Session #8 with Paul – The Automotive Engineer. It has been a while since Paul and I have connected and he has slaughtered his 2 property goal this year. He is now up to 15 doors!!
Key Takeaways:
- My BIG automotive engineer design idea for Paul
- Better to be lucky than Good
- Realtor’s are there to be make transactions happen
- Making the decision to flip a rental acquisition
- Stick with your criteria and sometimes that means your strategy changes
- Just driving by my ass, Mr. Tax Appraiser
- Know what the property taxes are and what the property taxes will be
- Purchasing a Subject-2 property for $10k
- Conflict of interest when referring your legal team
Episode Affiliate:
Links mentioned in this episode:
RAW Transcript
[00:00:00] Hey, what’s up, everybody? My name is Jay Helms and I’m the founder of this movement and podcast known as the W2 Capitalist. First off on Apologize about my voice. Yes, this is me as my son asked me the other morning. Daddy, what’s wrong with your voice? But anyway, we’re getting over the crowd here at the Helms house. And apparently this is just the remnants of that. But let’s get into the business of today. Today, I’m reconnecting with Paul. He’s the automotive engineer that I’ve been mentoring. And if you kind of go back and you go listen to the very first episode, I question who’s mentoring who. Because Paul’s got a lot of good stuff going on. Lot of great ideas. And he’s a man of action. He’s always encouraging to hear and talk to. So we catch up on a lot of stuff today. And at toward the end, you’re going to hear me say, you know, Paul, if I had another hour, I know I can sit here and talk with you and just chat with you because he’s got all this amazing stuff going on. So first of all. So a couple of things that we get into on the show today is he he is a buy and hold guy, but he actually got into this opportunity, read his very first flip and is actually working out pretty well for him. But then he’s got all this other stuff has been going on. His goal for this year now recorded this late twenty nineteen. Here we are about a week from Christmas actually very much is a week from Christmas today as we’re recording this. And his goal for twenty nineteen was to do two properties, so by two properties renovate them and run them out. And now he’s up to 15 door.
[00:01:34] So he is a man of action. So incredible, incredible stuff. Before we get into it, I want to introduce you to a new affiliate that we have coming on for the show. We’re going to have their founder on a couple of weeks, I believe, but is name is simply called Dille Check. So if you’re on BP just for the calculator and you’ve seen the benefits of those in that free trial has run out, you need to check out Dille, check IO deal check makes it easy to analyze rental properties, Flip’s and multi-family buildings. It helps you estimate cash flow and find the best real estate deals that’s available for desktop app for Android devices pretty much anywhere you go. You’re going to have access to this as a cloud based platform. What not anyway. So to give you little bit more insight about it, there’s been over two hundred twenty five thousand rentals in over one hundred and seventy five flips that have been analyzed with Dille check from over 100000 users in five different countries. So pretty incredible. I’m excited. Their owner reached out to me and said, Hey, check us out. Interested in doing it? Being an affiliate. Please let us know. So they’ve got a special promo code for us. It’s all you can find out about them. The promo code and everything. All of our other affiliates at debut to Kabbalist, WSJ.com Slash affiliates also make a link to this and the show knows be or check those out. But be sure to use that promo code because it’s up to 25 percent off and you get to try it for two months. So check them out. But without further ado, here’s Paul. And let’s get to work.
[00:03:25] You are a W2 capitalist. You are addressing the gap between your successful fulfilling W2 job and to building wealth for your family through real estate investing. You are ready to earn invest. Repeat. Welcome to the WTU Capitalist podcast. Now let’s get to work. Here’s your host, Jay helds.
[00:03:55] All right.
[00:03:58] All right. Well, technical difficulties, just more concern about that.
[00:04:02] Yeah, it was weird because I was in it and then it looked like you had joined and then they kicked me out.
[00:04:08] Well, first off, I apologize for my voice. This is still remnants of me trying to get over the crud we had last time. Where were we? Where I had to cancel on you. So Paul just fled. Thanks for being flexible and I apologize for my voice this morning. What the hell? We’re gonna do it anyway. But I’m not canceling you again. No problem. I was like, all right. Something’s not right here. And I’ve got multiple these accounts for various reasons. I logged in with the wrong one, but still, allow me, just like I saw you when I was like. Anyway, we’re here, man. What’s going on? Yeah. You guys ready for Christmas one year?
[00:04:50] Yes, we are. Yes, we are. I think that my job is slowed down, you know? Yeah. The big automakers, they you know, it’s funny. Like a few weeks before every holiday, things really slow down. And, you know, people aren’t but half the number of people in the building. And and so this week is even though it’s it’s a real workweek. It’s a very, very quiet week.
[00:05:16] Yeah. And I’m going to gamble and say that my boss is not going to listen to this.
