on someone’s personal situation. You mentioned have “money in the bank” before you quit your job? Would you suggest a year or two salary, plus a certain amount to operate for a certain period of time?
Thank you so much, Lauren, for your time to answer my questions. And thank you for coming onto the BP podcast.
P.S. I have already listened to the podcast twice this morning. This was an awesome one! Definitely the best podcast I’ve listened to of all the ones I listen to.
Well aren’t you sweet?! Thank you for the kind words Andy! You just made my day.
1. Here is the criteria for that list- Absentee owned, corporate owned only, purchased within the last 6 months, and organize it by zip code.
2. I don’t really need the association number until I’m under contract and usually the seller will have the HOA contact.
3. I would say 1 year at least for your personal expenses. As far as the business expenses, I personally started with nothing but a credit card. I don’t recommend that for everyone but I didn’t have a choice.
Lauren-
Great information on the podcast.
My question is:
For a newbie wholesaler who isn’t comfortable just “guessing” on the repair costs on a home based on the sqft, how would you successfully estimate the repair costs so you don’t have to go back and renegotiate for a lower price? Because if you’re to high, You may aggrivate the cash buyer and they may never work with you again and if you’re really low, You may lose potential profit when You assign the contract.
I’ve heard lots of people say not to just guess but to be as acurate as possible. Because I think if I were a flipper, I would want the price as accurate as possible.
Again, thanks for your insight.
Like Andy cross, I’ve already listened to this twice today; once on the drive to work and once on the way home.
Cheers,
Hi Isaiah,
The only way to get an exact price on repairs is to have a General Contractor bid every house you make and offer on. You need to be making offers every single day, so your not going to find a GC who wants to do that for you. So you need to get over that fear of yours.
When I lock up a contract, I tell my buyers upfront that I have not been to the house and my repair estimate is just that, an estimate, based on what the seller described over the phone. You would be surprised how accurate I am with my $25 psf estimation. (BTW this estimation is for a California product only! If you live in an area where houses are built in the early 1900’s, your repairs will most likely be more and you need to ask other flippers how much they are spending on their jobs to get an idea how to estimate this on a PSF basis)
Experienced buyers understand you are just estimating. Its part of the business and very common practice. If they get mad at you for under estimating repairs after you tell them upfront you haven’t been there, they aren’t very experienced buyers. You tell them you haven’t been there and haven’t have a GC do a bid, and its up to them to do their due diligence. If you have a real experienced buyer they will tell you whether its worth asking for a price reduction. They will know that asking for a price reduction could kill the deal so they wont have you do it necessarily.
My recommendation for you is to network and form some tight relationships with experienced buyers. People who are buying 20+ houses a year.
Lauren,
Thank you for your response. I will find out what the estimated PSF cost for repairs is in my area. Have a good July 4 holiday.
Thanks for the great interview Lauren. Question: you said you changed some of the ways you were interacting with sellers on the phone after you had that dry season. Mind elaborating some? Was interested in that but the conversation never went back there.
Here are a few things that I feel make me competitive when dealing with sellers:
– Every call gets answered or called back within 24 hours. No lead gets left behind.
– During my seller calls, I ask a lot of questions and almost never let them hang up without telling me the real reason they are selling and how much they want for the house. It’s those two questions that really help me determine how much energy I should focus on that lead.
– I’m VERY personable, and I train my assistants to be friendly as well. I want my sellers to feel like they can tell me anything.
– When I get the reason why they are selling, I “push the pain button” over and over again on the phone. For example, if they say its because they are tired of being a landlord, I will talk about my experience I’m having right now evicting some jerk in one of my houses. I commiserate with them. It makes us sort of friends by the end of the call. Then I stress over and over again how we can take that problem away very quickly.
– This is a big one- I don’t lie or shy away that I need to make money or their house has no interest to me. I’m not in this for charity. Here is something I say very early in the call ” We buy houses to fix up an re sell and we have a certain margin we need to meet or we will move on to the next house. We get a lot of calls so it helps to know upfront if you and I are on the same page.”
– I am also not afraid to tell people their other options like selling it with a Realtor. I almost encourage it so I can test their reaction.
Basically- Dealing with sellers is like dating. You don’t want to sound desperate. You want them to think your their best option. 🙂
Thanks Lauren. Very helpful response. I’ve done a couple of deals as a newbie (one off MLS and one auction) but will soon pursue a direct mail strategy. So one more question if I may: You mentioned that you have an assistant screen calls and pass on positive leads to you. What questions does your assistant ask and would you recommend a service like PatLive to perform this function for those starting?
I would NOT recommend an answering service like Patlive. I have tried 3 different answering services and even went with one that was way more expensive, and it just didn’t work for my needs. They don’t know how to screen the calls for you. You need to hire an assistant locally who you can train.
