Alright, my friends. Kris Krohn here. Welcome back. And today, I've got a
special treat because I've brought Jerry Norton here. And we're going to talk about
how much money you can really make in the game of wholesaling real estate.
If you're a subscriber, you're going to notice that today's video is going to be
different than some of the others because I wanted Jerry to share with us
one of his most successful deals that he's ever done, how much money he's made
on max. I want him to share the least amount of money he's ever made on
wholesaling. But most importantly at the end of the video, I'm going to have him
break down a very simple formula. All the time in real estate, people always
talking about "Crunch the numbers." Jerry has got the magic formula and it's so
simple that seriously, my daughter in elementary school can... It's like a
fifth grade math. It's 5th grade math. Hey, you can always go back watch it a couple of
times if you're a little get a little lost you okay. But this is
going to be a treat today because this is all about how you can make some crazy
money. And at the very, very, very end, we're actually going to show you how you
can access all of the best deals in the country right now for free. So, check it
out. Jerry, first of all for our viewers watching it, when we're talking about how
much money can you make wholesaling. Quick definition, what is wholesaling?
Well, wholesaling is not the same as fixing flip. So, I want to make sure
everybody's really clear. We're not talking about buy it, fix it, sell it.
We're talking about get a contract and a sign or flip your contract to another
investor. So, basically this is the in-between part. You find a really good
deal and then before you actually buy it, fix it, flip it and make money, you're
actually skipping that whole thing saying, "Uh-uh, I found it. I got a piece of
paper that says I have the right to buy it. And it's got such juicy profit. I'm
going to give it to somebody else." So, how much money have you ever made on
actually not even doing the deal dude? Just even like, "I found a deal, I gave it
to somebody else." Like what did you get like a $5,000 check? A $10,000 check? No, I
mean that's common. I mean, that's pretty normal to get a 5 or 10 thousand
dollar check in wholesaling. And I've done lots of those. But this one was a juicy
one. It was a $65,000 wholesale. Okay dude, hot dog. That's cool. Yeah, this is a really,
really fun story because it wasn't actually a residential property. It was a
commercial property and I'm not a commercial guy. It just kind of fell in
my lap. What happened was an agent that would bring me a lot of deals, they
brought me this deal and they say, "Jerry, I don't know how but I got this listing
from the bank. It's an REO. It's it's a bank owned property. And it's
actually this retail building." And I said, "You know what? I'm not really a
commercial guy. I don't really know that. I just do houses." And he says, "Yeah, but I
got it for a great deal. It was listed previously and like another MLS.
So, it's not even in the right place. No one really saw it. And here it is. Like I
got it. You got to check this out." So, I go to this property, I'm like, "Okay. Well, you
know, I don't really know how commercial works but let's just get a contract." And
the agent said, "I need a $10,000 earnest money for you to get the contract on
this." So, I said... Usually I said, "Okay, give me a couple days to get you there
earnest money." Okay? Because I didn't want to I don't
want to put that money down right now. Okay. -Actually, I'm loving hearing this because,
commercial fell into my lap. And then I made crazy money on it.
So, I'm loving where this is going. -Yeah. -So, you didn't even want to come up with
the ten grand. -I was too scared, yeah. So, I got a contract. I have to put this
earnest money. I got you know a couple days. Here's what I do: Right next to that
building is an identical building like same color brick, same size, everything.
And I'm like, "I wonder if whoever owns that building would want this building."
So, I walk in the front door and there's a psychologist. I just guess. There's a
couple retail, you know, things. And he was a psychiatrist. And I go up to the
reception and I say, "Hey, so I'd like to talk to the owner of this building. Um,
you know, I got a contract on the building here next door." And she goes, "Oh,
you know that's Dr. so-and-so. Here's his card. Want you call him." So, I call the guy.
He had been trying to buy that property for a long time. And just couldn't put it
together. You know, didn't happen. -Sometimes in real estate, it really comes
down to... We know that it's going to be available but it's not. We know it's
going to be available. Sometimes months goes by. We know it's going to be available but
it's not. And then there's this moment where it's available, you snatch it. -Yeah.
