Flipping Real Estate Out of State in 2 Hours a Month with Sharad Mehta

So how many deals, you might even know this has this piece of data. How many deals do you evaluate versus the number that you do? What’s the actual rate. Okay. 

I would say now, we are a little bit achier about bills. Initially when I started out. And analyzing a lot and lots of deals, because you’re getting started dating and I just want to get comfortable, buying your first few houses.

Like the first house. I remember it was listed on the mitral for $65,000 to. And I was just so scared. I made an offer of 20,000. I’m like, you know what’s the worst that’s going to happen? Somebody’s going to say no. So I made an offer of 20,000 and after back and forth, we ended up buying it for $25,000.

So that was my thought process going in. It’s changed from that in now, obviously, the market is also a lot different. So now, for the most part, we know right off the bat, if somebody has. $200,000 for the house and they have a $200,000 mortgage for the house. It’s only 1, 1 75. So we’re not even gonna waste our time on it.

They’ll say we’re still would we’re still going let’s say an appointment or eight, eight, or nine appointments before we get a property undercurrent. So we like to analyze, then you don’t want to get to appointments. That’s when we’re doing our analysis. So let’s say on the high end, like 10 properties that we analyzed, and then we make an offer and get accepted.

Okay. Now for our listeners out there who think they want to get into the flipping business, I want to throw this thought experiment at you. You’re in Toronto, Canada. Now your project managers in California, your properties are in the Northwest. Indiana. And what if it comes down from on high, some greater power says you can’t do deals in Northwest Indiana anymore, or the greater Chicago area.

You got to pick another market. That means another team, everything. Can you walk us through what you would do given those conditions? You can’t do it there anymore. You gotta rebuild this somewhere else. How do you pick that market? And then what do you do? 

I would start somewhere in the Midwest.

Maybe Ohio seems like a good market, and I would be I would want to be close to a major city like Columbus, Ohio, Toledo, maybe or Cincinnati it’s one of the cities then I would want to look at what’s the median home price is going to be around the median.

High-end not knowing that you know this, and then I would want to have, I want to look at some houses make some properties where I could have multiple exit strategies. Like for example, in my mind, he did not vest Indiana, for the most part with around $200,000 price when some higher, some lower, but, I ideal house would be 1 75 to $2,000 price, $200,000 price point.

Now with that house, I have few different options. We could do retail fix and play. We could do turn-key and we could also, I keep it as a rental property because it makes sense. So I would want to look at some houses where I get multiple exits. For example, I would normally want to buy a $500,000 house because I cannot sell that as a turnkey.

I cannot keep it as a rental. I only have one exit strategy with that house. So I would want to be in that, median home price, like one 50 and two 50 on the high. Because then with that price, when you can do a couple of different things. So that’s what I would want to look at. And then I would.

Sorry, I wanted to clarify that would be your ARV target.

Yes. Yeah. Sorry. Yeah. Sorry. That’s the ARB. So our purchase price would be 30, 40% lower than that, depending on the repair, but yes. So thank you for correcting that. One 50 to 250 on the height. Ideally, 1 5200 is the price point I would want to be at depending on how much the house can rent for and, a couple of other things.

But assuming if I can get close to 1% in monthly, then you know, if it’s $150,000, which in most my cousin’s inmate best, he should be able to get. 15 $1,600 a month. And those would be like, absolutely no-brainer houses for us. So I would start with that and then go up to 200 and really push two 50 on a high end for myself.

And then I would look at that I would start and look at a list of, I would pull a list of distressed. Based on people who have equity, some other criteria, like they might be absentee homeowners, a property might be vacant. They might be going through some other need to sell their house. Might be going through a P foreclosure.

They might have a lien on the property. And then from there, I would, my. To direct mail, which tends to work best for us. And then a lot of other investors that we talked to, like direct mail tend to be very consistent. It’s a long-term player. Then I would do direct mail to them and then just have a good system in place to convert as many leads as possible into deals.

