Joe: Hey, what's going on, guys? Joe McCall, Real Estate Investing Mastery podcast, live in the messy Joe McCall studios. Hope you don't mind the mess, but anyway, glad you guys are here in this podcast series. I'm excited about this is our fifth one, I believe, and we've been talking about on the series Deals Gone Bad. And you've heard me say before, if you haven't had a bad deal yet, you've not done enough deals, you haven't been in the business long enough. And somebody said smart people learn from their mistakes. Wise people learn from the mistakes of others. And I've had lots of bad deals. Our guest today has had lots of bad deals. But you know what? It's cool, because these guys that we're interviewing and ladies that we're interviewing on this podcast series of all bounced back from it.

Joe: They used this as a stepping stone, right? They're not afraid of failure. They're not afraid of making mistakes because we all understand, you know what? This is how we learn in the business. And sometimes, you know, it's a better lesson to have sometimes failure than success, because that's how you learn. And I trust I love it when I hear stories of people that rebounded. They failed at a deal. They lost a lot of money. But you know what? They came back. They didn't let themselves quit. So in this podcast series, we're talking about deals gone bad. And I have a mind map where I've been keeping my notes. My assistant has actually been going back through the recordings as well and adding to the mind map with notes and resources and links and tools and all that.

Joe: You can get the mind map by texting the word bad to thirty one thirty one thirty one. Text the word bad to thirty one thirty one thirty one or you go to JoeMccall.com/bad and we'll send you the mine map. Now the mind map. I'm thinking once I got about twenty or twenty-five of these interviews lined up, I put a post on Facebook. A lot of people raise their hand and said, yeah, I'd like to talk about this. And so a lot of people then messaged me privately, oh, man, this is a great idea. This is going to be really cool. So I might turn this into a book or a series or some kind of resource that you guys can get. And so if you want right now, you can get the notes of all of these lessons learned. And everybody that I go through with this, I ask them a question like, what would you have done differently next time? Or What would you have told yourself then? What would you tell somebody new in the business? What are some of the biggest lessons that you learned from this?

Joe: Really cool to hear these stories, and I hope you appreciate them as well. So if you want the mind map for the notes, text the word bad to thirty one, thirty one thirty one or go to Joe McCall.com/bad and we'll hook you up. All right. Also right now we are doing this live and bunch of you all are watching this on YouTube or Facebook. So if you're watching this, say hello, say hi, tell us where you are, where you're from. Give us a thumbs up like this video. And if you have a good question, then let us type it in the comments of YouTube or Facebook. And while we're on this video here, I can share it, put it on the screen and show it to Shane, or we can answer your question the best way we can. Cool. All right. Enough of me talking. Let's bring Shane on. And Shane, let me remove this banner here. This is ladies and gentlemen. Hold on one second to me. My computer screen is blocked up. OK, here we go. This is Shane Garza. And I pronounce your name right, Shane?

Shane: That's correct.

Joe: How are you doing, man?

Shane: Doing well. How are you?

Joe: Good. Appreciate you being on the show. And we've never met personally, but you told me your story through Facebook, Direct Messenger or something like that. This looks pretty cool. And you've got a unique story of a deal gone bad. Specifically, something happened where septic system. You thought it had one and it didn't. And that was kind of the tip of the iceberg. And then we're talking literally tens of thousands of dollars that you might have lost on this deal, which sucks, but looks like I looked a little bit up you, Shane, on Facebook, it looks like you're still active, you're still doing deals. You survived. Absolutely. This you're stronger, better investor now because of it.

Shane: Absolutely. Yeah, I, I agree. I actually use that line on my brother recently with smart people, learn from their mistakes and wise people learn from others.

Joe: And so yeah I guess I'm just smart but I'm glad you're here. That's why I asked you to be on the podcast. Shane, I appreciate it. Tell us a little bit about you first. Where are you from? Where do you live? What are you doing?

Shane:So my name's Shane. Shanethehousebuyer.com. We work out of southern Indiana. We do deals in both Louisville, Kentucky, southern Indiana. We're looking right now to get into Indianapolis market somewhere in Massachusetts. My brother lives out there. So we've been looking at deals out there, Ohio, Cincinnati and Dayton. So because we're right now.

Joe: How long have you been doing real estate stuff?

Shane: I've been in business for three years. I quit my full-time job last February and took the dove during this. And so it's been a lot of fun since then. So last February, as in like six, eight months ago. Well I guess prior to the twenty nineteen two years. Yeah.

Joe: And if you don't mind me asking, what were you doing before real estate?

Shane: I was a quality supervisor at a Ford supplier. So.

Joe: And what made you decide to get into real estate. What happened?

