R&G 5: How to Make Millions as General Contractor for Real Estate

[Music] welcome back to another episode of rants and gems my name is matt garland nmls number five eight seven zero zero better known as mg the mortgage guy and i appreciate you guys tuning in to the ransom gym show my name is kiana watson license number five one seven five one six and i am a broker owner here in the metro atlanta area broker extraordinary extraordinaire in the metro atlanta we're talking to short in there look i got to point this out y'all see the fit right now yo youtube y'all better enjoy this bit because whoa you out here i said i wasn't playing not playing no i got looks for days i was you you put me outside the first time i saw a couple of reviews all like oh man what's wrong with her fit nothing wrong with the fit what was up with her makeup well nothing wrong with the makeup he just had me out to two in the morning wanted to film the next day no big deal no big deal we're gonna make it happen but we're in it today we're in there today look these last couple of episodes queen i ain't gonna hold you up oh please don't i gotta go see the taylor please don't please but look we got a a special episode for you guys man this one is gonna be special get a pen and pad because we got my guy doug depp here doug is um phenomenal if you don't follow him on instagram please go ahead and follow him everybody in the audience go to his instagram page right now go follow him because this man is dropping gems every single day all damn day long about how to build welfare real estate so doug appreciate you being here my god yeah i just want to appreciate you guys both for having me out here i'm excited just to share this information get some rants in as well as the gyms let's go let's go so i got i got very important one very important question for you right now when did you fall in love with real estate i think i first fell in love with real estate back in in third grade so like my brother was incarcerated so he was incarcerated a place called greater ford right so every single sunday my parents would take me to greater fur we take this long journey to go see my brother i'm talking about putting my birthday money on his books right so we would go through this this guard station out in third grade i'm getting patted down i think i'll wait for one door to close just for another door to open and see my brother wearing that jumpsuit was like dang this is crazy but my parents wanted to break up that traumatizing negative experience to what they do and these were every sunday right we're going to see my brother but every sunday is also open houses so my parents would take me to see open houses every single sunday i'm talking about we would see these great mansions along the way right they would have fresh cookies in the oven they had these huge homes and i just like you know what something just got planted in my head that one day i want to own a house right i want to own multiple houses so that kind of i think like piqued my interest and then i went to this um phenomenal uh school back in middle school where it was like the super wealthy kids i'm talking about getting limo service to to to school i told my getting range rovers when they turned 16. i told my rent and allen iverson for birthday parties like it was a whole nother experience but one thing that i realized with that the parents you know there are doctors there's lawyers there's assistant coaches of the sixers and so forth right but what i realized was that they had that commonality of owning real estate they had apartment buildings they talk about beach houses they talk about cabins you know in the poconos right so that kind of started just piquing my interest and then i started just reading different books like rich dad poor dad right i started reading riches man in babylon that kind of just piqued my interest and i think that's back when i was in third grade that's my parents plant that seed just seeing open houses every single sunday it was great seeing my brother however i really enjoyed seeing those open houses i think that's what piqued my interest that's a gem within the first five minutes of this whole episode is exposing your children you know what i'm saying exposing them because you don't know what that would turn out to so that exposure at what you said third grade third grade that exposure at third day third grade has led you to now today over a eight-figure real estate portfolio right that's a bar right there okay that's a gym we need to know we need to know how how did you get here i mean i know you started at least everybody knows you start with one property at a time you read these books how did you start implementing your strategy to build this portfolio yeah so i think um to kind of take a step back right so i went to university of delaware i have a finance degree so i was you know locked in uh graduated school in three and a half years right but then we i got a job with bank of america so they had this leadership rotational program they picked five of us out of all of university delaware so the first day of work we're going up the elevator with hr and the other four of my students classmates get off the elevator there's lady carrying this box she's in tears i'm like what's going on here like oh we just had layoffs and this lady was probably about 55 60 years old i'm like well what happened like she had a mortgage he had kids in college they said oh we're just making room for the new guys right so there's a problem one getting paid six figures making room for us that's getting paid fifty thousand dollars so at that moment i said you know what this corporate thing is not gonna be for me there's no way that i'm going to be able to hug this cubicle until i'm 67 and a half right so long story short i knew that i i wanted to be in a situation where i didn't have to rely on another man to put food on my table right i didn't want to rely on someone else that could just pull the plug at any moment right so then it kind of went back to real estate i knew that real estate was going to be a way where i can get that cash flow coming in every 30 days right so shortly after school i spent one year great you know living in an apartment with my ex-girlfriend at the time but i said you know what i want to own a piece of real estate i want to own a property so immediately we rented for one year and i bought my first property was the fha so i put down that three and a half percent down and this was back when obama was given 8 000 tax credits yeah that was great what listen i love taking advantage of opportunities when they present themselves a lot of times people are asleep though 8 000 it'll be around next year right but it was only a short window that eight thousand dollars it was around for like two years or something like that you had that tax credit exactly exactly so i found this new construction townhome in newark delaware four bedroom three and a half actually four and a half bath um townhome right so i was with my girlfriend at the time we purchased the town home she said hey you know i want to be on that mortgage with you sorry well how much money are you putting up oh you're not putting up anything but you want to be on the deeds not so fast i mean we've been dating for three and a half years but not so fast right so so y'all heard that ladies and gentlemen listen right wait a minute are we together or not right you get it so we got this we got this four bedroom um town home right so i wake up i say you know what i don't want to pay the mortgage like what are you talking about you don't want to pay the mortgage mortgage is about thirteen hundred dollars it's 250 000 house had to put down 16 000 got 8 000 back so really at 8 000. so i don't want to pay this mortgage and she's like well what do you mean you don't want to pay the mortgage so i don't want to pay it she said well what's your idea like how are we going to pay this mortgage i'm going to rent these rooms out there's three other rooms here so now you're tripping you're tripping you're crazy you don't want a lady our age living in the property which you know it's understandable right you don't want a guy our age living in the property doesn't want a creepy old man living in this property either and so on my hands are literally but tied behind my backs i'm like what am i supposed to do so i went on craigslist and i found this retired grandmother to live on the first floor that had like a little suite with their own bathroom so i retired i found that retired grandmother for 750 dollars wow so i'm working at bank of america as a senior financial analyst as people like yo you're crazy you're renting out someone else's grandmother like this doesn't make any sense like she's not your grandmother you just found on