Intro:   Welcome, this is the Real Estate Investing Mastery Podcast.

Joe:      Hey, guys. Welcome! This is the Real Estate Investing Mastery Podcast. Glad you're here. I am going to just make this short and sweet. This is part two of our interview with Him Huntzicker and we released part one last week. This interview was pretty lengthy so we split it up into two parts. I think this is one of the best interviews that we've ever done in our show. I mean, if you are doing a lot of deals and you're doing a lot of direct mail and you're wondering, “How can I find deals off of the MLS?”

And, you may think it's pretty competitive. It's maybe overwhelming and daunting to think about getting deals on the MLS because you have to deal with all of these other things. Buyers… I mean, sellers and realtors and thanks. But, Jim has really, really broken this down into simple actionable items. You're going to get a lot out of this podcast and I'm really excited about this. So, this is part two of the interview with Jim. If you've not listened to part one yet, please go back and listen to part one and you're going to get a lot of really, really good juicy nuggets out of this, okay?

So, go to RealEstateInvestingMastery.com. Download our Fast Cash Survival Kit. Leave us a review in iTunes. We really, really appreciate the reviews. And also, I'll tell you, if you didn't listen to part one yet, later here on part two, we're offering this really cool contract that you can use to sell your LLC. One of things we're going to talk about, I believe, is going to be in part two. It's how you can wholesale your property that you find on the MLS by selling the LLC. In other words, buying it in LLC, and then assigning or selling your interest in that LLC to the investors.

It's a lot easier to wholesale REO properties that way. And so, one of the things on our website, if you go to the show notes, is I'm going to be giving you the contract that you can use to sell or assign the interest in your LLC. Now, you need to get it reviewed by an attorney, but go ahead and take it and give it to your attorney and ask them to review it, and I think you're going to find it very helpful. And so, with that said, enjoy the show, guys! Go to RealEstateInvestingMastery.com. Check out the show notes. We got a few cool bonuses there for you. All right. Thanks!

So, do you every just sit in the MLS and look up certain keywords like tenant or motivated or TLC or as is or do you just have your farming and you just look every day at the new properties that come on? What do you do when you look through the MLS?

Jim:     There are several ways that… You set up automatic searches. That’s a given, right? So, in the areas you want a farm, less is more with the MLS and what I mean by less is more is that the less stuff you put in, the more stuff you are going to get back, right?

So, if you are putting more restrictions on bedrooms, bathrooms, remarks or whatever, you are going to get different stuff back. You are going to get less stuff back. But, the… So, the keyword searches we use, like there are a couple of big ones like estate sales, my favorite sale in the MLS.

We usually use estate sale stuff: estate sell, must sell, make offer, desperate. I've seen desperate so many times. I’m always like, “Are you freaking kidding me? You put desperate seller in there? Really?

Joe:      Hmmm.

Jim:     But, they do. So, I use it as a keyword. Motivated, seller will consider because usually, they'll say “seller will consider any offer.” I have seen nursing homes so that’s a keyword. Assisted living, retiring, original owner, needs work, handyman's special, TLC and cash offers, right?

Those are all my keywords. So, if any of those come up, that’s in my estate sale search. For the foreclosure and REO stuff: bank owned, lender owned, corporate owned, addendums, corporate, REO. 100 in my marketing has to do with the taxes so unless you pay taxes in REOs, that wouldn’t apply to you. And then, as is. So, those are all… Corporate obviously for corporate owned stuff. And then, short sales. We do short sales and approve short sales even though there is no such thing as an approved short sale as we all know.

Joe:      Yeah. Well, with short sales, do you…?

Alex:    Hey, I’ve had some approved short sales and two this year already.

Jim:     Well, approved but they still have to approve the new buyer if you are a new buyer coming in.

Alex:    Oh, yeah.

Jim:     I mean, it may be an approved price, but they still have to go through the approval process for the new buyer regardless if their price is approved. That’s what I mean by there is no real approved short sale.

Alex:    Got you in MLS land.

Jim:     In MLS land. Well, yeah. But, in any land, really… I mean, if it’s approved… Well, if you are wholesaling an approved short sale, that’s different. But, yeah, the approved short sale in the MLS land, there is no such thing.

Joe:      What do you do with old MLS listings? Properties that have been listed at least 90 days. So, that’s three months, four months and they are still active and they need work?

Jim:     So, depending on that, that goes into the market research area, right? This is all in MLS Domination, my program that teaches exactly how to do this stuff. So, the market research portion of it is gone. Just look it up the public record. All MLS have access to that. We use Realist which I think most MLS use Realist as their public record provider. Either way, they all have something similar where you can look up the public record. So, what we do or what I have my acquisitions guy do is everything. We usually do 180 days or more because that’s when they get a little more desperate.

Joe:      Okay.

Jim:     And, 180 days or more, and then we look up to see what they owe, right? So, in my market, if it’s listed for $280 and I can pay $220, but they owe $260 and they’ve been at $280 for 180 days because that’s exactly what they need in order to pay the closing cost and break even on the mortgage, we don’t waste your time, right?

But, if it’s listed at $280 and they owe like $120 and I can pay $230, we’ll put an offer on it all day long. When it comes down to a property like that is that this is where most people fail in the MLS. It comes down to proper communication. It’s crazy but I always say don’t hide behind an e-mail or a fax. There are not many fax offers anymore but don’t hide behind an email.