Shane: I read a lot about it for years. I watched videos. I mean, there's so much content out there. You just see all these people doing amazing things and on the sidelines, it's cool to watch. But so you and I were just talking about wholesaling. A lot of people look at that and they're like, oh, this is my way in without a lot of money. Right. So that's what I thought. I tried that for a little bit, didn't have much success. So I fell off the wagon and then came back three months later and just hit it hard and just went from there.

Joe:So what do you what do you mainly do? What kind of real estate?

Shane: This year has been wholesaling. So it went from last year. We did twenty-eight flips and then we did some buy and hold this year, the year 2020. It's just been wholesale and it's just what's presented itself. In my opinion. It's limited liability based on how much we put into marketing compared to what our returns are. It's significant.

Joe: All right, so you're full time doing this now. Nice. It puts bread on the table.

Shane: Absolutely. Yeah, a lot of fun. So right now, so you got the scale right? You go from technician to manager or owner, operator to CEO. So right now I'm in a position where I would call myself an owner operator, but I think it's I enjoy it. There will probably be one day that comes. I might be sick of looking at houses, but that's probably years down the road.

Joe: So where did you learn the business from? Did you buy a course or book or?

Shane:So I'm in REA group, so that's where I started. I went there and there's just I think there's eight hundred members locally.

Joe: Local real estate club. Is that what you said?

Shane: Yeah, the Real Estate Association. And I just started asking questions, just hopped on the coattails of these guys who have been doing it for 20 years. And there's a lot of us with the gift of gab and we like to share info. And so there's plenty of people out there willing to help if you ask the right questions.

Joe: Nice. There's a guy in that part of Indiana, isn't he has a podcast, simple wholesaling. What's his name?

Shane: Oh, simply so Beau Hollis. That's my buddy.

Joe: And what's the other guy's name? Who runs a business? Who owns that?

Shane: There's Frank Miller. I don't know if you're familiar with him. He's got believe in it. Was it. It's not.

Joe: His last name is Snodgrass isn't it. I should know. I'm not sure.

Shane: No, I should know that too. I'm local.

Joe: Well, I thought he was in Indiana. Indianapolis. He's got a podcast called Simply Wholesaling. Never mind.

Shane: Beau's got Simply Sold. And he's been on the investment group I mean, he did a lot nationally. So that's the only guy that I relate to that. But that doesn't ring a bell.

Joe: Yeah, this would come to me later, so I apologize. I think it's Brent, Brett. I'll look it up later. I'm going to say I'm going to fire your dog. Simply wholesaling, simply feeling I forget anyway. All right. So you had a deal recently that you bought and you thought it had a septic system or something. Is that right or?

Shane: Yeah. So this was so last year and we were doing so many flips. I was buying a lot of wholesale deals from wholesalers and we weren't doing the the level of marketing. We didn't have all the avenues that we were bringing in deals. But this one in particular, it's a tough lesson. I don't know. So I didn't clarify in the beginning and tell you I still haven't sold this deal, Joel. So it's just one of those you get so many in the pipeline and it's just that dead weight that you just leave and don't mess with. We've already completed probably ninety percent of the rehab. And it's just I think well before I get ahead of myself. So September of last year, my wife and I got married. About a week prior to that, I had a wholesaler called me with the deal as a three-bedroom, two bath, two story, had a second story deck. A big, huge bottom deck is a good-looking property. I think he was at sixty-eight on it. I believe his contract price was around forty-five.

Shane:So it was a pretty, pretty decent spread for him. And we had spent prior to purchasing this. We spent several, several minutes on the phone discussing the septic tank because I said, look, if there's an issue, I was trying to talk him down on his fee and just said if there's an issue that comes up, I have to have some sort of margin to account for that contingency plan. So it ended up working out a little bit to where based on my purchase price, I had about ten thousand dollars in there in case I had to. Worst case scenario, I had to replace the septic tank. That's not worst-case scenario or worst-case scenario is that this septic tank doesn't exist. The house was from nineteen sixty-two and in my mind I'm thinking there's regulations, codes and stuff at that point in time to where they wouldn't be allowed to just have a pipe that goes out the side of the hill. I want to say it was probably about six inches in diameter and it just kicked up the side of the hill and that's where all the affluent everything went out.

Joe: Was it daylighted or is it just hidden underground?

Shane: It was hidden underground. So I did have somebody. So to take it further, I didn't purchase it at that time. My wife and I went on our honeymoon to Hawaii for two weeks. And during that time I had such deal bias. I was so ready to buy this house because the spread look great. I bought it. They emailed me the documents. I printed them out and a notarized sent them back to the closing there. And so I was just happy to come back to this great deal that I had bought but that wasn't the case.

