How to Get Your First Real Estate Deal: Strategies, Markets, and Opportunities

this is my model right my model was something you'll never want to do you want to know why hey guys I'm here with Martin Sanchez he came to this house that we just bought subject to because I put a post out on Instagram and I said hey guys we said hey come hang out with us at this property and boom Martin shows up I'm here so Martin we shot a YouTube video if you guys want to see the YouTube video fully breaking down this deal in fact here's a prop from last video go and watch that video we'll put a link in the description down below how did I buy the deal where did the deal come from what are we doing with the deal etc we finished the video and then Martin starts asking me questions and I'm like bro hold on let's do a YouTube video out of this because he has a great couple of questions what's your first question so I haven't gotten my first substitute deal yet what have you done any deals I haven't no no deals oh just watching your videos and then just learning and getting used to all the terms and everything okay but I do want to do my first deal okay so whenever somebody says I haven't done my first deal what do you recommend I immediately know that you're missing a couple of things okay you're missing Clarity on one number one what strategy do you want do you want to buy and hold do you want to wholesale or do you want to fix and flip Buy and Hold okay Buy and Hold cool that makes everything way easier because if you're trying to wholesale that actually it's even though it's an easy business to get into wholesaling is so ultra competitive because everybody is offering lowball offers on houses like this that like there's no way you could have bought this as a wholesaler but as a buy-inholder easy right and then also as a buy-in holder somebody that wants to buy and hold guess what you get to do all the wholesalers actually work for you so first thing is determine your strategy okay second thing is determine your Market you already know your Market Arizona pit Canal or maybe Maricopa County you already know that okay so guys write this down if you don't know your strategy pick one of those strategies wholesale Fix and Flip Buy and Hold and Martin chose Buy and Hold okay so but on the Buy and Hold side he just wants to put stuff in this portfolio and start getting passive income because you have a successful business already right so you have no point you have no goal of quitting that business why would you right right um all right first thing is strategy his first strategy is he wants to buy and hold second thing is pick your Market but uh you already chose Maricopa County and Pinal which is where I buy as well third thing you need is you need an LLC and you need a bank account attached to that LLC so you can start buying properties in an LLC not your current business LLC you need a separate yes so we use a company called Prime Corporate Services Derek has used them Derek's down the hall that's all I that's the only person I use so I call them up and I say set up an LL an LLC so I can start buying and holding real estate in Arizona and they'll set all that stuff up for you okay Link in the description for that guys start with prime.com now the next part of it is where am I going to see the opportunities right okay and when somebody says I've I've not done a deal yet and they already know their strategy they know their Market they have a bank account and an LLC then I already know you're not looking at enough opportunities Derek did you ever feel like you thought you were looking at enough opportunity that then you realize you really weren't oh I had not enough I was probably I was begging for opportunities because I was not doing any lead Generation generation yeah and so now working with other people is where I now see more of the opportunities so Derek's in my community you're obviously not in my community because you wouldn't have a lead problem Derek is in my community and so what he does is he's a buy and holder too primarily like you'll wholesale you'll do some lending but primarily you want to hold right yes okay so he wants the same strategy as you have yep so the next strategy would be first off the fact that you're not in my community just means you're crazy because our community is insane but what's cool is Derek can go to the commute and go hey guys I'm a buyer and then everybody will send him deals and the more frequently he says I'm a buyer I'm a buyer I'm a buyer and he shows up to the zooms and he shows up to the meetups takes three months four months sometimes six months depending on how loud you are but then at some point you actually get somewhat overwhelmed with opportunities is that right yeah yeah then it becomes uh different problems can you underwrite them and then understanding whether or not their deals is a little bit tricky yeah so every when people are like I've never done a deal before all doing a deal is is a graduation from the smaller problem to a larger problem smallest problem is what's my strategy you already figured that out okay graduate Market okay graduate LLC okay graduate now you already know your strategy you know your Market you know you have a business now you need leads you're busy with your business so do you want to go out and hire cold callers probably not no do you have to have cold callers Derek or do you just have to be in the community no I just have to be in the community I gotta be louder so whenever he wants more leads he just goes on my zooms that we do like 32 zooms a week and he'll pop in a couple of zooms go hey guys I'm buying hey guys I'm buying and all of a sudden it's like just an avalanche of leads so that's one way of doing it but in that regard you have to be a student in my community and that's not what I want you to do I don't want you to I don't want to pitch you on that so let's say that being a student in my community is not an opportunity for you you still have the same problem you lack leads you don't want to call cold