Episode Transcript
[00:00:00] Speaker A: Hey guys. Welcome back to Head in the Clouds. I'm Heather, you're a real estate talk show podcast host. And today we have Tony Holden with us.
[00:00:08] Speaker B: Hi everybody.
[00:00:08] Speaker A: Tony is a top producing agent in Krylike in Cumming, Georgia and he was a top producer for a big brand company before that. Today, Tony primarily works with real estate investors as opposed to home buyers and sellers on the residential side. Tony, do you want to tell us a little bit about you and how you got started in real estate?
[00:00:29] Speaker B: Sure.
Back in 2019, before all the craziness of COVID and everything, I got divorced and I got custody of my three kids and I was working a retail job at the time. And I just had to figure out a way to take my sales ability and turn it into something that I could support my kids with and still be flexible enough to be around for them.
Real estate seemed like the obvious solution to that.
[00:00:56] Speaker A: What was it like trying to get, get your license? Was that an easy process?
[00:00:59] Speaker B: I didn't have any issues getting my license yet. That was pretty quick. I went online, I took a course, I went, took the tests and got licensed within I think it was about three months start to finish.
[00:01:11] Speaker A: You're one of the first time test passers.
[00:01:12] Speaker B: I was indeed. And I was doing it all in secret so that my ex wife didn't find out about it. So it was, I was doing it late at night and early in the morning trying to get the test knocked out.
[00:01:22] Speaker A: For those of you who are listening who don't know about like real estate and the real estate exam, it is a very hard test. Most agents do not pass it on the first try. It's actually a several part test. You have to take one part and then you have to take a second part. You have to take your school part and then you have to take the state exam. And it's extremely, extremely difficult test, but smarty pants here passed it on the first try. So we're together. If you can't tell the nagging during the interview is because we're together, I'm not just a, just a Tony.
So switching kind of gears from that and going back to real estate, what made you switch from doing, you know, just the residential side of homebuyers and sellers to now primarily working with investors.
[00:02:02] Speaker B: Well, it was during the, the shift that happened in 2022 when we went from that crazy market of really that 2020 to 2022 time period where the interest rates were crazy and home buyers were everywhere.
Getting into 2022, the second half of it all of a sudden I saw that business kind of dry up and the people that I was expecting to do transactions just weren't there to do it. So I was looking for some way to make real estate a little bit more consistent for me as far as income goes. And that was what kind of drove me towards investing. So.
[00:02:42] Speaker A: So when you say more consistent because I know like real estate agents right now listening, we have the inconsistency of just because you have a buyer doesn't mean that deal's gonna close. Cause you know, things fall through all the time. Buyers change their mind. How is the consistency different with investment as opposed to just like your buyers and sellers?
[00:02:59] Speaker B: Well, generally with the investors, the ones that I work with, we look at the numbers, we analyze the deal and as long as everything makes sense, we go forward with the transaction. There's not a secondary step of another inspection after the initial walkthrough through with the contractor. And also what helps is there's two transactions for every property because there's a purchase and then there's a resell after the flip. And also there is consistency because that investor, as soon as they've made the money off that deal, they want to make money off another deal. So they're back right on the hunt to find another house. Whereas when you had a residential customer, they were buying that house for the next 8, 10, 15, 20 years. And you wouldn't get repeat business from that person, at least not right away. If you did get anything, it was really more referral based business.
[00:03:47] Speaker A: Right. This. I was just going to say the best you could hope for is if that was long term house was a referral every now and then down the road. So it gave you more security financially to go into the investor side of things.
[00:03:58] Speaker B: Yeah, that was the, that was the idea and it seems to be working out pretty well.
[00:04:01] Speaker A: Perfect. Well, I know that there are tons of videos and tutorials out there on how to, you know, how to do investing, how to like get how to and things like that. But let's kind of today I really want to zero in on what it actually looks like. Like, so like day to day, you know, Tony the investor agent, what does that kind of look for, look like for you and how it's different than when you were a buyer and sellers agent. Now just to be clear though, for our listeners, you do still work with buyers and sellers. Are you strictly only investing?
[00:04:33] Speaker B: Oh no, I still work with residential buyers and sellers as well. It's just not my focus. So if anybody's still looking to buy or sell, whether it's a referral or somebody that I meet as an online lead or something like that, I'm still more than happy to help them. It's just not where I'm directing most of my energy.
