Deal Breakers Every House Flipper Should Know!

You know, I probably have $2 million worth of flips right now. Probably the biggest mistake that I see newer flippers going is they're going into too tough a house. As an investor in doing this, you have to be willing to walk away from the deal. But what are the deal breakers? The the deal breakers. Welcome back to the Roots Podcast. I'm here with my co-host Max Moore and I am Tyler Lingal and we're here to teach you how to plant roots and build wealth. Today we have on Dave Short. Dave Short is just a legend in the real estate investing uh flipping space. He has done over 470 flip deals and he started doing it in 1970. So he's just a flipping uh master. Um but he is going to teach in this episode what are the pitfalls that new investors fall into when they're um analyzing flips. How do you build a network that actually brings you deals? So, network marketing, um, having recruiting people to essentially be your deal finders, how to fund deals, he set up unique, uh, private money, uh, private joint venture deals, and then how he's been able to build a legacy, start a co-working space, and much, much more. So, if you want to learn more how to flip in Indianapolis, this is going to be a treat. Thanks for coming on the show, Dave. Well, glad to be here. Before Tyler walked in, we were talking. You have seven properties going actively right now that you're flipping. Yes. Tell me about how how you've built up to having that many going um multiple crews in those jobs. Are they all under contract, all under construction at once or like how do you layer those out to be able to handle that many properties? Well, we're we're pretty good about structuring, you know, the houses and try to lay out and, you know, typically when we buy a house, I I have one GC that I use for most of my stuff, but I have four to five different um independent contractors that do a lot of the stuff that I trust them with value. Uh, for instance, I have a go-to HVAC guy. I have a go-to window man. I have a go-to demo and clean out. I, you know, I have a go-to foundation and basement guy. So, typically before I bring my crews in to do the house, I'll have the all of their stuff done when they go in. So, they can just go in and hopefully on a timely basis get my house done. They can do all the electrical, do the plumbing, install the kitchen cabinets, put them together. Uh, I have a countertop guy that does all my work. So, we basically try to save time by using specific entities where I I'm not paying a GC to hire a HVAC guy to come in. I'm not paying him to do the foundation guy. I'm not paying, you know, to do the countertop. So, there's no, you know, upcharge on those things for him to manage it with his people. Yeah. I think that's where people get stuck too because the GC may hire somebody for HVAC that they think they trust and then they go in, they do a crap job and they have to hire a new HVAC guy. So, you not only are saving time, but you're also are saving money, you're also saving time there having Well, we save the time because you know that I don't that's, you know, if my contractor brings the HVAC guy in, their work kind of stops while he's doing his work. It's like we'll get in there and get that that done once he's done. It never works out. But I mean, I I've this GC that I use now, I've I've fired him twice where he hasn't done any work for me for two or three months and then he comes back and I give him a new set of parameters that he needs to do. What most people don't understand when they're doing a with a GC is that guy's probably working on three or four jobs at once, right? And if he's got five people on his crew and he's got four jobs, that means I only get one and a half person manpower per job per right per week. And that just expedites the time it takes. I mean, it doesn't expedite the time it takes to to finish the house. So my kind of rule with him is that if he's got five guys on his crew, I need to show up there and he's got four guys working. Yeah. You know, I think it's helpful to to know like the viewer will be somebody who's looking at you going, "Seven going on at once. How do I get one?" And they're trying to get that take that first one down. Um, that's typically who we're we're most engaging with. And I know also, not only are those seven happening, but they're all pretty high-end areas, right? They're a class. You know, most of our stuff, our every sale price this year is probably going to be in the 3 to 350 range. Yeah, that's great. Indie, let's go back for a sec. Uh, how does that start? What's the kind of first property that you flipped? What are the the numbers on it? What's the area? How what lessons learned there? Well, I mean, you're you're way testing my memory to go back to my first one. I mean, I think we're on number 470 in Indianapolis. Oh, wow. I did not expect that high. You know, that's from the last 10 years. So, this is your life for the last 10 years. Yeah. Last 10 years I've I've been a flipper. When was your first flip? You know? Oh, my first flip was probably 1975. Uh, where you might have bought that thing for 15,000 or something. I can, you know, I can tell you the address. It was 3535 North Biscane over 38th and Franklin Road. Yeah. I paid 12,000 for it, put 5,000 in it, and sold it for 26 and thought I had died and gone to heaven. So, the first one was a success. Yeah. Major success. Yeah. Because what we always like to say is your first one's a price of education. And most of the time you don't make a profit. Most people I've talked to that. That happens a lot. I mean with part of our and I've titled you've been to our mastermind group. I'm not sure why you haven't been back but you know you're a good question. Too busy trying to do our own but well go back. I mean, we have a mastermind group and we have a lot of people who are entry- levelvel people uh that come and visit our group and you know, then all of a sudden you're, you know, a person that's only done one flip or no flips is walking into a room of 10 people that's probably done close to a thousand flips in Indianapolis. So, if you can't get the information there, it can't be had, right? And uh but on the same token, we all take our our our licks. We've all taken our licks. I still take licks every once in a while. Um and but we we want people engaged with us because we're I'm like you guys. I mean, we want to we want to bring value to the people that come into come into our area, to our life on it. And uh so it you know part of our like I do a boot camp and we're going to probably do that boot camp in September and it's a uh 2 and 1/2 day pretty intensive a toz with flipping and uh part of the deal with our boot camp is that