Joe: Well, let's dive deeper into the septic systems because some people don't know what that is right now. A septic system is the way you collect the waste from the toilet. It's in sinks and all that, and it's supposed to spread it out or leach it out or something like that or underground somewhere in your property. Right. And most septic systems are a series of pipes that they just kind of spread it out and it just slowly does what seeps into the ground or.

Shane: Yeah, they've got like what's called. So at the time, it was my first septic tank purchase. I've got a bad feeling about, but they if they're inspected. So I had had somebody go out there while I was on our honeymoon to inspect the septic tank. He called me back and said, hey, I can't find it. I just thought I took that is him just being lazy. I was like, he didn't look hard enough. It's got to be there somewhere. And so I went ahead and closed and yeah, this is why it's a bad deal. Right. So but anyways, as far as the septic tanks, they've got so many alternative systems now. I mean, it's amazing to these things can actually do, but they use the soil to filter the effluent and stuff that comes through there.

Shane:So based on how many rooms you have in the property, it depends on the size of the septic tank. Well come to find out. We had the prior owner, the actual owner of this property had been trying to work with the health department for five, six years to get a system in. They had done the tests, which is basically testing the soil to see if it's dense enough for this to be filtered properly and to find out it wasn't so. There was no alternative system, amount system, any type of system that you could put in that would actually work. So you just had a sixty eight thousand boulder.

Joe: And let's explain this further, because most houses in the city, they're tied into the sewer main. So every city has this big, huge pipe that's powered by gravity. It just goes downhill from wherever to wherever. Right. To collect the waste from people's houses. Right. Most people don't even worry about this. But when you're kind of out in the suburbs or the country, that's when you need a septic system. We have a septic system at our house. And the original house had one that kind of leached out into the field through a series of pipes. However, I don't know how it works, but eventually the way of all of the houses in our area pitched in a bunch of money. Everybody now has a grinder pump, which is a big tank that the waste goes in there, grinds up and pumps it through a series of pipes to a big pond system as well. Well, the septic tank has a pump in there and it pumps it. And then it goes main line, right. Is gravity fed down to the lowest point in the subdivision where it has this filtering treatment system there for like 50 or 70 homes anyway. So this is a big deal, though. If it doesn't if it's not working, because that could mean waste in the yard. It could mean waste getting into the groundwater. And was this house on well water?

Shane: No, it's actually hooked up to the water. And all the neighbors said it was kind of it was an odd street. So it was an ugly street and a really high end area, but it was on the outskirts of town. So these properties that hadn't been redeveloped already or whatever, it just they all had septic tanks. So one of the things I did try is I tried to go to all the neighbors and petition them everybody to throw up money so we could all get connected to the sewer line to try to lower some of my costs. That didn't work out. Nobody was into it.

Joe: OK, so the system that you had in the House currently was, back then was a just one big just one pipe.

Shane: I don't know what type of material it was, but it ran probably twenty-five yards out the side of a hill because I wish I could have had a, I should have had a picture of the property, but it's up on a hill. So you've got about a forty five degree slope on either side of it and you've only got about a quarter of an acre worth of space. So it wasn't much to work with.

Joe:So you buy the house and then you had some good margin in there and you even had a little contingency or worst case. How did you come up with the ten-thousand-dollar contingency for worst case?

Shane: That was just based on my contractor and several other investors I had spoke to and say, hey, look, what's worst case scenario? How much can I get a septic tank installed if we've got to replace it?

Joe:So they said about ten grand. So then how did you know you had a problem? How did you find that out?

Shane: The neighbor. Neighbor. So the neighbor actually will this is a small world. So I consider myself a Christian. And I think this was God kind of helping me out because I had only spent about three thousand dollars on the rehab at that point in time. And then I get a call that says, hey, I received one of your cards in the mail today and realized that you are the owner of the property two houses down from me. So this guy was an investor himself and he had saw that I had started working on it and was like, I need to tell him what's up. So anyways, yeah, he called me and said, hey, I don't know if you're aware, but that property doesn't have a septic tank. And I'm like, I just thought he didn't know what he's talking about, but he was friends with the previous owner. And so that's initially how I found out.

Joe: By the way, I just found it was his name is. Brett Snodgrass podcast used to be called Wholesaling Simple Wholesaling, now it's called real estate investing with a purpose. I'm ninety nine percent sure he is in Indianapolis market. You should check him out. You said you're a Christian. This guy, Brett, is a solid believer. He's got a great team with him.

Shane: Oh, I see. Yeah, we're I'm looking on Facebook now or actually we've got a ton of mutual friends, so.

