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Mike Arch is a founder of Alamo Home Source and is partners with Erik Saengerhausen who joined us for episode 27. Mike has been flipping for many years and has flipped hundreds of houses. He currently focuses on creating and selling real estate notes.
On today’s episode, we talk about how to find the “right” real estate agents, attorney, title company/closer for your house flipping business.
This biggest take away from this episode is that taking the time to find the team members that care as much about your business as you do is paramount. There are agents out there that always work with a sense of urgency and are great for real estate investors because you cannot steal in slow motion (meaning not to steal, but to get the great deals :)).
We discussed the best way to find agents doing great things in the areas you are investing or want to flip in and how to approach them so that they know who you are and can send you great deals.
It might surprise you to know that many agents that list a lot of houses don’t necessarily want their name on a junker house so they’d prefer not to list it. If they know you are a ready and able buyer, they can let you know about those properties before they go on the market. It’s a true win, win.
We also discussed how to find the right escrow officer or closer at a title company to close your transactions. Find out what fees are negotiable as well as the tips that pros use to save themselves time and money.
We also discuss the right kind of attorney to find. Obviously, you’ll want a real estate focused attorney. We talk about how we both have spent too much money in the past because we didn’t know how to approach and talk with attorneys. Don’t make the same mistakes, listen to this episode and gain the advantage.
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Ratings and reviews allow the podcast to be seen by more people, which will help me achieve my goal of helping as many others as we can to get started in the house flipping business and change their lives.
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Danny Johnson: This is the Flipping Junkie podcast episode 31. [music] Welcome to the Flipping Junkie podcast. My name is Danny Johnson; former software developer turned house flipper, flipping hundreds of houses. Each week, we bring you interviews, strategies, stories, and motivation to help you get started flipping houses and on your way to becoming your own boss and achieving financial freedom. Thanks for spending time with me today. Now, let’s get to it.
Hey everybody, welcome back to the Flipping Junkie podcast. Today I’ve got a good friend of mine in San Antonio, Mike Arch. He’s business partners with Erik Saengerhausen who was on episode 27 of the podcast. If you want to go back and listen to that after this, you can go to FlippingJunkie.com/27.
Mike has been flipping houses for a long time. He has been a real investor that’s flipped hundreds of houses and he currently focuses on creating and selling real estate notes. We’ll get some more info from him about how he got his start and exactly what he does. And then today, we’re going to be covering how to find the right attorney, title company, closer, realtor, and basically anybody else that you should have on your house flipping team that you might not generally have on your payroll. So that’s what we’re going to talk about today. It’s going to be a great episode full of great tips and information about how to find these people then what to expect from them and some of the tips of things that great people on your team will be willing to do that you might not have known is a common thing for title companies or attorneys or realtors to do for real estate investors. So lots of great info on this one. Thanks for listening to the podcast. I know there’s a lot of them out there to listen to so I really appreciate you checking out Flipping Junkie podcast. Be sure to check out our real estate investor websites at LeadPropeller.com. That’s LeadPropeller.com. Then we have our CRM system at REIMobile.com that you can check out. Great way to keep track of your leads and set up follow-up reminders that integrate with your Google Calendar and everything like that. So be sure to check out REIMobile.com and LeadPropeller.com. Enjoy the show!
Hey, Mike. Thanks for being on the show.
Mike Arch: Hey, Danny. Thanks for having me. How have you been?
Danny Johnson: Oh, been great. How about yourself?
Mike Arch: Pretty good. Staying after it.
Danny Johnson: Always are. So for everybody, the audience out there that doesn’t know you, do you mind sharing a little bit about yourself and how you got your start in real estate investing and sort of the path that you’ve taken and where you’re at now?
Mike Arch: Sure. I’ll give you the quick version. It’s kind of a long story but I’ve always had a passion for real estate and have always been interested in real estate. I was actually transitioning, oh gosh, about 15 years ago out of another business. I owned a property and casualty insurance agency in San Antonio and I was burned out of insurance and really looking to start doing something else. So I went kind of a traditional route, got my real estate license, found a really good office in San Antonio, a RE/MAX. It was a RE/MAX office and kind of learned the basics of traditional real estate. But I quickly within probably the first 12 months I found myself focusing on trying to find deals. I guess that was where my heart was at. So anyway, I went down that road for quite some time, probably had a good 10-year run of being a very successful flipper, flipped hundreds of homes. Kind of just stayed in my own little world and worked mostly out of my house and just had a successful business. I’ve got a couple of kids so it gave me the flexibility I want, the lifestyle I wanted. Somewhere along the way, I guess it’s been 6 or 7 years now, I met my current partner Erik Saengerhausen, and Erik and I started flipping together and then we kind of tipped over within the seller financed/owner financing market. That’s really – I kind of fell in love with that and that’s kind of where my focus has been in the last 6 or 7 years.
So currently, we have a company called Alamo Home Source and we create and sell real estate now is the bottom line and we focus mostly here in San Antonio. We have done some business down in South Texas, in the Corpus Christi and Harlingen area. But for the most part, the vast majority of our business is here in the San Antonio area. So we love what we do. We really enjoy the whole process. We’ve kind of fallen in love with the whole seller financed model. It’s really been a good thing. So that’s where my focus is currently.
