Lee is the CEO of Real Advisors. He is based in Tampa, Florida, and has been doing real estate for 16 years. He runs a collection of real estate companies and has bought and sold over 7,500 homes. In this episode, Lee reveals his strategies for flipping 50 deals a month and his entry into the cannabis industry.
Lee got started in real estate in 2003. He had bought a property that later got broken into. He sold it and made $30,000, which was more than what he made at his job. That convinced him to move back to the U.S. from Ireland and go into real estate.
Having mentors to coach him and asking questions when he was a newbie both helped Lee reach the success he reached. When he first started, he worked with a rehabber he met at church. He learned the right formula from the start and found out where to buy, what price point to buy, how to rehab, and how not to spend too much money.
When the California real estate started to dip, he moved to Florida. Since then, he has had mentors who were real estate investors turned lenders turned entrepreneurs.
Lee found his mentors by doing deals with them. The mentors would make money either as joint venture partners or lenders. This way, Lee also brought value to them.
In the past, hard work and dedication are needed to reach success. But in today’s generation, Lee realizes that technology has allowed younger people to speed that up.
Before if he wanted to bid on a property, he’d have to buy at the courthouse steps. Now, almost anything can be done virtually, whether it’s wholesaling, accessing informing, or sending contracts.
His team has been working remotely even before the COVID-19 pandemic started. It has allowed him to hire the best talents worldwide and assign tasks he needed to get done.
Lee believes that successful people focus on the right things they should be doing in a day. They value their time more than money. It’s not that they don’t work hard because they give all they’ve got on the things that matter.
So focus on high output ideas instead of wasting time checking up on a report.
People sometimes focus on the wrong things like getting a cool CRM or renting a kickass office. If you’re a wholesaler, focus on getting deals. If you’re a rehabber, focus on deals and money.
Money is still very important, especially in real estate. Without capital, you won’t be able to take down properties, get increased profits, and finally get the true internal rate of return from property investing instead of doing transactional deals.
Lee thinks we’re about to enter into new rental norms as we see whether renters will be able to pay their rent in May, June, July after having no income for months. In 6-12 months when the forbearance period is over, we’ll see the new real estate pricing norm. If people default, the property’s going to be gone in 90 days.
The market was already at its peak before COVID-19 started. So the prices are going to reset, and now’s a good time to watch and trade assets.
Wholesaling will be a great place to be as it will be like day trading real estate. With industries and supply chains getting messed up, people should tailor their strategy around what’s happening instead of fighting the market.
Line up your capital to get ready to pounce on deals. Projects with a long revenue cycle are not good prospects. Speculative land is too risky for most people.
It’s an acquisitions game with less competition and better pricing. So scrub your list and focus on acquisitions.
You should be buying below wholesale and selling it at or a bit below wholesale.
Their business is in chasing distressed sellers. Lee shares that to be able to do 30-50 flips a month, you have to have a system in place, the right people, and the right tools
Without a system, his business had topped out at $800,000-1,000,000 because there’s only enough time in a day to chase sellers and sign contracts.
To be able to free up your time to do more deals and tasks that make money, take the administrative or non-revenue-producing tasks off your plate. These are things that have nothing to do with business, like scanning contracts.
Focus on the quality of your lists instead of the quantity. Maybe you have a low cost per lead but the more important metric is the cost per converted lead.
There are two ways that you can pull lists, either you buy it or you scrape the information.
Regardless of how you got the information, your first job is to scrub out what you don’t want, so you won’t spend marketing dollars on them.
Typically, Lee looks for distressed properties with lots of equity. But he doesn’t want owner-occupied homes.
Chasing everyone is not a good strategy. You might end up with compressed margins and low conversion rates.
Lee is not impressed with how many people someone dialed up. He prefers to look at how many deals you got and how much profit you made.
There are many ways to find distressed properties. One way is to look at a list of people who died and check whether they own any property. A virtual assistant can do the work of finding out if the property was leveraged, how much equity it has, etc.
You can also go to your local municipality and get the watershed off the list. Code liens are also another source.
When it comes to making an offer, have a good value add like 90 days to stay. Since Lee has capital, they give them cash today. With everything that’s going on, the value of cash has gone up, and security is more important.
The happiest people are the ones who get exactly what they need. Ask questions to connect with the emotional side of the brain.
What sellers typically say right off the bat is what they want. Asking better questions allows you to get behind the scenes and find out what they need. It’s still a sales process.
Rather than competing on sales prices, you can poke holes in other people’s contracts. Everybody wants to know what the benefits are for them. You have to tip the scale where their benefits outweigh their fear.
Lee has an auction platform, an in-state platform, and a seller direct platform. Their goal is to close 4-5 contracts out of the 1,000 leads a week they pursue.
Lee has a team of 6 with one closer. The openers spend their entire time building rapport and doing all the heavy lifting. The closer only closes the deal.
Everything starts with a foundation which is mindset. There could be fewer steps depending on what your exit is. For a wholesaler, it’s just 4 steps with finding deals, figuring them, and flipping them.
It starts with the mind because you need to have a destination. Otherwise, how will you measure success. So you have to have a goal in mind.
But there is a big difference between dreams and goals. Instead of making a general statement, put an empirical way of measuring it.
Lee got interested in cannabis because he saw 6 years ago that it was going to be the next big thing. He found out that the money was moving away from growing and retail into processing and access to the right product licenses.
So he focused on technology and getting the right exclusive licenses. Because he has less real estate risk, he focused on riding the price down as sales were moving towards deliveries instead of in-store sales
With people staying at home, the cannabis industry is doing well.
For real estate, the wholesale market has more opportunities now to buy at lower prices. Their real estate education crashed, so they had to pivot to virtual education. They were down over 70-80% a month ago, but they’ve been able to get it back to 70%.
Lee thinks that the next 2-3 years will be a buyer’s market in real estate, and there will be tremendous opportunities.
Look at the market and find where the opportunity is then chase that.
Be market driven. Get ahead of the competition. Do what everybody else is not doing.
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