Episode #73 – The One Thing Every Real Estate Investor Needs To Know, with Jay Hines

You're listening to the REI Marketing Nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of Ad Words Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett. 

Dan: Alright, hello everybody. This is Dan Barrett. I'm here with Jay Hines from WeBuyCarolina.com. He's an investor who is buying homes in the Charlotte, North Carolina area. Jay, how are you, man? Welcome to the show.

Jay: Thank you very much, Dan I'm doing better than good, as Zig Ziglar used to say, better than good, God rest his soul. [0:01:00.0]

Dan: : Okay. A fellow Zig Ziglar fan. That's excellent. I like Zig Ziglar a lot, although you don’t really hear about him much. I think he's not forgotten, but he seems like maybe people think he's old news or something and they don’t see him pop up as much in people's reading.

Jay: Unfortunately, he did pass away but part of his legacy was he still has a company that reaches out and does training and motivational things. He's still got a lot of books. I just downloaded an audible book of his, trying to think of the name of it. He's still out there, but I think in self-improvement, for sure.

Dan: Yeah, cool man. Well let's jump right into it because you and I were talking. Before we hit record, we were sort of talking back and forth and you said a whole bunch of stuff that I really liked and so one of the things was we were talking about what your target area is and you said one of the ways you answered that question was like, hey, like where do I buy homes, because you basically say, well, I buy them all. So that was really interesting to me and you have a really interesting way of kind of thinking about this. Can you talk about this? You were saying you think of yourself as a transaction engineer. So let's dig into that. What do you mean by that? [0:02:13.3]

Frank: Yeah. I appreciate you asking me. What I was saying was I buy houses in all areas. You know, HomeVestors is big on we buy ugly houses. Well I like to say I buy the good, the bad and the ugly and so, I buy houses wherever. The way in which I buy them depends on where they are and what they are. If a lead comes in and I cast a big net throughout the Charlotte area and when a seller calls in, I need to deal determine. In other words, determine if it's a deal. So right away, I've got the address and I look and I see what kind of a price range the area is and if it's a low income area, I will usually wholesale that to a low income landlord that likes the cash flow, that wants to use that property as an ATM. I get in. I get out. I get paid. But I'm not interested in managing the low income stuff. [0:03:00.2]

So if I get a lead that comes in from a lower income area, then I'll usually wholesale it out to another investor. If I have a deal that has equity, in a good area, meaning it has good schools and it's got a lot of demand and you're in and around the average median home price… in other words, if the seller can get a loan, wants to live there kind of a thing, then I'll usually buy the house, fix it up and put it on the market retail for the big profit. Then if I find a nice property in a good neighborhood with a good loan on it, in good condition, sometimes the seller is behind on their payments or they've been transferred or they're getting a divorce or whatever their situation, I give them debt relief. I make up their back payments. I take the property subject to. I use a trust instrument. The bottom line is if a seller wants to sell a property, in almost every case, I can buy it and like I told you before, the unknown is whether or not they'll agree to the way in which I want to buy it. But yeah, that's what I do.

Dan: I love that approach for a couple of different reasons. One, I think obviously you have a bunch of different ways you can help a seller or get into a deal which is I mean I think really critical in the kind of, you know, the market that we're in right now where margins are so critical, having a lot of different ways to get into a deal is really critical. [0:04:15.5]

I think the other thing that really jumped out at me about that is you clearly thought a lot about what you don’t want to do. Right? You know, you even said that, "I don’t want this type of deal." I think so many investors are so thirsty for deals that they haven’t really thought about that question. I'm curious, you're obviously very successful…when you were kind of growing your business, setting up your business, designing your business, how much of that was conscious versus how much of that was evolution in terms of how you ended up where you ended up. Did you start out saying this is what I want to do or did you kind of just learn as you go and kind of sort of tweak things here and there?

