After meeting his mentor Josh Rudin started buying and flipping houses 6 years ago when he was 19 years old. He went through a lot of negative experiences and learned from them and grew in the process. Now he’s making positive cash flow and doing flips. He primarily focuses his flips in 4 cities near Victorville, Ca. He hired a project manager double his age to handle all his deals and having the help has given him the time to focus his efforts on finding deals and even traveling the world.
My name is Josh Rudin, I am 25 years old, and I grew up in a small city called Agoura Hills, CA in the suburbs of Los Angeles. The way I got started in real estate is my dad introduced me to a mentor he had heard about through a friend. Every Tuesday my mentor was holding meetings at Red Robin. He would bring a board game every day called the millionaire maker by Laurel Langemeier. The point of the game was to grow your balance sheet. I learned about assets, liabilities, income, and expenses and how to account for every dollar. The game really opened my eyes to a whole new way of thinking. One day I told my mentor I want to start doing this in real life. He let me know I am ready and that I need to be up at 4 am Saturday because he is picking me up and taking me to an area he’s been intrigued with the growth. That Saturday morning after driving for 2 hours we had made it to the “High Desert”. We would drove around all day asking questions to locals and writing down addresses of vacant properties, so we can really understand the market and the area. After a few months of driving out there almost every weekend I decided I feel comfortable with the area enough to make my first offer. It was accepted and at age 19 I owned my first home. It was one of the best feelings I have ever felt. Ever since then, I have slowly grown my business to where I am now, buying over 10 houses a year for the past couple years.
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Danny Johnson: This is Flipping Junkie podcast episode 103. [music] Welcome to the Flipping Junkie podcast. The podcast for flip pilots everywhere. Flip pilots are the house flippers that work more on our business instead of in our business by keeping a 30,000-flip view. You’re now part of a small group of house flippers that considers themselves flip pilots that strive to build the life of financial freedom and time freedom so that we can spend more time doing what we love with who we love. In this podcast, I give you a glimpse of the daily life of a flip pilot so let’s gets started.
All right. Hey, Josh. Thanks for joining me on the Flipping Junkie podcast.
Josh Rudin: Yeah, of course. Thanks for having me.
Danny Johnson: All right. So we’ve got Josh Rudin here. He has flipped houses for the last—has it been six years?
Josh Rudin: Yeah, it’s been around six years exactly. Yeah.
Danny Johnson: And you got your start when you were 19 years old. Is that right?
Josh Rudin: Yeah, 19.
Danny Johnson: Man, I want to talk about some of the struggles you probably faced starting this business at that age. I started early, but it wasn’t that early. You had mentioned that you had gone through a lot of negative experiences but learned from them, but you’re making positive cash flow now and doing lots of flips and that you focus your flips, primarily enforce it. He’s near Victorville, California. You hired a project manager double your age to handle all the deals. And having that help is giving you the time to focus your efforts on finding deals and even traveling the world. So let’s dig in to that. Let’s find out more about how you got your start especially at the age of 19. That’s very incredible. Props to you for that.
Josh Rudin: Thank you. So I actually started—I met a mentor, and he started every single Tuesday at Red Robbin. We would go and he would play a game. And I learned the balance sheet and everything, and it really changed my mindset. One day, we decided to start looking in, like you said, Victorville, Adelanto, Apple Valley. And I didn’t really know which city to go to so we looked at the numbers and found a little area in Adelanto to own mobile homes on its own land so you own the land. And you can buy a house there for like at the time when the market was down. It’s gone up three times since then. I bought my first house for $23,000. And my mentor told me that it was only going to cost $7000 to fix up. Obviously, I took his word because I didn’t know anything about real estate back then. I just was excited about it. I saw the game. I was really good at the game and ended up costing $35,000. And he told me he was going to fix it all up himself. He’s actually a contractor so I believed him, but he was only there on the weekends. There were some weekends he couldn’t make it, so it took over a year to fix it and it probably should’ve taken two weeks to a month. So that was one issue that cost a lot more. Luckily, the market was so down that I was able to gather it up eventually. But at the time, he was just teaching me to have renters and not flip houses and just hold it which was a good strategy back then when the market was so low. But now, I decided market is not going to go up much more, probably time to start flipping.
