In this podcast we discuss the a real situation of someone planning for retirement with limited access to funds.
We go over the pros and cons of selling your home or starting the process of a Reverse Mortgage. We break down some preconceived ideas that Boomers and Seniors have about Reverse Mortages that are simply not true.
In this podcast we also provide you some actual steps you can take to improve your current situation without having to get a part time job or take out a loan.
Stay tuned and leave a comment below with any suggestions you might have on this topic.
We go into specific details and example of when you should take an early withdrawal from you Social Security Benefits, when you should take a delayed withdrawal from your Social Security Benefits, or should you retire at the legal age.
We go over all the pros and cons. Stay tune and if you need help with any financial planning & assistance, Get Started Today!
In the video I use real-life example of how I dealt with a career crisis. I enjoy using metaphors when teaching, and in this video, I use the example of a Pilot losing its engines and making quick decisions in order to safely land.
The ability to take out a Reverse Mortage Line of Credit is under attack. This is something that is not being advertised and if you do not act now, it could be gone forever. Find out how to take advantage of this valuable program scheduling a call with one of our counselors.
Most of us know that you can buy a brick & mortar business, but Baby Boomers may not be aware of the resources available when buying an online business. In this interview, we talk with Empire Flippers about how Baby Boomers can purchase an online business that is already making money.
Want to learn more about Empire Flippers, fill out our brief form today.
1. Affiliate Marketing
Considered to be one of the most effective ways to make money online, affiliate marketing essentially means promoting other people’s stuff on your website.
The Amazon Affiliate program for example, lets you promote Amazon products in a variety of ways, which entitles you to a percentage of any sales they make to people coming from your site.
2. Sell Banner Space
If your traffic levels are impressive enough, you can sell banner space to other companies within your niche.
It’s as simple as reaching out to them with offers, or setting up an advertising page with all the details. You can also add placeholder banners that invite people to contact you in order to “Advertise here”.
3. Write Product Reviews
If your website or blog revolves around a particular industry, there are likely software or hardware products that you can review.
Reach out to the companies behind those products, and offer to review their stuff in front of your large audience – for a fee. The company in question may even provide you with the software or hardware free of charge.
4. Pay-per-click (PPC) Ads
As the name suggests, a pay-per-click ad entitles you to money every time one of your visitors clicks on a banner.
To cut to the chase, your best bet here is Google Adsense. Google lets you specify the type of ads you want shown on your site, and then gives you the code to insert into your sidebars and content. They will then pay you for every click they get. It’s as easy as that.
5. Sell a Digital Product
While selling your own product may not be as immediately simple as the rest of the items on this list, it has the potential to bring in a lot of revenue over a long period of time.
For example, you could put an eBook together (which is essentially a blog post on steroids), and make it the focal point of your website. Depending on your niche though, the possibilities could be endless.
6. In-text Ads
Don’t want ugly banners cramping your site’s style? In-text ads may be the way to go.
By signing up with a popular in-text ad company like Intextual, certain words within your content will be automatically hyperlinked to relevant websites. Visitors who hover over the link get a preview before they click, so it’s often welcomed as a relatively safe and noninvasive advertising process.
7. Become a Consultant
If you’ve been harping on about a subject for a number of years, you may be considered as an expert in your field.
If that’s the case, you could begin offering professional consulting services within your niche.
For example, if your blog revolves around health and fitness, you can charge for personalised diet plans, workout schedules, and so forth.
8. Sell Courses
If you’re enough of an expert to consult, you’re also in a position to create and sell online courses.
You can pre-record them and sell them as downloadable files, or you could have them hosted somewhere, so you can charge your audience for access.
Zippy Courses is a relatively new yet popular way of creating, hosting, and selling online courses through WordPress. Although Shopify’s Mindflash app also gets the job done.
9. Host Live Workshops
Don’t think your audience will go for pre-recorded courses? You might want to try live broadcasts instead; where you can teach, interact with your audience, and answer questions.
You can host live webinars and workshops through free platforms like YouTube and charge your audience for access. You can also charge companies to sponsor your broadcasts.
10. Start a Job Board
This one may not work for everybody, but If your website possesses a thriving community in the right market, a job board could rake in the cash.
As an example, the Pro Blogger Job Board – the go-to job board for budding bloggers – was started by Darren Rowse after his website Pro Blogger soared to digital stardom.
