That’s three techniques right there on one transaction. That’s the kind of stuff I preach. Leverage your license in multiple ways. I promise you’ll be grateful you did. Instead of just doing a linear one-for-one, you get multiple commissions per client deal.

Something else I really want to commend you on is for coming up with an accurate After Repair Value. If priced accurately, the property will sell quickly within 30 days. That comes back to your integrity. When you are authentic, genuine and sincere, the world is your oyster. It will open up and people will refer you to others. You’re doing it the honorable, ethical way.  But if you don’t, the opposite will happen. It’s a small, small world out there. Your reputation means everything. Particularly in the world of investing, you know?

Kelli: I totally agree. And that’s why I’m happy Keller Williams is offering this now. I do try to mentor some agents, but time is an issue for me. That’s why I was glad you were coming here. I sent everybody.

In terms of integrity, keep something else in mind. When I partner and team with contractors and electricians and plumbers, I tell them, “Be kind to my investors on your pricing.” Because over time it’s going to create a long-term relationship. They’re going to make more money over time by taking care of my clients and being kind on charges. They’ll make a lot more money.

Develop a team of vendors and contractors who are going to work with integrity. If they’re not getting it done and they’re not showing up and they’re not doing it, it’s going to reflect upon you. If my contractor as a partner is taking three or four months longer, who’s responsible for putting the investor and contractor together? Make sure when you’re doing this, you assemble a good team.

A lot of people know contractors and electricians. If I need something at Keller Williams, I have my front desk say, “Hey, Kelli’s looking for something.” Other agents will be more than happy to refer people to you. Use those resources at your brokerage.

When people ask why I don’t have my own office, I tell them I really like Keller Williams. Keller Williams lets me do my thing. You know, I have my purchase and sales. They’re not a company that has to micromanage you, which allows you to do a more open business, too.

You have to develop your own style. For example, to help when people ask about that buyer agent bonus I charge, I say, “Look, I’m going to hunt through many properties. We’re going to make several offers. We’re going to do all this. We’re not going to get paid for luck.” On that one property we say yes to, that we get and we close, I’ll take $1,500. When you budget it in that way, nobody says no. So these are things you develop when you’re figuring out how to do this for yourself.

Gary: What an excellent point. Okay, I want to transition now to talk about location. I have students from all over North America, literally coast to coast. California to New Jersey, all the way up into New Hampshire, Maine and up into Canada, Montreal, Toronto and all the way down into Florida. Everybody is wondering about their marketplace. And I’m telling you, we’ve done this in Dayton, Ohio, where the average home price is only $70,000 and we’ve done it out in the San Francisco Bay area where sometimes there’s an average home price of $1.3 million. The fact is wherever you live, every community in North America has investor properties. People are paying rent to somebody. It might as well be you.

So Kelli, describe a little bit about where you are. And maybe how that has affected your strategy? Or did you use a strategy in any particular way?

Kelli: Well to be honest with you, I don’t listen to the news. I don’t listen to the trends. Has the foreclosure market here reduced a bit? Yes. Which makes investors actually come back to the marketplace? What happened is some of them overpaid for properties, worried they weren’t going to get the deals. Here in New England, I have to be honest with you, the inventory is a little less. But because the market has gone up, everybody is selling their house. So there’s actually inventory, but with regular sellers instead of investors.

But if you hunt and find, there are still foreclosures. There are still estate sales. Each week someone on my team sends out probate letters and we get an average of 2-3 each week. As an investor you want to find properties off-market.

The market here now is very strong for selling. I don’t know if it’s a result of the TV shows or whatever, but in my investor group there’s an average of 6-7 new people each month wanting to get into investment. You’ll find engineers are a very strong investment-savvy profession. Some people will want to get into wholesaling. Don’t be afraid to talk to them.

Whether the house prices are only $70,000, or $1.5 million, there are people willing to invest and they’ll do it. Don’t listen to the real estate market ups-and-downs. Go out and you will find it. If you work hard enough, there’s a deal there and you’ll have investors that want to buy. Like I said, it’s the new retirement plan, because a lot of people want to quit their jobs. They want to ride around and look at real estate. They want to flip homes. That’s their new dream.

