Jerry Norton on Flipping Luxury Houses and New Construction

Steve Trang: Hey, everyone. Thank you for joining us for today's episode of Real Estate Disruptors. Today, we have Jerry Norton with Flipping Mastery, and he's here to share how he went from low margin, high volume wholesaling flipping to high margin flips through new construction and multimillion dollar flips. If this is your first time tuning in, I'm Steve Trang, broker owner of Stunning Homes Realty, founder of the OfferFast Homes app, the one app you need for wholesaling, and I'm on a mission to create a 100 millionaires. So please message me if you ever need any help with your business.

I know people are doing that now, and I appreciate that. I wanna give back as much as we can. If you're excited for today's show, please give me a wave. Please give me a thumbs up. And as a friendly reminder, I do not charge a dime for this show.

I don't make any money doing this. So here's all I ask. This is what it costs for you to listen to this show. If you get value today, please tell a friend by sharing this episode right now, tagging a friend below, or telling your best takeaway from the show later on. That way, we can all grow together.

And don't forget, this is a live show. So please post your questions for Jerry to answer. He's an open book, and he's gonna tell us everything we need to know. You ready? I'm ready.

Okay. So first thing is what got you into real estate?

Jerry Norton: Well, great question. So I've been full time now for about fifteen years. And when I first got into real estate, I was working construction, digging holes, minimum wage, mid twenties, you know, going nowhere in my life. Knew two things. I wanted to change that.

I didn't know how. Real estate was one of those things that was always felt kind of elusive. But I was a hustler, and so when I learned about wholesaling, I was like, I can do this. This is hustle work because wholesaling is hustle work. Right?

Steve: I can

Jerry: do this.

Steve: Your mid twenties. Yeah. Mid twenties. Which is in line with today's demographic of wholesalers.

Jerry: Yeah. I mean, that's you're right. That's kinda yeah. So if you've got some hustle in your mid twenties, most people can do really well with Yeah. And this was Detroit.

Steve: Oh.

Jerry: So I was doing low end, low, low end. I'm talking, like, 5 and $10,000 houses Detroit Yeah. When I started then. Yeah.

Steve: Okay. And then somewhere along the way, you got into wholesaling and flipping. Yeah. So what was that journey like?

Jerry: Well, so first, I thought I was a buy and hold guy. That's what most people who get into real estate, they think of cash flow rental. So at the time, what was happening was, I was working with a couple wholesalers who were bringing me deals. And I don't know if you remember this, anybody listening in in 2004, 2005, but they had this they had this, no doc, no verification, no income loan. Alright?

Steve: Ninja. Ninja loans.

Jerry: Like, if you could fog a mirror, you could get a loan. Yeah. And that was me. I mean, there was they had no business giving me loans. What was happening though is I a wholesaler would bring me these deals for, like, 20, 30.

I put 20 into them. I'm all in for 50. They'd appraise for 80. They would refi me with no no credit, no no nothing. They'd refi me at 50 and I'd turn around do another one.

So this wholesaler in the course of a year, year and a half, I picked up 20 rental properties literally virtually without not having no business doing that. Yeah. And I quickly learned what happened was I woke up one day and I'm like, this sucks. I don't I'm not made for this. Where's the money?

That was the question I had. Where's the money? And I'm like, these What am I doing? Yeah. And that's when I kinda had a mind shift change and got out of all of those rental properties.

Took me a little while, got out of all of those, and went straight wholesaling

Steve: Okay.

Jerry: And did wholesaling full time for about two years before I ever touched a rehab. Okay.

Steve: And then so you went from that and then you started flipping?

Jerry: Yeah. So then what happened was is this is Detroit. And what happened was is I started I started wholesaling to out of state investors because the bottom fell out. Right?

Steve: Yeah.

Jerry: And so all this outside money was coming to Detroit. I called it the cheap factor. So California and then overseas, I'd wholesale them a house, but then they couldn't they wouldn't buy another one until they got that one fixed up and rented. Mhmm. So I was like, well, let me help you do that.

Yeah. So by default, I got into the renovating. And so then I was doing a turnkey model. Right? I'd renovate it, put a tenant in it, sell it, ready to go.

Steve: That's still a popular model today.

Jerry: Yeah. Still works today. But I did I mean, I was doing seventy, eighty of those a year Wow. For for a few years

Steve: Wow.

Jerry: Until 08/00/2009, that fell out. And at that time, I said I gotta reinvent myself. So I took basically what I was doing and went retail. So first time buyer market, the one fifty to 200 price point, and I started just continuing what I was doing, but now flipping retail rather than the turnkey rental to investors.

Steve: Okay.

Jerry: Because my investors were doing the same thing. They would buy one, refi, buy another one, refi. So I'd sell one guy 10 houses.

Steve: Yeah.

Jerry: And it so it was it was nice. Well, when they can no longer do that, I could only turnkey to cash buyers. And so my model basically kinda fell apart.

Steve: And then at which point from there did you turn into, your your your big transition? Because at at one point, you said screw this. Yeah. What what screw

Jerry: this volume model? Well, so couple things happened. My wife and I had this we've had this dream for years of traveling with our family in an RV, and we homeschooled our kids.

Steve: Mhmm.

Jerry: And so we had this vision, but at the time, I was so tied to my business. Like, it was a you know, I was doing 50 to 70 retail flips, fix and flips. And some of your listeners, that's not very impressive. Some of them, it it is, but I was a one man show doing that.

Steve: Really?

Jerry: Not real good systems, just running around ragged. So it was it was not Yeah, at first, it was great because it was a lot I was making good money. Mhmm. But anybody knows when you're flipping, after a while, that wears off. Like, you're like, Yeah, this I'm making good money, but I'm not happy working like a dog.

Yeah. And I hit that point where I'm like, something's gotta change. I'm the money's awesome, but I'm no longer enjoying this. Like, the thrill of the money's over. The honeymoon's over.

I mean, better than digging holes for minimum wage, but

Steve: it Absolutely.

Jerry: So we, so we started to have this vision of, well, what would that look like? And at the time, I was like, there's no way this whole thing would fall apart if I leave for a day. Mhmm. Right? So and then at the same time, something happened where, I did this deal and it was it was way out of my my bread and butter or my comfort zone.

Mhmm.

Steve: It

Jerry: was a it was almost a 4 100,000 ARV and I'd been flipping 150.

Steve: In Detroit?

Jerry: Yeah. Suburbs.

Steve: Okay.

Jerry: Yeah. So on my 150 ARVs, I'd make $25.30 profit. Right? Mhmm.

Steve: And I

Jerry: was happy. That was good. That that's what I thought was the model. Well, I did this house that sold for, like, $3.75 or $3.80, and I made 75,000.

Steve: That's a little better.

Jerry: Yeah. Well, what I did is I said, well, wait a minute. I took a step back and I said, wait a minute. It was the same amount of time, energy, and effort to do this one for $3.75 as it was for these little ones for a 150. Mhmm.

But I made three times as much money.

Steve: So you went from 25 on a 150 k to 75 k on about 400.

Jerry: On about a 400. And but but here was the big takeaway. Same time, energy, and effort. Because I got a still manager rehab. I gotta get a painter.

I mean, things a a little different because it's a bigger home and a little nicer. Yep. But, basically, and more capital. I mean, that was the big thing, more capital. But apples to apples, it was three times as much money for the same amount of time, energy, and effort.

And that was the biggest moment for me was, why am I doing 50 deals a year? Why don't I do 10 and make us just as much money or maybe even more? Mhmm. And that was kind of a transition I was going to. At the same time, our family did a thirty day RV trip just to kind of test the waters.

Mhmm. And we did that trip and it was horrendous. It was horrible. We had the worst experience ever. Oh, that's awesome.

We had six kids.

Steve: Oh.

Jerry: Six kids.

Steve: Wow. Okay.

Jerry: Well, we were the RV was too small and we were trying to cover too much ground and we got home and we're like, okay, that dream's over. Cross that out. We're not doing that. But it it it, and my business fell apart while I was gone for thirty days. Okay.

So we get back home, and we're like, you know, if we woulda had a different setup, it would have been better. And if we woulda done this different and that different and we couldn't get away from just that idea of no nowhere to go, open road, our kids, real education, learning, spending time together. And so we came back to it and we got the right RV. We did we got this 50 foot cut I mean, it was awesome, custom built for us. And, we sold everything.