there's you know I I tell the students that here's one of three ways I want you to look at a flip and I want you to bring it to me and say would I do it? I'll tell you yes or no, you know, and you know, would I do it then? I'll tell you yes or no. And then you know would you do this? And I said yes, I'll do this house and that's the only one you should buy. You know, if I won't do it and I've done five close to 500 houses, why would you do it? It's funny because at our mastermind group, which is this is the first year we've headed that up, I asked, "What is the biggest downfall in flipping?" And Jose, who's done 50 flips, he said, "It's getting too emotionally attached and excited." He's like that dopamine rush of, "Oh, we found a deal." And we're in this negotiation process. Then you get in and you're like, "Oh, I paid 10 grand too much for this house. I didn't negotiate hard enough. I didn't walk away when I needed to." That's what I notic is one of the biggest pitfalls is getting attached to these properties and starting to envision it without rationally just taking a step back. Does this hit the profit margin I need to actually make a living from this? People are afraid. They start looking at, okay, I can cut the the quartz down to granite or then I can cut it to laminate, but does laminate fit in the in the price point of the product that you're trying to bring forward? So, you can't make that cut. You know, you can maybe make it in $150,000 house, but you can't make it in a $275 house. So, you have to figure out what's good and what's bad for you. But, you're absolutely correct. They they they fall in the h fall in love with the house. And probably the biggest mistake that I see newer flippers going is they're going into too tough a house. Meaning that there's too much work there to do. And once you start demolishing interiors of houses, then your cost to finish that house goes up proportionally. Uh the Fountain Square houses, you know, I I've I've done probably 10 houses in Fountain Square, maybe more, and the best I've ever done is a modest profit. And I've got my butt kicked on a couple of them, you know. So, it's not um like, you know, I just I I hardly won't buy drive by a Fountain Square house. So, where's that box? I'd love to know where you've um taken the direction of your flipping now that you're 470 in. I think a lot of people would be curious. What is your buy box in terms of what you think has been a successful flip for you? Well, probably the last three years, my box, my box has been very successful in houses that's built after 1970. Um, they're, you know, they're not ones where I feel feel I have to reinvent the wheel with electrical and plumbing, moving walls, demoing drywall. Once you start demoing um plaster and drywall, there's just too much underneath these old houses that you've got to look at the people that were living there. They lived with that house for 70 80 years. Their family has. But if you go into a 60sbuilt house or a 70sbuilt house, you know, they're more straightforward construction, much better techniques than they were back in the 1910 to 1940s houses. And it's because they tend to be more mass- prodduced. So they were, you know, they were after World War II, so they were more productionoriented and straightforward houses. So, you know, and it's kind of a rule of, you know, not not really a rule of thumb. It's like you look at a house and it's probably an okay house structurally if you think you could move that house to another lot and it just wouldn't fall down, right? You know, and that's a 60s or 70s house. You look at the construction techniques and the things with houses, you know, all these houses could probably be moved to another location and not fall apart. Anything older than that, it's just not going to work on it. And uh so m mine is, you know, I just see the people getting into these houses and I I like you, I get a lot of calls with, well, what do you think about this address? And I said, you know, I I don't know how you can win at that address. Um I mean, you can, but the buy box and the stuff that we see from the wholesalers, a perfect example is Riverside. You know, you hardly ever see anything under 80 or $90,000 anymore. Barely get under 100. And and and my feeling is the buy is only 50 or 60. Right. Right. You got to buy top out in the mid hundreds. They top out in the midunds. And and people think they can, you know, I get tickled when I see the wholesaler said, "Well, 50, you know, they budgeted 50 for rehab." And I look at the house just with pictures and I can't get in the house under 50. Well, these wholesalers have oftentimes never done a flip. They're just guesstimating. Oh, kitchen five grand. Let's call it really that that kitchen's going to be 10 grand, right? Right. HVAC 5 grand. It's like, no, that need the AC compressor and a new furnace. That's Well, and you know, we've priced out when because we like to do bigger flips, we've priced out custom bathrooms and stuff like that. So, I know when I'm going to do a master suite, it, you know, four years ago, I would have put $8 to $10,000 on that house. Well, today it's it's 22 to 25, right? To to cut to deliver the kind of master bath bathroom that I want to deliver. Or is there deal breakers for you when you're analyzing a deal? Like some people I know, they're like, "No pools. I'm just not going to mess with pools." or I know you said pre970 you're those are not it's not a deal breaker but what are the deal breakers the the deal breakers are going to be uh lo certainly location um but you know like major power lines behind it fairly close if they're extended I'm okay you know if I do them you know when I'm negotiating with a seller or another real estate agent I'll say look I need I need to take down I need to take 12,000 off the price because of these power lines and if I go to the backyard I'll walk to the power lines and if you get too close to them and you hear buzzing then I'm gone and you'll you'll hear that you'll physically hear buzzing that you don't know that that won't get to the house right uh on it and certainly the backyard so that's something that you know that that I'll walk away from I'll um you know most foundation problems doesn't concern me. We've got pretty good foundation guys that we can go in. Certainly mold doesn't concern us and anything like that because that's um you know anything that we can fix prior to a buyer looking at it can be fixed at 30% of the cost of if you get that inspection report and you find mold in the attic. You know, we save we've saved thousands on our flips over the last three years is that we make sure the crawl space is right. We make sure the attic's right. You know, if if I have to in an