Back then, I got a tenant and she had a Batman tattoo on her face and I didn’t really think much of it at the time. I didn’t screen her or anything. I rented to her and she ended up obviously not paying rent after a few months. I gave her a couple months instead of starting the eviction. I didn’t even know what an eviction was at the time. And I’m happy that happened because I learned from the experience. It happened another four times after that. Well, I really learned from the experience, but it hasn’t happened since. So it happened five times in my first year, and it hasn’t happened in the last five years.
Danny Johnson: Nice. And so what I love about what you’ve already shared with me is that you took action, right? You made mistakes. Everybody makes mistakes, even the most cautious of us. And then you’ve learned because you were taking action. And you going back probably wouldn’t even know some of the things you would need to know until you actually experience those situations. Obviously, it can be risky when you don’t know the basics at least or have somebody to turn to. So did you get much help from your mentor as you were getting started with those first rentals? When something came up, would you call him? How were you finding answers to your questions?
Josh Rudin: Yeah, I would call him but he was very busy. He wasn’t really 100% answering my questions. Eventually, he found a company that would do the eviction, but he wasn’t as helpful as I had hoped. When I bought the property, I put up all the money and he owned 50% of the property. That’s the only reason he was really helping me so much. He owned 50% of the upside. He really didn’t do what he said he was going to do, so you can’t always trust people.
Danny Johnson: Yeah. And making sure that if you are working with a mentor, what is expected, right? What’s expected of you and what’s expected of them because the relationship is different with a lot of different people. It’s up to us to learn and do. And we would go to them for certain things but not every single thing and wouldn’t expect them to have to find somebody to do an eviction like that beyond us. It’s like, “Here’s how to find one. Go and do it,” and we’d have to learn it. So did you shed that relationship? Did you break that relationship and move on? And how did you do that?
Josh Rudin: Yeah. At times, I did break the relationship. It wasn’t completely broken. What really broke the relationship is me and my friend who are partnering on a deal, we would go and talk to neighbors and ask, “Hey, that house next door to you, do you know the owner?” So we found the owner, called her, and ended up getting a property that was probably worth $30,000 for $8,000.
Danny Johnson: Nice.
Josh Rudin: And we had the voicemail and everything. She said, “Yeah, we accept your offer.” I told my mentor about it. He went out there, drove, talked to the neighbor, got the phone number, and bought it for $12,000. So that broke the relationship for years. But then, I just forgot about it. I know that he could still teach me. I have friends that wanted to learn from him, so we still did some meetings. I was just there kind of teaching as well. But yeah, I would never do a deal with him again.
Danny Johnson: I’m sorry, but that would’ve been—
Josh Rudin: I was like 20 at that time.
Danny Johnson: Do you still need help? What do you do now? What’s your business like right now?
Josh Rudin: So my business right now started about two years ago when I started flipping houses. I had a renter who came down from Santa Cruz, California and paid me $700 a month for a property I bought for $24,000 at the time. I sold it actually for $72,500 a couple of years ago. And he ended up saying, “Hey.” He saw me. I had a guy that was helping me with all the management of my rentals. I just gave him 350 bucks off the rent. He did everything. He saw this guy not doing a good job. He’s like, “I can really help you with this. I can take you to the next level. I’ve done this before. I’ve built a house from the ground.” He ended up losing everything. He lost everything to stock market, so he ended up in Adelanto, California in a mobile home. He had made money in the past and he had 24 years on me. He’s 48, and I’m 25. He’ll be 49 now. He really brought me to the next level.
Danny Johnson: So how did you go about setting up that relationship? Do you guys have clear expectations of what each other’s roles are and you have processes in place to make sure that he’s doing things correctly? How are you managing that?
Josh Rudin: Yeah. We do have a contract that says everything that he needs to do. He gets 15% of my profits. But at first just to prove himself, he got $500 and he had to hire everybody. And he proved himself. I made money on the first deal. I made money on the second deal. And eventually, he worked his way to 15%. He’s trying to get to 20%. He said his goal is to get to 25%. I’m not sure if he’ll be able to get there, but that’s his goal and he eventually wants to be 50-50 partnership once he gets us money saved up.
Danny Johnson: Well, that’s nice. What are your responsibilities right now in the business?