Mhmm. I mean Okay. My 8,000 square foot house, cars, boats, I was got rid of everything. All we had left, Steve, fit in a one unit storage unit, like a one bay storage unit. That's all we had left.

Steve: Okay.

Jerry: Pulled the suburban behind the RV, left January 15, and went straight to Florida because this is Michigan winter. Right? Straight to three days to Florida, straight to Florida, and did a whole year. And when I did that, it was the biggest leap of faith in my business because I didn't quite have I didn't know how it was gonna work out. Mhmm.

But what happened was is not being there in the day to day. And, also, I kinda opened up and I said, you know, why can't I do the same thing in other markets? Why does it have to be Detroit? There's a learning curve there, but I started doing deals, you know, outside of my home market, following the same principles, right, formula, and you do these things and comps and all of that. And what I found was when I was forced to not be there in the day to day, I figured out how to manage things remotely, and I hardly worked that entire year.

Here's the big here's the big lesson I hope people take away. I hardly worked. I mean, I worked a little bit, but hardly. Like, maybe maybe ten hours a week was about it in the RV that year. But my real estate business made more money that year than any year previously.

Steve: And what do you attribute that to?

Jerry: Well, I attribute that to building systems. First of all, doing higher margin deals. Yeah. Right. That was a big one.

But then also finding a way to get stuff done that I didn't have to do. Mhmm. And I I I couldn't I I was so stunned that I was doing all of these things that I thought I had to do because I was there.

Steve: Yeah.

Jerry: That's the biggest temptation when you're there. You're like, oh, I'll just run out to the property and check on the painter, you know? Yeah. Yeah. Or I'll just go do that.

And I wasn't doing any of that anymore. I was I was learning how to outsource all of that. And I found that other people could do it probably better than I could anyway. Mhmm. And it just became a thing where I would manage a few processes doing the right types of deals now and freed up so much time, you know, not being there at the job sites at the deals.

Steve: Well, so that's crazy. Right? So you you you had a business that you were you know, it was going, but you were frustrated with. Uh-huh. And you said, I'll just let someone else manage it.

I'm gonna go hit the road and then do what I the ten hours a week. And it just kinda took care of itself. Yeah. So you were still getting deals sent to you? Is it your phone?

I mean, how how what year was this?

Jerry: 02/2013.

Steve: 2013. So, you know, getting sent to maybe your iPhone.

Jerry: Yeah.

Steve: Right? And you analyze it, and then you say yes or no. And then everyone else is is doing the work.

Jerry: Yep. I even had a first layer analyzing. So I paid a guy $50 to analyze a deal that would come to me. Yeah. $50.

Right?

Steve: And I

Jerry: don't have to do it now. Right.

Steve: So he would

Jerry: be right at the beginning of this. Then it would come to me. So so nine out of 10 he'd kill. I'd get the one that passed the sniff test.

Steve: So you paid him $50 regardless of whether or not you took it down? Yeah. Wow. Okay. That's serious.

Jerry: Yeah. And it but it didn't really cost that much. For me not having to do it anymore Mhmm. Oh my gosh. It was huge.

Yeah. Just that alone transformed my entire business.

Steve: That was a big nugget.

Jerry: Yeah. Yeah. And there's guys that know this business. Like, I I so I so this guy is a five deal a year guy under he's full time, but he's a he's a I'm gonna run to Home Depot. I'm gonna do this.

So as a side thing for me, he analyzes my deals. Pay him $50. He makes a couple grand a month. I don't have to do it. Saves me hours.

Yeah. And he knows what I'm looking for, so I've trained him well on there's two things. Right? ARV and repairs. Yeah.

You get those two right, then you can you can get your buy number.

Steve: Wow. That's incredible. Yeah.

Jerry: So it's it's been working really well.

Steve: Okay. Any other, like, big takeaways that you could you could, you know, expound upon right now?

Jerry: Yeah. So my like, if if someone were to say to me, you know, what and this was one of your questions you were you were asking me earlier was, you know, what advice would you give, like, somebody new in the business? Really anybody is, the thing the mistake I made in the beginning was the same mistake everybody makes, which is this mindset of if I hustle, then that's how I'm gonna win and that's how I'm gonna get ahead. But here's the thing. If you work a hundred hours a week, then you are only two and a half times an average employee working forty weeks.

Steve: Mhmm.

Jerry: That is huge for me because two and a half times working one hundred hours a week, that's seven days a week, that's every waking hour you're working. And all you're getting is a two and a half times gain. That's not scalable.

Steve: No, it's not scalable.

Jerry: It's not scalable. Why would you do that? Yeah. So I have a different mindset of figure out your lifestyle first. And in today's day and age, there's two things you need to to scale a business without overworking.

It's technology

Steve: Mhmm.

Jerry: And it's people. Right. Right? If you've got technology and you're using technology right, you can save so much time.

Steve: Right.

Jerry: And if you've got the right team people doing things, then they can save you so much time. So I've been I focused now on the past several years on how do I how do I build out my technology and maximize and optimize and how do I get the right people doing the right things? And those two things allow me to not overwork, but still grow and scale my businesses.

Steve: Now it sounds really simple. Right? It's just those two things. It it's But each of those two things is amazingly detailed. Right?

So I I've I've told many people, like, incredibly blessed that I have amazing people behind me.

Jerry: Mhmm.

Steve: If I didn't have the people behind me, I wouldn't be doing the show right now. I'd be returning phone calls, text messages, whatever. So but it took me a long, long time of personal development to get this point as far as the people side. Right? Totally.

And then technology side, so I have an app that we've created. Mhmm. And it's working. You know, we're getting good feedback, but that wasn't easy. So you built your technology.

Are you dealing with developers? You you're you're negotiating with the programmers? What what is that like?

Jerry: So I have all my own software that we've created. And it's, so my my deal management platform is called Flipster, and it's an entire

Steve: Oh, that's your company. Uh-huh. I've heard of it. Yeah. Okay.

Jerry: So we developed that. It's a it's for flippers Mhmm. Wholesaling and fix and flip, but it's an entire platform for managing every part of the business. So

Steve: Okay.

Jerry: Everything from everything from acquisition, analyzing, offering, wholesaling, your cash buyers, your CRMs, your website, like, all of it. A to z funding, everything, proof of funds. So we build a platform, and I basically just took everything I've been doing for years that's been on spreadsheets and kinda all over and put it in an all in one all inclusive platform where you can just manage everything, and it communicates with itself. And so it's really cool. That alone has really helped me grow my business and manage it.

Because here's the thing. You you can do one or two deals and be unorganized. Right. But if you wanna start scaling, you start forgetting. I mean, I don't know who I talked to yesterday and

Steve: Oh, yeah.

Jerry: Where'd that go when you're driving across town looking for your paperwork or Did I sound

Steve: like that? Yeah. Yeah. Oh, yeah.

Jerry: I was a mess. Like, that's how I operated for a long time. And so that tool, we have some really cool deal analyzer tools, some, we have I have one tool that is an on market deal finder tool, and we get 1,500, 2,000 downloads of that software because I get it away for free.

Steve: Okay.

Jerry: A week, we get 2,000 people download that a week.

Steve: Amazing.

Jerry: And it's just a time saving tool for on market. What it does is it it basically gives you a list of everything that's underpriced

Steve: Mhmm.

Jerry: Which is probably a motivated seller.

Steve: Yeah.

Jerry: But it weeds through everything on market and says, here's here's here's what's under the average price per square foot.

Steve: Mhmm.

Jerry: Here's the percentage below, and then there's a way to organize and manage that data to keep it. You know? So it's just a time saver, but it's huge.

Steve: Absolutely. To

Jerry: have something like that.

Steve: If you're doing deals, it's it's a it's a a no brainer.

Jerry: So the way I do my if you're interested, Steve, I have a I have a, development team that's in Pakistan. Mhmm. And they're a three person team. My my lead developer is, like, $12 an hour. He would be a $180,000 a year US guy.

Steve: Yeah. Yeah. Well, we we pressed them out. We pressed them out there. They're Yeah.

Jerry: He's amazing. And he's living probably top of the food chain in Pakistan.

Steve: Right.

Jerry: You know? And he and he manages a couple of guys. So when when we do a big project, he'll we just deal with him. He brings on help, and that's how we kinda build out all our software and tools.

Steve: It's fascinating. So you're a licensed broker.

Jerry: Mhmm.

Steve: Tell me about that.

Jerry: So right when I got into real estate, I got my license, not for not for being a real estate agent, but just to have access to the MLS.