craigslist [Laughter] craigslist you know my name was floating around at bank of america this guy's renting out to some grandma so the moment i got that 750 in my palm that's when i knew like this is crazy all i'm doing is just providing somebody with a roof over their head she didn't even use the kitchen she had like a little microwave with a little small refrigerator she had the hot and reddies you know what i mean yeah so i got that 750 i'm like dang this is crazy like this is i started doing the math 750 times 12. i'm like man that's over you know eight thousand dollars a year just for having grandma in the basement you got all your money back get all my money back and my notes only 1300 so she's paying 750 that's more than half the note so i'm like all right so i get another idea so you know what i got these two other rooms right across the hall so i told my ex-girlfriend at that time say listen we got to rent those other rooms out so no you're tripping you're crazy like there's no way i want to see strangers across the hall living in this property with us and so forth i'm like we just came out of college like it's not that big of a deal having roommates it's the same thing same exact thing yeah we just extend in college a little bit yeah y'all notice he keeps saying x you're right for a reason y'all heard that list you said that like 10 times right right right kicking myself right now all right listen so so she said no we're not running those rooms out you're absolutely crazy so i woke up another morning i said you know what do you want to be rich or do you want to be poor she thought about it she say you know what i'm okay being poor what i said watch me okay kind of mindset is that she's like you know my dad he worked his way up as a manager at mcdonald's you know mom's a teacher you know we we we lived okay you know we got by we had food on the table i'm okay being poor so i had to go to work i immediately got dressed i'm driving down 95. i said okay being poor this is crazy like my whole mental was just messed up that whole entire day i'm pacing back and forth to the water cooler i'm talking to people i talked to my brother i'm like yo she said she's okay being poor my brother like ride that thing out man i got a good one right bro what's up yeah right right right i was like i'm all right we're not calling we're not calling you for any more advice like i don't know what type of time you on bro he's done you're right right so so i get back and i say you know what this relationship's not going to work so i gave her a two-week notice hold on can we talk about that real quick when you're the lord of your land you can actually do things like that you can make decisions and as he said she's not on the deed she wasn't on the notes she didn't put no money in it she get no money out she a tenant basically so you gave a two week notice so i gave it a two week notices like crying involved we've been together three and a half years and so forth but i had to i knew that i seen way too much i'm talking about renting out alan i didn't know that was a thing you could rent out somebody that's in the playoffs playing you know all-star player you just rent them out so i said i seen way too much so what i do i went back on craigslist i found two random guys in las vegas this is during the whole nationalization scared economy was tanking they were working at the venetian at the time but delaware just opened up delaware park a casino so they had a little poker room and these guys are poker dealers so they moved in and they were paying 650 650 each so once that two weeks had expired she's walking down the steps with her you know luggage and so forth crying these two guys are coming right up with that 656. you got 1200 walking into the building yo 1300 right right so short me okay not one dollar because he knows he don't play right you got to go so anyway so you got your third you got your 650 coming in the door you got it two times 13. coming up the door you got shorty leaving grandma still in the basement chilling with her hot and reddies gotta love it y'all gotta love it we're not done we're not done so so so she's gonna she's going out yeah i'll wrap it up but yeah so she um so we're living there i'm now i'm single in the master master bedroom soaking tub walk-in closet stand-up shower balcony all that good stuff i say you know what i'm 20 like four years i don't need any of this so what i do move my king bed down to my two-car garage right king bed down the two-car garage and they were in delaware so it got cold got very hot i figured out how to make my own air conditioner figured out how to get a sub-zero sleeping bag with the sleeping bag talking about with the hood where you tighten up your eyes hop in the cocoon negative 20 degrees how's that going for that for two and a half years what two and a half years yeah okay so yeah you're definitely the definition of stay down until you come up stay down to you come on that's my motto to this day jesus wow wait two and a half years in your garage with the sleeping bag hoodie joint yeah yeah that's gangster bro right more pro more props to you on that one and this is all while working at bank of america as a senior financial analyst not be you know i did that not because i had to but i knew that that's what i need that's the mindset that i needed in order to get to the next level right in order to really know that i'm be committed to the process and being obsessed with the process and i was obsessed with you know i turned off the tv so i wasn't watching lebron james you know play or work i should say like why would i show up spend hours and hours and hours watching another man work right when i'm not where i need to be yet so i'm talking i'm tapping into the audio books reading educating myself just tapping in 100 being obsessed with the process being obsessed with the work to the point where you know even when i go to work i got efficient at my job just so i can spend that extra time studying real estate making the calls right calling realtors and so forth so what i did was that extra money because a lot of times people get the extra money you know immediately they get extra 750 what are they gonna do they're gonna go spend the extra 750. right that's not what i did i was still eating rice beans broccoli every single day right every single day so that way all that extra money that i had money was piling up i put it into the stock market then when it was time to buy a house pulled that money out i bought a house bought a property i started accumulate properties in a place called coatesville pennsylvania and i started using the section 8 program so what's section 8 so section 8 for those that don't know so the government will actually pay people that are low income you know basically at the poverty line they'll the government will pay these landlords these third parties to have these people live in their properties right so that govern money is coming i'm talking about during the government shutdown during a recession during the nationalization scare during hail sleet snow doesn't matter that's coming that money is coming in so once i got tapped into that i said oh man this is crazy so he's just saying i could just buy these buildings and and slap these tenants in there and they just paint like clockwork so my first property my first investment property after after living this in this home here was a place in coatesville where i only had to put down 10 because originally i thought that i was going to have it as my secondary house so i put down the 10 and then you know i changed my mind we ended up writing that property out to a government section eight tenant i paid 12.50 the property was only 60 000 so 10 percent of 60 000. that's six grand wow plus closing costs we're talking about 9 000 about 9 500 out of pocket right so we got 1250 coming in my monthly note the taxes insurance all that is right around 500 so now i'm getting 750 of cash flow coming in every single month so i'm like man i no longer have to wait on my job to give me raises i can get a raise by just continuing to buy these properties right because there's been so many times where especially working at bank of america in that corporate setting they're sitting there like hey hey doug we appreciate you putting in 70 hours a week in work however the way when the company performs and so forth you're just a meets meets so they have this whole ranking system to hit you with the meats meats just you know meet expectations but then they don't have a bonus for you right there's no increase there's no bonus there's no two percent three percent raise so so i use that as fuel and ammunition so you know what thank you for you know basically they shorted me 30 hours every single week that i didn't get paid for because