PODCAST

Science Of Flipping With Justin Colby

Mitch Stephen|By August 18, 2020

Episode 401: Science Of Flipping With Justin Colby

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REIS 401 | Science Of Flipping

Nobody starts out great in the business. They either start with little idea about the job or little money to start their career. What pushes them forward is their determination to learn from others and take action. In this episode, Mitch Stephen interviews someone who is big on helping real estate investors create the business and lifestyle they have always dreamed of. He sits down with Justin Colby, a full-time real estate investor and the founder of The Science of Flipping, to show us the power of mentors and coaches to one’s real estate investing journey. Justin shares with us some of the programs they have over, such as The 5 Day Deal Challenge and The Science of Flipping Academy, aiming to help those struggling or just want to better their game. Listen to this great conversation where Justin gives a tremendous offer that could just be what you need to succeed.

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Justin Colby is here and we’re going to learn a little bit about The Science of Flipping. First, I want to pay homage to my sponsor, TaxFreeFuture.com. If you don’t have a tax-free or tax-deferred retirement plan where you can grow your finances and postpone or defer taxes forever, then you have no idea the size of the tool you’re missing in your tool belt. Go to TaxFreeFuture.com. Justin, how are you doing?

Good, partner. How are you?

I’m doing good. I’m having to do a little makeshift here. Adapt and overcome.

That is the number one resource us entrepreneurs need to have in our tool belt, being able to adapt.

Tell us a little bit about your background. How’d you get involved in real estate, so we know who we’re talking to and where you come from.

I got started in 2007. I was broke, busted and disgusted, as I like to say, when I got into the industry. I lost my home to foreclosure. The repo man took my car. I walked away from roughly $40,000 of credit card debt and I was sleeping on my buddy’s couch. That was a fun experience for me. What I did take out of that is I did know and believe and commit to being a successful real estate investor back in ‘07. From that point, it was about the grind and the hustle. I don’t think podcasts existed in the real estate investing space yet. There were not many coaches, if any. There were no YouTube channels about this, so it was literally figure it out on your own.

Being able to adapt is the number one resource we entrepreneurs need to have in our tool belt. Share on X

I spent all day, every day cold calling realtors to get my first deal. It took me nine months to get my first deal. Momentum starts to kick in. I immediately got a second deal. I went from two deals in my first year to 6, 20, 46, 96 deals, etc. I now have done roughly about 1,500 deals. That’s roughly about 400 rehab flips, probably about 100 whole-tails where you buy it and clean it out. You have roughly another thousand wholesales where I am assigning the property over. That number continues to grow. I still run a very active real estate investing business here in Phoenix. It’s been great. It’s been a hell of a ride.

There’s a lot of freedom at the bottom, isn’t there? I like to tell people in my book, “When you get to the bottom, it’s the perfect place to reinvent yourself because all the taggers or longers, they’re not there anymore.” Usually, nobody that matters is there anymore, except for some of your core believers, if you still have any left. It’s a perfect place to reinvent yourself. I call that your time in the woods. Everybody has a time in the woods story where it wasn’t working. They were down and out and they had to dig a little deeper, fight a little harder and fight a little longer.

It’s funny because when you’re in the moment, you think everyone’s going to leave you, no one’s going to love you, you’re a failure and woe is me. I never took that perspective, I’ll be honest with you. I’ve always had a positive mental attitude. I’ve had a positive energy about me, so I never did, but a lot of people can. Walking away from that and being able to look back now years later, all those friends that were friends of mine are still my friends. In fact, I saw one when he and his fiancé came out here to Phoenix to get away. We’re still friends all these years later. If they love you and they are friends of yours and family, they don’t give a shit. They don’t care if you’re poor or you’re rich. They love you and the person you are.

Do you know any rich people that started out doing this business? I don’t know any people that started out rich.

No. Everyone who’s well-off these days did not start out with money in their pocket to start. They’ve all started in that position of needing to make it happen and those that are in a big commitment level and in a big need, they tend to make that work.

When they start out, it seems like you’re going to have to start out wholesaling or assigning contracts. It makes perfect sense. Get some money in your coffers, get some momentum, maybe get your spouse off your back. I call it hush money. “Here, honey. I have half your yearly salary in the bank. Please be quiet now and leave me alone.” Do you train new people in the business all the time or do you usually take more seasoned people?

