Wednesday, October 1, 2014

The Significance of The Toothless Roofer

As the previous posting explained, Jack had networked with The Toothless Roofer. This moniker is not to poke fun at him. Rather, it is to share with you the power of networking. You never know who knows whom. So, who did Jack meet and what was the significance to our business? Before I get to that I am going to share with you how we got into wholesaling houses in Phoenix. This is important to lay some groundwork. Well, at least I think it’s important.

Shortly after Jack and I began in our business (2 months into it to be precise), we had more potential deals in the works than we could possibly fix and sell ourselves. So, we had to do something with them. But what? Well, the answer came to us in a lightning bolt. Well, not an actual one. No one got injured. What I mean is the impact was great and sudden. You know, … like a lightning bolt.

Phoenix, Arizona
One day Jack’s brother in Seattle called Jack and said he signed up for a real estate boot camp and the trainer was flying into Seattle to show him one-on-one how to flip houses. However, that isn’t actually accurate. You see, the course included the option to invite a spouse or a business associate. So, more accurately a one-on-two training. But, it’s called one-on-one so we will just go with that. 

Back to Seattle. Being Jack’s brother’s wife was 9 months pregnant, she had zero interest in being part of the action-packed, fun-filled, intense weekend. Wait…. was she 9 months pregnant? It may have been 8. Or, 8-and-a-half. I really don’t know for sure. Ladies are always up to speed on how many weeks, days and such until a child arrives. Men will be sitting around and the wife will say, "I feel a contraction, check this out." The guy will jump up, start packing the overnight bag, look for the car keys, grab his jacket and scream, “Get in the car! I am not having this baby at home!” Mom-to-be will calmly smile and say, “Relax honey. We are not leaving yet. They are still too far apart and not that strong”. Dad-to-be: “Are you sure? How do you know? Here, let’s time them. Never mind. Get in the car. We should just go in. Let the doctor decide if it’s too early. Seriously, I don’t what this baby at home! This is freaking me out!” (As he continues his nervous pacing around the room, wringing his hands, quickly walking back and forth with increasing anxiety….). Anyway, whether it was 8 or 9 months is not  important so we won’t dwell on it. 

So, this father-to-be called Jack to invite him to this weekend real estate boot camp. At the time, Jack was remodeling the few houses we had picked up and was up to his elbows in alligators with work. No, he wasn’t working in the everglades. That is just a way to say he was really, really busy. And, when Jack is busy he is best not to be bothered with nonsense like this. So, he told his brother to call me. Which he did. 

I went to Seattle. 

When I arrived there I stayed with Jack’s brother and his brother’s wife. The father-to-be was so calm and didn’t seem anxious at all about the birth of their new baby. He had a certain calm about him. I wondered if he was normal. 

The next morning we got up bright and early and drove to a motel down the way a bit. It was there we met a trainer named Jim Staples. He’s from Dallas. But, if you say “Dallas” he will quickly correct you and say “Ahlington”, which is really spelled “Arlington”. I know this because I have been there. He’s a true Texan and you can tell as soon as he starts speaking. But, more importantly, he is a master at teaching everything wholesaling. Jim has become a close friend over the years and we still work closely on investor education and real estate deals to this day. 

Jim Staples

While we were sitting there and reading and going through the manual on wholesaling, I had an “Aha!” moment and was quickly asking questions in rapid-fire succession. He told me to slow down and we would cover all my questions. After a few short minutes I had forgotten this instruction and began asking him 100 more questions, you know, like a young kid discovering something new. Due to this exchange, he gave me the name “WildCard”, or as he says, “WahldCahd”, and still calls me that to this day. I think it’s considered a positive nickname…

So, what got me so excited? He told me that we could get a property under contract, open escrow, find a buyer, assign the buyer or open a second escrow, close and get paid without using our own money. And THAT is what it means to flip a house. That wasn’t the exciting part. The exciting part was that we had a property under contract. (Remember, Jack was busy with the remodeling of the other 3 houses we had purchased.) And, all we needed was a buyer. So, Jack called Joe and told him about the house. Joe liked the house and bought it. So, we didn’t have to take it down. We sold it before we bought it. Confusing? No. Wholesaling. I will write a future blog on why investors buy from wholesalers like me and the value we bring. If I remember. 

Bakerson's First House Flip - 2002
This brings me back to The Toothless Roofer. The investor/house buyer that his step-daughter worked for was “Joe". Yep. One and the same. Jack had gotten Joe's name and phone number from him. But, that’s not the whole story. You see, in 2003 Joe and his team purchased 47 homes from us. And, we always flipped the contract to him or did a double escrow so that we could use Joe's money to purchase the house and then the difference was our profit. Here, let me show an example on how this works:

  1. Bruce finds a property and signs a contract to purchase at $30,000
  2. Escrow is opened
  3. Jack introduces the deal to Joe
  4. Joe said he can pay $35,000 for the property
  5. Joe opens escrow on his purchase (there are now 2 escrows open - one with Bakerson as the buyer and the other with Bakerson as the seller)
  6. Both the purchase ($30,000) and the sale ($35,000) close at the same time. 
  7. $5,000 goes to Bakerson.

Isn’t that awesome? I think so. And it’s fun. And, investors love to buy from us. Why? They just do. As stated earlier, I will try to remember to write a future blog on this subject. 

So, why is all of this important? Well, two exciting things happened. Actually, more than two. But, I am only going to reference two here. 

One: a man from Dallas, er, Ahlington, met with me in Seattle to show me how I can flip houses in Phoenix. And, while in Seattle we flipped our first house in Phoenix. I was completely sold. That system works. If a guy from Texas can meet me in Washington to flip a house in Arizona, well, I will believe him. And, believe him I did. We still work with Jim today. He is a wonderful resource for us. 

Two: we learned the power of networking. In other words, you never know who knows whom. Do not underestimate the power of networking. Do not be judgmental. Do not be slow to ask, “Who do you know?” As already mentioned, we met Joe in the winter of 2002 through The Toothless Roofer. We still do business with Joe and his brother in 2014. It’s become a great business relationship. Another great connection. Just like Jack, networking is real. Networking is necessary. 

My next blog will be on the cases of disappearing AND reappearing family members. Seriously folks, I am not making this up. Some members appear to have risen from the dead. It will be entitled “Family Matters”.

And that is real estate in my corner of the globe.