[00:05:21] But yeah, it’s just something about this time of year.
[00:05:28] I’ve been very fortunate to be in an industry where the last two weeks of the year pretty much dies out. We can somewhat relax. But I say relax. And the idea we can remove ourselves from the day to day grind and really kind of focus on what’s going to happen in January, right when we kick kick the new year. So that’s always a I. I really love this self reflection time from a personal standpoint and from a from a business standpoint. So, yeah, it’s tough, man. Hey, I have an idea for you. It’s probably not any breaking news, but. Ah, so. Give me a minute. I’m going to tie this all together for you. OK. But we got a new mattress. Right. And it’s one of those memory foam things like so the mattress we had before was it was extremely old. There was a huge exhibit in it. We’re out late. I mean, I made my mama would flip. It didn’t matter. It was still there. So we got a new and sleep’s amazing. And it’s one of those memory foam things where I can’t fill my wife move, you know, when she’s doing this. Yeah, filmi move, which is the more important thing. And then when the kids come in and jump on us, we don’t really feel like they’re there. So that recently happened and then we were driving down the road the other day, my son sitting behind me and he’s he’s kicking the crap out of the back of my chair.
[00:06:52] Right. Why don’t they make the back of car seats out of that memory foam mattress?
[00:07:00] That’s genius, right? Is that right?
[00:07:02] There is a million dollar idea because you really you you don’t. It doesn’t matter how many times I tell him, hey, don’t kick the back of my chair. I can pull over, I can spank and whatever. Guess what’s going to happen five minutes down the road. He’s gonna be excited about whatever’s going on is featuring. Those are wiggling. He’s going to up kick it. You know, I’m like, hey, you know what? I really care if he kicks it. I’m just going to fill it, you know? And I was like, yeah. I want to I want to know there’s something to that, I think. But you’re the guy. Don’t me. No, I totally agree.
[00:07:36] I totally agree. I’m not insee. I’m not in seats. But that is a genius idea because. And if my wife is here, she’ll tell you. That is one thing I. It’s a pet peeve of mine. And my son sits right next to me. And it doesn’t matter what I do. How many times and how I tell him, you know, nice to mean. Please do not kick my seat.
[00:07:59] And he just doesn’t anyway. Yeah.
[00:08:01] And I don’t remember, you know, being a little one sitting in the back seat. And like, I don’t know what it is that that need to kick that seat in you. But. Oh, man. So I totally agree. That would be awesome. Some kind of a memory foam, you know, backing. So but you know, you could not feel it.
[00:08:19] I’m Tony. I’m Tony. There’s something that’s genius. Yeah. Yeah. That’s what’s been going on with the V.A. It’s been a while since we’ve we’ve connected.
[00:08:31] It has. It has. So remember, way, way, way, way back. You remember I had just found this property. It was close to Butler University. You remember I was really on the fence about buying it because we really did know it wasn’t good. We didn’t take it cash flow as a rental. And but it was in a great area. And and then I ended up buying it and finding out that the the flood insurance doubled the insurance on it. Right. And so, you know, it was a bad it was potentially a bad deal. Right. And my partner really wanted to buy it anyway. And we went ahead and bought it. Well, fast forward to now. So since you and I’ve been been doing this, this is kind of the life cycle of a real estate transaction. We went ahead and fixed it up. You know what was nice was the hard money. They appraised that appraised a lot higher than I expected it would be, which means that we got a lot higher line of credit for rehab. And we put a huge bunch of money into it. And got a real estate agent. That was some of your advice. I’m glad that I did. Got a local real estate agent that’s very investor friendly. He’s been super to work with and. And so we decided that we were gonna flip it rather than hold it as a rental. And and so. We’ve got it all fixed up, cleaned up. Rehab is done. Contractors paid off and we listed it for sale and it was on sales for a few hours before it got a viewing. And then another few hours it went under contract.
[00:10:24] So I know what I know about this.
[00:10:28] You know what? It’s one of those things where, like, you know, for it to come down to this and for it to go under the contract so quickly. You know, I couldn’t I can’t really explain to you the euphoria of, you know, it was there’s just a lot of stress with, OK. You know, I know buy and hold. I I do buy and hold. I don’t do flips. You know, I don’t know if the market’s going to change. I don’t know what’s going to happen with selling. Even getting ready to list it. And I’ll tell you what, I. The listing price I listed it for what the hard money appraised to that probably could have listed it higher. But I listed for the what the hard money appraised. And I said and I did all the numbers I figured out. We can make a pretty good return on our money if I get this right. And my real estate agent pushed back a little bit. He’s like, man. He said, I listed for that, but I don’t think it’s going to sit on the market for a while. So I go, you know, sell it for lower than that. And he was shocked and I was shocked that it sold as quickly as it did. And it ended up, I think. Well, they say it’s better to be lucky than good. The people that bought it. There is this area in Indianapolis, north of Butler, it’s a really nice wooded older area in a flood zone called Rocky REPL and the people that bought it, they had been looking for a house for sale and Rocky REPL for more than a year. And they had noticed that we had been working on this, hoping that it would be a flip. And as soon as it went on the market, they went in to see it. And as soon as they saw it, they said they had to have it.