What happens so often is that people are embarrassed to submit these lower offers because they don’t know how to talk to their other agents so they just let those offer bought since this is why they you not successful especially with regular, when you are dealing with like an estate sale on regular people is that they… If you submit an offer, okay? So, let’s say its $280 and you submit… It’s been there for six months and you submit an offer at $200.

It’s $80,000 less than list price. And, they are going to think that… Obviously, they are going to get an offer e-mail, but you didn’t call the agent to tell them the offer was coming. They’ve seen an offer and all of a sudden it’s $200. They are going to pissed off. They are going to go back their seller. So, the kids, the heirs of the estate or whatever and they are going to say, “That’s guy is lowballing us,” or even if they don’t say, they will say, “Hey, we’ve got an offer. It's kind of low. It’s at $200,” and the seller is going to be all pissed off but if you… The secret to that is you go see that property two, three times or you let them think you did.

I always go see it at least once. My acquisitions guy will go see it at once and I’ll call the agent and I'll say, “Hey, we love that property at 123 Main Street. But, man, it just needs a lot of work and it's priced high for how much work it needs but we love it! I love that neighborhood. I’d buy that neighborhood. I just like that neighborhood a lot. But, I mean is there any room? I don’t want to waste your time. Is there any room they would be waived?” The agent has got to be on board and play ball and usually they’ll say, “Yeah, yeah, bring us the offer. It’s been on the market for a while.” They need to sell it or whatever.

They’ll tell you usually too much information. They say, “Okay, I don’t really know.” And so, the next day, you set up another showing. You don’t go. Especially if somebody is at the house, then you have to go clearly. But, if it’s a vacant house, nobody knows you didn’t go. And so, you set it up again. Then, I'll submit an offer. I’ll call the agent and say, “Hey, we are coming. We are going to come.” Based on what we did, this is very key. Write this down for anybody listening because I say this all the time from the first deal I got to the second deal. It was listed for $440. I got it for $300.

I just kept saying… Because agents will get pissed at you. That guy was literally f—ing me, like he was so annoyed with me. But then, I got the deal for $300 so I didn’t really care, but I always kept my cool, always super cool and respectful no matter what. That’s key here.

Joe:      Yeah.

Jim:     A lot of agents are jerks. They just are. But, I have always kept my cool and just be totally respectful with him and say, “Hey, look. But, based on what we are going to do…” This is the dialogue I use constantly.

“Based on what we are looking to do with the property, this all we can pay. And so, this is not to insult you. This is not you insult your clients. It’s just based on numbers and I think it needs $70,000 in work, and then I think it’s only worth $360. Then, you guys have priced at $280 and all I can pay is I mean, I’m in the low $200s here.” And so, I’m going to come in with my best shot and sometimes, I’ll… I use to negotiate. When I come in at $200, and then I go to $230 or whatever. I’ve got a lot more so… I love negotiating. If you can target talk fast like an auctioneer…

Joe:      Yeah.

Jim:     And so, I love, love negotiating. It's something I’m good at. I like it. I enjoy it. But, I have realized over the years that I’ve had more success coming at the prices they look. I’m giving you my best shot. I'm coming in with everything I got. I want this house. I want to buy it. I realize it’s less than they want to sell it for. You guys are $280. I’m coming at $230. I mean, if you guys came back at $230 and $1, I would say no. I cannot pay a penny over $230. I’m giving you everything I got. I’m cashed. I’ve been through the house. I don’t need… I can waive the inspection. That’s key, waiving the inspection for estate sale people. It's as is and I can close in three days, three months, whatever works for you guys and on an estate sell, what’s key…

I should have mentioned this originally. What I do when I call before I submit the offer is I ask the agent because some agents get weird about this. But, I say, “Hey, I’m a licensed agent or I used to have a licensed agent on my team or whatever.” And, you say, “I don’t need to take a commission on the deal. So, I can go down as a buyer’s agent but I’m going to waive my commission. Do you think that is something the real estate agent will be interested in?”

And, of course they are. But, once in a while, you’ll get an agent that gets weird about that because they don’t want to go back and talk about the commission in any way, shape or form because they have already got it down there at 6%. They don’t want to talk about it. They are like, “I’m getting my 3%.” And so, once in a while, they are weird. But usually, they are like, “Oh, really? That’s awesome!” And now, you get to build rapport with the heirs that you never met before. I mean, it's so, so powerful. That’s really, really, very, very good stuff.

And so, all of this comes down to basic communication stuff and being open and honest and not hiding behind an email and you’ll have more success than you will ever imagine with this strategy. And so, what will happen is you’ll submit at $230 or whatever and they will come back and say, “Oh, we can’t do it. Oh, we can do $260 or $250 or whatever they come back at.” So then, you either just stay firm or usually on an estate sale, I’ll set up another showing so they think I’ll go again and I’ve only gone once mind you, but they think I went three times and I'll call again, “I love this house. I want to buy it. I just… We are stuck at $230. I cannot… I really want to pay them $230 but I just can't,” and I get deal after deal after deal like that.

I mean, it’s just a… I mean, you can go though the MLS right now and most MLS and pick up five deals that will that will use that exact strategy. And, you have to follow it through a team. You can’t hide behind an e-mail, sending an e-mail and not call them. You have to call if they set it up right. Because what the agent does when you call him the first time, they call and say, “Hey, we got someone that's really interested through a cash buying and close quickly, but they said they are going to be low. They didn’t say how low. Are you guys open to that?”