inspection they find mold in my attic, the the least one of these contractors are going to do that for is probably 2500 bucks. I can do it preconstruction for 200, right? I buy two five gallons of kilt. So, I spray it and it's and then the inspector walks in. Oh, this has already been treated for mold. Saved me a deal under contract. The guy like literally poked his head and it was like, the crawl is good. The the investor. And then we come back and we have a a quote from Smart Crawl for 8,000 cuz he didn't he didn't inspect the flip. It was a wholesale deal and there was like no inspections. And I kept saying, "Have you checked the crawl? Have you checked the crawl?" "Oh, yeah. I stuck my head down in there and it looked dry." Well, the day of closing, it was the rainiest day of or the day of the inspection was the rainiest day of the year. completely soaked and damp, but they found mold all over the joist in the front part of the home that he didn't look the deal fell apart, right? He's probably going to contract that price much less than it was contracted for the first time. So, it's like, yeah, someone like you that never would have happened cuz, you know, that's a pitfall. Well, I think that's a good thing to expand upon a little bit where we're trying to find what on the back end for the retail buyer cuz who's the end user? likely going to be a family. And when that inspector who's supposed to be pretty objective gets in and and they're starting to have a bad day already in the crawl space, they get up in the attic and they see, you know, three rodents just chilling there dead for months and it's like, "This house was flipped. How did nobody take it out?" You you get the bad side of not only the inspector, but what's the retail homeowner going to do? I don't want to live in mold. I don't want to live somewhere a road and scare it in. I don't want to do this. Right? and they start getting scared and start, you know, writing these long inspected. You have to. And I'll I'll have it inspected by the toughest inspector I know. Yeah. I I don't want a guy coming names, but we all know because I want to fix the 38 items that will come up on the inspection report. Won't get them all and then there'll be another inspection. And if my inspection's really bad, I typically won't show. I won't offer it to the buyer. You know, even though I've corrected everything, they just see the stuff that even if you put the invo like here's what we see a bunch of red and be like, you know, and probably the newest thing the the most important one of the most important things that new flippers don't do is get a seroscope. You need to get a seroscope in every house you do. Now, especially in Indianapolis, we're getting to that age where if the sewer has not been touched in 20 years, it needs touch or 50 years or 60 years. So, we'll get a clean sewer scope, but if there's any indication, you know, there's tile and other potential just damage with it. We'll provide a 2-year warranty from Citizens Energy for the sewer line. Yeah, it's 560 bucks and it's off our utility shield. Utility shield. Even on the post 1970 homes, you get a sewer scope. Okay. You almost I mean the neighborhoods we're talking here. Well, it's roots and stuff like that. And and typically it's been built to code, but you know damage is damage and you don't have the slabless poured or the crawl or anything. So a sewer scope is 170 180 bucks. you know, you can get them rather than the there's people out there that will do them for, you know, for that that number instead of the $250 or $300. The name of the game is not chasing inspection items once you're under contract. It doesn't it doesn't work. It you lose. That's where a lot of people No, it I mean, I'm in the middle of one right now and it's about to drive me nuts, you know, where you know, I I I don't know that the stuff some of it's unreasonable, but the inspector has made it unreasonable. Mhm. And so it's very frustrating and the people quote really want the house and I think they do but you know they they bought it direct from us and I never sell anything direct and I did this one and I told the gal when I'm trying to negotiate through them and I said you know one thing that you've kind of ruined you know I went against my rule and sold this house to you and now you're causing me all this grief and uh but you know we're going to worked out and it's going to be fine. But, you know, as an as an investor in doing this, you have to be willing to walk away from the deal. Yeah. So, when we send them an inspection response, we send a mutual release and we say, "We're okay with you backing out. This is where we're going." Yeah. I mean, you have to do what you can do. Well, you just have to be willing to walk away from every deal. And then once you walk away from or they they're convinced you're ready to walk away, then you get your deal together instantly, right? Yeah. It's a It's a huge tactic to use there. We have, you know, I work with quite a few flippers that I I just butt up against, you know, we're putting on the market, we get under contract, and I I know what's coming in two weeks, and I'm like starting to prepare, starting to get my team together to go out and get all my Did they do the pre-insspection? No, they No, they never do the pre-inspection. They never They want to pay for Oh, $300. $300 is going to save you five grand on this inspection. without quite almost every inspection like that saves me 5 to7,000 because I've got work that I can get done for 2500 but if I have to go to to a licensed mold guy or a licensed plumber or I mean my contractor's licensed right but you know define license on a plumber on a HVAC guy on on somebody else so if they you know if I make work and done I said well all my guys are licensed which which they are I've gotten I've gotten through to one flipper that I work with and he started doing that about six deals ago and I can tell you he's at closing table looking at his profit. He's like, "Man, we we're making more about the five to to eight grand." He's like, "How are we making more profit on these?" Like he started doing the pre-insspection like don't forget why we started doing that. So, do you do a pre do you do an inspection when you acquire it? Typically not. Uh whe when I do an inspection, this is a a great trick. When I do a pre an inspection before I buy, I'm normally either buying it on market with another realtor. Uh and you know, I'm not independently negotiating direct. But with a realtor, I'll normally get an inspection. And here's the reason why. Number one, with a realtor, and God bless him. I'm a realtor. been a realtor for 54 years. But the these companies, which are great companies, I work at my licenses