Jay: Well let me tell you, that is a great question, Dan, and I wish I would say that it just, you know, I was so brilliant from the beginning, I knew all of this stuff, but the actual, the truth of the matter is I took a lot of trainings, classes, courses and things and one of the people that I ran across was a guy by the name of Todd Dodson in Arlington, Texas. [0:05:13.4]

He's still one of my best friends in the world today. He taught me the principle of area and exit strategies. It was part of a $17,000 mentoring program that I signed up for. It was a lot of money at the time. See, I started out as a Carleton Sheets guy. I was a rental, a landlord kind of a guy and I had 32 houses in 3 years using none of my own money, was a millionaire on paper, but the problem was, you know, at any given time, six, seven, or eight of these would either go empty or not pay and these properties rented for $1000/month or close to it. So I quickly realized, you know, I've got 30 something houses to manage, a full-time job. At the time, I was working for an insurance company. And I got all these houses I am managing. I have a family and I've got a negative cash flow of 6-$8000 a month. [0:06:00.6]

I need to do something. So that's why I signed up for the mentoring program. I had always heard that three most important things in real estate is location, location, location. And Todd is the one that told me - he said, no, Jay - it's the deal, the deal, the deal. You need to create infusions of cash into your business and you should not just be avoiding these other incomes because the money that you make in the lower income areas spends every bit as good as the money you make in the better areas and don’t think you're going to renovate a house in a low income area and then wonder why everybody wants to rent it out Section 8. I mean, you know, and he taught me the principles of areas and exit strategies and the person that can get a loan doesn’t want to live in the low income areas, but the low income landlords love the low income areas because the numbers work and they get cash flow. But you know, if you want to hold rental properties and you want a better type tenant, then you need to hold properties in better areas where you've got better appreciation. Your tenants can actually mail their rent checks to you. [0:07:03.5]

You know, you don’t want to go in a low income area and have a bunch of rentals unless you want to create another job for yourself. So I mean, these are some of the things. I always wanted to be financially free and what I didn't want to do is create another job for myself, one that I hated worse than the one I was already in.

Dan: Right. It almost sounds like, and you correct me if I'm wrong, right - my take away from that story is kind of like, look, there's always a strategy for any kind of area, any kind of market, any kind of deal, but the trick to that is finding the ones that are aligned with your goals for what you want your day-to-day to look like, you want your life to look like, you want your finances to look like. Is that kind of what you took away from it?

Jay: Yeah, and I always tell people and I train people all across the country in every major market. I mean, one of the things that Todd Dodson did was in 1997 he brought me onto his real estate fulfillment company and I learned a lot of this other stuff too, but one of the biggest things I learned was you buy and sell to create cash. You buy and hold for long-term wealth building. [0:08:06.9]

Because if you just went out there, Dan, and you just want to be flipping deals like hamburgers, you don’t want to be doing that when you're 80 years old. But there's a value to having infusions of cash into your business. So it was the mix I want to have rentals for long-term wealth building. I started out completely as a rental person and thought I'm never going to make it, you know. These things are going to crash and burn and kill me before I make it to retirement. So, just learned those principles and so, it really empowered me, really cast a big net. Be a solution-oriented company. The name of my company is Carolina Home Owners Solutions because I want to be a solution to the seller and the problem that the seller has is his property and then the way in which I'm going to make him an offer is I'm going to look for a solution that works for them and then I'm going to use an exit strategy that works for that property and where it is. So it's just been…it's been a great experience for me the last 20 years I've been doing it full time. [0:09:05.7]

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Dan: So, you have sort of an interesting background in that, like you said, you are an investor, but you also work with investors and have trained investors and certainly from our conversation, I've heard really great things about the way that you teach and the way that you work with investors. I'm curious because a lot of people listen to this podcast are …a lot of the people that listen to this podcast are very established, but there more people than that I think are kind of getting started or looking to get started. The thing that I'm most curious about is common mistakes that people make because I think a lot of being successful in many cases is simply just avoiding the mistakes that we know people make over and over and over again. [0:10:18.3]

I'm curious, kind of working with so many different investors and kind of working, teaching so many investors, what are the mistakes that you kind of see cropping up again and again? These kind of like errors of strategy or errors of thinking that people get into when they get into the real estate investing?