Gary: You and I talked about this topic before. I love my little letter. It’s worked wonders for me over the years and I’ve started to share it with the students. Now it’s really gone viral. I’m teaching in new areas only to find agents saying, “Hey, I got your letter from somebody up in New Jersey who already took your course. He said it’s a great letter.” So our MLS only gives us part of the inventory for our investors. But on the flip or resale, it makes sense to list the property because I can usually get a lot more money for the current owner. You’re still servicing your buyers.

And I remember years ago when I turned off my TV once and for all, too.

Now I have to admit that last Thursday when I was doing a webinar in Massachusetts and the Patriots were getting ready to clobber the Steelers, it was the first time I’d turned on the TV in two years. But all it does is mess with your mind. The news has a horrible habit of getting people into a negative mindset. I don’t care what the economy does. I’m out there every day buying and knocking doors down. And I know you’re doing the same thing.

So let me ask you this. You mentioned going to the investor clubs. A lot of people are always wondering how you actually do this, Kelli. Could you expand on one of your techniques? Have you done your own workshops, for example? Maybe something you’re proud of that you’ve developed or taken another idea from someone else and gotten innovative. Is there something you can think of that might resonate with people here?

Kelli: I have done hundreds and hundreds of transactions and my spin is this. I partner with a property manager who I invite to our classroom at Keller Williams to lead training on property management. He gets paid for his time, and I get connected to investors from the investment groups who want to attend the training.

I stand up and say, “I’m an investment specialist. If you’re new, I’ll mentor you. If you’re seasoned, I’ll help you. We hunt properties.” The key as a realtor is that I can give additional advice. Investors are great people but they always want the deal. They want something that somebody else doesn’t have. So I let it be known that I don’t invest. I’m not competing against my investors. As a realtor, you’ll get the first look.

This goes back to integrity and reputation. If you do invest, don’t tell them. If you do get a property, they’re going to think you’re going to take the deal out from under them. They want the deal. They want the inside “in.” So don’t compete against them. I do very well with my income not doing investments.

The beauty is honestly I can partner people. They use their money. I get paid. Their money is at risk, mine isn’t. I list the property on MLS. I get my commission. Honestly, I have no risk other than being the realtor. So the thing is I’m telling you to get out there and find out where the investors are.

If it means going to an auction on the side of the street to meet people you should. I’ve met some people at auctions where I tell them, “Instead of wasting your time at the auction—because if the property’s in the old seller’s name, it still means the bank is going to buy it back today—let me help you. Instead of you chasing auctions, let me put you on MLS. Let’s meet. Let’s talk.”

I mean I’m not a salesperson. I don’t like to push myself on people. Just have conversations. I’ve picked up a lot of businesses and commercial properties by stopping and talking to people. You know, and just listening. Then you build rapport and your reputation. It’s a small business. I get calls from realtors looking for renovated properties all the time because of the reputation of what I do with my investors.

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Gary: We have with us Kelli O’Keefe from a town outside Boston, Massachusetts, called Leominster, pronounced ‘Leminster’. The New England area, particularly Boston, is what I would consider a high-price/low-inventory area. If you’re in Toronto, Washington, D.C., or San Francisco, whatever we talk about is going to be very applicable to those areas, too.

Kelli, people like to know who they’re listening to, so let me first ask, “Who is Kelli O’Keefe?”

Kelli: Well, I’m a New York girl and a Yankee fan stuck in the Boston Red Sox and New England Patriots territory. I am an investor specialist with Keller Williams. I mentor new and seasoned investors. I have an investment team, and we focus on helping investors from New York and up through New England. I do consulting, and am licensed in Massachusetts and New Hampshire.

Gary: It sounds like you’re really leveraging your license if you’re working that wide range of territory and doing some consulting. I like to teach people to think of a real estate license as an asset that gives you the right to generate commissions and other streams of cash flow in multiple ways. Could you give us some examples of how you leverage your broker’s license?

Kelli: If you have investment groups in your areas, I highly recommend you attend investment meetings. There’s a Real Estate Investment Association that is throughout North America. I primarily obtain and retain most of my investors from that group. I attend and make personal connections.