at Sheets, Tucker, all the other things. These agents have been put on a rail. They know nothing about our business. And so they know that there's going to be an inspection. they know there's going to be a response, you know, so they're okay dealing with, you know, if the sewer line's bad or if the roof's marginal, you know, that kind of stuff. So, you can get stuff, you know, through the purchase that wasn't offered because a realtor's going to say, "Well, if you put it back on the market, you've got to do this, you've got to do that." Once you're under contract, you're kind of stuck. So, you got to negotiate all that on the front end. You got to negotiate all all that on the front end. Correct. And you know, I'll do, you know, there a lot of times if if I know I'm competing and and I'm comfortable with the house and it's asis condition, I may only ask for a sewer inspection, uh, sewer scope and maybe a roof and and a crawl inspection because those are be the three major items I'm going to look at. And so if these things come in and they get a crawlspace doctor out there who does great work, they they get, you know, um, uh, one of the major roofers out there and they get, you know, they're going to have $30,000 worth of expenses. This is stuff I know I can do for 10, right? So, I'm saying, "Look, give me 15 off and I'll take the house." Right. Yeah. So, I get all that stuff done. It's a it's a great trick to to get it and to keep it because you know you know you can get prorated taxes. You know you can get all the title fees done and paid by the by the seller because that's the only you know that's the only way they're trained. Right. A lot of them they're doing two to three I mean again we're real estate agents as well but a lot of people are two to three four five deals a year. That's it residentially. Right. these these agents as we're I think the average deal per agent in Indianapolis is two. Yeah. Two. Yeah. And and that's their I mean that's their living, right? And they're going to fight for for that living is where it's a little bit different. Two per weekish, you know. Yeah. Right. What I what I think we tell new investors is that first or second flip, go ahead and get the inspection and pay for that extra insurance if you can and have that inspection period. Once you've successfully flipped a home with a GC, I feel comfortable advising people, walk it with the GC, have a sewer scope, get someone on the roof, you're probably going to be and use the trades people, right? If there's an HVAC and it's so easy, you're probably going to be fine without it because you're replacing so much, right? And you know, a lot of times you can hand an inspection over to your GC and you know, I and just say, "Hey, I don't want any of these items to appear on my inspect new insp." So, they've got that going in. They and they've got a basis for how they do their their deal. Yeah. Right. Tyler brought something up earlier, which was uh like an expected profit or uh a profit target. Is that how you approach deals or do you approach it a little bit different? What's the math on the front end? Well, the math is um I I want to It kind of scales up. If you dound $150,000 house, you know, if you if you get a $20,000 profit, that's a reasonable return for that. Yeah. Now, that but in my mind, to do that house, that that needs, you know, that needs to be a 30-day turnaround to go in there and get that house done. We just bought one on the east side of town, and it it just I mean, literally cosmetic. It had had an old furnace and old air which we'll end up replacing. But literally, we closed last Wednesday and we're going to be ready for market Friday. So, we're going to be in in 10 days in this house and we'll be 100% on the market Saturday if my carpet guy can get out there and get his stuff installed, which he says he thinks he can. I mean, and we will have, you know, painted it new countertops, painted the kitchen cabinets, new hardware throughout, two new vanities, flooring. So, you know, it was just four guys working in the house for 10 days. So, it's just kind of like a sometimes it's time, sometimes it's money, and and finding Yeah. I mean, I fought that deal to do it because of the money, but we didn't have a lot going. I knew it would be quick. I felt very comfortable with our with our new price and I had an investor that had some capital and I I did my capital stack a little different than I do on a lot of deals. You know, my goal was to make 20 grand on the deal and so I was able to get it in, you know, I bought it for 102, but I got pr-rated taxes and I got a $2,000 allowance for HVAC. I mean, it's going to cost me seven to do it, but you know, I got an So, I'm in it at 98 and I borrowed 120 from an investor and I have to pay him back 126 whenever I close it, no longer than 5 months. So, he's going to he has a chance to make more than his 12%. And then I I know exactly what my capital cost and acquisition and rehab cost is going to be. I'm going to be at 126. So if I can sell it, you know, for the 152 that I think the house is going to do, I'm going to be at my $20,000 profit with no hold, no payments, no nothing. I've seen all across the map here. I know Jose in our group again, he's done 50 deals. His is 30. He's trying to make 30 per, but it doesn't take into account the deal size and the risk. Right? If you're making 30, but it cost you half a million dollars in debt. I don't see how that's Well, it doesn't. When when I do big deals with few exceptions, I do it with private capital. So my private capital stack is that they bring all of the money acquisition and rehab and then the my private capital gets 40% of the profit. So you more like a joint venture type. It's a JV basically. Because I was going to say how do you how do you get somebody to do the rehab? I know a lot of people that that'll do the but that makes sense because you have the JV. A lot of people lend the house but they Yeah, they loan everything. I mean, my acquis my last big one, my acquisition was 317 and my um rehab wasundred and our budget was 122 and we were at 136. Um so we ended up makingundred, you know, we made right at 117 on the house. I got 60%, my JV got 40, and we turned that house from start to finish, start to close in 120 days. Wow. And it was a pretty major rehab. And I'm assuming they want to see some underwriting on like what is this going to make? What is that 40%. To check to make sure it's beating their other investment avenues or I have I have long-term investors. Yeah. And you know we've in five six years we've averaged uh our worst year was 21% back to the investors on an annualized basis. Oh wow. And uh great and this past this deal on um that we just did because it's four