11. Auction Your Website
Looking for a quicker buck, with none of the long-term stress of managing a growing website? You might want to consider selling your web property altogether.
People regularly pay good money for websites with potential, and EmpireFlippers is a great place to start
If you watch HGTV, you see plenty of people making money flipping homes. Have you ever wondered if it’s as easy as it looks on TV? In this interview with expert house flipper Joseph Smith, we find out the real story on flipping homes.
Interview 1 – House Flipping: An Insider’s Interview with Joseph Smith
Dan F.: Welcome to the first episode of our interviews. There’s been a lot of interesting talk lately about home flippers and the profit they can generate, which has caused a lot of boomers and seniors to investigate house flipping to know if there is a possible solution for increasing their income.
So, we decided to get in there.
There are a lot of house flipping seminars you can go that are real “rah-rah sessions” that tell you all the good things about flipping homes and how you can generate millions of dollars.
What we decided to do was to take another look at it and get down to the nitty-gritty of the industry. It turns out, a lot of home flippers decided that they really don’t want to get involved in the actual details of interviewing a seller, then negotiating a house, and putting it into contract.
Many people, instead, choose what they cleverly to call “ a buyer,” and today we’ve got of one the best buyers in the country. His name is Joseph Smith, and he has worked for as many as 5 flippers at a time buying homes. He’s going to talk to you today about the nuts and bolts of this industry.
Hey Joseph! How are you?
Joseph S: I’m doing well. Thanks, Dan.
Dan F.: Good, good. Do me a favor and give us a little bit of a background on what you’ve done about buying and flipping homes in the past.
Joseph S.: Okay! Looking at the past 12 months, I put on a contract on about 21 homes at an average of about 70 percent of their retail value—less than whatever it costs to get to that retail value, which we call “the estimated cost of rehab.”
Dan F: So when you say that you went out and bought 21 homes at 70 percent of the retail value, what is the retail value? Is it sort of an AVR or ARV?
Joseph S.: Yeah! We call that an “after-repair value” or an “after-rehab value.”
What we do is go into a market and determine the value of the home, based on the comparable homes in the area, in the same year, property size, square footage, bedrooms, and bathrooms. We look at what it will take to bring that home back to fully rehab value.
To get that number, for example, I looked at a 3 bedroom, 2 bath house that’s 2,000 square feet recently sold for $400,000, in San Diego. We are talking with somebody who has same size of house, probably the same plan, probably same builder back in 1970. That house needs $40,000 to $50,000 extra to get to that $400,000 number. So when I say 70 percent less rehab, it means 70 percent less than that $40,000 to $50,000 it took to get to $400,000. Does that make sense?
Dan F.: Okay, yeah sure. We will talk about that more in a minute. But before then, let’s talk about how you get these prospects. How do you find people who have homes that are less than market-worthy and that you can buy at discount?
Joseph S.: Well, the franchise owner spends a lot of money with their respective franchise groups in developing these leads. They use primarily direct mail campaigns and target people who probably have lot of debt, people who have a good loan to value rate so they have the equity in the home. They take homes within a median range of value. I’m not exactly sure how they do it, but they spend a lot of money doing it. They buy bus back [advertising], or ads on benches, and in some markets, they buy TV spots. They do that a lot now. They even buy billboard campaigns. So all those leads go into a system that eventually makes my phone ring.
Dan F.: Okay! So basically what you are telling me is that you work for a group of people who are part of a national franchise, as opposed to individuals going out to do their own thing. In these franchises and groups, they have a kind of marketing provision, leading generation provision. They drop direct mail; they put things at the back of buses and maybe billboards or things like that to actually drive a phone call to you, is that right?
Joseph S.: Right!
Dan F.: Okay! Is that normal? Is that how majority of the people do it, or is that unusual?
Joseph S.: I don’t think the majority of the people can do it because of the overwhelming cost. I mean, the cost-per-lead is almost $1,000, and you can get that over many franchises.
Dan F.: So! Just getting that phone call—because of all the advertising that’s involved—costs $1,000? Correct?
Joseph S.: No! Not just the phone call. The phone call itself is probably $400-$500.