you know i was on salary so they assured me that time and i say you know what that's fine i use that as ammunition i use that as fuel i said i'm still going to be the best employee as possible but i'm going to continue to buy these properties up because that's me getting my own raise and it's also me getting my own freedom right because after a while once those 750s start adding up the 600s start adding up right then you start looking at yourself like why am i still even in this nine to five right i'm more valuable out there providing people with homes places to live opposed to being hugged in that cubicle looking at these big numbers and so forth as a financial analyst not really adding much value to the world so how important was it though having that financial analyst job and leveraging your w-2 right to start your journey oh man it was it was incredible it was incredible like anyone with a w-2 income coming in you got to use your job as your biggest investor right so i didn't go you know dog and pony show raising money from all these people i said you know what i'm going to use this company as my number one employer and all that money coming in i'm going to stack it up i'm a little way way way below my means i'm talking about to the point where i was basically saving about 80 percent of my take-home pay that's amazing i sacrificed that that's a real sacrifice how many years were you able to sustain that and keep that up yes i mean i worked at bank of america for five years it's japanese company in finance for two years and another two years um in sales for certainty um selling acoustical ceiling tiles and then after that you know i was on my own so nine years w-2 in that nine years you leveraged that w-2 to build your portfolio exactly we got to drink the dug in that sacrifice because this man over here oh yeah parental discretion i forgot to warn y'all about that right but we're drinking wine too but this is amazing story so far bro like too many people want to fire their job too quick right just because they get a couple dollars coming in from a different source and they feel like oh i don't need my job no more and then they find themselves like in a between a rock and a hard place right so i think it's amazing that you know you shared that with people because people really need to know look your job is not the enemy yeah it's just you your enemy that's what you're doing with your time and what you're doing with that job to to grow you know what i'm saying yeah and i think i think it's very important too that people use the job to learn how a business is ran too right so oftentimes we want to jump into entrepreneurship jump into this but they don't even know structure of business they don't know that you know business starts at nine o'clock ends at five right but having that structure knowing how to put together emails know how to look at p l's profit and loss statements right knowing how to talk to actually talk to them right because i just want to be entrepreneur i just want to be chilling and just had to get that freedom and your business could be failing because you don't have that structure and even with college i graduated college some people don't need college great but i actually got that foundation you know from college and even the you know middle school high school and just having that that background it helped me out a lot but you necessarily don't need college and so forth but you definitely take your job and and use that experience to grow that's huge that's major that's major i really commend you on that so after you stay down because you know we want to know the story so you stayed down so you came up you worked these jobs you acquired all your properties when you jumped out into entrepreneurship at what point did you say all right i've already owned all these properties now i'm ready to take it to the next level when did you decide to to step into general contracting yep yep so i so there's a there's an experience where it was right around the time i was getting started investing in philadelphia right so i was watching somebody they were doing these full gut renovations and prior to that i was basically buying properties that were turnkey throw some paint on the walls run them out very easily put your 20 down right so at this time i said you know what i want to get into like a full gut renovation so i had a contractor or a guy sell me a property a shell in philadelphia for twenty-five hours how many properties did you own before you went into that full gut yes i don't know we probably might have been what was it probably about like 20 20 or so 20 something problems so that means that he has some experience yes you know a lot of us want to jump out the window he wasn't afraid he wasn't a freshman right i wasn't a freshman he became a live man at that right he was alive exactly i like that all right keep it going so so so uh i said you know what i'm gonna go ahead and try something new so bought this shell in philadelphia house was a wreck complete wreck disaster for twenty five thousand dollars and i went against my my morals i guess and i always like using leverage and and so forth but i had the cash sitting around and the guy's like you know what if you have cash let's go ahead and just do this deal cash we bought it for 25 000. construction budget was 75 000 and i think the contractor basically gave me a budget just way too low because at the end of the day almost turned out to be new construction so we got in this project and they had to rip off the whole roof they opened it up completely this is a philadelphia row home so they opened up the roof took the whole back of the house off had to reframe it so like the demo was going extremely fast and i was like oh man they're rolling they're rolling the contracts like yeah man they're rolling the rolling just we got to keep the funds coming in so that way we just blitz this project it's gonna be a quick in and out job so next thing you know as we're rolling along 75 thousand dollars roll right on my right on my hands right rolling rolling rolling rolling so we're talking about the demo the framing next thing you know 75 000 was out of my hands because you know it's talking good it sounded real good but as soon as that money left my hands and that's when big tank got in the way so it was like big tanks like yeah you know all the guys are down at uh miami at big tank having a big party down there okay so who the heck is big tank yeah and what's he gotta do in my project yeah right so next thing you know the pope was in town in philly i said the pope what's he doing in north philadelphia in the hood right so we started getting all type of excuses and we got these excuses for two years whoa wait a minute hold on so you started a project right use your own twenty five thousand dollar cash right plus seventy five plus seventy five thousand so and now you can't find your contractors i mean they're at big tank weekend oh man oh no you got big tank on the big boat right miami so wait a minute what stage of the project were there was that was the back still out the roof was so long so they had they had the framing done and uh basically the demo is done and the framing was done and the roof i think the roof got done at this point as well and then everything just came to a complete hull so they got their money and basically ran off basically but the contractor like they misbudgeted that's what you know that's what he says he's like oh wait wait you underbit the job i eventually got it done right it just took a little long two years two years yes and i'm talking about you know i so at that moment i knew that i had to have control of this process there is no way that i'm going to give somebody my hard-earned money right and then not have control of the process but over that two years i did learn something valuable lesson i saw the whole all the steps of construction take place in slow motion right in those two years i'm watching okay we got the demo weeks weeks go by got the framing weeks weeks go by got the electrical weeks months go by so i started to see everything in slow motion i'm still going to the property almost every other day like yo where you guys at what's going on yeah so that i think that was the major the major key right there because i got to learn construction and then something went off so these contracts are no smarter than me i could put my own projects together so that's when the valuable lesson obviously you know what i have to be my own general contractor so what was that process like how did you become your own gc yep so in philadelphia is very actually pretty simple so you got to get something called the osha 30 and that's 30 hours of safety training essentially there's ways around it where you get the under 30 hours