[00:04:50] Speaker A: Gotcha. Gotcha. We actually have a listing appointment tomorrow. We're going to. Right? Today. Today.
[00:04:56] Speaker B: Today, Today, in like two hours. Yeah.
[00:04:58] Speaker A: So is that your way of telling me to stop talking and hurry this can get ready for your listing appointment?
So for the agents listening who are thinking about, let me maybe switch gears and get into investing as opposed to residential. Would you say it's easier than residential?
[00:05:16] Speaker B: No, it's just very different. It's more about, instead of sifting through, trying to find a new client, you're sifting through to try to find the right deal. And I probably run through between 90 and 100 deals before I find one that's, that's viable. Because there's a lot of deals out there that people think are deals or are pitching as deals that aren't really deals.
[00:05:37] Speaker A: Would you say that your busier in the sense of like constantly communicating with people, constantly having things to do as an investing agent opposed to residential agent, or would you say it's kind of relatively the same?
[00:05:49] Speaker B: I think depending on the way that it's done, I think it's, it's relatively the same. However, I think when I was a residential agent, I wasn't doing as much as I could have been doing to be more successful as a residential agent. Even though I had a fair amount of success at it. I just, I find myself more engaged in activities on the investing side. I think it's probably because I more interested in it rather than just dealing with, you know, one time home sales.
[00:06:15] Speaker A: So day to day Tony, the investing agent, what is your, what does your day look like? How do you, if you're, if you have an investor, you wake up and they're like, I want a property. How do you find properties? How do you find the right properties for your investors?
[00:06:27] Speaker B: Well, I have a bunch of different avenues to get leads from, but most of them deal with, dealing with wholesalers. So wholesalers are out there calling people all the time, trying to get deals, trying to get deals, trying to get deals. They find whatever they think is a deal, they get something locked up and then they pitch it back to me, who in turn, I look through the numbers on that deal, look at what the purchase price is, what the average retail is in that area, see whether or not it's potentially going to make sense. And then we go out there with the contractor to verify whether or not the repairs are going to make sense.
[00:07:01] Speaker A: And then what would the turnaround time on that be like? Let's say, kind of like, walk me through it. You put in an offer, the offer gets accepted, and then you have to do renovations. And then the whole goal for you is then to list that house for sale, correct?
[00:07:13] Speaker B: Yes. And so it depends on the, the, the method of purchase, first off, because if it's cash purchase, you can close in a week, two weeks, whatever. If it's a financed purchase, then it's going to be a little bit longer than that, usually three to four weeks. So that's going to vary that time a little bit. Then it depends on the amount of repairs that the property needs. If it's a, if it's a light rehab, which would consist of like carpet and paint, probably 20 to $30,000 worth of rehab, you could get done usually in about a month or so.
If it's a more extensive rehab, something like 50 to 70,000, then, you know, redoing bathrooms, kitchens, that kind of thing. It could take three months to do the rehab portion of it and then put it back on the market. All in all, a full turnaround time from purchase through rehab, through resale usually is going to average between four and six months.
[00:08:10] Speaker A: Now, it seems like it would be, and I know I'm not correct on this, but it seems like, you know, you open your email as an agent and you have tons of emails from wholesalers or wholesale companies that have websites with all these addresses, lists of like hundreds of houses. So it's like if you have all these houses that are wholesale houses available, it seems like it would be pretty easy to just pick one for your investors. But I know that's, that's not correct and that's not the case. So you want to walk us through why it's kind of a challenge to find the right house when there's so many available to you?
[00:08:40] Speaker B: Oh, for sure. So I would say 99% of the stuff that drops into my email, they have the wrong after renovation value price. So I have to go through and check what the actual after renovation price is going to be. Check what's sold in the, the neighborhood recently. Check the comps. Check the comps to make sure that they are actually comps. You know, if somebody's offering you a rehab and they say, oh yeah, the house down the street sold for, you know, $500,000, what they don't tell you is it's got two extra bedrooms and a finished basement. And that's not what the property you're looking at has. You know, the property you're looking at is on a slab and it's, you know, two less bedrooms than what they were selling. So it's not going to be apples to apples. Also, wholesalers generally underestimate renovation costs, and they say, oh, yeah, for, you know, $30,000, you can rehab this whole house. And really I get in there with a contractor, and the contractor's like, oh, well, actually there's this damage and this problem and water damage on the. The ceiling. So we got to patch the roof and do this and that. So you're really looking more like, you know, 60,000 to $70,000 worth of rehab rather than, you know, 20 to 30.