So now, it kind of sets the stage where they're like… They might not have been six months ago but now they are. Now, they don’t know where your offer is coming in but now they are like, “Okay, I can be done with this thing in like a week. Let's see if these guys are going to make an offer.” And now, they want your offer versus before, if you just submit some low offer, they might reject it because they think you are just some A-hole trying to steal it. Well, now, you set the stage with how much you like the house, the area, the neighborhood, blah, blah, blah.

Joe:      Hmmm.

Jim:     I mean, it’s true when I say it. But, I’m just saying what needs to happen to get the deal.

Alex:    No, that’s very true. I mean, even on the flip side of it, when I’m selling a house and I know a buyer, a potential buyer has gone back like two or three times, it's like, “Oh, I know this guy is going to buy it. He’s got… This is the one right here,” and you can feel that. You can feel that build up anticipation and you can see how that one can work really well.

Jim:     Yes. It’s very, very effective.

Joe:      Jim, can you talk about how you write your offers? I know you said that you do a two-week inspection. You waive… I’m sorry, two-week closing.

Jim:     Yeah. On foreclosures, I write two weeks. But, it never happens in two weeks. It’s very rare that a bank can close that quickly. They want to but they just can’t do it. Their paperwork doesn’t allow them to. It's usually three to four weeks for bank deals. But, I still write. I write two weeks from the closing day or from the offer day or ASAP or whatever, so that way, they’ll know when to just close whenever.

In the estate sales, I write the same thing. I just let them know when I submit it that’s it’s around their time frame. But, on the bank REOs, I always waive the inspection, like I literary axe off the inspection because what’s funny about the bank, about the REOs is that even though they may accept your offer because you wrote on inspection, our offers don’t mean anything because the addendums they are going to send you which are like 30 pages superseded our contract and in 95% of the cases, the addendums have an inspection clause in there anyway.

So, make sure you know your stuff before you use a strategy. But, in Illinois, we are also an attorney state where we use attorneys in real estate transactions. So, beyond that, I can always waive the inspection because I have the attorney review to fall back on. Now, I don’t make that a practice of mine, but if for some reason I did need to back out, we do have the five business days in the attorney review period that I could lean on that to get out of the deal if I need to.

Joe:      So, with private sellers, do you still waive the inspection?

Jim:     Yeah. With that, it’s even more important actually. Because when I go to a property generally, I’m going to send my acquisitions guy or my project manager there and both those guys could be you if you're new with this so that works out because you could all be there at the same time. But, so, I got a general scope together. I got a rough estimate. I mean, I already know what my numbers are and my guy… Once my project manager walks through, he’s got an eye for… The only thing we care about is structural stuff. The rest of the stuff, I can get it from pictures they take, but structural stuff sometimes you can’t see.

So, structural stuff and I am focused at the ads just so I know if I'm dealing with mold or not. Molds are very common in most markets and otherwise not different. Let's say over half the houses that I buy have mold on some level, but a mold to me is gold because it's an easy fix. But…

Alex:    Mold is gold. I like that.

Jim:     Mold is gold. I mean, I love it. I've been buying moldy houses for years and I'd buy them all day long. It scares the crap out of people and it's never… Once you fix the water source which is always easy to fix, it's gone. You just got to encapsulate it.

Alex:    It's simple clean up, yeah.

Jim:     It's so easy. I mean, it's… But, it scares the crap out of people and I'm glad it does because it means more deals for me.

Joe:      Yeah. And then, how much earnest money do you put down?

Jim:     I put down $5,000 for every deal. So, at my market, I'm getting to buying around $200. That’s my average purchase price for most of my acquisitions when I'm buying them.

Alex:    That's strong. That’s really strong.

Jim:     Yeah, but again, I'm not buying… If I was buying a $15, $20 or $40,000 house at $5 grand, $25 grand or whatever, but I use… All my contracts are pre-written with $5,000. And, in some of the REOs, they want 10% so that’s not even enough. Like, if they come back and say, “We accept your offer but we need… It's $200. Now, we need $20,000,” that’s what we got to do.

Joe:      Do you have to submit funds on the… The proof of funds on the REO offers when you submit your offer?

Jim:     Yeah, absolutely. They need to be there. They wouldn’t even look at it without that.

Joe:      So, what kind of proof of funds do you send?

Jim:     I have a bank statement. It’s the same bank statement I have used for eight years. I just keep changing the date.

Joe:      Okay.

Jim:     Yeah, I have always had the money, right? From different private lenders or whatever. But so, obviously, I look at it more of a tool, but I've never had a proof funds checked ever.

Joe:      Uh-huh.

Jim:     And so, this is a big road block for a lot of people. They don’t have a proof of funds. They have private lenders. I have had students coming to me where they are like… They are trying to use the MLS with no success, but they had like three proof of funds they were using from their private lenders and they are putting the name of their LLC as the buyer. So, the proof of funds they had didn’t even match the buyer's name. And, they're like, “I'm not getting any REO offers.” It's because based on how you are submitting your offer, they are rejecting it because how do they know the guy that's on the proof of funds is going to give you the money? They don’t correlate.

