Hard Money Lending Explained | Real Estate Investing for Gen X Entrepreneurs

Hey everybody, welcome to another episode of Sugar Spice and Spirits podcast where we have a great guest. But let's go in. What about having somebody who's loaned billions, millions, trillions, could trillions of dollars to investors? He's big bucks a lot. We call him Daddy Warbucks. >> Oh yeah. >> Lent lots of money to investors to either help make them or break them. We have the big dog in the house today of hard money lending. Eddie Gant is here. So, >> oh lord. >> Oh lord. No, no pressure. No pressure. He's an investor, a lender, and just an all-around great guy. Been in the industry for a long time. He also mentors and helps other hard money lenders. He's just >> a wealth of knowledge and information. So, I'm super excited to have my friend Eddie Gant from Jet Lending here. >> Well, thank you. I sum all that up and just say he's old. >> He's old. [laughter] Old old as dirt. >> He just sum that up real quick. >> He was here when the Tombball Cemetery that they just dug up happened. So, I was I was here when they bought the land [laughter] >> when they Hey, so was my my great. >> So no wonder you're so knowledgeable about about buying and selling. Let's keep your skin care secret, please. >> Right. >> Yeah. You know, that's right. I'm not Ultra. >> There you go. Speaking of >> We always start a sip with a sip of the day. So we are gracious um host here at Texas Hideout. We're so thankful to have us. Uh what are you drinking today, Eddie? >> Uh cold and free. >> Cold and free. [laughter] That would be a Michelob. the cold nickelobe ultra. Thank you. >> I'm drinking H no high noon. It's a black cherry and it's gluten-free for me. So So and I'm doing a Heineken zero. I'm on um some medication. So I don't want to alter the medication. So I'm doing a 0.0. It's pretty darn good. >> And I'm doing a dose dressed. >> So cheers everybody. Cheers everyone. >> Thank you. Thank you ladies. >> I know, right? [laughter] So ah >> Oh yeah. I guess I I guess I should face it, right? It is kind of it's kind of sultry in here. They opened up for us, so we're so grateful. >> Yes, they were. >> Yes. Thank you, Texas Hideout. Gracious to open up few hours early. >> So, Eddie, tell us a little bit about yourself. >> Well, where you want me to start? Any particular decade? [laughter] >> Give us the clip. >> Well, I grew up as a kid in Mississippi and I moved to the >> Every time you say Mississippi, I sing M I S. >> Yeah. Hump back. cricket letter. Um, >> I moved to the Dallas, Texas at the old age of 20. >> As most people would say, I I still had red dirt, red mud flying off my tires when I rode into Dallas. >> Yeah. >> So, um, I was up in Dallas for about I don't know, maybe 15 years. My corporate job moved me down to Houston. Back in those days, I was doing civil engineering work, mainly power plants, refineries, a lot of that industrial type stuff. And I walked into my job in June of 99 and I quit. I quit. And the next day, I was in the flipping houses business the next day. >> So, you quit with the plan. You didn't quit. >> Well, sort of. >> Anger and energy. >> Sort of. Sort of. I was just I I was entrepreneurial. I wanted to be an entrepreneur, but I did not want to do it in my fields. I was tired of going into chemical plants at 6:00 in the morning, >> you know, doing doing that. So, I uh got into flipping houses the idea. You don't I mean, maybe you did. I'm just getting to know you, Eddie. >> Yeah. >> And I'm finding that maybe you did, but >> how did you go? >> Well, I I like people think I do everything, you know, spur of the moment, you know, by the seat of my pants, but there's usually a little bit of planning behind it. Uh, I knew I wanted to be in real estate because I'm good at things I can touch and feel. I would not be a good electrician. I can't see electricity flowing through that. >> Oh, you can feel it that wire. You can feel it and go too late. >> Yeah. [laughter] So, you know, I I thought if being in real estate some form of fashion fit what I was doing and then I read a book called Buy It, Fix It, Resell It for Profit. And I said, "That's what I'm going to do." And that was about right at 1,900 houses ago. So I'm I'm right at 1,900. I don't know if I'll make 2,000 or not. I I don't know. That's a I don't know. I' I'd rather lend money and let somebody else fix the toilets than I would buy and flip a house the day. But I still do flip houses. I buy in three markets. I buy in Houston. I buy in Austin. I buy in Bulmont. So I mean, I used to do over a hundred a year a lot of years in a row. Now, I'm in that 20 range, which is still a lot of houses for some people, but for us, it's part-time job. To do 20, I say that sounds like arrogance and and a smartass, but it's really not. I mean, to do 20 houses in a year is from where we've been is is a part-time job. So, we got off into lending money in ' 04, and now we're pretty widely known in Texas, Jet Lending, >> and um you know, we you know, we have a great reputation. And the thing I'm probably most proud of is you can get on social media, you stay all day and I don't think you'll find a negative word about our company. They just don't exist. They just not because we've never made anybody mad is because we take care of business. Cheers to that. >> Make it right. Absolutely. >> We take care of business and I have a great staff, you know, that takes care of business. So, and I I would guess by by starting out doing the flipping and everything, you've you've had to at that point, I guess you dealt with lenders. >> So, all that process of dealing with lenders. Did that is that what kind of encouraged you to go into the the lending side of things? >> Sort of. I'll say it differently. I was watching the other hard money lenders from 1999, 2000, 2001, which all by the way are pretty much gone now. Those those people are not around anymore. Either retired, went out of business, you know, whatever. >> Do you mind if we take a step back real quick cuz somebody might be watching because we do a lot of different topics on podcast. >> Somebody might not know what a hard money lender is. Do you mind explaining that? >> Well, no. I don't mind at all. And honestly, I I hate the term. Uh we prefer the term assetbased lender, but it is an industry term. We kind of have to accept it, but it we are called hard money lenders not because it's hard to get. It's because the loan amount is determined off the hard value of the asset, the hard value. And it's an industry term been around out there for years. But when you think of hard money lenders, you normally are going down one path and that is we provide financing and funding for real estate investors only. So if you're buying a house to flip or to rent, I'm your guy. But if you're buying a house to go live in and sleep at night, we most all hard money lenders, we don't touch that. We're not we're not doing consumer loans. We're not doing loans for owner occupied properties. strictly investment or as we call it, you know, the technical term, business purpose. >> It's a business purpose loan. >> Okay. >> Okay. And and we're not we're not trying to compete with a bank. We're not bank rates. We're higher. >> So So our our rates when you compare to a bank are a lot higher. So you ask yourself, well, why would somebody come to a hard money lender? Well, besides my good looks and personality, there's another reason. All right? And that is speed. Speed of the game. If you're getting an investment property bought for, we'll say I'm gonna give a range 40 to 75% of value. Well, that's you're probably in that range somewhere. Most I'm going to be in that probably the upper side of the 65 70% of value. But if you're getting that deal signed by the seller, by the owner, you probably had to promise something. >> And what you normally promise, I can get you your money. And I'll talk just like I'm on the street. He'll get you your money in 10 days, 12 days, 14 days, 15 days, and you can't go to the bank and you can't go Fanny May and you can't go any of these other big lending ways and get that get that funding in 10 to 15 days. It don't happen. You come to a hard money lender and you pay for that convenience and that speed and the people line up at the door to get it because of the speeds. And that's that's far number one. Number two is reliability to be there on closing day. Okay? The dependability to be there cuz you know we we're we're going to be there for you on closing day and pretty much guarantee that we'll be there on closing day for you. So between speed and dependability that's why people come to a lender like us to get the funding. >> Do you see that? Because when you say that and not naming any names by any means, but have you seen it where somebody is >> working with a hard money lender or an individual that says, "Hey, I'll I'll do this loan for you." And it comes closing day and all of a sudden they're not there >> all the time. >> Happened to me >> all the time. Really? >> All the time. We I'm again not naming names and I would never do that anyway. Never do that. I don't I don't put that I don't put that badach out to her as Don Henley would say. I don't put that dirty laundry out there, you know. >> Yes. And >> cuz you have to represent your clients in the best of ways, too. >> Yeah. >> We made a living off one particular lender in this in the great city. Almost said great state of Houston. In the great city of Houston. Yeah. Uh I've made a living off one particular lender. They rolled in the door and said I was supposed to close my loan over at such and such >> and they're not ready. Can't do it. Can't get it done. >> That's you know, title's open. promised everything and and we'll we'll we'll we've closed many a deal in one to three or 4 days, but title's already done. They're able to get the appraisal assigned over to us. We get the appraisal reviewed. I'm okay with it and and fund the deal pretty quick and and you know, but but in that situation, everything's ready to go. >> They're not walking in off the street with no title work, no appraisal. >> Well, when you're do when you're looking at flipping or or investing, time is of the essence. I mean you you don't want to sit there for two three months while people dragging their feet and everything and you're like >> won't be there. It's important saying time is of the essence because you are trying to get that ball rolling >> for whatever your you know your plan for that property is. >> Well here's what happens. The typical investor is going to write that contract up at a 15 to 20 day close. Maybe a little longer. 