[00:09:48] Speaker A: So when you're getting those emails and you see those numbers, it's fair to say just take those numbers with a grain of salt and do your own research.
[00:09:55] Speaker B: Absolutely, absolutely. And that's the key, is to know your numbers and as an investing agent, to know the numbers better than anybody else, especially for the areas that you're working in, to make sure that you're advising your clients properly. Because the second that you give the wrong information to your client and they lose money on a property rather than make money on the property, they're going to go on and find another agent because they don't trust you anymore.
[00:10:19] Speaker A: So that relationship that, that rapport that you're building, that trust, speaking of that, you have investors now that don't even view the property. They just go off of what you say when you go to see the property.
[00:10:29] Speaker B: Absolutely. Several of my investors just expect me to go to the property with the contractor, look at it, let them know what the numbers are on it, and then they make their decision based on that. So they don't even care what the property looks like. They just, you know, will. Will take my word and the contractor's word that, yes, this is a good transaction to get involved with. Go ahead and do it. As a matter of fact, one of my investors, just a month and a half ago made a $415,000 purchase site unseen in five minutes, based on the conversation that me contractor had with. With him.
[00:11:05] Speaker A: Wow, what does it take to build that kind of like, confidence and trust with. With an investor?
[00:11:11] Speaker B: Just showing them that you have their best interest at heart and showing them that you know your numbers. If you are not well versed in the area and you, you know, are being optimistic, you're going to lead yourself down a bad path. So what you want to do is always be conservative on the numbers and make sure you let them know there's a range of prices that it could resell for after the renovation goes through. And you give them scenario and best case scenario, let them make the decision as to whether or not they want to move forward with the investment.
[00:11:41] Speaker A: And I know like when we were doing residential a lot of times, well, I don't want to say a lot of times, but there were, there weren't actually many times where we had taken clients out, we'd shown them a home and it just from everything they said was not the right home. And we would actually talk them out of buying that particular home because we knew it wasn't going to be what they needed, it wasn't going to serve them the way they needed. So if you're an investor agent and you're trying to break into investing and you're just like shoving properties at, you know, your investors and like insisting that this is a good deal, even if you don't know, or for it's not, is that like the number, like probably one way to lose that relationship by just cramming properties?
[00:12:19] Speaker B: Absolutely, if you are not listening to your investor. Because there are some investors that I have that are on my list of people to send properties to that they're looking for properties in specific areas or they're looking for properties that have a certain amount of return. And even though I may think it's a good deal, for the numbers that I look at and with some of my other investors may think it's a good deal, a particular investor may not like it. As a matter of fact, this last week I showed a property to an investment, an investing couple that decided that after they saw it, they weren't really thrilled with the, the purchase price. We were originally trying to get it for 195 and that's. They were told by a wholesaler they could pick it up for that. And it turned out that they weren't going to be able to get it unless they went up to 200 and they said that the 200 price point was too high for them. And I showed that same deal to another investor and it looks like he's going to be picking up the property on Monday.
[00:13:17] Speaker A: Nice. I think it was there, I think I overheard that, that phone call. And so when you have multiple investors that you're working with, you can do that. If you find a good deal and it's not a fit for somebody, it may be a fit for the other person. So definitely working with multiple investors, if you can line up a few, is the way to go.
[00:13:33] Speaker B: No, absolutely. But also the investor that you bring the deal to, at first you've got to give them the right, the first right of refusal. If you bring somebody a deal and then they hesitate or something and you immediately go take it to somebody else and you don't give them time to really think about it and go through it, then they're going to think again. You're not really interested in helping them out and that you're just in it for you. And the, the key to, I think the key to real estate in general is to be of service and not to be looking at it just as what's in it for me? Because if you look at it as what's in it for me, it's very short sighted. And you're going to not develop those relationships with the investors or the clients that you want to develop.