So that helps. Yeah. Yeah, absolutely. And that I think that system question is important to you. For example, in those direct mail pieces. What’s the call to action. What do you have them do you ask them to call you? Do you ask them to call somebody else? 

Yeah so that’s, yeah, that’s a great question.

So what we do is on our marketing pieces, it’s very important. If you’re changing some variable in your marketing piece, you want to be able to. You know where that lead is coming from or what triggered them to call you. They wanted a specific list they were on. Was it a specific marketing piece?

So we would use a dedicated number, which, we do really simple like we would have a dedicated number for, let’s say, direct mail if I’m mailing two vacant houses, for example. So if I’m billing two vacant houses, I would have a dedicated number for my direct mail for vacant houses, anybody calls back then we would use announcing service like colporteur for example, and then they would take the initial call.

They would scream the call ask some qualifying question and if it’s a good lead, then I will have somebody on my team work on that lead, but the initial call I would not take, but again, for people starting out again, it depends, a lot of investors that we work with, they might have a full-time nine to five job, but they want to get into the real estate game, but they don’t have time to take the call.

So that. Something like announcing service. I called for consent. Perfect. They take the calls from you, why you work nine to five. And if, once an after hours, if you want to take the calls, talk to the sellers, then you can have a job to do yourself. And once they take the initial call, And it becomes a lead it’s, somebody that’s actually interested in selling their house outfits, a couple of other criteria that you have at that point, I would have somebody in my team, start working on it, but if I’m starting out, initially when I was there, I would work on that lead myself.

I would go on an appointment. There’s nothing, even if initially, even if somebody has a house, a hundred thousand dollars house, they want a hundred thousand for it. And it has a hundred thousand dollar mortgage. I was still going to appointments initially. Okay. What happens is like you’re building a process that when you initially go, you might go to a house and in Midwest, modern markets have basements.

So you might go to the house, you’re not going to buy this house because the numbers don’t make sense, but it’s still good to just get that initial fear out of your mind, like the anxiety that you have about meeting these random homeowners and then just pay across this, for example, you might walk a house, you might come out.

You’re like, oh shit, I forgot to walk through the basement. The basement could be very exciting. Expensive fixes. What, if the wall is poignant, that could be a pretty major expense. Like we used to buy a house, a lot of houses from foreclosure auction, people, houses that were going foreclosure, and we could not get into the houses.

So that address, we have to factor it in, but then we put a process for that. But if I’m going and meeting a homeowner, then I would want to have a process. Okay. Next time then I would add that to my checklist. Okay. The first house I went to, I forgot to look at the basement. Now it’s in my check. If there’s a.

Next year, you walk through the basement. So you start documenting that. And then now as your business scales, you can just literally give the checklist to somebody else and say, Hey job, it makes you feel this checklist out. That’s it? 

Okay, so now you’re at the point where, okay, we’ve got the process.

We’ll find a house. We have to fix it up. Do you go in yellow pages to find a general contractor to look at it? Or how do you get that started when you don’t have a contractor team already? 

And so I would go to, I started at a local REIA meeting and just talk to other investors who may be not somebody who is.

Lots of deals because they might have their contractor busy. But let’s say if you starting hurting one or two deals a year, then you might want to lighten it up, but somebody who’s doing another one or two deals, and then you can ask them, Hey, do you know a good contract to how about, we give two projects to this contractor and tried to get a better price for both of us.

So that’s one way of doing that, but I will start out in the local area and try to get referrals. Or another thing is to look at. Look at some of the houses that other investors have sold in your area. Go back to the local building department and find out which contractor, pull the permit, and then reach out to those contracts.

If you know their house looks really nice, it’s sold really quickly on the market. That contractor must have done a good job. So then I would go that’s a little bit longer process, but then you would get some really good information of the houses that are flipped in your mind.

Find out who pulled the permit and just reach out to them directly. 

Creative. I actually have not heard that one before. 