So, what you got to do? Because a lot of guys had that problem. What you do there is take those letters to an attorney, pay him whatever, $250 or whatever he's going to charge you to do it and say, “Hey, your company, your LLC has access to blah, blah's funds.” Add up the funds that are your proof of funds from your private lenders. So, that way, he can take the information from… Basically, give your own proof of funds. So, if you have private lenders that are willing to give you proof of funds which you should, and if you're using hard money lenders, they’ll give you proof of funds too.

But, I have a lot of guys who have actually found private lenders but they are trying to send them offers. And, that will work for like the REO stuff or the estate sale and regular sale stuff. I mean, heck, when I started doing this, the first deal I did, I didn’t have the money. I didn’t have… The reason I got that deal for $300, I didn’t have the money to buy it. I didn’t have the $5,000 in earnest money to put down if they accepted it. I didn’t expect them to accept it. I thought that they wouldn’t, and then they did, and I had to figure how to freaking buy that thing.

So, the point is like I submitted the offer with no proof of funds because it was a regular seller. And so, estate sales are a little easier. You don’t have to… I mean, like regular sellers or estate sales, you can actually get away without it. Especially, just tell him, “We are going to put down $5000 in earnest money as soon you accept it. I'll get you proof of funds but that’s not… Let's just see if we can get this deal together first and worry about that later,” because it's not a requirement of those. But, for an REO, it's absolutely a requirement. You cannot even submit an offer without it.

Joe:      Okay. All right. And, will you talk about wholesaling MLS properties?

Jim:     Sure. So…

Joe:      It's not as easy as some people make it out to be but it can be done. Talk a little bit about how you do it.

Jim:     It's not easy at all. I mean, in fact, like most of the stuff… Most of the wholesale dealing I do in the MLS is actually, I'm a buyer of them, right? So, when I get broad deals out of the MLS that are already in the contract, even from wholesalers that I know and know their stuff, 95% of them are not contracted properly where I got to pick up the pieces in order to close it out right. And, sometimes, it's double closings that are… Which in my market gets real expensive because the prices are a lot higher. And so, you are paying transfer tax stamps and a lot higher amount which could be a couple of thousands of dollars per deal depending on the town you are in.

So, double closings are not ideal but it's just part of the process that needs to be… But, like on REO stuff, you can't… When you are buying fore-closures, you cannot change the name on the contract. You can add a name to the contract. So, if somebody brings me an REO deal and they want to sell to me and they put their name on it which happens. All we do is add my company name to it, and then we quitclaim them off at the closing. So, in order for me to give them their wholesale fee, they got to sign a quitclaim deed that we record on top of the deed at the closing which quitclaims them off of it right after the closing happens.

So, that way, the bank satisfies their needs for their conditions where the original buyer, the acceptance are on there. They let you add a buyer on. That’s never a problem. You could always add a buyer on. But, you cannot remove a buyer from a bank addendum so that’s one way you can do it. If you have a more sophisticated buyer… I'm sorry, wholesaler that has an… I thought out this in advance, and they have an LLC or a trust already prepared, they could just sign the beneficial rights of that LLC entrusted to you which is just a pretty seamless paperwork transfer.

The bank doesn't even see because it doesn’t matter. They are just transferring the paper of who owns the LLC. It's all done in the background and you just go and close on it and you are basically paying him for that LLC that’s the assignment or the wholesale fee is you're buying the LLC from them. So, it's no different than an assignment. It’s the same thing. So, that’s another way to do the REO stuff.

Now, estate sales… Even for me, I'll buy an estate sale with my company name and I have to put that I'm a licensed realtor because I am and/ or signs. And so, you have to get around that is all I ever tell them. Several LLCs that I buy are in different trusts and so I'm not sure where I'm going to buy it and my main company name is Yellow Star Properties. That’s what I put on the contract. But usually, I will close into a different entity. And so, that’s just so I can do that and that’s true, but you cannot at that point also wholesale. I mean, because in Illinois and in most states, I believe this is true, as long as the contract doesn’t specifically state that’s it is not assignable, it is assignable.

Joe:      Right.

Jim:     But, it has to say the and/or signs.

Joe:      So, why is it so hard though to wholesale MLS properties?

Jim:     I mean, I think that the margins are a lot tighter in the MLS. And so… And, it's because everybody knows what the exact prices listed for it, right? And, I figured that it’s the mindset of most investors that they… When you google or you look it up or when guys send me properties, the first thing I do is type it in the MLS and see what's up with there. Was it listed before? Where is it at? I want to look at the tax records. I want to see what's going on with it.

So, I type into the search fields the MLS and I see if it's contingent and it's at… The thing that annoys me is when it's listed at like $210 and you're trying to sell me for $230. That doesn’t even… Common, man. Especially if it has been on the market for a while, it even bothers me a bit. Like those deals, those are deals that are difficult to do. Even if I can pay $230, I mean, I'll pay the $230 if I can pay it, but that's just… You should do a double closing at that point. If you are a savvy investor, that would be the best thing to do which is to set up a double closing where you might hold it for two weeks or something, but that way, it's closed. You don’t have to market. Now, you can do like a prehab on it or something. Those are the guys that have the most success, who kind of do deals like that.

Joe:      And yeah, your idea for just selling your LLC is probably the best way to do it when there are banks involved, right?

