Investor Fuel
Investor Fuel
Jun 21, 2022
Wholetailing: The Perfect Exit Strategy
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Show Summary

Hey, welcome back! I’m excited to talk to you today with my good friend, Travis Johnson out of Minnesota. Today, we are going to talk about why wholetailing is the perfect exit strategy for the market we’re going into. It’s a must watch episode to learn about my favorite exit strategy!

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FlipNerd Show Transcript:

Mike: [00:00:00] Hey everybody. Welcome back to the show. Really excited to talk to you. Uh, today with my good friend, Travis Johnson, out of Minnesota, we’re gonna be talking about why whole tailing is the perfect ad strategy, the perfect, uh, exit strategy for the market. We’re going into.

Professional real estate investors know that it’s not really about the real estate. In fact, real estate is just a vehicle of freedom. A group of over a hundred of a nation’s leading real estate investors from across the country. Meet several times a year at the investor fuel real estate mastermind to share ideas on how to strengthen each other’s businesses, but also to come together as.

And build more fulfilling lives for all of those around us on today’s show. We’re gonna continue our conversation of fueling our businesses and fueling our lives.

I’m glad you’re here.[00:01:00]

Hey, Travis. Welcome to the show. Hey, thanks.

Travis: Thanks for having me, Mike. Yeah.

Mike: Yeah. Glad to have you. Uh, we just talked for a while. We should have just recorded that and made that a show. We were talking about all kinds of, uh, good stuff here. And so that’s one of the benefits for being, having a podcast is I get to spend time with my friends and catching up and talking about.

Stuff that, you know, talk and shop. Right. So,

Travis: um, you see the talk shop when you enjoy it. So yeah,

Mike: for sure. For sure. Uh, so Travis, Hey, I wanna, I’m excited to talk about whole telling today. I’ve been doing this for, we talked about this probably like since 2010, whole tailing has been my primary strategy. Um, And it’s obviously become a lot more popular over the years.

And we were talking about how it’s a great strategy going into this market. If there’s a little bit of a downturn or we’ll see what happens here, how it’s even, you know, a great strategy for that, it’s gonna be re it’s gonna kind of stand the test of time and upend down markets. But before we jump into that, maybe you could just tell everybody a little bit about your background as a real estate investor.

Travis: [00:02:00] Sure. Um, I came from corporate America. I like to say I’ve been, part-time investing in real estate since 2001. Uh, so that being had a fulltime job, obviously weekends, weeknights hobby, you know, buy a house, fix it up, flip it, that type of stuff. Uh, eventually hated my corporate job, uh, too much office politics.

So I think a lot of people could relate. If you still have a job that office politics can drive you nuts. So I finally put an end to it because there was no way around the. The employment where I was at. So I made a goal that, uh, I think it was actually December 31st, uh, 2015. I said, this is the day I’m gonna quit my job.

Or my last day on my job, I quit right before Christmas. And I said, I’m gonna go full time into real estate. And that was a risk. So basically 2016 on, and I’d be doing it full time, but it was, you know, everyone’s gonna do a gut check. Right. You know, like, is this the right decision that you’re gonna make?

Yeah. But if you’re motivated and you’re committed and you’re teachable, right. Anyone can really do what they apply themselves too. If, if they surround themselves with the right people. Yeah. So [00:03:00] I’ve been doing, uh, real estate investing, like I said, full time since 2016 and I’ve run a company called Minnesota.

Nice home buyers. Um, as our local company and we invest heavily in the twin cities area and also central Minnesota, which is a heavily rural area. And that’s a kind of unique, uh, area for in our market that a lot of investors don’t touch.

Mike: Yeah. Yeah, that’s got, and, and we’re gonna talk about rural some rural investing today too, and how whole tailing is a great strategy for that as well.

So let’s, before we kind of jump into this, like what if somebody were to ask you, well, I guess I’ll ask you, what is whole tailing? How do you, how do you describe that?

Travis: Well, that’s a perfect question. How I kind of describe it is essentially. You’re gonna do what you do on a wholesale deal. And if you haven’t done one or you’ve only done a couple, how I define wholesale is doing very little work to no work at all.

Now, if there’s some safety issues in a house, broken handrail, broken steps, missing smoke detectors, something like that. You wanna always try and shoot to make sure that you can get financing on, or at least conventional you’re whole tailing almost guarantees. You’re not gonna get [00:04:00] FHA financing normally.