15 to 20 day close. No no contingencies. Okay. No option period. They may have an option, but the option's gone and you know before the close date. So the point being once the close date gets there, you have you have the the buyer has no legal reason to abandon the contract. So they're actually in default of contract if they don't close. If they're in default of contract, the seller has two options. Kill the contract and go to somebody else, >> you know, or pursue it legally if they wanted to. Most don't, but they could, >> you know. So, you know, you you know, you're you got a timeline. You got a timeline. And I've said this forever in the conventional world, the conventional loan world, whether it's FHA, Fanny May, VA, USDA, don't matter. The underwriter for that lender does not care about your close date. >> Oh, they don't care. They You're You're in line and when they get to you, they get to you. In the in the in the investor world, when we receive a contract and we we train and we just drill this in our loan officer and processor's heads, first thing you do, look at the close date. Is it achievable? Okay. If it's achievable, get to work. If it's not achievable, we must let that client know. Say, "Hey, you just turned in a contract on June, what's the date? The 7th." >> Mhm. >> You know, July on July, not June, July 7th, >> 2026. And to say the close date is July the 9th, I don't have title work. I don't have an appraisal. That's unachievable, >> right? >> So, and the reason that might happen is they've been at another lender for a month or something, you know, or or some reason, you know, but anyway, it happens and and we I mean, we look at that close date. We take it very serious. If if it's reasonable, >> then it's our job to meet that close date. what I where I was just moved and I literally physically moved my body because I was thinking about this. I think about so the three of us worked together where we were at a firm where we would help investors understand how real estate could be either a passive or a very active investment with them. >> And you think of single family, you typically think of hard money loans. Smaller apartment uh communities, you know, maybe you would go hard money. But there are so many individuals that have been burned on real estate and sometimes it starts with that foundation either not having Natalie represent them. [laughter] But in all seriousness like the financing Yeah. understanding the loan getting swoons by somebody coming in said, "Oh, I can do that. I can make that happen. I can do this." And then when you can't close, you talk about being gunshy or working with the wrong people, not having the education. You just said earlier you've you've clo you you've invested in over 1,900 houses and there's got to be a big difference between somebody who just tries to do one and somebody who's reached 100 and a lot of people don't reach 100 and I I would imagine some of it starts with that we talk about how to have a business you have to have a strong foundation how to have a good house you need to have a strong foundation we don't always not buy a house because of foundation we can fix that >> but I would think lining up the financing if you don't have the money to buy it. Having a company like yours or somebody else's that does hard money, but it's having the education. >> It's uh you know what I was sitting here thinking what I was going to say when you finish. I wasn't going to interrupt you, but it's education and having a support system. And what I mean by the support system is vendors. There's 40 vendors you need, but there's about five that are super important. your your realtor if you're not already a a licensed agent, your lender, your title company, your insurance company, and your accountant, and maybe your attorney. Okay? I mean, there's, you know, yeah, you need a roofer, but before you get to needing a roofer, you got to have a lender, an agent, a title company, an insurance company. That's what I call the high impact, you know. >> Yeah. You know, and if you get in the industry, you need to use the vendors that are in the industry. Like I have been to title companies that's never closed an investor deal before. It's chaotic or it can be chaotic. Okay? You go to an insurance company that doesn't insure rental houses or flip houses, it can be a little bit, you know, you got to educate them. So you you get in the industry and you get in the industry by attending functions and coming to visit the other vendors and you learn who the vendors are pretty quickly that are in our space and there's there's a lot of them but compared to the overall size of the insurance industry the amount of insurance companies that cater to our industry is rather small >> but you got to know who those are. >> You do. >> Yeah. I do want to say one thing about hard money, Mindy. Like the whole reason you would use hard money for flipping and everything besides the time to close, it is a short-term loan, especially if you're flipping or the home won't qualify for an FHA or a conventional. It won't qualify for that loan that you need. It's got a hole in the roof, doesn't have a stove, doesn't have flooring. These are all things that will stop a deal from happening from closing. So, that's where a hard money may come into play, too. You can't use a conventional because there's DSCR loans, there's all these other different type of loan products. And hard money is another tool in your toolkit that experienced investors use and have. And so it's leverage, too. Like you don't want to always put your capital because you really don't know where you're going to need your capital. And that's where the hard money lender comes in and can provide that short-term source of capital. And also when you when you use like jet lending for the lender, you're getting their experience because Lord knows they don't want to take the home from you and they don't want to have you fail. So they'll give you feedback. He knows all the neighborhoods. He knows where flooded. Like it may not be on the flood map, but that house sure does flood. And I'll tell you why. Because he knows the areas around and has bought so many homes. It's you're you're also almost getting a coach in that process with >> You really are. You know, I call it second eyes. Yeah. >> Or a security blanket. >> And if your lender won't do the loan, there's a reason. Like truly understand that reason. >> We don't make one penny for saying no. >> Yeah. >> But I say this all the time. If you're unsure about your investment deal, take it to a hard money lender. You're going to get educated really quick. Yeah. >> Cuz a hard money lender is going to tell you probably one of three things. Hey, you got a great deal here, Mindy. Go. Or they're going to tell you, well, we don't like that deal. If a hard money lender tells you they don't like the deal, that's pretty good indicator to get your butt away from it. [laughter] Okay? Or the third thing, they'll say, you know, you're pretty close. You know, you're a little high. You you either got to accept this deal that it's a little thin or you need to go back and renegotiate and get yourself a better price. That's usually what the hard money lenders, one of those three things is going to tell you. Okay? And I I say it all the time. If you don't know if your deal is a deal, take it to a hard money lender. You're going to find out really quick. And yeah, you can bring it to Jet Lending and we want you to our industry is pretty knowledgeable, you know, you know, if you go to somebody else. The other thing I'll say is we don't know everything, but we have probably experienced about 98% of everything you're going to run into. We've already been there. I've got this the the the the skin up elbows from getting hurt on what you're about ready to experience. So, we already been down that path for you. We can tell you where the snakes are in the grass. And a lot of people don't think of, you know, you got a small lot that's got a whale and septic. >> Buyer beware that can get you in trouble. >> Okay. Just, you know, it's the little things that you learn over time, you know, and we're full of them because we've been, you know, not only loaning loaning capital to the industry, we also flip, 1900 oursel. I mean, we