Jim:     Yeah, without a question. There's no… I mean, it’s the easiest way of doing it. I mean, you have to have an LLC set up already. You have to have a proof of funds in that LLC's name which is not that difficult to get done, because you already got them to accept the offer, and then, yeah, you just assigned the beneficial rights of the LLC which is actually pretty easy. So, I would recommend having an attorney do it. I'm not an attorney. I'm just explaining all the stuff about trust and deed.

Joe:      Yup!

Jim:     But, yeah. I mean it's just paperwork.

Joe:      You know what? I just thought of something. I have a contract to… I'm going to put this in the show notes, okay? Anybody who's interested, you go to the show notes. I actually have a contract that I found somewhere that you can sell your LLC with. Now, you need to have an attorney review it. All right? So, don’t use this unless you get an attorney to review it. But, if you go to the show notes, I'm going to include in there this contract that you can assign or sell your LLC with.

And, it’s a pretty simple contract, but I think some guys that are thinking about doing this will find some good use out of that. So, instead of going to an attorney and ask him, “Hey, will you create this document for me?” you can send it to them and say, “Hey, please review this,” which will save you a lot of money by doing that.

Jim:     Yeah, that’s awesome.

Joe:      So, I'm writing myself a note. I'll do that. One of the things I wanted to ask you, Jim, is we kind of get wind down here. How do you come up with your offers so fast? I know you’ve got a lot of experience doing deals, but can you walk through? How do you come up with the ARV? How do you estimate repairs and your holding and closing costs and all of that stuff?

Jim:     Yeah. Yeah, for sure. It will come with practice like anything. I mean, I know if I'm dealing with a house… Most of the markets that I work in, I know pretty well. So, I can see it listed and know an idea what it’s worth and I still use the MLS to come up with the ARV to be sure of what's it selling because the prices are fluctuating all the time. But the… I mean, you have to be able to figure this stuff out in like literally hours.

When you go to walk through a property with your property repair estimate sheet, you literally… from the time you get in your car to the time you walk through the property and you're back in your car, you cannot be spending more than 10 minutes in each property because this is the “make an offer. This is not even… You are not getting this property. You don't need estimates.

Joe:      No.

Jim:     But, most of investors I see, especially new ones, they're like spending an hour with these properties and then they are like, “I can't do it. I saw ten properties and spent ten hours this week and I didn’t get any of them.”

Well, first of all, you shouldn't be spending an hour at any property and you have to get to the point where you are able to walk through and at least roughly estimate it. And, I'm not even kidding, ten minutes. What I do is I walk through these properties and I used to mark off what it needs. Does it need a roof? Yes. Windows? Yes. This and that. Can I walk through bathrooms? Yes. Whatever we need all the way through the HVAC. And then, I sit in my car and I feel out how much the… I put a value with each thing and I move on. You just do rough estimates and if anything, you estimate high. And, I mean, as you get to learn this business, obviously, you'll get better at this.

But, at the beginning, I recommend bringing contractors with you and paying them for their time. Like, if you are not doing deals, people will say, “Well, I don’t know. And, I have not given him any business yet.” Well, offer to pay him a couple a hundred bucks to walk you through a scope of work, like what it would like? I mean, as you're learning this business, if there's value in having somebody that's… If you are trying to estimate repairs and you've never done it before, that’s going to take you forever to learn.

Pay somebody like a mentor, if you will. But, you need to have a contractor to walk you through and give you an idea like, “Hey, can you get a hardwood floor at $6.50 per square foot?” so you can roughly estimate that. “How much is cutting your carpet cost per square foot? How much is drywall per square foot? Like tile and the cost of the tile, the installing cost. What's the tub cost to rip out and replace that? What are your cabinets per square foot?” I mean, you usually have a per square foot price basically for everything.

Joe:      Yeah.

Jim:     And, but either way, even before I used a per square foot price on stuff, I still had a ballpark. If it was a kitchen that was in a house that was 1,800 square feet, I know the whole kitchen cabinets and all the way down to appliances would cost me $10 grand, right? Like, that’s… Each full bathroom is $5 grand. Half bathrooms are usually $1,500. And, that's still numbers that I use. And so, that's even per square foot. I still bought the size of the kitchen, “Okay, $10 grand is good.”

And so, if I get the property, I send my project manager in there. Then, he gives me a better estimate of the hard numbers. “Okay. So, it's actually going to cost…” And usually, I'm right within 10% and so, it's just the… That’s how… But, you have to be estimating these properties very quickly, because otherwise, you'll burn yourself out on properties you're not getting and you're wasting all this time in there and that’s a big problem I see with new investors. They are getting burned out before they even start because they are spending so much time when they are estimating repairs and you don’t even have the property yet. In fact, you haven't made the offer yet.

And, you're like… Then, you go and make the offer and they're like, “Oh, we accepted an offer already,” and you getting all burned out. So, I would just recommend to people really learning to how to estimate repairs quickly. It was something I learned early on and it really helped me to get through and just evaluate deals quickly. So, having like a good property repair estimate sheet is very key.

Joe:      Yeah, and you could… That's a great idea. You find a contractor. You pay him a couple of $100 bucks. Go with him and just maybe two different contractors at two different times and just have him walk through a property with you and give you the per square foot prices for…

Jim:     Yeah.