There’s something one or two things for sure, majorly wrong that won’t get it. So you’re gonna have to have a cashier or a conventional. So wholesaling, you do very little to a property, but where the tail part, where we butcher it from retail is that we’re gonna sell it more than likely to an end user.

That’s gonna live in the property or maybe become a landlord. It doesn’t really matter. They’re gonna pay almost what a full retail value property is. Minus a little bit of the Condit. That the property in which is not gonna be as, as good as normal retail, but you’re making like two thirds of the profit.

On, on a deal on a hotel without doing all the work that is required to make a property retail ready. So that’s my definition of, of uh, hotel. Yeah, yeah,

Mike: yeah. Uh, and, and, and sometimes the profits are, can be higher if it’s a real heavy rehab, I’ve found that, you know, if it’s a real heavy rehab, a lot of times we underestimate the cost a little bit, how long we hold it.

Um, and then sometimes the, the person that buys it from you, you know, I, cause I think. Retail buyers that [00:05:00] buy a whole tail deal. This is what I, I, I generally, and we’re gonna talk about this a lot today. Uh, I generally think that it they’re great in working class neighborhoods where people do a lot of, they’re more of a DIY.

They do the work themselves, right. They’re probably not gonna go hire contractors to do that. And for guys like us, the labor costs a lot, right. For, to do those things. And it’s harder than ever right now to find labor, to do ’em anyway, people are gonna, you know, if, if it’s mostly cosmetic. Wallpaper, you know, old doors, stuff like that.

They’re gonna, they’re gonna redo that themselves. It’s they might have a year of weekend projects if you will. Um, and a lot of folks, uh, you know, they don’t necessarily equate the cost of those things on the house to the value of their time. They just look at the cost of the materials and I get to do it the way I want to do it anyway.

Right.

Travis: No. You’re absolutely right. And yeah, yeah. Right. Labor is, is really the Achilles heel. It used to be with lumber, but that’s finally coming down a little bit, but yeah, it’s labor getting dependable labor is another thing to say. It’s just, yeah. Even when you come to [00:06:00] it, it’s like, are they actually gonna do what they say they’re gonna do when they say they’re gonna do it?

and I, I hate to tell you, death and taxes are almost more guaranteed than what a contractor will, will tell you on a time you’re gonna be done.

Mike: that’s funny. But yeah. So it get, you get the best of both worlds. It’s kind of like a, you know, it’s not an assignment cuz you’re gonna take ownership of it generally.

Um, but it’s kinda like a wholesale deal. You take it down, but hopefully, you know, you’re selling it into the retail market and getting close to retail margins. Um, and it’s really kind of positioning. It’s like I kind of, I always give it the example of it. Walmart versus Nordstroms, right? Like people are buying something that they know is, is kind of cheap and not perfect, but they got a really good deal on it.

Travis: Right? Oh, absolutely. And then the best way to try and also look at hoteling is the speed that you get from return on capital, where some people might be like, oh, You don’t want to take down a property or I can’t because I can’t hold it that long. Well, that’s a good thing. Whole tailing doesn’t really allow me to hold it that long if you’re doing it right.

You’re you’re taking it down, making any necessary safety issue, improvement, [00:07:00] some, you know, properties you get, you can immediately just put on, you don’t have those issues. Right. And then, you know, with the market slowing down a little bit, It might, let’s say two weeks to get an offer, you know, where we’re used to a first day multiple offers.

Now it’s two weeks. Everyone’s gonna think, you know, the world ended because we had to wait that long, but you get an offer on it more than likely, I would say by the time you buy that hotel deal and you do that strategy 60 days later, that money should, and. More than likely will be in your bank account already.

Yeah. Assuming you did all the proper steps along the

Mike: way. Right? Right. And you mentioned the lending upfront, typically more conventional perhaps cash, but if it’s a retail buyer and it’s working class type neighborhoods, it’s typically a conventional buyer. Right. You know, one of the other benefits of, uh, not using FHA is, um, like you said, a little more string.

Inspection probably that you have to get through, but also, um, you get around the seasoning issue cuz you wanna move these things fast. So you don’t wanna have to sit on it for 90 days anyway. Right?

Travis: Oh, absolutely. Yeah. I I’m glad you brought up this season because yeah. That’s always the Achilles heel [00:08:00] with that.

And then also the 90 days is when it gets recorded at the courthouse, it’s not 90 days from the day you signed the piece of paper. Right. Uh, I found that out the hard way also. So if it takes seven days for your title company or your closing attorney, whoever’s doing your closing in your state to record those documents.