Josh Rudin: I find the properties basically, and I have a lot of extra time because he’s managing everything. So a lot of time I try to find deals on material and I talk to him every day for a couple of hours. But really, I don’t have that much to do anymore. At this point, I’m just looking for property.
Danny Johnson: Yeah, which is a really good thing to be doing. So what are your favorite methods of finding deals?
Josh Rudin: Favorite method. It used to be knocking on doors, talking to everybody, asking them: Do you own a rent? And I would take down their information. I’d say, “Do you know anybody? I’ll give you $1000 if you have a property that you know somebody is trying to sell.” That’s definitely where I get the best deals. I did a couple of those last year that my project manager actually—that’s where he bought his value. He found a couple of them, and he made me six figures and I’ll pay him that so that’s where his value is mostly. If I can do, he’s doing that. For him to do that, that’s huge.
Danny Johnson: Yeah, that’s huge. All right. So you do door knocking. And then, what else do you do?
Josh Rudin: One time, a property manager actually—I called her about a property and I was like, “Hey, do you have anybody who you know hasn’t been paying one of your clients and they may want to sell?” And she said, “Actually, yeah.” Somebody offered her like $70,000. She didn’t take it. I’m like, “All right. Let me offer $75,000.” So she’s like, “Okay. I’ll just bring it to him.. I’m like, “This probably won’t work out.” But then, she’s like, “Yeah.” She’s taking $75,000 and it was worth in the hundreds, and I made like $30,000 on that deal. So that was a great one, too.
Danny Johnson: So you’re making it sound really, really easy.
Josh Rudin: It’s not. That just one worked out. You call 10 people and maybe one of them works out.
Danny Johnson: So how are you funding these deals? Are you doing hard money? Do you have private money? What are you doing to fund the deals?
Josh Rudin: Well, at first, I would use my college money. I didn’t go to college so I decided that it would be a good idea to use that money on real estate rather than go to college because I could get a head start. I’m basically four years ahead all of my friends because I started when I was 19, and they’re just partying in college. I used that money and then eventually I ran out of money and I started using credit lines. My mom has a credit line, so I have been using her credit line at about 4.5%. That’s been taking me way to the next level. I’m in debt about a million dollars right now, but the properties are worth a lot more than that so I’m not worried at all.
Danny Johnson: How many deals you guys have going on right now?
Josh Rudin: Right now, I have five flips going on but I own I think about 12 properties right now.
Danny Johnson: Nice. So what are all the properties that are being flipped? Are those rental properties that you have?
Josh Rudin: Yeah, I have some rental properties and then I have a couple that are just on the market so they’re in process.
Danny Johnson: And how are you determining what you want to pay and what you want to cash flow for the hold properties?
Josh Rudin: I want anything over 10%, but I’m getting way over that because I was buying a couple of years ago. But right now, if I can get 10%, it’s not easy in California. People are buying apartments, so I’m getting 3.5% and happy with it. So 10% is great right now out there.
Danny Johnson: Are you building up like a reserve or something as you pick up more long term so you don’t have like a domino effect of market changes and you have problems?
Josh Rudin: Yeah. I definitely always have some money in my bank just in case. I’m trying to sell a few right now because I know the market is towards the top and interest rates are going up so property is probably going to go down in the next couple of years. So yeah, I’m definitely trying to get ready for that. I’m planning on going on a vacation for a few months which is great in this business. You can do that if you have somebody managing for you. I’m going to Europe.
Danny Johnson: You had mentioned before that there was a case where you had a bunch of tenants that weren’t paying at one time. What happened there? Can you tell that story?
Josh Rudin: Yeah. My issue was I didn’t screen anybody. I didn’t check their credit. Eventually, I did and have like 400 credits, terrible credit. I had evictions on the record, but I didn’t even know. No one told me that I should be checking that. And I kind of just did it. I’m glad I did do it because now I know obviously to do that.
But also the problem was I had three properties vacant at one time and I talked to this one girl. She lived in one. Her mom lived in another and her friend in another. So all of them were related and friends, so they all decided not to pay me at once probably because of my age. That’s why I started hiring managers because they don’t really respect a young guy as much as they do an older guy. So I had all those evictions.
One of the ladies never even moved her stuff in, just a blow-out mattress in the middle of a family room, and she never left that spot. Every time I went there, she was just lying there probably on drugs. Another person. Syringes all over in the little shed in the back. I don’t think they had their water on. That’s just how people live up there. It’s really crazy to me because I live two hours from there. Where I live, it’s really nice. And out there, it’s a whole another world.
