Introduction To Flipping Out

 

In this introductory episode of Flipping Out, a virtual real estate investing podcast, Paul Lizell talks about what this podcast will touch on and the type of guests that will appear on the program. From wholesaling properties across the United States to investing in cryptocurrency, this podcast will touch on how to run a virtual real estate investing business from your home – virtual rentals, virtual property management, use of VAs (virtual assistants) in your business, and how to buy and sell a property sight unseen!

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Introduction To Flipping Out

Virtual Wholesaling And Real Estate Investing Podcast

We will focus on the number one hottest topic in real estate investing now, which is virtual wholesaling. I’m your host Paul Lizell, the undisputed pioneer of virtual wholesaling with years of experience of buying and selling real estate all across the United States. I’ve purchased properties in 42 of the 50 states and will continue to dive into new markets each and every year. We use a cutting-edge technology mixed with some old school ninja sales tax and get to buy and sell real estate with a focus on small-town America.

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Flipping Out is a brand-new show. It’s about virtual wholesaling, virtual real estate investing and virtual everything. We’re going to hit on a variety of topics that will include cryptocurrency and other types of investing on occasion. This is a real estate investing show and our primary objective is to teach you virtual wholesaling and virtual rentals with virtual property management. How to use VAs to manage your properties remotely without any of the headaches that you have to deal with. What type of apps and companies you can use for collecting rents and collecting payments? Virtual wholesaling is our primary objective because that is our primary business. We have purchased properties in 42 of the 50 states. We have no intention of buying in all 50 states. 42 might be our limit, but we might add a state.

There are certain states that aren’t as profitable and aren’t worth purchasing. Unfortunately, a lot of the Northeast states where there are a lot more headaches, regulations and costs. It becomes a little bit cost-prohibitive to purchase in those states. New York is one of them, although we’ve done many deals. We’ve done a couple in that area. They are a headache and a pain about to deal with. We’re going to help you which states are the smart ones to invest in and which ones to stay away from. What cities to buy in, what are the up and coming cities and what are the cities that are under downward trend. A lot of those are going to be in states like New Jersey, California and New York where property taxes are far too high. People are losing the ability to write off those taxes. They’re fleeing those states. They’re going to states that are more tax-friendly like Texas. States like Wyoming, Montana and Pennsylvania.

Unfortunately, we’re getting a huge inflow in Pennsylvania from New York and North Jersey. Hopefully, they don’t change the state in a negative way politically. I think it’s already started there. We will get into politics a little bit but not too much. I want to teach everybody about investing in real estate and how to virtually invest. It’s not as scary as it seems. There are many investors that come up to me and say, “How do you buy in other states? How are you buying without seeing the property?” It’s easy because more than 90% of the properties we buy, we don’t see. In the North, it is 95%. Some of them in Pennsylvania that are local to me, I will go see and visit. Occasionally, in New Jersey as well. For the most part, I’m not going to be visiting these properties. I’m relying on the realtor to give me good information. I’m relying on the person I send out, whether it’s a company like BPO Photo Flow who will take pictures for you. We’re relying heavily on what they bring back as far as pictures, videos and so forth.

Virtually investing in real estate is not as scary as it seems. It’s easy when you can rely on the realtor to give you good information. Click To Tweet

Investing in other markets is not that complicated. It’s not that different from the market you’re investing in. Let’s say you’re in the Philadelphia market. I’m in the suburbs of Philadelphia. There are people who only buy in specific zip codes of Philadelphia, believe it or not. They only buy in one or two or three zip codes. I guess they get comfortable with it. They want to control everything there. They’re going to buy rentals in that area and it is easier to manage. I get that and it makes total sense. For me, that makes it more difficult for you. It’s harder to find good deals. If you’re looking in a few specific zip codes, good luck finding consistently good deals by not opening it up to other areas and other markets. That’s why I love buying all over the country because I’m trying to find the best deal. If it’s not a good deal, I’m moving on, I’m going to the next one.