Joe:      …A complete kitchen remodel. Maybe just countertops, reface the cabinets or carpet flooring fixtures, paint…

Jim:     Yeah, paint is a big one that people used to underestimate.

Joe:      …Windows. So, a lot of guys will give you… Well, its $200 bucks a window or it's… I don’t know, $20 bucks a square foot for wood floors. But, that’s not that hard to do and every market is different. So, if you took Jim's numbers in Chicago, they are going to be different than what you would get in New Mexico probably.

Jim:     Yeah, they're probably going to be a lot less in New Mexico than Chicago because the work here is not cheap.

Joe:      Right! So, it's got to be something you get familiar with in your own market. And, I'm sure you cover a lot more of that in your course and I'll ask you for your website here in a minute to get you more information. I wanted to ask you again though. When you calculate your offers, how do you get the ARV? And then, how do you work backwards from there to come up with your offer number?

Jim:     Yeah, actually and literally, there's… I walk through a property I bought last year in the MLS Domination course. Literally, it shows the whole property repair estimate sheet. Like, it's literally… I'm not terribly old but I'm not like super technological either. So, I literally keep a clipboard in my car and that is my iPad, right? Like, I'm very… I still do notes, I handwrite a lot of stuff and I keep a clipboard. And like so, I literally… I scan my sheet. It's all handwritten and that’s how I figure everything else. It's still handwritten. I mean there are some fanciful programs that work great, but that stuff doesn’t work for me because I do a lot quicker the old school way.

Then, I scan it, send a draft to my assistant and I'm done with it. So, to figure out ARVs, obviously, you just take a similar property right and figure out what they are worth. You don’t come at a two-story against a split-level and you got similar bedrooms, bathrooms or whatever. And, I see a lot of new investors trying to make up comps of something that they are not very often. And so, just make sure you are copying similar houses when you come up with the ARV. So, from there, I just walk backwards, right? I already know what the repairs are going to cost like that’s easy. It's on its own. But, like our… A lot of the sales cost like that your selling cost are coming out of the sale price.

So, if you say it's $500, right? Well then, you got to have a commission, which if you are a licensed agent on your team or it's you, you only pay half the commission because you are paying just to the buyer side. So, in my area, it's two and a half percent. So, that’s going to be two and a half percent. Attorneys… Well, I get discount attorney fees because I use them a lot. Attorney fee is $300. The title charges for that would be around $1,200. You got transfer tax stamps which are usually $1.50 to $3 per thousand. So, I'm adding up all of these stuff as I go off of the after repair value cost. Survey… We have to have a six-month recent survey. So, in most cases, I don’t get that from the seller because in the estate sales, I say they will have to give it to me.

Banks don’t offer it, so you have to buy a survey. It costs about $450 bucks and that's around it, right? So, we're working backwards. So, you've taken off all the selling costs. You've taken off the repair costs. Now, you just have your holding cost, right? So, all your utilities during the process which depends on the size of the house on what that’s going to cost. Generally, I just use actually $1,000 to cover all of it from maintenance whether it's landscaping and/or snow removal. And so, that's electric. It's gas. Generally, $1,000 would cover that. And so, I plugged that in… I know that’s about what's it's going to cost and we're figuring rough numbers.

And then, now, my holding cost for the loan, right? That’s easy enough to calculate. And so, a lot of times, my private loan would be a percentage on acquisition cost, 8 to 12% whatever depending on which private lender I'm using. It will be 8 to 12% on the acquisition cost. And actually, I have negotiated with all the people that I work with. They did the rehab cost because I don’t use a penny of my own money. The rehab cost is significantly a lower rate, 3 to 5%. So, if I buy it for $230 and I'm putting in $70, the $230 is going to be at 8 to 12% or whatever we worked out. And then, the 70% for the rehab cost will be… As soon as I drawn out, it will be at 3 to 5% interest so it's just…

Joe:      Interesting! So, you pay your investors a smaller interest rate for the rehab money?

Jim:     Yeah, but I have worked that out.

Joe:      Wow.

Jim:     And, if they said yes, all I got to do is ask, right? I mean, so that they're guaranteed the money in six months anyway for the acquisition cost. That’s the bulk of what they're going to make. And so, I have just worked that out over the years where if I asked somebody and if they said yes, and so, that’s my practice.

Joe:      Good for you. And then, you take out 15% for your profit?

Jim:     Yeah, we forget about that part. Yeah.

Joe:      Well, unless I wasn’t listening.

Jim:     Well, I probably did leave that out. Yes! So, I mean, literally, I'd take $500 times 15% which is $75,000. And then, that’s where you start. So, you got that, then you back out your repair cost, holding cost, selling cost. Now, you have your maximum allowable offer. And so, usually in my market, I'm offering that because people are afraid to offer that in many cases, because it's like, “Well, if you put all your cards at the table, you are never going to get that price,” and it's not true.

It's all how you present the offer and the dialogues you use in the process. And so, if you get… If you hide behind an email and they reject your offer and you are left nowhere to go because you offered everything you had and they rejected it, it's hard to go back at that same price. So, you probably needed to offer less or offer lower so that when the next time you come back, it’s the same A-hole.

Joe:      Yeah.