it's kind of hard to fool us with that kind of experience. It happens every now and then, but it's it's it's rare. >> Hey, the moment you think you know everything, >> right? >> I've seen everything. >> Well, yeah. That's you know, world changes. You know, >> three, four years ago, we were not talking about AI, were we? >> Nope. >> Right. >> You know, I can't even spell it yet. You know, [laughter] >> what's the biggest lie new investors believe? >> What's the biggest lie? >> Uhhuh. Or misconception. >> Yeah. They believe someone else's numbers. You know, it's a it's somebody flipping to them and and and the person selling it is saying it's worth this much and the repairs are only this much. In reality, it's really only worth this much and the repairs are this much. >> They accept other people's numbers. >> The daisy chain like there's so much with that. So, wholesaling, >> it's she her neighbors uh got a house for sale, so she gets it under contract. She's a little old lady, needs to move into the nursing home. She gets it under contract, but she didn't really know anyone. So, she comes to me, "Hey Natalie, do you know anyone?" But I'm not listing it on MLS. I'm going to go to my friends and my investors and I'm adding my fee on top of it, but then I don't really know anyone. Hey Eddie, who do you know? So, it's got three layers and that's called the daisy chain, which is >> Yeah. >> Layers of BS. >> You asked me a question. It took me about a second to come up with that one, didn't it? That that was big out there. >> That's That's true. So, um, are rentals still worth buying today? >> Well, absolutely. Is the is the short answer, but we have to dive into it. What's the problems with rentals today? It's it's probably the first thing that I just pull right out immediately. That's the problem with rentals is insurance costs. >> Oh, >> insurance costs. I mean, they've essentially doubled and and even in some cases 2.5x what you were paying for insurance three years ago. >> It's crazy. It's crazy. So, um, so you have to buy them lower from a percent base than you used to because of insurance. Another thing, you know, it's it's not as in my opinion as damaging as the insurance is interest rates. But interest rates are still not bad. I mean, but let's go back to when they bottomed out in 2021. I have a 40 house package refinanced at a bank here in Houston at 3.75%. 40 houses. Was that smart? Yes or no? >> Yes. >> You say yes. I would say yes. >> Well, >> okay. Yeah. Hold on. Buffer buffering. Smart. Yes or no? >> Well, they win. Yes or no? >> No, because you could have got it lower. >> No, you couldn't get much lower than 3.75. >> Not a 40 package. >> Here's why. Here's why it wasn't smart. >> It was 40 houses. I should have done 80. [laughter] >> I should have got >> I should have done 80. >> Do you hear about the 2% of three, you know? So, so now, >> so now what are they? >> My own, >> you know. You know, if you go through a community bank, which I have forever, >> the best I'm going to do at a >> What community bank is? I'm just kidding. >> At a community bank today, the best you're going to do is 6 and 3/4 to 7 and 12. That's the best you're going to do in a bank today. Okay. I got 3.75. Okay, that but that's 2021. Okay. All right. And I have a balloon coming up. Not here yet, but it's coming where I got to refi. Okay. They're not going to stay at 3.75. >> See, that's that's what I was when you said, was it a good idea? Okay. I wrote it when I wrote it for over 5 years, you know, or 5 years plus maybe. Yeah. Yeah. It was the end of anyway. Don't matter. Got a balloon coming out. But they're not going to call the note. They're just going to readjust the rate, you know, is all they're going to do. So anyway, you know, now the play in town is DSCR loans. And you said something a minute ago, one of you did, about being knowledgeable. I sit in room after room after room that's full of real estate investors. And the vast majority know very little about a DSCR loan. And that is your lifeblood today for financing rentals. You got on this cuz yes, a rental worth it. Most all investors that know what they're doing today when they buy a house with the intent to keep it as a rental buy it with short-term money first and refinance to a DSCR loan. That is the play over and over and over. And there's one reason for that or maybe more than one, but the big reason is to do the double close. Now, keeping in mind the double close is not simultaneous. You buy it with a short-term loan, get it rent ready, rent it, refinance with DSCR. Your total out of pocket when you do the two different financing um closings is less money out of pocket. >> Okay. Yes, you give up a little bit of equity because you got two closing costs, but you got most of your money back in your pocket, which is what most investors want. That's what I want. >> Right? >> Okay. I say this all the time. You can never get in trouble with money in the bank. >> Yeah, that's why >> you can't get in trouble. You You know, you can fix it with money in the bank. Have keep your money in the bank. >> So, for those that don't know, just really quick, cuz I'm sitting here saying the acronym in my head. So, tell our listeners what DS stands for debt service coverage ratio. It's an industry term just like hard money. They haven't been around that long. I don't I didn't write it down on a calendar with red hearts the day it was invented, but I'm going to throw a dart and say six years ago. Now all of Wall Street's piled on top of it cuz it's so uh it they perform. Okay. So, Wall Street's in on it big time. Now, >> isn't it a little easier to get than a traditional? >> Oh, it's not even close. >> And here's why. Tra Fanny May and banks look at your net worth, your cash, your income, your tax returns. Debt service coverage ratios have three underwriting criteria. Three, only three. They're all the same pretty much. Credit score, loan to value, and the debt service coverage ratio itself. Notice I didn't say income, did I? >> They don't look at your income. So the one that people don't understand, they understand credit score. Most investors understand loan to value, you know, you can you can get higher than 75% but the good stuff, the good rates start at 75% and less. So debt service coverage ratio, the easy way to think about that is most of them, you know, that most of them 1.15 1.2. What that means is if your payment is a to be a 1.2 two debt service coverage ratio. If your payment is $1,000, it must rent for $1,200. >> Okay. >> Okay. If your property rents for $1,200, your max payment cannot be above a,000. That's how you think about it. But one point, it's really simple once somebody maybe explains it to you. >> Well, and some of the DSCR rates, cuz Homerock does DSCR, some of those rates are even matching >> what some of the other rates are. Like it's >> they're very low. It's it's so competitive right now in that DSCR range. >> Yes, it's hard to quote one rate because it's such a factor of credit and loan to value and debt service. It slides, but generally speaking, we're closing these from I'm going to say right now today 6 and 12 to 7 and a quarter. Okay. Well, what's Fanny May today? >> Yeah. >> You know, you're not going to do any better. and you go through this five weeks of underwriting on income. >> So DSCR is the name of the nightmare and all the money comes from it's all Wall Street. It's all Wall Street money. >> So flip or hold. Where do you build your wealth? >> Oh, wealth is hold. >> That's not even not even close of an answer there. I mean, it's you [snorts] flip for cash, you hold for wealth. >> So, we had Hillary on. She's from Pennsylvania. you you don't know who she is probably, but she runs a little wealth club up there and she's very big on on you know I think 50% leverage like she's really very conservative and that's how she's done it the whole way and I think she's bought like a 20 unit and things but that's what frustrates me mo most with you flippers out there it's like >> you you have you get flushed with cash but you're not holding for the long term and for the dips in the market and those those other times that you need like that >> flip and hold flip two hold and flip like get some sort of formula or system where you're constantly building both stuffing both pipelines >> longterm you do you do some of each let me give you an example >> 2019 2020 2021 co was 20 okay the average appreciation for the three years cumulative in Houston Texas depends on which article you read but they all close to the same 40%. They average we averaged 13% a year for three years in a row. Wasn't exactly 13 but 40%. Now I had a whole bunch of rentals during that time. Now I didn't put all that money in my pocket then but I will one day you know over time that's very unusual. Usually in Houston we're call it 4%. >> You know some you there's an argument for three there's an argument for five but call it 4%. So what's that mean? and you buy a rent house today that's worth $200,000 in theory. Next year is worth $28,000. The next year is worth $216,000. The next year is worth 225,000. The next year is worth 232,000. You get the picture. I bore you to death with this. But but you get the picture. >> Fascinating. Actually, >> it is. Plus, you're if you have debt on it, not only you appreciating, you're paying the debt down. So So, so value is going up, debt's going down. over time. Even a country boy from Mississippi can figure that one out. [laughter] >> Can't pull one over on you. >> Yeah. You know, well, you can, but >> Well, we always used to say whenever we teach the class on the five different ways we would talk about that you make money when you invest in real estate. When we get to appreciation, I always said you don't want to count on it, but we appreciate when it happens. And it typically does. >> Yeah. And and long term, it's there. >> Yep. >> I mean, I remember when I got in business in 99, you know what I said? Damn, I missed out on all this appreciation. I said that to myself. Why didn't I get in this business longer? Okay, here's something you never ever hear from a real estate investor. You never hear this. >> You know, I should have waited and I should have waited a little longer. You never hear that. You always hear I should have got in earlier. >> That's the way I felt in 99. >> Should have kept it. >> And here I am in in 20 20 what? 7 20 Yeah, 26. Yeah. can't even remember. 