Danny Johnson: I’m not sure how much of it was age versus just the tenants that you were attracting into those properties, and a lot of that is probably area and stuff like that. Do you tend to try to get better properties now in better locations? Or are you still okay with doing those type of properties?
Josh Rudin: Actually, even for my rentals now that I’m just renting to people that I know and people that have higher credit. It’s really like that in same area. We really turned around that little area. It’s actually called the Joshua States that I feel like there’s a little bit of fate there. I’ve owned like eight properties just on Joshua Street in a little area. I’ve probably flipped 10 there. We really turned around that area. You see people trying to paint, there’s better people living in the area, and it’s really turning around. People are paying. Rents have been going up, and it’s been great.
Danny Johnson: So what were the other? I don’t know that you mentioned. What were the other ways that you’re finding these deals besides the door knocking?
Josh Rudin: The main ways on the market. I just make low-ball offers. Sometimes, it’ll be sitting for a long time. There are some times that it’ll be back on market. That’s a good one when it goes back on the market, and I just make low-ball offers and sometimes they take it and fix it up cheap. I got guys who will do cheap for a lot more retail.
Danny Johnson: So do you know the numbers of how many offers you’re making for those listed properties to the number of contracts you’re getting?
Josh Rudin: I would say probably about 5% of them.
Danny Johnson: That’s really good. So that’s one out of 20? Twenty offers and get one of them?
Josh Rudin: About one out of 20, yeah.
Danny Johnson: Nice.
Josh Rudin: The ones that have really worked out for me are these mobile homes are not on permanent foundation. They can’t be sold with a loan or FHA, they can only be by cash. So a couple of them were on the market for 100 and then went down to 90. Then, I offered 70 in how many other cash buyers in that area. It’s kind of my little niche. A lot of people don’t know about that little neighborhood. But when I was buying for 30, I’m really in Escrow right now and it’ll appraise at $130,000. It’s blown away. I bought that thing for $70,000.
Danny Johnson: Nice. So what kind of system are you using to keep track of the offers you’re making on those listed properties?
Josh Rudin: I’m using this flipping spreadsheet, but I’m not as organized as that. To me, I have Google Docs. But yeah, I don’t really write it down. I just have it in my email and I go back and check my email. Type in the address and it’ll come up. I should be more organized.
Danny Johnson: So you don’t really have a system for it. “I made the offer. I’m going to go back and resubmit my offer X amount of days later.” You don’t have anything like that?
Josh Rudin: I don’t have a system like that.
Danny Johnson: Some people get caught up in working on those systems instead of going out and making offers, so I applaud you for—
Josh Rudin: I think action is a little more important. Organization is very, very important.
Danny Johnson: Yeah. Once you get going, you need to build that in. It’d be a good thing to do. But yeah, taking the action because it’s so much more comfortable to be like, “I’m going to work on the process.” If you’re not doing it and getting to the point where you need that process and you need the efficiency of it, doing that. Awesome. So we did knocking on doors. You did listed properties, making offers.
Josh Rudin: Property managers.
Danny Johnson: How are you finding in talking with them? What’s the approach?
Josh Rudin: The approach with that is just calling them, asking them, telling them. I’ll give them commission obviously if one of their clients are in a bad situation and want to sell. So they’re always looking out. Just call every single in your area. Eventually, one of them will call you and say, “Hey, this client of mine is so over this tenant. They haven’t paid for a full year. They’re ready to sell, and I’ll make an offer.” Sometimes it’ll work, and sometimes they’ll want too much. But as long as there’s action, it’ll eventually work out.
Danny Johnson: Nice. I like how you’re going out there and doing the stuff that most other people just aren’t willing to do or doing and that’s how you’re finding these deals. That’s awesome. What else are you doing?
Josh Rudin: I have sent out letters. I’ve gotten calls, but I haven’t done a deal from sending out letters. I know you focus on the online generating, and I did get some leads from Facebook. I found that that has worked better than Google, but I’m really just trying to invest all my money and property right now. Once I have a lot of cash, I may start marketing more on Facebook and Google. But right now, I’m not at that point.