Science Of Flipping: Everyone who’s well off these days did not start out with money in their pocket. They all started in that position of needing to make it happen.

When I do train new people, I’ll usually do it in groups. I’m running a 5-Day Deal Challenge and there are 60-something people that’s part of that challenge and they are newbies. I’m walking through quite literally, if I was broke, busted and disgusted, in our economy with everything’s going on, what I would do to go and get a deal. I’m doing that in a group format. I then also do weekly group calls to newbies. I call it the launch phase. You’re trying to get into the business and you’re trying to launch. I do that in groups. Every week, I have a group coaching call that I do personally with those. On the people that are looking more into that growth phase, I’m doing five deals a month or I’m flipping 3 or 4 homes a month or whatever the number is they’re trying to get into a growth phase. That a lot of times I’ll do more on a one-on-one basis. Growth is still a little bit of a group.

The scale where they’re trying to hire, they now need to become a leader. Now they need to lead people. They can’t do the transactional day-to-day business. That is more the one-on-one stuff that I will do. The growth phase is still in groups because you’re trying to show them how to implement systems and processes. I can do that in a group. It’s when they need to scale, it needs relative. When they’re trying to become a leader, that’s where the challenge comes. A lot of people aren’t born leaders. Almost nobody is a born leader. They think scaling means letting go of their job and I get to be on vacation the whole time. That’s not what scaling means. You’re repositioning your workload into a leadership workload rather than the transactional workload.

I try to tell everybody on the one-on-one, they go, “What’s your program?” I said, “I don’t know. I don’t know what you need.” There’s no ABCEFG for a person and their business. You have to figure out who they are, where they’ve been, what they’ve done, what they’re good at, what they’re not good at what they like to do, what they don’t like to do, the whole thing. It’s never the same. Their market, strategy, funding sources, everything is different. I say, “What are we going to do?” When we first start, I was like, “I don’t know what we’re going to do. Let’s figure out what we need to do. Let’s start talking.”

In that launch and growth phase, I try to do groups because when you’re in that younger phase of business, the answers tend to be all pretty much the same. When you are looking to grow and you’re looking to scale in your space, bring in seller financing and creative financing, getting deals done like that, when you’re looking to build a team around your business, now it can be much more, “What do you need? What are the hurdles? What’s stopping you from scaling your business?” I need to get one-on-one and granular with that person.

I don’t know what they do in boot camps anymore. Do you hold boot camps? Are they virtual boot camps? What are you doing?

It’s all virtual. All the live stuff is pretty much gone. I know you yourself have done live stuff and I’ve done everything virtual. This launch, I’ve called it The 5-Day Deal Challenge. It’s like a boot camp. For those that want to get in and understand what I would do if I had no marketing budget, here’s that boot camp. People are loving it. Literally, it’s been some of the most fun I’ve had in a long time. It’s very engaging. I’m doing more of that and it’s all over Zoom.

It is easier to be educated, listen, and watch the training. It is harder to execute on what you should do and what people are teaching. Share on X

What can you expect on The 5-Day Deal Challenge? Can you map out day 1 through 5 what the topics are?

I sure can. I’m planned out. Day one, and this is going to sound very elementary to probably someone like yourself or myself, but I’ll promise you, it is lighting people on fire. Day one is understanding how to join Facebook Groups in your market and nationally, and start to converse with buyers. Who is buying? What messaging do you want to send? How do you want to find those buyers within the group? There are secret little ways that I teach that show you how to get directly to the people that are buying that are in the group. Day two is to be able to do the same thing within the meetup groups in Meetup.com. How do you get into those groups and how do you find the real buyers that are in those meetup groups in your town? As I started going into this, this could also be run virtually. Everything I’m teaching is virtual. I have several people in this group that are like, “I want to do virtual wholesaling.”

Everything I’m teaching, even though it’s meant to be about how I would start with no budget, it absolutely fits for those people that are looking to wholesale virtually. Day three is using Craigslist to find wholesalers, how I message them, how I follow up with them, and what I’m saying to them. Day four will be how to use Facebook Groups and Facebook Marketplace to find wholesalers. Day five is how to create the sheets and wholesalers with buyers. Where do you track these people? How often do you follow up? What notes are you taking? I’m doing three bonus days, which will be how to work with realtors as buyers, as well as bringing you deals. Day 7 and 8 will be some of my own students that will be giving advice based around working with me about how they’ve been able to either overcome the challenges that a lot of people are having or how they’ve seen a certain result by taking certain techniques. That is the layout of it.