26 and 27 years later and you know I got in it when I was 12. [laughter] >> There you go. Of course. That's what I was thinking. >> So what's the number one reason people get denied for a loan? Like >> you mean for like a a buy and you mean a real an investor loan or an owner occup >> for hard money? >> The numbers don't work. >> They trust in the other person's numbers. Not doing theirs. >> Either that or they just misvaluate. The numbers don't work. >> I'm going to do a rehab for 10,000 and it needs three major units. >> We see it every day. I mean, you know, the numbers don't work. They're so desperate and so in love with the deal, >> they're they get blinded. The numbers don't work. >> Too good to be true. >> You can't Yeah. I mean, you know, you just, you know, it's worth 300 fixed up. It's going to need 50. Real quick in math, I can tell you 160 is where you ought to be max on that deal. It's that quick. Okay. and they're they're under contract for 210 >> because they they they you know, yeah, you can't make any money at that deal, >> right? >> What's the number one reason they fail? And I know this answer because you did our meetup, but like what's the number one mistake investors make? >> Well, I'm going to give you number one, but there's two or three right in behind it. Number one, they run out of cash >> in my cash management. >> Cash management run out. They got equity, but they can't maneuver. They can't pay the bills because they're out of cash. Okay, that's one. I'm going to say to be in this business and really be a superstar, you got to have great communication skills across all avenues. You got to be able to go talk to the banker. You got to be able to talk to the guy who grew up school of hard knocks and communicate effectively with both. >> Yeah. >> A wide range of communication skills is very important in this business >> and with the contractors too. if we don't want to add that in just a whole >> contractor management is the hardest part of the business in my opinion is people think it's finding deals I don't I don't think that's the hardest part I mean I know it's not if you're in the business and you have a good reput you >> okay deals will find you but managing contractors is is not only the hardest part it's probably the the less the least fun part of the business. >> Yeah. >> You know, it's just not fun. It's hard >> and you got to Yeah. Yeah. I could go you you know, I could talk about vendors all day long. >> Oh, yeah. [laughter] Yeah. It's it that's that's the hardest part of the business. It Everybody thinks though it's finding deals. It's really not. >> So, let's talk market because everybody wants to speculate like we've I was holding hoping the Feds would would step in and have some common sense about them, not political >> posturing that's going on right there. Um, are we headed for another crash? Like foreclosures? What are what are we doing as far as the market right now? >> You know, as far as we're headed to a crash, I don't think so. >> Yeah. >> I mean, most knowledgeable people don't think so. Now, let's talk about the foreclosures. I promise you this. I can go to my phone right there and I can show you an article that's come out in the last 48 hours about the huge wave of foreclosures that's coming. and I can go to a different Google search and I can point you an article that says the direct opposite. >> So, who knows? They're they're trying to get clicks. >> So, what are you seeing? Because you go to the auction. >> I I don't I don't I don't think it's a >> It may be an uptick, but nothing. >> I don't believe it is. It's maybe an uptick, but it's nothing. >> Um I watch closely number of activives unsold, unpending that's on the market. I watch it almost daily. I can tell you right now where it was yesterday. >> Five where five months >> uh when I I'm talking about the pure number of active single family homes on the market in the h.com otherwise known as MLS in Houston yesterday about this time it was 40,700. Okay. Well, you went all right. All right. You did that. All right. Let me ask you then. All right. See that number means nothing unless you know where we've been. Well, true. All right. What's the high point and when? I know it cuz I got an advantage. I have presentation on. What's the high point? Yesterday was 40,700. Where's the high point that for all time Houston? >> Oh gosh. >> I'm going to tell you. >> 80. >> Yeah. Yeah. I had no idea. >> You say 80,000? >> Yeah. And I don't know. I haven't seen this presentation. >> Uhuh. >> I'm I've got you, girl. Don't worry. >> The number was in June of 2010. >> Okay. Okay. >> It was 59,000. >> Okay. Okay. really. >> That's when it peaked and it started coming down in July of 2010 and it came down essentially every month until 2021 and then we got down to 10,000 and I was watching it every day to see if it went to 99.99 and I never saw it go [laughter] there. So we got to 10,000 and plus a few but I never saw it go 999. So we went to we were at 59,000. We go to 10,000. Now we're back up to, you know, a little over 40. So that's that's where we've been. And and you know, it's it's it's five plus something months. And for these people that tell you, and I'm very glad you're recording, and I'll back this up against any economist. I mean, I want to throw something at them when they set up on stage and say 6 months is equilibrium. BS. >> Yeah. >> 6 months of inventory is a buyer market. That is not equilibrium. Not in today's world. >> Yeah. >> Equilibrium's probably 3 and 1/2 and >> maybe three, three and a half. Three and a half. >> You know, it's not six. That's a buyer market. >> And I know a lot of people listening to this applaud me on that cuz you hear it in every economy. You go, he's never bought an investment home in his life, you know, >> but he's saying that's equal BS. So anyway, but that's where we are today. We're a little over 40,000. It's not great. It's not great. It's not disaster. You know, in h.com MLS last month in June, there was about 8,000 houses. So, okay. Wasn't 10,000 like it was in 21, but I I don't need to sell 10 thou 8,000 houses. I need to sell five, you know. I need to see sell my five. Yeah. >> So, it's not great. My clients are struggling a little bit, you know. Let's not call it like it is. They're holding them longer cuz there's more inventory, more to compete with. >> Yeah. in Galveston, Texas. I don't want to make anybody mad in Galveston, but if you got a house to sell in Galveston, good luck. You better rent it cuz you ain't selling it anytime soon. >> It's the It's the It's the policies of the politicians and the economic situation on top of layered on top of >> Yeah. You know, and I I try to avoid political because, you know, >> I don't even know who's in office. I just know they're >> I say like Michael Jordan. You know, Michael Jordan never picked a side on Democrat and Republican. You know what he said? Republicans got to buy shoes, too. [laughter] So, I'm like Michael Jordan. You know, Democrats need loans, too. Republicans need loans, too. So, I'm I'm >> in office, but the policy >> Yeah. >> has impacted Yeah. >> as an investor. Like, if you had the Airbnbs, which is what a lot of those were. Am I Am I mistaken? >> Well, there's there's a lot of Airbnb. I mean, that whole market is just so saturated, you know? I mean, it's just just don't even go there, right? They don't even think about it. But really, the interest rates that's affecting us is not what the investors pay. It's it's the it's the rate that the owner occupied buyers pay cuz that's what's causing the inventory to build. That group is not buying as many houses right now as we want them to. >> Yeah. >> So, the inventory grows. It's not the investor rates, it's the homeowner, when I say homeowner, we're all homeowners. The owner occupied homestead rates. Yeah, >> that's what's affecting us. >> So, what's the biggest business lesson you've learned over 25 plus years? >> Wow. I don't know. >> I didn't You notice I didn't say like 100 plus years. I just said 25 plus. >> I don't know. I'm just got to throw a bunch out on the wall and let you comment on them. Um, for me personally, uh, probably slow to slow to change the technology a little bit, you know, maybe for me personally, >> um, I've always been I've always been really quick on the market. I mean, I'm really quick, you know, adjust my prices, where to market at, where where to spend my money advertising. Those are not technology questions, you