I actually fell into doing investment real estate when I started a little over 10 years ago. I met this young man who came in asking questions on houses. I found out he did some contracting. Lo and behold, now he’s 30 and I got him started on investing. We’ve done about 250 houses together. I hunt properties, search foreclosure. I call myself a catalyst. I put investors and properties together. I was doing offers, $30,000, $20,000, $50,000 and established a core business of individuals and partnered people.

Originally, I was an HR director for a Fortune 500 company. Then I got my own security business. So I had the business background and naturally fell into the business aspect of real estate. It was a natural progression into meeting investors, partnering with people, getting to renovations way before the DIY channels. All that happened over time. Right now I have about 60 cash investors. I mentor and meet them, and that’s my primary core business.

In six years I have not done a listing appointment. My investors refer me to their parents, their friends, their cousins. And that’s awesome referral business. Because of capacity, I now have buyer agents that I refer to them also. So it’s just not investments. You can actually establish a business of referrals.

So that’s how I’ve developed into where I am today. I am a top 2% named by Keller Williams International for New England as one of the top agents. And ironically and amusingly—it’s kind of a joke where I do $50,000, $60,000 offers—but my amount of transactions are phenomenal which makes me the top 2%. I may have a property that I purchase for $50,000. My investors renovate it, and then I list it for $180,000. I get the front end purchase, and also get a buyer agent bonus. Plus the commission.

And when those investors decide to list their $500,000, $600,000, $700,000 property, I get to represent those transactions as well.

Gary: You just mentioned a couple of key things. The referrals. I have always gotten way, way more referrals from my investors than I ever got from other occupants. The second thing is while 95% of agents are going after the same mass of people and competing toe to toe, when you focus on investors, you still get the owner-occupied listings. But you don’t have to compete for them because they’re laid in your lap through referrals.

Kelli: That’s absolutely correct! Here’s an example I will close on Friday. I got the property for $75,000 from my investor. I’ll get that $1,875 commission on Friday. We’re wholesaling it for $90,000 to my other investor and they’re partnering. For the second transaction I will get $5,000. And then because I partnered them, I get a $1,500 buyer agent bonus from the second investor. So on Friday with a $75,000 property, Gary, I’ll make $8,375.

Then after they renovate the property, I will get to list it for $325,000 at a 6% commission.

Gary: Wow. That’s how you do the business! In the last five days you’ve covered four ways people can leverage their license with literally one property and two investors. So one of the things I want to point out here is that you’re building the relationship up front. You help investors get the properties on the front end even though it means low commission sales.

But then you get the listing on the back end when they go to flip it. A flip in my experience is always going to re-list because the flipper wants their capital back. It’s like a guaranteed listing, a guaranteed sale, right?

Kelli: There is some work to it. If you are an investor, I have to give you an ARV that I can sell. Because if I can’t sell the property for what I say at the back end, they’re never going to use me again.

The other thing I do is multi-unit portfolio packages. I went to an auction on the street. A gentleman said, “Kelli, you know what? I don’t what to be a landlord anymore.” And he gave me the whole 7 multi-family packages to sell. I mean, there’s multi-units, there’s single families, and there’s flips. In today’s world a lot of people are taking their self-directed IRAs and instead of buying stocks, they’re buying real estate. That is the new retirement plan.

When I get them a multi-unit and they’re happy, they’ll say, “Hey, my brother’s looking to buy a home.” It’s just an amazing referral basis once you win an investor over. They can’t stop talking about you. Of course you have to make them successful with cash flow because they have carrying costs. But even multi-units, when people are acquisitioning and want to buy and hold, they’re still going to refer you.

And then what happens is I always say, “Whatever I buy you we’ll have to sell one day.” Some will build a portfolio, some will hold them. But they’ll also refer you. And that’s what this business is. If you take care of them and understand they have carrying costs, they have cash flow; they’ll take care of you all day long.

Gary: You’re chock full of good stuff tonight. This is one of my favorite interviews.

Kelli: I hope I’m not jumping around too much. I’m just trying to tell you that it’s a great business. I’m happy Keller Williams has started offering this training for our agents, because it’s usually a luxury. I signed right up for your class and went to Concord, Massachusetts. I’ve been very successful at this and love what I do. But someone can either take the long way like me, or quite frankly for the cost of the course, you can cut it down substantially and hopefully be where I am sooner than later.