I want everyone to go to 1000Houses.com/busted. You’ll get to see information there and contact information. Anything that Justin wants to put out about what he’s into these days, it will all be over there. If you’re busted, this is a great place to be. It may or may not be for you, but it’s a definite way out. If you can get passionate and get some heart and soul behind these methods. Nothing works if you’re not passionate about it. That’s why I said it could be for you. If you’re not passionate about this, then find something else you’re passionate about and find a guru, a mentor or someone to help you along and get with it.

I was lower than low when I started. I couldn’t rub two nickels together. I was going out and confiscating political signs the minute the election was over. They had 48 hours to pick up their signs by law. I figured in one minute I was doing the city of favor. I was picking everybody’s stuff up for them. I was flipping them over and writing, “I buy houses for cash,” and nailing them up on telephone poles. I didn’t have any money. I could barely afford the black marker that I was writing with. I put up hundreds and hundreds of signs because it’s all I knew to do. That was all I could afford. I answer my phone and it took off from there.

I got one deal, made a little money, got a little budget, got a little breathing room, and got the gun away from my head. I was operating minute by minute, even down to how much gas I have in my car. How far can I go? It’s pathetic, but it’s true. I came out like a rocket, though. I got a couple, then I quit my job because I got encouraged. I did 45 houses. This was a whole different era. This was 1996, ‘97, ‘98 when you could get in the classifieds by 8:30 and two deals by noon and perfectly good deals. If you screwed up, you’ve got more deals than you wanted and you didn’t know how you’re going to pay for them.

Science Of Flipping: Scaling does not mean letting go of your job and going on vacation the whole time. It is about repositioning your workload into a leadership workload rather than the transactional workload.

I quit my job in March of 1996. I did 45, 65, and 150 deals. One hundred and fifty was way too much. I lost as much money as I made practically from not being in control. They didn’t have all this information and this help these days. My life would have been so much better to have someone. To be able to bounce something off of and not have the anxiety. I was having to try things to see if they would work. I was inventing them off my head and a lot of things I tried didn’t work. I found out later why, but I wasted a lot of time and energy. Tell us about one of your best success stories. Do you have a student that stands out?

I definitely have several. I have a student that I work with one-on-one in the State of Washington. She’s been a long-time realtor. She has only known the realtor space and she has now successfully transitioned into a great real estate investor, not just realtor. Now she’s being able to monetize all of the leads that are coming to her, not in the realtor space and being a listing agent, but now she is flipping and she is actively wholesaling.

What a powerful duo, to have the license and to be the realtor. What a powerful combination of things to have. I think eventually people that have the license will gravitate all the way over to the investor side, but that doesn’t mean that they can’t be a broker and run an office, do all kinds of other things with that license.

She has found so much freedom in doing that because everyone that she has a conversation with now has all these options. “Am I going to list this? Am I going to buy and rehab it myself? Am I going to wholesale this?” She is crushing it. I’m proud of that one. I’m proud of all my students that make progress. I have another business partnership out in Denver, Colorado. These are awesome dudes. They’ve been rehab flipping and developing for years. You know and I know, because I’ve done this as myself, is the profit margins are massive, but can you come up short on cashflow because you’re waiting for these flips to sell. You’re waiting for this development to get done.

There’s no income coming in. They hired me to help implement a wholesaling business within their business. Now they’re doing 5 to 10 wholesales a month. They’re making multiple six figures every month in their wholesale space while these bigger flips. They also develop and are taking their time to sell. They’ve done a great job implementing the strategies and systems to create this. They understand this is the marketing strategy that also will feed their rehabbing and development plays. When they got that, they took off like a rocket. Every week, it’s more about understanding and managing their leads and their KPIs because they now are crushing it in the wholesale space as well. What they do, and have done for years, is the rehabbing and developing.

I’m proud of those two. The list goes on. I’ve mentored a lot, if not thousands of individuals over the years, but those two are top of mind right now because I’m actively working with them. In my launch group, which is the group coaching, there’s an individual that got his very first deal for free. He did not spend a big marketing budget. It was a free deal. I’m incredibly proud of him. He’s doing great.

