Learn this week’s Best Ever guest’s best ever books, real estate deals, ways to give back and biggest mistakes
Best Ever Book – The Progress Paradox by Gregg Easterbrook
Best Ever Deal Doug has Done – $150,000 Profit on an Adventure Flip
“I think 2011 I was down in San Diego and I was working on one of those adventure flips I mentioned, and a real estate agent up here in Utah called me and said, ‘Hey, I’ve got this deal… It’s a land deal, I would totally buy it, but I’m a little capped out on cash right now, and they need cash and a quick close. Income property, $50,000; it just dropped from $100,000’ and I said, ‘Send me the info.’ They sent it, I ended up buying it for 38k. A little bit of legwork, I found out some of its issues.”
“Long story short, I got all those things cleared up, I was all in for about $40,000. I sold it a year and a half later for $190,000, so a pretty good flip.”
Best Ever Way Doug Likes to Give Back – Adoption and Active in the Church
“My wife and I have adopted three times. Three awesome kids, and we give a lot of time and energy to them.”
“We’re also pretty active in church, in helping and teaching adults and youth, so… It pretty much takes up all our time.”
Biggest Mistake Doug Has Made So Far In Real Estate – Thinking the Music Would Never Stop (Until 2008 Happened)
“[My] biggest mistake was believing the hype of 2002-2006 and that things were always going to go up. I think we all knew the music would stop somewhere, but just not how fast and how hard it was going to drop. I would say one particular deal – in buying into that hype – I invested in a condo … and the wheels fell off during construction. I could either lose $25,000 earnest money, or just go all in. I went all in, and I lost close to $90,000.”
What does Doug do differently now?
“Well, I wouldn’t buy that, that’s for sure. It really is all about the numbers and good, solid fundamentals. Make sure you’ve got cash flow, make sure you’ve got a plan A, plan B, plan C. Plan A – if it’s going to be a flip, that’s great. If that doesn’t work, can you rent it? Can you lease-option it? Do you want to live in it, maybe? What is your plan B? Plan C is if I really had to get out of this thing really fast, with my lowest price, am I going to lose my shorts? What are the other options? Can I wholesale it to somebody else? What are the other things?”
“Have that all mapped out before you begin. If you know the fundamentals, it should tell you what to do.”
Click here for a summary of Doug’s Best Ever advice: How to Invest in Real Estate on Vacation with Adventure Flipping
Best Ever Book – The Go Giver by Bob Burg
Best Ever Way Stephanie Likes to Give Back – Donating to Charity for the Deaf
“My heart is really with the deaf community, so I serve on the board at the local Deaf Action Center, and I try to give money for every loan that I close to that center. That’s one of the things. I do several things, but that’s really where my heart truly is.”
Click here for a summary of Stephanie’s Best Ever advice: Top 3 Questions to Ask When Interviewing a Mortgage Lender
Best Ever Book
Tom: The Great Gatsby by F. Scott Fitzgerald
Mickey: If You Don’t Have Big Breasts, Put Ribbons on Your Pigtails by Barbara Corcoran
Best Ever Deal Tom and Mickey Have Done – Raising the Price from $8.5 million to $12 million on Townhouse
Tom: “We sold a townhouse on the upper West Side for another celebrity client, and it was a situation where we went in and we were the second broker… They had it priced at eight-and-a-half; they lowered the price, they were finally ready to move on. We went in, we wanted the listing, we raised the price to twelve million, because it’s not often where you go in and you say, ‘This is underpriced. This is being approached from the wrong angle.’ We went in, we raised the price to twelve, and we wound up closing at eleven million dollars, and that was a record-breaking deal at the time on the Upper West Side.”
Mickey: “One of the cornerstones of our business is comps. People go by numbers, so when you run what sold in the last six months or the last year of comparable properties, people come up with the price – dollar per square foot, based on the quality of the space, the block, the renovation… And at that moment, when we looked at those numbers we realized ‘There’s a gap here. This house is far better than anything in the eight-and-a-half-million-dollar range, or the nine-million-dollar range.’ So we broadened the search, and we saw an opportunity not in that neighborhood, but in other neighborhoods; the lines blur very quickly… And we thought, ‘We can do this. We can really get away with this,’ and we had half the brokers on the Upper West Side calling us, telling us we were insane. But there were a few [of our] colleagues who came through that house and they said, ‘You nailed it, you’re exactly right. I’m bringing my people back.’ And they did, they brought rounds of buyers back over and over, because they believed in the pricing.”
“Certainly after that, the closing price was posted… Those same people were calling us, ‘How did you do that? What did you do? Was there something included with the sale? Was there extra furniture?’ No, we saw an opportunity in the market, we believed the market could bear that, and it did. That forever changed the benchmark in that neighborhood for pricing the townhouses.”
Best Ever Way Tom and Mickey Like to Give Back – Charitable Donations Tied Into Deal
Tom: “We write checks to a bunch of different charities, but really our preference on this kind of thing is to be very hands-on and create events that we will host ourselves. We’ll bring in VIP clients to have an experience and to raise money for some charities that we support.”
Mickey: “New York City real estate in particular is known for these glittering soirées designed to market properties, and what we like to do… Where a seller has an organization that they believe in and they’d like to support, we try to find the tie-in with the property to raise money for that cause. Because people are more inclined to turn out if they feel there’s some good to be done. So it’s great for our marketing efforts, but more importantly than that, it’s great exposure for those organizations.”
Click here to watch the full interview with Tom and Mickey
Best Ever Book – Mistakes Millionaires Make by Harry Clark
Best Ever Deal Danny has Done – $585,000 Profit on First House Hack
“The best ever deal that I’ve done was that first primary residence purchase that really created the equity nest egg. I bought a three-three condo in the Bay Area for about $775,000, rented out two of the bedrooms, which covered all but about $400 in living expense for me. I then sold the property about a little over two years later with tax-free gains in 2006 for $585,000 in profit, and with those proceeds my fiancée and I started building our real estate empire.”
Best Ever Way Danny Likes to Give Back – Random Acts of Kindness
“The best ever way I like to give back is through what I like to think of as random acts of kindness. The other week I was traveling through the airport and there was this lady who was just struggling with holding her child, trying to put her stroller and all of her luggage down the plane, down the jet bridge and get on board in a reasonable time fashion to keep everybody else happy, and nobody was helping her. So I pulled off to the side of the line, helped her get her stroller, put away, helped her get her kid on board, and then notice that she was seated in the row behind me. I happened to be in first class, so she was in the middle seat and there were two larger gentlemen to both sides of her and she was very uncomfortable in her seat, so I gave up my seat in first class for her to be comfortable with her child, and for her kid to have some space on that flight.”
“So random acts of kindness, buying people cups of coffee when they least expect it, and just making people smile on a daily basis.”
Biggest Mistake Danny Has Made So Far In Real Estate – Forgetting to Include all Expenses in Initial Money Raise
“The second deal that I did was a $960,000 commercial property. It was four office professional spaces and I syndicated that deal and raised about $200,000, which was just enough money to close the deal and make some improvements to the property.”
“The mistake I made was forgetting to include startup funds for marketing and office professional furniture that we needed for that deal to be successful. So I had to go back to my investors and get more money from them, which wasn’t a problem… However, the investors only wanted to put additional funds in based on the equity share that we had agreed to, so I had to come out of my own pocket to cover my equity position in that property, which in hindsight, if I would have included those startup costs upfront, it wouldn’t have been a big deal to the overall return on investment for the investor, and I would have kept a little bit more money in my pocket.”
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