months. So he made he made I think his return annual return on investment was 29% on that on that deal. And and how did you um a lot of our listeners are going to be super gung-ho about private money, right? They're tired of paying the uh money the hard money lenders, you know, and going through all the underwriting. How have you gone about um recruiting um building relationships with your private money? I think relationships is I I I was always prior to that I was um I'll not say say a big-time real estate guy that listed and sold houses, but you know, we were we were closing 130 transactions in 1990 on residential side of it. So, we were pretty big. So, I developed a fairly good network. you know, your network is is is everywhere that that you go. Mhm. And it's a matter of um hey, you know what? What everybody likes flipping, you know, everybody likes it. It's you know, it's like they have no idea how hard it is, but everybody likes flipping. So, you know, you get to higher net worth individuals by uh going to Syria. My two biggest investors that I have today were are Sireheia members and they come to me by me teaching a class every Thursday and seeing what we were doing and our thought process. So I got to I got to sell them on my abilities. So, and two of them took my class, my boot camp. And what they learned was um that they didn't want to do this. It was too hard. Like, I'll just give you the money. I said, "Let me let me just give you the money and you do the and you you do the transaction." Your class has been a recruiting tool for your private money. I've all goes into this every you know, Syria hobby. You know, Sirea is I mean, I have a purpose for being there. I mean, I I genuinely give back, right? And but to a point, you almost don't have to ask for the money. Yeah. They'll they'll volunteer the money. I mean, and and it's a it's a stupid story, but I swear it's true. I did a bigger podcast several years ago, and I didn't realize how big it was till I got, you know, was on it. And then I'm I'm talking to the U wasn't David Green. It was Josh Josh. And uh so he said, "Well, how do we get a hold of you?" And I started to give my number and he cut it off. He said, "Do not give these people your number." You know, he says, "You will get bombarded." So I give him my email and I was bombarded. I had four guys out of Las Vegas and another guy out of California and say, "Well, I've got 500,000 in my IRA. I'll just wire it to you." I said, 'N no, it doesn't work that way. I said, 'Number one, I don't want to know that I want to be your partner and you don't know how I work. And I said, 'We can do it. I said, I don't want to do a joint venture with you, but I will let you loan me the money at then it was 10%. And if that goes well and you like the way I work, then the next one can be a JV. But you have to do a private money deal with me first so you know how I operate and you're okay with that versus you know the guy says well my wife really likes I said I I you know unless your wife's really pretty I don't want to meet her you know because she's not she can't pick out my color she can't do this stuff right you know I do what I do you know I have a a palette of colors that I don't you don't need another active partner no I don't need I've got my wife as my active partner and she can go to Lowe's and get all the stuff and she knows what we want and the price of the house and that kind of stuff. So, but no, our private money is it it's just a networking thing, right? Um, a lot of, for instance, if you get some I get a lot of my high-end flips from from high-end realtors, and uh it's amazing how many times they'll offer to to finance the deal. They'll bring me the deal and they said, "Well, I'll give you the money to do it. How much do I make?" I said, "Well, here's you have to be a private money guy first. So, you have to loan it to me at an interest rate, which you'll get, and then if you like the way we work and how it turned out, I'll show you what if you'd been a JV, what you would have made, and if you'd been private money guy, then you can decide if the risk is, you know, the only difference with risk with me of private money is we'll pay the interest and it's guaranteed. with a private money. My private money guys, you're not guaranteed a return, but you are guaranteed your capital back. So, if things go crappy, I'll let you know right away. And this may not be a good deal, but their their capital's secure. Well, I love that because now you have an army of realtors working to bring you deals because they know I'm going to get paid and have a buyer for this distressed property. Yeah, I've got I'm looking at two in Caramel that are just you know, well, one of them's in Caramel, one of them's in Gist on the Water, and I think I got a shot for both of them, and the realtor gets to negotiate my deal for me. Hey, this is what I can pay. I don't care what you make. And is that realtor listing on the back end or No. H is that does that realtor list on the back end? He does not list on the back end. I'm I'm not saying I wouldn't do that. I'm just curious if that was part. No, my my son does all of my all of my listings and he's a really really good investor profiled agent. Yeah. And uh so he does the best for me for negotiating. Yeah. He's he's I'm a lot more willing to walk away from a deal than he is. So he keeps me engaged when I don't want to be there. Yeah. Um when you get that inspection response in your life. Yeah. He gets out. Yeah. Where, you know, I we'll get a low offer. And Brian says, "What do you think?" And I said, "Just just reject it." And he said, "Well, the agent the agent said that they think they'll buy it." And I said, "Okay, then." Right. When I get an offer, it's like, "Cool. It's a starting point. We got to go to battle." And some people are like, "Eh, I will not." And one of the things when you go to battle with a low offer, and a lot of flippers don't realize this and won't because they're so anxious to get it sold. I'm just as anxious as anybody. Uh is that I will not negotiate against myself. So if I've got a $300,000 house and they brought me a $ 250 offer, if I counter that, I'm negotiating against myself. Mhm. So I need to get them up to a point where I don't feel that I'm negotiating against myself. Right. It's like, so I won't I won't counter those offers. Is it going against what you know is true about the house? Yeah. It's going knowing that I I've got a house that should sell for the money. Yeah. I mean, almost all my houses I feel comfortable enough that, you know, early on I'm certainly not going to be bullied. if if I really need myself, I try to put myself into a position where the agent thinks they're bullying me, but