[00:14:17] Speaker A: Yeah, and definitely, I definitely think building, you know, strong relationships that last with whether it's investors or whether it's with, you know, your buyer and seller. Because actually some of the investors that you have right now that we're working with are previous purchasers. They bought a home two years ago. Two years?
[00:14:34] Speaker B: Yeah, yeah. We have one couple that bought a home just two years ago and now they're ready to do some investing and they're 100% on board with using me to do the investment purchase because they had such a good experience with the residential purchase. And they also know that I've been specializing in the investment stuff for the last couple of years, pretty much since they bought their house. That was kind of like the, that was kind of like the turning point was right after they got done, I started switching more into the investing side.
[00:15:03] Speaker A: And when they've like, since then they had some concerns and some issues with their HOA and stuff like that, with some issues with their property that they've called us since then and we've kind of talked to their, you know, HOA and like kind of helped with that. And I think a lot of agents kind of have the attitude of, well, the closing table, peace out, we're done. You know, don't call me anymore unless you want to buy or sell. But if you're really there and you really care about these people, then you know they're going to know they can trust you. And that's how you would build that trust and rapport to where, you know, they're wanting to use you for the investing.
[00:15:33] Speaker B: Yeah, absolutely. If you don't do the, the extra things for people and you don't spend a little bit extra time and extra care to show them that you're really there to, for their best interest. They're, they're not going to develop that long term relationship with you that you want.
[00:15:47] Speaker A: Right. It's about. I know I, I don't know if you remember we made the, the joke because I know agents are always trying to come up with ways to like, market and do things. And there's like the magnets, there's the, you know, the refrigerator magnets and the stickers. And agents will spend hundreds of dollars on things like that. And do you remember the listing that I have right now with, with, with our buyer? She has a realtor magnet on her fridge that's not mine. So I just thought that was very funny. So relationships, relationships trump refrigerator magnets. Just build those healthy.
[00:16:16] Speaker B: Absolutely.
[00:16:18] Speaker A: Kind of get back to what we were talking about. Day in the life of Tony as an investor agent. So you've found the property, you've pitched it to your investor. They're like, you know, yeah, I want, I'm interested in this property. Whether they go with you or you go by yourself. Now you're going with contractors. Who are these contractors that you're going with to the property?
[00:16:34] Speaker B: I have a list of several contractors that I've used on other properties projects. So I know that their quotes are accurate. I know that their timelines are good. I know that their word is good. So when they say, hey, I'm going to focus on this and I'm going to get this done by this date at this price, that it's pretty much going to be that unless there's something crazy that shows up. And most of the time we build in a little bit of budget for the crazy to show up just in case it does.
[00:17:01] Speaker A: Now, I know with a home buyer, like a regular residential purchase, you would go do the showing and then if you like to put in an offer and ask for a due diligence period, typically we say about a week. But with the investment side we don't, we don't do a weak due diligence period. And you have your inspectors are your. Well, they're doing the inspection on site. Do you want to explain to us how that's a little bit different than the.
[00:17:23] Speaker B: Sure. So it all depends on the individual investor. Some of the investors still want to have a due diligence period to like double check some things or to have some specialists come in and look at some things or to get Multiple quotes or whatever their individual needs may be. But to get the best deals on the properties for investors, generally, either wholesalers or sellers are looking for somebody that's going to come in, give zero day due diligence, say this is what the offer is, be very specific about what they're going to be getting, and they know that there's nothing that's going to derail this transaction. They can just go ahead and sign the contract and go to sleep peacefully at night because they're not worried about something happening three or four days from now that's going to derail the transaction. I go to the property with the, with the, we're looking at pretty much everything. We're looking at all the systems in the house, we're looking at the roof, we're looking at the foundation, we're looking at the cosmetic upgrades that need to be done. Clearly we're not going to be as thorough as a home inspection is going to be because we're not going to be there for three or four hours on every house. We can't do it. It's just not enough time to do that. So we take educated guesses about how much repair is going to be needed. We provide a range for the client that's going to be doing it and say, look, the, the bottom end is it's going to be 40,000. The top end is it's going to be 60,000.
So somewhere in that price range is what we're going to do. And the, the purchase price is this and your after renovation value is this. Does this deal make sense to you and do you want to move forward?