[00:12:09] So and so one big one under contract within a few hours of the market. So, yeah, so let’s back up for minute number one. As much as I do appreciate, realtors also realize that they eat when they make a sale. When they make a transaction. Right. So the advice that your realtor gave you, maybe it was skewed a little bit with him needing a sell pretty quickly and wanting you to lower the price. It can happen. Right. But I love that you set your guns. And now this is this is where I think is going to happen. And surprise both of you. Right. So that’s the first thing I want to say. Second thing is. Just told us we’re train thought help.
[00:12:56] So this is your very first flip. Very first flip. Yes. And young women. I’ve never flipped out. We’re going to buy it and we’re going to hold it.
[00:13:07] That was the original thought. Yeah.
[00:13:09] So at what point in time did you say, all right. We’re not. I mean, you you always have that. That is an option, right? Once you buy it and you start working on it. You could eventually turn into real, but I imagine that if you guys at some point on one you said we’re gonna make this a flip, then possibly the finishes and everything you did on the remodel went up. Right. So the yelling time to decide, OK, we’re gonna we’re gonna actually try to flip this thing. Right. What was the conversation? OK.
[00:13:42] So when I came in to buy it, you know, I was buying it for seventy something. I don’t remember the original purchase price was. And I thought that it would value around 140. And so the finishes that I was gonna put in, I don’t know, one forty. You know, I thought I had maybe a thirty to forty thousand dollar rehab. Right. And if I cashed out at thirty or forty thousand what I thought it would rent for it would cover that debt service. Right. So when the hard money. Did the their appraisal to determine purchase price and rehab funds. They do 70 percent of that. They’ll do up to 70 percent of a RV, which they prayed that, right? Well, the appraisal came back at one seventy rather than one forty. So it was like another, you know, thirty forty thousand dollars higher than what I thought. And even when we went to listed, there were no comps that justified a 170. And I don’t know where the you know, the the appraisal got it. But so I went back to the hard mileage rights of all the low. Can I maximize my rehab funds? So fix it up. Nicer than what I had originally planned. And, you know, some wrangling with the hard money lender, but they finally let me do it and they extended the line. And so now I had I think it was like seventy thousand dollars to put into this place.
[00:15:20] Right. And so it was at that time I thought, wow, I’ve got enough rehab funds from the hard money lender. I can flip this place. Because it had to not unconnected garages. And it was like on a quarter acre of land. And it was a little three bed, one bath. But another thing that I might mention that I think helped us is it had a porch and I know in bigger pockets. David Green and those guys. They’ve mentioned about this is making it a good deal. Right. So instead of leaving the front porch alone, we actually knocked down the front wall of the front room and we poured concrete to raise the front of the front porch. And then we finished the front porch, framed it out and finished it and insulated it and then carpeted it. And so we added a 100 square foot to the livable area, which, you know, really helped the comps in the area. So it was at that time with the hard money lender that we’re like, oh, wow, we can flip this right. You start running the numbers. And the problem is as if we put that kind of money into it. The debt service on one hundred and seventy thousand wasn’t the rent that the market was demanding. Even with college students wasn’t going to support that. Right. And so it was it wasn’t going to cashflows would put that kind of debt service on.
[00:16:59] So the turning factor really was when that appraisal came in way above what you guys thought was going to come in. You’re right. All right. Right. I love I love how you. You were open to that.
[00:17:11] I personally wouldn’t have been able to do it now. I would not have been able to do that.
[00:17:18] Yeah, it scared the crap out of you, I’ll be very, very honest with you. You remember when I was get ready to buy it in the flood afferent.
[00:17:25] I had a thing. I told you not to buy it. Actually, you did. Oh, yeah.
[00:17:30] You even followed up on Facebook. You know, you’re like a dude. Seriously?
[00:17:34] It doesn’t matter. Just don’t do it right.
[00:17:37] Yeah, you totally did. And you know, so when the flood insurance came in and it was double, that was another thing that was eating away at the cash flow. It was like this is just not going to work. Right. So anyway, it worked out. And then a weight off my shoulders, it’s under contract, closed on the 9th January. And I am thrilled.
[00:17:56] So I want to circle back. Right. You stick to your criteria. Yeah. If you change your strategy, there’s a whole different criteria.
[00:18:06] That’s true.