Joe: Yeah, he super good guy. I've had him on my podcast before. I've been on his podcast before and I'm looking to see if he has an address on our I can't find his business address, but nice guy. Any of you all want to listen to a real good podcast and check out simple wholesaling dotcom and their podcast called Real Estate Investing With a Purpose. Just a shout out to Brett.

Joe: He's a good friend. He's a good friend. He's not that great of a friend because I forgot his name. But anyway. Well, that's good. He's a good guy and he's got a lot of good deals, too, if you're looking for deals. All right. So the neighbor called and said, hey, did you know and what did you do?

Shane:So at that point we stopped. We stopped work for a while. We kind of step back to reassess the situation. We talk to the health department. We got all the documents sent to us. And to be honest, I was very upset. I mean, I was mad. Did the seller fill out like a seller's disclosure statement? No. And this is afterwards. I spoke to three different lawyers, you know, and hindsight's twenty twenty today. I can say know I'm not upset as I was, because at the end of the day, it was my fault. I didn't do the due diligence to the extent that I should have. But since it was a wholesale deal, he was just designing his equitable interest over to an as is contract. And so when I approached these attorneys, they said there's not much you can do. And I and I even I asked I said even if he represented that there wasn't any significant issue, there might be holes in drywall here, flooring of whatever. But I mean, if you're telling me there's a septic tank on the property, then you're obviously fabricating that story.

Joe: All right. But worst case, ten grand. Put a new septic system in, right? So. Yeah, yeah. Whywas this a bigger deal than that?

Shane: Well, because it had been so it had been tested for so long. I mean, they first tested the first test in 2015 and that's where they dig down. And based on that, those soil samples, it was not appropriate for any sort of septic system. So even I mean, I think there were six or seven alternative systems above ground systems, whatever we could do to make it work.

Joe: And nothing was making your stand with the tests, which are tests that you do on soil measure like how much the drains are not doing the density and how well the tests came back saying, hey, you can't even put a septic system in here.

Shane: That's right. Right. So I went and talked to the county. I talked to one of the guys on the board. And actually through the neighbor, the neighbor was so aware of the situation that he had already had all the contacts. He knew everyone. And he was a tremendous help. I love this guy's good dude.

Joe: Did he have a septic system?

Shane: He had a septic system. So, at that point, what options do we have? The closest sewer tap was about one hundred and ninety yards in a different neighborhood, down forty-five degree hills with trees, rocks, brush. It was just a bad situation to add to that point through other people's property. So we were going to have to get easements. So and that was the only solution we had. Right. So then what? What did you do? So the neighbor, since the guy had been working on this for so long, the previous owner had tried to get this easement from him for years and he wouldn't give it up. He wouldn't do it. So it got to the point to where we had to make a cash offer on the neighbor's house to buy it, to get the easement.

Joe: To get an easement for what?

Shane: To get the pipe, the system to the sewer tap and the neighbor, the neighborhood next to ours. So does that make sense?

Joe: So you had to go through it. Was it this neighbor that you said you've been talking to?

Shane: Yeah. Yeah. So he was an investor as well. So of course he's looking for. And so he's kind of looking, OK, how can I benefit from it? And it wasn't in a malicious way. It was just like, I know this guy needs help. What can I do to try to make it work?

Joe:So you had to buy an easement somehow or negotiate an easement through the neighbor's yard to get sewer main from your house? Two hundred and ninety yards away. That was two football fields. To the sewer main. And that investor who owned that house didn't even, wasn't even connected to the main himself. He had his own septic.

Shane: So as far as the negotiations, when we negotiated, I think I was going to pay two hundred for his house and we got to the closing table. And before I signed the purchase agreement, I just looked at him and I looked down and I just his name is Monty. I said, Monty, I really don't want to buy your house, man. So he's a humble older guy. Cool dude. He basically said, well, you know what? And he looked at his wife and he just said, hang on, let's hold off for a minute. Let's talk about it tomorrow and figure out what we can do.

Shane: And so 8:00 a.m. the next morning, he calls me and he says, you know what? He said, we're going to give you the easement. He said, you can have it. You don't have. He's like, I don't want to twist your arm to purchase our property, he said. But the only the agreement has to be is you've got to hook us up too. And I said, fine, we'll do it. So that was. Yeah. So that was a blessing. I mean, that was awesome.

Joe: Good for him too, because it increases the value he might be able to sell the house for more. Right.

Shane: Yeah, absolutely. Exactly. And so they were going to they were looking to move. So that's part of why we agreed to that. And it added a significant amount of cost. But it wasn't anything compared to, it was cheaper than buying the extra house.

Joe:So you now had to connect his house to the main also. Yes. All right. So what did you do then?

