PODCAST
How to Increase ROI of Your Real Estate Business by 100+%
Episode 71:
Larry Goins is a Visionary, CEO, Entrepreneur, Real Estate Investor, and Educator. Larry has been investing in real estate for over 20 years.
Previously, Larry served as president of the Metrolina Real Estate Investors Association in Charlotte NC, a not-for-profit organization that has over 350 members and is the local chapter of the National Real Estate Investors Association.
Larry is an active real estate investor and travels throughout the United States speaking and training audiences at conventions, expos, and Real Estate Investment Associations on his strategies for buying and selling houses. Larry has also written several books on real estate investing that are available wherever books are sold. Larry and his assistant Kandas are also the hosts of the BRAG Radio Show. BRAG is all about using real estate to Be Rich And Generous.
Between speaking engagements and mentoring other investors, Larry oversees the daily operations of his investing business that wholesales properties, seller finances properties and holds properties for investment.
On a personal note, Larry and his wife Pam have two children, Linda and Noah. He also has a grand daughter, Ember. They are members of New River Community Church in Lake Wylie, SC. As a husband, father, businessman, and real estate investor, Larry holds true to his core values and moral integrity. His personal and business motto is, “People and principles before profits.”
What you’ll learn about in this episode:
- The Filthy Riches program that allows you to buy and sell cheap houses at deep discounts with zero risk and the upcoming webinar that dives in DEEP
- Why you don’t need a buyers list with Filthy Riches
- Why you want to aim for selling a property for 3-6 times what you paid for it — and why you can’t do that with expensive properties
- How to increase ROI of your real estate business
- Why you need to take in payments less than rent
- Why you can only buy fixer-uppers and not blower-uppers
- How to vary your kinds of deals so that you have money coming in that keeps adding up
- Why you need a coach when you start along the Filthy Riches/Owner Financing process
- The free analyzing tool that you will get for attending the Filthy Riches webinar
- Why you have to sell your notes when you start in owner financing — and why you want to keep as many as you can when possible
Resources:
Transcript:
Welcome to the Real Estate Investor Summit podcast. Coming to you straight from the smallest big town in Texas with your host, mentor, and owner financing master, Mitch, aka Be The Bank Stephen. The possibilities of life without a J-O-B start here so grab your pen and paper and listen up.
Y’all just might figure out how to fail forward to financial freedom.
Mitch Stephen: This is Mitch and welcome to the Real Estate Investor Summit podcast. Hey man, I have Larry Goins back one more time because he’s going to talk to us about his Filthy Riches program. He’s got a way of buying houses all over the country. Houses that people don’t even want. He’s going to show you these tremendous returns we can make. Right now I got to get a few words from my sponsors, but I’ll be right back to talk with Larry Goins.
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Mitch Stephen: Alright, ladies and gentlemen. Today you are going to get you some more Larry Goins. Larry Goins is a friend of mine. We met each other kind of bumping around in the different circles we run around in and we do similar things and we have a similar mindset on how to not just flip real estate, but how to manipulate real estate and generate a residual income and with no further ado, how are you Larry Goins?
Larry Goins: What’s up buddy, how you been?
Mitch Stephen: I’m doing good, I’m doing good. I got the sniffles here so you have to excuse me if I got to mute myself. I hear a sneeze every now and then. I don’t know what’s got ahold of me, but something’s got ahold of me.
Larry Goins: I hear you man, but you can’t keep a good man down. You keep pushing, don’t you?
Mitch Stephen: It wasn’t that bad. Couldn’t keep me from this, because this is going to be exciting. I think your Filthy Riches program is a tremendous way for people to start because it’s kind of at the lower echelon property values and there’s big money in that arena, right?
