Speaker 1: Coach, the energy out there felt different. What changed for
Speaker 1: the team today?
Speaker 2: It was a new game day, scratches from the California
Speaker 2: Lottery players, everything. Those games sent the team's energy through
Speaker 2: the roof.
Speaker 1: Are you saying it was the off field play that
Speaker 1: made the difference on the field.
Speaker 2: Hey, little play makes your day, and today it made
Speaker 2: the game. That's all for now, Coach, one more question.
Speaker 1: Play the new Los Angeles Chargers, San Francisco forty nine
Speaker 1: ers and Los Angeles Rams scratchers from the California Lottery.
Speaker 1: A little play can make your day. Peace made responsibily.
Speaker 1: Must be eighteen years or older to purchase plate or claim.
Speaker 3: So now we're going to go into what you guys
Speaker 3: actually are on TV for as far as you know,
Speaker 3: fixing up homes and flipping homes in Chicago, specifically in
Speaker 3: South sud Chicago, Right, that's your the area you focused on,
Speaker 3: all right? So okay, so what's the real estate opportunities
Speaker 3: because in Chicago were in Chicago, So I think it's
Speaker 3: important to talk about how like that, Yeah, before we
Speaker 3: start anything, how is this what's Chicago real estate looking like?
Speaker 4: And what's the real estate opportunities in Chicago? There are
Speaker 4: a lot of opportunities in Chicago. Man, we have one
Speaker 4: of the hottest mark it's in the country. Right. The
Speaker 4: question is, you know, it's just how are you starting?
Speaker 4: I mean, if you do have your your credit and
Speaker 4: your and your and your money saved up, you know
Speaker 4: what I'm saying. As a first time home buyer, there's
Speaker 4: an enormous amount of opportunities, and we advise people that
Speaker 4: are starting off to go for cash flow, go get
Speaker 4: that three or four unit of property, or go get
Speaker 4: a two or three K renovation loan or some kind
Speaker 4: of Fanny made construction loan so that you can get
Speaker 4: a properties below market value because there's thousands I'm not
Speaker 4: talking about hundreds of property. There's thousands of properties in
Speaker 4: the Chicagoland area. Yes, that you can get below market
Speaker 4: value and renovate and then turn that into a cash
Speaker 4: flowing property or a property that you live in for
Speaker 4: a couple of years and you know people talking about
Speaker 4: house hacking. Now you know, living for a couple of
Speaker 4: years and then you know, sell it after two years
Speaker 4: and now you got this check and now you've got
Speaker 4: capital to start a business or get another property or
Speaker 4: do multiple things. So when you say, below market value.
Speaker 3: Like what are we talking about as far as numbers,
Speaker 3: It's like some what's an example of, like a home
Speaker 3: that you just recently flipped or something that you can
Speaker 3: like expect Like, okay, this is some than that is typical.
Speaker 4: I mean, tell him about the one over the Bronsfield
Speaker 4: house you were talking about. You said, the last property,
Speaker 4: the last one. It could be what anything? So what
Speaker 4: I do use this is hample a lot. So so
Speaker 4: I got a three thousand square foot greystone single family home, greystone, greystone.
Speaker 4: What is that? It's like a brownstone, brownstone, oystone, right right?
Speaker 4: So I got a square foot graystone in Bronsville, which
Speaker 4: is a neighborhood on the south side, got that for
Speaker 4: two hundred thousand, got it below market value because the
Speaker 4: recession was going on and the guy was trying to
Speaker 4: sell it because he was in pre foreclosure. So got
Speaker 4: it for two hundred thousand. And I used a two
Speaker 4: O three K renovation loan for that property. So that
Speaker 4: allowed me to have the money to purchase the property
Speaker 4: for two hundred thousand, and I also rolled in thirty
Speaker 4: thousand in renovation. Now this property didn't require a gut rehab.
Speaker 4: I mean thirty thousand. I did a couple of the
Speaker 4: bath rooms, redid the porch and the kitchen, and that's
Speaker 4: what I initially did. Made all of those things look
Speaker 4: brand new. Didn't touch any of the drywall throughout the house,
Speaker 4: none of that type of stuff.