Shane: See the look on your face? That's how I felt for so long. I mean, I feel bad for you. Well, it is a lesson learned. I mean, I just I can say I was so angry. I mean, as an entrepreneur. Right. And so I want to I want to point this out, make this point, because my brother is in a business class. And one of the things he pointed out to me was that ninety six percent of businesses do not see their ten-year anniversary. And so as an entrepreneur, we all think we're the exception to the norm. We don't think we're ever going to lose. We're always going to win. We're going to bring in the most amount of revenue. And that's not the case. Stuff like this happens and you have to take it as it is. So with the purchase, I did consider there, I was like, what if I just cut my losses at sixty eight thousand and just spread it out over a couple of years? But anyway, so that's what ended up happening.

Joe: All right. So let's go back to the house itself. Like, what would you feel like? The house is worth fixed up. What was the ARV?

Shane: I think one seventy-five, one seventy-five to one eighty.

Joe: And you bought it for how much?

Shane: I bought it for sixty-eight.

Joe: OK, so it sounds like a good deal. If there was no septic system problem at all. How much work did the house need itself?

Shane:So I think my initial budget was right around fifty to fifty two ish.

Joe: Would have been all in for about one hundred and thirty-five. Right. One hundred forty. Sell it for one hundred and seventy-five. All right. So this was going to be a it's a full gut rehab sounds like. Yep. All right. Which sometimes are the best rehab. Those are sometimes even the easiest to estimate. Well, because, you know, everything is going to be new and you're pulling out everything. There's not going to be any surprises. Right, except for the septic system. So you had maybe a thirty or forty thousand dollars spread potential profit on this deal. How much was this whole septic system thing main going to cost you to fix?

Shane:So I was told by well, I called eight different companies and basically only got three to show up. And of those three, only one gave me an initial bid of like forty-four thousand dollars. And it was because he said because of the bedrock that they would have to get through and because he didn't think they could use a gravity system. So they would actually have to put those grinders in which you were just talking about, which was going to add I think they we had to put three in and they were, and no two, and they were because of the neighbor and myself. And it was ten thousand dollars each. So that was an added twenty thousand dollars to the bid. And so fortunately, I got a hold of the developer who developed the neighborhood next to us and called asked him about the land and the property. I had him come to look at it and I said, Are we going to hit bedrock? If we go through here, can we put a gravity system?

Shane: And he said, absolutely, like, you can put a gravity. So that brought our initial bit bid from the other company from forty-four down to thirty thousand.

Joe:Have you finished the work yet?

Shane:No, we've got about a shower to get done and countertop and that's about it. So I'll actually be done with it here in the next few weeks because I just sent a couple of guys out there the following week. And so I appreciate you put in that post because I was like, I need to get this still important, guys.

Joe: I mean, and shouldn't I appreciate you putting yourself out there, Shane Adams, but who is the Adams? Is that your middle name?

Shane:So then I should have done this when I started the company, but first in name a first and middle name switch. So my middle name, Shane. I've always gone by sharing some of the guys that work with no means. Adam, just switch those. Shane Adams.

Joe: Your last name is Garza?

Shane: Yeah, it didn't. Shane Garza real estate doesn't roll off the tongue the same way. Right. Cool.

Joe:So it sounds to me like you'll be lucky on this deal to break even.

Shane: Absolutely. Yeah. I've gone ahead and put like based on interest by. Right. I'm probably going to be like maybe ten to twelve thousand dollars loss.

Joe:So ten to twelve thousand loss. All right. Well, let's talk about lessons learned, is that all right?Absolutely. If it's not too painful. All right. So let me open up my questions here. What would you have done differently if you could go back?

Shane: Well, it's the due diligence. You and I spoke about this prior to the podcast, but there's just such an extent now. So we have it set up in our system. At the time of the purchase property. I didn't. Set up that our system is set up specifically, so it ask every single one of these questions and we have to have an answer for it prior to any purchase. Another thing I often just forgot, when I'm analyzing a deal and go looking in a house to even check to see if it's in a flood plain, because you get so focused, hyper focused on the renovation dollars per square foot. Where's it located? All these different things? There's just so much that you kind of got to put into one space and make sure you buy the right deal.

Joe: Would you mind sharing these questions with us? Is it like a spreadsheet or a PDF?

Shane: It's actually hopefully is the gold nugget for some people who are listening. But Podio Dotcom is great. Great. I'm sure several investors use it. We use that. It's actually tied to our calendar. So it seems all of our follow ups with it. And then it also additionally, if we walk into any property, we can fill out these questions for our calls that are made are cold calling. It's tied directly to that. Let me see real quick.