know, those are those are those are marketability questions. Um, probably would have thought, you know, I got to an age where I got very conservative because I was doing very well. I didn't want to blow it. Probably would have took a few more risks. Now, that's not good advice for for the rookies out there, but [laughter] older in in this deal, I probably would have took more risks. Uh-huh. >> You know, you know, you know, to to make it bigger, >> uh, probably would have been okay there. >> You know, you get comfortable, you know. >> Um, >> that's a that's a tough question for me. I don't know. I mean, I there's probably soon as I walk off camera, I'll think, oh, I should have told her this, you know. >> So, what's the craziest craziest thing you've ever seen an investor do? >> Me personally? >> Yeah. or you or if you heard from a reputable source like >> craziest thing they've ever done >> ever that you've ever done or that you've ever seen an investor do. We're going to give you options here. >> Craziest thing. >> He doesn't do anything crazy. >> Yeah, I'm pretty damn uh methodical by thought even though people don't think that. People think I'm all crazy and do you know, but I'm pretty method. Um an engineer design. The thing that come to mind was not what I did is what I got myself into. in Conro. One time I got into a house that had eight monkeys running loose. >> What? In the house. >> In the house. >> Did you catch them? >> No, you didn't have to catch them. They were all over you. >> I had eight monkeys and they all wanted to grab a hold of me, my arms, my legs. >> Suddenly like >> Yeah. >> Okay, good. They were attacking you. >> Yeah. No, it wasn't vicious, you know. And I mean you I couldn't walk two foot. But I've got eight monkeys all over me. >> So, did you buy it? >> No, I did not get that house. >> It didn't smell like money. >> Oh, it's Oh, it smelled bad worse than money. [laughter] Better than But I mean, I can think about that one. I've had a gun pulled on me. >> Oh. >> In an appointment. I've been threatening to get in a fight a couple times in an appointment, you know. Uh, >> did you buy them? >> Uh, a couple I did. Couple I did, you know. Uh, >> that was Mason's first story. I had him drive the list myself. >> I've been I've been You know, it's not the people that cause your problems. Your number one problem looking at houses and damn pitbulls. >> Oh, >> I've had almost go into a backyard and a pitbull who was not friendly launched himself at me. And I mean that's that's probably scarier than than the gun being pulled on you. >> Yeah. >> You know, and the gun never went in my face. It came out of the back. >> You can you can sometimes deescalate that gun. You can't always escalate that job. It's coming at you on >> here. Here's a weird and this has happened a couple of times. I walk in a vacant house that's dark that's fully furnished and and you have this feeling. There's someone in this house >> and you turn the corner and there they are. I've had that happen probably a half a dozen times. You know, there's somebody in the house that's not supposed to be there and they're in the house. >> I've had that happen. Yeah, that's that's a little unnerving, you know. So, you got that. But, >> so my story on Mason, I made him drive the foreclosure list. I'm like, "Son, I bought a lot of houses from the foreclosure list." Like the pre-forclosure list. >> Drive it. First neighborhood. He stops by our neighborhood. It's good rental neighborhood. >> Yeah. Yeah. >> It was like an MS-16 gang member pulls a gun on him and Mason like, "I'm never driving again." So, that's why he doesn't leave the desk. That's why he does everything AI from his desk. >> Yeah. This one's kind of bad. You have to unfortunately use your imagination. And I'll just tell it tell the story. I won't tell the the details, but you go into a house that's being lived in with no running water. >> Oh. >> Oh, >> that's that's and I had one very recently. That's not a good experience. You know, just leaving that, you know, you have that deal. Um >> I mean I mean it's just it's crazy out there. I it did not happen to me, but it happened to a friend of mine one time and I actually saw this guy about a week ago. We had drinks at at the at the bar at Papacetas and he went into a house one time and the guy opened the door and he said the guy's eyes is that big just wired and he's got army fatigues on. And when my friend walked in the door, the guy behind him shut the door and deadlocked it and put the keys in his pocket. And in the kitchen, the all the countertops were covered with newspapers and there were butcher knives laid out on on the countertop. And this guy was just wired. My buddy said he headed to the back door cuz the back the front door he walked in and he hit that back door. He said, "I need to look at the outside and the back." And he went through that door and he kept going all the way around the house and it scared him that bad. >> Oh, I would think so, too. >> Yeah. >> Unpredictable. >> Yeah. Yeah. And he and I had drinks last week at a papacetas and he was he we talked about that experience with him. >> So, remember Quest IRA would do fright nights? Yeah. >> And so, the investors would get up and tell their stories about the crazy things they'd see. Like, it's not good for real estate. Not when you're trying to sell coaching or IAS or loans or whatever, but a guy went in the backyard and there was a body back there and he was like, "Yeah, all right." Like, but you hear all kinds of things. >> Yeah. Yeah. I have bought houses that had death in them. Yeah. >> Fortunately, I've bought houses that had death in them where the >> sound so bad the body had been there for a while. >> You know, that's I've had that. I've had I've bought them, you know. >> So, >> yeah, somebody's got to buy. >> It happens. >> It happens. It's It's life. I mean, I hope they don't they don't sound bad, but I mean, you know, >> it happens. >> It's out there. >> Like one of the vendors actually had to he was with his family in a home and he ended up selling this home, but he was with his family and then um they're out on the balcony and they see a guy get out of a cab or an Uber >> and he comes in their door and they're like, "What?" So he's like told his wife and kids to stay upstairs and he had his his weapon >> and the guy's coming up the stairs like on roids or something and just like >> charging up the stairs and he's like and they're like stop and he had to take take care of his family you know. >> Yeah. >> All right here's a good riddle. I just thought of this one but I've told this many times. All right. One night I lost two tenants. One bullet. One bullet. One gunshot. I lost two tenants. What? True story. >> I lost two tenants. Two. >> One bullet. One shot. Huh? >> Pregnant? >> No. >> Not the mort. >> One gunshot. >> One gunshot. >> And I lost two tenants. >> Well, one just left. [laughter] >> Most people died. The bullet went through and killed two. That's all happened. I own both houses side by side. This tenant got rescued. >> Killed the other tenant. One went to the graveyard and one went to prison. >> True story. I lost both tenants in one night. One night, one gunshot. One tenant next door killed my tenant in the next door. I own them side by side. >> You think about this and that is so true story. That's a true story. And these scary story and whatever you called those freak nights, freak stories, whatever. Like that's why so many people will not invest in real estate. They're like, "I've heard the horror stories. You hear tennis, toilets, taxes. I don't want to do it." >> And there are these and you have to have the stomach for it. You have to know it is a business. There are things that are going to happen. We're dealing with humans. We are complicated people. There are things that happen. You could have this person who >> has a great job, seems to have a great head on their shoulder, and then unfortunately something happens. You you you just don't know the the the army fatigue or whatever that person was in. You don't know. Were they actually military? Were they dealing with PTSD? Were they did something happen? Nobody knows. And that's the thing that you want to do the best screening that you can. You want to find the invest best investment that you can. You want the numbers to add up. But there are times it's just not going to work. I've invested in stuff where I've literally lost my tail and it was supposed to be the most it was supposed to be a great investment. The person I invested with, I trusted them. Things go wrong. But you have to have the stomach for it. It's a great way to build wealth for a number of people, but it's not for everyone. it the current and I I'll say this for every bad tenant I've had 50 good ones >> for every every bad deal on a buy appointment I have had hundreds upon hundreds and hundreds of hugs thank you for buying this house tears at the closing table so we that that we hadn't talked about that side but you know but but that that all happens too I mean I mean literally I've got I've got I mean one of my most recent buyers was in Sunnyside. The man was 91 years old in excellent health. Man, he was so much fun. War uh a war veteran, Army veteran, but he's 91. So, he's going to Dallas to live with his daughter. So, I met with his daughter and him at the house, and I got nothing but hugs and handshakes, and when I'm back in town, I will call you and let's go