Speaker 5: This is not a fixer upper.
Speaker 4: So yeah, so this was just updating a great opportunity,
Speaker 4: and you only put three percent down, three and a
Speaker 4: half percent. So I came to that closing with seventy
Speaker 4: seven hundred dollars, so seven thousand, seven hundred dollars. And
Speaker 4: the reason why is because I couldn't negotiate because it
Speaker 4: was the bank and it was a foreclosure.
Speaker 3: I want to, I want to, I want that to gold.
Speaker 3: People said, because we talked about two or three K
Speaker 3: loan actually with Jay Morrison, but we didn't go through
Speaker 3: a real world example.
Speaker 4: So this is good.
Speaker 3: So you got two hundred thousand dollars property and then
Speaker 3: you had thirty thousand for renovation costs, so it's two hundred.
Speaker 4: And thirty thousands the full long.
Speaker 3: The two O three K loan allows you to put
Speaker 3: three to three point five percent down, but the thirty
Speaker 3: K gets wrapped into the mortgage, so three percent of
Speaker 3: two thirty is like seven thousand or seven seven. So
Speaker 3: you got the innovation and the home for not including
Speaker 3: closing costs, but out seven thousand dollars is how much
Speaker 3: the down payment was, right, we're closing cost. How much
Speaker 3: was it with closing cost?
Speaker 4: I mean I came to closing total all in for
Speaker 4: seventy seven hundred.
Speaker 5: How did you roll that into the market.
Speaker 3: Yeah, because it was all rolled in. Okay, he rolled
Speaker 3: it into all right, it's good to know.
Speaker 4: Actually actually rolled in three of the first month's payments
Speaker 4: into the into the loan also, so I didn't have
Speaker 4: to make my first payment, and so I was actually
Speaker 4: moving into the property, which was ninety days later.
Speaker 5: That's because you were there, was gonna you were updating.
Speaker 4: The bathrooms, right, because all the updates the relations Okay,
Speaker 4: I'm sorry I cut you off, sor right, So now
Speaker 4: speed it up.
Speaker 3: So all right, you got the property for seventy seven hundred.
Speaker 3: Now you have it? Now what Now? Now I have it?
Speaker 4: Renovation needs to start just about immediately. So in that process,
Speaker 4: I had already got three different contractors to give scope
Speaker 4: of work so that I can decide which one I
Speaker 4: wanted to work with as far as you know just
Speaker 4: completing the work and how much the materials would cost
Speaker 4: and things, and you make the contractors very honest when
Speaker 4: they know that they're one of three in nickapeting.
Speaker 5: What was that process like dealing with contracts, because a
Speaker 5: lot of times people going to these deals and they say,
Speaker 5: that's the toughest part is dealing with contractors.
Speaker 4: We always push doing these these two or three K
Speaker 4: renovation loans because when you do a renovation loan, there
Speaker 4: is an inspector who comes behind the contractors on each
Speaker 4: draw or phase of the project. The money comes each draw,
Speaker 4: let's say thirty thousand, you get ten thousand. Three times
Speaker 4: the money comes to the homeowner that ten thousand dollars
Speaker 4: to pay the contractor. The contractor for the first draw
Speaker 4: has to do that ten thousand dollars worth of work
Speaker 4: out of his own pocket. The contractor has to put
Speaker 4: its own money up and has an inspector who comes
Speaker 4: to make sure that he's done the work up to
Speaker 4: code before the money is released to the homeowner to
Speaker 4: give to them for the next phase. So they don't
Speaker 4: make their profit until they finished all of the work
Speaker 4: because they have to go to do the first phase
Speaker 4: out of pocket, so now the homeowner's protected. There's no
Speaker 4: contract to getting over on you or trying to convince
Speaker 4: you that the work is good enough.
Speaker 5: Quick question now, because I'm thinking like, you guys are
Speaker 5: firefighters and obviously you guys must know code, right. Did
Speaker 5: your experience as being firefighters help you during that process?