Joe: Well, maybe you could after we finish this, could you send me just maybe screenshots? Yeah, yeah, absolutely. I've sent me some screenshots or just a little volume video or something of you kind of scrolling through the questions and I'll have my assistant write them out. OK, that'd be super cool because I can put that here in the mind map in the notes.So some of the questions would be like what?

Shane: It starts off like a mortgage balance. What's the note remaining on the property floodplain, property condition one through 10. What else? Comps in the area. With that question about septic system in that the existing septic or. Yeah, and it just. So I stopped about a year ago doing inspections and all of my properties just because I've seen so many now at this point, I kind of get it. But there are times I think that somebody should get in that crawlspace because I'm not. I won't. But you've got plenty of people getting their look at the choice. And that's going to be your I mean, those things are these significant costs. I mean, you've got your roof, your flooring, your joists, your windows, those type of things. So, yeah, I'll send you those questions and hopefully.

Joe: I'll put them in the mind map here, because that would be really cool. And I know people will get some value out of that. All right. So you would have asked more better questions next time. I would have done better due diligence. Now, does that mean just hiring a professional inspector? What does that mean?

Shane: Well, it just, to that end, as far as questions go and then being accurate with your numbers, I mean, that's obviously a big deal. So, I mean, I'm sure most of you know, it's you make your money when you buy, you don’t make it on the back end. And so at this point in time, hey, I thought I was making the money when I bought, but I had deal buys from the beginning. I saw this. I was so ready to buy it. I thought the margin was there. And I was like, when this individual told me, hey, I can't find a septic tank, I should have listened to him. These guys do it for a living? I shouldn't have just brushed them off and said, oh, yeah, he was he was being lazy at the time.

Joe: Interesting. What else what else would you have done differently?

Shane: I would have not bought the property. No, I and I think closing on a deal out of town for me is not something I'll ever do again. And then but when you get to a certain level, I will say this. So this is what we're going through right now is I have a problem delegating. I like to do stuff myself. And it's hard to pass off these things, especially when they're such they're so important. And so when you're doing enough deals, you've got to just trust these people that they're going to treat this opportunity the same way. If it were their own money, they're putting their own money at risk. And then it's just all about. I think one of the things I'm looking at closer now is what's our risk reward as far as how much money I'm putting out? I'm not going to spend one hundred thousand dollars to make twenty thousand dollars. It's just not it's not worth my time. If I'm spending four months on a rehab, it's just not worth it.

Joe: And I suspect this is why you've been doing more wholesaling lately. Right? I feel like it doesn't it just make more sense when you could during the six months it would take you to normally do a rehab after putting all that money in all of that risk liability, the adult day care of managing contractors, dealing with inspectors, realtors, picky buyers, lenders and city inspectors and all of that mess, you could have wholesale three or four or five, six deals during that six months and made the same amount of money.

Shane: Absolutely. Yeah. And I think a lot of the older investors, these buy and hold guys that are just old school, they look at it like I think, ah, have you ever heard of Mike Butler? Mike Butler, he wrote a book called Landlord on Autopilot. I'm sorry, but misquoted that. But he basically says that you're your. What's that. What's that. What's the Dolphin movie back in the day? Flipper. So he calls his dolphins because we're always just going out looking for the next deal. So he thinks it's just a constant, which it is in reality. But if you if you get the right systems in place, you got the right people in place, it becomes way less of a hassle. You're not spending a ton of time just chasing the next deal. But I think the outsiders looking in, they think we're just busy running around looking at 15, 20 houses a day, which isn't really the case.

Joe: So. All right, so what were some of the biggest takeaway lessons that you got from this? What was your biggest takeaway?

Shane: Again, I mean, I just have to reiterate the due diligence. I mean, it just it's such an important thing when it comes to houses, because I'll tell you, two years, nine months ago, whenever I did my first property, I know I'm OK with being outside of my comfort zone, but I was naive in a lot of ways. And I'll tell you, one of the first things when I went to went to Home Depot with the contractor for the first time, he's looking for four window casing. And so I just want to I want to act like I know what I'm doing. So I walk over and look at this and he's like, why? Why are you looking at baseboards? And I'm like, OK, sorry. So especially to start off, it's you're taking a lot of people at their word. And the reality is, is I say this as positively as possible, but not everyone has your interests in mind. So just ask a lot of questions, make sure you're very comfortable with the decision you're making, especially when it involves a large amount of money.

Joe: So, yeah, I would say even to if you're a new beginning investor who wants to have a house, I would suggest instead, if it's your first deal, especially partner with somebody local, like, I'm sure, Shane, if somebody brought you a deal today, I'm new. Heard you on Joe's podcast. I think I got a deal here. Would you look at it? Maybe we can partner on it and split 50 50. I'll do all the work. You just help me coach me through this process. Would you would you say?

