#140: Without Phil and the Freedom Mentor Program I Don’t Think We’d Be Standing Here

John: The Andy D. show
Andy: Hey. Here we are.
John: The man, the myth, the legend.
Andy: The legend. Here we are at a subject two that is getting some work done. We have three pickups here and this is the carpet installers, real time, so we’re hoping to share a couple things that we do.

Share a little insight on… We’ve been around for a little bit and let’s go take a look.

John: Yeah, let’s go take a look. Flooring’s going in, hard at work. A lot of dust. You can see the laminate flooring there. This will all be laminate within this area. Bedrooms are over there. You can see that we’ve painted this whole house. Believe me it did not look like this when we first got in here. Hopefully you guys can get a decent picture of everything. Still quite a bit of work to be done, but hopefully within the next couple of weeks we will be finishing this one up.
Hey this is John. This is what’s going on here. Working on a house in North Dakota. Beautiful weather. You got to come here in January to get the full effect, but it’s a nice 80 degree sunny day. It’s not always cold up here.
Right now what they’re doing is they’re installing flooring in the house. This is a house we took over, creative financing. Gave them a little bit of cash up front, put some money into it. We’re fixing it up, we’re putting the flooring in today. They’re in there, you can hear the saws going, some banging going on, so hopefully by the end of the week the flooring’s done.

Andy: Hey John, why did you decide to do a subject two to this property instead of wholesale?

John: Just the way it made sense. We worked out the numbers with the owners. We came to an agreement that it was a win-win situation. They were moving to Arizona, looking to rent, didn’t necessarily need to have the cash up front. They wanted the moving expenses, so we paid for that. We paid for the closing. Once we get this finished, and sold, the loan will be out of their name and it’s a done deal. It’s a win-win for everyone.

Andy: Okay. What do you expect to make on this property?

John: This one we’re hoping to make anywhere between 40 and 50 thousand. Once all expenses are paid it should be a pretty good deal.

Andy: Very good. What made you decide to start the program with Freedom Mentor?

John: I was teaching full-time, very interested in real estate. Eventually stumbled upon the program online. Thought it felt like a good fit for me. It was what I wanted to do. It’s been a learning experience, to say the least. It’s been a lot of work, it’s been a lot of time, but it’s starting to reward itself I guess or I’m starting to get rewarded.

Andy: How many properties, real time, right now are you working on?

John: Well this one, there’s a four-plex north of here, two other ones north of here, one south of here that we have, and we just picked one up, real time, yesterday.

Andy: Hey what’s really important, as we’re at this property and as John alluded to, there’s a lot of hammering going on, there’s installation of the floor happening, is contractors. How do you find them? We found over the course of time that it is a challenge here and there to make sure that you get a good contractor. But some of the techniques that we’ve leveraged, and this is coming from some of the coaches that we’ve talked to, is calling the Home Depot, the Lowe’s, figuring out who they’re using or who they’re contracting with. Talking with folks that have very large apartment buildings and who manages those, as far as their repair work and their maintenance. Also, leveraging your own network. So if you, in the past, have been in other industries where you can connect with somebody that knows somebody that’s also a really good place to find contractors.
One key point when dealing with contractors is to make sure to set the stage right away. This is your business, so make sure that you’re leveraging your time with them wisely and your money with them wisely also. Meaning that just don’t take their word for it. Make sure there’s checks and balances, that you’re getting other bids. Sometimes you may get three to four bids on a project until you find that contractor that’s a really good fit for you.
It just so happens that the folks doing the flooring here today, we’ve used them countless times. We’ve done business with them a lot. They do what they say they’re going to do. They come in, they do a great job, and they’re out.

John: Andy, have we ever had any issues with contractors?