Danny Johnson: Great. With Alamo Home Source, it’s sort of like a full service company where you’re selling houses owner financed. You do a great job of fixing up than have a buyer in there that’s buying it with the owner financing and then you sell those notes to investors. Is that right?
Mike Arch: Yeah, that’s right. And so we’re licensed real estate broker, we’re also licensed mortgage loan originators. So yeah, what we do is love to hold all of these notes ourselves. We always give the example of we’re digging all these wonderful oil wells and we’re giving everyone else all the oil and of course the oil, with the endless of strings of income with good interest rate. So we wish we could hold all of the strings of income or these real estate notes ourselves but the reality is it’s a very capital intensive model and you have to have private investors. We do have to have private investors to continue to keep the machine rolling, so to speak, by purchasing real estate. That’s really I think the key. Especially for us it’s been truly producing good real estate notes and that could be probably for a whole another subject. But producing a good real estate, producing a good stream of income, we’ve been able and fortunate enough to find private investors, Danny, like the typical private investor who’s 60, 65, 70 trying to be living off their nest egg and what other choices these days? I mean, going into stock market, a lot of people aren’t comfortable with that and then obviously banks aren’t paying anything. So these real estate notes are, we presented it as kind of an alternative investment, an alternative to stock market, or an alternative to a CD. So there’s obviously some risk there but we found that to produce quality real estate notes that the investors will step up and purchase those notes, that’s been our experience.
Danny Johnson: I think it’s great because it’s sort of like investing in turnkey rental properties except for that you’re not having to deal with the tenants and the broken toilets and all that kind of stuff.
Mike Arch: Exactly.
Danny Johnson: Great. So today, we’ve decided to talk about building up a team for house flipping and for real estate investing and those people that we typically work with as real estate investors that generally aren’t on the payroll but do a lot for us and we do a lot of business together. Who would you like to start with? Who on your team do you want to start with – attorney, title company, realtor?
Mike Arch: Let’s start with realtors because being a licensed realtor, I’m probably extra sensitive to how poor so many realtors are, I say, and I’ll rate them a lot, but just I think if we can start with realtors, that would be a good place to start.
Danny Johnson: Let’s do. It. So what kind of qualities do you look for in a good realtor/real estate agent?
Mike Arch: I think in this it’s going to apply a lot of these principles or thought processes, they’re going to apply to everybody we talk about today, Danny. But in a nutshell, someone that is number one, accessible; number two, available; number three full-time on these realtors. And probably the most important quality that I learned after doing this 10 or 15 years and working with realtors, and someone that truly has your best interest in mind and is willing to have a sense of urgency when you’re especially on the buy. Now let’s focus for my thought process on the buy side. You know, as an investor, hot deals don’t last long so you’ve got to have a realtor that is willing and capable of moving quickly. Now let me back up. You know, Danny, most realtors as you know can set you up as investor with like an automated search where every time there’s a new listing it comes out in a certain price point for example or certain zip code for example that it automatically sends an email. So every realtor can do that.
Danny Johnson: It’s not putting them out too much to ask them to set that up for you, right? I mean, it’s a pretty quick think for them to do.
Mike Arch: Yes, very easy to set them up and I would assume any MLS has that capability. I know it does it in San Antonio and I talk to other investors across the country and that is very common practice for the realtors to set them up on an automated search. But where the rubber meets the road is when it comes down to one of those properties you want to make an offer on. You see some potential to make a nice profit. So that’s where the realtor has to step up and help get the deal done so to speak. I can talk you through, Danny, kind of the way we do it. I think that will help your listeners kind of get a handle on what will be expected from a typical realtor. Would that be all right?
Danny Johnson: Yeah, that would be awesome.
Mike Arch: Okay. So for us, I mean, when we have a deal – let me just tell you a story, Danny. I had one this week and literally this weekend. What’s today? Tuesday. So we had one, yeah, this was actually Sunday afternoon. I almost never work Sunday afternoons but my girls had a roller skating party. I dropped them off down. I had a couple of hours to go ahead and kill, and I had a listed property that I hadn’t seen. So anyway, I went out and I found a property that I really, really liked. It was in my target area. It was priced right. And that’s the thing I want to impress on so many new investors, Danny. Real estate is an imperfect business which is really where the deals come from. There’s no perfect pricing. Just an imperfect pricing. Sometimes things are priced too high, some things are priced too low. So you have to know your market and go after. But this particular property, Danny, it came up on the market and it was in the area along, it was priced right, I wasn’t going to negotiate at all. I was happy with the price it was at and so I saw it through. This is a strategy that I use and this does and doesn’t work depending on if you have a realtor presenting offers to you. But I want to circle back to this because I think there are times, Danny, where even if you have a realtor that represents you, obviously they stick to get paid commission and that’s the correct way things should work. However, we talked about this last time you and I had lunch. We talked about other realtors that you meet that actually buy and sell homes in the area that you like to buy in. You may have your own realtor that works for you to present offers. But if you build relationships with some of these other realtors, they may call you directly before a listing even hits the market. You know what I mean? So just let them know that “Hey, I like to buy homes in this area.” A lot of times these realtors will go take a listing and there’s just maybe too much work involved there so quite frankly, I found realtors that really don’t want their name so to speak on the signage in front of a house. They might just call you and say, “Hey, Danny, come on over. If you want to buy this house,” before it hits the market.