My assistant asks for motivation and price they want for the house, along with other basic questions about the property. I want my assistant to determine how serious this person is about selling so finding out why they want to sell usually helps me filter these people. For example, If their reason to sell is because they just got my post card and was curious about what I would pay for the house, this is not a motivated seller. If the reason is they just inherited the house from their mother who recently passed away, this is a motivated seller. Both sellers get offers, but I spend more time on the phone with the motivated one.
Hi Lauren,
This was a great podcast. Loved the strategy, very unique.
I’ve already shown it to a few other people I know that want to get into the business in the SoCal area. I think the biggest take away is something I never thought to do as a fix and flipper – follow the competition and you’ll find your deals. Great advice.
Also heard you say you were interested in syndications. I’ve done a few myself, so if you ever have questions feel free to reach out.
Best,
Dave
Thanks Dave! Great to know! Feel free to connect with my on BP and stay in touch. 🙂
Great great podcast! I’m not even halfway through yet. It’s great to hear from women investors especially Mommy-women investors! Thanks for sharing and being a great example for other mother investors!
Thanks for listening!
Lauren,
Really enjoyed the podcast. Have listened to it twice now.
I am looking for a good CRM to use and you mentioned Podio. Can I assume that you would recommend that or do you have another one I might want to check out? Also if I understood correctly you submitted an offer out of Podio? That sound like a very nice feature.
Peace,
I love Podio so I highly recommend it. There are some RE investors who are selling their customized podio versions that have the capabilities I mention already re-set for you so you don’t have to reinvent the wheel.
Lauren,
Awesome podcast! I got a lot of great information from this episode. My market (Tampa Bay, FL) is extremely competitive as well. You mentioned using listsource to find where your competition is going outside of the more desirable areas and refreshing your list every few months. There are about 4.2MM people in my metro area. For Hillsborough County my list price is about $4,600. There are 6 counties that make up the Bay Area here. Are you purchasing a list this size every few months? Do you have any suggestions on how I can get the cost down on this list? I’m paying $.08 per entry
Thanks,
Danny
Hi Danny! No you don’t pay for this list, its free. I’ll do my best to explain how to pull it.
Put your criteria into REI source like I mentioned in the podcast. Go to Purchase List. Then at the top left of the purchase screen there is Purchase Partial List. It should have a drop down of some kind that says By Zip Code. Click that. Then there should be an option to email or export/email to yourself. List source will email you the zips with the count of properties. It wont give you the LLC names but you don’t need that. If you need help try calling their support line.
This is one of my favorite podcasts you guys have done in a while. I’m a full time rehabber and I’m definitely inspired by Lauren. She’s a step ahead of me and she’s where I would like to go get to in the next year with my business. Sounds like she’s a few years younger and has been doing this for a little shorter time than me too. I guess I better get back to work!
Aw thanks Robert! This comment made me smile. Everyone goes at their own pace. I have moment where I see newbies killing it and I ask myself why it took me 2 years to understand this business a little.
A big thanks to Lauren/Brandon/Josh.
Loved this podcast. Great info and behind the scenes insights .
Great show. One of my favorites.
Hi Lauren,
Great podcast! I had a question about your $25 per square foot calculation. If you know the house needs a new roof, do you calculate the $25 per square foot and then add $7k for a new roof? Example: Property is 1600 sq feet x $40k plus $7k = $47k? It sounded like you did but I just want to confirm. I tried this against my method of breaking down each item and we were very close.
YEP exactly
Thanks, Lauren, for all the information about your flip business. It really sounds like you are in the business of finding flip deals, and then the contractor does everything else after that. Do you do the sale listings yourself? Interesting concept with the very non-specific rehab estimating, but I’m glad it works for you! Thanks for the great podcast!
Thanks for listening! I do list the houses that are close to me, but if they are over 2 hours away or I’m not a member of that particular areas Board of Realtors than I hire someone.
Lauren, just got done listening to the podcast. By far my favorite so far. Im from OC myself so it was definately inspiring to know that deals are being made here in my backyard. Thank you for providing detailed information on how you operate your business. Again, thank you for sharing.
Hi Lauren, Great stuff here! I find that each time I’ve listen through this I get something new, so thank you for taking the time.
You mentioned Podio is your CRM & workflow tool. Out of curiosity, did you set yours workflow up or purchase an existing workflow? It looks like a great tool once it’s setup property and will be super helpful for staying on top of new leads.
Wow, everything I have experienced as an investor, Laurel has spoken of in a very similar manner. The whole process of ball-parking repairs, finding trustworthy contractors, direct mail campaign trials, and the ease of condos is similar to my own philosophies. Thanks Brandon and Josh for hosting the site.
Maybe I missed it in the podcast, or Lauren can answer: What parameters does Lauren mail to? Unoccupied only? Out of state owners? etc..
Thanks!
@ JESSE RIVERA
From what I remember the parameters were vacant houses that were corporate owned
I mail absentee owned houses. Not what Jesse said… (Sorry Jesse) LOL
Excellent podcast. Really liked your advice and it’s good to see the hustle you need to make it in competitive markets.
Thanks for sharing!