Dan F.: You and I talked prior to the phone call, and you mentioned that in addition to those types of leads that are generated by the franchising company, they are also expected to generate about 50 percent of their leads on their own. Is that right?
Joseph S.: Right! Right! The individual franchises are expected to go out and generate their own leads. They call them, well I don’t know what they call them, but they do it by going out there, finding homes that they believe are not in the best shape. I always thought that to be kind of insulting: Knocking on a person’s door and saying, “Maybe I can fix your home and take a discount on the sale price.”
They are expected knock on doors, and have relationships with relators, brokers, and other investors. A lot of times, investors will buy from other investors.
Dan F.: So, basically what you are saying is that they are home-grown leads that maybe run around their neighborhoods seeing homes that needs to be repaired, maybe knocking on their doors and saying, “Hey! You need to sell your house to me at a discount,” correct?
Joseph S.: For example, when I’m going on appointment for some franchises, I am required to go round 10 or 15 houses and hang door hangers on the homes that I thought might be the kind to explore for this process.
Dan F.: So I’m getting the indication that generating these leads can be really tough and pretty expensive.
Joseph S.: Yeah, it can be very expensive if you don’t do it right.
Dan F.: So in your case, you are working primarily in California. On average, what was the cost of an actual sale if you took $400-$500 per lead? What was your close rate?
Joseph S.: Well, that depended on the market, really. I primarily worked in San Bernardino in Riverside county markets. I did some in San Diego and Orange County. Now, the more expensive the home, then more expensive the cost per deal was. So, on Riverside County, you can count on an average of $6,000 per deal transaction, but if you are in San Diego or Orange County where the houses are twice the price that they are in Riverside County, you could well expect the cost of acquisition to be $12,000 to $15,000.
Dan F.: Okay! So right after that you have to cost $5,000 to $15,000 just to acquire a single customer, right?
Joseph S.: That doesn’t even involve all the other costs included, like franchising fees, paying me, and closing on the deal, if that’s the route they chose to go.
Dan F.: Okay! The reason why I’m really trying to home in on this is those “rah-rah sessions” on the weekends that make it look like they buy the house for $300,000, they sell it for $500,000 and they pack up $200,000. It’s far from that, correct?
Joseph S.: Right! And I love the franchises I work for. They hire me additionally because they don’t know anything about the business. They just signed up and so the smart thing to do is to hire someone that has done it a couple times.
DAN F.: So again, we want to get to the outline/anatomy of an actual transaction in a minute. But take me through the process. Once you get that lead, how do you actually make that appointment? What do you do to make the person to allow you to come out, look at his house, and give him an offer that you know is lower than what he is expecting?
JOSEPH S.: Well! From the start, when my phone rings, I have someone on my team whose job is to answer the phone. He is ready from the script provided by the franchise that basically says that we are discount buyers, that we don’t pay for retail but we’re going to offer them cash now. Pretty much anybody with a heartbeat, we will try to go out and see so we have a really good success rate. Once we’ve gone out to the home, we sit with the homeowner for an hour or so and just try to figure out why they called you. There are some reasons they will take a discounted rate, instead of going to the realtor, or renting out the property, or waiting to sell it for full price and fix it up themselves. Nobody wants to lose money so there is a reason why they called us and our job is to try to figure that out.
Then we will walk through the property to figure out what it will cost us (if maybe their roof was leaking or maybe their kitchen needed a rehab) in order to get to that ARV number we were talking about. I’ll need to show them pictures of other houses on their street and why they sold for $400,000. I’ll need to show them more like, “Look at this kitchen and look at your kitchen. This is what we have to do in order to get that number.” Then we can tell them it’s easier you do it yourself or this is the number we can get to you. It’s always shocking to them when you sit across the couch and say, “Your house needs $75,000, in rehab costs in other to get to the number.” They already thought the house is worth more. It’s a bit of a shock and a lot of times they don’t take it well. They can be a little tender at times.
DAN F.: So! How would you get that presentation without literally getting you another house?
JOSEPH S.: Well it comes with that first hour when you are sitting there building rapport with the customer. When you ask them why they are selling it with us and listing their options and being honest with them. I tell them, “You can sell this house on the real estate now probably for much less, you can sell it to me, or you can spend the money to rehab it to get the maximum value out of it.”