Steve: Yeah.

Jerry: Because because I wanted to set up my own showings. I wanted to access properties, and I wanted to run comps.

Steve: Right.

Jerry: And then o four zero five, these other tools like Zillow, Redfin, they weren't developed really then. I mean Yeah. If you didn't have MLS, it was hard to do the business.

Steve: You're flying dark.

Jerry: Yeah. I mean, you could get an agent, but then you're always waiting on the agent. So I just got it for my own investing. What I found was every year, the broker would pull me in and he would say, you know, you're not you're not making any sales because I was I was doing deals, but not running them through the brokerage. Mhmm.

So I'd have to find a new broker. So so finally, I just said, you know what? Screw this. I'll I'm gonna get my own broker's license. I don't gotta answer to anybody.

Yeah. So that's what I did. I got my broker's license. That license that broker is still active in Michigan. I have, you know, usually five or 10 agents that, work under that brokerage.

Steve: Mhmm.

Jerry: I spend maybe a couple hours a year in in that business because I've got a I've got someone that manages those guys and super hands off

Steve: and Yeah.

Jerry: But I keep it active and it's great. And they pay me basically a a per transaction fee. And then and then I tell them, don't ever ask me for anything. I don't wanna hear about it. Follow the rules and the law and pay your pay your insurance.

Steve: Pay your email insurance. To follow the rules.

Jerry: So And they're all investors. So you know?

Steve: And then you have I I was kinda, surprised. So I was telling my buddy Max, you know, Jerry's coming on the show. Jerry Noren is like, oh, that's the guy with the with the the big following. He's got the program, whatever. Or not the program.

He's got the YouTube channel. Oh. So I looked it up. I was like, you've got, like, 14,000 subscribers. What's that about?

Jerry: Well, just to put that in perspective, my goal is a million. Subscribers? A million subscribers. Yeah.

Steve: Okay.

Jerry: And it's not about the subscribers. That's just the benchmark. So everything I've done in my training business for the past, you know, eight, nine years, I was telling you this before the show, it's all been paid advertising. So, you know, I'll pay to run ads. I'll get people in my funnels that do my books and my programs and my home study courses and my coaching and all of that.

But it's been a so I look at that following, though, and we built, like, a million subscriber email list. And so I know I know online marketing. I know email marketing. I know those things. But what I haven't done is I haven't built any kind of, in my opinion, any kind of organic, following by giving by really being impactful.

Steve: Mhmm.

Jerry: Right? Or so now I've completely changed the I mean, we're still gonna do advertising because it works. But now what I want is I want to really have influence and impact, but I wanna do it organically. I don't wanna pay my way to it. I wanna I wanna build that by giving good content.

So that's the goal with the YouTube channel. We're doing a video a day on the channel. But like I was telling you, my my vision isn't, you know, fifteen, twenty thousand subscribers. It's a million subscribers because that for me, that'll be a benchmark that I'm really having a massive impact.

Steve: Yeah.

Jerry: So but I've gotta I've gotta be able to really put out good content, consistent content, and have it mean something to somebody for it to really happen.

Steve: Well, yeah. I mean, to have when I was looking at it, like, a video a day is just nuts. I can't even imagine doing that. So Yeah. That's Real Estate Freedom TV, guys.

If you guys wanna check it out, it's pretty cool. And it it looks like when we're talking about impact and and and giving back, you know, financial freedom seems to be the message, the core message. Yeah. So talk about that.

Jerry: Yeah. So, you know, kinda like I was saying a minute ago, I wanna I wanna be you know, we're we're dead a whole lot longer than we're alive. Right?

Steve: Yeah.

Jerry: So I want that to mean something. And so, too often people get into real estate, and it's about the stuff. It's about the money. It's about the house and the luxury cars. And there's nothing wrong with that.

I want nice stuff too.

Steve: Yeah. Yeah.

Jerry: But I don't want that to be my sole focus. And it was for a while. It was all about the money. Right. But, I've got eight kids, and I wanna be balanced.

I don't wanna overwork. I love real estate, but if if I'm honest, it's not about houses. Right? It's about what that provides. And so for me, I look at it.

There's four things. There's be, do, give, and be, do, have, and give. Right? Be the person, develop yourself, your talents, your hobbies, be able to have nice things, right, and and do nice things, but also give back in a meaningful way and and be able to do those things that really matter. And I think the only way to do that is to have time.

Steve: And the

Jerry: only way to have time I think you have to have financial financial first, but if you're and if you're careful, then that can free up time. So one of my mentors, and this is kinda where I learned this, careful, then that can free up time. So one of my mentors and this is kinda where I learned this. One of my mentors taught me that too many entrepreneurs get into business, and they they have this mindset of, you know, in the beginning, I'm gonna work eighty hours a week and a hundred hours a week. And then someday in the near future, hopefully, I'm gonna arrive.

Steve: Yeah.

Jerry: And as soon as I arrive, then I'm gonna live my dream lifestyle.

Steve: Right.

Jerry: But what happens is during those two or three years, you develop habits and then they get there and they could they could change, but they don't change.

Steve: Right.

Jerry: Because they've just developed these habits. Yeah. So I've kinda looked at things and said, any project I take on, I look at it and I say, can I do it without overworking and becoming imbalanced? If I can't and I don't see a clear way to do it, then don't do it.

Steve: Right.

Jerry: So that's kind of my filter is is is it gonna jeopardize the my ideal lifestyle? Is there a way for me to do that thing but but not not become imbalanced by doing it and overworking? Mhmm. And I'm not perfect at it.

Steve: Oh, no. No. Of course.

Jerry: But I try.

Steve: So that's but that's one of the things that, you know, we try to impart on on, at our brokerage and other people that we we work with is that everyone has this idea that you've got this business and you fit your life around it. Yeah. Right? And it's backwards. It's backwards.

You got your life.

Jerry: Yeah.

Steve: And your business serves your life. Yeah. And so, yeah, a lot of people get that wrong.

Jerry: Yeah. That's why when I look at deals so let's say a deal comes in and I put it through a filter and my filter is first, my first filter is what do I have going on in my life right now?

Steve: Mhmm. If

Jerry: it's if I've got a lot going on personally in my life, then my my step is wholesale it.

Steve: Mhmm.

Jerry: Because then you're done. Right?

Steve: Alright.

Jerry: If I've got Bandwidth so my second filter is then okay. Business wise, does this deal make sense to take on? So I either wholesale it or I fix and flip it. So fix and flip is a whole another layer of management. Right?

Because you gotta get funding. You gotta do a renovation. So then I say, is it worth the return on investment? Is this worth the time, energy and effort it's going to take me to take on this deal? And if I've got the bandwidth personally and in my business, I'll take it on.

If I don't, I wholesale it. And I love that model.

Steve: Right. It's a great model.

Jerry: It's a great model because it keeps you in check so that you're not overdoing it. Too many people are like, I'll take it on. I'll take it on. I'll take it on. Next thing you know, you're working, you're overworking, and your relationships are falling apart.

Your spirituality, your personal like, your health, all those things go secondary. Mhmm. And it's all about the deal.

Steve: Right. Fastest way to broke. Yeah. And miserable and unhappy. So, guys, remember, this is a live show, so please do ask your questions.

Okay. So we talked about you were doing fifty, seventy five deals in Detroit.

Jerry: Mhmm. Right?

Steve: And you're wholesaling. It was a low it was a high volume, low margin business. So a low margin on those wholesales and flips. You were so flip was 25 k. What was the wholesale?

Jerry: Wholesale seven ten.

Steve: $7.10.

Jerry: Every now and then, I'd get a, like, a 12 or 13. And Then that was a big deal. Now that's no that's not a big deal at all.

Steve: Right. You know, we're in a

Jerry: different market.

Steve: But So back then, that was the and I think those numbers are pretty consistent with today. Yeah. If someone's wholesaling and flipping Yeah. They're pretty average. 7 to 13 is a is a good target for for wholesale, and the flip is 20 to 30.

Mhmm. Right? So now For entry level. For entry level. Yeah.

Right. And so you're you're talking about new construction and luxury. So Yeah. Let's start with luxury. Okay.

Jerry: And then

Steve: we'll talk about new construction. Luxury, what is your, what how do you define luxury? And after that, what's your target acquisition?

Jerry: Great. So to me, I think the safe place for people to transition to is the three to six hundred. Mhmm. Because that's still that's I wouldn't call that luxury. I typically call luxury over 600 in most markets.