[00:18:07] Well, that’s it. Yeah. vaska. Hey, is it possible to flip it? But. I knew that wasn’t a niche man, so so it’s not fair.
[00:18:16] What does that mean going forward? Do you. Or are you looking at you obviously now have the confidence. If this comes up again and probably you’re going to look at every deal with two different exit strategies right here or.
[00:18:28] Absolutely. Yeah, yeah. But you know what?
[00:18:33] I’m not into. I see you shaking your head. Yeah.
[00:18:37] You know, I just I like the idea of of owning an asset and having you appreciate. And while it’s appreciating having a cash flow and pay down its own debt service, I love that. And and I feel like you’re building something when you’re doing that right now. You’re putting eggs in the basket and. Flipping it. We’re going to make a little bit of money off of it, but and it is like thrilling. So I can ask you what people, you know.
[00:19:12] But psychologically, there’s some adrenaline. I’m sure Syria chemical there rushes in when, you know, you forget the property and go check. But yeah, yeah.
[00:19:25] If I get if I get in a corner, I know that I can do it. Yeah. It’s like you said you can if it’s you, you’re more comfortable exploring that as an option if you get a pickle. I’m not going to buy with the intent of flipping.
[00:19:42] Well, congratulations, man. I think that’s awesome. Thanks. Amazing update. One I was not expecting to hear this morning. That’s extremely cool. But like you said, to start this off, better lucky than good. Right. That’s right. That’s exactly right. What else have you have been having going on? So drinks in this country. Right. So my words make sense.
[00:20:06] Yeah, sure. So, again, updating you, if you remember, we ran into some issues with cash out, revise your city head lanes. So worked very closely with the city. Got those lanes lifted and I got those cash out. Refi is done. So private lenders and hard money lenders are all paid, all the property’s cash flowing. You know, so few more transactions completed since you and I talked. OK. And then I learned a lot from that. And so I have another property that’s finishing up rehab today. It’s walked by the property manager today. And it ended up I found out when I found out that, you know, ran into the cash out revise for for that property. And I was looking at the documentation from the city. I saw an address of another property that I owned that I didn’t realize had Lean’s from the city. And so I still had a month of rehab to go. And so I proactively went after that. And so now, you know, the city is already you know, I’ve got it fixed up. Well, the contractor was in there working and we got those liens lifted. And so that’s that’s ready for a cash out.
[00:21:24] So, you know, I don’t think that those Helene’s. How did you find those lanes that were on their property?
[00:21:31] So, number one, if you go back and look at your closing paperwork, almost always the title company. In fact, now I see it. It’s what it’s like. You know, if you want to buy a red car or a, you know, a new truck, that’s all you see on the roads is red. Dry up, you know.
[00:21:46] Now, when I look at title work, that pops out to me and I actually just got done buying a few more houses and it all that paperwork’s in there. And I ask the question from the title company. Are there any leads for the city? But I went back to the title to work through this property that finish up rehab and they had told me they had actually given me the information that I needed. And I just you know, again, this was actually one of the first episodes I did with you where it was my first property that I that I bought without any of my own money. Yeah. So I used a private lender plus partner funds. And I didn’t buy I didn’t put any of my own money in it. And so the euphoria and the excitement of doing it, I didn’t look that closely at the title paperwork, but it was in there. So I went back to that. But the title company, I was able to follow up with them. And then Indianapolis has a great public portal where you can go in and see these things. But it turns out that like I don’t know, on a monthly basis or recurring basis, when the city puts leans on properties, they don’t do it per property. They put leans on a whole bunch of properties in batch form.
[00:23:04] And so when I found now it’s actual work.
[00:23:07] Is that just for that municipality or is that just nacion problem?
[00:23:13] No, I can’t speak to nationwide. Just know that, by the way, Indianapolis works kind of funny, little, little different than a lot of other municipalities, like when they assessed taxes right here in Michigan. As soon as you sell it, whatever you sell it for, they reassess on the sale price. Indianapolis. In Indianapolis. You can float for a while on the other, the taxes were, you know, and then they decide to reassess, you know. Yeah, which saves you some money.
[00:23:44] I don’t know. I don’t know what we’re real quick interrupted. I don’t know what we what our Count County does here, but we just refinance our personal home. And then just a couple of weeks later, we get this notification. Like they hung it on our mailbox. Hey, I was attacked. Yes, sir.
[00:24:01] Just driving by, as I said that you were right. You were just driving around by my ass.
[00:24:11] Yeah.
[00:24:12] Now that and that’s you know, when you’re buying property in Michigan and I just know this because I live here and I interact with a lot of real estate investors here. Everybody knows that. You know, you you can calculate what your taxes are going to be using, the millage rate and your your purchase price. And so, you know, in Indianapolis, I kind of have to do a little sleuthing with the city to anticipate what the taxes might be. That’s too right. So that I’m hedging on making sure my numbers work, right?
