TIME MANAGEMENT IS THE BIGGEST STRUGGLE: KEEP A JOURNAL
- You need to know what you did. If you are struggling with time, you are struggling to focus, which is where the problems are created.
3 PRINCIPLE THINGS YOU SHOULD BE LOOKING FOR EVERY DAY
- Things I want to do, things I need to do, things that will get me paid.
FOCUS ON MONEY MAKING ACTIVITIES
- If you are struggling as an investor, you must focus on money making activities. You may be doing “productive” things, but they are not generating money. The journal becomes an activities log. Write exactly the things you “need” to do but focus on the revenue generating activities.
START YOUR DAY BY LOOKING AT YOUR JOURNAL
- Look at your journal every morning, prioritize money-making activities first.
GETTING PAID ACTIVITIES
- Marketing: That is the only thing that will get you paid, regardless of the knowledge you have, you cannot make money without action. If you are not getting deals, either increase your volume or change your strategy. Find one or two motivating strategies and focus on those.
PRE-FORECLOSURES
- Before you purchase a list, you need to know how clean (scrubbed) the list is. You must find the fastest way to source that data. For pre-foreclosures, go to the courthouse, scrub the data as soon as they come in, start cold calling those leads.
VERY FIRST THING EVERY DAY – GET THE DATA
- Find the best data possible, use that data to market constantly and consistently. If you are journaling, you can review your activities. The only way to turn data into money is to reach out to those list contacts.
IF YOUR MARKETING STRATEGY IS NOT SCALABLE AT YOUR BUDGET, CHANGE IT
- If you are doing postcards and you can’t scale that, skip trace those same leads and you can call those people as many times as you want. A postcard is only one touch. The very successful wholesalers spend tens of thousands of dollars per month in direct marketing, can you compete with that? If not, get creative.
THE GOAL OF INVESTING IS OWNING ASSETS
- Which means you want to be absentee owner. An absentee owner list will do nothing for you unless you know how to stack data to find deals.
40 HOURS A WEEK: COLD-CALL, SKIP TRACE, DIRECT MARKET
- Do these for 40 hours a week for 4 weeks a month. You will then create opportunities. You must go on the appointment. You can then learn how to handle the negotiations, phone calls, etc., but with no opportunities, you will make no money.
IF YOU ARE AFRAID OF COLD CALLING, CALL FSBO
- Call FSBO (For sale by owner) leads. Call 100 a day for 2 weeks. This is practice. You are calling them to make an offer, not just to get information about the house.
ESTIMATING REHAB COSTS
- LIGHT REHAB: Get in touch with several general contractors and ask them the approximate cost per square foot for a light rehab. A light rehab (Cosmetic only) is flooring, wall paint, light kitchen, bath, and exterior paint. Approximately $16-$17 per square foot. Windows: $300 per 3×5 opening, so 2 windows in a bedroom = $600.
THE BIG FIVE: ROOF, ELECTRICAL, PLUMBING, HVAC, FOUNDATION
ROOF
- Ask the seller when the roof was last replaced, if they don’t know, the roof probably needs to be replaced. Roofs are estimated in a 10×10 block (this is called a square in roofing). In roofing, a square is 100 SF. A 2,000 SF house is 20 Squares (2,000/100 = 20 Squares). You have overages for peaks, overhangs, etc. Add about 20% overages, so 2,000 SF * 1.20 = 2,400 SF. 2,400/100 = 24 Squares. If roofers in your area are installing roofs at $200 per square, and you have 24 squares: $200 x 24 = $4,800, assume about $5,500.
ELECTRICAL
- What type of electrical panel is in the home? 3 types: Federal Pacific, Zinsco, Fuse. If it is a Fuse box, assume it must be replaced, not moved. About $2,500 just to be replaced. Only
- Needs to be moved if it is in: bedroom closet, laundry rooms.
- Is it copper or aluminum wiring? If aluminum, add about $1,500. Homes pre-1965, homes were wired on 2 wire systems, which may need to have a ground wire system put in.
- Service entrance cable: Is it underground, overhead? If overhead, does it have proper clearance?
PLUMBING
- Where is the hot water heater (In the house or in the garage)? About $1,200 to replace. Two Important factors: Date Installed and was it installed properly. Does it have a catch pan underneath that is plumbed to the outside? Date installed.
CODE CHEATSHEET BOOK
- Cliff’s notes version of the building code.
- What is the drain waste vent system of the plumbing system?
- If it is PVC (Polyvinyl Chloride), then it is newer construction. It should have a clean-out system, which is the plumbing cap outside the house that you can
- If it is cast-iron and the house has foundation issues, do a hydrostatic test.