Danny Johnson: Cool. If you want to, we do those here, too. A lot of people don’t know that, but LeadPropeller, we do those, manage the AdWords and Facebook marketing account for investors. So when you’re ready, give us a call. I’ll get you hooked up on that. Yeah, Google takes a while for SCO for you to rank higher. AdWords works pretty good, but you got to have a good budget. What kind of Facebook stuff were you doing that was working pretty good for you?
Josh Rudin: I hired a guy in India and paid him like, I think, $500. And he made all these ads, a lot of chump stuff because it catches people’s eyes. I’m not sure exactly what he did. But yeah, Facebook ads.
Danny Johnson: Were they driving people to your website?
Josh Rudin: Yes, exactly. And my website was made through LeadPropeller which did an amazing, amazing resource.
Danny Johnson: Thumbs up. Yeah, those guys are cool.
Josh Rudin: Victorvalleyhomebuyers.com.
Danny Johnson: We’ll have a link to your site in the show notes for you. Awesome. So you’ve tried some different things. That seems like more of the hitting the street and being out there and talking to people has really helped you a lot. Would you consider yourself somewhat of an extrovert? Are you introverted?
Josh Rudin: I’m definitely introverted.
Danny Johnson: You’re introverted definitely?
Josh Rudin: It’s taken me a long time to be able to do that, but I saw my mentor. We go out every day at 4 a.m. in the morning at first before I was buying. He would ask every single person he saw, “Do you rent or buy?” And then if they rented, he would write it down and put in his renter database. If they bought or if they own, he would ask them, “Hey, are you ready to sell? Or do you know anybody who’s ready to sell?” And he gives a little coupon to everybody. He’ll give you $500 if you could find a property. I turned it to $1000 because I think $500 is a little cheap. You’re making $30,000; $1000 is okay.
Danny Johnson: That’s awesome. So how often do you feel like you have people contact you because you’ve mentioned that?
Josh Rudin: Probably only 1% of the people I give a little card out to. But if you give it out to 100 people every week, you’re getting four deals a month. So it’s definitely worth doing.
Danny Johnson: I like those numbers. So how long did it take you before you got comfortable doing that where you’re asking everybody?
Josh Rudin: It took me a long time. I remember I tried to meet this guy, Jimmy Goldstein. He’s a big guy. He goes to a lot of Clipper-Laker games all over the world. He flies. He’s courtside always. He has a girl next to him. I tried leaving him a voicemail to see if he can teach something, and I literally recorded my voice and left a voicemail because I was so nervous. This was like three or four years ago. And now, I’m surprised I’m even doing this podcast right now.
Danny Johnson: It’s awesome. You’ve done a lot. It’s pretty impressive. And I like the fact that you pushed through even though you’re introverted. I would feel like you would be more comfortable doing the behind the scene stuff, but you pushed ahead and said, “I need to be able to do this to be able to have success, so I’m going to figure it out.”
Josh Rudin: Yeah, I used to be nervous just to drive down there alone. It’s not the safest town ever. And now, I feel so comfortable going there. I have people I know. And I really love giving people work, too.
Danny Johnson: Yeah, making an impact. It is interesting whenever we first started in the business, too. Going to some of the properties, some of the parts of towns that I would feel like was the bad part of town. But after being in the business for a little while, you’re like, “That’s not a bad part of town. That’s a good part of town. This is a real good part of town.” Like you have a different perspective on all that, I think, after you spend more time. And some of the areas that I grew living in some places that weren’t really rough but we didn’t have a lot of money. So it’s not like I came from a rich place and a working class neighborhood. It was seem rough, but you still kind of have that idea that certain parts of town are not good but after spending some time it’s really good and it’s a great place for investment.
Josh Rudin: I’ve been to San Antonio one time for a Clipper San Antonio game, the playoffs. Great game. Great city. I like the boardwalk.
Danny Johnson: The Riverwalk down there?
Josh Rudin: The Riverwalk, yeah.
Danny Johnson: Yeah, it’s really cool. It sounds like you’re a big Clippers fan.
Josh Rudin: I am a big Clippers fan.
Danny Johnson: So do you have a goal to get courtside or something?
Josh Rudin: I sit courtside a few times. My dad owns the biggest ticket agency in LA, various tickets. So I go to a lot of Clippers/Lakers game, Kings games, concerts. So it’s a great perk to have.
