From Zero to 11 Real Estate Deals in 6 Years by Buying Properties 99% Ignore

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20:20Ashley Kehr:Okay, so welcome back. Tiffany, You learned on the first tax deal and eventually moved into REO-owned bank properties. So first of all, tell us what that is and what does it mean? Yeah, of course. So REO bank-owned properties is where somebody doesn't pay their mortgage. The lender later goes in and forecloses on that property. They go through the full legal process. It generally, at least in the state of Florida as far as I'm concerned, and I think most other states work like this, it later goes through a process where it's auctioned off to the public through the county website. But this time, instead of tax deeds, it's foreclosures.

20:56Again, same kind of process where you have to pay for these upfront, usually within 24 to 48 hours. So it's really a lot, it's a lot harder for beginners to get into this because, you know, these houses are selling for$200 ,000 and you have to have that in the bank the next day to write a cashier's check to the county. So when these properties don't sell through the county auction. The lender then forecloses on them officially, keeps the property. They're not in the business of holding these homes. They're not in the process of property management, of being landlords. They later then go off to these third-party auction sites where they put them for sale and people and investors like us can go in and buy them.

21:39Tony Robinson:So there's a lot of similarities between the tax deed sale and the REO. It's just in one, the homeowner lost that property or gave that property up to the local municipality. And then the other, the homeowner gave that property back to the bank that held the debt. Yeah, precisely. The only difference is that once the lender gets a hold of it, they sell it in creative means, which means we can also buy it in very creative means. And that's kind of where the shift is and where it makes it a lot more attainable for newer investors like myself to get involved.

22:11Ashley Kehr:Now, Tiffany, how can people actually find these properties besides just some that may be listed on the MLS? Yeah. So funny enough, a lot of these properties actually are not even listed on the MLS, which makes it a lot better for us investors because there's a lot less competition out there for them. But usually you'll find them on third-party auction sites, such as like auction.com or HubZoo, two of my favorites that I've bought property off of. And they're listed just like normal houses. Sometimes you can even find them listed on Zillow and you just kind of scroll through and you'll see a big fat auction red tag on them.

22:46And that's how I know I'm looking for that.

22:49Tony Robinson:Of all the different websites that are out there, can you maybe rattle off a few of your favorites and why you like those? Yeah, for sure. My top favorite that people hear me talk about all the time is auction.com just because they're very easy to work with. I've built relationships with the entire company at this point because I've done so many deals with them. I'm bidding on their site every week practically. Hubzu is another really good one. There's another one called Home with an X. That one's also really good. And there's a couple off ones that are sometimes state specific. So RealtyBid is a really good one.

23:22And those are kind of the ones that I have off the top of my head.

23:25Tony Robinson:And Tiffany, is the process to get on those websites just as simple as it was for you to do the tax deed sales where you're literally just like, hey, name, email, phone number, whatever it is, and you can immediately start submitting bids on different auction properties? Yep, precisely. All it takes is a phone number, an email, and your name. That's it. Sometimes, depending on the property, I've noticed that they started implementing a deposit, which is usually about$1 ,000. But it's nothing that will keep you out of the game. And there's still tons of opportunities out there that don't require a single dime to get in.

23:57Ashley Kehr:How are you analyzing these deals? Do you have a formula or a method? If you're bidding on at least one week on these sites, is there kind of some kind of formula or method that you're using to evaluate them before you bid? Yeah, 100%. So I didn't have a formula when I first started and then I started kind of noticing a pattern. So I reworked everything backwards, divvied up some numbers, and I've noticed that I kind of land on the 60 to 65 % ARV. So once I run my comps for the property to make sure, you know, this is what the area is selling for. And I always do a backup strategy. So for me, that's renting it.

24:35So I also run comps for rentals. And after seeing that, whatever that may be. So for example, I recently just bought a property. It came appraised after I bought it for$300 ,000. I spent 183 ,000 on it. So if you do the math, it's about 63 % or something. And I'll know a lot of investors tend to stay around the 70 % mark. For me, that's just a little too risky because I can't cash out refi if I wanted to. I would still have money in the deal and I probably wouldn't cash flow.

25:06Ashley Kehr:So how fast do you actually have to move on these? Are these properties listed and you have to bid on them within 24 hours? What is kind of the timeframe that you actually have for an underwriting process? Yeah. So for these, it's a very slow and patient game. There was a property that I ended up finding. This was one of my first REO bank owned deals where I kind of uncovered this whole formula. And I remember just kind of watching the auction. I wasn't really sure how to go about it. I just knew it was too good of a deal for me to just let somebody else buy it. And that was that was enough reason for me to act on it.