Now in California, you can buy a shed, you know.

Steve: 600 crap.

Jerry: Or New York City or whatever. Right? But in most markets, you start to change into a luxury buyer usually over $6,700 because now you gotta start thinking about, you know, do I put in a a sub $020,000 fridge?

Steve: Mhmm.

Jerry: You know, am I doing, like, crazy crown, or am I going really so so your strategy

Steve: The details matter more.

Jerry: Details start to matter a whole lot more. Not three to six, though. Three to six is basically the same thing you're doing at 150, 200 Yeah. In a nicer neighborhood in a bigger home.

Steve: Right.

Jerry: So now it's 4,000 square foot instead of 1,800.

Steve: Mhmm.

Jerry: And it's just I mean, other than that, you're almost doing the same granite, the same everything else.

Steve: Mhmm.

Jerry: You're just a different neighborhood. So it's it's an easy transition, but your margins go way up. Yeah. So I like the three to six is kinda that's now my low end

Steve: Mhmm.

Jerry: Is three to six. Luxury, though, is pushing that six to a million, a million 2, a million 3. So, for example, I've got a deal right now up in Scottsdale. Bought it for $6.30. Our we're almost done.

Our rehab was 2, a little over 2, and we've got a couple interested buyers at 1.2.

Steve: Mhmm.

Jerry: So, I mean, we're looking at about a 400 gross, and I've got, obviously, closing fees and carry and stuff, but a gross $400,000 spread on one deal.

Steve: Yeah.

Jerry: And it's still a six month turn. You know? Like, we're turning it in six months, hopefully. Maybe maybe a little longer time on market, right, because you're at that price point where you might have to wait for that buyer a little bit longer, but nothing really changes a whole lot more on my lower end model other than you better really understand that buyer, what they want, get get so get a designer and, like, don't guess. Yeah.

On your on your electrical fix on your light fixtures and your you know, don't guess.

Steve: Bring in a professional.

Jerry: Get in get experts. So I I get experts. I get expert agents and designers. Mhmm. And I really try to make sure I know that buyer way more than you don't need to know your buyer at $200.

Steve: Yeah. You don't need to

Jerry: know that buyer.

Steve: It's a lot of them.

Jerry: They're just There's

Steve: a lot of those guys out there.

Jerry: Yeah. And it's easy to figure out what's in style today and all of that. But but at the higher ends, you really gotta know your buyer. It's very market specific. But, you know, think about it.

I'd have to do 15 houses at 25 a pop Mhmm. Right, or whatever. 12 or 12 or so to make the same on just this one deal. And here's the thing. There's way less competition buying a house for 600.

Steve: There's almost no competition.

Jerry: There's almost no competition. Yeah. So not all markets can support it. Mhmm. Arizona can.

Right. And so you gotta hit. But every market has their high

Steve: end. Mhmm.

Jerry: Every market does. I don't care what market you're in. There's there's suburbs that are your million dollar neighborhoods, right? So that's where you go and there's you'll find that it's you know, I I think 80% of fix and flippers are under 200,000 ARV.

Steve: Yeah.

Jerry: So maybe another 10% go from 200 to maybe three fifty.

Steve: Mhmm.

Jerry: Virtually none, maybe 5%, are the higher end flippers.

Steve: Alright.

Jerry: So it's a different world there.

Steve: So we're looking at, so 600 plus. Right? So you're buying this one for 600, and you were talking about gross margin of 400. What is well, a, how did you you how did you source that deal?

Jerry: Yep. Well, so, I started I picked Desert Mountain

Steve: Mhmm.

Jerry: Scottsdale, and then we just started really looking. So I like to look at new construction first.

Steve: Mhmm.

Jerry: And if I can understand the new construction market, then I can kinda I can kinda see what retail's doing on flips around that. So same homes that are going on there that are, your remodel homes. And then I try to figure out, okay, well, if this is what the new construction buyer looks like, what does the what does the retail in that same neighborhood or that same area look like? Mhmm. And so I but I always kinda go in first with new construction in mind.

Steve: Okay.

Jerry: And, like, I'll give you like, in, for example, in Fountain Hills here, we're doing one where, bought the lot for 100. We're doing about a 800 construction, maybe $8.50 build, 4,500 square foot. And so I'm all in around 9 and maybe $9.50, but, back end's $1.04. Mhmm. And so and it's a 4,500 square foot.

I know my buyer. It's a second home buyer from Canada that buys new construction in Fountain Hills.

Steve: Yeah.

Jerry: And I know because I've done my homework to learn what does that buyer want, what you know, no steps at all.

Steve: Oh, yeah.

Jerry: You know? Right? And and what kind of so pool and kitchen and all of that, we spend a lot of time trying to learn. But from that and understanding that buyer, I can now start start to look at the rest of Fountain Hills, for example Mhmm. And understand, well, there's a certain buyer that is not the new construction, notch it down.

Now what are they looking for? And how do I provide a product that's like new construction

Steve: Yeah. Is typically the way I'll go. Okay. But going back to the other property in Scottsdale, how did

Jerry: you

Steve: but going back to the other property in Scottsdale, how did you source that specific deal?

Jerry: I just decided that I wanna I wanna I wanna search that area. It was on market.

Steve: It was on market? Yeah.

Jerry: It was on market.

Steve: Yeah.

Jerry: So it was on market, and there's three or four more that I'm really eyeing.

Steve: Yeah. You know,

Jerry: I gotta prove this one because it's a little I'm pushing the market at one too.

Steve: Right. You know, I'm pushing the market. So you sourced it. You've taken it down. Mhmm.

And then I'm assuming you have lenders that you work with on on a first name basis that give you pretty good rates. Yeah. So, I mean, what what what is

Jerry: But I do a 100% funding.

Steve: So a 100% funding. Mhmm.

Jerry: What about the rehab? So what I do is I do I usually do an eighty twenty or a ninety ten. So I'll get I'll get, hard money

Steve: Mhmm.

Jerry: Asset lenders at the 80% to 90%.

Steve: Okay.

Jerry: And then private money on the so that's total. So purchase and rehab.

Steve: Mhmm.

Jerry: Right. That's what's so cool about the market today. Hard money lenders are cheaper than they've ever been.

Steve: Oh, yeah.

Jerry: I mean, like single digits. I mean, are you kidding? I paid I paid 15 to 18% when I first started and eight points. But it was all that was available.

Steve: Right. Right.

Jerry: You know, so so now if you can show a track record, you can get down to nine percent one point. Mhmm. If you can now if you're new, you might be paying twelve percent two points. Mhmm. 80%.

So come in with 20%. So I'll use private money to cover the other 20%. I'm a 100% in.

Steve: Okay. So you said six months hold time. Mhmm. You you manage accrues. You have accrues.

What what's that look like?

Jerry: Yeah. So there's two models there. I like the GC model and manage the GC. Mhmm. Now I haven't always been under that belief, but you have to if you wanna scale.

Yeah. And you have to if you wanna do remote. So, like, I just did a deal in Houston, Texas. It was a hurricane Harvey house. I I've never saw the property once.

Steve: Mhmm.

Jerry: Not once. I didn't go out there in the beginning, middle or end. And so I had to rely heavily on my I've got a system I follow for my remote deals.

Steve: Yeah.

Jerry: And it's basically you got to have a GC. You got a budget higher than you normally would. Right? Because if you want a good GC, you're gonna pay for it.

Steve: Yeah.

Jerry: So I go into every deal 20% higher than my competition. Mhmm. So I gotta work harder because I gotta buy it less because I'm paying more. Mhmm. But I I wanna build in my management into the deal.

And then my system is I have a narc who follows up on the I call him a narc. But it's basically someone that goes out to the property. He

Steve: was the tattletale back in time.

Jerry: He's the tattletale.

Steve: Yeah.

Jerry: Yeah. And those guys are cheap. I mean, all I want him to do is go out there and take pictures and video and tell me what's going on.

Steve: Kinda like

Jerry: secret shopper. And then and the GC never knows when the narc's showing up. Yeah. So he can't screw with me.

Steve: Okay. Yeah. That's a huge I mean, that's a huge nugget. Yeah.

Jerry: Right? I pay him so I find someone really local. Usually, it's a freelance photographer on Craigslist.

Steve: Mhmm. Because all

Jerry: I need him to do is go out there and take video and pictures and tell me what's going on. That's it. His need to know any construction, nothing. Doesn't need to talk to anybody. So he'll go out there at 10AM and say, there's nobody here.