Kansas City used to be a great place to invest. Now, that’s become so overwhelmed with investors. I don’t know what their hedge funds forgot in Kansas City at all yet, but I’m sure to some degree they have. Along with St. Louis, they have very similar markets, good markets and lower taxes. The rents are decent. The costs of the properties are fairly inexpensive. They’re great markets to invest in. There are other markets like Jacksonville, Florida that were like that as well. However, Jacksonville did get hit huge by the hedge funds. They had a big run-up in values. If they pull out of that market over time, you’re going to see prices negatively affected by that. Be careful when you’re investing and following hedge funds. Following them in is great but ride it for a couple of years and try to get out before they do because if they do a mass exodus from that area, you might see prices fall way more than you want to and you could end up losing on some deals. If you hold it long-term, that’s fine. If your plan is to hold at five, ten, fifteen, twenty years, you should be fine over time. You’ll never know but those are good markets to be in.

The Carolinas are some of my favorite markets. You can buy properties in North and South Carolina for pretty good values. Anywhere from $10,000 to $60,000, you can purchase bank REO properties. You can flip and keep them as rentals. There are definitely turnkey guys in those areas. That’s something you can’t do with that since the real estate taxes are low. The cost of living is low. The rents are a little lower as well. That’s something to be cognizant of. Overall, those are great markets. I see them going well long-term. I have seen the long-term and I think you’ll have Baby Boomers moving to those markets. Baby Boomers can retire or at least semi-retire there. You may see a trend of people doing what I want to do, where I would love to have a place in Hilton Head, South Carolina, and a place out in the Rocky Mountains where I can ski. I can have two different areas where I can be and escape the heat from the southern states. Maybe escape the cold at times in the Rocky Mountains. You’ll see probably an upward trend in that. If you can find places that are fairly well-priced, when you’re not using them, you can always Airbnb. You can create an income source for yourself to where those properties pay for themselves over time for something. I’m looking forward to doing in here.

I’ve got a property at Wyoming. I don’t know whether I’m going to keep it as an Airbnb or a longer-term rental or just flip it, but it’s in a decent location. It would be easy to rent. It was a property that was built in 2015 so you’re going to have less issues with it. It might be a good long-term buy and hold. Wyoming has very low real estate taxes, but also low population. I think the state’s population is around 832,000, which is less than most major cities out there. It’s something to think about because there are more parkland and nationally owned land in Wyoming than there is a land to purchase for people. It’s great skiing out there. There’s Jackson Hole, Wyoming for serious skiers. That’s a great area. If you’re looking to buy virtually and it’s something you want to utilize occasionally, Airbnb is a great way to do it. You have to fully furnish the place. It can cost anywhere from $7,000 to $10,000. You can utilize it when it’s available. You can also pick and choose when you want to make it available. It will be such a great resource and a great option for investors for now and in the future. I haven’t seen it going away. It’s like the Uber of the real estate world and a great way to bring in some income when you’re not using the property.

 

If I get something in the Carolinas as something I’m going to do as well. If it were villages and Florida, a semi-retirement area. It’s another one you could probably Airbnb fairly easily. You’re going to have probably had age restrictions on a property like that. I don’t know and I haven’t looked into the villages, yet to see if they have any restrictions on short-term rentals or not. I wouldn’t imagine they would do, but you never know. It’s always something to be cognizant of though. When you’re buying these properties in HOA communities, whether it’s in Florida, the Carolinas, Texas or Arizona, these vacation areas, California. You’ve got to make sure that these HOAs don’t have restrictions against short-term rentals because a lot of them do. There are some up in the Poconos that might have restrictions and short-term rentals and a lot of them didn’t allow it.

I do a lot of investing up in Poconos, Pennsylvania. The Pocono Mountains are great, good cashflow-ability. They do have some higher taxes which are drawback and you’ll have HOA dues depending on where you are. Overall, in the long-term, you can get some good cashflow in those rentals because it could pick things up for $50,000, $75,000 to $100,000 and rented for $1,350 a month. I get some pretty good cashflow out of those and hopefully longer-term appreciation over time. You can Airbnb it as well and probably get over $2,000 a month on average showing it that way. You’re going to know how to fold your money, which is tremendous.

