Episode Transcript
[00:00:00] Speaker A: Hey, guys, Steve Seymour here with the investor Agent podcast on site with Alex Kutchta, and We are at 20 Bishops Ave. In Aston, Pennsylvania. You want to come check it out?
Alex, so how did you find this property?
[00:00:17] Speaker B: Yes. So we bought it off market.
I have a team of cold callers in house. I have three guys.
I forget what kind of list we were targeting, but basically this came into our CRM back in, I want to say, like, January. And we just been following up with this guy, and he just said he was ready to sell. Come. I think this was early April, so I came over and got it under contract.
[00:00:39] Speaker A: All right, so you guys are prospecting.
Tell me a little bit about the story behind the negotiation on this.
[00:00:46] Speaker B: This one was a little crazy. So I want to say, like, back in. I think it was like March, like mid March. I came to the property. He was locked up by this contractor doing work. I think this was back in October. He signed a contract to get the windows done, the roof, and then I guess the exterior door, and they didn't start the work for six months.
So he was bonding. This contract that was like a $36,000 contract with a big company. Not going to say their names. And he's just like, I want to move to Texas. I want to get out of here. I can't afford it. So I came here, assessed it.
When I was here. He actually got a call from another investor trying to buy the property when I was sitting here at his table.
Basically, other people are promising extraminal, like, crazy numbers that they can't perform on. And I basically just gave him what he wanted, and we were able to get something done.
[00:01:36] Speaker A: Nice.
So this is just a paint and carpet deal? No.
[00:01:40] Speaker B: Yeah, you should have seen it. Everything was, like, literally to the ceiling here, just filled with stuff. We'll probably have orders. Dumpsters.
[00:01:47] Speaker A: Looks like one of those hoarders.
[00:01:48] Speaker B: Oh, for sure. Yeah.
[00:01:49] Speaker A: And what's that smell?
[00:01:51] Speaker B: He had a older dog in here, but it was a nice dog. Besides that, it was just, you know. Definitely smells a little bit in here. Can't tell really what it is, but.
[00:02:00] Speaker A: Some cigarettes and dog.
[00:02:01] Speaker B: Some cigarettes.
[00:02:02] Speaker A: Smells like money.
[00:02:03] Speaker B: Yeah.
[00:02:05] Speaker A: All right, let's take a walk through.
So tell us a little bit about the plans here. You're just doing, like, cosmetic rehab. Are you going to open any walls or anything?
[00:02:14] Speaker B: Yeah. So we're partnering up with two local flippers, Zach and Laura Sides.
They're going to help us flip this again. I find deals. I really don't want to do the rehab, and I Don't in cruise. So what we're thinking to do is I'm not sure if Zach wants to open up these walls. I'm not sure if they're low bearing or not. But definitely just seeing the neighbors. It's definitely open concept.
[00:02:32] Speaker A: Yeah.
[00:02:32] Speaker B: So you can definitely open some of these walls up.
You know, got the kitchen floors, paint.
[00:02:48] Speaker A: So when you were estimating the rehab budget, since you don't flip and Alex, how old are you, by the way?
[00:02:53] Speaker B: I'm just turned 25.
[00:02:54] Speaker A: 25. And you've been wholesaling a little bit now. So you've gotten better at estimating rehab. What did you like, how did you go about calculating the estimate on the rehab for this?
[00:03:05] Speaker B: I honestly thought that, you know, anything like this, it's basically cosmetics, but. But again, there's just so much stuff in here. So I'm just like, is there other stuff that I can't see that's wrong with the property?
So I was assessing that it would be around like $60,000.
[00:03:19] Speaker A: 60,000.
[00:03:21] Speaker B: Zach wants to try to get this done for under 50. Okay. So I'm not sure if he will, but I basically, if I was going to send this out to someone or if I was to do it myself, I think it would cost us like 60.
[00:03:31] Speaker A: Yeah. I haven't seen the whole thing yet, but that looks about right based upon the condition. So.
[00:03:35] Speaker B: And keep in mind, are you. So we're under the. The roof. All the windows and exterior doors are gonna get replaced by the company. So that's not outside of the seller's expense.
[00:03:44] Speaker A: So that's already.
[00:03:45] Speaker B: That's already sell to a title.
[00:03:46] Speaker A: Oh, that's huge.
[00:03:47] Speaker B: Yeah, exactly. So we just got to mostly just do a cosmetic flip.
[00:03:50] Speaker A: Okay, great.
[00:03:50] Speaker B: So it makes it pretty easy.
[00:03:51] Speaker A: And what about like the H vac and plumbing?
[00:03:53] Speaker B: I mean, there's dots and everything. Right.
[00:03:55] Speaker A: It doesn't really look like you have to do too much there.
[00:03:57] Speaker B: Right. It's all original. The mechanics are a little old, so there might be some little things, but I don't think anything crazy needs to be done.
[00:04:04] Speaker A: So what. How much were you thinking on the exit for the sale price?
[00:04:07] Speaker B: So I underwrote it looking at a few comps. It's weird because some are three bedrooms. Ours is a two bedroom. So I saw one that was like a 290, but it needed cosmetics. So I'm like, okay, maybe we can get definitely a little bit more. The highest comp I've sold that sold in the past three, six months was like 320 325. So I'm like, that's our best comp.