Andy: We have had some issues with contractors. We’ve had contractors that, I guess in my opinion, got a little greedy. Their prices went up. They got a little complacent so they started wanting to make some more money. Although we set the stage and to say, “Hey listen, this is our livelihood. We want this to be a continuing relationship, not a one trick pony, not a one-time thing, but a multiple time event,” so that it’s great for them, that they got continued revenue coming from us, and then we have the stability with a contractor that keeps coming back, and we know that they’re going to get the job done. But we’ve had contractors elevate their prices on us. We’ve had contractors that we thought were great. They came in, and would work a day or two, and then they wouldn’t come back for four days.
So hold tight to your process. If that’s happening you got to cut them loose. Don’t say, “Okay, well four days,” and then they go two more days. You got to stop that stuff because, just like this project right here, you got to get in and get out. Time’s money.
Well John there’s a lot going around this property that you have. Looks like maybe there’s some challenge. Can you talk to us about what’s going on with this construction and how it can affect the sale of the property?

John: Yeah, definitely. We picked this one up, owner was facing foreclosure, behind on payments. We picked it up preparing to sell it. Well if you look behind us here, and you can hear it, there has been road construction all summer. Basically up here there’s two seasons, you got winter and you have road construction season. It just so happened that this road got completely ripped up and no one’s been able to even look at the house because they can’t get to it.

Andy: How soon after you got the property was it ripped up?

John: About two days later.

Andy: Did you know that it would happen?

John: I knew that it was going to happen. What I didn’t know is they had been about four weeks behind schedule this summer. I don’t know if that’s due to the rain or just … I know things come up just like anything, but it’s put a wrench in the sale of this property. Hopefully this street will be opened up by the end of the week. We can get a contract on the property and get it gone before too long.

Andy: Are you doing very much work, if any, to this one?

John: The only work that we did to this one was clean it out and paint the basement floor. That was about it.

Andy: Okay.

John: It didn’t need a whole lot of work. That’s the big thing, is just knowing what to do and what not to do. Do you rip into something? Do you not rip into something? Is there going to be a cost and reward to it? For this one it did not make sense to even touch it, so that’s the ones that we like to do.

Andy: Yeah, excellent. Hey, what do you think you’re going to make on this one?

John: This one? We have it under market value right now, so hopefully once the street opens up we can get a bidding war going. This one will probably net anywhere between 20 and 30 thousand, potentially more.

Andy: Hey, 20 to 30, that’s pretty good. Hey John I know that you’ve done quite a few deals, okay? How accurate are you with determining the projected sale of the house? How do you come to that number?

John: I think what we’ve learned over time is we’ve gotten fairly confident on our ability to pull comps, knowing what it will cost to get a property to be able to sell and what it will sell at. We’re pretty accurate in our numbers, that we’ve found to be.

Andy: So you probably … Because we do this together, but get more than one opinion right?

John: Yeah.

Andy: Is that correct?

John: Yeah. Andy and I, we always have two sets of eyes looking at our deals, which has been very beneficial. Obviously the coaches help out a ton. They look at all of our deals too, so we just have a lot of eyes looking at it. Then we put an offer in and we know the retail sale of the property. We’re confident in our numbers. Again, that just helps when we go in and talk to sellers to begin with, that we’re confident that we know what we’re talking about. We’ve been there, we’ve done it.

Andy: Well John here’s an interesting one, tell us about it.

John: This right here is a four plex I picked up. Again, doing creative financing. A little bit of cash to the seller and working a deal out. Out of town, didn’t want anything to do with the rental property anymore, looking to go off in a different direction in life. Picked it up at a pretty good price. Today, real-time, we’re looking at possibly getting in two offers today. Then when it’s all said and done, after expenses and everything, it should come out to be about a $30,000 deal. Again, if you look behind, if you turn the camera around, we are dealing with-

Andy: Road construction.

John: Yeah.

Andy: Boy it’s kind of an interesting thing when we said, “Hey, don’t spend a lot of money on your vehicles and all that crap to save some money, right?”

John: Yeah. Yeah.

Andy: In case stuff like this happens.

John: So I mean this road construction … Usually these properties would be gone fairly quick. With this inconvenience with the road construction it’s really cut down the number of buyers coming to the properties. We’ve had to hold them a little bit longer than what we’ve wanted. But when it’s all said and done I think we’ll come out all right.

Andy: Yeah. That sounds good. Yeah, a little bit abnormal. When we’re dealing with the real estate generally single family homes 99% of the time, but there’s sure an opportunity isn’t there?