Speaker 4: Yes, because I mean as firefighters too, I mean we
Speaker 4: learn about building construction and we see a whole lot
Speaker 4: because we in the process of being a firefighter, you
Speaker 4: see houses that are like burned down and destroyed, so
Speaker 4: you see and we tear out a lot of walls
Speaker 4: and ceilings and things like that. So we're kind of
Speaker 4: on the other side of it. Yeah, and then we
Speaker 4: also work with a lot of firefighters earners.
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Speaker 4: Need happen to be in the trades, so we you
Speaker 4: know you learn a lot through that process also, So
Speaker 4: I mean the thing is it removed all the fear
Speaker 4: because you actually had this this inspector who comes and
Speaker 4: make sure that the work is done complete.
Speaker 3: So all right, So okay, so now you started the
Speaker 3: bringing the contractors in.
Speaker 4: What's the next steps after that?
Speaker 3: Like how long did it take to fully renovate it?
Speaker 3: When we were able to get tenants in? Like, what's
Speaker 3: the deal?
Speaker 4: Well, well, this was a single family home, so I
Speaker 4: wasn't I didn't have to deal with tennants. But I
Speaker 4: had ninety days to get the to get the work done,
Speaker 4: and it actually it got done in a short period
Speaker 4: than that. I think we were done in like, you know,
Speaker 4: sixty five seventy days or whatever. So by the time
Speaker 4: I had to make my first payment more just payment,
Speaker 4: I was able to move in, move my front frontiture
Speaker 4: in and it started. You was living there? Yeah? I lived there?
Speaker 4: How long did you live there? I was there for
Speaker 4: three a little about three and a half years. My
Speaker 4: attention was to be there for two years because I
Speaker 4: knew that, you know, after two years, I would be
Speaker 4: able to sell the property no capital gains. And also
Speaker 4: I knew that my credit would go back up because
Speaker 4: I did short I did a short sell. See we
Speaker 4: didn't include that the condo that I had, I did
Speaker 4: a short sell on that. After two years, my credit
Speaker 4: went back up, and it coincided with my ability to
Speaker 4: sell this property with no capital gains. Now I was
Speaker 4: enjoying myself so much that I actually ended up staying
Speaker 4: for a little bit longer than I anticipated. We had
Speaker 4: so many ports, you said, toga parties, and so you
Speaker 4: guys were both leving boils.
Speaker 5: You guys are both living in the problem.
Speaker 3: So can you talk about that capital gains? You said
Speaker 3: that in two years you allowed you not to play capital.
Speaker 4: Game, right, so you hadn't been there twenty four months.
Speaker 4: That's the rule. What is capital Gamespital capital gains is
Speaker 4: the profit that you make on a property, the difference
Speaker 4: between how much you paid for it and how much
Speaker 4: you actually sold the property for it. So the profit
Speaker 4: is the capital game. And so the tax on the
Speaker 4: capital game happens on properties that are not your primary
Speaker 4: residents or you haven't lived in as your primary residence
Speaker 4: for at least twenty four months. So that's why I
Speaker 4: knew I needed to be there for at least twenty
Speaker 4: four months in order to be able to collect those
Speaker 4: capital games, which in this instance was katy thousand dollars cash,
Speaker 4: and then be able to then have the capital to
Speaker 4: move on to buy a multi unit property and then
Speaker 4: start flipping homes and then partnering with my brother to really,
Speaker 4: you know, start to do more than we had ever anticipated.
Speaker 3: So if you don't live in a property for more
Speaker 3: than a year and you sell it, but you use
Speaker 3: their proceeds to buy another home, do you still have
Speaker 3: to pay capital games?
Speaker 4: Yoe? You can do what they call ten thirty five Yeah, exchange. Yeah.
Speaker 4: Oh yeah, he knew you knew what you want to
Speaker 4: there's different way.
Speaker 3: Yeah, yeah, yeah, I answered my own question, all right.