but you know say 30 hours you got to get insurance for automobile you have to get liability insurance and insurance only cost you about 850 dollars right you fill out the paperwork you get a business license with the city which is free and now you're and you know have a company set up if you will or you can do a sole proprietor or you actually be a contractor in your name so we got that paperwork set up and it took less than a week to get that paperwork wow so now i legally can go ahead and buy properties fix them up myself and then you know keep running the play so you got your gc license so you're ready to go how did you find your so you know that's step one from some people they they think the general contractor does the work so you can can you let them know what the general contractor does and then also tell them who else you had to hire to help you with your project yep yep so let's say you have a house right and um the roof is leaking so what do you do you either ask a couple people hey do you know a roofer or you know you go to different sites there's angie's list there's home serve there's different sites that you can actually tap into so hey i'm looking for a roofer in this area you call a roofer have them come out give you some estimates right same thing if you need plumbing done same thing if you need you know floors done right so basically as a homeowner you're kind of like managing your own project but as a gc what you you know to be a gc without being uh actual guy doing every single aspect of the project you just learn the process the steps so let's say for instance row home in north philadelphia or wherever you are there might have to be some demolition taking place some interior demo where you're either removing just the trash out the property or you're taking the old walls off and you know exposing the sheetrock so you have the demo done you have the roof done right because you want to protect your invest and make sure the roof is good so that way as you're going to be fixing up that property you want to make sure uh no water damage takes place right the next thing you're going to do are your your rough is called rough mechanical so like your electrical is going to get done so you're running all your electrical wires you're running your plumbing wires you're running your hvac so that your heating and cooling system you're running all that in right and then after that gets inspected you're going to do insulation making sure that you the walls are insulated from the outdoor elements making sure that way the house is not just freezing cold or extremely hot run your insulation gonna do your sheetrock the next thing you know you're gonna start doing your finishes right so you're gonna start doing your finished plumbing so you're putting your fixtures in your electrical outlets your lights led lights and so forth your hvac units in plus the vents then you're gonna start putting your flooring you're painting and then you're basically walking down the steps of a project but it's not very hard once you have the steps but the key is you're going to need a team so you could like for instance you know i've done basically every aspect of putting a house together and i've even got in there and done every single thing in the house but what i realized was that i'm more valuable picking up properties and having other people put them together right that's the way i can do instead of just one project over months and months and months i can do five six projects at a time and all i'm doing is just going through my steps calling the people that i need to call to get the job done and i always recommend having three of everything okay so like for instance three roofers uh three demo guys three electricians three plumbers three hvac guys three flooring guys three framers uh three guys um that do finish work so the finished carpentry installing the doors the baseboards the trim right so now what happens is you get estimates from these guys so that way keeping everyone honest keeping them though you know what the price point is another way for especially for new people uh one way that you can actually tell like what things cost there's something called uh homeserve.com right where you can actually go in type in your your zip code where the property is located right type in the zip code and then you can type in hey i'm getting electrical done electric work done and it'll tell you okay this is the cost this is the going rate for for that project here's the low estimate here and that works nationwide nationwide right that's the gem that's the gym that's the jam what's the website what's the what's the website it is uh it is uh homeserved.com homeserve.com y'all make sure y'all write that down put that in the comments if you watch this on the video so you got to have three of everything yeah right how do you hire these people what are the questions are you asking if you're a newbie how do you know you you have the the right three people yeah no that's a great question so one thing i always recommend is is joining join communities of other investors so that's probably where you're going to get your best referrals from like for instance i have a community that we all work with and say hey i'm looking for a roofer who do you guys recommend it's always good to get recommendations another great place is like angie's list where you're going in and say hey i need roofer electrician and you're looking at the ratings looking at the customer reviews you're searching on google if they have any bad remarks and so forth so that's one way and then another way that i that i like is i'll drive around say where a lot of construction is going on so it's like i could build a whole team wherever i'm at in a matter of a half a day right so you're driving around you're seeing construction taking place a lot of times these guys it's a dead giveaway they have vans they have hey i do heating and cooling i do electric i do framing right and all you gotta do is hop out and talk to them hey you know do you guys do framing are you guys looking for extra work right how long you guys been doing this any way i can see your active construction project a lot of times if they're right there on site they're going to walk you through yeah that's a gym right there we want the receipts we want the receipts don't tell me you go show me you good exactly show me you know anyone can get pictures and show you all yeah this is my framing job and they could have just been the guy just walking through taking a picture from google exactly exactly so you want to get references as well so references are huge so at least three references so now you're getting that getting the receipts making sure that they are who they say they are right and you can actually you know again get their license number if they have a license we'll make sure they're licensed and insured plug their information in see what comes back but biggest thing is getting the references looking at their work multiple projects if they have active sites and if you're going into one of their active sites you might not know anything about plumbing but you'll know if the job site looks clean you know if you know things look in order you can kind of tell something that's sloppy versus something that's not right with just you know just the naked eye but it's very very important to do the vetting of these contractors and getting those referrals because they can make or break you right so oftentimes yeah so i hear you saying basically you're doing your due diligence you're not rushing into a project you're getting the project but you're making sure that you hire the right people but right i mean of course where you are now you have a list but when you think back to when you didn't have a list and you had none of these references like tell us because everybody wants to you know we like we said we've seen some flips and we've seen some flops right yeah leaves you know and we want to talk about that so that way people can at least learn from a mistake or two that you've made so they can take a step back and and walk into this process and not run yeah so so like francis uh one mistake was going with the cheapest guy like this guy was a handyman and i had a backed up sewer line sorry the sewer line was backed up i went to this handyman said hey can you handle the backup suit oh yeah no problem i could take care of it so we dug he dug this big hole about eight feet deep tapped into the sewer line he got it open right now tennis is using the bathroom flushing toilets so the whole backyard ended up being a being a whole pool basically a cesspool of just raw sewage in the backyard so i'm like like what's going on here and he's oh no no don't worry we're going to take care we're going to take care of it going to take