So anyway, not to cut the other realtor out or anything. My point was so that at times the strategies that we like to use and I like to use being a licensed realtor is just saying “Hey, here’s my offer.” And in this particular case, Danny, I actually bumped the price $500. I walked out on a lot of deals recently. This thing was priced very good. When I called the guy, keep in mind this has been on the market one day. It’s literally day one. The guy had already had a couple of offers. So now, I basically said all right. The strategy I used was here’s my offer, I’m going to bump it $500 and I did say I want no inspection period. No option period. And I want to close in 1 week to 10 days. So now, I don’t want to give poor advice. Obviously I bought and sold hundreds of homes so I don’t want to tell a brand new investor, “Hey, don’t get an option period. Don’t get an inspection.” That probably would be bad advice. But when you’ve done it hundreds and hundreds of times in the same area and the same city, you pretty much know what you’re getting and what the potential wild cards are. Would you agree on that?
Danny Johnson: Absolutely. I think to touch on another part of that, you had said before and I love the phrase “a sense of urgency.” You were talking about this is Sunday that you were out and it was just listed that day and already there were a couple of offers. That’s just the way it goes in this business. If you want great deals, you’ve got to have a sense of urgency and whoever’s in the loop or in the process or chain of getting your offer to the seller, they all have to have the sense of urgency to make sure that there’s not a delay anywhere.
Mike Arch: That’s exactly right. And Danny, like what you said, if I were coaching a new investor, I would be saying, “Listen, you get a realtor, you have them present to your office, and make the offer as clean as it possibly can.” Also immediately follow up that email up with an offer. I can’t say it how many times. Because I’m a seller, Danny, as well. I sell a lot of properties. I’ve got properties that I’ve got 2, 3, 4 offers over a weekend let’s say. Well, guess what? The one I pay most attention to is the realtor that would call me, “Hey, Mike. I just want to reassure you we’ve got the cash. I’m going to get the proof of funds and that’s ready to go, etc. etc.” That is kind of like the squeaky wheel gets free. So, so many realtors just send an email and the offer contract. It’s sometimes completed correctly, sometimes it’s kind of iffy, sometimes there’s a lot of blanks missing. That’s another thing, you know, just the realtor’s attention to detail. I mean, you need to get a very clean contract.
Danny, one of the strategies that I’ve used quite successfully and like I said, I don’t want to give poor advice, you know. When you’re buying something and you’ve done it over and over again and you’re comfortable with it, I like putting a big earnest money, the typical earnest money on a typical house in the price point that I would buy in which would be maybe under that $100,000 rate. It might be a $1000. Okay? Five hundred to $1000. Well, my earnest money is normally $5000 and I make sure I point that out to the listing agent and say, “Listen, not only is it a clean offer, in this case it’s full price plus $500. I’m laying my cards on the table. I want the property.” It’s hard to find deals so when I find one I really want, I want it. So I lay my cards on the table and say by the way, “The earnest money I put up is $5000.” The other thing, even though the contract, if I don’t put an option period, technically that option period – I mean, if I do not put in an option period or an inspection period in the contract, technically that earnest money is the seller’s if I fail to perform. But I actually restate that verbiage in the special provisions of the contract, Danny. I just want them to know I want to pound the point home “Hey, I’m serious. Here’s $5,000 nonrefundable earnest money.” I put a statement that says earnest money is non-refundable if the buyer (me) fails to perform. In other words, I want them to know if they sign off of my deal, there’s not going to be any red tape. It’s going to be a smooth closing. What I normally tell them is “Hey, listen. I’m never going to go back to the property. I’ve seen the property, I’ve bought and sold dozens and dozens of properties in this area. I’m happy with it just the way it is. You don’t have to haul up any trash. You don’t have to build anything.” Now, this goes against traditional real estate buying where it’s tit for tat and this realtor wants to do this and no we’re not going to do that. If you find a deal, I go back to it being an imperfect market. I mean, this thing was priced probably about 10,000 low, Danny. So I wasn’t going to sit and try to shave. You know what I mean?
Danny Johnson: Yeah. I like what you were doing there because everything that you did is basically hammering the point home that this is a done deal for the seller because a lot of times sellers are there wondering and sort of nervous about “So this going to go through?” And the listing manager is wondering is this going to go through, is this guy going to be able to perform. Everything you were saying is just hammering the point home like you’re going to feel good about this one. Like this is the guy to sell to because you know it’s going to be done.