We’ll get into virtual rentals as well. I have rentals in Texas. I manage them myself with the help of the VA. The VA has the address. They have all the information from the renters and the tenants. They have the information from the handyman out there, a plumber or electrician depending on what’s needed, painter, carpet cleaner, whatever you need for that property. If something goes wrong, the tenant will contact the VA and the VA will let me know what’s going on and we’ll decide what plan of action to do. If it’s something as simple as there’s a problem with the ants and we need to get Terminix or somebody out there, it’s something that can easily be done. They can handle that and the bill would come to me. This way you’re managing a property, you’re keeping a 10%. You’re paying your VA, but hopefully you’re using your VA to do other things for you as well.

This is something that’s going to be good. People are going to be able to do this a lot more down the road. You will be doing that like what I’m doing and manage your rentals virtually with the help of the VA, which costs $5 an hour. You’re talking about $10,000 annual costs. If you have five or six properties and you’re paying a property manager 10%, you’re going to more than get your money back on that. Hopefully, the VA can do some other things for you and they can do a decent enough job. You’re setting up the payments whether it’s with a company like Cozy.co or Venmo.com. I do a combination. I use Cozy and I also use Venmo. People pay me directly in those ways. They could do an auto ACH on Cozy, which is tremendous. I love that feature. Automatically on the first of the month or fifth month, whenever you had the payments coming out, it will automatically come out and go into your account. First goes Cozy, then it goes to you. It’s a great way to do it.

It's harder to find good deals if you're only looking in a few specific zip codes or markets. Click To Tweet

If their payment fails, which occasionally happens, they can go in there and use a debit or credit card to make a payment for you to make up for that missed payment if they do have that. As rentals, you’re going to have that. The timing of when people get paid and the money’s not always going to be in the account at that time. They have an automatic late fee. You can put that on there through Cozy. An automatic $35 late fee, which I have and I’ve been paid many times. I don’t mind when people are a little bit late. Sometimes it pays out and you make a little bit more. Virtual rentals, it’s going to be something we talk about a little bit, how to do that, and how much easier it is to manage with apps on my phone. I can do virtually anything with the apps. It’s a great resource and something we can all use out there and take advantage of.

Virtual wholesaling is a whole other animal. A lot of people are nervous about that. Virtual wholesale just bank on properties for the most part. Locally, we do some of the MLS, which means some estate sales. For the large part, we do bank-owned properties. The drawback to those is you do have to double close on. You do have to bring your own funds. The positive is we have the marketing costs, our costs are finding deals, which I do and my VA does. We do blast off the MLS. We do blanket offers off the MLS. We get properties that way. We get a state sales off the MLS. That’s a whole other program we offer too with our coaching program.

By the way, REO Auction Academy is our program for coaching. If anybody’s interested, feel free to contact me. I’ll get you in touch with Michael, who will set you up with whichever program you choose. We have multiple tiers of coaching program from basic one starting at around $7,000 to our high level one at $33,000 where your hands are held. We will help you from A to Z. We have quite a few students with that. We’ve had successful students at the $7,000 level. We’ve had successful students at the $33,000 level. It depends on what your comfort level is. How much time and energy you want to spend on finding and reselling these properties. Virtual wholesaling is difficult for a lot of people because they don’t see the home. That’s where I run into a lot of issues. “How do you go in? How do you buy a property without seeing?” For me, it’s pretty easy. I can get somebody to go in there and video the property. I can get somebody to go in and take pictures of the roof, and the foundation to make sure there are no cracks, in the basement to make sure there’s no water in there. Pictures of hot water heater, what type of heat is it? Is it gas, electric, oil or propane? Which you have in different areas where it’s more rural and there is no gas. People will use propane heat, which is very efficient too and pretty inexpensive.