they're never bullying me. You know, they're just um you know, they're negotiating within the time frame or the the price point that I feel I need to be with that with that particular house. You said investor profiled agent. It's going right at the top of my bio. I love I love that way to put it. Um, that embodies a lot though, right? It's not the retail Aunt Susie agent. It's the agent that understands the cost and value of things within the home. So, when you're going to negotiate, well, I mean, my son Brian, he's a he's a he he gets a fair fee, but he's a loss, you know, I consider him a loss leader, meaning that I'm not paying him a full fee, but I'm also bringing him 22 to 25 listings a year, right? So, uh, found business, you know. Yeah, he he understands that and he gets residual business from that. Probably helps him get other listings. Yeah. I mean, it gives him numbers. Uh, he he's been, you know, he's been in the business close to 16 or 17 years now. And he's he's he's a really really good agent. and um and everybody that I re other investors and stuff that I recommend to him where he lists them then they're they're really impressed with kind of the work he he does around selling their their specific property and he under he understands their personalities that you know that uh they they may be deeply underwater on a deal and he's got to help negotiate them and let them see crystal clear why he needs to do this deal. Yeah. Where where have you found the most success in sourcing deals? How do you go about that? Um to build that flywheel of constant deal flow. Well, part of my when I first, you know, I've probably done 10 boot camps. The very first one that I did, we had 10 ways to find flips was we spent two or three hours on that. 10 ways to find flips. Now we spend a half a day on it because we have 45 ways to find flips. So we go over ways that you don't even think about and the and I would say over the years the 45 ways I've probably they got added to the list because I found a house that way on it. and uh you know where one of my contractors who's you know pretty brave. He's driving home and he calls me and and he said there's this vacant house looks like it's been sitting there forever and but somebody might be living in there that might be a flip for us cuz he knows he's going to get the work. And I said well go back there and knock on their door and see if they want to sell and I'll give you three grand if I buy it. So he turns his car around, knocks on the door and I'm in the house two days later looking at it. you know, don't get a bought. But, you know, I had a pretty good opportunity and it's not an opportunity that, you know, it's been six months ago, but it wouldn't surprise me in another month after they've went through all the other yo-yos that's out there, they'll call me and said, you know, if you can raise your offer to 170 from the 160, I'll do the deal. You know, so, you know, you get you get an opportunity to that. And you have to, you know, as a negotiator with properties, you have to always think on your feet. We had one in Carmel that we did two months ago. And our our buy number was 325 is what we wanted to be. And the guy kept telling me how much money he had. I believed him. I mean that he this house didn't it wasn't you know it wasn't necessarily matters of the dollars on the house but it was just that he he wanted to sell it and he said and he told me he said look my my number's 335 or 335 my number was 325 and I said well I said you've told me how much you know what that you've done very well in real estate and I can see that. And I said, "Well, how about if you sell it to me for 325 and then you finance it for me? I'll put $30,000 down on it and I'll prepay the first $10,000 upfront. So, you got your 335. I'll do that deal." So, I got my number. He got $10,000 more upfront and we end up the house was too big. We didn't want to flip it. So we wholesaliled it and made 62,000 bucks and I called the guy and says, "Well, we're going to pay you off and so you have to credit me back 8,000 of that 10,000 interest." Oh, okay. So, you know, we got exactly what we want by just giving giving the perception that he got what he want. Yeah, we all got to the same number. It's already the deal, right? Wow. You're blowing my mind just rattling off 60K, 100K deals, right? What I I don't think, not to say you didn't answer a question, but what are the top three sources of deals that you're my best my sources deal now are the real estate agents on pre-market? Yeah. you know, uh, so pocket listings and you're, I mean, what you've rattled off numbers wise, you're looking at things that aren't necessarily having, uh, 10 squatters living in the property, right? You're looking at things that a retail homeowner has been living there and and they're retail, but it it's amazing. Probably three of the last 15 deals that we've bought, the house hasn't been occupied between seven and 10 years. Wow. And they're in unbelievably good neighborhoods. You know, worst house in the best street, right? Well, it didn't on the surface didn't look like the worst house, but it was, you know, I bought one in in in a caramel neighborhood and we got it closed and the neighbor immediately come out to me and says, "Did you buy that house?" He said, "How'd you buy that house?" Everybody in this neighborhood's trying to buy that house. Wow. Real connection or something. No, I bought this one through a guy who buys leads and uh my deal with him is if he's with this guy if he sends us a deal, we buy it, we give him five grand and um uh we negotiate the deal and he gets his money up front. What you you you've mentioned now multiple times, you pay the realtors to bring you deals, you pay the contractors that bring your deals, and you bring the bring the deal finder money. So you basically instead of penny pinching I'm gonna do it all internal and not pay any marketing. You're just paying per lead or per deal. I'm paying five genius. Five to 15,000 per lead and on a six figure flip you know at 600k. That's money. The last one I did with the the one that Gist and and it was, you know, the the realtor sent me the lead and it's in Gist, great neighborhood, and we're talking and he he said, "Well, this is kind of the mess. I'm looking for this." I said, "Why aren't we talking about flipping this instead of you doing this? It's in an estate. The people are in Illinois. you know, they they have no fi, you know, connection, emotional connection to the house and it's in for it's in early stages of foreclosure. So, there's just a lot of puzzle. I said, "Why aren't we flipping this house?" I don't know. I said, "Well, let's look at find out what the number is." And uh so he found out the