call you don't want to work with agents I think working with wholesalers which is what I did here here come out here let me let me show you guys this video real quick if you check this out I put this in my I put this in my YouTube video but this is how this deal got done okay so here's the seller there's their house the house that you're standing in right now and here's the agent okay the agent put the house on the market for it was on the market for 100 days the seller had to go take another job offer somewhere else and they couldn't sell the house because it doesn't have any Equity okay so a wholesaler reached out to the agent because they saw that the house was on the market for over 100 days okay and they gave that agent a low ball cash offer do you think they could take a low ball of cash offer on this house there's no equity so you can't the answer is no you can't if there's no equity in the house you can't do a cash offer you have to do creative Finance you have to this is why creative Finance is a thousand times easier than cash okay I just take over some of these payments like taking candy from a baby it's so easy so the wholesaler didn't know what he was doing so where'd the wholesaler go wholesalers like I am just learning on YouTube like a dumbass I'm sorry sorry guys but if you're only learning on YouTube it's not really for Education it's really more for entertainment so the wholesaler then finds somebody in in my community Munich and munib says hey I'll pay you two thousand dollars to get out of my way that's what he did so the wholesaler gets out of the way munif calls the agent direct and says hey so monif knows he has me as a buyer right so you see what I did you see how many people are involved here so do you want to be the wholesaler that's going out there and finding the deals or do you want to be the person that's the buyer that people just bring the deals to the buyer okay so you got to find muniv so you got to find Derricks you got to find people in my community and they already are locking up deals you don't bro to do your first deal you and I could do your first deal in 15 minutes right now like all I have to do is pull up my phone and I go in my free Facebook group and I scroll through my Facebook group and I find Shout Out free Facebook group creative finance and paste more B Link Bar all the things we could scroll through that Facebook group right now and within 15 minutes you could have a deal under contract from another another wholesaler or one of my students and the paperwork is already done the negotiations with the seller are already done and now you got a deal what's another question you got um so on your first deal like you said on this house you don't really cash flow that much I don't cash flow at all I break this is a break even so if it's a first deal would you be fine breaking even or would you want a cash flow okay so everything is a mindset right so um I now have a different mindset than I had when I first started when you start your fee your mindset primarily is fear of the unknown I don't know what I don't know right and so what you end up doing is you just second guess everything if you could go back if I could take my knowledge and go back to when I've never done a deal before and I knew what to do with a non-cash flowing deal the answer is yes I absolutely would have done this deal um because I know what to do with a non-cash flowing deal you have two options basically well you have three options option one is you don't do the deal and you assign it to somebody like me okay if so if Moon Eve assigned this to somebody else and that somebody else is like oh it doesn't cash flow I still would have bought this deal and paid somebody an extra 5 000 bucks so you could even squeeze yourself in here somewhere in this Rel in these relationships that's option one option two is you buy the deal and instead of it being a rental you try and find a different strategy to rent it out like what what would be a better strategy right yeah rap would be really good here actually but I don't do wraps in Arizona because wraps are not a long-term forever strategy okay wraps mean you don't own the property anymore so all those benefits of me getting tax benefits the loan pay down the appreciation all of that goes to my rap buyer and I no longer get those benefits so the only benefit to a wrap is I get cash flow that's it it's the only benefit okay so um yeah alternative strategy for you go wrap it that's what I used to do in Arizona now I only do that in Texas the um other strategy is the third thing that I would do is just sit on the property for a long time and raise the rents over time that's it and that's the strategy I choose to use on this particular house if this was a non-cast flowing deal in Texas I would wrap it okay but here in Arizona I want to in this this house in 50 years I want this to be my kids are making money on this house so if I buy a house in Arizona I have zero intention of ever selling it the intention I have is it pays all the way down I might refinance it and pull a bunch of tax-free money out at some point but I will always keep this property in my portfolio interest rate I think you said you try and stay 105 or I'm kind of interest-free under five percent if somebody sends me a 5.125 I go nope not even going to look at it okay um because you know if I look at my if I just look at my email right now okay you look in my email you will see today somebody because I put a lot of work in obviously I deserve this right check it out um I got another deal in Allen Texas 4.375 that literally came in at what time is it not even an hour ago right okay so let's go I got enough I bought another deal this morning in San Angelo 9 50 this morning 3.75 percent sub two so from one of your students this is my model right my model was something you'll never want to do you want to know why because nobody's willing to put in the work that I put in it took me 10 years for anybody to pay attention to me once I got people to pay attention to me it