25:44Excuse me. Watch the auction. Notice that nobody bid on it, which I thought was very peculiar. Came back three days later and it was auctioned again for the same starting bid. same time and day just the following week and I was like that's weird did nobody want to buy this mind you this was a brand new 2023 construction there was nothing wrong with this house it would pass an FHA loan inspection with flying colors nothing wrong with it I'm over here okay it's been a week watch the auction again nothing nobody's bidding on this house and I'm like okay that's enough reason for me to go in and like you know pull the trigger so I go in and I put it a bid on the third round.

26:25So it's been re-auctioned three times now. On the fourth go-around, I think they just kind of gave up, if I'm being honest, and they just sold it to me. So again, with the 60 % ARV, they were like, nobody else is bidding or buying this house. And they sold it to me for what I bid for on it. And it only took a month. And then later, six months later, I bought another house where it took six months from bid number one to it being re-auctioned for six months for me to buy it for the price I wanted.

26:52Ashley Kehr:I had a contractor once that many years ago, he wanted to actually buy this property that was in our town on auction.com. And he must have bid on it like 20 times. And it would just say like, nope, didn't meet the minimum of it. Didn't meet the minimum of it. It just kept going and going. And then you eventually ended up getting it, but it just kept getting relisted so many times. Yeah, it happens day out.

27:17Tony Robinson:So Tiffany, the reason that they kept relisting it was because no one was actually offering what they were asking for. Is that what I'm understanding? So on this property in particular, I can almost guarantee I was the only person bidding. On other properties, I've seen where other people are bidding with you, but this property, it was just me and the seller. There was nobody in the room but me and the seller. And then what about from a due diligence perspective? When I get a property under contract on the MLS. We've got 30 days to kind of go through that whole process. Even if I'm buying from a wholesaler, I usually have like a couple of days to get in there and do my thing.

27:52Tony Robinson:But with these auction sites, what kind of access do you have before you submit your bid? How do you make sure that you're not stepping into something where your rehab estimates are significantly off? So with these auction properties, generally, I know a lot of people kind of get scared off, right? And this is where it kind of differs from the tax deed scale and the county auctions where you need to pay in 24 hours, the closing time on these auction deals are actually 30 to 45 days. So it's a normal closing process with the due diligence, you know, for checking for liens, title issues, all that stuff.

28:27You're getting a title search done and a lien search because they also allow for hard money financing, which a lot of people don't realize because it says cash only when you go to buy them. So it's quite literally just like a regular closing. The only asterisk to that is that you can't get any sort of traditional financing. So it does need to be hard money essentially for these deals. And as for going out and inspecting them, there are a lot of properties that either allow interior access or they give you the code, usually the realtor, the code, not you. Or they have like photos online that you can look through.

29:00Now, when I'm doing this and I have my buy box, of course, you asked about inspecting, kind of seen the condition of the property. The last couple of deals that I've bought have been turnkey, as I mentioned, like there was a 2023 new construction. It looked like nobody had lived there. It was impeccable. It was better than my house that I live in. I was like, okay, this is the, you know, so I mean, if the house is only four years old, what could possibly be wrong, right? Air conditioner, roof, well, septic, all that stuff was just put in, which are the most expensive things when it comes to rehab.

29:35So it kind of just gave me a peace of mind. And even if I didn't had gone to see the house, I think I still would have bid exactly what I bid.

29:43Tony Robinson:I had no idea. Ash, did you know that on auction sites like that, that it was like almost like a traditional closing timeline?

29:49Ashley Kehr:No, I honestly didn't really know how it worked because I've never done it. And when that guy did it, I think he just paid, he ended up paying cash for it, but I don't even, it was so long ago, I don't even remember the actual process for it.

30:03Tony Robinson:Now, Tiffany, you mentioned hard money. How does the hard money align with the auction process? And I guess maybe even taking a step back before we talk about that, how are you finding your hard money lenders? Because I think a lot of rookie investors understand the benefit of hard money in a situation where you're doing a lot of rehab or you need to close fast. But how do you actually go out there and find the right hard money lenders to work with? Yeah. So I stumbled across mine. Gosh, I love social media. They have followed me on Instagram. And that's how I found my lender. I didn't know what hard money was until I started doing REO bank loan.

30:36Like I said, this specific property that I'm mentioning here multiple times, it was just too good of a deal for me to pass up. It was right down the street from my normal neighborhood, turnkey house, new build. It came back appraised over 100K what I ended up paying for it. I said, there's no way I can lose this deal. I don't know what I have to do, but I'm finding the money to make this happen. And that's kind of when I remembered stumbling across, you know, somebody, Kiavi.com actually specifically, who ended up following me because I post lots of content about real estate investing and decided to reach out to see how it worked.