I get to know why they are selling it. A lot of times, it’s an emergency situation like they are leaving town. They needed the cash for one reason or the other. This isn’t the same situation that every homeowner is going to be in. It can be some kind of need that they need to get the cash now. So you sit there talking with them for about an hour building that rapport/relationship with them so when you do drop that price on them—which is sometimes half of what they are thinking—you’ve hopefully built up enough rapport to get you another house.
DAN F.: So I’m getting the sense that there is really a lot of selling going on in this presentation. I mean it’s a lot more than just walking into the house and determining that it needs $30,000, of work and that the normal house in that area would sell for $300,000 if the work was already done. So you have to offer the $30,000 less for the repairs, then you are going to make a profit because you are going to offer them even less.
So it’s not like you are going to say, “Well, there’s $30,000 worth of repairs so I’m going to give you $300,000.” At some point, you are going to offer them close to $250,000. At that point, how many people on average accept your offer? How many appointments do you have to go through before you finally get someone who says yes, or goes and signs the bottom line?
JOSEPH S.: Well! I can cover a really large area. Sometimes I can have 20 appointments without getting anybody to sign a contract. But on average, the 200 appointments I’ve gone on, I gotten somebody to sign about 1 in 12 appointments. So it took me a dozen people to get one deal.
DAN F.: So you went out and essentially sat through this process 12 times just to get one deal?
JOSEPH S.: Right! And I thought that’s really better than the company average. If you talk to many people, they went through a hundred appointments before they got one. I know a guy that went through 50 appointments before he got one. I was really fortunate.
DAN F.: The reason I want to emphasize on this point is because this is what they really never talk about at these seminars. They just say, “Go find houses and either buy them yourself and flip them or turn them over to a wholesaler.”
They never talk about what it really takes to do one of these transactions. So you’ve got to be willing and good at it to get 12 of these calls before you actually get one. Then if you are not good at it, it can take you a lot more than that. If it’s taken you more than that, then your cost for each transaction is increasing like crazy, isn’t that right?
JOSEPH S.: Right! It’s far beyond coming over to one house and saying, “Look, that house over there was sold for $400,000. Here’s what I think the rehab’s going to be.”
This is part 2 of our interview, if you have not seen part 1, please CLICK HERE
Have you ever considering flipping homes, do you think it would be an easy way to make money. If you are a baby Boomer and would like to know more information about flipping homes. We have an industry expert who specializes in flipping homes.
Video Transcript Follows:
Interview, Part 2 – House Flipping: An Insider’s Interview with Joseph Smith
Dan F.: Can you take us through the course, the outline of a typical fix-and-flip transaction? You’ve got some houses, just pick one that you’ve have worked with.
Joseph S.: Yeah, I wrote down an example here. I had a property in Riverside not too long ago that I purchased it for $260,000. It was easy to estimate the value because it was in a recent track development. The property wasn’t too old. It was built in 1990s so a lot of them were identical. I mean you could see 10 to 12 of the exact same houses just around the corner within the same area. That’s always important to determining value.
Not only could you have value change within city, obviously, but you could have a change of value from across the street. So it is really difficult to make sure that you are right on your numbers. If you were wrong on your numbers and you wrote an offer, you would be locked in that offer, pretty much. So you can lose money on a transaction if you don’t have the right training in the MLS system, in home repair, and all the other costs. Because there is one more cost and I will go over that then just the purchase price and the rehab cost. Again, I had a property I put under contract for $260,000, and the value I had was about $375,000, which turned out pretty close.
This particular franchisee wanted to actually fix and flip the house, which means he actually had to close on the property. There was an initial closing cost for $9,000, the cost of repair was $25,000, and as I learned, the rehab cost. You always want to be a little heavy on your rehab costs because you go into a property and not fully estimate them pretty carefully. You can pull back the carpet and find there are stains on the hard woods that you have replaced. You can find a lot of heavy repairs that you didn’t necessary see right away. This particular closing cost was for $25,000 and those were pretty minor. Three 3 months later, the house sold for $350,000. So I was a little high on $375,000, but I think the franchisee wanted to get it out quicker. I think you if you hold the property longer you can get the higher number, but that relates in the more holding cost. The holding cost totaled about $2,000 worth of HOA fees, water, insurance, and things like that. The second closing cost, including a relator fee, was much higher at about $16,000. I was paid $5,000.