took me four years of Relentless servitude serving and serving and loving on my community and getting my community to be the industry leaders when it comes to closing and creative Finance deals so that I could buy 60 of my deals from my community so 40 of my deals come from myself okay sixty percent of my deals now come from my students okay and some people go oh that's a cheat code yeah it is yeah it is a cheat code but it's a cheat code that took me four years to complete and 10 years before that before anybody would even listen to me so it took me 14 years I don't think anybody really wants to go that route it's not the easy route it's the hard route but I knew and I had a vision and I said if I created industry leaders like Derek Barton will be an industry leader at one point okay munif is an industry leader monif is about a year ahead of Derek and you see these guys leading the industry and now I because I taught him he didn't know anything about real estate never done a real estate deal until he joined my community now he's doing a deal a day so now I go hey can I buy four or five of those a month from you and he's like please I would love to so for me 60 comes from my students 40 comes from my own efforts I mean I guess another question so let's say it's your first deal how much down would you put down on your first deal less than nine percent that's the nine percent of the whole deal the whole deal that's cash to the seller cash the wholesaler cash to the agent cash the closing costs cash the furniture Renovations everything okay my property cost me 350 000. I put 20 000 in it so far to give Monique 13 the wholesaler to the agent five the seller got zero okay so it's 20 grand but I got closing costs one month of payments and a little bit of renovation so I'll be all into this property maybe 25 to 27 Grand that's like eight percent total okay okay when I first started where did that where does that money come from didn't come from me private money or I could go to a Derrick Barton and Derek Barton I go hey do you have some money you want to partner with me on this deal you would probably you would have partnered with me yeah Derek and I will partner on stuff in the future so I go I got the deal do you want to bring the 25 Grand to the table and we'll go 50 50 and Derek yeah because he gets half the appreciation half the cash flow half the tax benefits he gets half the loan pay down half the leverage he gets half of everything and I didn't have to bring any money to the table I brought the deal okay but I'm that's not me anymore I'm not a I'm not a beginner when you're new you if you knew my sub 2 Community you could go to people like Derek and go hey Derek if I go find a deal will you bring the money to the table and then monies never should never be your problem like literally I will commit to Deals when I have negative 400 bucks in my bank account and I was oh yeah I'll buy that deal for 50 Grand I'll buy that deal for 60. I'll buy that deal for 1500 bucks or whatever it is I will commit to Deals because I know the money is never the problem the money always comes this is that's very very easy the thing you have to do is you need to see more opportunities right okay I would say you need to look at 30 to 50 opportunities to buy one really good deal and probably two or three other decent deals okay okay I say yes to 80 of the deals my my people send me but why they're good deals they're your students a lot of good deals but I also train them on what I specifically want and so most of what they're looking for they already know the numbers right I did the hard work I did the training I did all that kind of stuff and so like even right now you know what I used to do and you know how I started a community five years ago I used to tell people here here's my Instagram come meet me at this property and we get 40 50 people that show up here you're the only one that showed up before besides Derek yeah I used to do this with 40 50 people and I would teach and teach and teach and teach and teach for like four or five hours and then they'd go out and 35 of them wouldn't do anything but five of them would and I would buy deals with those five people right and that's how you that's how I that's my strategy help people do deals and ultimately buy those deals from those people okay that's not really a strategy that's going to work for you yet but that's what worked for me so um when I first started it was I had cold callers we still do cold callers text messaging we built a door knocking team for a year and a half but then covet hit and so we stopped doing door knocking real estate agent Outreach if you want to go that route or you just go to like my sub two meetups and you meet my sub two students who go I'm a buyer because you you own a business you do trailer you sell equipment yep construction equipment okay so you make money so if somebody came to you with a deal like this you would have the money you could pull together to buy this yes so just do what I do which is go to my students and go sell me a deal okay that's it you could own this for 20 grand with no credit check no application nobody checks your tax history none of that stuff you could own this property for eight percent of the total purchase price pretty cool crazy yeah crazy I and what's funny is I have three more I have to go to two today and I've never been to any of them I wasn't involved in any of it I shouldn't say that I was involved for 14 years and now I'm at a point where I get to reap the benefits of all the seeds I planted does that make sense yep so what are you going to do to get a deal um my next question like you said like partner up with someone so let's say you're buying this one with a partner yeah um how does that work exactly like how would you partner with someone to buy this if I trust them like I trust Derek 50 50. I go hey let's go 50 50. if I don't trust them to operate it I would say Hey you bring the money um and I am fully responsible for running everything because I know what I'm doing