Larry Goins: You know, absolutely and the cool part about it is you know, you and I both have students all around the country. We’ve got students around the world, but this model that I’m going to talk about, the Filthy Riches model that we’re going to kind of go over today, it just blows me away how many people have started out from scratch, never done a deal before, bought course after course after course, been to seminar after seminar after seminar, and after they learned of this model, they went out and did their first deal and it just blows me away. Filthy Riches is a model, I didn’t invent it, I just like to think I perfected it. I’m going to go over in detail exactly what we do, but we’re also going to have, we’re going to invite people to a special webinar that you and I are going to do to give them even more detail at the end. How about that?
Mitch Stephen: Yeah, so just so they have it, it’s 1000houses.com/riches. R-I-C-H-E-S and this is going to drive you over to the show notes and the show notes will have a link to this webinar that we’re talking about, but tell us, get us started on what Filthy Riches program is all about.
Larry Goins: Well Mitch, Filthy Riches is a proven system for buying and selling cheap houses anywhere in the United States at deep discounts with none of your own cash, credit, and zero risk. Then, we turn around and sell the property for three to six times what you paid for it with seller financing. I know you know a thing or two about seller financing.
Mitch Stephen: I try.
Larry Goins: Then with a reasonable down payment, we’re going to seller finance it with a reasonable down payment, all with no buyers list. You know, people talk about getting started in whole selling, your biggest asset is your buyers list. With this, you don’t even need a buyers list, okay? Then, now if you’re brand new or if you need cash right now, we’re going to show you how to sell the note for immediate cash or you can collect monthly payments for the next 10 to 20 years. I got to tell you, it’s one of the fastest, safest, easiest ways I’ve ever seen for people to put anywhere from $16 to $28,000 cash in their pocket in the next 30 days. It’s even faster, easier and safer than whole selling. I just love this model.
Mitch, one of the reasons that this thing works so well is you want to sell the property for three to six times what you paid. Now, you and I both know you can’t sell $100,000 house for $300 to $600,000 even with seller financing. However, you can easily sell a $5 to $10,000 house for $30 to $40,000 with seller financing and payments less than rent. If you guys are taking notes, you should write down, payments less than rent. You could even sell a $20 to $30,000 house for $60 to $90,000 with seller financing and payments less than rent and all you really need to get started with this is a phone and an internet connection.
In fact, you can easily do it from anywhere because all the ways that I’m going to show you how to get deals and how to sell the properties, you do it all on the internet. I would venture to say everybody listening to this podcast, you got a phone and an internet connection. Don’t you think, Mitch?
Mitch Stephen: I’m pretty sure of that. I’m pretty sure of that. You don’t do a lot of fix up on these houses, if any at all, right? You just get them and then you sell them as is?
Larry Goins: You know, that’s the best part. You know me Mitch and you know I hate rehabs. I hate rehabs, okay? I love real estate but there’s two things about real estate I hate. Tenants and rehabs, alright? I don’t have to deal with either one of them. I mean, a sample deal might be, let’s say I pick up a house for $5,000. Now guys, I know some of you are thinking, oh my gosh, $5,000? There’s no way. Maybe that worked back in the ’90s or maybe that worked before the real estate crash or after the real estate crash, but no. I could tell you, I pick up houses. I picked up one little mobile home not too long ago for $1,500. We buy a lot for $3, $4, $5, $7, $10, $15, $20 and $30,000, but let’s say you pick up a house for $5,000.
Now, it can’t be a blower-upper. Now fixer-upper’s okay, but it can’t be a blower-upper, okay? You got to know the difference.
Mitch Stephen: Alright, alright, what’s a blower-upper? This is a new one for me. You’re [inaudible 00:08:16] me already.
Larry Goins: If you see in the listing the value is in the lot, you know it’s a blower-upper, right?
Mitch Stephen: Okay.
Larry Goins: No, but here’s the deal. We want to find houses that are close to livable, okay? If the ceiling’s caved in, if the floor’s falling in, if the roof’s falling in, all that stuff. You don’t want something that’s going to be too overwhelming for a weekend warrior, somebody that’s going to go out there and do a little work to it either before they move in or before they rent it out.