John: Yeah. This one, I mean, it made sense. It cash flowed right off the bat. That’s basically how we look at every property, “Can we cash flow it if we need to? Can we sell it for more than what we were buying it for?” To keep it simple, this one made the criteria, so we should come out pretty well on it.

Andy: Well John we took a look at a couple subject twos, some creative financing deals. Tell us a little bit about this one.

John: This one was done about two weeks ago. This is a back-to-back closing. We went through Phil as the transactional funder. Again, every real estate deal you’re going to have your issues. We ran into our issues day of closing. Got it through, you just got to keep pushing these deals through. Eventually by the end of the day the buyer came through and closed on it. It was a win-win for everyone. This one was about a $20,000 profit and I owned the house for less than 12 hours.

Andy: Very good. Looks like the folks that bought the house from you is starting to do some rehab already. Big garbage dump, looks like some building materials sitting there, so looks like they’re moving already.

John: Yep, they’re on the move. They’re going to be roofing the house here, adding new gutters, maybe they’re fixing side up there. Inside all the big stuff was done. New furnace, new water heater, flooring was redone. It was pretty nice inside. It did need some work though, so they got a good deal on it, I got a good deal on it. Like I said it win-win for everyone. All right, we’re here at one of Andy’s properties. Andy-

Andy: Past properties.

John: Past properties. We’ve already sold this one. I’ll try and get a view. We’re in the truck right now kind of drive by. Thought we’d drive by it. Andy, yeah, go ahead and tell us about this deal.

Andy: Yeah, sure. We talked a little bit about some of the creative financing deals, we talked about a transactional fund deal. This one is a cash purchase to a wholesale. As we drive by here, so we’re a little bit inconspicuous, just a small property, needs some work. Picked it up and then wholesaled it to another investor and made, I think, around $15,000 on it. Probably had it for two or three weeks. They bought it on a cash deal. The closing happened really quickly.
Just like John mentioned with his transactional fund deal, on this one I really wasn’t looking forward to investing $20,000 to get the house where it needed to go. The demographic of town too. The transactional fund deal that we just saw with John is in about the same type … In the same neighborhood. It’s probably about seven blocks away, so it’s really key just to understand where you’re at. Where you’re at in town, what sells, how long it sells? Is it a good idea to put investment in it? Didn’t feel that that was, hey made 15 grand. It’s a good deal.

John: Good deal. So you want to tell us how the deal went down?

Andy: Yeah. Kind of interesting. Brian if you get to watch this, was down with Freedom Mentor with Phil and the coaching staff down in Florida. Oh gosh, this was awhile back, a few months ago or during the winter time. Being that John and I work together, although we’re separate companies we work together on deals, I was down in Florida. A lead came in, called John, said, “Hey John, here’s a lead, can you check it out?” He checked it out. He asked me what I thought. I’d paid for it, I told him. Next thing you know he told me I bought the house, so that’s how that went down. John did all the paperwork while I was gone in Florida and wrapped the deal up, so that’s how we work together.
For us it’s great. For most people probably not a good idea. If you have somebody that you want to partner up with probably a pretty tough go. We’re just fortunate that him and I work out extremely well. We watch our back and we make money together. Oh hey, we’re passing a, “We buy houses sign,” right there. Did you see that?
John: There it is.

Andy: There you go. You know what? Alluding to that too we got a lot of marketing that we both do. We do 4×4 signs. The coaches have been so gracious with us. Phil’s got a lot of videos online on how to really penetrate the marketplace. You know what? We just passed that sign, that’s a 4×4 sign. It cost me about $150 bucks to put together, $120 bucks. I built it myself. It takes me like an hour, an hour and a half to put it together. I got to haul it in the pickup. I got to put it out there. I got to find a place. Check with the city and county to make sure that it’s appropriate. It just so happens that in our neck of the woods up here any commercial property you can put a sign on.
We just got done talking about the white house there. I got that deal from that sign. That sign has been there for months. Actually I’ve gotten two or three deals from that sign. It cost me $150 bucks to put it there.

John: Good ROI you’re saying?