31:11And since then, I've bought properties using fix and flip loans. I've also used DSCR loans on these properties. So it's really flexible. As long as you're using hard money, there's really no ifs, ands, and buts. And of course, passing inspection for things.

31:25Ashley Kehr:That is so exciting to hear because they actually just came up BiggerPockets Pro - perk partner with us. So like anybody that's a bigger pockets pro gets like a discount on funding. I can't remember offhand what it is, but like you get some of the money taken off of your closing costs. So you can go to biggerpockets.com slash pro perks and check that out. That's cool that that's who you ended up using. Yeah, no, I have them on Speed Dell. They practically know me by name and they're all my close friends on Instagram. They see me like doing my deals. They're like, hey, do you want me to get the pre-approval ready?

32:00I'm like, send it in. Let's go.

32:02Ashley Kehr:We always love an unplanned, spontaneous pro perk, a shout out here to someone that's actually using them and partnering with them.

32:11Tony Robinson:So Tiffany's built an incredible strategy to find literally properties for pennies on the dollar. And I want to talk a little bit more about how she's using that to build her portfolio versus stacking some cash. So we'll cover that after a quick word from today's show sponsors.

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33:06Tony Robinson:Learn more at biggerpockets.com slash BAM. Only for accredited investors, past performance is not indicative of future results. Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS-compliant strategy that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal. Cost segregation, guys, is the go-to firm, having done over 12 ,000 of these studies with$500 million in total depreciation identified.

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34:24Tony Robinson:That's biggerpockets.com slash L-E-N-N-A-R. Sign up for free and start exploring this smart investing opportunity today. Please consult your own legal and tax advisors to help evaluate the risks of any real estate transaction. Lennar is an equal housing opportunity builder. All right, we're back here with Tiffany DeSilva. Now, Tiffany, you kind of blew both mine and Ashley's mind talking about the auction process. But I know some of these you're keeping, some of these you're flipping. How are you making the determination on whether this is a flip property or a hold property? Yeah, no, for sure.

34:58I love that question. I think for me, everything is a flip until it's not. Because ultimately, you know, I'm kind of still in the beginning stages of growing everything. Obviously, I'm a lot more established now. But still, I say the more capital, the better, because you can usually start bidding more aggressively or, you know, get deals done a lot faster. So for me, if I can flip a deal and it makes sense, you know, I'm always buying, like I said, between that 60 and 65 percent ARV percentage. So most of the deals do work for flips, all of them. I make sure of it. And then if the market just tells me that it's not going to flip for a next couple of months and I'm able to kind of shift gears into turning it into a rental, I'm going to do that.

35:42And I always, like I said, buy with a second strategy. So I'm buying to make sure that I can either fix and flip it or not fix it, but quite literally just flip it because there's almost no fixing involved at this point. or I can take it and put it on the market and have it rent enough to cover the DSCR loan that I end up purchasing it with or later refinancing into.

36:06Tony Robinson:So one follow-up question on that. So are you, when you, if you do have to refinance, are you bringing cash to the closing or have you built in enough margin between your, your all in costs in the deal, your, your purchase price and your renovation so that when you do go to refinance, there's literally no cash out of pocket for you? Yeah, there's definitely not been cash coming out of my pocket, aside from the down payment and the closing costs. So I try to keep that kind of borderline there. But generally, I know a lot of people like to buy with fix and flip because you can put as little as 10 % down, which is great.

36:39But because I kind of play the market in the economy a little bit, you know, if the house doesn't sell in three months, and I'm getting a little impatient here, I'm just going to put it on the market for rent. And with that being said, I like to buy these properties if I can with the DSCR already with no prepayment penalty. So that way, if I want to just shift gears, I already have a 30 year mortgage on it and I'm good. Like I either just sell it or I keep it. It doesn't make a difference.

37:07Ashley Kehr:That's so interesting. I don't know if we've had somebody on that has done it that way. What are your closing costs for the DSCR loan compared to if you did the fix and flip loan? Have you compared the two at all? I have. And I've also done a comparison of whether it's worthwhile just going straight into a DSCR or doing a fix and flip to bypass a 10 % extra down and later refinancing. And what I tell a lot of people is if you have X amount to make it work, and that means you have to go into the fixed flip, make it work. Make sure you're making a safe investment, but make it work. In my case, if I can just buy straight with the DSCR, I've noticed that the clothing costs are a lot more affordable.

37:52And of course, because it's a 30-year, usually I do PITI. So you're paying off principal and interest at the same time. And generally, the rate is a lot lower with those. So overall, you're saving probably a couple thousand dollars on a deal. I can't give you a specific number just because they all kind of fluctuate, but I'd say between three and five thousand dollars per deal.