-And there was all these other people waiting for it. Like this guy. -Right. So, I
had the contract for 285, okay? So, I sit down with this guy and this was nuts. He
invites me into his office. And he's got this big cushy chair and he says, "Have a
seat." And I'm like, "Oh crap, if I lay down, it's all over. He's going to like
hypnotize me and take my deal. So, I'm sitting on the edge of my chair. And he goes,
"So, what do you want for the building?" And I said... You know, I'm thinking, he who
names the price first loses, right? So, I say, "Well, what do you want to pay?" He's
like, "Well, what do you want for it?" "Well, what do you want to pay?" And no one
wanted to put a number. So finally, I'm like... -Gold nugget, by the way.
-Yeah. Never name your price. Let them name their. Well, he wasn't going to. So finally,
I say, "385" Okay? And remember I got it for 285. And 385 was still a great deal. Like
he, you know. And he says, "No way. I'll pay... I'll pay... The most I'll pay for it is 300."
Here's what I do. I stand up I stick out my hand I say, "Nice meeting you, I'm out
of here." And he goes... This is literally he says,
"Whoah, whoah, whoah tough guy. Sit down, sit down, sit down."
And so, we ended up settling at... What's 65? -350. -350. Yeah, we end up
settling at 350. And I did a true assignments, right? Meaning, I just... I had
my contract. I told him, "Look, we're going to close in 30 days, I need a $10,000
earnest money like right now." -Okay. Now, why do they need a $10,000? -Because you
had it under the contract and you had your 10k earnest money. -So, I took his 10,000 which I
turned around and paid the, you know, the bank for my earnest money. So now, I
got nothing. Not a dime out of this thing. 30 days later, we go to closing, check for
$65,000. Just like that. -Dude, that is freaking awesome. And here's
what's cool about it: It's... A lot of times this business, it's just being at the
right place at the right time. And not afraid to get out there and get a
contract. Now, I had a 10 day due diligence on that thing. Meaning, if I
couldn't have find a buyer, I could have gotten out of the contract. -Yeah. But dude,
here's the thing that I noticed here. You are uncomfortable with commercial but
you said, "Let's just take a couple of days." You looked at the person next door
and you actually tracked them down and sat in her chair. You are willing to walk
from the deal when you didn't get the number that you necessarily wanted. Like
you did a number of things that take a little bit of gumption. That's the word I was thinking.
Some gumption. And dude, made the whole deal happened. You got paid $65,000. How much,
how many hours did you put in that whole thing? -Oh, I think, End to end? Five or six maybe?
-Five or six hours $65,000. Dude, I like making $10,000 an
hour. That's what I did on most of the deals that I do. That's freakin awesome.
-Yeah. -But listen in all fairness, let's go the other direction, right? It's not like
everyone has just overnight success without sometimes, licking their wounds.
-Yeah. What was the worst amount of money you ever made? Before we share
this formula. Because by the way, I'm telling you right now, what I do in real
estate, my mind, I go into... I get in get into some really complicated
calculations and how I do things. And the way that Jerry's about to break
it down for you, you are going to lock pen and paper. You're going to want to write
this down. Because it's going to be super, super
valuable. But real quick, worst deal? -Yeah. So, first of all, there are a lot of
measures you can take to minimize your risk. Especially wholesaling, right? But in
in real estate, let's face it, I think your audience is big boys and girls.
There might be a time where you lose money on a deal. And I want to give you
permission and tell you, "It's okay, right?" If you're doing big checks and you're
doing this right, you should make a lot of money. But every now and then... -It
doesn't go your way. -It doesn't go your way. And if anybody tells you different,
they're just blowing smoke, right? I know you've done the same thing. If you've
been in the game long enough, you're going to do a bad deal and that just
happens. It's part of the business. -I've made a lot of money but I've also lost
seven figures. -Yeah. And that sucks. And I have to on some big fix and flips,
right? I thought, you know, but on whole sailing... -That's why you're going to benefit from us.