And I'll call my GC and I'll say, yeah. We're working away. No. You're not. And so now I take massive action to correct if we're off off our timeline, but I don't need to be there.

Steve: That's incredible. I mean, you outsource really just about everything. So Yeah. You got the you got the NARC and you got the GC.

Jerry: Mhmm.

Steve: That's pretty much it. Right? That's all

Jerry: I need.

Steve: Am I missing anything?

Jerry: No. I mean, I'll what I'll do is I'll get I'll the very first thing I do so when I get an overseas deal overseas Mhmm. Remote deal, out of state deal, the very first thing I do before I even pick my GC or anything is I decide who my listing agent's going to be. And I go for a top selling agent and I make them double as my designer. So they come in right from the very beginning and they tell me this is what you should do and not do.

Mhmm. Because they know. Right? They've got the buyers. They know their market.

Steve: Right.

Jerry: Now don't do this with any agent, but a really top selling agent. Mhmm. And they love it because I tell them, look, I plan on doing 12 to 15 deals in this market. I get them to do it for a flat fee, my whole thing.

Steve: What's the flat fee?

Jerry: $1,500.

Steve: Oh, jeez. Okay.

Jerry: Now you're not gonna like that as

Steve: a pro. No. No. No. As a broker, I am Maybe you stop talking that more well now.

I'm offended right now. Okay. So then now that what what would be the net profit percentage of the deal, like, in a luxury? Like, what's the target?

Jerry: So I still try to follow the 70% formula. So ARV times point seven less repairs.

Steve: Mhmm.

Jerry: And that gives me about a 15% profit margin.

Steve: Okay. So 15% profit margin is is the target after GCU is paid, agents paid Mhmm. In the bank.

Jerry: Yep. 15. And a lot of people look at that and they go, well, why aren't you happy to make 200 instead of 400? The reason why is you're taking a bigger risk. Yeah.

Right. You're borrowing more capital.

Steve: Mhmm.

Jerry: Sometimes sometimes you're you're not right on. You might have to sit a little. I mean, there's things that can go wrong.

Steve: So Six months or something

Jerry: like that. A home run. Yeah. I better hit a home run. So I want that I still want that 15% margin

Steve: Yeah.

Jerry: On the even on the big ones.

Steve: Okay.

Jerry: You and you should. Like, you deserve it. You should.

Steve: So now let's let's let's take a turn. Whereas that was that was luxury. Multi millions to multi is the same margin for multimillion? 3,000,000? Same target?

Okay.

Jerry: Yep.

Steve: Now new construction, not a lot of people are are involved with new construction. So talk about what new construction looks like.

Jerry: So your formula is not it's slightly different, but what's what's as the fix and flip formula Mhmm. It's a little different because, basically, in with fix and flip, you got two things. You got your house and the rehab.

Steve: Mhmm.

Jerry: With new construction, you have your lot and the build. Mhmm. But you're still dealing with kind of two things. So with new construction, everything is about price per square foot. Like, that's the measurement.

You look at everything. So your build price per square foot and, your your and your sale price per square foot. So once you convert your thinking with new construction to a price per square foot

Steve: Mhmm.

Jerry: It allows you to really understand how to look at at that model. So in a really general rule is whatever you're selling for price per square foot. So let's take $400 a foot price per square foot. You wanna be building. Now this isn't always the case, but it's just a general rule.

You wanna be building for 200 a square foot. Mhmm. So you your cost to build is 200 a square foot. You're selling that $400 a square foot. Obviously, you have your lot now in there and your lot, if you're bound 10 to 15% of your sale price.

Steve: Mhmm.

Jerry: So I'm trying to ballpark a little

Steve: bit here. But it is good.

Jerry: It kinda gives you a way now to look at things. So so but but what's nice about new construction is all of the guesswork is gone. Yeah. Like, what I do is I run my numbers. I think I've got my numbers, but then I I spend the money upfront for my design, my architectural plans.

Steve: Mhmm.

Jerry: And I'll spend $1,015,000 dollars typically on a set of plans, custom plans. When I say custom, I wanna I wanna architect to build a plan on that lot.

Steve: Yeah.

Jerry: Capturing views or whatever. The right layout, where your

Steve: project can't you we can't reuse. No.

Jerry: It's not Internet plans for a dollar a foot. No. Not when you're doing high end.

Steve: Right. Right.

Jerry: Now if you're building a 300,000, yeah, buy it off the Internet and plop it on a 50 foot lot or

Steve: whatever. Yeah.

Jerry: So we custom build it. It'll you'll have to invest 10 to $15,000, but now you can bid that out.

Steve: Mhmm.

Jerry: And when you bid it out, you bid it to the dime. It's all new. Right? So contractors now there's no guesswork unless you change something.

Steve: There's no surprises when we

Jerry: No surprises. Yeah. Yeah. Oh my gosh. Rehabbing, it's like, I've done hundreds of rehabs, and every single one, it's like, well, we didn't know that was there.

And Mhmm. Oops. Now we're over budget.

Steve: Yeah. We didn't know the sewer line was was done.

Jerry: Yeah. So that's what's it's more predictable. And think about it. You know, there's nationally traded builders. There's not very many nationally traded rehabbers.

Steve: Yeah.

Jerry: Because every deal is unique to the deal. Mhmm. Whereas construction, no. You can have a model and it's you can understand your cost upfront. So then when I bid it out to builders, right Mhmm.

Now I know my numbers, and I can say, does this make sense? Do I move forward? So I've done lots of deals where I've invested $1,015,000, found out that my cost to build is way higher than I thought. Right. Now it doesn't make sense.

I don't do the deal.

Steve: Yeah. And that goes back to when we're talking earlier about a 50% margin because you have these other deals where you're spending $50 every time for the guy to underwrite it. And you got these hard costs that Yeah. No deal happens, you still got that hard cost.

Jerry: Yeah. Yeah. But, well, here's what's so cool about new construction. The other thing I love about it is you can be way more creative on your acquisition with lots. So so lot owners will sell their lots, and they're way more open to creative financing than

Steve: They have to be.

Jerry: They have to be because it's dirt, and there's no value in it right right now. Mhmm. So I'll buy a lot of my dirt, on terms. Mhmm.

Steve: And a

Jerry: lot of times what I'll do is I'll get that lot owner to subordinate and carry. So they'll carry it for me and they'll subordinate. Meaning, they'll take a back seat to my construction loan.

Steve: Second lien.

Jerry: And now my construction lender will look at the lot as my acquisition as my, equity. Mhmm. And they'll give me a 100% construction. So now I'm doing a deal 100% financed.

Steve: Yeah.

Jerry: Absolutely. Put a dime down on the lot because I I'll tell the lot owner. I'll say, I'll give you 200 for your lot, but here's what I need you to do. I need you to wait to get paid till I sell it. Mhmm.

Steve: But But

Jerry: it's not selling. It's sitting there, and you haven't been able to sell it. So all I need you to do is subordinate to my construction lender.

Steve: Mhmm. Well,

Jerry: it's still leaned up.

Steve: Alright.

Jerry: It's just second place. Yeah. Once we sell the house, you get paid your 200,000, and you get your lot moved.

Steve: Okay.

Jerry: And now that $200,000 lot, the bank or my construction lender will now look at that as basically 200,000 down. Mhmm. And then they'll give me the 6 or 700 or whatever for construction. So 100% financed.

Steve: That's that's incredible. So then are you still looking at the same profit Mhmm. Okay. Yeah. So then how do you acquire those?

Jerry: New construction? Well, now you're now you're sourcing lots.

Steve: Mhmm.

Jerry: And so you gotta you gotta start to really understand what's your new construction market. So you always start with what is new construction selling for? And that's the same as flipping, right? What's my ARV?

Steve: And

Jerry: we don't call it after repair. We would call it new construction sale price.

Steve: Right.

Jerry: And so you start there. Now you gotta the second thing you gotta figure out is, well, what's it gonna cost me to build that house that sold for, you know, 2,500,000.0 or whatever. Start to figure out that number and then run your formula and get to your lot buy. And now you know what you gotta acquire your lot for.

Steve: Yeah. Yeah.

Jerry: So it's pretty similar, right, with houses. You you right? So you

Steve: Back back

Jerry: in to your buy. Yeah. So here, you're backing into your lot buy Mhmm. Following pretty similar process.