Jay: Yeah, and that's a great question. I would say this, I would say from a lot of the people that I trained, not properly knowing how to deal determine. In other words, determine if it's a deal, and areas and exit strategies, not understanding the principles that I talked about prior. When somebody gets trained, they're so excited. They want to go out and they want to do a deal and they hear of somebody down the street that wants to sell their property and the neighbor tells them they're super motivated, and so I get a call from one of the students and they say, oh, I'm so excited - I have finally got a deal. [0:11:08.7]

And my question is always this - what do you plan to do with the property? That's the most important thing. The biggest mistake is people don’t think through that and you have to know ahead of time what you plan to do with the property. Well, I don't know - it's a great deal. I think I'm going to go ahead and fix it up. Well, that's great - how much do they owe - what is it worth - how much the repairs are going to be. We have got a formula that we use and then once we backtrack everything, we figure out that this person owes a lot more than what we can buy the property for and turn a profit, so it's actually not a deal. So the mistake was they didn't really deal determine. They just found a motivated seller. So you know, you have the high of the buy - you want to do your first deal, which I completely understand, but you really have to ask yourself what you plan to do with it ahead of time and properly know how to evaluate the deal is I would say the biggest thing. [0:12:00.6]

The other thing is there are some gurus out there that tell you, oh my gosh, you, you know, everybody's worried about once I find a deal, you know, how am I going to find a buyer - hey, we're going to do reverse wholesaling. All you need to do is go out and find all the I buy guys and I buy gals and get them in your database and ask them what kind of properties they want and then go out and find them and you already have the buyer built in. You don’t have to worry about it. So many people run out, and I know this, Dan, because I get calls all the time from these beginning investors that are calling me, wanting to put me into their little database, and I nicely tell them, you need to go out and find a deal. The buyer is the easy part. The money is the easy part. The most important thing, and I say watch this, the most important thing is finding the deal. If you can find a deal, then it doesn’t matter about the money - it doesn’t matter about your buyer behind the door. Trust me, I know. There's…I don’t want to sound like a country music song, but there's too many investors looking for deals in all the wrong places, you know. [0:13:04.8]

And they don’t really understand how to properly evaluate a deal and certainly you don’t want to ask your local neighborhood real estate agent, and that's not a slam on agents - I like agents. My twin brother happens to be a great broker in Charlotte and a teacher at the Canopy School of Real Estate, but the real brokers that are in the know also know how to do deals too. The typical real estate broker, I've found, you know, thinks he can get $5000 on the $200,000 property it's a deal and it's, you know, it's nice to get a little bit below what it's worth, but you're, you know, it's not exactly an investors deal where he can turn around or she can turn around and sell it.

Dan: I mean, it strikes me, right and I think what you just said is super insightful and it's, you're talking about the high of the deal, right, and I think especially when you start, it's so alluring because you kind of feel like, well this isn't real until that happens, until I sign the piece of paper, I'm not a real investor, I'm not really in the business, but really, the business starts when you start to think like an investor. Right? [0:14:17.1]

It doesn’t start when you sign the paper. It can start when you turn down a deal because you know it's not going to be profitable for you. Right? That's you being an investor.

Jay: Exactly.

Dan: But it's so tempting to be like, well, unless I sign the thing and money changes hands, I'm not successful. I always think about someone like Warren Buffet or Charlie Munger who are the most successful value investors of all time and 99% of their time is saying no to stuff. It's really interesting to me. When you work with someone, let's say they're new, they're coming out of the gate, they're hard charging and I mean, I think…I don't know if you would agree with me, my impression of investors in general is investors, male and female, tend to be pretty hard charging folk a lot of the time. [0:15:06.3]

They can be pretty intense and they're out there and they're ambitious and they've got all the energy. How do you slow that down a little bit? How do you teach someone to think through, not just the first order consequences but the second order consequences of what they want to do? Is it just like here's the checklist, go through the checklist. Is it here's the spreadsheet - put it in the spreadsheet? How do you teach someone like that to make better decisions over the lifetime of their business?
Jay: Wow, that's a lot of stuff, Dan. But I do think you swerved into something here and listen, I don’t want to slow anybody down. I want the hard chargers to get out and get after it. You know, the secret of this whole thing - I'll just tell you - I don’t know how long we have been visiting over the phone, but the secret to this whole business is you got to make a lot of offers. It's a numbers game. So you have to create your big deals flow and your big deal funnel. So I don’t want somebody to slow down. [0:16:01.4]