-That's right. It's like, "Please don't step in our pitfalls and our... Don't make our trial
and error mistakes." -I'll tell you... Seriously,
learn from the guy (-That's right) that have done it right and learn from the
guys that have done it wrong. That's when you're going to learn what you need to know.
-Kris, I would give my right arm when I got started. Yeah. I
literally would give my right arm. When I got started, if I would have had a
mentor like you, then I could have learned what not to do. Not just what to
do but what not to do. Because I made so many mistakes that I... A lot of them I didn't
have to make. -Yeah. Right. So anyway, yeah, I did this... I did this wholesale deal and I
realized into my into my deal, I'm talking to these, you know, cash buyers.
And I'm like, "Oh-oh, I don't have a good deal." I thought I had a deal. I don't have a
good deal. What do I do now? And my worry was, "Hey, if I back out of this deal... (Which
I could of) I'm going to lose a lot of goodwill with this agent who had brought
me the deal. Because this agent had fed me a lot of good deals. -Yeah. And my worry
was, "Hey, if I go back on this deal, they're
not going to be happy. I mean, they'll figure it out, they'll put it back on the market
and find a new buyer and it'll be okay and maybe the relationship will be fine."
But I didn't want to risk it. I didn't want to burn a bridge. -How many deals had
you done with them before? -About 20. Maybe 22 deals. -And how much money would you say
that you had made all... Hundreds of thousands. -Okay. So, hundreds of
thousands of dollars. What were you going to have to eat to walk away from this one? -I
had a buyer that was willing to... I would I would lose about three grand to just
just to do the deal. And it was like, "Done, I'll do it. Let's do it."
-So, $3,000 was worth the price to pay for the multiple six figures that you earrned
with this relationship. -I probably would have lost 25,000 on that deal.
You what I mean? -And I'll tell you guys some right now. So,
you lost 3,000 deals, you could have walked away with it. And you had your... You
had your risk metrics put in place. You could have walked but the relationship...
But I want to just take a moment just say, "That's actually why Jerry is on this
video." Is as I've had a chance to gauge his character and who he is as a human
being. Who he is as a father? Who he is around his children and his wife. As I
sat down and my family's been over this house. And we've had dinner with them. Had
a chance to really get to know him on a more intimate basis. And you know, you've
noticed, there's not a lot of guests I put here on my channel. Because frankly,
I'm a skeptic out there making sure that I'm only working with the best of the
best. Right now, when it comes to the game of flipping, you know, Jerry's a great guy
to learn from. So Jerry, here's what I would love for you to do. Will you break
down your formula for us on the white board here and help our team here
get as much value as we can. Give you as much value and saying, "Okay, show me how
to do it." -Yes. let's do it. So, the first thing you need to know is when you're
putting together a wholesale deal, right? There's all this math to do. Because you
got to think about well I got to buy a property or I got to get a
contract and then I got to find a buyer. And what are they going to want it for and
then maybe there's repairs. And all these different things. And so, you could like
wrack your brain with a calculator and spent all this time like running all
these numbers. And it's all a waste of time. You don't have to do that. So, what
we've done is we come up with a really simple formula. Here it is. Here's our
formula. We call this the 70% formula. It's written up here. Now, if this looks
like, "Well, that looks like some advanced math." It's really not. It's simple. We'll
break it down. So, let's talk about what we've got up here. First we have ARV. Now,
that just stands for After Repair Value, okay? So, that's the number
that the house will sell for once it's fixed up. -Okay, because when you buy it,
it's probably going to need some repairs, you're factoring that and later
it's... What is this thing really potentially going to be worth when I've put
my hand on it or my team's repair it. -That's right. Okay, so we start with that
ARV number. So you have to know. What is this property worth fixed up, right? So we
have that number. Then what we're going to do is we're going to times... Like on your
calculator, multiplied by 0.7. Now, when you multiplied by 0.7, think back to your...