Danny Johnson: It’s awesome. Well, if you get extra tickets for stuff, send them my way.
Josh Rudin: Yeah, if you ever come to LA.
Danny Johnson: Yeah. I’ve been there once, I think. I’ve been to the airport several times, but I’ve only been through there once. I wanted to ask you, too: What is your goal? What do you want to do with this business? What are you trying to achieve? What’s your vision for your company?
Josh Rudin: My vision is to start marketing more kind of how LeadPropeller does their marketing online and just keep on getting leads, keep on getting properties, and eventually have a team that kind of just runs on its own. Obviously, I’m going to be the main decision maker always, but I want to eventually—I hear all these people buying 100 properties a year. It’s crazy to me and that’s where I want to get. Right now, I’m 10% on the way there.
Danny Johnson: It sounds like you know how to do it by bringing in help and not trying to do that all yourself because it’s not possible when you’re trying to—
Josh Rudin: It’s not.
Danny Johnson: Are you part of the Flip Pilot group?
Josh Rudin: I am. I’m on the Facebook group.
Danny Johnson: It’s really good to have a good community. And everybody listening, if you’re not a part of the Flip Pilot Facebook group, you can find it on Facebook. Just look for the Flip Pilot group. It’s a private group, so you need to be invited in because we’re trying to keep spammers out of there. So we’re just vetting people. But if you go there and you’ve got a legitimate profile, we’ll let you in the group. So go ahead and do that. Or you can go to flippilot.com and just put in your email address and we’ll get you access to the group. So, what other resources have you found that’d been helpful in your journey to be a more successful real estate investor?
Josh Rudin: I think social media is where it’s really going. I have an Instagram called The Flipping Guru, and I post a lot of my travel on there just to get a lot more followers, a lot more people. And I post all my before and after on there. People randomly in different states have been direct messaging me that they have a grandpa who wants to sell or people in glittery Miami, different countries sometimes. So it’s great. I only have like 900 followers right now. But eventually I feel like if I have 100,000 followers, the leads are just going to be coming. So that’s my main goal, is to just get that thing growing.
Danny Johnson: To me, that’s a hot tip.
Josh Rudin: Yeah, so you got to create your Instagram account.
Danny Johnson: We’ll put a link to the Instagram account too in the show notes page which will be at flippingjunkie.com/103, and we’ll link to that Instagram account too so people can find you on there and get you some more subscribers and more reach. I want to see what kind of pictures you’re posting.
Josh Rudin: Yeah, check it out.
Danny Johnson: What are the main things that you post? You said travel, but like what other?
Josh Rudin: My before and after photos as well. So they’d only let you post about 10 photos then I just pick my best five of before and five after. There’s a bunch of websites out there that automatically likes people’s photos and automatically follows people. And you can choose what type of people you want to follow and then those people will follow you back. So I follow a lot of people in the real estate field.
Danny Johnson: Nice. So it’s an automated thing that automatically follows people?
Josh Rudin: Right. And I have a friend doing it, so he charges me 50% off. I’m paying him 15 months’ worth.
Danny Johnson: Nice. So does he manually do it? Or he operates some kind of software that automatically does it?
Josh Rudin: Yeah, a software that automatically does it.
Danny Johnson: Do you know the name of it? Would you mind sharing it?
Josh Rudin: Yeah, I can share it. It’s Statlistics, but I don’t think that’s the actual website. That’s just what they call it. We can put it in the notes at the end.
Danny Johnson: Okay. Just send it over to me, and I’ll put it on the show notes page.
Josh Rudin: Cool.
Danny Johnson: So that’s cool. I’ve gotten a lot of great info from you about that. I think the big takeaway though from the show is just the ability to, even if you’re an introvert, to go out there and do those things and talk to people, right? So many people are trying to stay behind the computer instead of getting out there, and that’s what it is. Just getting out there and seeing what’s going on, talking to people, and finding out who has a house that they like to sell. Offering incentives for them to reach out to you. So do you have a business card that has that on there that you pay $1000 when you give them a business or you just tell them?
Josh Rudin: It doesn’t say that but I tell them when I hand it to them. It just says we buy houses. Think about home buyers or Rudin Enterprises.
Danny Johnson: And so they got to remember it. So I wonder if adding that to the card might be a good thing.