Mike Arch: Exactly. Then I go back. I’m different than many investors because I have a real estate license. In this case, Danny, one other tool that I pull out of my toolbox is I say, “By the way, Mr. Realtor, no commission on my end.” In other words as you know most realtors usually get a 6% commission involved and 3% to the buyer’s agents, 3% to selling agent. In this case I said, “By the way, even though I was entitled to the commission because I’m a licensed realtor, the commission was offered via the MLS and it was listed that the buyer’s agent would get a 3% commission,” in this case I said, “Hey, no commission for me.” That I think oftentimes seals the deal too because the realtor selling the home instead of only getting 3%, they’re getting 6%. Now that doesn’t necessarily apply to a lot of investors that are working with the realtor and that’s fine. All the other points usually will get the job done. The quick close, the strong earnest money and no option period if you’re comfortable and no inspection period if you’re comfortable with what you’re seeing there. But I think back to that other point, Danny, that we talked about, you know, I am very loyal, very honest, and very ethical with people. And if I had a realtor, I would like them very honest, and I need them, and very ethical. However, if another realtor calls me and says “Hey, I’ve got a listing here. It’s clean.” And like the example we gave before, I don’t see anything wrong with that. You get to know they all use standard contracts. It’s a cash deal. There’s really not a whole lot to it. I mean, it’s 50,000, 80,000, whatever the number is. So my point is, I would feel an obligation necessarily to bring my realtor and give up 3% commission to them if someone that they knew nothing about an off-market deal, let’s put it that way. So that was the value I think that new investors can do is when they have a certain area they really like, they want to drive the street, Danny, and kind of see whose signs are in the year, who’s selling those properties in that area that they like. I would actually pick up the phone and go meet those people and just hop into their office and say “Hey, I just want to introduce myself. I’m a cash buyer. I work in this area a lot. If you ever have a property that comes on the market that before maybe you list it, you want to run it by me.” And you’d be surprised how many of them do that. I’ve got several realtors that call me. The funny for you and I, guys like us that invest, we’ve seen it all in terms of ugly properties and all these properties and everything else. A lot of realtors, it’s kind of funny, just really don’t want their names associated with a property like that. I get it. So a lot of times if they have a property they wouldn’t want their pretty nice sign out, they wouldn’t want to be associated with that house that smells like 20 cats live in it. Well, they may just call someone like Danny or someone like Mike and say “Hey, you know, you want to come and purchase this property before I even put it on the market?” So anyway, just another idea I think when I talk about realtors. You’ve got your own realtor. I also think it’s wise to go ahead and at least meet some of the realtors that are working in your area, let’s put it that way.
Danny Johnson: I think that’s great because that’s a very underutilized tactic in finding deals. And I think to your point of driving the areas where you want to be flipping the houses and looking for that sign with that name that you see over and over again because those people are plugged into that area and even the ones that you see, you’re not seeing all the ones that they’ve listed and they’re probably getting calls for some of these properties that they might not be all that interested in listing. But if they had somebody like you that they know they can quickly sell and get a commission on, they probably will pick those up and call you up.
Mike Arch: Exactly.
Danny Johnson: Investment in time. You’re making me think that I need to go drive around a little bit, but get out and talk to more of these people myself.
Mike Arch: Yeah. Absolutely.
Danny Johnson: As far as listing agents and listing properties and buying them from them, but what about buyer’s agents? Do you have any qualities you look for or ways to find great agents to help locate properties for you?
Mike Arch: I think that the biggest thing, one big thing, I touched on this earlier, but just make sure they’re full-time in the business. This is their profession, number one. I’ve seen investors trying to work with part-time realtors and like I said, that gives a sense of that just doesn’t work. I think talking to other investors, I think maybe talking to title companies might be a good idea. But you know, the great thing about realtors is that there’s so many out there and they work 100% on commission generally speaking. So I guess the message I would want to send is you might have to go through a few to find the right one that you’ll connect with and click with. But at the end of the day, someone that’s responsive, someone that understands the sense of urgency.
I got surprised, Danny, when I was first doing this. I was such a control freak on how I wanted my offer vetted kind of like we talked about. I would draft an email and I would forward it to the realtor and I say “This is the email I want you to send to the other realtor.” Obviously, he was a professional, he was a licensed person, they’d have to give their blessing. My point was, I can’t underestimate or I can’t overemphasize, I should say, the importance of just getting through your realtor’s head that when you find a deal you want to move on, you want to move and if that means 8:00 at night, that means Sunday afternoon, they have to be willing to do that. So that’s probably the biggest thing. And a lot of realtors aren’t, quite frankly, and I get it. I have a family and I get it. But you want one that when you say “jump,” they say “let’s go.”
Danny Johnson: It’s important to say that because you might talk to 10 or 15 and they all seem like they could really care less. It’s important to know that there are some out there that are just you’re saying “let’s go, let’s do this” and they are the go getter type and they do exist and it’s always important to know that they do exist and you will find them if you look long enough. I think your point of driving around and looking for who’s listing what, and you know, names start to pop up over and over again when they are that type of realtor because they’re doing a lot of business and they’re doing a lot to get their name out there.
Mike Arch: Yeah. Danny, one lesson I learned early on that I want to share too, early on before I was licensed I started in the investment world, you know, I ran my realtor ragged. I mean, I was like “let’s go.” I’d go over there and it was next to an ugly commercial building. I’d go over to flip that house and I would run that realtor all over town. But one thing I did learn is these automated searches. When you’re getting these automated emails, you see something that might be interesting. Hop in your car, run over there and look at it just so you’d get a feel for what’s next to you. So before you waste your realtor’s time – again, it works both ways. I mean, realtors can also fire clients just like clients can fire realtors. You know what I mean? So it has to be a win-win relationship. When you show a realtor that you’re being respectful of their time and you call them and you say “Hey, listen. I got your automated search I went to three of them. There was only one that was really interesting to me. Can you set up a showing? How soon can you do that?” I think they really respect that. So that would be a little piece of advice too, is don’t run your realtor ragged if you don’t think you really are potentially are interested in the property. It’s hard to tell sometimes when you’re looking online. You look at the pictures, it all looks good then you show up and you got the neighbor from hell, you know.