Steve: So then the same contract are the same GC that's doing your rehab, or is that the same GC that's building these properties? Or No. Completely different GC?

Jerry: Yeah. So they're builders.

Steve: Okay.

Jerry: So I'll hire a builder to do the new construction, usually.

Steve: So, like, is there, like, a builder that you that you like in town? Or,

Jerry: Well, so every market's different. So in my so I do new construction in Utah. And in Utah, the builder like, the be a builder is so competitive that there's a lot of them. And I can hire a builder for a flat rate of, like, $25.

Steve: Mhmm.

Jerry: Like, here in Arizona, they want 15%. You know, it's it'll cost me a $180 to hire that builder where I can do the same thing in another market for, like, a really low flat fee.

Steve: Yeah.

Jerry: So I'm always trying to figure out, like, how do I do this?

Steve: What's the right way to do it? Fascinating.

Jerry: Yeah. Every market's a little different.

Steve: So the other thing we talked about we talked about luxury. We talked about new construction. We're now we're talking about virtual

Jerry: Mhmm.

Steve: Flipping. So we there's virtual wholesaling, and there's some people that that play in that space. Haven't heard a lot of people virtual flipping. So talk about that.

Jerry: Well, fix and flip? Yeah. Yeah. Well, it goes back to that GCNARC system. You've gotta really have good eyes on the ground.

Yeah. And it's still not foolproof. Like, I've gotten I've I've gotten into some bad whenever I get over my head on a virtual, it's because I'm not getting the right information.

Steve: Yeah.

Jerry: And my GC is taking me for a ride. So I end up I end up not having the quality that it needs to be because he's cutting corners because he knows I'm not there every day looking at it. Yeah. So the way that you prevent some of that from happening is you gotta have a really good eyes on the ground. So my agent's gotta be eyes on the ground.

My narc's gotta be eyes on the ground, and my GC better be an honest good GC. If you can get those three things

Steve: Mhmm.

Jerry: Then you can do deals remotely.

Steve: But

Jerry: I look at every time I go into a remote market, I try not to look at one and done because there is a learning curve.

Steve: Yeah.

Jerry: Every new market, there's a learning curve. So I look at it and say, I like this market. I like what's going on here. I'm in it for the long haul. I'm not so worried about my first deal as I am my fourth or fifth deal.

Yeah. Right? Mhmm. So let's let's find the right team. Maybe that takes a deal or two to get that right.

I don't do so well. I mean, I don't wanna lose money.

Steve: Right.

Jerry: But I'm but I'm looking at it a little more long term than just, like, one deal.

Steve: Okay.

Jerry: You know?

Steve: That makes sense.

Jerry: But I have a, you know, I have a pretty healthy relationship with risk and fear, and most people don't. A lot of people that want to get into flipping, they really struggle with that fear and fear of well, fear of messing up, fear of losing money. And anybody I coach, I tell them you're going to like, just let's just get that out of the way. You're gonna lose money on a deal. And they look at me like, what?

You're going to lose money on a deal. Just

Steve: Just a matter of time.

Jerry: If you're not, then you're not in the game long enough or, you know, you're not you're not doing the game right because, you know, nobody bats a thousand percent. Right? Mhmm. I mean, what's a Hall of Fame baseball player? 300, three fifty?

Steve: Three hundred. Yeah.

Jerry: I mean, that's good.

Steve: Yeah. That means you're

Jerry: not getting on base seven times. So I kinda look at it, and I say at the end of the year, did I win more than I lost? Mhmm. And make sure that that margin, that that ratio is really good. But you have to.

Right? Because you're not gonna hit it. You're not gonna do it perfect every time

Steve: Mhmm.

Jerry: On every deal.

Steve: Yep. So Max has a question. We kinda talked a little bit, but, you know, someone that's wholesaling right now in this market. Right? So that that's who's listening right now.

Mhmm. A lot of them, 25, 30. Yeah. And they're wholesaling today. So what advice would you give them if they wanna make this, pivot to Mhmm.

Not just flipping, but luxury flipping?

Jerry: Well, so if you're if you're wholesaling, what I would say to a wholesaler is really sit down and think about your endgame. Mhmm. Very few wholesalers stay wholesalers.

Steve: Yeah.

Jerry: It's a hard life because it's such a hustle life. So it doesn't it's not conducive to, a really the the ideal lifestyle for most wholesalers. Now I'm generalizing because there are some that just ramp their model up and they just crush it and they just stay wholesalers. But generally speaking, what I've seen is people transition from wholesaling into the next step would be starting to do some fix and flips because you start to look at it and you go, you know, I passed that deal off for $10. That fix and flipper just made 40.

Wait a minute. What's he doing that I can't do?

Steve: Yeah.

Jerry: And you start to think about, well, maybe I should transition into that. And so those are some things to kind of think about. Well, where do you want to be? Where are do you want to stay a wholesaler? Do you like that model so much so that you could see yourself doing it in ten years?

If the answer is no, then start to think about what that looks like and what do you need to learn? What do you need to do to kinda start to transition into that?

Steve: Mhmm.

Jerry: And that can be a two year plan. I mean, for me, I did it two years, five, six deals a month, and I was happy as could be. It was great. But I looked at the business and I said, I wanna always progress. How do I learn?

What's the next thing for me to do to progress in my journey? And it's either do more wholesales or transition into higher profit deals.

Steve: Yeah.

Jerry: And so that's kinda one thing to really think about with with, wholesaling.

Steve: Okay. Well, I like that. So is there anything that you attribute your success to? Because, you know, there's a lot of people that flip. Mhmm.

What what what's what's been the key to your success?

Jerry: I would say, developing my mindset more than anything else. So when I when I first started wholesaling, I knew my mindset was wrong. I had a really bad mindset, scarcity mindset. I grew up poor. I had a belief that success was directly correlated with how hard you worked.

That's what my dad taught me. Good principle.

Steve: And my dad taught me the same.

Jerry: Yeah. But it doesn't equate to money. Like, there's no relationship. You tie the relationship. Yeah.

So I thought I'm gonna if I work really, really hard for a long time, then I'll see the fruits.

Steve: Mhmm.

Jerry: And it's taken me a lot of work to change the mindset to more of a work smarter, not harder to get ahead and more of a a business mindset. And so this this is, like, the biggest thing I could say to somebody is, especially wholesalers, don't focus on doing a deal. Because maybe you do a deal, maybe you make some money, but in flipping, every deal you do, you're out of business. Right? You gotta do another deal to make money again.

Mhmm. And so so many flippers chase a deal instead of building a business that does deals. Yeah. And if you can adapt the mindset of how do I build a business that does deals? Because now you have processes.

You have systems. You have you start to build a team. You start to think outside of chasing and hustling and doing a deal. Mhmm. And that's the only way that you can really scale in this business and maintain a good work life balance and and have a good lifestyle is you've gotta develop out the business side of this.

And I see so many wholesalers that just they just focus on the the deal, the next deal, the next deal, and they're inefficient, and they're working really hard

Steve: Yeah.

Jerry: But they're not getting ahead. They're they're no they're no better off than they were last month or last year

Steve: Mhmm.

Jerry: Because they they're not developing out the business. So fill the business.

Steve: So let's talk about that a little bit because we talked about, you know, you got your guy that underwrites for $50, and you got you got the NARC and the and the GC. But that's property specific for the most part.

Jerry: Yeah.

Steve: So your operations today Mhmm. Right? So, I mean, how many flips do you have going on right now?

Jerry: So, just a handful.

Steve: Just a handful?

Jerry: Yeah. I just do I just have a handful of deals going on right now at any given time.

Steve: So who who's on staff in your organization?

Jerry: So everything I'm doing on my so on my deal business, everything is, location specific.

Steve: Mhmm.

Jerry: So whatever wherever I'm doing a deal, I'm gonna build my my local team there.

Steve: Okay.

Jerry: And that's my GC, my NARC, my agent. Those are my three key people. You know, title's important, but that's not as critical. Mhmm. You know, but those are my three maybe a designer if I'm doing higher end

Steve: Mhmm.

Jerry: Then I need to I need a good designer. But I'm gonna build my local team there. And then the other thing that I do that's been really instrumental to my business is bird dogs.

Steve: Yeah.

Jerry: So, I mean, I used to do a million mailings, literally a million mailings a year. In 2012, I did a million mailings. Like, that was my total mailings I did.

Steve: Wow.