have coffee or breakfast. You get that kind of stuff, too. You know, you do. you get as many as much of that good stuff. >> Well, and the repeat and the referrals, I mean, you see it and and some people aren't cut out for tenants. Some people aren't cut out for the wholesaling side, the finding the deals. And that's why there's wholesalers. That's why there's realators that work with investors. That's why there's >> safety places, you know, safety um nets in place for those that don't want to handle certain things. Like, you don't have to deal with tenants. You could hire a property management company and still reap the benefits. So, like there's a whole lot. But yeah, but it's fun to tell some of the stories because it's interesting. >> They're entertaining. >> Yeah. >> But it's not the norm. >> Yeah. You know, thank goodness. >> You know, it's not the norm. I mean, good. You know, I I mean, I've >> I have probably been in 12,000 houses to buy. >> Bought 19. I mean, you don't get them all. I'm probably about 20%. >> But, you know, you you know, the average day is boring. You know, it is. you know, you know, you get to run all over town, but these kind of stories we're telling is not the average day, you know, just kind of special things with, you know, >> and we're dealing with people who are in a certain situation. >> Yeah. >> So, it's it's when you're buying from a list or you're you're >> buying directly from the seller, they're not in a good situation. They're in a situation of hurt >> and so you're meeting them at their at their home or their place and trying to give them a solution >> so that they're walking away with something versus the bank just taking everything. So typically >> it's that and and the vast majority of houses we buy, there's a reason they called an investor and not Remax, not Cutter Williams, not Gary Green. There's a reason. >> There's something going on. Yeah. >> Okay. And sometimes it's major, sometimes it's minor. I mean, >> I buy a lot of inherited houses and a lot of times I show up at the house, the kids will not even go in the house. Wow. >> It hurts too much. >> Yeah. >> So, that's the good side of the business. You know, you do find people that are um relocated. >> The fact is a lot of people don't take care of their houses. >> It's it's it's it's bad. It's it's deferred maintenance. >> So, they h they need us. >> Um you know, rent house gone bad is a big one for me. They thought they wanted to be a landlord and now they find out they don't want to be a landlord or maybe they were a landlord by default. >> Yes. >> Okay. Okay. So, so you're helping those people out. I mean, it's just over and over and over and over the reasons. It's all, it's really the pure financial and losing it to the bank is a small percent for me personally. It's the other reasons, you know. You know, I have closed deals sitting out on the tailgate of my truck. And it's true cuz the the inside of the house was so bad they didn't even want me in there. They were embarrassed. So, we went out and sit on the tailgate of my truck in the shade and negotiated the deal on the tailgate of my truck, you know, because you know >> what's the biggest thing or the craziest thing you've ever bought? Craziest thing I've ever bought. Um >> cuz you don't just do homes. >> Yeah. God should have prepared me for some of these. Um I bought 60 or 80 acres out in the new KY area one time that already been plotted for subdivisions and I thought I could re it hadn't been no dirt had been turned. There were no streets. It's all plotted and I thought I could turn around and just sell it as raw land. mistake [laughter] mistake you don't so that so that um >> I bought them right on the Gulf where the the seaw water is a rolling away at the property those are a little tough >> you know so um you know I don't have a lot of crazy crazy stories I got more probably than I've been to you know I've been to these crazy hotels and beer joints and everything else that I was called out to buy it but didn't buy You see, you see more crazy you don't buy than what you buy. >> Hey, Eddie, come look at this. It's great. You're going to love it. You should look at it. You're like, "Oh, I'll come see it." Eddie invested a lot. >> Here's a funny one, I think. And now, this shouldn't scare anybody away cuz there you got protection here, believe it or not. Is you go buy a house, you get a an opportunity to buy a house, and you detect that person don't own this house. When it's too easy. >> Yeah. And I had one of those last year. The guy was in prison. She was the alleged girlfriend and she had a POA, power of attorney, and I just determined this this lady's lying. >> Yeah. >> She does that POA is not real. So what we did was we did a lot of research with the internet. You find a lot. We found the the guy was in prison. Okay. But we found his aunt, okay, and started talking to her and she turned his own to the truth and she was legit. And this lady had forged everything. Oh my gosh. Now, now what would have happened had I bought it? >> Well, one of two or three things would happen. It would have went on through and I would have sold it to the next person through the same title company and made money. Or before I got it sold, it all erupts and I can't sell it. But then my favorite and innocent little title company is on the hook. So for me personally, I would would probably been okay, but I just I couldn't be a part of it knowing that that was what was going on. And it was all BS. >> I had that happen to me. He was the the brother. >> Yeah. Yeah. We've we've had that multiple times when it's too easy. >> So gather your gut. >> When it's too easy. >> Well, always close with title. Well, well, yeah, of course. But I mean, but you said you you kind of had like this is just >> Yeah. >> This is we're just >> Yeah. You just This is too easy. I mean, let me tell you a jet lick we do. When we suspect that the bar is committing fraud, we quote the highest prices ever. You know, it's 18% interest rate, blah blah blah. Way higher. >> You know, all of this stuff. And they go, >> "Okay, [laughter] okay. Where do I sign? It ain't it. Something ain't right." Yeah. >> So, when they when they So, so we smoke it out that way a lot of times, you know. So, what I'll do when I suspect there's fraud on a seller, >> I'll tell my title company, I said, "Double, triple, quadruple check this. It don't seem right. Something ain't right. >> Something's not adding up. >> Something ain't right." And when you dig into it, normally you'll find your instincts were correct when it's too easy. So, for that person that is a newer investor, what are questions they should ask if they're looking to go hard money because they want the short-term financing and then they've heard about flipping it over, turning it over to a DSTR loan. What are questions for that initial hard money lender that they should be asking to know, is this the right company for me? >> Um, okay. Uh, you mean there's the client is looking to use Jet Lending or any other company and he wants to know >> any other company. What should they ask? >> What should they ask? >> Yeah. What are they looking for to hire? >> Well, I'll tell them what I was say. I said, you check referrals and you get on the internet and check out their reputation cuz you can't hide on that internet anymore. And and if it's Houston, I would even say, who is it? You know, and here's you. You don't you're not going to know you won't know this unless I tell you almost all not all, but almost all of the Houston hard money lenders are all friends. We're all buddies. And I don't want to publicize them here. I will if you want me to, but we're all buddies. Now, there's a couple that we don't socialize with, but there's just like this quarterly dinner. We all, not all of us, we all a lot of us get together >> and we go to a quarterly dinner and we talk, you know. So, you just you just investigate and you ask, you know, you know, ask other investors. Go to real estate meetings and ask other investors. Tell me about this jet lending bunch. Tell me about this bunch. Tell me about this bunch. You know, and just ask other investors. Um, we're I don't know of a hard money lending company in Houston that does anything illegal. I don't know one. I mean, I know some that are arrogant. You know, I know some that are not fun to hang out with, but I don't know any of that are what I would categorize as bad. I really wouldn't. I will say I know them all. >> I think we're pretty strong in the Houston market. The Rich Club was very solid >> in a foundational way for the investment community and creating >> a really strong cohesive >> synergetic kind of group of people that you know of course they want to win but they also aren't trying to do anything unethical in the sense of >> let me piggyback on that we're very lucky in Houston this industry not just hard money lenders the industry is very close you do not get that in Dallas for the most part you don't get it in Austin, for the most part, this Houston market is very friendly in our industry. Everybody wants to hang out. I mean, it shows. You have an event, everybody shows up, you know. You don't get that in other other places. You really don't. And I go to industry events in Dallas and Austin, San Antonio, Corpus. You don't you don't get that. >> We all know each other, too. So, if you're going to screw one of us over, don't worry. Everybody know. Yeah. >> Yeah. Yeah. I I'll