Pictures of the kitchens and pictures of the bathrooms, just so you know what you’re in for. We use a blanket square-foot approach with most of our rehabs. We use $15 a square foot if we know it needs a roof, kitchen, bathroom, windows and doors, then you’re going to get that $25 per square foot approach. It’s going to be much heavier rehab. If you need a new electric panel or all new plumbing throughout, you’re going to have heavier costs in there. That’s a good point of having somebody to go out there video that for you, so you know what you’re in for rather than just the listing agent of the REO, which they go in and take base of pictures.

 

They’re not doing a whole lot. They’re not paid much by the bank so you’re not going to get a whole lot of great info from them. Hopefully, you can get the BPO with their price opinion is with the value is the 30-day sale price, the 90-day sale price and the after-repair-value. They are great resources for that. These agents have a pretty good idea of what the values of the properties are as-is and after repair. The numbers are dead on for the most part of the experienced agents. Newer agents are a whole other thing, you’re going to want to do a little bit more due diligence when you have a newer agent you’re dealing with.

Virtual wholesaling could be very profitable. We brought our average wholesale fee up from $7,800 in 2013 to around $10,800 in 2018. We’re getting better at doing it. We’re hitting different markets. We’re fluctuating, which markets we buy in because sometimes you’re going to be in a market like Pittsburgh. We used to do a bit in Pittsburgh, but it has become a difficult market so we’re moving out of that and looking at properties in other markets to offset that. Not that we won’t take a good deal in Pittsburgh if a bit one pops up, but it’s much more to dispose of a property in a Pittsburgh area. We have much more holding costs. We’re trying to avoid that and trying to find markets that have quicker turns. We don’t want to own it for 90, 120 or 180 days. We want to try to dispose these properties within 30 to 45 days as often as possible.

There will be times where it’s worthwhile for you to hold on to it a little longer. Maybe do a little wholetail with it. Maybe the property needs a couple of things to get FHA financing. Maybe it’s worthwhile to put a little bit of new flooring in, slap a coat of paint on there, and do some things like peeling paint off then repaint it and get it FHA compliant. Sometimes it comes worthwhile to do where maybe you make $10,000 on wholesale. If you do a quick wholetail, you’re going to get $30,000 to $35,000. To me, that’s a no brainer. If you could do that and maximize your profit on some of these deals, then it becomes worthwhile to do. There are markets that are pretty easy to do. That’s in Indiana and Ohio. We’ve done several of those. Markets are a little bit more difficult where sometimes it’s better to take that $5,000 to $10,000 wholesale fee and move on to the next one. It’s harder to find contractors in some markets and others.

These are things we’re going to talk about. I’m going to do a few solocasts and get into certain specific things that the audience may want to hear or know about. I’m going to take a lot of audience feedback because I want to know what you guys want to learn and know about. We’re going to have a lot of interviews with experts. We’re going to be interviewing Larry Goins. We’re going to begin interviewing some high-level players. We’re going to be talking to Cory Boatright. We’re going to be talking to Mike Hambright and Sensei Gilliland both out of from FlipNerd and some high-level people out there. I want to bring you in some of the top-level talents so you can get ideas of what they’re doing and what’s working well for them. We’re going to get some guys who do owner financing because we do a lot of owner financing with these bank-owned properties. There are skills we find from $5,000, $10,000, $15,000. We’ll turn around and sell them to somebody with owner financing for $30,000, $35,000 $40,000 then get $5,000 to $10,000 down. We’re made whole or near whole and we’re just collecting a note. We call that our federal reserve method where we’re printing money. The printing presses are getting turned on. We’re close to it.