[00:18:55] Speaker A: So how much, how much should an investor, if they're a first time investor, expect to spend on like their first time investing on a property? What would be like, you know, just the starting point for an investor?
[00:19:07] Speaker B: Are you talking about all in or are you talking about on the rehab or what do you, what do you mean?
[00:19:12] Speaker A: So let's talk like I call you up and I'm like, hey Tony, I'm interested in, you know, starting to invest. I want to buy like a townhouse or something.
What would you say, budget wise? I mean, I guess give us two, like all in and then maybe kind of like break it down for us. What that means, what exactly? All in is?
[00:19:28] Speaker B: Okay, there's, there's a couple of different ways to go about it. So if we're talking about a flip for investing, then we're talking about, we want a purchase price somewhere between 100 and 150,000.
Rehab, budget, is probably going to be somewhere in the range of a minimum of 30, maximum of 70 somewhere in there. And sometimes you can finance that with the contractor and either pay half up front or half at closing or work something where they go work a pay at close with you or something like that. So there's, there's different ways to get around that, but the minimum to kind of get in, I would say would be somewhere around the $50,000 mark. So you'd want to have $50,000 saved up in order to make a move that direction. Because the purchase itself, you need to generally put down at least 20%. So if you're putting down 20% on, say, call it 125,000, you're talking $25,000, right? So you got $25,000 right there, plus the rehab cost. Call that 25, 30K. You're looking at, you know, getting right around 50, and that's not including closing costs for the loan or any other small fees that may be in there. So around 50 to 60,000 is where you're, you're going to start being able to do flips. If you want to do a rental property, you can get into rental properties for roughly around, you know, 150 to 200,000. The tenant in place, get something like that, you're talking 30 to $50,000 for your down payment plus your closing costs. So somewhere in that 30, $50,000 price range is where you can kind of really start looking at doing real estate investing.
[00:21:11] Speaker A: Now, speaking of loans, how is investing getting a loan different than residential? What kind of loans are we looking at when it comes to investors?
[00:21:19] Speaker B: Well, a lot of my retail clients when I was working retail homes was they were looking for really low down payments. They're talking three and a half percent down, sometimes zero down, down payment assistance programs, all that kind of stuff. You don't really get that for investing investing, you're typically going to be looking at a minimum of 20% down, sometimes 25, sometimes 30, depending on what you're, you're trying to do. A lot of my investors are actually cash. So they just purchase the home in cash and then they don't have to worry about dealing with a loan. But, you know, it all depends on where you are in your real estate journey and what you can afford to do and what you can't afford to do.
[00:22:01] Speaker A: When it comes to like purchasing power. When you're working with investors, does, like cash over the loan make a difference when it comes to buying property, or is it property specific?
[00:22:11] Speaker B: Cash is usually more Advantageous for several reasons. One, you don't have to worry about getting denied for a loan or anything like that. So the seller is more comfortable knowing that you've got the cash to be able to just purchase the home. And you don't have to get approval from anybody to make the purchase. There's no appraisal necessary, it's just you, you're going to hand them a lot of cash and they're going to give you the keys of the property and everybody walks away smiling. The second advantage is if you're getting a loan, there's carrying costs for the loan that you have to build into the flip. So you have to worry about how much is the origination fee for the loan, how much is the monthly carrying costs of having it, and how long do you plan on having this property before you're going to be able to get out of it. And worst case scenario, if it doesn't go to plan, what's going to be the negative impact on the deal financially? If it takes an extra three, four, six months to sell, is it still going to be a profitable profit with.
[00:23:08] Speaker A: You know, all that we've talked about? Do you have any crazy stories of any deals that have gone sideways?
[00:23:14] Speaker B: Actually, yes. I had a deal where I had an investor that was a first time investor. She started looking at a property that was tenant in place, property that had equity in it. So there was, there's a lot of good things about it, but she, she wasn't doing what she needed to do to get her loan situated and she eventually decided that she just wasn't ready to make that purchase. So that was fine. Brought in a backup investor that I've worked with several times. He was interested. We said, yeah, let's go forward with this. Everything looked good. And then as we dug into the deal a little further, we started finding out that the seller was misrepresenting the property. She had told us the end date to the lease that was in place was a different date than was actually on the lease. So when we got it, we finally got our hands on a copy of the lease. The ending date of when that tenant was going to move out was different than what we were told. We were also misrepresented as far as there was no security deposit on the property. So the tenant that was in there had no financial interest in making sure the property stayed in good condition. And on top of that, the tenant was in arrears for the lease as it currently stood $3,500. And none of that was disclosed. At the beginning of the transaction, we ended up canceling the transaction the day before closing. Because of that and because of that misrepresentation, we were able to get my buyer's earnest money back and move forward without any negative repercussions on him. But it was, it was not a good situation.