You know, elementary math. That's the same as taking 30% off the top. -So, it's
basically helping you find 70% of this value? -Yes. We do a sample in a moment. So
we kind of break that down where it's taking equivalent to making sure there's
a 30% margin. There's a reason for that? We'll talk about what the 30%
covers. But you take 30% off which is times 0.7. Then we have to subtract
out the repairs. Now, this is a variable because every deals different. So, could
have $5000 of repairs or a thirty thousand largely. -Yes. So, you put
that number in and then when you run that math through, that equals now your
buy price. -Okay. So check it out. Yet the the total thing that you think it's
going to be worth. What is the home or project or property going to be worth, we
got to subtract out a margin for a reason. We're going to subtract the
repairs and that'll tell you what you need to buy it for. This is important
because if you guys are going to bring a deal to Jerry and say, "Jerry, I know that
you'll give me $10,000 if I bring you a deal." This is important video
for you to watch to make sure you understand, "Alright. How do I know that
I'm actually bringing a deal that is attractive to an investor like Jerry or
somebody else?" -So, let's just break down real quick what the 70%
covers or the 30% we take off. Alright. So, let's talk a little bit
about this 30% that we're taking right off the top, right? So, there's three
things that that covers. And this is really important because whoever does
this deal, they're going to have these things. They're going to all have it, right?
You're going to have closing costs when you buy it and sell it, there's closing costs.
That's commissions, -realtor fees, prorations, title insurance, right? If you
ever bought and sold real estate, there's fees you have to pay. -Okay. -So, we've done...
And I've done this math a million times and it comes in right around. Now, this is
a this is a ballpark but we're creating a formula. So, about 9% of your
ARV covers all of your closing costs when you buy and when you sell, okay?
The second thing is carry cost. And we call carry cost, that's just your cost of
financing. Because there's money that's going to go into this deal. If it's a fix
and flip. -If you borrowed the money from anywhere, if it was a hard money lender,
if it was a bank, -private money, yeah. It's always a cost for, "Oh, I borrowed that
money for 60 days or 120 days." And on average that works up to about 6%. We're
going to budget 6% to cover that, right? Now, if you're self funding your own money,
then you wouldn't have that line item, right? But we're assuming that most
people are going to get the money from somewhere. And then the third thing is
your profit, right? So, we have 15% in your profit. That's the most important number
out of all that, right? And this adds up to about 30%. -Now, if you take
70% and add the nine the six of the 15, this is how you get
%100. -Yeah. -So, you know what? What I want to do, if you're okay with it, Jerry,
I want to now... Let's just do an actual example to make
sure everybody gets it, okay? Yeah. Let's just say for a moment that someone buys a
home that after it's fixed up could be worth $100,000. -Simple number. -Okay? We'll
go with $100,000. So, if I were to multiply that by 0.7 then that
$100,000 is going to turn into #70,000, right? -Yeah. -And then I
need to subtract my repairs. How much should we shave repairs are on this deal? -Let's
just say 20? 25? -Okay, let's go $25,000 in
repairs. So off of 100,000 and then... -Take out your 30. -I take out my
thirty which brings me to 70. From 70, I have to subtract my
25,000. That means that if this house is worth 100,000, I
need to be able to buy it for $45,00. -That's right. Now, if I
buy it for 45, that gives me 25,000 for my repairs and
then the rest of this margin says, "Closing costs are covered. Carrying costs
are covered. I pay me profits", right? I got I get money out of this deal. So, for
example, if we're sticking with one hundred grand. What that is... This is
going to be $9000 for my closing costs. This is going to be
$6000 for my carrying costs. And this is budgeting $15,000
as a profit. So, in summary, let's say that you found a house that
you could buy for 45 if it only was gonna take 25,000 of
repairs. And afterwards, it would be worth a hundred grand, then you would basically
say, "Hey, on this deal, I got $15,000 budgeted for me." -That's right. -So, this is
the formula that you use all the time pretty much in all your deals? -Yeah. If
there's one variable that you would change on any of this,
it would be your profit. So for example, if you're like, "Well, I'd like to make a
little more than 15. I oughta make 20,000." Well then we'd have to
change this to 20 which would change this to 65. -Okay. -So sometimes
I'll use this 65 for me. -Okay, so this is your 70% formula.