Shane: Yeah, that's absolutely a hundred percent what I did in the beginning. So I just found these guys in the local REA You build a lot of rapport with them. They trust you. They think that you start working together and that those my first deals were all 50 50 equity split and my 50 percent equity was just sweat equity. So I was doing everything I could to make this work, managing the job and making sure that I kept this guy's money safe. And after we did three or four deals like that, we initially I started realizing in terms of how extensive equity is compared to interest. And so over the past two and a half years, he's become one of my main private lenders. And I think we work on maybe like a nine percent no minimum term interest rate on borrowing.

Joe:So all that's so cool. Yeah, I think you nailed it right there. This is so important for newbies and beginners to understand like network with the local experts in your area. They'll tell you if that street is a bad street or if it's on the wrong side of the neighborhood. Or I also recommend you find local hard money lenders because of hard money. If the hard money lender won't lend you money on that deal, it's probably not a good deal. Right? If you can find these local investors, they're going to tell you the title companies are who the good hard money lenders are, what areas to avoid. And obviously you can't just get this to them, get this from them for free, bring them a good deal and partner with them. You do all the work, split the profits with them. Fifty fifty.

Shane: Yeah, that's what I've found is hard money lenders. They are way more interested in the deal and experience. So if you bring someone with experience and you bring a great deal nine times out of ten, they're not going to have a problem. One local hard money lender stay away from them. Yeah, yeah. That's a great point. That's a great point, because I've looked at some of these national guys and their origination fees and all these added things. They put in, and it just gets really expensive.

Joe: So cool. What advice would you give to a beginning investor? I know we've already kind of given a bunch of good things. I'm going to summarize it here in a minute. But any other good pieces of advice you'd give to a beginning investor?

Shane: I just would say if you've got, exactly what Joe just hit on is find the right people, get in the back seat and go along for the ride till you feel comfortable. That is, to step out on your own. And then initially, I think not specifically related to wholesaling, but put money into marketing. So if I start if I had five thousand dollars right now and I was just starting now, I would find some sort of marketing. I use in particular, we use a call tools. So I don't know if anybody's familiar with that. That's great. Great service. It's one hundred and twenty dollars a month or so and you can just buy and then you can buy lists, you can buy leads off line. So a great website is list source dotcom. They've got a great way of putting parameters in to find specific leads that you want and you just throw them in there, start making calls and you might meet some unfriendly people. But at the end of the day, there's going to be people in situations that are ready to sell your house.

Joe: Oh, that's good. Who do you skip trace your lead with?

Shane:So we've got three different services. So I've got a local attorney we use on people who are really hard to find. We also use been verified dotcom. We use white pages dot com. And we kind of if we can't find one somewhere, we go here or if it's absolutely we can't find anything because there's some people. You just don't you can't. There's nothing out there. And so we contact our attorney.

Joe: OK, cool. Let me review kind of what we talked about here just to make sure I feel like these are some really good lessons learned. Number one in my notes here make sure the seller fills out a seller's disclosure statement because the seller not the not the wholesaler or. If they would have filled that out and then not disclose that this wasn't the right septic system or whatever, then you could maybe have something to go back to and say, hey, listen, you lied to me here. You need to fix this. Due diligence, obviously got to do due diligence. It starts with, I think, getting a professional inspection. Right. But it also has to do with asking specific questions. And we're going to put those questions later on in the mind map here. But sometimes it's questions like what's the mortgage balances? Find out if it's in a flood plain or not. Septic system is another one, right? Termites, radon, mold. Those are just kind of questions you need to make sure being asked is the mortgage current at the taxes current? Who's the actual owner on title? Make sure you're dealing with them. Right. You've got to be accurate with your numbers. You got to know your numbers. You make your money when you're by your money, when you buy and you have deal bias. You were just. What do you mean by that? I wanted to ask you about what do you mean by deal bias?

Shane: I just I was so sold on the deal before I had asked every single one of those questions. I was just ready because it was just a B. And so what we what I do now or any of the guys you go look at properties is we've got a spreadsheet and this is what you do. This is what you put your numbers in and this is how you do your renovation numbers. And then you look at your return, you look at your borrowing rate or your carrying costs, everything associated. So you take your emotion out of it. You have to be objective because there's so many thought that it was just a cool house. I wanted to buy it. That'll get you in trouble.

Joe: That's good. Take your emotion out of it. I love that. Don't close on a deal while you're out of town.

Shane: Yeah, I think so. Because, you know, to each their own, if someone thinks they're comfortable with it and they've asked all those questions and then fine. But at this point in time, based on that experience of mine, I'm just not interested in it.