[00:24:44] Speaker A: I can imagine. And I can imagine that if like that was an investor's first experience doing an investment project like that, that would probably leave a bad taste in their mouth. As far as like investing goes. Was it his first time or was it somebody who was more seasoned?
[00:24:59] Speaker B: No, that, that was an investor that I've done several transactions with. So it wasn't a big deal. It was the initial investor. It was her first time and she decided she just wasn't moving forward for other reasons. Had it been her and we found that out, then, yeah, that probably would have left it really bad, bad taste in her mouth for investing at all.
[00:25:18] Speaker A: I can imagine. But that's why those relationships that we were talking about earlier, building that rapport, building the trust, building the relationships is so important so that, you know, because situations are going to arise in real estate, no two transactions are ever the same. Things are going to happen and you just got to be there for, you know, for your client, whether they're investor or whether they're residential, just to, you know, help them, guide them through, you know, the best possible, the best way you can. But you can't always see things that aren't, you know, foreseeable. Like that in this situation where all that came to light. That was crazy.
[00:25:46] Speaker B: Absolutely.
[00:25:47] Speaker A: What advice would you give, this is a two part question. What advice would you give to agents first who want to start to be working with investors? And what advice would you give to people who want to start investing first?
[00:26:01] Speaker B: Advice for agents is just get to know what's available in your area. So get connected with wholesalers, get connected with every group that is talking about investment real estate that you can, whether it's on Facebook, whether you are just going on and getting connected with different people that are doing that and looking for buyers. Just get connected with people and have, start having conversations and find out what kind of deals are available so that you can take that information and you can give that to the, the investors so that they can make their determination. And as far as the advice for investors is, if you're looking to get involved in, well, first bit of advice for investors, if you're looking to get involved with investing in real estate, call me. But other than that, also if you're looking to get involved in real estate, find yourself some good partners, find yourself a good contractor, find yourself a good realtor. Find yourself people that can connect you with deals, all of that stuff, and make sure that they know what they're talking about and vet the information that's coming from the contractor and from the realtor so that you're not going to get taken advantage of. Because it is very easy for a realtor to say, oh, yeah, this is a great deal. And then you get involved with it and you're 20 grand underwater. And they say, sorry, I really can't do anything about it. You know, the market is what the market is, and it's not the market, it's the fact that they didn't give you the good information to start.
[00:27:26] Speaker A: And speaking of that, that good information, what would be the. When you're going through a house that, you know, your investor just bought, you have your contractors, and you're going to do their renovations, and this could be for people who, you know, maybe they inherited a house or they have a house, or they're just trying to do a flip on their own. What are some repairs and renovations that absolutely need to be done for resale value, and what are some that don't necessarily need to be done, but because people always think, oh, this has to be done, and you're like, you're just out pricing the house at that point. So what would be things that need to be done and what would be things that don't need to be done?
[00:27:56] Speaker B: So generally updating the house, making sure that the house is neutral colors, updating the floors, updating the walls. That kind of stuff is very useful. Bathrooms are a big one. People are always looking at bathrooms. People are always looking at kitchens. So master bathroom, the kitchen, those have to look good. If those don't look good, the house isn't going to sell. So you've got to make sure that part of that budget is making sure those rooms look good. Something that a lot of people want to do is that they think is going to add a bunch of value is finishing a basement. Sometimes it does, sometimes it doesn't. It depends on what you can do with that space.