38:15Ashley Kehr:Yeah. And plus, when you do a fix and flip and then if you end up needing to refinance into the DSCR loan, you're paying those closing costs twice. So, yeah, you're saving even more money. No, no, no. I was just going to say that's exactly what works for me. But that's why I say every investor is a little different. And hey, if you only have enough for the 10 % down payment, you better rock and roll with that, baby, because it's better to have a deal than to not. Yeah.

38:39Tony Robinson:Well, Tiffany, you're like blowing my mind on the whole auction process because I just always assumed, and this is, I think, part of what's deterred me from trying to leverage this as an acquisition model is just like the complexity around trying to make sure that my bids are dialed in. But the fact that you actually do get some length of time to go through a normal due diligence process, I think, opens this up to me in a way that I hadn't considered before. And while you were chatting, I just happened to, you know, and Ashley's going to laugh, I just happened to pull up auction.com. And there's literally a house that's not too far from me that's, it says the current bid right now, or at least the opening bid was$275 ,000.

39:14Tony Robinson:It looks like the current bid right now has gotten up to$475 ,000, but it opened at$275 ,000. And I plugged the address in a prop stream to see like, okay, what is it saying there? And there's houses on that same block right now that are going for over$700 ,000, where the bid right now is$455 ,000. Now it closes in eight minutes. I don't know if I'll have enough time during this podcast recording to do all of that, but it's just, it's encouraging for me to know that there are those types of opportunities out there, even in the markets that I'm in. So I appreciate you for opening me up to that.

39:43Ashley Kehr:Come on, Tony, do it live. Come on.

39:47Tony Robinson:Well, in addition to the REOs and the tax deeds and the flipping and holding them, you've also done some construction, right? Some ground up development, Tiffany. So I want to talk a little bit about that. You built two tiny homes from scratch, which I think is incredible, right? You renovated a farmhouse down to the studs. How does that construction knowledge change the way that you look at deals, knowing that now not only is renovation an option, but now you've also got this opportunity to build something from the ground up? Yeah, no, for sure. I mean, definitely a very big learning curve. And I think everybody kind of looks at real estate.

40:23If you want to fix and flip, you have to actually do the fix part. I'm here to tell you that you don't, especially if you do the strategy that I just told you with the turnkey auction properties. And yes, there are a handful of them out there. I will say though, I'm very grateful that I went through that. So building, you know, two tiny houses from scratch, even though they're tiny houses, they still have air conditioners, they still have, you know, appliances you need to put in, framing, roofing, anything you can think of. And so I think having that knowledge now not only lets me be able to inspect these properties with a lot more of a fine-tuned comb.

41:01I also am able to take a deal and see how it's going to perform post-fixing it up, right? Because if we're flipping, let's say, for example, and we need to have a buyer, and this is an affordable house in an affordable neighborhood, we're probably going to get an FHA buyer. That house better pass all inspections. And so having built these properties from the ground up, I can now go in and basically see, hey, this is what we need to fix in order to get this property in tip-top shape so that whoever does come to purchase this is going to have a seamless process.

41:35Ashley Kehr:Well, Tiffany, thank you. Tony, did you say something? Oh, weird. There was like an echo or something. Okay, sorry. Tiffany, thank you so much for joining us today. We really appreciated you taking the time to share your journey with us. Where can people reach out to you and find out more information about what you're doing? Yeah, of course. They can find me over on Beauty and a Builder on all platforms. That's Beauty and a Builder. Thank you so much for joining us today. And if you enjoyed this podcast, make sure you are subscribed to our YouTube channel at Real Estate Rookie. Go give Tiffany a follow.

42:12Ashley Kehr:And again, Tiffany, thank you so much for taking the time to share the lessons that you've learned and your experience so rookie listeners and us can learn from you. I'm Ashley. It's Tony. And we'll see you guys on the next episode.

42:24Tony Robinson:Hey, rookies. If you're watching this, we want you to apply to be a guest on the Real Estate Rookie Podcast. That's right. Ashley and I are looking for amazing stories just like yours to be a part of our Real Estate Rookie Podcast. Now, look, you don't need to be an expert. You don't need to have done thousands of deals. Even if you've done one deal, your story could help inspire the next listener.

42:43Ashley Kehr:As a rookie investor, especially if you just got your first deal, it is all fresh in your minds and you are the best person to tell your story, give your experience on how you got it done to help someone else get their first deal.

42:55Tony Robinson:So head over to biggerpockets.com slash guest if you want to be a part of our show. Again, that's biggerpockets.com slash guest. And we'd love to have you on.