A lot of realtors are afraid to work in investing and ask me about it. It’s like anything else when you first start. You get out there, you try, you listen and you join investment groups. That’s the key. If there are any groups around you, just go. Because of that, I don’t have to pay for any of my leads. Just maybe $100 a year for the investment group membership.

Gary: I would consider your 10 years the fast track for self-educators. It took me 29 and half years to get where I am.

But back to what you were talking about with the flips. For me this has been true across the board. When you sell homes, 30% of the time you get them back as single-occupant buyers as well. From that one transaction you described, you’re not just going to make money on the wholesale transaction. You get paid twice then you get paid again when they later sell the property because you’re the listing agent. And 30% of the time, Kelli, you’ll get them back as for their own personal property transactions.

You can potentially get paid four times on one property. The fee you charge the buyer on the wholesale side. The commission from the sale. The fee from selling to a partnered investor. Then once the rehab is done, a fourth payday from the resale commission.

And potentially the end user buyer—the family who’s ultimately going to live in the house once it’s remodeled—could even be a fifth commission. So kudos to you for being creative and figuring out how to combine wholesaling, flipping and traditional use of your license.

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Note: I am not a lawyer. I recommend that you seek the advice of a competent lawyer when deciding on which entity to use when growing your real estate empire.

What is the best way to hold Real Estate? I have purchased a lot of properties and most of them have been held in LLC’s. I have had as many as 20 properties in my own name too. I have clients who hold property in S corporations. I have clients who hold property in trusts. I have clients who hold property in partnerships – limited and general

The two easiest ways to hold property are in your own name and in an LLC. LLC is short for Limited Liability Corporation. Liability to you personally is limited because the underlying asset, your rental property, is held under a tax identification number that is separate and unique from your social security number.

So, other people and entities including government entities, particularly the courts, see an

LLC as another individual. It is taxed separately at the state level and any tax burden can be passed through to you personally at the federal level. Then you would include any income or loss of the separate LLC on your personal income tax statement.

 

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I am a big fan of using cash to buy real estate. It gives you more advantages than any other method of acquiring property. I know the entire theorist who insists that you never touch principle. If you put things into context, what they are referring to is using principle for non-investment purposes. Deploying investment capital to build wealth and income is a

good thing not a bad thing. Deploying investment capital to purchase doo dads for personal use is foolish.

 

Now for one of the other pearls of wisdom. I am going to encourage to not really owning real estate. That’s right. You will control it without actually owning it. It is far better to own companies that own real estate. Read on.
 

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There are a lot of ways to buy Real Estate. Two are the most basic. The first is what Icall Turn Key. Buy the building the same way you would buy your own home – make a down payment and finance the rest with a mortgage and note. The second way is to buy wholesale, remodel and sell for profit or rent and refinance. That is what I learned from RER and it works at the end of a real estate cycle is approaching when there are more foreclosures.

In my experience, in a slow market, buying turn key is the preferable and traditional way to purchase property, especially if you are buying a multi-unit property. The banks prefer it this way also. They like the fact that the property doesn’t have to or hasn’t had to go through extensive remodeling. They like the fact that\ it is already in use and is making an income.

You can also get more favorable rates and terms this way. I know it’s not very glamorous and it runs counter to what seen on late night television. Yes you can buy real estate without using any of your own money but it is more expensive that. It’s harder to get a good cash flow. The banks certainly don’t like it and when they’re offering loans at ridiculously low rates, why take advantage of it. Plus it’s easier to have a positive cash flow when you buy the traditional way and you don’t have to make crappy offers on crappy properties. If you are reading this book then you will also want to read “Rental Profits without Pain” an   how to manage your properties for profit once you own them.

If you are interested in flipping or wholesaling properties please read “FlippingFor Profit Without The Risk” and“Wholesaling For Profit So Everybody Wins”. Please call me at 1-800-931-2605 or email Gary@WinReatyAdvisors.com. You can also  learn more by visiting MyInvestmentServices.com to get these books and others and sign up for our instruction courses where you get hands on training!
How I Did 110 Transactions A Year With NO Assistants…And You Can Too… Get My Case Study Now>> https://www.myinvestmentservices.com/gift/ “Guiding You to Massive New Wealth in Real Estate in 1 Year or Less Guaranteed!”