So it's really something that you need to talk to the contractor and the realtor about to make sure that if you do finish that off, it's going to come back to you in the return on investment. Because if you're not really careful, you can sink a lot of money into finishing things that you don't need to finish that you don't need to do. There's sometimes repairs on the outside of the home. Like there could be some little siding things that may not look perfect, but they're, they're passable and they'll do well enough so you don't have to spend the money on doing those repairs. And I would generally tell people, if it doesn't have to be repaired, don't repair it. It's something that's an obvious flaw and something that's going to drive people away from the house. Then go ahead and do the repair. You can always come back and do more repairs during due diligence of the buyer. So when the buyer comes in and they get their inspection report, and their inspection report says, we want to fix this, this, this, this, this, it gives you a negotiation point to start from. If you try to fix everything in the house, they're still going to find things that are wrong. So there's never going to be an absolutely perfect house that you're going to be able to walk into, and an inspector is not going to find something wrong with. So no matter how good the rehab is, there's always going to be something that they can find to ask for. So leave a couple of things not quite perfect. As long as the house is good and everything looks good, and let them ask you for it. And if they don't ask you for it, then you just save the money on it.
[00:29:57] Speaker A: Is there anything that you can think of in, like, your, you know, your past history of showing investors homes that you've seen where somebody has, like, tried to fix something and you can tell they. They were like, trying to cover up something bad by doing that quote unquote repair. And if that's kind of like a red flag that maybe buyers should be on the lookout for.
[00:30:16] Speaker B: Absolutely. I mean, the, the quality of the repair inside is something that should always be looked at. I've gone into houses where the painters just painted completely straight up and down the wall and covered the, the power outlets and the wall switches and all of that stuff. Stuff. And everything is just one color that's indicative of a repair that's not been done well and the details have not been looked at. Right. So if you see something like that, or if you see something near any kind of plumbing where there's, you know, some damage to woodwork or something like that that looks like it's been patched up, you need to find out whether or not the repair has actually been made to that issue or if the issue is still existing. Generally, what I do Is if I look at a property and I see something that looks like it, there was damage there, I assume the damage is still there until we get in there and we do the repairs.
[00:31:14] Speaker A: Have you experienced like going into a home like that that looks beautiful, it looks immaculate and then it's not. Has that ever been a thing for you?
[00:31:22] Speaker B: I mean, on the residential side of things? Yeah.
On the investor side of things, I generally don't walk into houses that look immaculate. They look, they look like they need some assistance, which is why we're there. But yeah, I've definitely gone into houses that looked really pretty from the outside. And then you get inside and you find out that there's something like polybuty and plumbing or Chinese drywall or something like that. The, the average person may not know about that. The, you know, the expert, the realtor, the construct, the contractor can, can give them some information on that'll really affect how much they, they want to get the house. Because I mean, those repairs can be for polybutyl and plumbing you're going to be talking anywhere between 5 and $20,000. And for Chinese drywall you can be talking anywhere between 30 and thousand dollars to repair those kind of things. And if somebody isn't given that information and they don't know, you don't know what you don't know and then you end up in a money pit.
[00:32:22] Speaker A: You can get catfished by pictures online of houses and get there and it is not what it looks like from those pictures.
[00:32:30] Speaker B: Absolutely.
[00:32:32] Speaker A: When you're working in this market with investors, what type of properties are you dealing with?
[00:32:37] Speaker B: Whatever the numbers make sense on. So whether it's a townhouse, a duplex, a single family home, it doesn't make a difference to me or the investor as long as the numbers work. Basically it's your cost of acquisition, cost of rehab versus your cost of resale or your cost that you're going to lease out the property for. And as long as everything is lined up numbers wise, then we're ready to make a move.
[00:33:00] Speaker A: So with the investing side it's more about the numbers, whereas with residential it's more about, you know, the emotional tie to the houses that they're looking at. And with, you know, the investing, it's pretty much strictly financial.
[00:33:11] Speaker B: Yeah, the, the investors don't care how big the kitchen is or if it has a yard or doesn't have a yard. It's all about how much can I get for this property on the market or how much can I rent it out for to somebody Else I don't really care about the details of the feel of the house or anything like that. It's all about what can I get for it? And what's the. What is the return on investment?
[00:33:34] Speaker A: So what would be a misconception that you would like to. Like to clear up for everybody? What is something people think about investing that's not actually true?