We’re going to take that little $5,000 house, we’re going to put it out there and we’re going to sell it. Now, I’m going to show you all the different ways to sell it on the webinar, but a few of the different ways. You could sell them on eBay. You could sell it to a neighbor. You could sell it to an investor. Okay? Then you could sell it on Craigslist as well.
Let’s say we take that $5,000 house, we turn around and sell it for $30,000. We get a couple of grand down, okay, we’re going to finance $28,000 at 10 years at 9%, the payment’s going to be a little over $350 a month. Think about this. I paid $5, I got $2 down, I have $3 in it now plus closing costs. I’m leaving closing cost out just to keep it simple. But, closing costs will change your yield a smidge, not a whole lot. I got $3 in it plus closing costs and I’m getting $354 a month for the next 10 years. That’s 141% return on my money. Is that good enough?
Mitch Stephen: That’s good enough. That’s good enough. You don’t really need to be exact. Don’t even need to know where the decimals are in this equation.
Larry Goins: No. No, not at all. And I got no mortgage, no vacancies, no repairs, no taxes, no insurance, no tenants and no rehab. I love this model. I love it and I’m …
Mitch Stephen: You’re doing this all over the country or are you doing it right near hometown or certain states? Where are you doing this?
Larry Goins: Well I’ll tell you, of course now you’re not going to do it in Orange County, California, alright? You’re not going to do it in Manhattan. You’re going to go where the properties are. I’ve done this Mitch in 12 different states right from my office in Lake Wylie, South Carolina and I focus on the Carolinas just because that’s where I am, but I will tell you this. You said right in my own local market. I’m in the Charlotte, North Carolina MSA, even though I’m right across the state line from Charlotte, North Carolina I’m in South Carolina. I haven’t bought a house in Charlotte in over three years. I haven’t bought a house in Charlotte.
Mitch Stephen: [inaudible 00:10:59].
Larry Goins: Yeah, I go where the deals are. I go where the deals are. We got a deal recently where it was listed in the $70s. We picked it up in the low $20s. About 30-35% of list price. As long as you’re not trying to buy where all the competition is then you’re going to be able to pick up these deals at 50, 40, 30, sometimes even 20% of list price.
I got one not too long ago. It was listed for $44,000. I paid $9,150 for that house. I mean, do the math. It doesn’t take long to get rich quick doing that kind of deal.
Mitch Stephen: I understand it. I understand it. We’re doing the same thing and I’ve been a believer in these little throwaway houses all along because I built my career starting out with those houses. They were smaller numbers, it was easier for me to find the private lenders, it was easier for me to raise the capital or put it on my credit card even until someone would give me my money back in a down payment.
We also bought a house for $12 last month and put it up for sale for $36,000. We always say with a reasonable amount down because we don’t like to name the number and let the buyer …
Larry Goins: Exactly, I love that.
Mitch Stephen: Let the buyers [crosstalk 00:12:24]. Yeah, the buyer says, “What’s reasonable?” You say, “Well reasonable to me is $15,000 but that’s neither here nor there. Why don’t you tell me the most you can do and I’ll take it to my partners and we’ll see if we can’t get you a house? Of course the more you offer the easier it’s going to be for me to get it, so let me know and I’ll go fight for you.”
Larry Goins: Exactly, exactly. You know, even in addition to that, instead of telling them when they say, “What’s reasonable?” Say, “Well most people put around $15,000 down,” so that lets us know hey, you know, I want to be like most people. I want to be able to do that. It really kind of depends on what they have. We try to get as much down as we can.
Mitch Stephen: Of course. How are you raising the funds to buy these houses? Where do you get your money?
Larry Goins: Well there’s a lot of different places you could do that, okay? You can use private money. You can use hard money, because the numbers are such that you can use that, but one of the best ways is just to raise private money. You could put them on a credit card. You can sell a partial. You can table fund these deals using your note buyer’s money.