And it’s seven more days after when you actually bought it. You’re really waiting 97 days before. They’ll let you take it. Um, I had to find out the hard way on a few of those. Uh, but once you do that, you correct your habits very quickly, but yeah, but you’re really looking for the conventional buyer and normally these are pretty good deals.

And for the most part, getting a conventional buyer is not really that hard. You know, people shouldn’t be scared by like, oh, I have to wait for a conventional buyer. The supply is still way down, even though maybe the multiple offer days are almost in a rear view mirror, it’s still gonna be a very common financing.

Yeah,

Mike: well, and I think, um, you know, we talked about it being the perfect exit strategy. And we’ll talk about in a little bit about, you know, if the market’s shifting down here, um, how it’s a [00:09:00] great strategy even in that scenario. But I think, um, you know, at the end of the day, um, It’s uh, there’s housing affordability in most markets across the country is becoming more and more of a challenge.

Right? And so there’s always people that will take, it’s kinda like buying a used car. Like you don’t get to pick what color you get. Even with new cars these days, you might not be able to, but you don’t get to pick like the perfect scenario of the car. You just, because you’re buying used usually means that you can’t afford new, or you don’t want to pay that price.

And so. Part of the trade off is lower price, but you don’t get exactly what you want and it might need a little bit of work as well.

Travis: Right? Correct. And, and the key thing is, is pricing the product correctly, especially if you know, we are gonna probably get a little bit of a slow down, just making sure that your property is the cheapest property in that market.

For the, the, let’s say it’s three bedrooms, two baths, you’re finding another three bedroom, two bath, and you’re priced cheaper than that retail on one, because you have to because of the condition. But the other thing is, is [00:10:00] let’s say. You want to for sure. Move it a little bit faster. Just go ahead and price it a little bit cheaper.

Yeah. You’re giving up a little bit, maybe extra money on it, but when the market slows down, sellers also tend to get a little bit more desperate because they can’t move as fast. Right. Where they want to. That means you can buy deeper and make up that way. So that’s kind of my strategy, how I did it before.

Um, When I was doing not necessarily whole tailing, just actually retail flipping. When the crash happened, after the crash, things were moving slowly, I could still move pretty much any of, one of my properties under 30 days, even the, uh, oh 9, 20, 10, 20 11. And yeah, I’d like to say I put out a decent product, but I was the cheapest house.

And in that price range for that condition of the house. So when someone finally came up, went out shopping, they say, I’m gonna buy Travis’s house now because they like me. They have no idea who I am. They like the house weekend. They’re like, Hey, this is cheaper by like five, $10,000. Another one. Why is it?

And my main, uh, reason is because I want to be the first to be sold. Yeah. And how [00:11:00] I know for my margins is I just bought deeper, which I was allowed to do, because if people can’t sell their house, when they need to sell it and they have to use an investor, they tend to get, I hate to use the word, but desperate and they’ll, they’ll take the.

That you presented to ’em and that’s what I’ve been

Mike: doing. Yeah, that’s great. I, I was, I was talking to somebody the other day, even in like 2008, 9, 10, 11, 12. Let’s say when the market was down and I’ll even say 2009 and 10, when people were running away from the industry, you know, they basically, the, the market so-called crashed it.

Wasn’t. That bad in Dallas, where I’m at the market was pretty resilient here. But even for houses that we full on rehabbed, we did exactly what you said. Like we would put out the nicest house and this is, you know, in my first few years we were heavy rehabers and we went, every house was like fully decked out.

Like we decked out to the nines, you had to buy it in a way that allowed you to afford to do that. But also we put it like the nicest house at the best price or we’re priced. [00:12:00] Uh, you know, at the same level as the other houses, but were way nicer. And so right there was always, all it takes is one buyer, right?

You maybe you’re not gonna get 20 offers opening weekend or whatever, but, um, even in. 9 10, 11. It would be very uncommon for us to put a house out on the market and not have it under contract within seven days, even with someone saying as a down market. And it would also not be uncommon for us to buy a house, wait 30 days to, by the way, in the neighborhood, there’s several other houses for sale.

Buy a house. Wait 30 days to close, do a complete rehab, put it on the market, get it under contract, sell it 30 days later. And all those houses are still on the market. And all we did was we just built a better mouse trap, better product at a better price. And then I insert myself at the front

Travis: of the line.