Speaker 4: So Okay, in the whole time that he was doing that,
Speaker 4: mind you, I'm also out to unit buildings while he's
Speaker 4: doing that. Right, So by the time he sold that
Speaker 4: property three and a half years later, I already had
Speaker 4: two three unit buildings and a cash flowing and so
Speaker 4: it's like the two of us are like like one person, right,
Speaker 4: because I'm implying one strategy. Yeah, and when his condo
Speaker 4: went from worth of one fifty to being upside down
Speaker 4: to thirty thousand, I looked at that I was. I
Speaker 4: ain't never buying a condo. In fact, I ain't buying
Speaker 4: a house neither. You know, I'm going straight for the
Speaker 4: multi unit apartment buildings.
Speaker 5: Thanks for making that mistake, bro, Yeah.
Speaker 4: Somebody has to jump out there first, and yeah, bus over.
Speaker 4: But the thing is what we did learn though, is
Speaker 4: we learned about the power of cash flow, and we
Speaker 4: learned about the power of buying properties below market value
Speaker 4: and being able to get that cash and that leverage
Speaker 4: for us to then be able to go, Now, now
Speaker 4: I got this lump summer money, and now it's like, okay,
Speaker 4: now let's buy another multi unit property. So we for
Speaker 4: cash flow. Now let's go. You know, we went hard money,
Speaker 4: you know, did a flip that way, and then you know,
Speaker 4: from there, now the wheels are turning and now you
Speaker 4: got the next deal and the next deal, more confidence,
Speaker 4: more confidence things you know, things go wrong, and those
Speaker 4: when you get burned when you touch that stove, we
Speaker 4: don't ever touch it again. So, like, you know, different
Speaker 4: things that we learned about how we deal with contracts
Speaker 4: and stuff like that. You know, everything didn't just you know,
Speaker 4: shoot perfectly, but it still was you know, enabled us
Speaker 4: to make it to the point where we ended up
Speaker 4: on TV. How did you how much did you sell
Speaker 4: that property for? I ended up selling that property for
Speaker 4: three fifteen six three fifteen and well you want to
Speaker 4: give the exact three thousand and sixteen thousand and five
Speaker 4: hundred or whatever it was.
Speaker 3: But yeah, in two years you held up two years
Speaker 3: three not bad. So one hundred and sixteen thousand dollars
Speaker 3: profit that you made right for three years and you
Speaker 3: got it for seventy seven hundred dollars.
Speaker 4: How much was your monthly mortgage? A monthly mortgage was
Speaker 4: like I think it was like fourteen hundred. That's powerful.
Speaker 3: That's actually really powerful because especially in New York, we're
Speaker 3: paying rent for nineteen hundred and twenty one hundred, twenty
Speaker 3: two hundred dollars a month.
Speaker 5: Where is that at?
Speaker 4: It's like, right, what twenty twenty one? Is that it
Speaker 4: is one bedroom?
Speaker 5: Okay?
Speaker 4: Not three thousand square feet? No way. Maybe it wasn't
Speaker 4: three bedrooms and four bathrooms.
Speaker 5: Maybe nine hundred square feet, no.
Speaker 3: Man, seven seven hundred square feet, one bedroom, one bathroom,
Speaker 3: row man.
Speaker 4: And you gotta get the parking. So you got you.
Speaker 3: Got a property for seven thousand dollars paying under two
Speaker 3: thousand dollars a month and you held it for a
Speaker 3: couple of years and made one hundred and sumi thousand
Speaker 3: dollars profit. I say that to say a lot of
Speaker 3: times people don't fully understand how attainable buying a home
Speaker 3: really is. Ken It's different programs and there's different ways
Speaker 3: you have to educate yourself. That's one of the reasons
Speaker 3: of the podcast. But it's it's not as far fetched
Speaker 3: as it may seem.
Speaker 4: No, it's not.
Speaker 5: I think I mean people, I think people live in
Speaker 5: fair right because they've never seen it. Like I said earlier,
Speaker 5: it's like we have first generation, so like we don't
Speaker 5: know what we don't know, Like people don't know that
Speaker 5: you these these these opportunities are out there.
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