They're going to be excited. That's part of it, but I also want to put together an action plan for them where they can create this big funnel of deal prospects that are coming through their system and it's almost like you cast this big net and you have to toss back a lot, but you're going to get a deal. If you make enough offers, you're going to get a deal. I didn't say property. I said you'll get a deal and a deal is something that you can make money on and you know, once they do their first one, it's almost like the Lays Potato Chip commercial, you know what I mean, try to stop at one, you know, but you're not just going to be able to eat one. You're going to get excited and people have to believe that they can do something, that it's real, and what I like to tell people is when I train somebody…I mean, I'm meeting with a couple tomorrow from in Charlotte, and teach them how to do it and somebody says, you're going to train somebody in your own market?! The answer is yes, absolutely. There's tons of opportunities and tons of deals and there's room for lots of people to be successful, but you have to go ahead and you have to speak to your faith. [0:17:02.9]

You have to give them an action plan, believe in it, but then, you know. I've seen so many people go into seminars and everybody's all jacked up and they're saying I want to be rich over the loudspeakers and everybody is dancing and the speaker is selling his books, tapes or courses - well I guess they don’t have tapes anymore, but shows how long as I've been doing it. These people get on, you know, back row and stand up on a chair and they surround him like he's the messiah and he's giving away the last four programs at a discounted price and everybody has their big stuff. I was at a real estate convention in Orlando years ago and I mean it was huge. It was some mega center. They had 10 different speakers going at a time and you'd see these groups of students, these beginning investors running from room, ballroom to ballroom with their big bags of materials and all this stuff and you know, most of them just, they needed to be focused. [0:18:05.8]

So that's what I do - I give them an action plan and I tell them it's a numbers game and you know, you want somebody, that after the high of the excitement wears off, that they have an action plan to follow and if they do it, it's the principle of sowing and reaping, you know. If they will, you plant those good seeds, you're going to reap some good rewards, some good deals.

Dan: Yeah. I think you want someone, like you said, when the high wears off, you want someone that's going to give you the plan. You always want someone that's not going to flee the country and be overseas all of the sudden, you know, when the credit card bill comes due. Well, first of all, okay, so, this has all been amazing. I know you have an appointment coming up. So WeBuyCarolina.com is the website that you have for sellers. I highly encourage, you know, investors who listen to this show know, I always point out people that do a really good job with their website. It actually think Jay, you guys have done a really amazing job with the copy specifically on your website. I think it's really good. I think it speaks to the seller. You do a really good job talking about who you have helped. So I highly encourage investors to go check out. For investors who want to reach out to you or curious about what you do, is that the best place to reach you? You know, do you do like social media? Where do you want people to contact you? [0:19:23.6]

Jay: I really appreciate the compliments, by the way, Dan, and I was just going to say, yeah, our WeBuyCarolina.com is the website for sellers, but anybody listening to this podcast that wants to shoot me a note or ask me a question, I'd be happy to answer it or if they want to get me over the phone, we can do that too. But if they'll just send an email to jay@webuycarolina.com, that's my email address, jay@webuycarolina.com. They can send me a note. I'm also on LinkedIn, Jay Hines, if you do a little, you'll see my shot - I think it's my real estate investor magazine where I was on the cover of that. You can see that. I'm also on Facebook. You can reach out to me there, but probably the best way is to jay@webuycarolina.com and send me a note and I'll be happy to help wherever I can.

Dan: Alright, cool. Anybody that's listening to this, you go to AdWordsNerds.com/podcast. You can search for this episode. I'll have links to all of Jay's social media, a link to his, maybe not a link to your email because I think a million robots will email you or something, but you know, I'll have some way for them to contact you there and have a link to everything that Jay is doing. I will say just, Jay, like we work with people that work with Jay and they have absolutely nothing but awesome things to say about the way that he works and the way that he teaches and everything. So Jay, this has been awesome, man. It's been a really intriguing conversation and you really gave me a lot to think about. I know for a fact that the audience is going to get a ton of value of that, and I just want to say I really appreciate you. I appreciate you coming on.

Jay: Thanks so much, Dan. I really appreciate you taking the time to visit with me over the phone.

Dan: Yeah, man. My pleasure and I will be sure to talk to you soon.

Jay: Alright, take care - thanks.

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