[00:04:26] Speaker A: Yeah.
[00:04:27] Speaker B: One just went under contract for, I think, like 350, 360.
[00:04:30] Speaker A: Oh, nice.
[00:04:31] Speaker B: So it's definitely going to be a higher average.
[00:04:32] Speaker A: That helps you, right?
[00:04:33] Speaker B: Yeah, exactly. Yeah.
[00:04:34] Speaker A: Cool. All right, well, show us around. Should we check out the basement or what's next?
[00:04:37] Speaker B: Yeah, let's go to the basement. That'll be good. Unless they're.
[00:04:40] Speaker A: Yeah.
[00:04:41] Speaker B: Squeeze through. You want to go upstairs first?
[00:04:43] Speaker A: Yeah. Since they're working there. Yeah. Got the crew.
It's a nice size master. It's nice. It's got a balcony, too.
[00:04:51] Speaker B: It's a good size. Just you can see it wasn't really cleaned or anything.
[00:04:55] Speaker A: Little cobwebs, you know.
[00:04:57] Speaker B: Yeah.
And then these sliding doors. We're not. They're not getting replaced in the quote. I think they're fine, though. They open up and everything. Fine. So I think we're just gonna leave it as is.
[00:05:10] Speaker A: Yeah.
And what do you. What, like, how involved are you getting in this? So the way you structure the deal is you're really the wholesaler. Did you get a wholesale fee and some of the upside of the flip or just all on the upside?
[00:05:25] Speaker B: So with the new laws and pa, I can't just get an assignment fee now. So what we've done with, like our other investors, we always get PA back end. So I actually closed this under my llc. Hard money's under our name. But Zach brought the funding. He brought the funding, and then him and Laura are going to do all the work. So I probably won't step back foot in here until it's done.
[00:05:42] Speaker A: I got you. Yeah. So it's really. You're the flipper versus wholesaling it, and you just brought in a partner to.
[00:05:49] Speaker B: Basically to manage the project, Correct?
[00:05:51] Speaker A: Yeah, I like it.
Leveraging out things that you don't like doing or not necessarily great at and sticking to unique strengths on finding deals.
[00:05:59] Speaker B: With multiple deals going on. It's just I don't want to get too invested in one deal and then, you know, let another one slip.
[00:06:05] Speaker A: Yep.
All right, well, definitely going to probably. I'm assuming you're going to gut this, right?
[00:06:09] Speaker B: Yeah, I think Zach's gutting this for sure. I wouldn't see him really salvaging everything.
[00:06:14] Speaker A: I mean, possibly glaze the floor, but.
[00:06:17] Speaker B: No, he's definitely.
[00:06:18] Speaker A: I would just demo it.
[00:06:19] Speaker B: And yeah, he's definitely new tile.
[00:06:24] Speaker A: So this is the second bedroom.
[00:06:30] Speaker B: There's another bathroom over there. It's actually not that bad. Has some wallpaper in there.
[00:06:34] Speaker A: The styles have changed a little bit, you know, you don't think you're gonna go with, like, red carpet now, huh?
[00:06:40] Speaker B: Nah, this is all original. I think he was here for like 30, 40 years, so. Yeah, nothing has been done to it.
[00:06:46] Speaker A: So 25, getting into flipping and wholesaling. It's pretty early to get into real estate investing. It's kind of nice. We'll go out here. Yeah.
You know, but that's what. What really had you get interested in investing in the first place.
[00:07:01] Speaker B: Yeah, I used to work an accounting job for like a year.
Kind of got out of that. Really didn't enjoy it. It was good money. Just really didn't like the 9 to 5. And it was not really a 9 to 5. I was working 70, 80 hours. So I'm like, I got to get out of this rat race.
So I invest eventually. Just started partying up. One of my buddies from when I was younger, a family friend, he was wholesaling.
Worked for free all of last year.
Now we're doing it together right now. So it's been going pretty well.
[00:07:30] Speaker A: So worked for free, meaning kind of got.
[00:07:33] Speaker B: Didn't make any money last year.
[00:07:34] Speaker A: Yeah.
[00:07:34] Speaker B: Now I have equity in the business, and, you know, we're doing some deals now.
[00:07:39] Speaker A: All right. So definitely have a lot more clean out to do down here still.
[00:07:43] Speaker B: Yeah, this still needs a lot.
Yeah.
So again, drywall's probably have to be replaced. Yeah, all paneling. I think Zach's gonna drywall this whole thing.
[00:07:55] Speaker A: Did you guys find anything cool down here?
Cool stuff, but it's just like, we see this every single. Yeah, you can't take anything. No, it's not worth it.
Then you'll become a hoarder yourself.
[00:08:11] Speaker B: Yeah.
Mechanics are in here if you want to try to get in here. I don't got a flashlight. I'm not sure if we can. I don't know. There's a light here somewhere.
Here. It's not connected.
[00:08:23] Speaker A: Let's see if this one works. Got washer and dryer.