care of it city condemned the house i had to put my tenants up in a hotel for days and days and days and just to realize that you know what this is not the guy for the job so the course you thought you were saving right you want to play in the hotel right in the hotel all type of foolishness and i went to the city like hey listen do you guys have any recommendations of a a plumber that can actually take this get this job done they say we typically don't give recommendations but for you we'll give a recommendation they gave a recommendation paid the guy what he wanted and he got the job done in less than 24 hours whereas this guy kept giving me the whole run around so one of the things that you want to look out for is does that contractor subcontractor show up on time right do they meet their deadlines the contract is coming in late and giving you start giving you excuses from the beginning that's not the contractor for you right so be slow to hire fast to fire right so if they're showing up late not making deliverables not making time frames you have to let them go or find some alternatives uh of a contractor that's the whole gym yeah that's a big gym that's a whole gym so you started at property number 20 to become a jc how many properties do you have right now i don't even know [Laughter] the reason why i don't really like the count because i i always i'm a basketball player right so i go back to imagine if you're playing a game of basketball and after every single point you're running to the scoreboard like how many problems how many props is that because once you start accounting you start to get complacent right because numbers start putting limits on people so i just know i just got to keep going and i don't have enough but you becoming a gc and now managing your projects how did that help you scale now oh yeah so one way is i get paid to be my own gc right so i'll kind of break that down for you so let's say for instance we have a project like for instance one project on the top of my mind is this triplex right on temple university's campus i picked it up for uh twenty six thousand five hundred dollars right put together construction budget for three hundred and twenty five thousand dollars okay and i used a hard money lender to do this project so with the hard money lender they want basically uh 10 down for the purchase and then they'll give you 90 of the rest of the purchase plus 100 of the construction remember the construction is 325 000. but with me being my own contractor i'm gonna be able to get the work done for about a hundred and seventy five thousand dollars right and they're okay with giving that 325 000 because that's what a contractor would charge in a situation like this right however as we're going through that project i'm going to be putting that extra in my pocket so i don't have my calculator on but 325 minus 175. a buck 150k so 150k profit profit to you now you can go use that money to go get another project right and that's because your general contract that's because i'm a general contractor right opm other people's money so now we use those funds to continue to grow and pick up more assets right and it's all we're doing is you know i get the plans i see my team out there and they put the play together while i'm collecting and everyone's getting paid fair and handsomely but it's just knowing how to price things out and my lender you know works when they lender actually prefers that i am my own general contractor because their main goal is to get the bag back yeah i'm bringing them that bag back after every single project they're going to keep rocking the fashion exactly so when i when i look at the numbers right as a general contract let's say for instance let's say i'm building right around 50 a square foot most contractors in my market are charging about 85 a square foot right so i told my lender every anytime i'm analyzing a deal analyzing a project i'm putting it in as eighty-five dollars a square foot so the numbers work at that eighty-five dollar a square foot number then i'm good to go because i know that i'm gonna make about thirty-five dollars a square foot on that project so let's just break it down very simple we got a thousand square foot property and 85 dollars a square foot is is what general contractors are charging that's 85 000 for that project however i'm getting that project done for fifty dollars a square foot so that's fifty thousand dollars so for that one project that's putting thirty five thousand dollars in my in my pocket just for a small single family property so so yeah on top on top of the cash flow the cash flow on top of the cash flow on top of when i take that property to the bank and do a cash out refi at 75 percent i'm getting about 10 points back in my pocket because i run my numbers at that 65 percent rule okay you got to talk about the 65 percent rule this is a whole lot of games everybody doesn't know a whole lot now i want to make sure that we're talking foreign no no we got to go back to episode we're talking from an investor's standpoint right right a true investment investors standpoint fha this ain't that this ain't that give us gifts so so every time i anal the most import let's take a step back the most important thing is to analyze a deal correctly right oftentimes people like yo i just want to get in the real estate i want to buy something to buy something but do the numbers make sense at the end of the day it's down to the numbers do the numbers make sense does it cash flow are you buying a good deal most people don't even know if they have a good deal or a bad deal right they just know i oh i own some piece of real estate it could be negative cash flow bad deal right so i i take pride in being at using that 65 rule so just to kind of break it down for those that are following let's think of a geometry geometric equation right 0.65 you can write down 0.65 times arv the after repair value equals purchase plus construction right i know it might seem like a foreign language right now to some but 0.65 times the arv equals purchase plus construction so what we mean by that is let's say we got a property worth a hundred thousand dollars right so six five times a hundred thousand dollars that's sixty-five thousand dollars so what that means is the purchase and the construction have to add up to be sixty-five thousand dollars so i need to be at sixty-five percent of the arv correct so let's say for instance if we know that our construction is forty thousand dollars right and we got this property worth a hundred thousand dollars that means our purchase price cannot exceed twenty five thousand dollars right because it's 25 plus the 40 equals 65. so that's how i'm analyzing every single deal and the reason why i analyze the deals that way right is because okay so we're all in that 65 percent so now on the back and once that project is done is rented out got the cash flow coming in every 30 days then i refinanced that property at 75 percent of that value taking temperatures in your pocket right and there will be fees and so forth but you know high level exactly yup yup so now on that same property worth a hundred thousand dollars i'll take on a mortgage at 75 percent of that which is 75 000 right so that minus the 65 percent the 65 000 i'll pay back the the the original lender and they had if i had to put some of my capital up then i would get that capital back and then so gems yep so now you're just able to just continue to recycle those funds over and over and over again because initially when i was first buying properties i was leaving 20 in those deals because they were basically ready to go turnkey just had to throw some paint on it you want an income right that was your goal just right get that and then return the job exactly and the return was great we're talking about you know 60 70 return on my money cash on cash return on my money that's huge however once i started using this strategy i'm like it's an infinite return because i don't have any capital actually in these buildings of my own right but even at refinancing at 75 percent there's still 25 equity in these buildings right so how are you finding your deals i think everybody is like okay now we kind of figured out okay we know the formula we know we got to stay down until we come up but now you know from a realtor's standpoint you know we know we know inventory is low so how are you finding your deals and what tips and strategies can you give us crazy especially in this market yeah yeah so because you're buying every day every single day every day every day i see you i'll always be closing abc abc so one of my advantages is that i wake up extremely early so i'm up at 4 30 every single morning right so i'm up early i'm looking at sites like craigslist you know every day i'm