Josh Rudin: Yeah, that would probably be a good idea because they probably just put it somewhere and forget about it. And if they see $1000 on there, they might look at it again like, “Oh, wow.”
Danny Johnson: Yeah, that’s a good idea. So I think that’s a big takeaway. Do you have anything else that you wanted to share with everybody on the show? Anything like another situation that maybe you faced as a young investor that was trying and you felt like it was because of your age.
Josh Rudin: Yes. I bought a house. I was expecting to make like $40,000 to $50,000. The appraisals can kill you sometimes. This one ended up being a mobile home. Even though it looked like a home with stucco and had central AC, my project manager didn’t notice it. None of the contractors noticed it. And because it was a manufactured home on its own land on permanent foundation, you can only take comps from different manufactured homes. So I had it in Escrow out like $172,000 and the appraisal came in at like $115,000. I was so shocked, so pissed, but the buyer ended up coming up like $10,000 in cash and I made like $400 on that deal. I haven’t lost money on any deals so far. That was the closest that I’ve gotten to losing money.
Danny Johnson: So the buyers didn’t even know.
Josh Rudin: The buyers didn’t even know.
Danny Johnson: Did the inspection uncover that? Or was it the appraiser that uncovered?
Josh Rudin: No, just the appraiser.
Danny Johnson: Wow. So if that have shown on the county debt or anything that it was—
Josh Rudin: It did, but I didn’t look. It was untitled.
Danny Johnson: Wow. That’s pretty amazing.
Josh Rudin: You got to definitely look at title and ask people who know if you don’t know.
Danny Johnson: Yeah. Well, at least you didn’t lose money on that.
Josh Rudin: Yeah, I didn’t lose. If you’re buying deals that are that good, you usually don’t lose even if it’s $20,000 or $30,000 more than you think it’s going to be or you get $20,000 to $30,000 less.
Danny Johnson: Nice. So anything else? Any other situations that have happened? That’s an interesting one. I’ve never heard of that one before.
Josh Rudin: I got another story. I’m in a project right now. I paid $175,000 for it. I expect to put $100,000 to $105,000 into it and hopefully try to get $400,000. This house is an acre, and there’s three properties. One is just a little 500 square-foot work shed and the other one is a garage with 350 square foot of gas space and then a 2900-square foot house. And we started doing it without permits which a lot of the time you can get away with. But this time, somebody came in. They saw we were doing it and we’ve been shut down for the last two months. What happened that was good of it is we were able to add 400 square feet to the house because we’re adding the bathroom. There’s like a little area that you can add square footage to, so it’s actually going to really help the value. But that was scary for a little bit. Maybe we would have to tear something down. We’ll see. The permits haven’t really gotten accepted yet, but we have a guy who’s pretty confident that it’ll work out.
Danny Johnson: So do you feel like that’s a way that you’re going to move into, maybe trying to add value by adding more space in the future? Or is that too much work?
Josh Rudin: In that area, not as much if I was in Beverly Hills or Los Angeles. One day you want to buy million dollar homes, but out there you’re buying $300,000 homes if you put $50,000 to $100,000 into something that had a few square footage. It doesn’t really make sense.
Danny Johnson: The return on the amount of hassle and time and cost is not there. We’ve never been one to really do that either. Some areas there are like you said were more expensive where you got an older home. It’s kind of obsolete.
Josh Rudin: There’s nothing but $1000 a square foot, but 400 square feet that’s another $40,000.
Danny Johnson: Yeah. So that’s cool that you guys were doing it on that one to experience. It’s too bad you didn’t have the permits pulled.
Josh Rudin: That’s happened a couple times. I’ve actually bought a property that was burnt from fire and this was good if you have good connections with realtors. My broker actually ended up being the one selling this house. He almost had to tear it down, but he rebuilt it. Put it on the market for $7000 and I was like, “Okay. This is weird. Why is it so low? Is this just something I can’t make money on?” And then, I started bidding up and I asked my broker, “Hey, where do I need to be to get this?” And usually they’re not supposed to tell you. But because I had a good relationship with him, he was like, “Wait out an offer at $20,000, and you go higher.” So I offered $22,500, and I got. And that project took a year as the permits takes so long sometimes. But it ended up working out. I made over $40,000 on that one.