Right. Yeah. And that’s, uh, literally, it sounds like even though we didn’t know each other at the time we were basically doing the same strategy yeah. Um, to do it. And I only came up with that strategy because in my mind that was common sense. Like, yeah. Well, if you’re gonna do something, isn’t this how you would [00:13:00] probably do it and right.

Well, I didn’t and it was working, so I didn’t change it.

Mike: Yeah. yeah. Awesome. Well, let’s talk a little bit about rural markets. So you do a lot of stuff in rural markets. Um, and I think even in markets, you know, in Dallas where I’m at there there’s most investors here never go out to the rural markets just because it could be it’s too far away.

And historically like dispo is harder out there. Like it might be easier to buy cuz there aren’t as many competitors, but you do a lot of that. And let’s talk about kind of whole tailing in the context of rural markets. Like how it makes sense out.

Travis: Oh, absolutely. Um, it’s fair to have fear in an area that when you don’t, you don’t find other investors or at least know of other investors investing in rural areas.

So then you almost start thinking. You know, am I charting their own path? Did someone already did this and fail? And should I maybe not be out here because I should only go wherever one else wants to go. And I get that, that that’s the, the right logical mindset at first to have, but if you go ahead and also unapply the [00:14:00] emotional part that you were making with a logical and just make a strictly business decision.

It makes complete sense to go out to a rural area because the competition almost doesn’t. At all. And the thing is, is when there isn’t competition, you can almost name your. To a motivated seller. They’ll sell you the house. And if you don’t think it’s true, I would tell you, just go out and do it. And you, you quickly realize if they’re motivated, they don’t have options.

If they want it to be the problem solved, they will sell it at the price that you named at. So I treat rural properties like bank owned properties and, and that’s a great way. I think for people to wrap their head around, if they’ve ever been in a bank owned property where you’re, it’s on MLS as a REO and you go through and you see the normal.

You know, blue tape over the toilet and the sticker don’t turn on the water, that type of stuff. Of course, I don’t go to that level. I don’t put it on, but I treat it like a bank bank. All they’re gonna do is clean out the property and sell it in as is condition. And that’s what I’ve been doing is I go in the rural markets and I only, uh, buy from people that are willing to basically sell their house at a deep discount.[00:15:00]

And then I just go ahead and clean it out. And then I put it back on the market tree, like a bank price, it accordingly for the condition. Of the property, but yes, the dispo is the MLS. It’s not another investment because you don’t know where that investor is or investors and the MLS will either pull them out or find your retail

Mike: buyer.

Yep. Yep. And you use realtors to, I mean, obviously if you put on the MLS, um, I mean, do you, do you rely at all on local realtors to those markets to help at all? Or do you just listen yourself?

Travis: no, absolutely. I am a licensed agent, uh, but I kind of just do it on a necessity, but I’m smart enough to know that I’m only smart in the area that I actively invest a lot.

And when I’m in a really small towns, you know, there. There’s a lot of areas. I’m two that three hours away, one way to go to one of these properties. So I’m like way out in the sticks half the time on these properties, but it makes financial sense to do so because the deal is that good. But I don’t know that market just because I’m, it’s in my seat, you know, half of these cities, in all honesty, I have to Google it when the lead comes in.

I’m like, I’ve never heard of this city. You know? I’m like, where [00:16:00] is it? Oh, here it is. But then it’s like, well, how do you find these realtors? You know, I’m a license agent. I could list it, but let’s be realistic. You know, if I don’t know that market and this house that I’m gonna put on is like a bank owned.

It’s gonna be almost in an investor condition, like of being ready to be a landlord gobbled up, or there’s always a chance that a homeowner might wanna buy it, fixed up and live in it at the same time. Or it’s actually someone that’s gonna flip it, but you don’t know those investors. So you gotta find the agents.

That know that area, that already know those investors that maybe aren’t looking on the MLS, even though you’re putting it on the MLS, but those agents know, Hey, John, over here or Tori over here is someone else invests in this area. I already know I can contact them after you gimme the listing and I’ll go ahead and, you know, bring them to the table and, and buy the property.

And I’ve made almost as good as margins on some of my. Just being in these small towns doing that strategy. Yeah. But I have no competition. Yeah. I might have to wait in all honesty, probably 35 to 40 days [00:17:00] in these small towns before inspection period. Everything’s done before you go into contract. So yeah, I maybe closer to 75 days to get my money back doing the hoteling, but I didn’t do anything other than I maybe went to the property twice, uh, total.

