Brant Phillips – Navigating The Realities of Residential Real Estate Investing

Either that, or that investor may no longer be in the business. So that’s one thing that we’ve done a lot. And we get a lot of deer-in-the-headlight looks, but with especially newbie investors, where we’re helping them out. We’re coming to do an estimate for a job and we’re telling them absolutely that it’s not a good deal or that the house may need too many repairs, which makes it not a good deal.

And so that’s kind of the reason why. And our business is really built on repeat customers. Because the average contractor, remodeling company, when they do a remodel for their average customer, their typical customer, it’s a one-time service for that customer, most likely, because people don’t renovate their personal homes that often.

But we’ve got customers that we’ve done 20+ remodels in a single year for.

So we’re built on repeat business and the only way to really establish good relationships is to help them truly be successful in their real estate investments. And I can’t tell you how many times, literally hundreds and probably thousands of times, that we’ve told people either to walk away from deals or we just talked them down on they may want to add some things to the project, something that they saw on HGTV. But it just doesn’t make sense in that market.

So we’ll try to analyze what is the customer’s desired outcome, but what’s really, in that target market where that house is located, kind of where’s the sweet spot? What are the minimum things that we do? What are the things that you, we call them must, should and wow.

The things that you must do. There are some things that you probably should, but you can have some leniency on that, whether you do or don’t. And then we throw in a couple of wow factors to the project.

So we kind of help them make those decisions through a business perspective on what’s going to bring them the best return on their investment.

Jack:          Yeah, one thing that I know we’ve talked about is clearly we see how you can help people avoid bad deals. Avoid making mistakes that can be very, very costly and even life-changing in their finances.

But on the other side of the coin, you’ve come across that people think is a bad deal because of what I call 25 cent problems. Where they’ve gone and they’ve watched the shows on TV and they walk in a house and decide that they don’t want to buy that house because it has a hole in the sheetrock.

Now, that’s a 25 cent problem, but they think it’s major. How many people do you come across that you actually can help them navigate and say, you know what? That’s not nearly as bad as you’re thinking and this is actually a really good deal. And they’ve ended up getting home runs off of things that they initially may have passed on because they weren’t educated in what the true problem was.

Brant:         Yeah. So that happens quite a bit, too. People, just either through fear or really lack of knowledge or experience, they’ll make a small situation so much bigger. And really, unfortunately, I see a lot of people walk away from deals that they could have made really nice size profits on. And our company actually bought quite a few of those deals where we advised the customer, the client, this is a really good deal. We ran all the numbers and plugged everything in and it made sense.

But there’s some obstacle in their mind that they can’t get over to move forward on that deal. And recently, we had a customer who had already purchased a home. Got into the rehab. They had, unfortunately, hired another contractor. And things went bad. Things went sideways.

And the contractor had run off with the money, left them unfinished on the project. And this investor wanted to ditch the project. Take a loss. Because they were just so in a state of shock at that point in time and they were afraid and just, really, you know, she wasn’t thinking straight at that point in time.

And was determined to just walk away from the deal.

So we came in, looked at her budget, looked at her numbers. Assessed the renovation where it was at that point in progress. And we were able to come in, advise her on that deal. She actually, in that point in time, with the contractor, what we recommended to her was to renegotiate, re-contact her contractor first to work things out, communicate.

And go over, and first seek to work things out with that original contractor, rather than file a lien and go through that process. And she actually was able to do that. There was some misunderstanding, communication on both sides. Worked it out with them. Got the house listed and walked away with a really nice profit.

And so sometimes, that’s our role, taking another perspective. Looking at it with a business perspective and talking them off the cliff, so to speak. And that was a great example, where we weren’t even looking to do the construction work on her project. We just wanted to analyze it and see what needed to be done. And she, to her credit, took those steps and walked away with a nice profit.

Jack: Well, I think that right there is a perfect example. It’s a spotlight on the fact that you’re an advisor. You had this advisor capacity, similar to the financial advisor that I talked about. And rather than making decisions or guiding a customer that’s going to be the most profitable for you, you go for what’s the best outcome for those customers’ success.

Brant:         Uh-hmm.

Jack:          Now, there’s a lot of people that watch the shows, the reality shows. And they see that and they think that real estate investing means walking through dirty, nasty houses, swinging sledgehammers, knocking down walls. And that they have to get involved with the actual construction of this.

Jack Mize

Jack Mize - is a Best Selling Author,host of Influencers Radio and Business Innovators Magazine covering Influencers, Innovators and Trendsetters in Business, Health, Finance and Personal Development.