Let’s say you have no money to buy this deal, okay? You don’t have $5,000. You go out and you find a note buyer that’s willing to buy this note. Let’s say if you even sold this note at a 20% yield, okay? A 20% yield on this note that I just described, I mean you’re going to cash out quite a bit of money. You’re going to cash out what is it, about $19,000 on that deal if you sell the note. Let’s say you sell it at an 18% yield. That’s $19,684 on that specific note. I just ran the numbers.
You’ve got your note buyer lined up. They wire the $19,000 to the closing attorney. You buy the property, you sell it with seller financing, and you assign the note right there at closing, you use the note buyer’s money to pay your seller and then you keep what’s left over, which is $19 minus the $5. Actually, you only have $3 in it, so you netted $16,000 minus your closing cost, of course.
Mitch Stephen: Yeah.
Larry Goins: You can use your note buyer’s money to pay your seller. It’s called table funding. Lenders do it all the time. It’s a part of the industry and I used to be in the mortgage business. It’s a part of the whole industry.
Mitch Stephen: In this case of table funding, you don’t have any of your own money in this, so to try to figure out the yield, it’s infinity. You can’t calculate a yield if you don’t have anything in it.
Larry Goins: That’s exactly right. That’s exactly right. You’ve got to have some money in it.
Mitch Stephen: Okay, so let’s run through it real quick. You get this house [inaudible 00:15:14] to buy it for $5 and then you find someone who wants to give you $2,000 down and so you still need $3,000 to purchase the property but you find a note buyer and instead of doing the whole way and putting up the other $3,000 yourself, you just don’t have $3,000 so because you don’t have the $3,000, you can’t make 141% rate of return on your money, but you can still make a substantial cash deposit into your bank account. You find a note buyer and you agree to selling this note so that he can get a 19% rate of return which means he’s going to bring about $19,000 to the table.
Larry Goins: Right.
Mitch Stephen: He brings the $19,000 on the table and this all happens simultaneously, or in a very short period of time from one to the other. You go in to buy the house and your note buyer comes in with the money, the $19,000.
Larry Goins: Right.
Mitch Stephen: You buy the house actually with his $19,000, so you end up with $14,000 in your pocket but then you pick up the $2,000 in your down payment so you’re back up to $16, and that’s how it works. There’s a little, like Larry said, there’s some closing costs in there. It won’t be quite $16. It’ll be a little but less, but you know, who’s counting? This is a great deal. You did it with none of your own money and when you learn how to do deals like that, you become pretty unstoppable because this can go on day after day, month after month, year after year.
Larry Goins: Absolutely. Absolutely.
Mitch Stephen: There’s no shortage of deals out there.
Larry Goins: I mean think about this, Mitch. Okay, think about this. You do one of those deals, you cash out $16,000, okay, you put $6 in your pocket and then you go buy two houses with the rest. Now you have $700 a month coming in. You sell those, and then you go buy four. Then you’ve got $1,500 a month coming in. Okay? You could sell one, keep one. You could sell every other one. You could sell five years’ worth of payments and never run out of money. Just sell enough to get your costs back. Is that great, or what?
Mitch Stephen: Yeah, and this is why, we just walked off into the professional zone. Some of this stuff that Larry’s talking about, you got to be kind of a pro at it. That’s why you hire a coach like Larry or myself or somebody so that when you get to these [inaudible 00:17:51], so they can help you explain your choices. Then when you see a choice that you don’t really understand, if you ever manipulate a deal using that technique, you will understand it after you live it and sometimes it just takes someone to walk you through it.
Larry, if people want to know more about your Filthy Riches program where you can buy these very, very inexpensive houses all across the country, they just go to 1000houses.com/riches, all lowercase on the riches. R-I-C-H-E-S. Have you got any samples or any free stuff there to give away or am I putting pressure on you here?