Andy: Yeah. It’s good ROI. But back to marketing, you can try things and they might not work but you just got to keep trying different things. You got to try to mix it up. Put signs in different areas. Don’t be afraid to talk to people, “Hey can I put a sign here? Is it okay? You got a commercial spot can I put it on here? Maybe give you $50 bucks a month,” or you know? Just boy I’ll tell them, “Hey for most folks they just let me do this for a few weeks.” A lot of people go, “I don’t care how long you have it there.” It just so happens that that place I get a lot of material from. Consider that guy a friend of mine that owns that place. He owns eight lumber yards. That signs going to sit there as long as I want it to be.
Other types of marketing, as long as we’re already talking about that, yellow letters are good. Door hangers are good. Obviously the signs. Even door knocking. If you’re on a property that you get, door knock. Go around the neighborhood and knock on the doors. Figure out what the neighbors are, what they like, are they looking to sell? Do they know somebody? You never know. Both John and I have gotten deals because we’ve landed a deal, and then we knock three neighbors down on each side, and we pick up another deal.

John: That or, I mean, you find a buyer for the property. They know someone that’s looking in the neighborhood. So you can really increase your lead generation just, like you said, talking to people.

Andy: Talking to people, yeah. Just get out there and give it a go. We’ve done a lot of deals. We talk about a couple deals here, 15, 20 grand. We’ve made $60,000, $70,000 on deals before. Not trying to pound the chest but it’s because we get out there. We pound the pavement. We do our marketing, we do our online campaigns. In fact, in this neck of the woods, with the online campaign we’re number one and number two. So we know that we’ve got our bases covered. We’re diligent on checking them, we’re diligent on calling our phones.
Setup, I know John uses Google Voice. I actually got an unregistered telephone number. If you call them every few days and make sure they’re working. You get online, and you go to your website, and make sure … Do a test to make sure it’s running. Some things happen. With Jeremy, with Freedom Mentor, he’s done a lot of good training on the AdWords, and so has Phil, and the other coaches. The key is just listen to what they’re telling you. Take it to heart and then do something. Make it happen.
Well we’ve talked about creative financing, subject two, transactional funding. We talked about a cash deal to a wholesale deal. Now let’s talk a little bit about this, we’re headed out to a different spot on a closing that happened yesterday on a creative finance deal. But let’s run you by this property. It closed a week ago. This is a bedroom community from where we’re from. It’s about 12 miles out of town. In the past we weren’t really looking for out of town stuff, but we gave it a shot and here we go.
Got this one on a 4×4 sign. We’re driving by it right now, this little white one to the left. We should probably start showing some nicer houses that we’ve done. But this little white one is a good example of a cash deal. Bought it cash, and then actually sold it retail, and didn’t do anything to it. Didn’t touch it. Mowed the grass a few times. I put the deck on, I guess we could see that it did have a new deck on it. I mean that was it. Popped it on the MLS, put it on for a good price, and it sold. That was a $23,000 deal.
Made the offer, they accepted the offer on this particular deal, but bought the property and did an inspection. They wanted a quick close, but did an inspection and found a couple things a little bit concerning. Just said, “Hey do you think we can be a little bit flexible here?” They said, “Sure.” So actually offered them $10,000 less, I think it was. An hour before closing. But rightfully so, there were some things we found out. Then obviously when we sell it you just talk about that or disclose some things about the property to help the buyer get to where they want to go and help them understand how much it’s going to cost to get it where it needs to go. That’s another great deal, like John was talking about on that transactional fund. This is a great deal for this individual. We made $25,000 or $23,000 and they’re going to come out in a couple years making $40,000.
You know several times it’s really good to get the property and just wholesale it out. As Brian says, what is it? “A quick nickel beats a slow dime.” But we do both, we take the slow dime and the quick nickel. But we’re just very intelligent on, as I was saying before, just making sure that we’ve got more than one set of eyes on the property. We got multiple people, especially John and myself, working together to make sure the price is right. No pun intended.

John: There you go.

Andy: Well John we had quite a day. Went and looked at a property that closed on yesterday. Looked at a couple properties that were closed last week. What are some highlights of doing the real estate business? Maybe some highlights of the coaches, the support they give?