[00:24:53] Yeah. Because that could that could dramatically affect your cash flow. Right. I mean, that could take if you’re looking at a hundred dollars per door. You know, as just an example. Right. That could very easily get squashed by the missed tax calculation, so how highly one of the things that I think goes unnoticed. And I think I’m glad you brought this up. I do this, too. Right. So I will calculate taxes when I look at. David, I’ve got to get more coffee. I’ve only been up since 4:00. And I woke up just no more. Oh, here’s so here’s the story. So we’re gonna chase this rabbit real quick. OK. I woke up and I was like, oh, shit. What time is it? And I roll over and look at my wife’s cocking, says 5/20. Well, she sets it ten minutes ahead, but she also hasn’t adjusted for Daylight Savings Time. It’s a little joke. But it caught me for like five minutes. I was like, oh, shit, I’ve got it. Call. Paul, I gotta get up and get go at. And I roll over to grab my phone. My phone’s dead and I’m like, oh, you’re freaking out. Damn it. Is that all that happened within a matter of like three minutes? I was like, no, wait a minute. I don’t think she’s adjusted clock yet. Well, you know, so that was enough to get me up and go in. But my mind hasn’t kicked in the gear just quite yet. I have a dragon. Oh, yeah. But no, it’s such a huge important thing to know what the taxes are.
[00:26:28] But then you got to project on what they will be, right? Yeah, exactly. That’s a huge. And this goes with buy and hold. Specifically. But it goes with small single family, small multifamily. And of course, the larger apartment complexes. So yeah, pretty much. Have you ever noticed. So there was a. The multi-family that I have over mobile, we we bought it significantly lower than what the previous owner purchased for. So yeah, we the tax the year after the tax assessment was for the price that he purchased it for. I mean, we bought it for like half price of what he paid for it. Yes. And so we went to battle. You know, we we challenged that. We won. We came out and won. What the. So and of course I posted this on social media, a victory where I save thousands of dollars issued this year in taxes and whatnot. And then somebody asked me, said, well, as you increase in value and your rents go up and you’re, you know, I guess better or you can go back to the tax assessor and tell him. It’s like they’ve already done their job for him once. I don’t know that I’m going to do it again. But I don’t do that. Like they. They wait for the next sale. They’re not really, you know, confidence saying that because we already got the tax notice this year, the same as it was last locked in its longest hand. And, you know, they don’t do that, which again, I’m not a big fan of the government, so I’m not shocked that things are not working as optimal as they probably should be.
[00:28:07] But yeah, that’s something in Indianapolis on a multi-family. You know, there’s two different ways that they assess taxes. You know, the market value, they use market values as a tax assessment. But if they see a multi-family or a single family that’s rented out, they’ll use kind of the rental income to assess taxes.
[00:28:30] You know, mobile family, you don’t want them to know that you’re renting it.
[00:28:35] Right. And if you tell them that you’re renting it, your taxes will almost certainly go up because you’re you’re getting more than what they believe the value is worth. So you’ve got to be careful with that. But on on a multifamily, I I would imagine this is a larger like five units or more.
[00:28:52] Yeah. Yeah, maybe. Yeah. And we you know, the packet of paper that I sent was pretty thick, but I got a copy of it releases a game, a PNL balance sheet. So look, it’s worth what we paid for it, which is about half inch are accessing it for. So. Anyway, sorry, I ran a chase. That rabbit now forgot what you’re talking about.
[00:29:17] Nuts. It’s all good. So last thing I want to share with you is a property that my wife and I, we have have a joke that I keep on saying. And you and I talked about this the last time we talked. What are you going to quit buying? You know, the last time I last time I was on the show with you is I. I said, OK, I’m done for the year. Right.
[00:29:43] Slow down and make sure that I get these cash outs done because all this opportunity popped up.
[00:29:49] Yeah, I wanted to do, too, this year. Right. That was my original goal.
[00:29:54] And, you know, they were in line last year and I won to double.
[00:29:58] And now you’re still the last time we talked you, you’re up to six, I think.
[00:30:03] Yeah. No, by the end of this year, I’m going to be at 10 properties.
[00:30:07] I just I had just pulled this up, 10 properties.
[00:30:11] And let me see here how many doors. It’s it’s like 15 doors. So, you know, my goal is 31. So I had no idea. By the end of my first year of really doing this, that I would be halfway to my goal, 31 doors. You know?