tell you a funny story. I won't call names. It's a hard money lender that I'm buddies with and uh I'll tell you the event. It was a patent law firm rooftop parties. >> Okay. >> Okay. I'll just tell you the event. So, so I'm talking to one of my competitors and we're friends and he's telling me about this fraud thing he's going through. He got defrauded and he's out. It's $150, $200,000. And I said, "Well, who was it?" He gave me the guy's name. And I said, "Wouldn't you suspect it when you met him?" He said, "I've never met him." I said, "You don't know it." He says, "No." I said, "That's him standing right there." [laughter] The fraudster was at the party. >> Oh, wow. >> And my buddy, a competitor, just took off right to him and confronted him. Of course, the frost go, "No, it's all a misunderstanding, miss. I'm getting it all cleared up bl and it was fraud and and I it all happened on the now I say patent I just tell I mean they're friends of mine I love patent I mean closed with them for years patent >> title actually we've closed >> hundreds and hundreds of deals at pat very investor friend >> so they're getting a little free pup here but they they used to throw the only reason I'm mad at them they don't throw the big parties in >> I was wondering I was like I hadn't gotten an invite but I haven't closed >> this was a few years ago they had a big party up on the rooftop over there and it was fun >> changed so like they've expanded to so many locations and everything. >> So, we >> we have a spicy segment. We're just going to ask a couple of questions. Quick fire. >> Airbnb, yes or no? >> No. >> Flipping or rentals? >> Both. >> Debt, friend or enemy? >> Both. >> Interest rates overblown or real concern? >> Real concern. >> AI replacing realtors? >> No. >> Why? You can't can't replace the human. Totally. You can you can cut jobs, but you can't replace. >> Biggest investing myth. >> It's easy. >> It's easy. >> Or Oh, get rich quick. >> It's not. It's get wealthy long term. >> And then the best city in Texas to invest in today. >> The best what? >> Best city. >> Oh lord. Well, I will say the Houston metroplexes or the Houston area. Metropon area is very good. I mean I mean I I go to Austin and this what I say about Austin. If you know what you're doing, you can do really well over there. But it is very harsh from the person who's not experienced. So I go to Austin. I buy it Austin. >> And how when you say it's harsh for the person that's not experienced, >> it'll fool you. You'll think it's worth this and it ain't anymore. It's worth here. It'll fool you >> because the dynamics of the market shifting. >> That's right. That's right. It means it's like California, you know, it's up and down quick. Houston just >> in Dallas for the most part. San Antonio, it's kind of steady. But back to the best. I mean, I don't know that. I mean, if you want to flip the best city is where is your deal that you're today? >> Where are you getting a lead? I don't invest by city. I invest by lead. My lead is over here in League City. My lead is in Katy. My lead is in inner Houston. It's the source of my lead. I go where my lead is. I also want to add on that because you mentioned vendors and you mentioned your your key vendors from the attorney to the title to the lender to the realtor. All fantastic, but managing the contractor. So, when we're going into that aspect, you've got to check your jobs. You've got to manage the cash flow. You got to manage your change orders. All of that is part of that process. And don't wait till you get a flip to find out the contractor you're going to work with to find out who your subs are going to be if you're going to try and doc see it yourself, which I do not suggest. Um, >> referrals, referrals, referrals, referrals. >> Know who's everybody else is using and don't pay upfront. Have everything in writing. And when I say everything, I don't mean just on a sheet of paper. Uh, going to rehab this house. Like, know from room to room to room what's going to happen, what the cost is going to be, what the, you know, from demo all the way up to the the whole process, which I think people try and get lazy. And as investors, we get lazy, and that's one of the biggest things. So, don't wait till you get to that flip >> to to have your team built. >> Yeah. Go to industry meetings. I mean, that's where you meet people. And I mean, I'm telling you, you get a ton of referrals if you ask for them. >> Yeah. Um, I used to know this hard money lender that had this huge event at the Redneck Country Club every uh month and it was so massive and it was so much fun. I wish they only had a meet up again. >> We >> This Texas Hideout would be a great location. Yeah, >> we talked about it. He likes he likes a little bit further south. Texas head out is great, >> but people don't drive the the southerners don't drive up to the north as much. >> So, I have too. >> Well, what? >> Yeah. Yeah. Well, yeah. [laughter] >> I got nothing else to do. I got nothing else to do Thursday night. Hell yeah. [laughter] >> He's like, I'm there. I'm there. So, um, >> what's one real estate rule you would break? I don't know who makes the rules in real estate. Like, is there a >> real estate rule? >> Is there such a thing like that? >> Oh, I'm such a rule breaker, too. I stay in that gray area all the time. I stay between the ditches, though. I don't run off too bad. One real estate rule I would Right. Wow. I don't know. I'll come back to that. I That's There's got to be something about drawing a blanket. >> Okay. If someone listening wants to become financially free through real estate, what's the first thing they should do this week? >> Start your education process and start meeting people in this industry. >> Go get involved. >> Find them at Meetup. You can find them on Eventbrite. You can find them >> through other hard money lenders. You can find them just in a variety of places. Monday through Thursday. Not maybe every night, but at least 60 to 70% of the nights there is a real estate event somewhere. >> Yeah. >> Monday through Thursday. >> It's not hard to find no find a place or find an event. So, >> and shop around. Don't just stay in at one and go, "Oh, I really like these guys." That's fantastic. But also go to others because maybe you like this one. Maybe you like that one. Maybe there's somebody there. It's just expand your horizons with that. Everything you kept saying, I kept thinking about network, network, network. Expand your network. >> Yeah. >> And pick one national. >> Pick one national event to go to. You don't want to go to even more than that. Probably >> I go to one or two national events a year. >> You like to go to the Vegas event. He's in Vegas. >> I do. [laughter] >> We've had fun. We've had fun at the table. >> Guilty. Guilty. >> Um, so how do you just real quick and then we'll wrap because I know you got to go and we appreciate your time. How do you evaluate a deal? Like if somebody's like, "Oh my gosh, I had this hot deal that that's my neighbor's house. They're they're moving, they're selling, estate, sell, whatever." How do you evaluate? What are the things that you look at for a quick evaluation? >> And number one, really quick, ARV after repaired value. What is that property worth fixed up? It all starts there. It does not end there. That's where you start. >> Okay. >> Yeah. >> So on on that note, I'll [clears throat] tell you the situation that I'm in. I fell into a rental situation un, you know, unexpectedly and learned a lot from from these ladies when I met them and and we all worked at the at the same company together and had some had some renters that they took care of the house, but they just weren't the smartest renters. Um, >> then the second renters that came in took care of everything. They were like, "Oh, they were ideal. Oh, I could do this forever." They moved out, bought their own bought their own house, and now it's sitting empty. And I'm like, "Okay, I need to do a few repairs to it." So, I'm taking advantage of of it sitting empty, but now I'm to the point where it's fr I'm frustrated. I've made some improvements and I've made some repairs, but my realtor is like, "We're not getting any any traction. Let's drop the price some more." And I've already dropped it several times. Mhm. >> So, do I And she's like, "Let's let's put out there, you know, brand new paint, brand new floors, brand new this, brand new that. Do I keep the price the same? Do I lower it? Do I I mean, and it's a good it's a great question for you as well, because at this point, I'm like, I'm just ready to sell it." >> Yeah. and and I >> could probably go ahead and make some really really good rental income, but I had I was that one that had that bad experience with >> the renters that just drove me bats smack crazy, >> right? So ARV I look at this one you already own. So So we're past that point of determine ARV because you own the asset today. >> Okay. All right. In this in this case, you need to are are you looking at what your competition is in that area? Are you looking at the other actors? Cuz cuz here's what you do. >> Here's what I'm looking at. The fact that and I could be looking at it completely wrong. >> Yeah. >> Is that what you listed at? >> It it is f it's financed and I'm watching as as the as we keep dropping the price. I'm looking at the lesser amount of money in my pocket. All right. What's your what's your list at? >> Still didn't answer the question. >> Answer the question. 