Danny Johnson: Yeah. So maybe do some research upfront sometimes on some of these to know, so that you aren’t just wasting their time. And I know what you’re talking about because I remember being in that sort of position where I see something and before giving it a whole lot of thought, I was just like, “I’ve got to go on this. I’ve got to go on this” without giving it enough thought because when you show up the property and say “Oh, there’s something I forgot here. This is a waste of time.” And it was a waste of time for the realtor because I didn’t think through everything before. I just had a knee jerk reaction and called them up to have them meet –
Mike Arch: Right. That’s good.
Danny Johnson: All right, great. Let me see. What do you want to cover next?
Mike Arch: While we talk about title companies, that kind of goes together, you know. The title company, I think it’s a similar philosophy as a realtor of finding the right ones, someone you connect with, someone who’s responsive. Danny, I’m sure you’ve been through this. We’ve talked about this in the past but I mean, there’s so many times especially in the investor or in the investment world when you’re buying a home, there’s a reason why the home is a potential deal for an investor and oftentimes it’s a neglected home, an abandoned home, an estate situation, an old unwanted rental. Who knows what the dynamic is? But oftentimes when you find someone, let’s say you potentially make a deal on a home and then there’s title issues. So that’s where these title companies really need to step up. I had a story recently, Danny. I had a situation where I really, really wanted this house and to make the long story short, there were literally 11 different heirs to this guy that passed away and 5 different estates that they had to deal with these affidavits of heirship and all of that. We’re talking on a very low price deal. I think most title companies would just say, “Sorry, can’t help you.” I mean, but these people literally worked on these for a couple of months and got it done. So, if you experience some of those situations, you might not appreciate what title companies have to go through to get clear title that they would be able to issue a title policy. But that’s…
Danny Johnson: Yeah. There can be a lot of work and scheduling all of those people, you know, you find out who has ownership based on heirship and then that home has to be scheduled and planned. Like you said, that one, I think you said different states and everything. So all of those people. One example I’ve had too in the past a long time ago, there was a house and the woman that owned the house was an elderly woman and I actually got it under contract for 8,000 and for people that aren’t from a place that has those kind of price points, it’s hard to believe that you can buy out. But really, I don’t know, maybe it was even 12,000 that I was buying it for, it was so long ago. But a little piece of junk house that really was only worth that much to me. No one was living there for a long time. And before we closed on it though, unfortunately the seller passed away. So it went from buying from her to having to buy from all the heirs and it turned out, I think there were maybe 18 people, believe it or not.
Mike Arch: Oh my God.
Danny Johnson: That ended up being a part of this thing. And split up $8,000 or $12,000 between that many people and they’re not even willing to take the time to talk to somebody about getting it closed. And unfortunately, that one didn’t close but those kind of situations do come up where there’s a lot of work to find all these people, schedule them, and they all have to accept the sale of the house to sign and everything.
Mike Arch: Yeah. A couple of other things regarding title insurance, you know, as your listeners and new investors may or may not know is that title insurance, at least we could speak for Texas, the rates are regulated by the state. So you go to title company A, B, C, or D and they’re giving you the exact same rate for this title insurance. But here’s where the difference comes in in terms of money out of your pocket as an investor, is they call it the escrow fee or the closing fee or the title fee. Not title insurance. But just closing fee is what I call it. That is basically for performing their service of handing the closing and disbursing all the funds, they charge the buyer a set fee and they charge sellers that fee. That ranges, I mean, in the low side $150 and on the high side that I’ve seen somewhere around $450. Well, if you’re doing a fair amount of volume like I do and what our company does, that’s a difference of saving $300 to $600 per transaction because often we’re paying both sides of the closing cost to get the deal done. That’s another whole conversation. But anyway, so my point is that’s one thing that I found, Danny, is having them do reasonable. Like I had a title company and their rates were somewhere around $300 close which is kind of the middle of the road. I think it’s leaning a little high to be honest with you. But big $300 to close the buyer and $300 to close the seller. Well, yeah, we were doing a lot of cash transactions. I mean, a cash transaction is like a dream for a title company. I mean, generally speaking they don’t have all the loan documents to mess with. They’re not wiring money back and forth or emailing documents back and forth for this house. I mean, it’s very clean, it’s easy, it’s more efficient for them. And we negotiated with the title company. We just said, “Let’s go. We love you guys. You’re wonderful You’re a great company and we’re very loyal. On our cash transactions would you consider doing them for $150?” and they said yes. I mean, it’s kind of like you don’t think it’s negotiable but it was just like houses, I mean, and they were happy to do it. They were saying “Yes. You give us all of your business, then we’ll be happy to give you a deal on the cash transaction.” I thought that was valuable.
I think the other thing that I learned over the years on different title companies, I’ve learned, Danny, that some title companies are a little more accommodating when it comes to maybe doing a mobile or a remote closing. I think that’s value. I didn’t even realize that. I was years into the business when I had an elderly lady and trying to figure out how we’re going to get to the closing. The title company said, “Well, we’ll send out a mobile closer and we’ll go out there and we’ll show up at her house and do the notary right there.” I’m like, “You can do that?” I was thrilled. So, we take advantage of that a lot. So that’s another thing as you’re trying to figure out which title company you want to use. I would ask about their ability to accommodate out-of-state situations, FedExing back and forth, sending a remote closer or a mobile notary out to get the deal done and for what it’s worth, I give applause to Chicago Title. We’ve had great luck with Chicago Title here in San Antonio. We work with the Stone Oak location there and it’s just been great. Another thing is, believe it or not, in some cities if it’s an issue of the Spanish-speaking, the bilingual aspect too, I think you work with title companies that have really good relationships going with them. And they really couldn’t accommodate our Spanish-speaking buyers so we had to switch because of that. That’s another thing, just making sure that they’re fit for that.