number. It was 302 was his number was the number the people wanted would would take. And I said I said, "So your fee on top of that is 3% I'm assuming." Well, I didn't wasn't going to ask for that much. And I said, 'Well, if you're bringing me this deal, I'm I'm okay with with the number. So, so the number was 3 317. I bought the house for him and at the closing I give him his 15 and he's out of the way. So, but that guy's pumped to bring you the next one. Oh, he's already sent me one. We're looking at one tomorrow. Yeah, that's huge to have. Well, and then you know I call a guy, we close it and I call him and I said, "Hey, I got your check for the 15." I said, "What if I brought you $100 bills? Would you take 12?" He said, "Man, my wife wouldn't know about that." He said, "Yeah, I'll take 12." So now I have to go to the bank instead of write a check. And I got him 121,000, you know, 121 12,000 worth $100 bills. And we had lunch. I said, "Well, you got the money, so you got to buy." And so he took he took the 12,000 to save. So he just took it off title. Basically, the commission was off title. Oh, yeah. I never put anything on title at the title company. I pay them outside to close it. Yeah. Yeah. Yeah. Right. Better for them. Yeah. It's better for them. Better from It doesn't matter to me, but it's better for them in regards to the seller. So they don't see that they're making 15,000. All they have to tell the seller is that guy's taking care of me. Yeah, that's that's huge to I think the two key components that you have there. It's not only the the deal finders, but also having the capital to go after it because where people get stuck on the first one is, oh, now I got to go and find the hard money lender. I finally found the deal that works. That's, you know, went through seven daisy chain wholesalers and they're paying 20K extra plus 1. 99% in origination fees if they're lucky. Probably more like four, right? And you know, we've done with with wholesalers. It's hard to make money that way. It is hard to make money that way. But you know, if the guys has got a really good deal, yeah, you know, he can bring it to Syria and find a partner. You know, he may like if he brought it to me or somebody else, he might have to, you know, make it more of a learning curve where he gets 25% of the deal, right? And he gets to do some of the work. So, he gets to see a hands-on thing and then, you know, maybe my private money guy's getting 30, I'm getting 35 to to walk him through the deal. But he takes takes that deal off my plate, too. I think that's huge to to get that that gateway. That's Well, and and I help him. So many of these guys, you help them and you know, when you get into their deal, it's a bad deal, right? Yeah. you know, you shouldn't. I said, you know, you shouldn't do do this deal. Well, that's the number one thing that I get reached out for is I want to buy flips. I want to buy burrs. That's what everybody's calling and telling me. And I I end the phone calls like, I don't have an agent on my team who's going to drive around the properties to make a thousand bucks to go through the whole 30 days and to go through the hard money lender. There's nobody that's going to do that. And if and if there is, they're the brand new agent right off the block that has no idea what they're doing. And I'm going to be transparent and say that. You got to go find your deal sources. You got to go find your funding. and and put it together. We'll certainly give our opinion on value, right? But it's running a business. You know, the the funding on private money or private lenders versus maybe private money is you have the difference with private money and private lenders and is what you can negotiate. for me, you know, I probably have $2 million worth of flips going right now and I can't afford to pay $20,000 a month in payments, right? I can't do it, right? So, I got to bring in a JV cuz I can't expand cuz I don't have the capital to do that. So, it makes it so much easier. Well, now you're just paying based on performance. I'm paying on performance for everything. Yeah. Yeah. Which is much more scalable. It it's much more scalable. So you can do, you know, multiple numbers with a with a track record if you can, you know, you can out you can outsource your own deal. And, you know, all of my network marketing goes to the fact I don't want to sit in front of the seller that's worried about the dollar. I want to sit in front of the seller that's worried about the convenience. I live in Denver. my, you know, you you've got to look at all the psychological aspects that goes into into negotiating with these with these kinds of sellers is that, you know, they're in from Denver and they're at their parents' house and it's just full of crap. Nothing's been done for years. The kids haven't been home, you know, and want to deal with it. They they're embarrassed, right? They want to eliminate this problem as quick as I can. And it's not about the money. And it's like when you can set with them on a Monday and they're going to leave back home on Friday and they're getting the stuff that they want and now they're looking at a cleanout. They're looking at an auctioneer. They're looking at some, you know, anything that goes there. And if you're sitting in front of them and say, "If you'll take 250 for this house today, take all the stuff you want, you never have to come back. I'll close Friday." So, they're leaving with their money, 5 days, and they're thinking, they're already planning three trips back. They're looking to their agent to get them a a demo. And the agent's sitting there and says, "You know, this is really a pretty good deal based on what we've been talking about." And the agent says, "Take it." And then she gets her money. They get their money. And and my my demo crew are in hog heaven trying to pick through the stuff that might go on Facebook. Yeah. Getting the Facebook marketplace crime. I mean, there there's been a couple times when I've had stuff that that's really probably has some value to it. It probably does, you know, and and I'll look at if I think there's value to it, I'll I'll tell my my gal that, you know, this is a 5,000 cleanout. I want you to do it for three and I won't, you know, we won't try to pull some of this stuff out and sell it. You can keep it all, you know, or if it's if it's junk, I know I don't want any of it. Yeah. I'll just say, "Okay, I want you to start your clean out on Wednesday. You got Monday to Tuesday to pick take anything out of your house, but I don't want to pay you to clean out stuff to sell. Yeah. So, I get a 20% of my demo done for free. Yeah. Or my clean out and then they they come Wednesday and they're You probably just post the