And then I had to do a bunch of paperwork, which is pretty easy because it’s all done digitally. And so you have to do yeah.

Mike: It’s that easy. Yeah. I think a lot of folks that avoid the rural markets it’s because the disposes harder, it’s usually easier to buy, but harder to sell. But I think, you know, that’s the beat of, of whole tailing.

Is the market out there, if you will kind of quote market is usually the retail market. I mean, that’s the MLS, that’s the clearing house. Out there it’s because there’s not huge pools of investors that operate there usually. Um, and then you don’t have to compete with nice new houses in a lot of rural areas because it’s mostly just older houses that might have had some updates here and there, or more likely to be people that, that roll up their sleeves and value sweat equity than in town where it’s a bunch of people [00:18:00] like me that just want it done for you.

Yeah.

Travis: You, you hit the nail on the head, uh, sweat equity. Yeah. Um, because that’s what I found out by doing this, that most of the people, I thought it would be more landlords. It’s actually more homeowners that wanna do sweat equity. They’re like, Hey, you got the, the, they could afford the property, but they can also do what they want to the house.

Meaning. I didn’t pick the wrong pain color. I didn’t pick out the wrong flooring, even though I think that I don’t, but that’s just, as they have the mindset, they can make it the way they want. They didn’t have to pay to have something that’s already nice put in, but not the way they want it and take it out and then put something else in.

They already know they’re starting kind of with crap. So it only gets so they get to have their HD TV moment, right? That’s right. That’s

Mike: yeah. Yeah. And a lot of folks, you know, you might be selling a house at, at 90% of ARV minus repairs. Sometimes you could use a lower repair number cuz they might do the work themselves in value it differently.

Maybe we should talk real fast about, um, cuz I, I know what I think [00:19:00] on this and I’d love to get your opinion, like the best way to comp uh, the market value. If you will, on. As is properties because you’re not looking, you’re not gonna, you’re not gonna do a full rehab. So sometimes if you to historically, most people are looking at what’s sold and what are the nicest properties in the neighborhood.

And if I were to model that, what could I sell mine for? It’s a little more challenging for whole tailing, because you’re like, I don’t wanna replicate a really nice property. I wanna replicate something that is equivalent quality to mine. Right. So that’s what I need to look for. Any tips on how to do that.

Travis: Well, default is rely on the local realtor. I know that isn’t a quick answer that you wanted, but that’s really what I’m doing is trusting that agent in that market to say, have you sold any other junker houses and what do you think this might sell for? But I’m gonna apply a little bit of the actual pricing where it’s closer to me.

And if I was actually gonna, uh, [00:20:00] hotel the deal myself and be the listing agent in this current market that we’re in, um, I was doing a hundred percent of what that property’s worth minus. Retail repairs. So I was kinda being generous. So if you do it yourself, you’re gonna see a very big benefit because you don’t have the expensive labor added in.

Sure. But I was selling properties as is tailing with ease just with that strategy. And sometimes that could be a little cleaner, but I think you hit the nail in the head where you’re gonna have to probably slide down to a 90% of what it’s worth minus the repairs. And don’t try and shortchange anyone on the repairs.

No, one’s gonna be fooled like, oh, maybe they won’t notice the roof or they won’t notice the bad siding or the, the drafty windows. People are gonna notice that stuff. So just budget accordingly for it. Right. But if you’re doing right, you’re making your offer to the seller, knowing all that stuff. So it’s already factored in.

So when you pass it on down the line, you’re just the pass through collecting the middleman fee, the, the wholesale fee. But in this case, whole tailing.

Mike: That’s right. That’s right. Yeah. One of the things I’ve kind of told people before, when I coached a lot of people and stuff over the years is like, instead [00:21:00] of looking to comp it, if you will, instead of looking at the nicest houses, like, just look and see what’s the worst that, that, uh, that the lowest anything sold for and how bad was it compared to mine.

Right. And so sometimes we usually look for the ceiling on the, on comps. It’s like, just look at the floor, like what, what floor has been set now in rural markets? Sometimes that’s tough because. , there’s not a lot of activity in the first place on the MLS. Right? So that’s, that’s always a little tricky.

I’ve honestly, I’ve probably always been ultra conservative in rural areas that I’m afraid to death. I can’t sell this thing and I’m always like, surprised, like, oh my God, we sold it like on the first day. And it, it it’s because my first impression is there’s nothing selling out here. And, but the reality is there’s nothing for sale out here.

So one thing pops up and everybody’s interested because there hasn’t been anything there for a long time.