Larry Goins: No, no, no, no, no. It’s okay. In fact, when they sign up for the webinar we’re going to give them a free analyzer to help them analyze these little deals literally in a couple of seconds flat. It’s very, very simple. We’re going to give them, everybody who signs up for the webinar is going to get an analyzer absolutely free. They’ll be able to analyze these deals in two seconds flat.
Mitch Stephen: Okay great, so you’re going to get a free analyzer and you’re going to get to watch the webinar on Filthy Riches at 1000houses.com/riches. Tell me, what is the best deal you’ve ever made using this strategy?
Larry Goins: I bought a house, well it’s really kind of hard to say the best deal because the great thing about this is you do a lot of small deals and they all add up and before you know it you’ve got tens of thousands of dollars a month coming in. Okay, because your goal, now naturally you need to sell the note if you’re starting out. If you’re broke, if you don’t have any money, you need to sell the note. However, your goal should be to keep the note. That’s your goal, okay? Once you sell a few you get enough money coming in, then it’s a self-funding asset. It’s self-funding.
In other words, what you’re going to do is, let’s say you got $5,000 a month coming in. Now you can buy a house every month without having to come out of pocket with anything. Then you get up to $10,000 a month, you can buy two houses a month. $15,000 a month, you can either buy three houses or you could buy a $10,000 house or you can buy one $15,000 house. You eventually start upgrading and upgrading and upgrading and you got more, more money coming in every month and it’s self-funding and you get to the point where you can’t spend the money fast enough. You’ve got to find other deals to invest it in. That’s a beautiful thing, as you well know, isn’t it?
Mitch Stephen: Well that’s what I try to explain to people. It’s not about selling a note with a big hit. You know, one of the things I do is … I just can’t, I’m going to talk personally here for a minute. I just really can’t spend more than $250,000 a year. I can eat as much as I want. I can drink as much as I want. I can go and travel as much as I want. I live in the house I want, I drive the car I want, and it’s really tough to spend really over about $220,000 and so what I do is …
Larry Goins: Mitch. Mitch. You haven’t met my wife, have you?
Mitch Stephen: Yeah. I get you. Yeah, well you got to have a little help, too. What happens here is I’ll manipulate houses whatever so I get about $200 and something thousand proposed income for the year. Sometimes that happens in the first quarter, sometimes it happens in the first six months, and then I start doing these deals in my IRA and my 401K because there’s no sense in just paying taxes on more and more money. Do you invest like that yourself?
Larry Goins: Absolutely. Absolutely. You just keep it going.
Mitch Stephen: Yeah, and the other thing is [crosstalk 00:22:01]. The other thing is these properties, you’re not a landlord. You’re just collecting a payment. If something breaks or goes wrong, they’re the owner of the house, not you, so you’re not trying to find a plumber over in Saskatchewan, wherever the heck. You’re just collecting a payment and if they stop paying, you just resell it again like you sold it the first time. Hopefully that doesn’t happen, but it’s going to happen if you do this enough. There will be some choices.
To me, the greatest strategy in the world, on the planet, is to buy it, don’t fix it, owner finance it for double or more, and watch the person that’s making payments to buy the house go over budget fixing up your collateral. That is the best strategy on the planet as far as I’m concerned and I think you’ve latched on to just exactly that too, Larry, because that’s exactly what you’re doing.
Larry Goins: Absolutely. Absolutely, and I do like the lower price, price ban properties. You get to sell them for $3, $4, $5, $6, sometimes even more. I bought houses, I bought mobile homes. $1,500, $2,000, and sold them for $19,900. $29,900. You get 10 times what you paid for it. Listen guys, this is the kind of opportunity. People say, “Oh, you’re ripping people off.” Some people say that. Not many, but some people. Let me tell you something. I am helping that person become a homeowner. I’m providing them with housing that’s going to be theirs and there will be an end to the payments. What is sad is they pay the same amount in rent and there is no light at the end of the tunnel. Okay? They’ll always be a tenant. Regardless of the price I’m selling them the house for, and I never sell it to them above market. I sell it to them at market, okay? Sometimes even less. But, there is going to be light at the end of the tunnel for them and they’ll see, at some point hey, they have no more payments and they own it free and clear.