it depends on the person that's coming to the table right so when you ask the question of like how do you structure a partnership well you didn't tell me who the partners were every partnership is going to be a little bit different you know what I'm saying if you came and brought a deal to me I personally would not partner with you I would buy the deal from you but I don't want you involved why I'm not your student at all that is you pay attention I told everybody in January I will not partner with a non-student ever again but let's say forget about that let's just say in general before I was I wasn't doing deals with non-students why would I not partner with you what do you bring to the table after the deal you don't know how to you don't have contractors you don't have know how to manage um issues and tenants and you don't know how to like I have a whole team as you can see like you came to the house and I had a whole team of people with me those girls run my office so long term there's not much you bring to the table to me besides the deal so what I would rather do if you brought a deal to me is I'd rather just pay you for the deal and go hey you don't bring any value to me long term what I'm now doing with my students all over the country is I go I'm funding we have this new program called The Deal or No Deal my students bring a deal to the table and I will fund all the money and take 50 of the deal but they have to manage boots on the ground because I'm like I don't want to do deals in California well I just changed that we bought three Deals in California last week but I'm not managing them my students are required to if my students can't manage the rental then I take the property back over there so you know it just kind of depends on how people show up you know this I mean you have employees I imagine right and some are just better than others and some partners are better than others and so depending on how they show up you have to react and all that okay but I would I would go to my I have a YouTube video about how to partner with people properly and there's like paperwork underneath it I would read that paperwork but like if you were if you went to Derek for example I would go to Derek and go hey how would you want to partner because he would be the senior in this situation you would be the junior right so he would be the one that determines the structure of the partnership makes sense yep and is it usually 50 50 or could it be like 70. it could be 7 3 30 I am yeah I have a lot of 70 30 deals 80 20 deals a lot of that okay and does that depend on how much money they bring or experience or what it depends on if they are going to manage the property if they brought the deal to the table if they have money that they brought to the table if they're going to manage the construction it depends on all of the things right but again if somebody only like monif in this view I'm partners with munif in a five Plex in Dallas I'm partners with him in a 22 Plex in Florida but most of the time he just assigns deals to me because I go you don't bring value to this particular transaction because you don't live here and I do right but in Dallas and the one in Florida he does bring value there he has a team that's managing those so I go cool you bring value long term so you should get Equity long term as well and so it just shows you like munif and I don't even have a standard structure we depends on the deal where it's located who brings what to the table and then we go how do you want to do this uh you want to do 50 50. cool let's do that every deal is determined by the deal the location and the people that are involved in the deal okay and so really what you have to do is get your hands on deals and go screw up 100 times yeah I think like even if you ask Derek when you're brand new you're afraid of making a ton of mistakes as you should be to a certain degree degree but you don't learn anything unless you're making mistakes we all know that it's like you imagine trying to learn he's he used to play professional baseball you imagine somebody trying to teach them how to hit a home run but he never had to hold a bat yeah right so it's like you're asking how to hit a home run and I go all right so you got to go out there and swing a bat and practice and practice and practice but then you don't go out and get the bat and then three months later you're asking man I don't have my first home run yet how do I get a home run like have you been hitting no I've been watching a lot of YouTube videos though so that's a reminder to You YouTube people make sure you subscribe to the channel anything else Martin um so nothing over you said ten percent for I will if it's a deal in my backyard and has a really low interest rate I will bring more than 10 to the table okay and so what's the reason behind the 10 percent um just mathematically um imagine this imagine that you're going to a river and you only have so much bait to catch as many fish as possible you don't want to just put all the worms on one hook and throw it out there and so I just came up with an equation um based on a lot of experience I go oh man I'm kind of finding that my deals are the best when I stay under nine percent and that's where that came from it just was a lot of math and a lot a lot of experience and then reverse engineering the math and going oh okay my best deals are where I put less than nine percent of my worms on the hook right right because I just put a lot of worms on the hook to get this deal I don't want to go put 100 Grand on this deal because that means I could with the same amount of money I paid for this deal I could have gotten three right and so you just figured that math out so I stay um personally I stay at nine percent or lower okay make sense anything else I think you covered it all right cool later guys

Channel: Pace Morby

Views: 18,085

Keywords: real estate, real estate investing, pace morby, pace morby creative financing

Id: Tu7JpU3tn58

Length: 22min 4sec (1324 seconds)

Published: Thu Jun 22 2023