Hi there, Moguls.
Apparently, you guys can’t seem to get enough of Mogul expert, Cody Sperber. We’ve had numerous requests to hear more from him. And we totally get that, Cody’s awesome!
So today, Cody is going to share with you his own personal story of how he made $15,000 in only 12 days. Now pay attention, because even if you aren’t new to investing, you will learn something valuable from this story.
Most of you are familiar with our Mogul celeb, but if you aren’t, check out Cody’s training call and other terrific lessons.
Now then, let’s hear from the great and powerful Cody himself…
What Had Happened Was…
Hi, guys, Cody here, thanks for having me. I have a personal story I want to share that I think will teach you some valuable lessons. So here goes…
It all started with a junky little house in Phoenix. The seller contacted me and explained that he owned a property but lived in another state. He obtained the house because his parents passed away. The seller further explained that he had been paying the taxes (and so on) for a couple of years and that it was now time to sell the property and pay off some debt.
I quickly did some research, gave him a call back and asked him his lowest price. He answers with the number of $30,000. I then agreed to physically go check out the property, so he had a neighbor hide the key.
I get there and the place is a complete piece of poo. However (as an investor), I continue my walk-through because I know a 4 bedroom/2 bath in downtown Phoenix might be a highly profitable deal. So I call the seller back, and our conversation goes something like this:
Me: I’ll give you $10,000 for it (thinking there is no way).
Prop. Owner: Great. How fast can you wire the money?
Me: Tomorrow.
Prop. Owner: It’s a deal.
Nice, huh? So, what can we learn from this? Well, let me knock it out for you real quick….
Kapow! #1
You can’t steal in slow motion (this sentence is much more effective if you also pretend like you are talking in slow motion as you say it.). Money loves speed and will not wait around for you to catch up.
I acted on this deal IMMEDIATELY. I sent the property owner the paperwork IMMEDIATELY. But then, the dude tells me he has a brother who also shares ownership. So then I have to draw up another contract and get it signed right away by both the brothers.
After sending the paperwork, I realize that it looks like I am purchasing the property for $10,000 from each brother (a total of $20,000). So then, I have to send an addendum for each bro to sign (agreeing that the total price between the 2 contracts is $10,000).
Okay, so pay attention here…
Although the deal hasn’t actually gone through, getting that paperwork done gives me control of the property. With the contracts signed, I gain what’s called “Equitable Rights” and I can put the house back on the market. This legality is worth about $30,000-$40,000 retail.
So then I go to open escrow and my Title Manager lets me know I have another problem. There’s no paperwork to prove the brothers own the property. The parents never went through probate correctly.
So, what is my point in telling you this? Well…
Kapow! #2
When you’re in a hurry, small mistakes can cost you big. Watch out and double check the details.
So anyway, how do I fix the problem of no proof of ownership for the Pop bros?
I IMMEDIATELY find a Phoenix lawyer through referral. I call him up and ask him the quickest way possible to prove that the parents gave the right of ownership to their sons. The lawyer did an awesome job and guided me to find the parents’ certificates of death through the use of public records…
I faxed those documents over to him and he filed the necessary paperwork to make the brothers the legal owners of the property.
What is my takeaway here? Well…
Kapow! #3
Confucius Says: He who’s willing to solve challenging problem gets paid.
After I had proof of ownership for the bros, I put the property back on the market for $25,000 (using mobile marketing). Within 5 minutes, I received a text from another investor taking me up on the offer. I let him know as a wholesaler, I insist on controlling the paperwork and needed $25,000 cash or hard money within 10 business days.
So now – wait for it – I have 2 escrows open at the same title company. The first one with the seller (the brothers) and another with the new buyer (the fast-biting investor).
Fast-biting investor turned around and sold the property to another investor for $34,900. So now this property has been flipped a total of 3 times with simultaneous closings.
And what’s the key learning from this? Well…
Kapow! #4
As a wholesaler, it’s best to always be in control of your paperwork on both sides of the transaction (buying and selling) whenever you can.
When you’re making $5,000 or less on a wholesale deal, it’s fine (and cheaper) to just assign your contract and get paid your profit as an assignment fee.
If you’re making more than $5K, it’s a good practice to set up a double closing (2 back-to-back closings) — or in this case, a triple closing… which keeps your profit in the dark from people in the deal who might otherwise have a hard time swallowing your profit.
So, what’s my final point?
Kapow! #5
Besides the fact that I have super hero investing powers…
It’s also a good rule of thumb that if you ever do a triple-play deal like this, make sure you’re working with an investor-friendly title company who really understands how to handle simultaneous closings on multiple “related” transactions.
Make sense? Now go out there and kill it!
Holler, Yo
Who else out there has discovered they have super hero powers when it comes to investing? What are some of your personal stories of transaction engineering and creative investing? Let’s hear em’!
Act fast on deals.
Conduct business with thorough paperwork.
Solve problems creatively if needed.
Control paperwork on both the buying and selling side.
Hire knowledgeable title companies.