Jerry: And I did crazy marketing. And now I've transitioned. It's taken a while, but now I've got bird dogs nationwide. Yeah. And I teach them, here's my criteria.

Here's tools to go, like, find deals. I'll train you and teach you, but find deals that meet my criteria and bring them to me. Yeah. So now I no longer chase deals. Deals chase me.

Yeah. And, I mean, you're bringing me some deals. And so, so yeah. So that's kind of my model now is if you buy into the bird dog model, it's the most brilliant model ever.

Steve: Right.

Jerry: Right? Wholesalers, bird dogs, finders, I kinda put them all in the same category. It's other people that are willing to do the marketing, the negotiating, get the contracts, and bring them to me. As long as they're in my formula, I don't care how much they make on a deal.

Steve: Yeah.

Jerry: As long as it fits my criteria, my formula. And that now has has allowed me to really stop all acquisitions department completely.

Steve: Yeah. So you don't have to have an acquisition department or marketing department. It's just deals just come.

Jerry: If you build a good referral network, a good bird dog network.

Steve: So then the other part we're talking about was you're either gonna flip or you're gonna wholesale.

Jerry: Yeah.

Steve: So So on the wholesaling side, are you the disposition arm?

Jerry: Are you

Steve: the one that's passing that on?

Jerry: No. So my my, my same guy so we have a process where we basically, if I don't want it but it's a deal Mhmm. We co wholesale. So I don't even wanna develop a cash buyer list. What I wanna develop is a wholesaler list.

Because what I found is other wholesalers that are doing that business really full time, the players Mhmm. They're gonna have a better cash buyer than I would or that I'm willing to develop.

Steve: Yeah.

Jerry: So I'll go to I'll go to you, Steve, and say, hey. I got this deal. Shop it to your shop it to your buyers Mhmm. And we'll call wholesale.

Steve: Yeah.

Jerry: And even that has worked brilliantly, and I don't even need I can find the players on Craigslist in about an hour. Right. I can I can find them? I can talk to them, and I can co wholesale a deal in an hour if it's a deal.

Steve: Yeah.

Jerry: Because if it's a deal, those guys are gonna have buyers ready to go.

Steve: Right.

Jerry: And they're glad they'll gladly co wholesale with you. Yeah. Simple JV agreement, done.

Steve: Okay. That makes a lot of sense.

Jerry: And and a lot of those are $20, $30 gross that you're that you're splitting with that wholesaler. And so it's a little different mindset because everything you learn about the businesses, build a cash buyer list, build a cash buyer list, and then do these do these massive acquisitions.

Steve: Mhmm.

Jerry: And you are, if you wanna dominate as a wholesaler and own own the whole thing.

Steve: Right.

Jerry: Acquisitions to disposition. But since I'm kinda more focusing on higher margin flips

Steve: Mhmm.

Jerry: I don't need I don't really need that model

Steve: Right.

Jerry: So much.

Steve: As not as not as critical to your operation. Yeah. So Yeah. Let's talk about markets because you talked about, you know, Hurricane Harvey.

Jerry: Mhmm.

Steve: And it was obviously here. You know, heard you heard about Utah. So what markets are you are you virtually flipping in?

Jerry: Well, so it really doesn't matter if somebody finds a deal that meets that criteria I like. I don't care where it's at in The US. Okay. Yeah. Now I have a few rules.

Like, I don't like low end. So my I mean, ideally, like I was saying earlier, I love the 3 to 600. I get really excited there because I can learn that model anywhere.

Steve: Yeah.

Jerry: It's that's an easy one to learn. Over 600 in a market I don't know is a little more work because there's some nuances there because now you're hitting luxury. Mhmm. And that's gonna change market to market, even what you do. Mhmm.

You know, and what that buyer wants. The under 300, I don't get so excited about and I won't touch anything that ARVs less than 100.

Steve: Yeah.

Jerry: Really 150 because it's just for what you'll make on that, it's not worth the time, energy and effort. If you know how to make more for the same time, energy and effort at a little higher end.

Steve: Yeah. Right? Oh, yeah. Oh, it makes a lot of sense.

Jerry: Yeah. Like, I honestly, Steve, I see the flippers here in Arizona, and it blows my fix and flippers. It blows my mind how competitive it is at the 200,000 price point, how little margins they make, and how they're there's one after another that'll do it. I just, I don't understand it. I don't understand a $5,000 or $10,000 profit margin doing a fix and flip.

Steve: Right. Well, for the risk.

Jerry: Yeah. There's there's easier ways to make 5 or $10. I mean, the wholesaler made more than you did.

Steve: Right. Usually. Oh, I think that's kind of the attitude you see in our on our Facebook forums. They're like, man, the wholesaler is is is eating better right now Yeah. Than the flippers are.

Jerry: I did one I did one this past summer, Steve. It was, I picked picked up a package back in back in Detroit, Oak Park, Michigan. It was five houses from a burned out landlord. I picked them all up. And these were these were my old model of, like, a 125, 150 ARV.

Mhmm. Little thousand square foot brick ranches, $25 easy rehabs. Like I just I can do that in a like in my sleep. And one of them, I was like, you know what? I've done the other four.

I kind of am done with this. I'm bored with this. I'm just gonna wholesale this last one. I make two phone calls and I wholesale this thing for, like, $32 to a fix and flipper. And I know what it takes to fix them up.

I know what it'll sell for. Mhmm. And I'm like, he's gonna make $15 if he does everything right. He's gonna make $15. I just made 32 wholesaling it.

Steve: Yeah.

Jerry: So I get it. I mean, I see why now there has been there is no better time to wholesale. But here's the thing. Here's the trade off. Harder to get deals, make more money than you ever made wholesaling

Steve: Mhmm.

Jerry: Because the buyers are overpaying. They're way out of formula.

Steve: Yeah. They are.

Jerry: Like in Arizona, I think I I talked to one wholesaler that does about eighty eighty wholesales. I don't know if you know Dave McLennan.

Steve: I know of him.

Jerry: Okay. Yeah. Super great guy. Good friends. You know, I grew up with him, so I know him for a long time.

Steve: Yeah.

Jerry: He told me, said, Jerry, my cash buyer formula is 82%. Mhmm.

Steve: It

Jerry: is. 82%.

Steve: Yeah. That's what it is right now. That's what it is today. It's 82% minus repairs. I I don't know anyone's paying 82% outright.

Jerry: But 82% less repairs.

Steve: Yeah. That's

Jerry: That's 82% less repairs.

Steve: That's been the formula for about a year now.

Jerry: Minus 65%, you know, maybe 70%. Right? Like, so oh my god. I can't so if you're in, if you're in the low end business, if you're gonna flip in the 200 price point, do not be a fix and flipper. Be a wholesaler because you you the wholesalers are making all the money.

Steve: Right.

Jerry: Because they're they're they're getting off market deals.

Steve: Mhmm.

Jerry: They're making 25, the fix and flipper, who's doing all the work

Steve: Taking all the risk.

Jerry: And taking all the risk is making $15.10. Yeah. Crazy crazy how that is, but it's because it's because it's harder to find deals. So when you get that deal, there's a lot of meat on the bone.

Steve: Yeah. So we already talked about Flipster. That's the name of your Mhmm.

Jerry: That's my software.

Steve: That's your software. So is that the tool that you can't live without?

Jerry: Yeah. That's the tool you can't live without.

Steve: Okay. And then what would you do if the market dips?

Jerry: Well, so, the fortunate thing about flipping is you really should you really shouldn't get caught in the market because you're not in it long term. Mhmm. Right? So what I luxury though. You're in it.

In luxury, you are in it a little bit. So there is there is more risk there, especially like the, you know, Paradise Valley 3 to $5,000,000 homes. Yeah. Those are eighteen two year turns.

Steve: So

Jerry: you could definitely get caught in some of those. I actually hope that we flatten out and we level out some more in the market. And the reason why is because I think the majority of flippers will go away because they're surviving on accident right now. Yeah. Because they're riding an appreciating market.

So they're screwing up and still making money.

Steve: Right.

Jerry: When it's a when it's a flatter market, they go away a lot quicker. And then you're left with just people that know what they're doing.

Steve: Yeah.

Jerry: And I want I I think it would help the the real flippers. And I don't mean that in a disrespectful way.

Steve: No. Not at all. There's it's we have the same exact mantra in real estate. Right? Like you can if you're in an appreciating market, even if you price it wrong, it'll still sell.