Just like the realtors, Danny, as you know, it takes an act of Congress to get a deal done a lot of times, with all the paperwork and the realtors and the closing and the inspections and the appraisals and all of the stuff. Oftentimes title companies too, they’re willing to stay after hours. I mean, I can’t say how many times the one we use, Chicago Title, they’re there 6:00 waiting for the customer because of the traffic and that sort of thing. So that’s really above and beyond the world of title insurance. So I just think it’s the same thing. Like when you originally asked me to be on your show, Danny, and we were talking about this subject, I mean, don’t underestimate the value of all these people. The title companies, the realtors, then the attorneys that we’re going to talk about next because boy, you need them and having the right one really helps make the transactions go smoothly.
Danny Johnson: Everything you mentioned there, our closer has done for us for years and I just actually wrote a note, a gift for Lauren because she’s awesome and we definitely need to acknowledge that more. I email and tell her a lot. But yeah, all those things that they do, it’s incredible, the times that I’ve gotten emails. Even I think sometimes at 4 or 5 in the morning, working to get everything done on time all the time and working very hard. Those people do exist out there and are great to find. I wanted to also talk about the fact that you talked about those remote closings and for sellers, the ease of the transaction for people selling a house to you where you could have the title company out there and close where it’s convenient for them. Because sometimes you’re dealing with sellers that have problems with getting around and things like that and so it’s nice to have that.
Mike Arch: Yeah. Very important.
Danny Johnson: It’s also good to utilize that for yourself and I’m sure you probably do it too where they come out and close you so that you don’t have to go to the title company to do the closings.
Mike Arch: Absolutely we do that all the time on ours. Yeah, they send the mobile closer out, we did it, we did it all right in my office on our schedule. So that works out beautifully.
Danny Johnson: Great. Do you have any tips for finding people for title companies and things like that? Maybe talking with other investors or…
Mike Arch: Yeah. I think talking to other investors, I think other experienced realtors, yeah, and I hate to say it but it’s kind of like realtors. I mean, there’s a lot of them out there. So if you don’t feel like you’re getting outstanding service, move on to someone else. I hate to say it but that’s really the way it works. But by the same token, the minute you find someone that you’re really comfortable with like you just mentioned, I mean, treat them like kings and queens and really build those relationships. I think that’s the key message I think, Danny, to new investors is these are real relationships. I consistently and I know you do too, cultivate these key relationships. I mean, because there’s a lot of things that’s happened behind the scenes at title companies and with realtors to help get deals done. And when they’re sitting there going “Oh, is this really worth my escrow fee? Or is this really worth my commission?” And they think about Danny and how wonderful Danny is, they‘ll step up and get it done. But I think that is really the message, is kind of have a system in place to cultivate those relationships on a regular basis whether it’d be sending them a Christmas gift or taking the out for lunch a few times a year. I think that’s really, really, really important. That would be the best advice. The good news is there’s plenty of them out there. Just like realtors, there’s plenty of title companies. You got to find one that you click with and is able to do all the things we just talked about
That kind of leads naturally into the other subject of attorneys. Would that be okay to talk about that next?
Danny Johnson: Yeah, let’s do that.
Mike Arch: With attorneys, I just wanted to share my experience with – I’m a very loyal person. I find an attorney that I like and I’m happy with and for me, same qualities. I want to know that the guy is available. There’s nothing more frustrating for me especially back to the whole sense of urgency on all of this stuff when it comes to the investment side of things. Having to make quick decisions, having to move quickly, having an attorney that will answer your phone call is very at the top of my life along with him being competent of course. But just being able to pick up the phone and get that attorney on to ask questions. The story I would like to tell and this might hopefully bring some value to your investors. A lot of attorneys as we know, they charge for their time. Early on I had this particular attorney that I used, was referred to me by someone way, way back when I was first getting started in the real estate business. We connected and he’s been great. Now, early on I was getting a bill and I talked to the guy and I called him up and asked a question about a foreclosure. What happens if someone files bankruptcy? How does this work? Especially because a lot of this stuff applies to the seller financing model that I’m currently doing. And I was getting these little bills. I understand you’re going to get a bill and that’s how they bill for their time. But the one little thing that I learned, I kind of negotiated with him and said “Listen, I’m getting tired of these nickel and dime on these little bills. I call you up and ask you little questions.” And we started talking about it, he’s like, “Well, that’s how I get paid for my time.” I said I understand that. To make the long story short, Danny, what we started doing is we started having a bad attorney – he was a real estate attorney – prepare all of the real estate documents for all of my closings. Now maybe that’s obvious to some people but the way I used to operate before I knew better is I go to the title company and we would have a transaction there and they would contact their own attorney, whoever they’re comfortable using. I just said to them, “Hey listen, can I have an attorney that I know because he prepares the documents for my transaction.” They said of course. So maybe that was obvious to some people. It wasn’t obvious to me in the beginning. So basically we were talking about, Danny, the warranty deed, we’ve got the real estate note and then you’ve got the deed of trust or a mortgage as it’s called in some states. So those are the basic legal documents. Many title companies, like I said, have their own go-to attorney because they have someone they trust. They’re quick. They know what the fees are and it’s just kind of an automatic system. Well, I kind of worked out a deal with my attorney. I said, “Listen, what if I bring you in so to speak and you prepare all those standard documents that are part of every transaction? Then you stop nickel and diming me every time I call you.”