KITCHEN UPDATE
- What is the per-linear foot cost of replacing cabinets and countertops? $210 per foot, including granite countertop. Base price for a basic bathroom update includes: Tub, tile surround, toilet, vanity, fixtures.
HVAC (HEATING, VENTILATION, AIR CONDITIONING)
- If you walk into the house in the middle of summer and the house is cold, the AC probably works. In the winter, get an infrared thermometer hold it up to an outflow vent, you should see a 15-20 degree drop from the regular room temperature. Full new system, about $3,500 – $5,000.
FOUNDATION
- Even just one corner of the house, is about $3,000, two corners about $6,000, any more than that, get an estimate.
ACTION STEPS
- Journal, prioritize: Need to do, want to do, what gets you paid. Your day does not end until your money-making activity and need to dos are complete. If you complete them early, you can do your want tos.
HOW TO SCALE FROM THE INTERMEDIATE LEVEL: CO-WHOLESALING
- As a beginner, your money-making activities are cold-calling, etc. At the intermediate level, go to networking events every day. Purpose-driven networking: Meet every person in the room. Who are they and what do they do? This will build your buyers’ list, finding private capital, and meeting other wholesalers. At networking events, you will meet individuals who have private capital at the network events. You will meet buyers, which builds your buyers’ list. You will meet other wholesalers. Find the new wholesalers, offer to help them and split the profit in an agreed way.
ACTION STEPS FOR THE NEW WHOLESALER
- Approach the intermediate wholesalers with your value-add and ask them how you can partner. It must be mutually beneficial, not unilateral.
YOUR GOAL IS NOT WHOLESALING
- Start adding a “0” to every deal that you do. Have that goal in mind from day one.
- 2015 – Daniel did 60-70 deals, but breaking it down to hours spent, the money was not as good as it looked on paper. He was only looking at transactional volume, which means nothing.
DEAL VOLUME MEANS NOTHING
- You could do 2,000,000 deals a year and only make $50,000 or you could do 2 deals and make $5,000,000.
HOW TO ADD A “0” TO EACH DEAL
- If you make, say, $75,000 the first year, plan your next year to make $750,000. Strategically plan your year from day one. Focus on the quality of the deals rather than the volume. Analyze your prior deals – Which ones made the most money, why?
- The rehabs made far more money than the wholesaling, although he spent most of his time trying to wholesale.
QUIZ
- What 3 principles need to be prioritized daily?
- What should be your goal as a real estate investor?
- What 3 activities would almost guarantee a deal if you did them every day for 8 hours?
- What top 3 fears must real estate investors overcome?
- What are the 6 common costs of house rehab?
- How can an intermediate wholesaler scale up?
GET THE ANSWERS
Key Points:
- Daniel addressed the 3 most common fears that real estate investors must overcome: Cold-calling, estimating rehab costs, getting to the next level.
- Overcoming them:
- Cold calling: Call FSBO (For sale by owner) leads. Call 100 a day for 2 weeks. This is practice. You are calling them to make an offer, not just to get information about the house.
- Common Rehab Costs: (Ask several general contractors to get numbers in your area. These are broad estimates). NOTE: ONLY UPGRADE TO THE LEVEL OF THE COMPS
- Light rehab (Cosmetic only: flooring, wall paint, light kitchen, bath, and exterior paint): $16-$17 per SF
- Windows: $300 per 3×5 opening. A double window is 2 – 3×5, a triple window is 3 -3×5, etc.
- Roof: $200 per SQUARE (not per SF), a square is 100 SF (10×10)
- CODE CHEATSHEET BOOK: Great resource for quick code guidelines. ($90)
- Electrical: 3 types of electrical panels: Federal Pacific, Zinsco, Fuse. If it is a Fuse box, assume it must be replaced. Replacement cost: $2,500 just to be replaced. If it has to be moved, it is around $1,500, or more.
- Plumbing: Hot water heater is about $1,500, other plumbing issues, get estimates.
- HVAC: Check the system, even in the winter. Get an infrared thermometer. Full new system, about $3,500 – $5,000
- Foundation: About $3,000 if one corner is low, $6,000 if two corners are low, any more than that, get an estimate, it could be cost prohibitive.
- Intermediate wholesalers can scale up by co-wholesaling. Go to a networking event every day, meet everyone, build your buyers’ list, possible private money contacts, and other wholesalers.
- Transaction volume means nothing: You could do 2,000,000 deals a year and only make $50,000 or you could do 2 deals and make $5,000,000. Focus on deal quality and plan on adding a zero to all your deals. If you made $75K this year, plan on $750K next year. You must have a strategic plan to do so. This is where partnering matters.
- Your goal is building wealth, not creating a job.
INTERESTING DANIEL QUOTE: TRANSACTION VOLUME DON’T MEAN SHIT!