Travis: Yeah. And that’s absolutely correct. That’s what we realize is inventory doesn’t exist. You just go look and you’re like, there’s one house for sale. And you’re like, yeah, but the, the, the town population’s 236, you’re like, well, that’s probably a fair [00:22:00] number one, but you gotta be realistic.

That’s one house to other townships that are still called that city, even though they’re farther away, that still includes all those areas. And while people wanna live in those areas, there, there just isn’t any inventory. But even if there. Inventory coming on, right. Because the market’s slowing down. So it’s, you’re gonna start building up.

You kind of hit the nail in the head once again, when it comes to looking at the Crapp your houses, because yeah, I do focus a lot on the nice ones, but when we can’t figure it out, sometimes it’s like, well, You said it best. It’s like, what is the crappy one? What did it sell for? Right. And is mine crappier equal or better than that one?

And then I was like, that’s, that’s, it’s a confidence booster. But if you go in with being conservative in the world market, because again, less competition means you’re conservative numbers should still not burn you. Where if you’re in a competitive market, conservative numbers will probably burn you and you won’t get the.

Because you’ll just end up being too low, but in the, the more rural it ones, you’re gonna realize, Hey, I’m kind of all by myself. If they wanna sell, they’re gonna have to sell it [00:23:00] at this price. And then when they move forward, it’s already factored in into your pricing.

Mike: So when we first, uh, right before we started today, we were, we were talking about this topic and I said, look, I think whole tailing, uh, has been a great model as the market’s been going up here.

Um, and if the market starts to come down or slows down or whatever, I think whole tailing is even a better, it’s the perfect strategy for, uh, a market that’s starting to go down and I’ wanna talk about that a little bit. What are your thoughts on that?

Travis: Yes, I, I’m kind of new to the hoteling. Uh, I mentioned to you before, I think I started roughly 2019, uh, doing the hoteling.

Um, I dabbled in it before, but I always kept thinking it was a fluke that I was getting better prices. I was like, oh, this is a one off. And then I do it again on a, a couple more deals later. And I was like, oh no, this was unique because of this. Eventually I. Either I got unbelievable unique luck, or this is really a pattern.

Like people are buying these properties. So then I’m like, Hey, what if I start doing more hotel on all these properties? Then when they kept being gobbled up, then I [00:24:00] one, I started losing my offers to sellers because I knew I could sell even crappier properties back on the MLS relatively fast, which then only got me more deals, which is, you know, the whole goal out of this more deals.

Get more money.

Mike: Yeah. Yeah. I kind of compare, I use this analogy of outlet malls and those things are everywhere now. Right. And it’s really popped up a lot over the last 20 years for sure. But it’s like, people have this never ending hunger for value in America. We’re all like value. And, and by the way, the, you know, I’m, I’m guilty of it too.

Like. Buying something in an outlet mall or something, even a regular mall that’s on sale, which I don’t can’t remember the last time I went to a mall, to be honest at this point, but historically buy something cuz it’s a good deal. Cuz I’m a, I’m a sucker for deals and most Americans are I think, and I’m hanging up in my closet, you know, it’s like, ah, it’s not the ex.

Right color that I wanted. It’s a little bigger than I thought it would be. And, uh, you know, it hangs in my closet for like a year with a tag salon. I never even wear it. Right. and so I think that’s the analogy I like to use is like, there’s a lot of [00:25:00] people that just like a good deal. And I think as there’s pressure on affordability, housing affordability in America, like people are gonna have to move to smaller houses.

I’ve seen a bunch of people on social media talking about how housing prices are so on affordable these days as compared to like 1980. It’s like, yeah. Well, people live in houses that are on average, like two or three times the size too. Like what’s gonna happen is people are gonna start to go to smaller houses.

I’ve even seen some of the big national builders here in Dallas. They’re building like 12, 1400 square foot houses. Again, I haven’t seen that anywhere in a long time, but that’s the direction we’re going, right. Is. To make housing more affordable. You either have to get a smaller house or you have to get something that needs some work and it’s imperfect and you’re willing to accept the deal for

Travis: that.

Right? Yeah, I think that’s very fair. And then I think the trend for the near, or let’s just say the next decade is one level living. I mean, the baby boomers are still going on and droves, I’m buying, you know, three properties this month that are all mom’s moving assisted living. Mom’s moving to a condo.