Jim:     But, if you present the offer properly which is… It's everything. Presenting the offer properly and having proper communication is staying right in front of it. I mean, the offer you are going to get accepted is not going to change whether you hide behind an email or not. So, they're never going to like you if send them an email that’s low and then you didn’t call them first or you called them and set them up properly. You called them twice like, “Oh, man. We really like this house. We really want to buy it but…” I'm not a freaking actor. I'm not even kidding. I go through a whole song and dance.

Joe:      That's like lawyers, right? It's all the way you present it and you can make somebody believe that somebody is guilty of something.

Jim:     It's all being… Yes! I mean, it's not going to be yes because I'm genuinely buying the property and I want it. But, if I don’t portray, if I don’t play the part the right way in my end, it's very difficult for this that the agent to take that back to the seller to get my offer accepted. So, it's just that it's very powerful when you do it the right way. And, I mean, I’ve been doing it successfully and maybe it's because I came from an agent first. And so, I had that agent mentality. I knew how to talk to them and what they were hoping to hear. That’s why I’ve had so much success with it but it's just a very powerful thing.

You’ve got to understand that the agent wants to close that deal worse than you do, right? Because they need to get paid. That doesn’t sell if it's been in the market six months. So, if you give them the right dialogues to take back to the seller, they are going to give those exact dialogues to the seller because they want nothing more than to close this deal tomorrow, right? So… But, they don’t know what to say because they suck. I’m sorry. The average agent in the National Association of Realtors does three deals a year.

Joe:      And, their average income is $12,000 a year.

Alex:    Wow!

Jim:     Brutal, right? So, you have to give them literal dialogues. So, I can’t say, “Hey! Here is the dialogue I’m going to give you. Please bring this back to the seller so they can accept my offer, you idiot!” That’s not what I say to them because that wouldn’t work, right? But, if I say, by holding “Oh! We love the neighborhood. We love the schools. I'd love to buy here. It’s just a great family neighborhood. We always sell to young families or young couples and this is so great,” and they take all that stuff back in an instant and it’s blah, blah. They are going to take $60 grand off of the list price because I said I liked the neighborhood but it happens all the time. It's all how you present the offer. It’s very, very powerful.

Joe:      And, at the same time, when you are making the offer, you're removing the emotion from it because it is just cold hard numbers. It’s… “These are the numbers. This is how I came up with the offer,” and it’s really good. When you do make an offer without looking at the property though, how are you estimating your repairs?

Jim:     I basically get that outgoing where it needs to get rehabbed. It needs everything inside and out – roof, windows and siding. In an interior, I'm basing it off in square footage. So, I’m running… You really… I don’t recommend doing that until you really, really, really know your stuff. It’s just not recommended which is why the offering the bad stuff generally doesn’t work well. It pisses off a lot agents. Your name gets smeared because you can get on in the REO agent blacklist so fast by doing stuff like that because they don't see you coming and they see that you’re not even seeing the property. You just offer, offer, offer.

And so, you get blacklisted, where I mean, literally, they see like… I go to these offices and I got bloodies from REO agents and I’ll sit there and they’ll say, “Oh, this guy again. This guy knows what he’s doing. He’s always lowballing,” and they… Even when… Because a lot of times now, these banks will have you upload the offers into their system directly, right? Well, that’s fine. But, who do you think they’ll call to find out if they should waste any time with the offer? The REO agent or their staff, right? So…

Alex:    Right.

Jim:     They are going to say, “Hey! We got this offer from this guy.” What do you think he’s going to say, “Hey, that guy is known to back out of deals. He’s been putting off bad system in. He used to send as many offers as possible. He's just inefficient. And, I think he might back out of the inspection anyway because he’s known to do that.” If you get on that blacklist, you’ll be on it forever.

Joe:      Wow!

Jim:     Yeah! You do not… That’s part of the problem of sending out so many offers at least on the REO side. On the estate sales side and whatever, because those agents I never know. Rarely, do I know the agents at the estate sales. But, you do that in the REO market and you'll get a name across the REO market. Those guys talk and you’ll get blacklisted. I know several guys that are blacklisted in our market. Thank God, I’m not one of them, but backing out of deals will get you that real quick.

Joe:      You’re beating on mostly homes that you're going to sell retail, right?

Joe:      Correct. All. Yeah, that’s all I do.

Jim:     So, how would your strategy change if you are bidding on properties that you’re going to buy-and-hold for as a rental or you’re looking at ROI? Do you know?

Joe:      Yeah. I mean, I don’t… All the properties that I’ve held over the years are multi-units in my area because that’s where it actually cash flows properly where I’m at. So, I’ve stumbled across some four units, two units. Those are all my holdings. A couple of town homes here in my area and even with the association fee, they still cash out really well. But the… Those are obviously based on their numbers too, but it’s rare in my market. When the houses are expensive as they are, it's hard for them to cash flow properly. Most of what… Cash flow stuff is about an hour outside of where I live and these are cheap houses. They cash flow really well. So…

Jim:     I think the same principle applies though. Like, in St. Louis, if you’re going to be targeting homes in the North County that are in the $40 to $50,000 range, you can use the same principle. You just figure… If to get it rent-ready, you are going to be spending about $10 to $15 a square foot for the property…

Joe:      Yep, it's about that.

Jim:     …To get it rent-ready. And then, you have to have at least 17, 18 % cash-on-cash return, depending on the area. A little nicer area may be 13 to 15%. And so, you just work the numbers backwards from there, but I think what you said was really, really good about just picking up the stinking phone and calling these agents and talking to them.