[00:33:42] Speaker B: Well, they think it's easy. That's the big one is people think it's super easy and that all you have to do is go in and find a cheap property and put money into it and you'll automatically make money on the other end. And that's just not the case. And if you're not careful and you don't know your numbers, you'll end up on the wrong side of the transaction.
[00:34:02] Speaker A: So I know you mentioned know your numbers quite a few times. Can you break down for us how to know your numbers and what they need to be looking out for?
[00:34:11] Speaker B: I can go through some of that, but as far as, like, if you want a real detailed breakdown, you need a realtor to kind of go through that with you. But generally what you want to be looking at is how much of the homes nearby sold for? Do they have a comparable amount of bedrooms and bathrooms? Are they a comparable square footage size? What are the houses in the area selling for per square foot? How many square feet do I have? And you know, what is the quality of the home that's sold nearby versus the quality of that individual property that you're looking at? What is the building material? If one's brick versus one being siding, it's going to make a difference. Is it a single story, two story, three story? What are the different things that have gone on? Be very careful of using comps that are from neighboring neighborhoods, because you can go from one neighborhood and cross the street and you've got a completely different style of house. Even though they might be the same square footage, it might be a difference in 50 to $100,000 for, for the same size and same, same bedroom and bathroom property.
[00:35:14] Speaker A: Wow. And you're doing all of that. So all, all of those like calculations and estimates, those all need to be done before you go to look at the house. Right. So that's what determines whether or not it's even warranted to see it.
[00:35:26] Speaker B: Yeah, it doesn't, it doesn't make any sense to go look at a property if you haven't looked at the numbers before you go look at it. Because if you go look at the property before you look at the numbers, you're just wasting your time because the property can look great and only need 20 or 30 thousand dollars worth of rehab. And the price could look good just off of a quick look. But if you don't go and dig through the numbers, you might look at it after the fact and go, hey, if we do this, by the time we're all said and done, we only make $5,000. And there's really not a point in doing a flip for, you know, that kind of a profit.
[00:35:57] Speaker A: So your, I guess our key takeaways for from today and our talk today would be to obviously do your research, know your numbers, double check. When you get the list from the wholesalers that have all the little numbers on there, you want to make sure you're double checking those numbers and not just going off those numbers and then passing that to your investor.
[00:36:14] Speaker B: Absolutely. If you're a realtor, you've got to do your own numbers on that stuff. And you cannot trust the numbers that are coming in from the wholesalers because 99% of the time those numbers are not accurate.
[00:36:25] Speaker A: And then have good, you know, relations. Just, you know, build that trust and rapport with your investors. Have good connection. If somebody doesn't have like, like right now, for me example, I didn't have any connections to any type of, you know, contractors until I met you. So if you're an agent, you have no connection to contractors. What do you say to them? What advice do you have as far as how would they build those connections with contractors?
[00:36:47] Speaker B: There's a couple of ways to do it. One of the ways that I built some was to go to networking groups. And if you go to these networking groups, you'll find, you know, roofers and contractors and all that kind of stuff. And you can talk to those guys and you can get a feel for how they do business from talking to them. And then, you know, go and see their work and make sure that it's, you know, of good quality. And then, you know, once you, you start doing that, you can get a little bit more due diligence and give them little projects to do and see if they stay on budget and on time. And once you realize that they are good, then you can move them on to bigger projects like flips.
[00:37:22] Speaker A: Well, Tony, I want to thank you so much for taking the time today to talk with me on Head in the Cloud. Speak to all of our listeners here and on live and just share with them about investing and, you know, the day to day life of an investment agent. If somebody is interested in investing, needing an agent here in Georgia. What is the best way for them to contact you?
[00:37:42] Speaker B: They can give me a call, 708-00-8216. They can go to my website at holdenhomesre.com that's H O L-E N H O M E S R E.com. they can reach out to me on Facebook. They can reach out to me on Instagram. I'm Tony Holden, realtor on Instagram. I'm just Tony Holden on Facebook. Feel free to reach out and speak to me and you know, DM me or whatever and I'll definitely help them out as much best as I can.
[00:38:12] Speaker A: And I'm also going to go ahead and link all his information to the video so that if you guys need them, you guys can get them with a simple click. That is going to be it for us today on Head in the Clouds. Thank you guys for watching. I'm Heather. Don't forget to like subscribe and share and we will see you guys next time. Bye.