DAN F.: – The second closing cost for the person who actually sold the house to the eventual buyer who is going to live in the house. So in your case, you have closing cost when you buy it and you also have closing cost when you are selling anything?
JOSEPH S.: Right. And then this franchise that I worked for they required a fee on the transaction and their portion of that was $7,500. So for $260,000 purchase, it actually cost about $335,000. So they only netted about $20,000.
DAN F.: How long was the project from the time that you actually put it on a contract to the time that you resold it?
JOSEPH S.: It was 3 months. Oh actually there was time before when I put it on a contract before the initial owner moved out. So it took about 5 months from when I put in on a contract till he closed the final last round.
DAN F.: That’s a pretty low return on investment for that kind of risk, don’t you think?
JOSEPH S.: I do, but there are other ways the franchise can limit its risk in this.
One is wholesaling a property. So in $250,000 purchase there are lots of investors out there who will pick that property up for about 75 percent of its value. So if the franchise was new, they can pretty quickly assign that contract without even closing it to about $275,000. So they can make a quick $10,000 or $15,000. That’s not including the franchise fee because they still charge a franchise on wholesaling and they still have to pay me. So they can take a lot less money quicker on their first transaction if they like to or they can gamble for the bigger money by doing the rehab themselves and double closing.
DAN F.: Ok let’s review it a little bit. This wholesaling assignment — what capital is involved to do that? You’ve got the same property, you are making exact same offer, you are putting up a certain amount of capital. At that point is that is that the total amount of capital that is involved in the transaction for the franchisee?
JOSEPH S.: Well no. When you open an escrow on the initial transaction, so when I put a home on a contract that we know the franchise is going to assign, they have to put up an earnest money deposit. So that when we open the escrow, which is the very next day, that franchisee has to put up $2,000 or $5,000 to open an escrow. And that money is held till the escrow closes. When the new investor comes in and basically meets them and buys the contract for whatever they’d agree to which sometimes is up to 75 percent and sometimes high as 80 percent of the value of the home, depending on how much that new investor wants that property.
DAN F.: Ok, but the earnest money deposited is really part of their actual deposit to put the house under the contract. I think what am getting at is that it sounds to me like there is a huge difference between the risk involved with just simply going out finding a property, putting it into contract and then immediately assigning it to a wholesaler. Or on the other hand, actually closing it, having to come up with the money to actually close or repair it, coming up with the money to actually hold onto it during the time that you are doing that, and then placing it back on the market. Am I describing that properly?
JOSEPH S.: Right. That’s not the only capital required because in addition to that in the background you are still funding your next marketing campaigns. You are still going in a lot of times that’s not the only property you have under contract. So even if you are taking the less risky way of assignment and you are only putting up $2,000 to $5,000 per deal, you probably have 2 or 3 deals in progress, in addition to continuing your business. I hope I answered that correctly?
DAN F.: I understand what you saying. So let’s assume that someone is interested in getting into this business and they want to start out with as little risk as possible. So that means they just want to go find and put houses under contract to be assigned to a wholesaler. What do you believe would be the minimum amount of capital that someone would need to actually successfully get into this business and get to a point where they are actually making money before they run out of money? Because they don’t have enough to actually go buy the next house or they don’t have the money to support their marketing campaign?
JOSEPH S.: You reminded me of something as well. In addition to the assignment fee that you’d give to an investor, you also have to figure out that $6,000 to $15,000 custom acquisition is still included in that. So I put $15,000 again after you pay me and you pay the franchise fee and you still got the custom acquisition. But to answer your question, I have seen hundreds of franchisees in this business and a lot of them are undercapitalized because for one they think they are going to buy a house right away and is quite impossible that you don’t buy one for a whole year. So you have to be able to capitalize your business for a year and you have to be able to live with no income on the private side for up to a year. And not to mention, in funding if you are going to rehab your property or if you are going to have several houses on a contract all those take more capital. So, I wouldn’t do it for less than $100,000 or $150,000 in liquid cash available.
DAN F.: So you think that at least $100,000 to $150,000 in capital is necessary to pretty much assure that you are not going to run out of money before you actually start to create transactions that are going to start returning your investment?