Jerry: Yeah. So if the market will just flatten some, then all of these flippers at 82% making 10 or 15, they will go out of business because they'll start losing money.

Steve: Right.

Jerry: And they only need to lose money a couple times before they go back to the job or whatever.

Steve: Yeah.

Jerry: And so then we'll get back to more healthy formulas, and it won't be so competitive on the on the, you know, the buy side. Mhmm. And, I mean, when I went through 2010, I didn't slow down one bit. I had to work a whole lot harder selling, but I could buy any day of

Steve: the week. 2010. The world's oysters.

Jerry: Buy. The foreclosures were, like, boom. Like, REOs, I would just buy REOs, like

Steve: Right.

Jerry: Any day I wanted. But then but then it was, like, getting your buyer to qualify for financing was a whole another story.

Steve: Yep.

Jerry: But I did fine then.

Steve: So what is your biggest struggle right now?

Jerry: Well, it's, the same as everybody finding deals, getting deals. You know? So because the challenge I have right now, Steve, is so many flippers will pay 82% and I wanna be at 70%

Steve: Mhmm.

Jerry: The player the wholesalers that have a list, they can make more with their list than bringing me deals.

Steve: Right.

Jerry: That's my biggest challenge is I'm having a hard time from the serious, like, like, a player wholesalers Mhmm. Who are good at getting deals because they can make more with somebody else.

Steve: Right.

Jerry: So where I've had to really rely on is the entry level new

Steve: Birddoggers.

Jerry: Birddoggers that don't have a cash buyer list, don't know that they could get more if they did, and they bring them to me.

Steve: But they don't know how to get more also. Right. Right? They wouldn't know they don't have a buyers list yet.

Jerry: Right. Yeah. So it works, but it means I've gotta cultivate 10 times more bird dogs because nine out of 10 don't stick with it.

Steve: Yeah. Okay. And then what would you consider to be your superpower?

Jerry: Systems. Yeah. Systems, having a business focus on this. You know, if you think about it, Steve, if if you're a onesie twosie flipper, let's take fix and flip. Mhmm.

And you put all your focus in finding the deal, all your focus in managing the deal, all your focus in marketing and selling the deal, and you can turn a deal in four or five months, and then you start all over again, you're only gonna do three deals a year max.

Steve: Right.

Jerry: Right? And that's how most flippers operate. They're they're three to five a year company, but they could easily do 10 or 15 and half the work that they're spending right now if they just learned how to develop out some systems with technology and and some team people.

Steve: Yeah.

Jerry: And they're and they would make way they'd make way more money, and they'd have way more time and freedom.

Steve: Right. Which is the end goal.

Jerry: Which is why everybody does this in the first place. Right. Like, why are you doing this? I found that. I went from one job to another job.

I made more money, but it was just another job. Yeah. And that's not why I did this.

Steve: You weren't fulfilled.

Jerry: Yeah. I wasn't fulfilled. So focusing on that lifestyle first is key.

Steve: Absolutely. What is the greatest lesson you've learned?

Jerry: That success in this business is 90% mindset, 10% skill. You can learn how to wholesale. You can learn how to fix and flip. That's the 10%. Mhmm.

But if you don't if if you don't have an abundance mindset, you don't have a healthy relationship with money and how that works with time, with success, then you'll you'll just self sabotage. You'll never your your thermostat will reset back to broke and back to struggle and back to hardship and back to scarcity.

Steve: And that's so incredibly true about the thermostat. So for you guys that don't know, you know, the you got your temperature thermostat. Right? If it says 75, room gets hotter, AC turns on. If it gets lower, the heater heater turns on.

So we all have a financial thermostat. And if you're accustomed to a certain amount of money, when you start when money starts coming in, you find a way to blow it to get back to the

Jerry: same Subconsciously. Yeah. You don't even know you're doing it. Yeah.

Steve: Find a way to do it. And then we see that with people that win the lottery. Yeah.

Jerry: And I did that for a long time. I was roller coaster, and I'm like, why am I broke again? I just made money. You know? And so I had to really work on that.

And, Secrets of the Millionaire Mind was transformational for me. T. R. Vekker, his book. Mhmm.

I still listen to that book couple times a year

Steve: on over. Oh, really?

Jerry: Yeah. I've listened to it 25 times.

Steve: Yeah.

Jerry: Because I gotta go back and make sure my my, you know, my wealth files are are aligned, my affirmations. And because, you know, these things are ingrained in us from our childhood. They're not easy to eradicate.

Steve: We're programmed.

Jerry: They have programmed in their deep, And they'll resurface. They'll they'll rear their ugly head. You know, the other thing I I think Steve is, you know, what I tell people is make more offers. Mhmm. And so I have a belief that if you make a 100 offers a month, that's 5 a day, five days a week, 25 a week, 100 a month.

If 5 a day, five days a week, 25 a week, 100 a month. If you just do that, you will get a deal. It's the law of averages. It's just it's just how it works.

Steve: Exactly.

Jerry: But most people aren't willing to do it.

Steve: No. They're afraid of rejection.

Jerry: They're afraid of rejection. That's the exact reason why. They're afraid of rejection. And I I tell people this, and they get to offer number 40. And then they say to me, you know what?

This doesn't work.

Steve: Yeah.

Jerry: And it's like, you you're giving up too early. Make a 100 offers. You will get that deal of a lifetime if you're willing to make a 100 offers a month.

Steve: Alright.

Jerry: Just do it. Yeah. Let it roll off your back when you get the rejection. Don't sweat it and just make more offers. If that property is still available if if they're asking $1.80 and you offer $1.10 and it's still available next week, offer again, offer again, offer again.

I can't tell you how many stories where, you know, it's it's listed for 120, you offer 60, they say no, you offer again, you offer again, you offer again, six months later, they take your 60. Like, that happens Yeah. More than you'll think if you'll just do it. Yeah. Right?

Steve: Oh, yeah. Oh, it makes a lot of sense. So Sean and Danda, Ananda had a question. Is Flipster a mobile app or a desktop app?

Jerry: It's mobile friendly. So you log in just like you would on the desktop Mhmm. And it works just fine on your iPhone or iPad.

Steve: Yeah. Yeah. So they wanna learn more about Flipster. How how how how do they do that?

Jerry: So Flipster, if you go to, Flipster software, slash 97, that will take you to a, a video you can watch where it walk it goes through all what it is. It's about a ten minute video, and then they can you can decide, there's there's three different levels of it. Mhmm. And then you can decide at the end of that video if you want to do the the basic pro or prime.

Steve: Yeah.

Jerry: And you get more things, obviously, depending on which level you go.

Steve: Right.

Jerry: Yeah. And so it's a monthly subscription.

Steve: Yeah.

Jerry: Yep. Cancel anytime. Yeah. But you'll find that it'll it'll change your life. What I tell people is if you're brand new, follow follow the Flipster system of doing the data entry and the, you know, tracking everything.

Temptation is, you know what, I really don't need to do all of this because it's just I got one deal going on and I can I already know everything about it? But if you if it's like anything, if you build the right mindset around it and the right process, then when you start getting the three and four and five, you're you're jamming, man. You can do it. You can manage it.

Steve: Yeah. Yeah. And then guys, this Jerry is always looking for deals. He's got he built a nationwide referral network of bird dogs.

Jerry: Mhmm.

Steve: And if you wanna send him deals, it's pretty simple. All you gotta do is and you get paid $10,000. Yeah. Yeah. So he's got the capital.

He's got the system fixing them up, and he's selling them. So if you're new to real estate and want ready to go buyer or or a seasoned wholesaler and you wanna get more, serious cash, buyer tech deals to, just go to findhousesgetpaid.com, findhousesgetpaid.com. And from there, you can see a web training

Jerry: on

Steve: how to get started Yep. On how to bring you deals. And then he's also got that project we talked about earlier. It was Real Estate Freedom TV. Definitely check it out.

I I watched a few episodes. It was pretty exciting.

Jerry: Oh, cool.

Steve: So Thank you. And again, guys, if you like this show, please share this episode right now. And next week, we do have Brian Kengeski. He's coming on. He's another volume flipper in in our market.

So, he's gonna talk about his way of flipping, and then, it'll be very interesting. Thank you guys for tuning in, and thank you.

Jerry: Yeah. Thank you, Steve.

Steve: Absolute pleasure. Yeah.

Jerry: It's been great.

Steve: Got a lot of gems out of this. I'll see you guys next week.