looking at craigslist and i have my alerts set i put the word package in there framing i put the keywords like arv fixer upper so i'm getting these emails every single day i'm looking on craigslist every day i have a whole laundry list of wholesalers that i'm tapping into so i messaged them hey i'm looking for a deal look for deal what do you guys have what do you guys have right so they're constantly sending me deals they know that i'm a serious buyer and i put it out there that hey i'm looking for deals so anybody that has a deal send them my way right so we're looking using social media heavy using craigslist we're tapping into realtors as well wholesalers also wholesalers yeah for sure definitely wholesalers and i'm okay with wholesalers making money because at the end of the day i'm doing my analysis if i can make money on the deal and the whole seller makes 10 000 off the deal 30 000 it doesn't matter as long as my numbers are ran correctly and that it works as a deal for me right that's a that's a major gym you know he's keeping his eyes on his own paper i think we need to make sure we start doing that i'm counting other people you're counting other people's money in a lot of games a lot of times especially in real estate is the most pay to play business i have ever been in my life so the fact that you even understand that listen everybody got to eat everybody everybody got to ebay including the bank you know right right right so yeah it's um and also also just networking right so all the guys that do work for me i let them know hey i'm looking for properties i'll give you a thousand dollar bonus if you bring a property and i close them or two thousand dollar bonus it doesn't matter because if they bring me a good deal and i can make thirty thousand dollars as a gc plus a cash flow of seven hundred dollars every single month and own the property i'm fine with that right so it's just networking thinking outside the box and of course you could drive around you can look at properties that are abandoned find out who the owner is and and get in contact with them that's that's that's huge i don't think y'all caught that 30 000 as a gc plus right plus so you eat in every which way you can yeah yeah you got to every single way always be the way yeah always be in yeah outside will always be closing i like that so all right go ahead i think my question is because people you know understand like a gc so in my thoughts so gc is like okay i'm i'm the head person in charge but i hire everyone else to do the job and i have to oversee it so you know but at the end of the day insurance is responsibility who is responsible i'm the head but i hired a roofer electrician flooring person you went in this person's house you messed up the floors who do they come back to just talk about the liabilities of being the gc and why they it's very important for them to have the right team right right right so you talk about is if i'm general contract for other people or for my projects both okay so for about a year i did some gcm for other people like i did a church i was able to profit about fifty thousand dollars off the church you know i believe it was in there it was so hard it was all for insurance uh insurance job insurance jobs we did a triplex you know significant amount of money off of there but it's definitely important to have insurance so being a general contractor you do take on that liability however as you're hiring subcontractors you want to make sure that they have their insurance as well right so that way if there's a plumbing issue make sure that plumber has insurance so if a plumbing issue happens that their insurance would be the ones that cover that and of course as you're buying and fixing up these properties you have to get builders risk insurance naturally if you're using a hard money loan builder's risk is going to require builder the hard money loans are going to require a builder's risk insurance those insurance policies usually double what it is to just have a standard home ready to go yeah so you as a gc and that was good gems too i actually i had to get that policy right now for deal but as a as a gc with these rising costs of labor i mean not labor materials excuse me lumber everything's up right how are you saving money and still making this type of profit how are you doing this how are you finding the deals because that's what we really wanted yeah the people want to know and i got a follow-up question because prices is crazy right now yeah yeah i mean the lumber price is going crazy is definitely tightening up putting a constraint on margins for sure um so one way is i'm calling lumber yards i'm seeing what lumber they have for sale but i'm even looking at the lumber that might not be in the best of shape like for instance i just caught a deal i bought 300 pieces of a 2x4 by 10 for five dollars right they're actually pretty straight but they just didn't look the best they're a little ugly but i bought the whole skid and i said hey what else do you have so he has a two more skid you actually gave me a call two more skids 300 out 300 pieces each so i'm gonna buy the i'm gonna buy everything right so it's just calling around asking for deals and one of the big ways that i save money you know even you would deal with gcs anywhere i'm always asking the question is that the best you can do right so it's good mouth don't get fed closed mouths don't get fed but when you ask that question you got to make sure you pause after that you don't say anything else right so if you say is that negotiation one on one i'm a hustler baby i just want you to know yo so you know times are tough there's a lot of competition out there is but every everybody can bring the price down right and you got to get those estimates so by having those estimates you're basically having those those uh folks competing against the job to get your business right but you also have to let them know you have to not just say hey you're not going to make a million dollars off of this one job right we're in this for the long haul you got to give everyone that works for you the vision like hey this this one project is not going to be yet we're here we're going to do five projects a year maybe 10 projects a year right so once you rather have that consistent work where i'm bringing you a project every single month and you're getting paid handsomely opposed to just trying to make all your money and then i have to go find somebody else because you try to take my head off but so this just um just knowing how to play the game man i got to ask a question i gotta ask the question now you guys know i'm the realtor on here broker owner so you know a lot of my agents a lot of other agents and i'm speaking to you guys even some consumers they're in the middle of contract and i just knew it wasn't going to happen to me but it has happened to me twice builders in the middle of contract some of them have been in their paperwork so they have a legal right are raising prices thirty thousand forty thousand dollars saying because the cost of lumber is so high so for example you know i have a deal so i think it's like six hundred thousand and like i'm sorry if you want us to continue with this deal the new price now is 640 000 because the cost of lumber is so high now we're researching we see they say lumber's up 250 all this and all that what the people really want to know is is this bs can they really they i know they can legally raise the price because again it's the contract but are they they are they exaggerating on the cost to build right now because you're building yeah yeah let us know say for instance um you know before the the lumber spiked right you can get a two by four by ten for right around five dollars and forty cents right now depending on the market it's going for about thirteen fifty fourteen dollars for that same piece of lumber wow so if you multiply say the average house depending on the size and so forth let's say you know 1 000 square foot property you might need 400 pieces of lumber so you could do 400 times you know say five and a half dollars and then you do 400 times you know 14 that's a substantial increase oh okay then listen i'm just speaking for the people oh okay then it sounds sounds like the prices are up yeah it's up and it stops stopping that's so right now i'm talking to a a lumber a lumber yard out in maine where they actually have the actual wood and it will cut the lumber that you need so basically cutting out the middle man i just got to figure out how to ship it down to where where i need so i'm trying to get through we got to talk off racket on that one truckers truck drivers yeah we're going to talk about that one off right we want the connects too we can't tell y'all everything though we can't blow it up i'm sorry