JOSEPH S.: Yeah, if you do it right they will start returning investment
DAN F.: So, we’ve talked about basically a lead format where you are generating these, what about the ideas of going to the auctions, you know, the bank auctions, foreclosures, things like that. Is that real or is that just that hype that we hear?
JOSEPH S.: It is real, but you are competing with everybody else out there. All those investors that you have been assigned to or you end up selling to on assignment or even on a rehab, those are all the guys that are standing at the court house steps willing to pay 90 percent for that house. So this business model can’t survive on a 90 percent purchase. It never will with both transaction costs and everything else. We have to buy at 65 percent to 70 percent, 75 percent at the top end.
DAN F.: Less repairs?
JOSEPH S.: Right. And that’s not going to happen on a foreclosure. No bank will agree to that. And doesn’t happen on probate sales and everywhere else that people are trying to get leads from.
DAN F.: So these advertisements of companies that are telling you to buy a list of foreclosures and it will make you rich, that’s a pump and dump; that’s a hype scheme?
JOSEPH S.: Well the list of foreclosures is not a secret. Anybody can buy the list. So you are competing with everybody else who has mailed that person or phoned that person. And you are probably not the highest offer, especially in our case. A lot of times if I was competing against another company or individual investor who didn’t have the same overhead that my franchise had, I would lose every time because that franchisee have to account for me, their franchise fees, and everything else included.
DAN F.: I kind of zero in on this because I think this is really one of the most important aspects of the hype that surrounds this business. Everybody thinks they can go get a foreclosure or they can just talk to a local bank and the bank is going to sell to them at a discount. They think they can drive up and down the street and see some house that is in need of repair and just knock on the door and the person says, “Gee, I’m so glad you came by today because I was waiting for someone to come take my house at a discount from me. Essentially that’s not realistic; it is really a lot of hard work and there is a lot of money that goes along with that hard work to actually locate those individuals who might be prospects. And in order to do that, you’re taking a pretty big risk. It’s not like a sandwich shop where you put up a sign, you buy some inventory, you start making sandwiches and people start coming in the door and giving you money. In this case, it could be months and months, maybe even a year before you get any kind of return. Is that right?
JOSEPH S.: That’s right, and all the while you are capitalizing the next month of leads that will be coming that are vital to your business.
DAN F.: Okay! Good, that’s depressing news. I think in this case this is exactly what am looking for. I am looking for the answers that tell people the reality behind each one of these types of opportunities. And if someone really has the ability and the temperament to actually go out and find these properties and talk with the people and deal with the people and has the money to kind of back them up as they are doing it, this could be a pretty good opportunity. But if they don’t have all of those things in place, it’s probably not the right opportunity for them. Would you agree with that?
JOSEPH S.: – If they have the right temperament, the money and the skill, they probably already doing it. So, it can be done if you have the time and the patience and skill of selling. And you have the financial means to sit back for a while and learn and buy enough leads to do it. But it takes the right amount of money and temperament, I suppose.
DAN F.: – So one last question before we wrap this up, tell me what you feel are the pros of this industry or this business model and what are the cons?
JOSEPH S.: I got a lot of windshield time, I wasn’t stuck in the office, the franchise seemed a little different. Well the pros is I have talked to a lot of franchise who like seeing a project done together and they like helping people. So for example I worked for a franchisee here that he bought a house from a woman who was in a pretty bad situation in her marriage needed to leave the house and we were able to get her the money that she needed quickly and get her out of that particular situation. We were able to to fix up the property and make a little bit of money. But the cons are, it’s a long process. You have to find the right deals and not to just sit out there waiting for you and it takes a lot of money to find those deals. And it takes some patience. It takes a skill or at least the relationships in multiple fields of construction, of escrow, of lead generation, of selling. You know you need to have that type of broad network in other to make it successful.
DAN F.: Yeah, I got it. Joe I really appreciate your time and I wish you lot of luck out there. I think we will probably get in touch with you in a few months to see how things are going. So thanks again, and we will talk to you soon.
Thanks for tuning into this week episode I hope that you find it informative please check out the note section so that you can get more relevant information and links that you might find interesting. Also, if you like what you’ve seen please subscribe so that you are up to date every week on what we are talking about please make sure that you like us on Facebook, that’s very important. I look forward to seeing you next week.
Click Here to start with Part 1: House Flipping: An Insider’s Interview with Joseph Smith