Mitch Stephen: Yeah, it is a great service that we do when we pick up these houses because they’re usually in decay or they’re going to be decaying quickly. Nothing good happens to a vacant house. The neighborhood suffers, the neighbors suffer, the taxing authorities suffer because they’re not getting, the municipalities because they’re not getting their tax money generally or a lot of times.
Larry Goins: Right.
Mitch Stephen: Contractors are suffering because they’re not out there doing the work on those houses. I mean, there’s just a lot of wins that happen in this column when we go out and change the dynamic of these old, neglected houses. They’re not always old. They’re just neglected.
Larry Goins: That’s true, I mean I’ve picked up nice double-wide mobile homes on an acre of land, built in either the late ’90s, early 2000s, three bedroom or four bedroom, two or three bath, vaulted ceiling, plant shelf, garden tub, deck off the back, and I’ve picked them up for $8,800, $9,100, $12,000, $15,000. They’re in small towns where people were born and raised, they have ties to the community, they have relatives there so they have a support system in place, and that’s the best kind of buyer to have. They’re not going anywhere. They’re not transient. They were born and raised there. They know everybody. Everybody knows them. Here’s the best part, as you know. If they run into a problem and become late on their payments, they have friends, relatives and people that can help them out to help them keep their house.
Mitch Stephen: Yeah, and I was going to say. You probably find a lot of your stuff in the world in America, right? Just outside the city limits where [inaudible 00:26:06].
Larry Goins: Small town, USA.
Mitch Stephen: Yep. I love that. We’re doing a lot of that here in Texas, too. I think those little communities are sometimes tighter and more charitable than certainly some of these big cities because it’s just a mess up there.
Larry Goins: That’s right.
Mitch Stephen: Okay, so you go to 1000houses.com/riches, all lowercase R-I-C-H-E-S. Man, is there anything else we need to know before we call it a day on this subject?
Larry Goins: Well I think the most important thing is to get people over there to watch the webinar because we’ve only really scratched the surface. I mean, a lot of people are scared about well what happens if they stop paying? Actually quite frankly, that’s the second best thing that could happen is they stop paying and on the webinar I’m going to tell you the best thing that can happen and we’re just going to go through, I’m going to show you sample deals and everything that we’ve done. Real life deals. You’re going to get the analyzer, we’re going to show you how it works, show you how to market the property and how to have it sold before you even buy the property.
Yeah, you guys need to go to that website that Mitch mentioned and sign up for the webinar and it’s a special link, a special webinar we’re doing for you guys. We’re going to show you case studies and everything.
Mitch Stephen: That’s why I think, we can talk about it, but you did such a good job in the webinar, succinctly talking about it one step at a time and talking about, and showing the examples. I think the case studies are so important. I love case studies.
You guys get over to 1000houses.com/riches and I think that’s about it for now. I want to compliment all of you all for taking the time to get you some Larry Goins today. Maybe you’ll learn how to raise some money sitting in your underwear at your house on your computer, just like Larry. There’s a sight to behold. Let’s just erase that I ever said that.
Larry Goins: I appreciate that.
Mitch Stephen: Larry sitting in his underwear at his computer getting rich. Getting filthy rich.
Larry Goins: There you go.
Mitch Stephen: Alright, this is Mitch with the Real Estate Investor Summit podcast. We’re out of here.
You’ve been listening to the owner financing master, Mitch Be the Bank Stephen, on the Real Estate Investor Summit podcast. Let us now blatantly, without apology, bribe you towards financial freedom by offering you a whole bunch of free stuff. Go to 1000houses.com and get you some. Y’all come back now, you hear?