Your 65% formula is if you make this .65, this turns into
20%. Now, you have our profit. -And that's important to know because when
people cut margins, let's say I went the other way. I went 75. It's not coming here,
it's not coming here. It's coming here. That's it. So, now you would make 10
instead of 15. -And friends, if you're going to do a deal and you're going to
put up money and walk through this entire thing,
10% profit, I would say, "You better know what you're doing.
You better have experience. You better have an experienced mentor on your back."
Because one of the things that I love that Warren Buffett teaches. (Golden
Nugget for you.) He says that all the money he's made that 85 billion
dollars that he's worth is all about... He does in business, what we're teaching
you in real estate. But he also does it in real estate. Which is buy low, sell
high. And the lower you buy and the more you can sell for it, it creates a margin
of safety. The bigger this number, it's not about you getting paid more. It's
also a measure of risk. So, the bigger this number is, the less risk you're
taking because the more money you can make. If something goes wrong, you can eat
into your profit margin. If you start with a % profit margin, you could
get in trouble really really fast. Because you can't afford for very much
to go wrong on the deal. Well, think about it. If it sells for 95 instead of
100 and if your rehab goes to 30 instead of 25. -And you just took another
10,000 out of this. -And that's that's easy to do, right on a deal. So, you
got to be careful with your formula. A lot of people think, "Oh, well. You know,
it'll all work out." Well, follow the formula. -Yeah and I
want to share with you a golden nugget here. And then I want to let you know, we
got a special bonus for you. For those these that are like, "Awesome dude.
You guys have shown me how much money." You can really make wholesaling real
estate. If you want to skip the whole flipping part of the process and
actually click to $10,000 finder's fee, stay tuned just at the very end. I just
want to share this one point with you. So, check it out guys. Jerry has just shared
with you his formula for and also great stories on money he's made. And how he's
making it. Now here's the best part guys. If you're sitting here you're watching
us like, "Guys, this is a little steep for me. I don't want to get in that heavy
that fast." The good news is that there's an excellent way for you to participate
and play skip all of this part. But collect a big fat juicy $10,000 reward.
Jerry, thank you so much for breaking down this, man. This is great
information. I hope you guys are loving this... I hope you're getting this video
big thumbs up. If you've written this down, you get a great value here. One of
the things that Jerry does I think that is quite extraordinary is that he's
always out there looking for deals and so he's teaching this to help educate
you. But Jerry, you also have a free software that you can download for free.
Like no cost and actually go into the market and start finding some fantastic
deals right now. Would you like to have access to that? Jerry's going to dish it up
right now for you. -Awesome. Well, thank you for being here and like Kris said, I
do have a free deal finding software. What's awesome about it is it serves up
a list in any zip code. You put the zip code in and it gives you a list of
underpriced properties for sale right in your markets? You've got the best deals
to go after. -And now this is in the United States. So guys, we don't have this for
India or Germany. But for those of you that are actually hunting for deals
inside the United States, every zip code is covered. And you have a free software
that will actually hand off really, really good deals. -Yeah. You just download the
free subscription to it. There's a login, you login. Put your zip code in, boom!
Gives you a list, awesome. -So guys, if you want to get that information, all you
have to do is Jerry's putting on a free webinar, it's a web training to show you
how do you find these deals. And then better than that, he'll actually show you
that after you find a good one in your market, you can bring it to Jerry or
someone else. But Jerry will actually pay you $10,000 which i think
is pretty phenomenal. So, all you got to do is click the link in the description
below. Check that out and get hunting down your first $10,000
finders fee.
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