Airbnb is a great resource and a great option for investors for now and well into the future. Click To Tweet

From that point on, everything is pure profit. Those are our favorite deals and obviously, they’re going to have more profitable deals over a period of time, which is good and bad. Money in hand now is worth more tomorrow. However, having that nice stream of cashflow that’s like a rental without the headaches of rental is awesome. I look for those deals. If I can find them, I’ll do them. Our first method of disposing properties is wholesaling. The second method would be wholetailing, fix and flip if it makes sense. We do them more locally, within a two-hour radius up here. We have done virtual fix and flips. I’ve done quite a few in Tucson, Arizona because I have a good REO agent down there who helps me with those and manage the fix and flips. We’ll do buy and hold. We’ve added a lot over the past a year of our buy and hold. Also, we’re adding more of the owner finance because the owner finance is great. It is mostly hands-off. Your VA can manage those for you. We set up our payments through Cozy.co or we do it through Venmo. Some people prefer Venmo, some people prefer to mail you a check. They’ll mail a bank, cashier’s checks, money orders and certified checks. Some people like to use Cozy. I personally prefer Cozy or Venmo, but if people in the mail check go that way, I’m totally fine with it.

There are a million different ways to dispose of the properties. I think it’s important for virtual investors to use all methods, not just one. Don’t lock yourself into one where if I don’t get this and I got turned and sell it for a loss. Why sell it for a loss if you sell with owner financing and make money over time get your money back on those? We’ll do wraps. I’ll refinance the property and then sell to somebody else with owner financing where say I have a mortgage of $50,000 and I will sell it to somebody for $80,000. They put $10,000 down and I hold a note for $70,000. It makes sense to do things like that. If they pay it down early, you’re just paying down your mortgage early. We create some arbitrage because my rate might be six and a half on my end. I’ll charge them 9% or 10% on their end.

We’re making arbitrage both in the financing part of it as well as the spread overall. We find different ways to skin a cat and a lot of different ways to be profitable in real estate. That’s why I love real estate. It’s far and away my favorite thing to invest in. My second favorite being cryptocurrencies, I’m big into Bitcoin Litecoin, Etherium, and several others. We’re going to talk to some cryptocurrency guys, but most of these crypto guys that we’ll speak to are going to be real estate investors that also purchase cryptocurrency. We may get some cryptocurrency experts here so I can help educate you guys because it pays to have a nice balanced portfolio. I love my rentals. I’m adding those. I love the wholesale, the fix and flip, wholetailing and the owner financing.

 

You want to have a lot of tools in your tool belt and you want to be able to have a lot of different sources of income. It’s been slower for us wholesaling. That’s partly because I had a paradigm shift where I’ve added a ton more rental. Instead of wholesale on these properties, we’re fixing and flipping, but we’re keeping them. That means more cash on the streets and less cashflow coming in, but longer-term cashflow coming in. Hopefully, longer-term growth in my net income and future earnings with rentals and tax benefits. Tax benefits are big. I’m hoping to get some tax experts on our show and tax strategists as far as accounting is concerned. Maybe a couple of attorneys who know the tax strategy. We’re going to take advantage and utilize a lot of these things. It’s going to be a very good educational show. We’re going to make it fun. Hopefully, you’re going to enjoy our guests and the solocast. Thank you.

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I want to give you a quick tour of our website. It’s TheVirtualInvestor.co or it’s under PaulLizell.com. Either one will take you to the main page. We have our educational platform REO Auction Academy where you will eventually be able to sign up as students or you can look for information. We also have some videos of different properties that we’ve purchased. There are a bunch of videos that are good to watch. We have House Deals America. This is the website where we sell the home or all the homes that we have under contract. We’re always adding properties. It’s always a good idea to check and see what we got inventory-wise. We do have the Contact Us Information button on the website so you can reach us at any point if you have any questions.

Important Links:

• BPO Photo Flow
• Cozy.co
• Venmo.com
• REO Auction Academy
• Larry Goins
• Cory Boatright
• FlipNerd
• House Deals America
• www.REOAuctionAcademy.com

About Paul Lizell

Founder of JP Homes Inc. and HouseDealsAmerica.com, Paul has been a successful real estate investor since the late 1990s. He has bought and sold hundreds of properties nationwide during his investing career.

Paul enjoys being able to help home sellers and home buyers, as well as improve communities as it is an extremely rewarding experience. Building a long term relationship with our customers and creating wow experiences is our daily goal.

As a graduate of Drexel University, Paul attributes his success in business and investing to coaching, education and systems.

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