Take action every day, one step in front of another. That is the one thing that separates the people who win and the people who fall off. Share on X

At some point, it’s not about making more money. It’s always interesting to make more money. I’m not saying it’s not, but there’s got to be a little bit more to it. You’ve got to have a higher reason after a while because watching the money in the bank account is not that thrilling anymore. You’ve got some giveaways for our readers. What are you giving away?

I can give anyone who is reading this, because it’s you and your tribe, access to my Science of Flipping Academy. This is a full built academy that I typically will sell for $2,000. I’m going to give it away to your tribe because you are who you are. I know the value you provide to so many. As a matter of fact, one of my closest friends is one of your private clients. I love that, so I want to be able to give back to your tribe. The Science of Flipping Academy is something that I sell. It is a full-blown course. It’s not just about wholesaling, not about getting started, but also about how to transition to an expert real estate investor. How do you start whole-tailing? How do you start rehabbing? How do you find and raise money? How do you potentially find a couple of properties to put in your portfolio?

If you’re reading and you’re busted or you’re struggling, this is a tremendous offer. I want to thank you. I wasn’t expecting you to give away something. All I can think is the word glorious. This is a great offer. It’s big. Go to 1000Houses.com/busted and get an education. This guy just offered you a $2,000 course for free. I don’t think he’s going to have it out there forever. Go out there and get a hold of it. Any words of advice to the newbies out there?

I would tell you, if you’re a newbie, the number one hurdle I come across from newbies that are in my launch coaching group is to take and execute on what you know you should be doing. It is easier to be educated, listen, and watch the training. It is harder to execute on what you should do, what they’re teaching, what I’m teaching, what Mitch is teaching. Take action. Every day, one step in front of another. Every day, you’ve got to keep swimming. That is the one thing that I firmly believe separates the people who win and the people who fall off. It’s the simple fact of never giving up and taking the action steps that they need to be taking. It can be as simple as doing. The first day of my coaching was go on Facebook and find more buyers. Slew through the Facebook groups to find people who were saying, “Send me your deal.” It can be as simple as that. As long as you’re taking action, you can start to achieve those results. I know that’s more motivational rah-rah, but quite literally what I’ve seen, the difference between fall off and fall out of the industry and the people that gained success and continue going.

It’s a marathon. It’s not a sprint. You accumulate talents and lists and knowledge a little bit every day, a little more every week. You’re better at the end of this month than you were at the beginning of the month and you start to build. It’s no different than an athlete or someone in training or a bodybuilder. He didn’t start out with all those muscles. He started out scrawny as you and me. You got to love it enough to stay with it. That’s the big thing. The other thing I’d like to add is do your business with integrity because you could make all the money or build a business, but if you don’t have integrity, it can all go down the tubes in a heartbeat because lawsuits and pissed off customers and all that stuff, they’ll take a toll for sure, if not sink you. Sometimes it takes a bigger man to go, “I’m going to pass on this deal. There are things I can see that I don’t want to get into it.” Sometimes it takes a real man or a real woman to stand up and say, “I didn’t know this problem when I bought the house, but I know it now, and I’m not going to cover it up and send it on to someone else. I’m going to take it on the chin like a man. I’m going to handle my shit and take care of it.”

I believe that when you live life like that, when you’re talking to people, somehow it comes through. When you believe in yourself and you know yourself that you’ve been honest, that comes through the airwaves somehow and people pick up on that you’re a good person and that you’re right. When you don’t believe in yourself or you’ve been hiding or you know you’ve been doing shady things, that goes through the air too and people pick up on it. Like every business, we need to stay doing it right and do what you would want done if you were on the other side of the table. Do it like that. I understand all is fair in love and war and negotiation and all that, but that doesn’t mean deceit or take advantage of people that don’t have any idea what’s coming. I appreciate you taking the time to come on. I’m enjoying working with your friend.

I like working with the big boys too because they’re fast studies. They don’t need much. They want to see, “What are you doing that I’m not doing? How are you doing it?” Their minds are so big that they’re fast. I had some guys with 150 houses come on board. I’m with them 2 or 3 weeks and they’re off and running. They’re way down the track. I said, “You haven’t called me lately.” He says, “You open the door. I got it.” I appreciate you taking the time. I’d like to say thank you to my sponsors, TaxFreeFuture.com. If you don’t have an IRA or a self-directed IRA, 401(k), you’ve got to look into it. Don’t wait before they change the laws or something. Get it now. Who knows what happens in the future with the political atmosphere the way it is? Check it out. Thanks for stopping by to get you some Justin Colby.