house on Craigslist and say, "Come come take it. It's free." Well, you probably could, but that you know, you might get people. Who knows what you're going to get there, right? But um yeah, so you know, I mean, we're looking for that seller that, you know, it it's about convenience more than it's dollars. Yeah. No, that makes a lot of sense. I think uh I think when you get to the psychological part, you play the game 450 plus times, right? Right. You get there. Um thanks for coming on, man. We have a couple rapid fire questions to wrap up the episode. Um the first one is, what's a habit that's changed your life? A habit that's changed my life. Um, well, that's a tough question. I've never been asked that one. You know, I'm I'm very disciplined. Yeah. So being, you know, being very disciplined has really helped my life. And I do a lot of things that people might think I'm scatterbrain in some of the stuff, but I get a lot of stuff done. I mean, I can I can spend all the time I want with my family. I can get these flips done in a in a timely basis, reasonably close to budget. Um, I can play poker every weekend, you know. So, I'm I'm I'm structuring my life to uh I need to be effective in 35 to 40 hours in my flipping business because I've got too much other stuff that I need to be a part of, whether it's poker, whether it's golf, whether it's my wife, whether it's my grandkids. So, those are all extremely more important to me than they were 5 years ago. Yeah. I love that. Making time for the life things. Yeah. Right. Having the boundaries. Yeah. Well, I can't I mean, poker is my get away from this stuff. Yeah. You know, where I can I can not not even think about it at all. Yeah. That's like pickle ball golf for him for me. It's like being golf used to be that way, but poker has kind of taken over golf, even though I still play some. So, yeah. Yeah. I imagine you're a pretty good poker player. I'm I'm reasonable. I'm reasonable. Yeah. Um, next question for you is like what is your favorite uh go-to dinner spot in Indie? Um, Tibberon in Fisers. Okay. It's a high-end seafood and sushi and they have a steak. Nice steak if you want it, but that's that's probably that. And hering Izzy's for lunch is is like the best. Yeah. Yeah. Great steaks. Yeah. Great. So, are you a Fisers guy? You live I am. Okay. McCordsville Fisers. or Gist or uh I'm out atund uh off Olio Road 96th Street. Yeah. Yeah, that's a great location. What's an area of life you're focused on growing the you know we didn't we haven't talked about it at all, not that we needed to is you know four years ago I I started a co-working space in an event center on the east side of Indianapolis. It's a beautiful space. I think we've done a great job with it, but I had everything in the world I owned in that space because it was going to be my legacy in my retirement. And COVID hit. So, I wasn't able to lease or do anything with my event space other than pay investors for two and a half years and losing in the in the tune of 30,000 a month for a long time. And I made the decision that I had a lot of private investors in this deal. And my attorney and some other people told me, "I just need to shut it down. I can't you can't make it work." I said, "These these are little guys with a lot of money in it, and I I said, I've I have to be broke before I make them broke." So last month we the last three months we've made uh $147,000 net in the event space business. Wow. Going from 30,000 negative. But it was the integrity kept me there. And uh so now I want this to be uh you know I'm past the I've got it up the hill. Now I can start now I can start rolling where you know as as little as eight months ago I had no idea if I was going to make it. The first time we talked I think it's cuz I saw a post you had on Bigger Pockets about selling it or like when I hadn't even started it when I was on Bigger Pockets. Okay. It was somewhere. Yeah. You know I've got some investors that may make me you know may force something but we're we're working through that and we'll we'll get it done. And um but you know and the other thing that I would always want to put out to other investors that we cover them in in bigger pockets is pick a rail. Yeah. Maybe two and stay on it. Yeah. And and treat debt appropriately. Yeah. Investors do not treat debt appropriately. Right. So they they that's probably the biggest thing that if I look back I did wrong. I didn't treat debt appropriately. Treating it as leverage as a tool. As a leverage as a tool versus um just keep going on and on because you can stack. Yeah. Just stacking. Just because you can doesn't mean you should. Doesn't mean you can't. You shouldn't. Because the spreadsheets like the cash on cash is here. If you get more debt, well it's okay to own that property in cash, right? It's okay. And it, you know, and investors in our business will will get the feeling of not having cash and that's not a good feeling. No, it's not. It's not a it's not a friendly feeling, right? And what's funny is when you feel it, what do you go to grab you go to grab more, you know, and it's like, you know, I've got a nice equity in my house, but you know, I don't want to use it, but you have to be willing to do it if you're going to be in our business. Yeah. At times. at at times, you know, so but just, you know, treat it appropriately. Yeah, I love that. I think the investors that have been doing it the longest, they always say keep your powder dry, right? Keep a large pool of liquidity because it helps you sleep well at night and be able to leverage, right? So, it's leverage with margin. I think it's a great place to jump off. I know you have a mastermind group um and you're very involved with your Irvington event space. Where can people find out more about you and what you're doing? Well, my email is dshort. at c21 sheets s chz. com. Uh you're welcome to reach out to me and myself 317590 4499 but our just in closing our mastermind group meets every other Monday at the Irvington Event Center. And to be a part of that you need to be in my Irvington space which is 129 bucks a month for that's great value. It's a great value and you're around, you know, it it's it's a it's a small real estate incubator and you'll on any given day, you'll find so much talent in that room that's willing to share with you. Yeah. Well, I think you've built quite the legacy for yourself. I mean, you are very well respected in the Indianapolis real estate community. I appreciate that. And I think it's a testament just like what you did with sticking through the Irvington Event Center and how you've built your business and profiting others through that is is just incredible. So, thanks for coming on the podcast, man. Okay. Enjoyed it.