Danny Johnson: That’s a great tip.
Mike Arch: That’s a great idea. So anyway, that worked out. So I think that’s the first about attorneys in general in my experience whether it’d be real estate, insurance, just attorneys in general. And I get it. They bill for their time. But you have to draw the line sometimes. Some of them over the years I found kind of pushed the envelope on basic little questions.
Danny Johnson: Yeah. And you have to be careful. Because I’ve had this happen several times where you go in and you start talking. Before you know it, you’ve chitchatted for 15 to 30 minutes. Well most of the time the clock is running. Like you’re paying for that time. So realize that and get to the point I think is the smart thing all the time. Never assume that you don’t start paying until you talk business because most of the time you’re being charged for all the time. So cut the chitchat and get down to business usually pretty quick.
Mike Arch: Yeah. Not to contradict what we just talked about, I mean, if you want someone competent, I think a typical attorney, Danny, we were talking about that the other day, we’re probably looking at probably $300 an hour or something. I mean, let’s face it. When you need a good attorney, you need a good attorney. When you’re a new investor and you’re trying to learn the nuts and bolts of foreclosures and bankruptcies and warranty deeds and someone passes away and what’s an affidavit of heirship. And all this basic fill-in-the-blanks as a new investor. I mean that’s the part where I think come on, that’s where – I think communicating that, sometimes it’s just a matter of letting them know your expectations. If they truly see you, they want business just like anybody else and I think that advice to new investors would be to maybe accumulate, maybe make a list of all of the questions they might have just on different subjects and maybe getting a referral from another investor, another realtor, maybe a title company. Title companies would be a great one for that because they already who’s preparing the documents. And you go over there and you say, “Hey, introduce yourself. Hey, I’m a new investor and I just wanted to let you know that I’m looking for an attorney to be kind of part of my team so to speak. I need to have a go-to attorney. Would you be willing to spend a few minutes with me on some of these basic subjects?” And it works both ways. If they’re not willing to do that, I think you got the wrong person. Like any attorney, any investor, any realtor, I think you got to invest a little bit of time to build the relationship. So that is an approach I actually took early on with my attorney. I came up with some things and we sat down and I took him to lunch or whatever and it kind of set the ground rule so to speak. I think the same principles apply, Danny, is back to building a relationship. I honestly can say that I have a very strong relationship with many realtors, you know, key title company and then also the attorney.
Then you think about for a minute – sorry to go back to the title company – but one thing about the title companies that you’ll learn as a new investor is I said for example Chicago Title but usually there’s a specific escrow officer.
Danny Johnson: Absolutely.
Mike Arch: There’s a specific escrow officer. You don’t want to just turn your contract in to Chicago Title and let them hand it to wherever it goes. You need one specific person, they call them an escrow officer or the closer that actually handles the transaction. That’s who you were referring to as well, right?
Danny Johnson: Right, right. And it’s important to call around or ask and then ask who is working with closing a lot of investors, you know, somebody that’s already working with investors so that they’re not confused. By the way, we handle transactions.
Mike Arch: Exactly. So anyway, back to the attorney. I didn’t want to give poor advice on any of that. I mean, when you need a good attorney, pay up and get a good attorney, make sure they’re competent. One thing to learn as an investor is you actually need an attorney I think more than you might realize. I know we do. I seem to be talking to my attorney once or twice a week about something. What’s been your experience on that, Danny?
Danny Johnson: Yeah, not so much. I mean, we have points where we’re trying to figure something out and then we talk but as far as the – a lot of times it’s really just ordering, communicating to get the documents.
Mike Arch: I think a lot of that probably has to do with our seller financed business model. I mean, it’s a little more complicated in the sense that you’re not only the guy selling the house like you were on a traditional flip. But you’re also the bank and you’re also the collections agency. You know what I mean? So there’s a few more hats there on the seller financing. It’s probably what’s happening with my particular model. But, anyway.
Danny Johnson: Yeah. I think overall for this whole conversation, there’s been a lot of great things for people to understand sort of who to look for, what’s possible, what to expect from the people that you put on your team that you work with throughout all of your house flipping business. It’s so important to take the time to find those right people and then if you do find that, you have the wrong person. You’ve got to be quick to cut ties and find somebody to replace them with because if you are finding any part of your business causing you stress or causing you frustration, you just have to change it because there’s too many things that we’ve got to do in this business to have any part of the machine grinding and making a bunch of noise and causing a bunch of problems. So just being smart about taking the time to find, putting the time and effort to invest, and finding the right people is paramount.