[00:26:00] Dad’s moving a condo. Mom just passed away. They want, they want it downsize. They want simpler, but they. Living, they want something simpler. So, you know, condo as a elevator naturally is normally how it works. Townhouses depends on their age because obviously their, their knees are normally the big problem.

Right. Um, so if you’re saying that they’re downsizing, if, if they can keep it to one level living, I know, you know, for any builders that think about living, if they’re like, what kind of product should I build? I’d say go with one level because we can’t find ’em in a market. They get gobbled up in a heartbeat when one level living pops up because people need to be into those type of properties.

Yeah,

Mike: that’s good stuff. Well, I think we beat up, uh, whole tailing today. So Travis, would you mind, uh, you’ve been a, you’ve been an investor fuel for a little while now as a member. And would you mind just kind of sharing a little bit of your experience, a little testimonial, if you will, about, uh, being a member of investor fuel?

Travis: Oh, sure. Uh, without being on investor fuel, um, I honestly, I probably feel lost. Being a real estate investor. You feel like you’re on an island at times, right? [00:27:00] You, you, you try and network with other investors, so you kind of know what they’re doing. And of course they have to see you not as competition.

Well, it’s kind of hard to do that in your own market, right. Because everyone thinks like, Hey, if you’re gonna talk about things in your own market with another competitor, you’re gonna give up trade secrets or talk about things that only gonna benefit one side where like investor fuel, you know, you’re bringing the nation.

Type audience and putting ’em into a very large room at this point, because it’s grown very big. It allows you to talk to other people with open minds, no egos, nothing like that. They allow whatever’s working in their market. If you ask someone a question I’ve never been resisted by someone sharing what, what works for them, why it’s working, getting feedback on anything.

Um, I even have a, probably up on my shelf here. I have an investor feel that, you know, you get the, the booklet, you know, the kind of the direct. And it’s just nice. You go through and I pick up the phone and I’d call someone like, Hey, there’s no guys in this market, I have a lead form. Or, Hey, I, I saw him at the fuel event.

He had some great info. I [00:28:00] didn’t get time to talk to him. He was too busy. I got busy. I reach out. So it’s a perfect networking community. And for me it was, I believe it was roughly. Six months after joining, I got one idea from investor fuel that was shared, uh, at the event that I already went down the path, uh, with a, a hedge fund that I thought I could sell a property to.

And basically I was blocked a couple years ago. Nope. We don’t deal with investors, all that stuff. So I had that in my head. Well, uh, Someone in fuel. I forget who said, oh no, I’ve been selling to them. And I said, no, the rules, they don’t do it. They’re like, oh no, no, you don’t talk to the live person. You gotta use the computer, you get around it this way.

And I did it and I was able to make $80,000 profit on a deal. That I was gonna actually rehab, but it was perfect whole tailing strategy, but because of fuel mentioning, like, no, no that, uh, the hedge fund is gonna buy that way, reached out and it worked out literally a couple weeks later, I had an 80,000 more than what I would’ve ever made [00:29:00] on a retail flip.

I made on that deal and I’ve had other positive ones, but that’s the biggest one that comes to mind. Like just being part of the group made me that much money just by listening and, you know, setting the ego aside. I don’t feel like I have one because I’m always learning, but other people set their egos aside and share this information, which is very valuable.

And I just don’t see myself anywhere else. But investor fuel from education and networking for other investors.

Mike: That’s awesome, man. I, I didn’t know that that’s great. You know, one of the things that I wanna, uh, share is the something you shared with me before we even recorded here was that, um, we have a pretty active Facebook group community for just members only.

And somebody posted in there and needed some help with something. And you, you told me you responded, um, and that you could help, like, you were very familiar with this issue and that they didn’t write back. They probably got busy or whatever, and that you went out of their way to call them and say, You know what I know they need help.

I mean, that, that, that culture, that’s the culture that we have is people that really wanna help each other. And everybody’s busy. And I’m not saying that [00:30:00] happens every day, but just the fact that you took an extra step to try to help somebody and call them when they haven’t responded to your email is the exact culture that we’ve built here.

And that we try to lean into, uh, is just having amazing people that help each other. And I think a lot of you said it. Feel like we’re on an island a lot of times. And, and I think we really have an amazing brotherhood sisterhood of people that are looking out for one another and helping one another. And I think even going into a shifting market here, and I’m not a doms there, I think the, I think honestly times are gonna get better for real estate investors if the market shifts here.

