Propelio’s series of interviews with some of the most successful, young entrepreneurs in the industry gives new Real Estate investors the chance to get a “behind the scenes” glimpse at what it takes to transition from regular 9-5 worker to full-time entrepreneur in Real Estate Investing.
In this episode, Propelio’s Daniel Moore talks to Tiger Butler from TEB Properties. Butler is relatively new to Real Estate investing, having only made the change from the corporate world around 18 months ago.
Butler explains that he and his wife, Erika, started Real Estate investing about a year and a half ago. They had some friends that were investing in Real Estate- and after sitting on the sidelines and watching them making huge financial gains, they decided they would like to try to do it too.
Tiger Butler says that after they had decided to change their trajectory and just to go for it. He says with pride, “we’ve just wrapped up our 20th property”.
Types of Deals and Strategies
Butler explains that when they first started out, they were doing the classic wholesaling like most new investors. He says they wanted to create some capital to work with to grow their business and expand.
Butler outlines his strategy they are employing for the future now that they have secured some capital from wholesaling. He explains that they have shifted their focus to owner financing, mainly because it generates passive income.
Butler says their goal for the future is to retire themselves financially, and in his opinion, that owner-financed investing seems to be a pretty good avenue for that. Daniel Moore adds,
“Owner financing is a strategy that can be implemented with very little money and can secure a nice cash flow.”
Butler explains that the only money they had, they used to pay for coaching. They started out broke, but now after 18 months, the coaching as has more than paid for itself.
Tiger Butler explains that they started out doing a lot of doorknocking in the beginning; knocking on the doors of the houses on the pre-foreclosure list. In fact, that was how he got his first deal.
Butler says that doorknocking still makes him feel nervous despite having done it thousands of times. He jokes that he still has a shaky voice when they answer and it never gets easier.
Tiger Butler’s First Real Estate Deal
Tiger Butler discusses his first deal as a new Real Estate investor- a house in Rockwall, Texas.
They knocked on the door of a pre-foreclosure. At this point, he was only 2 weeks into investing. One he explained that he was there to help, the owner was happy to sell the house to him as he was the first Real Estate investor to make an offer.
He and Erika contracted the property and then assigned it over to another investor for $5000. After that, they hit the ground running.
A year-and-a-half later of Real Estate investing, Tiger Butler has been involved in the purchase and sale of 20 properties. A good chunk of those were wholesales and they started doing owner-financing deals last year-successfully owner financing 2 properties.
He outlines the future for their Real Estate investing business, aiming to delve deeper into owner-financing strategy.
Butler hasn’t found a cap on price point where it gets harder to wholesale a property. He says that for owner-financed deals, there are certain price points with more buyers, so he typically aims to find houses which are around $125,000 and below.
Owner-Financing Properties
Butler says that a lot of the time the owners are behind on payments, and that it is easier to take a property “subject-to” if the owner isn’t up-to-date on their lien payments. He says they’re usually willing to let you have a property “subject-to”.
Tiger Butler goes on to discuss a rehab they did on a property which was particularly profitable. He explains that they bought a property in Fort Worth for $19,000, which did need quite a bit of work.
Butler says that they had to put self-finance the renovations. Since it was their own money, they were not going to just sell it on a wrap, but thought it would be better to owner-finance the property.
As they were in the rehab process, they got a lot of interest in the property. This was a house which was in the price point of $125,000 and below, but they had managed to purchase for under $20,000. Butler says they got a lot of offers for the house,but finally someone came in and offered the full price in cash.
Marketing for Real Estate Investors
Tiger Butler goes on to discuss how they have managed to be involved in 20 property transactions in just 18 months. While at first they were focusing on simply doorknocking, now they have a much more sophisticated direct mail marketing system.
Butler explains that they market to everything they can think of – probates, pre-foreclosures, substitute trustees, notice of defaults. They spent around $5,000 a month on marketing, from which they get one or two solid deals every month.
Tiger Butler discusses how he and Erika, are aiming to financially retire themselves. After such a short period of time, they are about a third of the way there.
Their aim is to use owner financing as their main strategy, as it’s passive income that steadily builds over time. He reiterates their price point for owner-financing deals, looking at properties of $125,000 or less, and how it can work with houses with little to no equity in them.
Fear, Coaching, and Making Mistakes
Butler says that the biggest fear he had when he got into Real Estate investing wasn’t his lack of money or where the funds would come from to secure a deal,but on that he was confident just to dive straight into it.
Tiger Butler’s biggest fears when beginning his career as a Real Estate investor were more to do with the fact that he didn’t know everything. For example, he didn’t understand how to write a contract.Butler continues by detailing the partnerships which he incorporated throughout his 18 months as a Real Estate investor, working with experienced investors that could help guide the deal in the right direction.
He explains that they were happy to split the equity 50/50 to ensure the deal went through to the end. He says that they have made a couple of mistakes as Real Estate investors, which did mean they lost some money, but ultimately learned from their mistakes to aid them better going forward.
The Importance of Staying Focused
Tiger Butler says that the most important thing he feels is necessary to make it as a Real Estate investor is to stay focused. Butler says that really helped him when he was starting out.
Early on, he figured out why he was doing this and what he wanted to be. The important thing is to remain focused on that goal and not to deviate from it.
Butler says he and Erika have reduced that focus down to marketing. He outlines the importance of marketing as a daily activity in order to get those deals.
It wasn’t a simple transition into becoming a Real Estate investor and he had to make a lot of sacrifices. The main things he has lost, as his Real Estate business has grown, is his own time and time with friends and family.
Butler mentions there are sacrifices which need to be made for the sake of the business. For example, they actually sold their own house in order to get access to the capital within it so they could focus more on Real Estate investing.
Daniel Moore sums it up,
“The sacrifice today will pay tomorrow.”
Tiger Butler details his own life after 18 months as a Real Estate investor, explaining that his wife and business partner, Erika, has managed to step away from her 9-5 job to concentrate full-time on Real Estate investing. Butler says that it has helped a lot, as she has a lot more time to devote to the business and they actually managed to get a couple more deals due to Erika focusing on Real Estate investing full time.
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