[00:30:27] Yeah. Yeah. So this property pops up. It’s a wholesaler and it’s a subject to and I don’t know if you’ve ever done subject to there’s a subject to group out there that’s kind of interesting that I just I just watch it. Right. I don’t participate. But anyway, this guy and it’s he’s selling it for ten grand. And I’m like, okay, ten grand. This place is gonna be just junk. There’s no way to this place. But it has a tenant in it, which is the first thing I’m thinking. Oh, OK.
[00:30:58] Well, it’s livable, you know. And so I go look to see if the city has any, you know, health department violations or, you know. And sure enough, it’s clean. And I start looking at the pictures. It looks like it’s in really great shape. And then I go to Zillo and it was listed for rent like six months ago and it looked like it was in really great shape. This guy’s Silvis 10 grand. What the heck’s going on? So I get on Facebook Messenger and I message you. Hey, what’s going on with us? I’m really interested. You know, I got 10 grand all wired to you today. If it’s really in this great shape, he goes, oh, it is. It’s in great shape. But here’s the caveat. He said it’s got two lanes on it. That you’ll have to buy the property subject to those leads. Meaning that if those lane holders come knocking, you’re going to end up having to pay them out. Yes, sir. OK. Well, how much are they worth? Forty thousand. OK. Well, the property is worth sixty. So if I even if I paid the Lean’s. You know, 10 plus 40. You know this I’m all in for fifty thousand and it doesn’t need really any work. He’s like, yeah, yeah. I said, OK, great. So I put it under contract. Right. And, you know, the taxes are unbelievably low. Like a lot of Indianapolis. I couldn’t believe even if they reassessed it, you know? So start doing some tighter work.
[00:32:28] And long story short, I filed a quiet title with a local attorney. And the attorney basically did the research. And it’s what the title company and told me is that these two companies were out of business and it’s likely that they’re not going to come and claim these leads. And so if you can get a quiet title on it, you can do a cash out refi and pull money out of it. You never put in it. Right. It’s like a. More than a perfect bird.
[00:33:02] Right? Yeah.
[00:33:03] You know, it’s tax free money to pull pulled back out of the property. So what’s really interesting is the wholesaler, the ten thousand dollars was his assignment. The. So whoever he was buying it from and he did a double close. So he was in the trying to title whoever he is buying it from. Sold to him for nothing.
[00:33:26] Which is very strange to me. Which I don’t know. You know, now what I finally got into, I realized the tenant was a non-performing tenant. He hadn’t paid for months. And so a combination of the tenants. Turns out he’s a veteran. So a combination of know lieutenant. That’s a veteran. He’s an older guy. You know, I’m not in good health and. Having these leans on it so really can pull their money out of it. They couldn’t even really amsellem on the MLS. Yeah, nobody touch it. Right. And so and I think she’s some kind of a congresswoman in California.
[00:34:06] And, you know, when you look at your portfolio and you’ve got a nonperformance. And in Indianapolis, you know, three times on the way, she’s like, I want it gone. And so we sold it doing. So since then, I’ve been able to get the tenant out cash for keys, you know, nice and and the quiet title. I think I’m going to be able to successfully get a quiet title on it. And then I’m going to go do a cash out refi. Fifty thousand, I’ll probably walk away with thirty eight thousand dollars of tax free profit. Then I’ll go and reinvest it somewhere else.
[00:34:44] You know, it’s so, so quiet title. Process. Is it expensive? How long does that process take? What is that look like?
[00:34:55] Yeah. So I I did a little research on this before I went forward with it, but quite title of man, I thought, you’re just gonna roll the dice.
[00:35:09] You know, they’re kind of the quiet title depending on what attorney you get two thousand to twenty five hundred dollars. And it’s usually about a four month process. Now, I don’t know all the mechanics of it. Like from an attorney perspective, I heard that they had to put something in the newspaper. And and then, you know, what my attorney told me is that they have to go look at the chain of title and they have to sue everybody in the chain of title that owned it. After the Lean’s were put into place. And based I mean, the suit. It’s not like they’re going to get a lawyer and go through that. But it’s really they have to claim, look, I have no claim on this property. I you know, it’s free and clear. You can have it. Right. And so the man to go through and do that for everybody all the way back to the original leaseholders. Anyway, when we looked at a little bit closer, it looks like Lean’s didn’t get recorded properly, so small title companies, sometimes they don’t record the release of Alene.
[00:36:18] So anyway, it’s about what does that mean specifically? Does that mean that the lines are just invalid or. What does that mean?
[00:36:27] Well, it looks like, you know, and again, I don’t know enough about the mechanics of that, but I want to lead.
[00:36:34] Our lawyers are for. Right.