right but that's gonna be all right so what the hell was gonna actually it was something i was gonna actually oh prices is up lumber is up what do you think about the real estate market is it going to crash hey that's a great question that's a great question but i feel that people still need homes i don't see it being like a crash back in 2008 2010 where i was picking up a lot of foreclosures and so forth i think it's going to be you know the interest rate low there might be some it might be a correction but uh i don't know i don't have a crystal ball i wish i did well let me piggy back off that because i know you're using a lot of affordable housing that is that is the proper term the proper term outside of section section is called affordable housing you guys all right i know you have you know you have a lot of housing homes with affordable housing but if you have some homes that are not on that how's the moratorium affecting you because we always talk about glorifying being the landlord being the lord of your land but what is happening to people that they have one or two properties and now their their tenants are not paying rent and they're not in the position to pay their current mortgage at their house plus pay the mortgage at two other homes without receiving a passive income has it affected you at all and what advice do you have for people jumping out here you know to invest because i i don't believe in it but i also believe you want to be smart for sure for sure so for instance we did have one tenant she was back on her rent so i basically gave her cash for keys so i knew that that property is more valuable having her out the property and then getting it back on on the rent roll so for instance i'll give you this story she was back on the rent so i said all right let's work out a deal i'll pay your moving expenses and i'll give you your security deposit back but you just have to get out the house in 15 days so she said okay no problem she said you pay my moving expenses i say yeah i'll pay your moving expenses and i was thought she was just gonna go like move to the other section of philadelphia right she said no i'm coming down to atlanta i told hold on hold up wait a minute make sure you tell me so so we wanted her out out of the property so i adjusted to moving him out a little bit more and she agreed to it and i said you'll get your cash you know right one the moving truck is there fully loaded and um we got her out so i just gave her the cash for keys and then we got the creator basically right you got to be creative you got tenants because look the moratorium is about to be over yeah you know at the end hopefully i mean hopefully it's such a sticky place it's it's such a sticky thing it's it's like hopefully as well but it needs to be over it it's such a sticky place no it needs to be over i don't know i'll say this be over landlords are suffering landlords are suffering i think we're forgetting that landlords are people too and they think that every landlord they don't you know they don't have a six figure eight-figure portfolio some people just got that one extra house and they can't afford to carry both so everybody is suffering so i was interested to hear that from your perspective this also happened to me recently um shout out to eyl got a referral from eyo but the guys out you know he's out in cali got a house here the issue with k with um cash for keys is the person he actually is leasing to no longer lives in the property they sub lease to another person and so now you can't really track that person down but like you don't even know my real name damn you don't have none of my information so i don't need your cash i'm staying here wow here we are yeah it's a tough situation waiting for moratorium i'm not trying to scare you guys about investing but i as an agent as a realtor i get so many calls from people that are in over their heads you have to make smart decisions join groups make sure you you make smart decisions you just can't investing is not something you just want to jump into head first because you could really hurt yourself absolutely i agree but the moratorium needs to be over i agree if we're looking out for landlords we're looking out for people that have made the decision to invest in real estate and say listen i'm going to build generational wealth it's not fair to hold them back because nobody's helping them and everybody deserves some help not just people that are renting but what about the landlords that have also been misplaced from their displaced from their positions at their jobs been demoted and now they have to carry two mortgages you have the police savings not right you know it's not right it's not fair at some point we have to restart the world i'm so glad mgb being the bad guy today baby they're going to get me a comment they're going to give me the comments but it's all it is what it is but like look you can't keep kicking it down the road right it's just going to make it ugly and ugly and uglier you know what i'm saying so like at some point you know you gotta you gotta let eviction start happening again you gotta let foreclose it's the cycle it's part of real estate yeah you know i agree unfortunately it's the unfortunate part about real estate and i don't wish nobody to be homeless but you know it is what it is right yeah well what i like about you is i asked you up front i said are you nationwide because a lot of people like oh that's only atlanta that's only new york that's only delaware and you're like no i'm i'm pretty much everywhere so let's talk to people about how your principles apply to pretty much every state because you i know you have a big awesome amazing investment group i'll follow you i'll be like oh man my head is spinning one more job for kiana but go ahead tell people about how this works nationwide and how you're able to assist other people in building generational well no for sure so like for instance i you know i have a mentorship where i'm training other people just you know my principals and how to go about getting their next investment property or even their first investment property or even just scaling up right so there's people in hawaii there's texas there's california there's you know maine all throughout the country investing in real estate but what it comes down to is just being able to have that experience of how to analyze these deals appropriately right how to find these deals there's a deal everywhere right even when people say oh the price are too high right just go outside of that radius and find find a deal right so just have to be willing to put in the work right so the information is out there and i'm just happy that people are able to take the information and execute on the information that's why the program is called the acquisition execution say it again it's called the acquisition and execution program i love that execution most importantly that's the most important thing i think i think uil says was to say uh education on us execution on you that's a fact yeah [Laughter] but it's the truth though we can educate you we can lead the horse to water you can't make them drink right know you can listen to and watch rants and gyms you can come to your programs but you got to go execute at the end of the day you got to get the hell off the couch get off the phone get off the youtube get off of whatever you're doing and actually go out there and put some action in place and execute because experience is always going to be your best teacher absolutely at the end of the day so look um we're about to wrap this thing up man this has been a phenomenal conversation so far but let's end it with our uh we gotta we have some questions we gotta ask we gotta answer the question before we wrap up we got a question we got to answer some questions i said we need two people i'm looking where y'all at all right there we go so there we go peace peace brother uh arthur andrews again from connecticut um question i have for you uh we're talking about the lumber prices and them being so high i actually have a friend down in florida who just did a new construction and he used uh like metal framing um and so i just wanted to get your thoughts on that um one of the things that he said was that you know given that lumber is so high now um the price differential between the two isn't as different uh isn't as large obviously um however that it lasts longer that being said i'm not a contractor i'm not a builder i just want to get your thoughts on on the viability of that and if you think that's a a viable option for those who who are looking for other other alternatives to lumber because even though the lumber prices even though it's still a little cheaper sometimes you can't even get the lumber that you want even if you're willing to pay