John: My biggest thing is real estate’s kind of like a roller coaster ride. You’re going to have your ups and downs, your turns. Things are going to go one direction but the coaches have been great. It’s been great working with Andy. Biggest thing is, Phil always says, “Don’t give up.” Just keep grinding, keep going at it, day in and day out. Things are going to work out to your benefit. You’re going to learn new things, and then you just put those to use, and you just keep going, and going, and going, and things will happen. It may not seem like it today, for some people, but eventually you’ll get there. We’ve all been in that spot where, you know what? We didn’t think things were going right. They turn around, they get better. You just got to put in the time.

Andy: Hey, here’s a question for you, being that you were … I think you alluded to the fact that you were a teacher for several years. Can you imagine … No pun intended but could you imagine still being a teacher today?

John: No. I honestly couldn’t imagine being a teacher still today. I loved the career, I loved working with the students, but being in control of my success and failures, that’s what I truly wanted. I get that with this industry. I get to meet some really cool people. You know what? I get to learn every day.

Andy: Cool. Cool. Now on the financial part of that, what does that mean for you that you’re in real estate instead of doing your alternative career or the career that you had before?

John: Financially I feel like I’m setting myself up for financial success in the future. Not only for myself but hopefully my future family and just keep going at it. It’s something I enjoy doing. It does not feel like work every day. I get up and I’m excited to do what I do.

Andy: Cool. Hey, for a future student entering Freedom Mentor what are a few things, some bullet points, something that you could explain to a new student that’s coming into the program? What to expect? Or just shoot from the hip.

John: What to expect? Expect to put in some long hours. Listen to the coaches. Listen to the people that have experience. They got some powerful knowledge and just take it to heart. Listen to the recordings, get on the calls. Get out there, put what you’re learning to use. Are you going to be successful right away? No.
Again, going from teaching to this, big transition. Talking to sellers the first time I was awful at it. Today we can go into houses, we can explain what we do fairly well. Can we always improve? Yes. But we do a good job. We’ve learned what works and what doesn’t work. The only way to do that is to gain experience and to listen to other people’s experiences.

Andy: Hey, what a day. We looked at a bunch of properties, put this camera on, it was great. We got some work done. Made a trip out to one of the new properties. It’s pretty cool.
Yeah, so new students that are coming in. I guess, hey if I can do it anybody can do it. I mean look at me. Holy crap I look like Duck Dynasty. If I let my hair down it’s halfway down my back. And yes I wear my hat backwards all the time. You know I wear work shirts to just about everybody we show up to.
So for the new student I just encourage you to soak everything in that you can. Phil’s real. I’ve been with him. I’ve gone fishing with him. Had lots of conversations. Talk to him frequently and all the coaches too, so this is the real deal. It’s legit.
Personally I started in the real estate industry with Freedom Mentor. Prior to that I really didn’t have any handle or any experience on what this looks like. Now since then I’ve seen folks come into the industry, and falter, and fail because I see so much online about, “Get rich quick,” or, “Have a fancy car,” or whatever. That’s just … Well it’s just not who I am or who John is. So I guess the idea … Phil talks about, “Don’t chase the shiny object.”
For me it’s about being able to spend some time with my kids. It’s about being able to set them up for their education. It’s about having debt freedom. It’s about being able to go to a movie, take a trip, not worry about finances so much.
You know what? When I first started I was a little bit worried and I was a little bit intimidated, but without the coaches, and without Phil, and the Freedom Mentor program I don’t think we’d be standing here … I would be standing here at this position.
Anyway, had a great time today. Anything else to add John?

John: How did we meet?

Andy: John and I, kind of a unique situation, that … You may stumble on another Freedom Mentor student in your demographic. Some of you may not, depending on how large or how big the community is. But I was trying to do a contract on a property with a gal that said, “Hey, is your partner John Anderson?” I said, “Well no.” She said, “Well I think he does the same thing. He’s buying the house next door.” Immediately being kind of new into this I took the attitude of, “Well whoever this guy is I’m going to bury him.”
I think she had your card, and I called John, and basically just said, “Hey, let’s get together,” and we did. We had coffee and the rest is history. We get along great. We work together on all our deals. We’re very fortunate.

John: Just a couple farm boys.

Andy: Just a couple farm kids man. Tilling the ground to producing crops of properties, I guess. You know?

John: Yep. There you …