[00:36:37] Right. Exactly. And I’ve got a great lawyer in Indianapolis that’s working on this. But when the Lean’s recorded, you know it with with the state, you know, it’s it shows up in the title work. And so when you pay off the lane, there’s another, you know, release of interest that gets filed. And that lane gets removed from a title company has to file that. Well, it doesn’t look like on the first lane, the oldest lehne that that ever got filed. But then at the same time that that that it looks like there was a sale, there was a newline recorded for about a thousand dollars more from that than the price of the first line. So it looked like to us that. The second lane was put into place to pay off the first lane, but the first lane did not get released. Gotcha. So the first line is actually with a company that does exist in Utah. And you know, if it was valid, they’d probably have, you know, an interest rate. Right. But the second lane that got recorded is with a company that doesn’t exist anymore. And it looks like it was put into place to pay off the first one.
[00:37:57] Gotcha. So, you know, I don’t hate her.
[00:38:01] Fifteen hundred dollars to start the process. And then once the process is done, another five hundred dollars to clean it up. And, you know, it’s just clean, idle after that.
[00:38:11] That’s all. Yeah, that’s awesome. A purse. I personally was interested in your answer because I’ve got one I’ve got to do.
[00:38:23] Well, it doesn’t have a clean title on it now.
[00:38:26] In my basically what my lawyer told me was wait till August of because I’ve got to own it for several years before I can do the cheaper option of whatever the quiet title is. And I don’t remember the lead, but that’s what I pay him for. Right. Hey, do you recommend your lawyer to other investors? Yeah, sure. So I do, too. And in. But the thing here’s the thing. So I recommended is all single family, 600 square foot house that I sold. And we the guy bought it from me. So who’s who’s the lawyer you normally use to look at all this stuff and us? Well, you know, here’s my here’s Bill. Here’s my guy. And I gave him my his contact info and to a did our closing. So Bill calls me. He goes, hey, I know, you know, I’ve done a lot of business together, but this guy initiated this transaction. He goes in order for you to be okay with it. I can’t represent both of you. He yeah, I’ve got to represent just him and you have to sign this piece of paper that says, I believe you’ve got other interests at heart or whatnot. I was like, yeah, I’ll I’ll sign it. It’s fine. Just so you know, if something comes up, I can’t represent you. I had to represent him like.
[00:39:43] This is what I get for a referral. Yeah, right. No matter referral thirlby.
[00:39:50] Yeah. As I got now I get it. I didn’t I just didn’t realize it at the time. And now I’m. I still recommend them. But it’s it’s not typically for people who I’m gonna do with it. Oh for sure. Yeah. Yeah. Oh. Conflicted lawyer.
[00:40:08] Yeah, exactly. If it’s a good lawyer, you want them on their side. That’s for sure.
[00:40:12] Yeah. Yeah. That’s awesome, man. Now you found that property through a wholesaler.
[00:40:18] Wholesaler just posted on Facebook for 10 grand, and it’s one of those things where I think everybody should never discount situation. Yeah. Right. A lot of people they would have seen 10 grand said. That’s probably a piece of crap. Forget it.
[00:40:35] All right. Half now. I would have Sydnor raise my hand. I would’ve been guilty as the day is long out of which I don’t know that I’ve ever said that phrase before, but I would have looked at that and said, this is a scam.
[00:40:47] This is somebody trying just to get my contact information. I wouldn’t even the fear. So kudos to you for jamming out and diving into it.
[00:40:57] Yeah, for sure. Yeah.
[00:41:00] Well, that’s that’s I actually I guess another.
[00:41:06] I did another purchase was last week, I think. Yeah. So my private lender, she lived out in Arizona, New Mexico, and she and I had known each other for a while.
[00:41:22] And so she that that duplex I told you about that I didn’t put any money in of my own money. She used her self-directed I.R.A. to finance the purchase of that duplex. And so we’ve just been waiting for the rehab to get done and cash that out. But that money back into her self-directed IRA. And then we were gonna go do another deal next year. Well, she sold her house in New Mexico and moved to Indiana. It was a coincidence that she is from Indiana. Yeah, well, she sold her house there. She sold it for like one hundred and fifty thousand dollars more than what she bought it for. And so she made a lot of money off of it. And so she’s got this money socked away in their checking account, savings account in whatever. And it’s making like a point zero one percent, inter alia. Right.