up you know so i just want to get your thoughts on that yeah for sure so uh yeah with the with steel framing or metal framing you're going to be able to save a couple dollars and a couple dollars definitely adds up as you're getting you know do your stud count um typically with the steel it's for the non-structural or the partition walls however you have to do a lot of structural framing wood's going to be your best bet for for residential unless you start getting into the actual steel like structures and they're that price is very very expensive when you compare it to a two by six or two by four structural yep great question that's a wonderful question yeah great question we got one more question okay my name is vincent grimes i currently have one rental property but i want to expand and get more it's a section 8 property here in georgia and i was thinking about i own the property free and clear and i was thinking about doing a heloc or get a fha 203k so i can start looking at trying to do like tax liens trying to try to find some tax liens i can get and expand it that way what are your thoughts on that right so the 203k that's going to be for your uh primary residence right so you're not going to use the 203k for say an investment property unless you're living in one of the unions exactly okay we're going to correct you on that like no you got to live there but if but if you own a property free and clear one of the suggestions that i would do is um i would basically refinance that property uh pull some equity out then use that equity of course to invest in so you might take on an interest rate of say four and a half percent right now actually they're as low as even lower than four percent for invest for uh investment loans where there's basically no docs no tax returns there's looking at the rents that are coming in looking at the value of the property and they'll go up to about 75 percent some will go up to 80 but i typically go up to 75 percent okay so you can tap into those funds and then if you feel confident you can make more than four and a half percent or even you know greater then i would go ahead and put that into to investments and learn the strategies and so forth because you can really take those funds from that property and you just keep recycling the recyclers funds over and over again every time you do full uh recycle you're basically spitting out another asset that's cash flowing you get a little more money on top and you keep just running that uh that money through the same cycle basically just washing the money essentially yeah definitely do so i just want to tell you tax sales in georgia a little different you gotta hold the property for 12 months for 13 months okay 12 months and plus one month okay um so you can't really do anything with it so it's an investment and if you can't do anything with it you also get a high percentage if they end up paying the taxes i've purchased tax sales the home that the new construction project i just finished and we just so we started off as a tax sale we bought it because it was everything was connected it was like an old trailer but we knew we didn't have to do plumbing we didn't have to do all the roughing so i say that to say def you got to go with cash so get your heloc get your cash out attend some tax sales in the places that make sense for you right and i'm going to say that's going to be a little further outside of the city of atlanta definitely outside of fulton county yeah yeah absolutely because they are um it is just way too much competition but i highly recommend it get you at least two or three you know just to test it out you can't lose right you either you're going to get your money back plus 20 or you're going to be able to keep the property either or you can't lose and you'll get a feel for what it feels like to get out here and get a good deal and it's just a good way to get started my first tax property was five thousand dollars and uh for me that was like but i'm not gonna say buying a bag that i but i am out of that i am out of that mindset and it it felt really good so to see it go from being that back a bag money to an entire house right just change my sh my mindset continues to shift so at least start there now yes baby shifting chanel to tax sales i like that all right so we're gonna wrap this episode up um let's let's hit them with the final question all right so our final question for you is we gotta give the people a rant about your industry and you gotta give them a gym you don't drop so many gyms but i think you got one more for us but you got you ain't going to get what you got you won't give us no headache and i know it's headache it gotta be give us a rent ah let's see a rant i want to be a real estate investor but without putting in the work um talk on it please talk heavy on it we just talked about that in our lives right right so oftentimes people see the freedom they see the mobility but they don't see the work that goes you know into it right so it's you know finding the property putting the property the project together coordinating with the team people see you know it's just passive income but you have to be willing to put the work or the people that just want to invest or become you know in real estate want to buy properties without taking time to actually learn the steps to invest right without you know people want to be compensated before education so always say education before compensation so hey i just want to get in real estate i got this money got ten thousand twenty thousand dollars what can i do i wanna go ahead and get into real estate slow down let's get some education first then the compensation will come i love that i love that what's the deal that was kind of a combination that was the comment that was a combination that was the two piece yeah the rent was yeah educate yourself first the gym is the compensation comes after right right yeah i think i mean yeah yeah all right voice there you have it there you have it there you have it look this has been a phenomenal episode how can they follow you doug tell them everything that you need to know to get in contact with you so you can follow me at uh doug depp i'll spell the last name a lot of people butcher it uh it's like the abbreviation for department with the e at the end so it's d e p like peter t like tom e like eddie so doug d-o-u-g dept um you could also go to execute with doug if you want to tap into my team to kind of talk about different uh programs that i have available for you if you're looking to further your real estate career to see if you're good fit or if that we're a good fit but really just comes down to just executing and just making up your mind to put in the work so that we can have that freedom of mobility if that's what you choose i love it i love the way he said that if that's what you choose like you didn't like you don't want to choose to be free yeah but people aren't choosing them some people want to hug the cubicle until they're 67 and a half all this free is for me and it's okay to pay for their education but definitely you got to pay to play you gotta education is very important and execution is even more important and having a good plan and a good strategy i can tell you just from experience i'd much rather be a part of a group and pay some money than to pay the money out of my own pockets and still lose when it comes to real estate investing because it's not easy and having someone kind of show you the ropes is going to always be easier for you because the entire reason we have the ransom gem show is to make it easy for people that are coming behind us like we want to make sure it's going to be easier for you because it was harder for us facts so everybody we're bringing on this stage everyone we're bringing onto the show we're giving you information to make it easier for you so that way you can glide into generational wealth and not stumble and fumble not stumble fumble well look this was a dope episode doug we appreciate you coming on board man a lot of gems right here um so we're gonna end this one right here man again like comment share subscribe listen to the damn thing on audio please let's make ransom gems the number one real estate show in the world all right my name is matt garland in mls number five eight seven zero zero better known as mg the mortgage guy and my name is kiana watson real estate broker extraordinaire extraordinaire in the metro atlanta area license number three one seven five seven six thank you so much for tuning in to the rants and gym show [Music] peace [Music] you

Channel: Earn Your Leisure

Views: 21,999

Rating: 4.9565582 out of 5

Keywords: earn your leisure, business, finance, sports, entertainment

Id: 5BNRl_pY9BY

Length: 65min 0sec (3900 seconds)

Published: Wed Jun 30 2021