Um, but it, especially those that are in a community like investor fuel, where we can talk ourselves through. Here’s what’s going on. Here’s how I’m changing things, pull each other off the ledge every once in a while, whatever it takes to make sure that we all get through this together. We did that with COVID.

We’ve done it with every sort of issue that’s popped up and together, you know, together we’re better quite frankly.

Travis: Oh, it, it absolutely. That’s the only way it works and yeah. And maybe some people don’t know this about fuel. I mean, that’s area, if you don’t, until you investigate more. But you [00:31:00] have guaranteed four meetings a year, if not more, if you do the other events, but I’m just saying you’re gonna have four meetings throughout the year, almost on a quarterly basis where you’re gonna be obviously invited out to wherever it’s hosted at, to get with everyone.

I try and attend every single one of those. I it’s. I only miss one ever since joining. And that was because my son’s birthday. Overlapped one of the dates. That was the only reason why I won attend is because my son’s, but outside of that, I there’s no excuse not to attend because I don’t know what type of wealth nugget of information that’s gonna be shared at the event.

And because I wasn’t there, I wasn’t gonna be able to capitalize on it. So it’s worth its weight and goals. Yeah. Awesome. Awesome.

Mike: Well, Travis, uh, I know you’ve got a book out and you’ve got some other information. If folks wanted to connect with you or get a copy of your book or anything like that, can you share where, where they would.

Travis: Sure. Yep. I, I’ll kind of true obviously for the people displaying. I have a book called.

Mike: Yeah. Yep. And, uh, take the words outta your mouth. Sorry.

Travis: that’s alright. Uh, if you wanted, this book was designed is basically to [00:32:00] tell people that if you’re kind of new to investing or you dabbled a little bit, but you haven’t really got your, your feet wet enough.

This is like a to Z for investing on real estate. This kind of basically tells you, you know, how they get the business up and running the different marketing strategies, how they deal with motivated sellers, how they interact with them, you know, from setting appointments, setting goals for yourself, let alone, I have a whole chapter about hard knocks.

How to come up with ARVs, you know, it’s just basically a one on one guy, a to Z, how to do stuff. So if, if you’re kind of new and you’re dabbling around, I encourage people to get the book. I basically just want you to cover my cost of shipping. So you can go to www dot, uh, book by Travis. Dot com again, book buy travis.com and I’ll send you over to my website and basic, I’m gonna ask you 10 bucks for shipping and I can go ahead and ship the book out to you if you want it.

If you don’t want the physical book and you wanna be on the digital platform, you can go out into Amazon Kindle. Uh, you can type in seven figure flipping or type in Travis Johnson. I believe in the search bar of Amazon [00:33:00] and you can get it on Kindle. I think I only charge like three bucks there and the reason why I’m trying to keep it very affordable is because I want people to be able to maximize their chance.

Learning real estate, uh, without feeling like they’re being bogged down with cost and not sure if it’s worth their time. Uh, so I think it’s a, a very good entry level product to get exposed to real estate. You like anything about what you read or what I share with you? You know, obviously let’s reach out and see if we connect and do other things together.

Yeah.

Mike: That’s awesome. Travis. Well, Hey, thanks so much for sharing that. Thanks so much for sharing all your knowledge on, uh, whole tailing today.

Travis: Yeah, no, I have no problem. And the one thing that I want to do before we wrap up, if it’s all right. Achilles heel. I think for every real estate investor is follow up, follow up, follow up on leads.

Um, that is just, I can’t say it until I’m blue in the face. You gotta follow up on any leads that come in, just cuz it’s not a yes today or you can’t connect with someone today or they won’t reply to an email or a phone call type of thing. If they raise their hand until they tell you to stop bugging them, you follow up all the time [00:34:00] with them.

And because when you do that, you will reap the rewards big time in the business and people that don’t do follow. We’ll be in business and out of business probably under six months. And that’s just my honest opinion,

Mike: the money’s in the follow up, but there’s no doubt about.

Travis: It absolutely is. And, and it sounds like such a simple kind of boring thing to do, but it works.

And that’s where majority of our profit comes from is from follow up,

Mike: you know, in this market too, as we shift here, there’s people that didn’t accept your offers before that are gonna become a little more realistic, a little more open to selling. Don’t wish these things on anybody. There’s gonna be some people that.

Lose jobs have other issues that kind of come along. And I think that’s, that’s the main thing is if people contacted you in the first place, there’s, there’s, you there’s some smoke there, right? Maybe not fire yet, but for a lot of folks, and again, we don’t wish this on anybody as real est…

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