Mike Arch: Yeah. That is a great, great point. I knew an investor, I touched on this earlier about working with someone part-time in real estate and he had, I don’t know was it a brother-in-law or something who’s a teacher and a realtor, which is great for him but not for the investment. So back to when the investors needed to move quickly, the guy’s teaching 8th grade science. So the bottom line is, like you said, you got to be smart and it is a process, it is a team and when you find those good people, really build the relationships with them and they appreciate it as well. That’s the great thing about real estate, Danny. One thing I love about real estate if you think about it, everyone’s motivated to get the deal done. I mean, the title company gets paid, like commission on the title policy, realtors get paid a commission. That’s one dynamic I really, really love. So you just got to make sure. It’s like a tug of war that everyone’s pulling as hard as you are.
Danny Johnson: Right. I think what came out of this episode for me too as well as the fact that just knowing what type of person and what to expect and what they should be doing helps a lot because I think a lot of times people will talk to an agent or a title company, a closer, escrow officer, and feel like asking them to do something is probably asking for too much and you need to understand that it’s not. So if you have somebody making you feel like what you’re asking for is too much then you’re talking to the wrong person.
Mike Arch: Great point.
Danny Johnson: Well, thank you very much for being on the show and covering all of this and all of your advice has been great. You and Erik are actually releasing a book very soon, right? You want to talk about that.
Mike Arch: Yeah. Thanks for letting us plug the book a little bit. Yeah, this has been a couple years project and thank you for mentioning that, Danny. I wasn’t going to mention it unless you brought it up. But I appreciate you bringing it up. And you know, people ask us all the time how we do what we do because like I said earlier, we do seller financing but we do it in a very professional way. We’re licensed and we create good notes is the bottom line. That’s the bottom line. So we kind of documented our process and we have an abundance mentality and a couple of years ago we put on our goal list. We had to write a book and boy, much of it might have to come through so it’s been a labor of love, it’s been a couple years project. It’s just literally good and thought out. I would say it will be on Amazon probably in the next couple of weeks. We’re almost there. We had just submitted the final edit. But we put a little website, StopFlipping.com. The actual title of the book is Stop Flipping, Stop Renting: Seller Finance Your Way to Financial Freedom. But the website to buy the book, to check out the book is StopFlipping.com.
So thanks for letting us plug the book. I think it’s actually a very good resource. Even if you are into flipping or building rental portfolios, it kind of gives you a different perspective and I think that’s the beautiful thing about real estate investing, is you could have literally 10 people in the room and every one of those people are in real estate and none of them are doing the exact same model. So that’s the beauty of it. You have to kind of find what your niche is. We really gravitated to this. There’s a real feel-good side to what we do in terms of providing the financing for a family that might not get it, improving the neighborhood one house at a time. Like you touched on earlier, the biggest one for us is dealing with an owner mentality versus a renter mentality. Erik and I both had pretty good sized rental portfolios but when we kind of started dealing on the other side of the fence so to speak with owners versus renters, that really pushed us over the edge to move forward with that model. But yeah, I think it’s a great book. There’s some really practical how to’s in there. We really didn’t hold anything back. We laid out our model on paper and it also kind of intertwined a lot of the philosophies that kind of drove us and help us become successful. So I think it’s a good mix of nuts and bolts and business philosophy.
Danny Johnson: Great. So is there a way on the StopFlipping.com website for people to get notified when it’s released?
Mike Arch: I think there is, Danny. I think they can almost pre-order it. I’m sure there’s a way to contact there and like I said, we’re literally talking in the next couple of weeks. So I’ll keep you posted. Maybe you can make another office announcement to all your listeners maybe on one of your upcoming podcasts. I’ll let you know for sure when it is. But yeah, I sure do appreciate you inviting me on. I think you’re doing some great, great things. And I don’t know how often you toot your own horn but you’re a real pro in this business and you’ve been doing this for a really long time and one of the best in the game.
Danny Johnson: I appreciate that, Mike. Thank you for being on the show. And for people that would like to find out about the book and you should be one of those people because I’m looking forward to it, you can subscribe to Flipping Junkie. If you go to FlippingJunkie.com, you can subscribe there and I’ll definitely send out an email as soon as I find out that the book has been released and I will mention it also on the podcast that comes up within a couple of weeks to let people know that that’s available. And then the link for StopFlipping.com and Mike and Erik’s TheNoteFactory.com, I’ll put on the show notes page which you can easily find at FlippingJunkie.com/31. That’s the show notes for this episode. Well, thanks again, Mike. I really do appreciate it and I’ll talk to you soon.
Mike Arch: Yeah, talk to you soon. I’d love to be on again. I really love what you’re doing and love to spread the good word about everything we know that might be able to help new investors. So thanks again for calling me today and having me on.
Danny Johnson: Awesome. Have a great day.
Mike Arch: Bye.
Danny Johnson: That was another great episode in this series for learning how to flip houses. We started with the foundation and motivational episodes. If you go to iTunes you can see those previous ones and check out the series and start from the beginning and listen through if you’re starting from one of the middle episodes. But we’re working on building teams and talking about all the different people we interact with as real estate investors in these last several episodes, we’ll be moving on into the nuts and bolts of analyzing deals and finding deals and getting leads and things like that. If you want to get a jumpstart on that, of course you can get a real estate investor website professionally done with all my years of knowledge and getting leads, thousands of leads over the years from my real estate investor website myself. We’ve put all that knowledge into Lead Propeller websites. It’s websites for real estate investors. You can check that out at LeadPropeller.com. Hope you guys have a great week and we’ll see you next week.