Yeah, we’ve tried it. Yeah. We’ve all. Or you can just if there’s a word going on, driving around the neighborhood, there are so many flips going on. You could see a building permit usually has, who’s working on the property, which contractor is going to work on it.

So you can get that information, if you see a construction contractor, man, just write down there now. Ask them to make sure you always check the references. That’s another thing, one of the things. So now we let our contractor buy their own materials, their own materials, just to we pay a little bit more, but it’s like a much more streamlined process for that.

But before, when we used to buy our own materials at home Depot, we were like one of the largest buyers at our local Home Depot. So one other thing to do is I go to the local Home Depot and go to the protest and ask somebody at state, which contractor would you recommend? Somebody that’s coming in day in, day out.

And it’s consistent, comes early in the morning because that person shows up on time, asked to be put at your desk. They would be very helpful in helping you find a good contract. 

Interesting. Those are all awesome ideas. That’s creative too. Yeah. Yeah.

Everything that we’ve tried, used to get our contractors. So now we work with the, we’ve been working the same contractor for four years now and I’ve never met any one of them personally. I’ve never talked to any one of them personally. Now we’ve gotten it to the point where. Project manager.

I have a separate bank account set up, so I just transferred money into that bank account. And she writes all the checks from it. I don’t even write any checks. I don’t do any payments. I just transferred into that. And she’s the one who’s talked to our project manager. Our contractors, plumbers, electrician, that I’ve never talked to, even if they were in front of me, I would have no idea that they work on one to five.

Which is how I would want it, and just like every systemized 

At this point. Yeah. And hands-off so that it can run without you there. Absolutely. 

Absolutely. Yeah. Yeah. One of the craziest closings I’ve done is my dad used to live in Tanzania. I even started a business in Tanzania use a clothing business.

We used to export no joke. We used to export used clothing from us and Canada. To Tanzania because people can’t afford to buy a new pair of clothes, new clothes, Levi’s jeans for like just these hot commodity, by the way, for anybody that’s donating their clothes. So we started, so I went there, I went to Tanzania a few times.

So this one. The crazy closing that I did was a Weaver. I went with my family, we were on this African safari in the middle of Serengeti and I had, to close on a deal and we went to a local notary in Tanzania. Those two deals, candidly. But that was like the craziest closing that I did. But it was only possible because we had everything systemized to, at this point now at this point, even I don’t even sign any cell site closing documents because I left.

Canada. And then I’ve given power of attorney to somebody in my team. They just go assign the closing documents. Diner, the community knows where to wire the money. I just looked at the final height to make sure everything looks good and then they go sign and that’s it. 

That’s awesome. Now that we’ve given everybody the formula to build a passive sort of passive, almost entirely passive flipping remote flipping business, we’re going to move on to the next part of the show.

We’re going to take a quick break for our sponsor. All right. You’re out. I’ve got three questions. I ask every guest on the show. Are you ready? Yes, sir. All right. Great. First one. What is the best investment you ever made other than in your education? 

Oh I wholesale a house. It was like a, not a house.

It was a 10 unit property and B and I made almost a hundred thousand on it. Wow. Yeah. That was that’s the best for you. It’s been a while, but yeah, that was I, yeah. I haven’t been able to top that 

Nice profitable. Yeah. So we had the best investment that we go to the other side of that coin.

Hopefully, it’s not the same magnitude. What is the worst investment you ever made? 

Worst was where we lost 20,000 on a deal. I think we bought in an area that we were not super familiar with. We took on a project that was way too big for what we wanted to deal with. And we worked with a new clue that we didn’t have full confidence in and we ended up losing 20,000 on that idea.

So that was painful. That was a couple of years. 

So just knowing the area better would have really made a difference. 

Yeah. Yep. Yeah. I think we went a little bit outside of camp, not comfort zone, but like the area that we were familiar with and then just speculate a bit on that deal and lost 20,000 on it.