[00:08:26] Speaker B: Let's see if this works there.
[00:08:28] Speaker A: So you got a.
[00:08:29] Speaker B: There we go.
[00:08:30] Speaker A: Is it gas or is it electric? Oh, no, it's oil.
[00:08:35] Speaker B: So you got oil, you got oil?
[00:08:37] Speaker A: Oil, Forced hot air.
[00:08:38] Speaker B: Yep.
[00:08:39] Speaker A: Are you. Are you guys going to replace the mechanicals or.
[00:08:41] Speaker B: No, I. As.
[00:08:42] Speaker A: I know.
[00:08:43] Speaker B: I think Zach's leaving everything.
Hot water heater is newer.
[00:08:47] Speaker A: Okay.
[00:08:48] Speaker B: The stack pipe is running over here pretty good. Like, maybe little portions of it need to be replaced, but from what I see, it looked pretty good.
So. Yeah. Definitely older, but everything's pretty good.
Never really dealt with oil heating, so. Oil tanks. So I'm not really sure with that.
A lot of stuff we bought was with gas, so. Yeah, I know.
[00:09:08] Speaker A: Well, gas is ideal, but a lot of these houses have oil, so.
[00:09:11] Speaker B: For sure.
[00:09:11] Speaker A: Yeah.
Yeah. I mean, it's not a really difficult flip, but it's also not a paint and carpet.
[00:09:18] Speaker B: No, I would say it's a little bit of grabs, though.
[00:09:21] Speaker A: Yeah, it's more. It's in between like a full gut and a cosmetic rear, so. But it should come out nice. Good, easy layout and it's a. It's a good flip for, you know, you getting your feet wet with it and even though you're not getting so involved. But I'm sure you'll learn a ton. For sure.
[00:09:35] Speaker B: Yeah.
[00:09:36] Speaker A: And what else? What do you think is important for anyone listening, you know, especially the younger generation that want to get into this and they see it on hgtv.
What are some of the real stuff that you've seen?
[00:09:48] Speaker B: Yeah, this was.
It's definitely hard work at the end of the day, but, like getting this deal, it wasn't all. It's not like someone called us looking to sell our house. We outreached and we was this. I think this was in her CRM for I think three months. So it was consistent follow up, just going back and forth.
[00:10:04] Speaker A: Hey, we're shooting video here, man. Watch out.
Just kidding.
[00:10:07] Speaker B: But actually just like going the step above for your client and just like, what do they physically want? He wanted to close us out at the end of April and he wanted to move to Texas, and that was very important for him. So I was able to make that happen. And then he was also kind of getting screwed by this company that they didn't start work for six months. So I physically drove to Delaware with him, went in person to try to cancel the contract. Wasn't successful, but showed I actually cared because I did. I truly did care about the situation.
[00:10:33] Speaker A: Got it. So really what I'm hearing that is finding out what the seller's real needs were. You were able to provide a solution and in turn get a deal that works for you.
So, yeah, that's. That's great. If you guys are out there negotiating, it's all about what does the other person need? You know, how do you create a win win. All right, let's head up. So since we're slowing up the clean out crew.
All right, so to recap, what did you buy it for? You said around 185, so it was.
[00:10:57] Speaker B: A 185 purchase price. With closing, we're probably another $10,000 in. So all in about 195.
[00:11:03] Speaker A: And you're thinking between 50 and 60 on the rehab. That's kind of where the S should be.
[00:11:07] Speaker B: Lower on the 50. Yeah.
[00:11:08] Speaker A: And then on the high end was the 350 on the exit. But maybe 325. 25 what you're thinking conservatively.
[00:11:16] Speaker B: Yeah.
[00:11:17] Speaker A: So it's better than a sharp stick in the eye is what my dad would say.
It's a nice little, nice little flip profit and hopefully you can get out there and get another one. Anything you want to leave the viewers with with. In terms of just getting started and taking action, I would say if it's.
[00:11:33] Speaker B: Someone my age that definitely is not is like willing to work, I would say is just work for free. For someone that knows what they're doing, you can learn a lot. If I think I did this on my own, I think I would never got my first deal. I think last year we did 45 deals and that was my first year because I had people that were already doing it.
[00:11:51] Speaker A: Yeah.
[00:11:51] Speaker B: So I would say is learn from someone, work for free and either work in their business and add value or try doing it themselves how they did it.
[00:11:59] Speaker A: And are you looking to buy more? Are you looking to expand your network?
How could people reach out and work with you?
[00:12:05] Speaker B: Yeah, again we're actually hiring right now. We're looking for acquisition guys.
We're a three man operation with one guy that we just hired us based and we have a bunch of virtual assistants that work for us. But right now our biggest need is we have a lot of leads coming into our CRM. We have a pretty big marketing budget and we don't have the manpower. So that's something that we're really looking for right now.
And then also just looking for more deals. So if anyone has any deals, we're in buying as well. You buy North Jersey, New York in PA so awesome.
[00:12:36] Speaker A: Well, I appreciate you walking through and thank you for sharing all this because I think it's super helpful and I'm super excited to see where you take this because you know, you're really just getting started. It's very excited.