2 >> status 2 269 279 something like that. >> Okay. 27. All right. Here's what you do. Here's what I would do if it was my house. >> Okay. >> I look at every house that's active I'm competing with today. >> Mhm. >> First, I look at a half a mile or subdivision. >> Mhm. >> And then I expand out a little bit. No more than a mile, but I'd start a half mile and subdivision. And I You got to be honest with yourself and you look at every other house that's on the market. If one buyer shows up tomorrow, one buyer, and they go in all of them, which one are they buying? And you have to be honest with yourself. You're at 279 and you got houses at, we'll say, 280, 290, 300, 310, and you got houses underneath you at 260, 250, 240. And you based on that price and the product, one buyer, and they got to buy a house tomorrow, which one they buy. If they're not buying yours, you're you're you have to be honest with you, then you need to lower your price if that's your goal. Okay, >> I do that and I and I do that. I'm not telling you to do something I don't do. I do it constantly with my houses. >> Well, I think a lot of my issue go ahead. Sorry. Go ahead. >> Second thing you do if you're going to rent it, what's your what's your cash flow? >> You got to be honest. It's going to rent for this. I got my debt. I got my insurance. I got my taxes. I got my HOA. or what if you have an HOA are what is your true monthly cash flow before maintenance? >> Okay. And look at that number. Is that a number you can live with? >> Right. >> Okay. All right. If you can't live with that number, then you need to get back to that. All right. Where can you sell this thing at? Because if you look at the first exercise and let's just say there's 10 houses within a half a mile and you look at them and you say, you know, those two right there, they're going to sell before mine at their current price and my current price, you got a problem cuz yours ain't selling tomorrow with that one buyer. And you got to be honest with yourself which one's going to >> very logical. You can get it. You can get it. And that's and I do it all the time. >> Well, you also need to look at hold time, too. like you're just looking at your bottom but you're not deducting the whole time and the money you're spending >> to be there. So like you've got to weigh all that and then we're also going into slower time. So if you're not >> reducing and it's not moving I don't know what your DOM's are days on market but that's also something that you have to look at and take consideration. And I remember part part of what we used to teach um some of the investors uh through the company that we were with was you know you don't you [snorts] always go in by the by the the fixer up or the you know it smells like money so you know what that you know what you can get out of it. But my issue that I dealt with initially and the reason why I've put some money into it lately was because there were a few things in there that if I thought if if I do decide I want to sell it >> Mhm. >> it wasn't turnkey enough. there were there were things that needed to be done that you know I said fill the holes all paint this you know fix that little section in in the wall and do whereas if I'm coming in to buy this house I don't want to have to do that stuff so that's when I said all right let's go ahead and take care of this that way if that buyer does come and says okay here's this house or this house this house is maybe a little bit lower but I'm gonna have to put this much money into it because this needs fixing and that needs fixing I made sure everything was fixed Everything was put back together. So now I'm like, do I really want to lower the price? But again, there's just not any traction coming for whatever reason. So >> here's something else you check. How many days you've been on the market? Do you know off the top of your head? >> It's been several months. >> Several month. Okay. Let's say 60 days. >> Okay. >> You need to go look at every house that went pending since yours. >> Okay? >> And and ask yourself, why did they pick my house and excuse why did they pick that house and not mine? And you got to be honest with yourself. >> Okay. And your agent should go be able to tell you, did they ever look at your house, >> right? And it and it they did it first. >> Yeah. >> But so now that we've changed a few things, she's like, "Let's take some pictures. Let's drop the price a little bit." I mean, even if it's just a little bit just to get it back out there. And I'm like, >> people are stuck on that DOM, too. Retail buyers are stuck on the DOM for some reason. Like it's like, it doesn't make sense to me. Like I want to look at all the houses. Well, has she done that trick where you take it off the market for a little bit and then you put it back on? So now a smart realtor of course is going to know that what it was, but a buyer may not know because they just started looking and so then they're all a sudden seeing, oh, this house is only it's a brand new listing. >> It's only 30 days off the market now and it resets, but it's still like realers know because there's an aster can be effective. You know, it can be that can work. It's not a it's not a save off. Well, and and I if I look at things from a buyer's perspective, I look at things like also how many times have they reduced the price? Was it because they just had it overpriced to begin with or is it just a piece of >> There's still a correction happening. Excuse me. There's still a correction >> in an industry term. >> Yeah. So, you know, and and >> I don't know. And I don't want to do wrong by my by my realtor, but if someone came up and said, "Oh my gosh, I'm really looking for something to rent. >> I want this." and and suggest and I know the the the renter would be like done. >> Well, >> because I did like having >> Yeah. >> I often list houses for sale and for rent. I take the first one. >> Oh, I have the one of those right now, too. >> Do it all the time. >> Okay. So, let's get back to the investor because I know you got to leave. So, we look at the ARV. That's our starting point. >> Absolutely. >> And then where do we go? >> How many dollars am I going to put in it to get it to where to sell at that ARV >> repair? And that's to sell at the retail. >> That's at the retail. That's the way I evaluate them all. >> That's the comps, like he said, your comparable cells in the area. That's the pictures. Are they have do they have granite? Do they have the farm farm kitchen sink? >> Um what's the roof look like? What's the landscaping? So, it's taking all of that into account when you're going into that. So, then what else? So, dollars in so rehab. >> And then you got ARV and you got dollars to get it there. And then it's formulas. And I know and I use three of them. And I use three every time I buy a house. Every time. You need to know the formulas. You want me to tell you what they are? >> Yes. >> ARV * 70% minus repairs. Second one. ARV * 65% minus repairs. That's your second. Your third one is my formula. And I swear to you, I do all three every time. The first two you do in your head. >> Mhm. >> Okay. The third one, ARV minus how much is it going to cost me to buy it? How much you going to cost me to hold it? How much you going to cost me to rehab it? How much profit do I want to make? How many dollars going to take me to sell it? And what's my dollars I'm going to pay in commission? And those all those three numbers will be closer than you think. Good. >> First two are 5% apart cuz you went from 70% to 65% is 5% of your ARB spread in there. And the other one's going to be in the ballpark of the other two. if you've done it right. And I do it every time I buy a house. >> Well, thank you. Thank you for that. >> That's great. That's great. >> So, if somebody is looking to get in touch with you, >> how do they get in touch with you? >> Uh, Eddie e d i ejetlanding.com. >> Oh, you directly. You just gave your personal email out >> and I I I'll get my cell phone out. I don't care. I ain't scared. [laughter] >> Doesn't mean he'll answer, but >> 2817887594 is my cell. 281-788-7594. My office is 281-8727800s. I get myself out. I ain't hiding. I not hiding. >> And your website? >> I used to be in the www.jetlanding.com. If Mark Cuban can call it, you can too. [laughter] >> Mark. Hell yeah. He called me >> for Okay. You've been holding out for what? >> Buy a jet. [laughter] finance to play a jet. But soon, and he was super nice, >> but as soon as he found out I did not offer financing for jets, >> he got off phone pretty quick. >> That's >> he had called me back. >> That's an incredible story. >> You could finance you and Steve could go in a jet lending business, but >> and we get probably >> I don't know, it's not that many. Three to six calls a year out of it. Financing jets. Mark Cuban called me one day. Now, that wasn't yesterday. Hey, that been a little while on that story, but he sure did. >> Was it Was it like December when he called you? Was it like the end of tax season? Like end of the year? >> This was probably 20 years ago. >> Oh, okay. >> Oh, wow. >> This is probably 20 years ago. >> Well, we want to say cheers to Eddie and cheers to Texas Hideout for having us at this um giving us this wonderful venue. Cheers, guys. >> Cheers to you. >> [music] >> Sugar, Spice, and Spirits is forformational and entertainment purposes only. 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