Joe: Learn how to delegate things or only delegate the most important things.

Shane: Well, I don't know, because so don't delegate. So my old boss at my old company is what he said to do is write everything, everything you don't want to do on a whiteboard. And that's your job description for the next guy. But there are aspects of any start to finish buy, purchase, review and all that and selling on at retail level. There are so many different moving parts that you just kind of make sure you got the right people in the right place. And I'll go ahead, because we just recently did this, Joe. We used predictive index dotcom, which basically takes an assessment of the people and you put them in the right spot. So based on their skills and their talent, you get the right people for the right job.

Joe: I have a real good friend who is one of the main coaches for predictive index. And so would you say maybe some advice for somebody new is start off learning how to wholesale before you start rehabbing?

Shane: That's just tough because you have to be able to borrow money or you have to come in. I think there's a lot of people out there that'll sell you the idea. You start with zero money and then you're going to walk into a flip and it's going to be amazing. In my experience, that hasn't been the case, but wholesaling is a way to get your foot in the door. But those relationships are so important. Is that going to help you out? Wholesaling, flipping, buy and hold whatever you're doing.

Joe: If you're a beginner, find an experienced local investor partner with them, bring them deals. I like what you said here. You said find the right people and get in the backseat, follow them and watch what they do. Put money into marketing called tools. You do a lot of cold calling. It sounds like call tools. The tool use it to multi dialer. I think it's like does it can it dial up to ten numbers at one time. Yeah, yeah. Ten numbers at one time. You get your lists from list source. So you like to target. Probably I'm going to guess high equity owners in certain specific zip codes. Absentee owners. Does it matter?

Shane: Yes. So I'll touch on that real quick is I think one of the things is, is, is for our local market. And I'm going to share this and all my competitors are going to listen and they're going to be on to me But it's just keeping it simple. Stay with the absentee owners. There's people in different situations, different time, and then follow up consistently, because what I have found is these probably these pre foreclosures, these code violations, it's become so saturated with people sending so many direct mail, so many letters. And based on what we've, our response rates and our conversion rates, we've seen the best deals come from those absentee owners, which is just the simple where a lot of people start.

Joe: Oh, yeah. That's so important to follow up consistently. Cool. Shane, I appreciate your time. I really do. This went longer than I expected, but this was really good. I appreciate you sharing your painful experience and hopefully you get out of it soon and keep me updated. Would you? I'd appreciate it. And how can people reach you, Shane? I see the phone number in the background there. You have a website or.

Shane: Yeah, so it's a website. Shanethehousebuyercom. If you want to submit anything. If you want to bring me a wholesale deal in any of the markets that I mentioned, we can try to JV that. And if there's any value I can add to point you in the right direction, I'm fine with that.

Joe: So give me your email one more time or the website. I'm going to write it down here in the banner.

Shane: ShanetheHouseBuyer.com.

Joe: Write it right there, ShanetheHouseBuyer.com. All right, go check out his website, guys. If you got some deals, if you're beginning investor in those areas that we talked about before, don't just call Shane and say, hey, can I take you out to lunch and pick your brain, bring him some deals. Right. Get out there, do some work, bring him some leads, show some effort, show some work, and then you'll probably be interested in working with you as long as you're willing to put in the work first and don't think about what's in it for you. Think about what's in it for Shane and what can you bring to him. How can you help Shane make more?

Joe: This is a real lesson learned right here. Valuable lesson. And this is what Shane and how he got started. If you're new and you're thinking I want to find a Shane like him, I want to find a guy like him that I can partner with, don't think about what's in it for you. Think about how can I make Shane more money? How can I help him grow his business and bring him more deals? When you come to that kind of with that kind of an attitude, you're going to succeed and you're going to find success and you're both going to grow adding value, just add value to each other.

Shane: And I agree with Joe. I love that question. But I mean, at the end of the day, if you've got a question, you just want to call and ask my number. I think I don't know if you can see it all, but I can only see part of it. Eight one two, which is an Indiana area code such as, eight one two seven zero four zero zerozero five. Shoot me a text, call me whatever. I make myself available all the time.

Joe: You might regret this.

Shane: Well, I thought so. My wife regrets it that's for sure.

Joe: It's all right. All right, Shane, good talking to you, man. Thank you. I appreciate it.  Let's see ya later, guys. If you want the mind map and all the notes and we're going to change. Going to send me his questions and stuff like that, get the mind map. You want to text the word bad to thirty-one, thirty-onethirty-one or go to JoeMcCall.com/bad and you'll be sent to a link where you can get the mind map and the notes and all that stuff and get that. We get some get comments here too by the way. But we got to go. All right. We'll see. Thank you. So you guys, everybody, bye bye.