[00:42:17] And so I’ve been talking to her and she’s like, man, I just hate this money. All this money is sitting here. It’s not make any money. And I said, well, you know, you and I talked about it. If you want to go buy a turnkey, I’ll help you buy a turnkey. If you want to do this. I’ll help you do that. And I said in a private lender is always an option. And I think she’s been real nervous about like waiting in and being a landlord and owning property, right? Yes. You know, an older lady. And she just she doesn’t want that stress. Right. And so this you know, she’s been getting these checks into our I.R.A.s, she’s watching the Guerlain riots. You know, I pay 10 percent to my my shit. You know, it’s unbelievable, right? Every, you know, mailbox, you know, money type of thing. And so she finally says, you know what? She said, I think I want to do a private lender deal with you with this cash I’ve got in my savings account. Hey. OK. I mean, I’m good with that. And so a deal came up and, you know, I borrowed sixty thousand from her and bought this property. So, again, not none of my own money, you know, both property, Pater Appointee’s. It’s funny because I had to read the text message because she was actually drawn to the title company to pick up her check because I paid her, you know, pro-rated for the month of December. And then a point. And so she loaned out sixty thousand. She got a check for nine hundred, you know, walking away from it. And that’s all interest only, right? All. That’s what I pay her for doing. Doing the work, you know. So she was like, super excited. Know she didn’t. She’s since moved Indiana. So she didn’t have a job. She’s doing kind of odd jobs here and there. And so she’s going to probably be able to live off of the interest only checks that are coming in from the money she loaned out. Nice. And then cashed her out. E, you know, started over.
[00:44:11] So how did you end up getting. How did you initially meet her?
[00:44:19] So there is a Facebook group. I think I’ve talked about doing the home equity lines of credit. Yeah. So that’s kind of how I got into real estate. Right. I got hooked up with this group that teaches how to refinance your primary mortgage into a home equity line of credit. Then pay it off in like five to seven years. Yeah. So when I got into that group, that’s a whole bunch of people that had their own their primary. Free and clear. And they were using the equity to go buy real estate. And so she was in that group. And so she she and I kind of got hooked up to that group.
[00:44:57] All right. I’m interested to know I know we’ve talked about that group before, but now I really want to join it.
[00:45:04] It’s a great group, man. Similarly great group immediately. I will.
[00:45:08] I honestly will. Yeah, I hesitate to pitch it on your on your show here, but I’ll definitely. I mean, he’s a great guy, you know, but I don’t know if I’m authorized to advertise for him, but I don’t care.
[00:45:23] No. He’s a great guy.
[00:45:25] Ok. Well, it’s Michael Lush. It’s called Replace Your Mortgage in Nashville, Tennessee. He’s a super guy.
[00:45:34] And the group is like I said, it’s it’s a group full of real estate investors. You general, that, you know, they’re taking the equity out of that and and buying real estate.
[00:45:46] So, yeah, no, I mean, I mean, I’d love to have him as a sponsor for the show.
[00:45:51] There you go.
[00:45:52] You know, if it’s something that helps you out, man, and sounds like it’s going to pay dividends down the road. Well, you know, let everybody know about it for sure.
[00:46:01] Yeah. You know, I mean, especially me. You know, for sure. For sure.
[00:46:06] When I bought in to it. All I was thinking was, I’m going to figure out a way to pay my primary mortgage off faster. Right. And it’s worked very well from that perspective. But the almost intangible benefit that I never could have imagined when I signed up for it is that kind of the financial education and, you know, getting into real estate that I I didn’t even have a thought or view a way to build wealth. And from that perspective, you know, my piddly thirty five hundred out, I just made thirty eight thousand on this quiet title deal. You know, it just the return on my investment there is is going to be infinite because, you know, I’m on track to hopefully, you know, be financially free from real estate.
[00:46:56] Awesome. Awesome. Well look, Paul, I know it’s been awhile since you and I have connected. I could see you. I talked to for another hour at least. And but I can’t do I got to get. I got to go. And it’s about time for me to. Shower up and shave. Well, I’m not going to shave less. Let’s be honest with you. And I need a trim, man. It’s it’s getting a little bushy. But I’ve made a decision last week that I’m going to go on vacation. The 24th, 23rd is my last day in the office. I’m not going to be back there until the first of the year. So I think I’m asking. Let it all go. Just let it go. See what happens to my wife says, all right. This is probably down, you know? Yeah, it’s probably time. Yes. But look, man, I already. Yes, sir. Let’s do this again. And I’m going to hope I’m not go promise, but I’m going to hope next time. I’m not going to be sick. Well, we’ll see. Now, I love what you do. Feeling better? It’s exciting. Always gets me jazzed up every time I talk to you. It’s encouraged. Awesome. There’s some questions I want to send you. Just just out of curiosity. But yeah, please do. If we sat and chatted, it’d be another hour or so. But I got to go. And so. Yeah. What a problem. Right. You brought out to those. Hey, I do. Yeah. Yeah. When you go in today, just remember me when they adopt that memory foam in the back of the car seat. Right.
[00:48:24] You know, innovation.
[00:48:27] This is like a poor man’s patent right now. I got it recorded on Zoom. This is true. Yeah. Right. There he is. Yeah. Hey, buddy, you have a go. And Merry Christmas and happy new year. Yeah.
[00:48:40] Merry Christmas. Have give one everybody.