Alex:    Hiding behind the emails, that’s something you said a lot and that’s what a lot of people do. They just send e-mails and texts and there’s a lot more that goes into this than just sending e-mails and texts. It’s what separates the men from the boys. It's being able to get on the phone, talk to people, relate to people, become likeable to people and do it quickly, and that’s going to separate you from the pack really.

Jim:     You guys know as well as I do. It's the business where you can make millions of dollars. The MLS is just one of many deal sources out there. I'm not going to attest that it's the only one. It should be one. If you are a rehabber, this should absolutely be one of your strategies. I’m not saying it has to be your only. It's just because I learned it and knew it so well. That’s why it's been my primary deal source for my whole career but it's all I really knew at the beginning and I was able to find deals that way. And so, I just crafted. It works. And, I’ve been using it to make it through every kind of market. It doesn’t matter – the good, the bad, and the ugly. I’ve been doing it since… I started it when it was pretty good. Then, it got really crappy and it got better again. It doesn’t matter. It worked through it all.

Joe:      Yeah! That’s very good. All right. So, Jim, where do people go to get more information about you?

Jim:     They can go a couple of places. They can go to MLSDomination.com. It’s just MLSDomination.com. There are some free videos up there right now. They can check out about MLS Domination and my website is JimHuntzicker.com. It's just J-I-M-H-U-N-T-Z-I-C-K-E-R.com. That's just my general website. They can contact me through that. There’s free training available on that as well.

Joe:      Yeah. And, we’ll have those websites on the show notes. But, it's MLSDomination.com and Jim Huntzicker… J-I-M-H-U-N-T-Z-I-C-K-E-R.com. And also, don’t forget guys. If you want that paperwork that I have, you should have your attorney review for selling or signing your LLC. Go to the show notes as well. And, if you just go to the RealEstateInvestingMastery.com and do a search for Jim, you’ll find this podcast there at the top. I don’t know what episode number this is going to be at. And, you’ll see the show notes there and you can get all this good information. This has been fantastic, Jim. I sure appreciate you taking the time to talk with us and I think a lot of people are going to…

Alex:    Yeah, awesome, Jim!

Joe:      Yeah, this has been real good.

Jim:     Yeah, yeah, guys, thanks for having me. I love talking about how I started. I'm sorry if I talk really fast for most people, but I have a hard time turning this stuff down so…

Joe:      And, you have kept it clean too, man.

Jim:     Yeah, yeah, I know. It was hard. It's tough. It's challenging for me to do that but I was able to do it. So…

Joe:      We didn't have one curse word. I mean, because Alex and I tried really hard not to curse.

Alex:    We had some borderline words but we’re good.

Joe:      That's been good, Jim and I look forward to… We should go to a Cubs game together some time. I’ve never been to Wrigley Field.

Alex:    Ha!

Jim:     I’m going to have to wait for a year. Otherwise, there’s been a construction. I mean, they just released something yesterday. It said, “Oops! It's probably going to take them an extra year like the whole outfield is torn up. It’s probably going to be that way all year.

Joe:      No way. Are you serious?

Jim:     Yeah, yeah. They just released something about it… Yeah, I don’t know. I didn't read the whole story. Yeah. But, it’s wild. I don’t know what’s going on over there yet.

Joe:      Wow!

Jim:     But, a whole year.

Joe:      I have been to Wrigley field in the middle of January and it was 300 degrees below zero. It was cold. And, I’m looking at the stadium thinking, “What is this?” It was like in the middle of the winter. This is a world famous baseball stadium.

Jim:     It's ancient. It is ancient and it’s not huge and it's… Yeah, man. It should be soon to see the improvements that they make over there.

Joe:      Yeah. It is… Chicago is a great town. I apologize in advance to anybody who’s been offended with my comments about the cubbies, but if you look at the last 15 years, which baseball team has been in the playoffs more than any other team in the major leagues?

Jim:     Cubs.

Joe:      No.

Jim:     Yeah.

Joe:      The St. Louis Cardinals, not the Yankees, not the Boston Red Sox, not the Dodgers, the St. Louis Cardinals.

Jim:     Yeah, I think… Have the Cubs been there at all?

Joe:      I don’t know.

Jim:     They’ve been there a couple of times. It's been tough. It's been tough to be… When you’re from Chicago, you got to be a Cub fan. I mean, it’s a…

Joe:      My dad was born and raised in Lake Bluff, Illinois which is a suburb, isn't it?. Isn't it in the Northern Chicago?

Jim:     Yeah, North. Yup, straight north.

Joe:      So, I do have some Chicago roots but my blood bleeds red.

Alex:    Cardinal Red.

Jim:     Yeah. If we can go to a Cubs game, it would be good. That would be a good game for us to go to.

Joe:      Yeah, sure. The Cardinals… In fact, the season opener, I think… No, it’s going to be against Milwaukee. Nevermind. Anyway, sorry guys for the baseball talk. Thanks, Jim. You’ve been a good guest.

Jim:     Hey! Thanks for having me. Happy to talk to you.

Alex:    Thanks for the awesome time, man.

Jim:     Yeah, thanks for having me. It was a lot of fun, guys. Well, talk to you later. See you!

Joe:      RealEstateInvestingMastery.com. Guys, go there. See you.