Danny Johnson: That’s almost like building a new house. How much of it was burned? What percentage?
Josh Rudin: We had to put trusses on. That was the first time I’ve ever done that. Brand new roof. I had to remove a lot of wood. It was really worked out. I have the before and after on my Flipping Guru Instagram.
Danny Johnson: Cool. Hopefully, it’s not one of those things where you fix the house and then one day you go by and it’s like humid or something and you smell something burn. You’re like, “Oh, man. There’s a burn smell.”
Josh Rudin: Yeah, I did not like walking into that house. I feel that for the workers that had to remove all the debris. That was gross. I would buy them a mask though because that’s a liability if anything happens to them.
Danny Johnson: Yeah, those burned houses are no jokes. What you said was pretty valuable, too. It’s asking the broker: Where do I need to be? And you’re right, they’re not really supposed to tell you. And another question, good question to ask though is: If I were to offer this, where would it put me? Because they’re not telling you, but they’re just kind of like, “Give me a little heads up about where you’re at.”
Josh Rudin: A lot of the time they don’t really tell you the exact number, but they can kind of nudge. I could say, “Hey, if offer $25,000, will I get it?” “No, you probably need to go up a little bit.” They can say that, but they can’t tell you really what the other person offers.
Danny Johnson: And at the end of the day, they’re trying to get the most for the person selling it though as they’re doing what they’re supposed to. Awesome. I like the stories. Have you got any more good stories?
Josh Rudin: Probably. My project manager one day, he just quit on me because he asked me if he can invest in a property that I had already bought and I already was into the property for a month. And I said, “No, because you need to take the same risk that I take. If you buy it at the same time as me, sure, but you can’t take the same risk.” The problem with him is he’s very emotional and he has lack of sleep. He has sleep apnea. He is aware that he is really groggy. He doesn’t act like himself. I have to deal with that personality a lot. So he ended up quitting one day, and he’s writing me this full essay and I was just like, “When you calm down or if you’re on some sort of drug, just text me tomorrow. We’ll talk about it.” The next day he was like, “I’m so sorry. I don’t know what got into me. I still want to work for you.” And he’s like, “I got offered 20% by this other guy.” I’m like, “All right. Take it. I’ll find somebody else. You’re not, I think, different than anybody else.” And sometimes he thinks he is.
Danny Johnson: Yeah, it’s always tricky relationship-wise on those kinds of things. You got to be careful though if that kind of behavior keeps creeping in. That’s good that you didn’t just quickly give. And when you want to treat people respect and help them get what they want, but they also need to be emotionally mature about things. So it sounds like—
Josh Rudin: He’s double my age, but I have to be the mature one sometimes.
Danny Johnson: You’ll never know, yeah. It sounds like you’ve handled things pretty well. You’ve made mistakes, but I think all in all, man, you’ve done really awesome. Congratulations.
Josh Rudin: Yeah, I really turned things around. This kind of says don’t give up if things start to turn out bad. If other people are successful, there’s no reason you can’t be successful in it as well.
Danny Johnson: And you reached out to me to be on this show. Did you reach out more than once? I think you did, right?
Josh Rudin: I reached out once and then you said meet you up after Christmas because you’re really busy and then you answered right away and it’s great. I’m happy I’m on the show.
Danny Johnson: See. Because you took the time to reach out to me. And now, you’re on the show and given lots of great tips. I’m sure a lot of people got a lot of good stuff. I know I got a lot of good stuff out of this.
Josh Rudin: I appreciate that. Hopefully then we can meet. Maybe I’ll fly out or you can fly out to a game.
Danny Johnson: Yeah, that’d be cool. All right. So how can people out there listening get a hold of you, Josh, if anybody wants to get in touch with you?
Josh Rudin: I can give out my cellphone number, I don’t mind, 818-395-9141 or The Flipping Guru Instagram. Just DM me.
Danny Johnson: Right. And we’ll have that on the show notes page as well, flippingjunkie.com/103. Anything else you want to share before we sign off?
Josh Rudin: No. I’m just happy that I was on this show, and it was great to meet you. And I hope all the listeners can learn a little bit about me and learn more about real estate and get excited about it.
Danny Johnson: Awesome. Thank you, Josh. We’ll be in touch. [music]
Josh Rudin: All right. Thanks, Danny.
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