Coach, the energy out there felt different. What changed for the team today?
It was a new game day, scratches from the California Lottery players, everything. Those games sent the team's energy through the roof.
Are you saying it was the off field play that made the difference on the field.
Hey, little play makes your day, and today it made the game. That's all for now, Coach, one more question.
Play the new Los Angeles Chargers, San Francisco forty nine ers and Los Angeles Rams scratchers from the California Lottery. A little play can make your day. Peace made responsibily. Must be eighteen years or older to purchase plate or claim.
So now we're going to go into what you guys actually are on TV for as far as you know, fixing up homes and flipping homes in Chicago, specifically in South sud Chicago, Right, that's your the area you focused on, all right? So okay, so what's the real estate opportunities because in Chicago were in Chicago, So I think it's important to talk about how like that, Yeah, before we start anything, how is this what's Chicago real estate looking like?
And what's the real estate opportunities in Chicago? There are a lot of opportunities in Chicago. Man, we have one of the hottest mark it's in the country. Right. The question is, you know, it's just how are you starting? I mean, if you do have your your credit and your and your and your money saved up, you know
what I'm saying. As a first time home buyer, there's an enormous amount of opportunities, and we advise people that are starting off to go for cash flow, go get that three or four unit of property, or go get a two or three K renovation loan or some kind of Fanny made construction loan so that you can get a properties below market value because there's thousands I'm not talking about hundreds of property. There's thousands of properties in
the Chicagoland area. Yes, that you can get below market value and renovate and then turn that into a cash flowing property or a property that you live in for a couple of years and you know people talking about house hacking. Now you know, living for a couple of years and then you know, sell it after two years and now you got this check and now you've got capital to start a business or get another property or do multiple things. So when you say, below market value.
Like what are we talking about as far as numbers, It's like some what's an example of, like a home that you just recently flipped or something that you can like expect Like, okay, this is some than that is typical.
I mean, tell him about the one over the Bronsfield house you were talking about. You said, the last property, the last one. It could be what anything? So what I do use this is hample a lot. So so I got a three thousand square foot greystone single family home, greystone, greystone. What is that? It's like a brownstone, brownstone, oystone, right right?
So I got a square foot graystone in Bronsville, which is a neighborhood on the south side, got that for two hundred thousand, got it below market value because the recession was going on and the guy was trying to sell it because he was in pre foreclosure. So got it for two hundred thousand. And I used a two O three K renovation loan for that property. So that allowed me to have the money to purchase the property for two hundred thousand, and I also rolled in thirty
thousand in renovation. Now this property didn't require a gut rehab. I mean thirty thousand. I did a couple of the bath rooms, redid the porch and the kitchen, and that's what I initially did. Made all of those things look brand new. Didn't touch any of the drywall throughout the house, none of that type of stuff.
This is not a fixer upper.
So yeah, so this was just updating a great opportunity, and you only put three percent down, three and a half percent. So I came to that closing with seventy seven hundred dollars, so seven thousand, seven hundred dollars. And the reason why is because I couldn't negotiate because it was the bank and it was a foreclosure.
I want to, I want to, I want that to gold. People said, because we talked about two or three K loan actually with Jay Morrison, but we didn't go through a real world example.
So this is good.
So you got two hundred thousand dollars property and then you had thirty thousand for renovation costs, so it's two hundred.
And thirty thousands the full long.
The two O three K loan allows you to put three to three point five percent down, but the thirty K gets wrapped into the mortgage, so three percent of two thirty is like seven thousand or seven seven. So you got the innovation and the home for not including closing costs, but out seven thousand dollars is how much the down payment was, right, we're closing cost. How much was it with closing cost?
I mean I came to closing total all in for seventy seven hundred.
How did you roll that into the market.
Yeah, because it was all rolled in. Okay, he rolled it into all right, it's good to know.
Actually actually rolled in three of the first month's payments into the into the loan also, so I didn't have to make my first payment, and so I was actually moving into the property, which was ninety days later.
That's because you were there, was gonna you were updating.
The bathrooms, right, because all the updates the relations Okay, I'm sorry I cut you off, sor right, So now speed it up.
So all right, you got the property for seventy seven hundred. Now you have it? Now what Now? Now I have it?
Renovation needs to start just about immediately. So in that process, I had already got three different contractors to give scope of work so that I can decide which one I wanted to work with as far as you know just completing the work and how much the materials would cost and things, and you make the contractors very honest when they know that they're one of three in nickapeting.
What was that process like dealing with contracts, because a lot of times people going to these deals and they say, that's the toughest part is dealing with contractors.
We always push doing these these two or three K renovation loans because when you do a renovation loan, there is an inspector who comes behind the contractors on each draw or phase of the project. The money comes each draw, let's say thirty thousand, you get ten thousand. Three times the money comes to the homeowner that ten thousand dollars to pay the contractor. The contractor for the first draw has to do that ten thousand dollars worth of work
out of his own pocket. The contractor has to put its own money up and has an inspector who comes to make sure that he's done the work up to code before the money is released to the homeowner to give to them for the next phase. So they don't make their profit until they finished all of the work because they have to go to do the first phase out of pocket, so now the homeowner's protected. There's no contract to getting over on you or trying to convince you that the work is good enough.
Quick question now, because I'm thinking like, you guys are firefighters and obviously you guys must know code, right. Did your experience as being firefighters help you during that process?
Yes, because I mean as firefighters too, I mean we learn about building construction and we see a whole lot because we in the process of being a firefighter, you see houses that are like burned down and destroyed, so you see and we tear out a lot of walls and ceilings and things like that. So we're kind of on the other side of it. Yeah, and then we also work with a lot of firefighters earners.
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Need happen to be in the trades, so we you know you learn a lot through that process also, So I mean the thing is it removed all the fear because you actually had this this inspector who comes and make sure that the work is done complete.
So all right, So okay, so now you started the bringing the contractors in.
What's the next steps after that?
Like how long did it take to fully renovate it? When we were able to get tenants in? Like, what's the deal?
Well, well, this was a single family home, so I wasn't I didn't have to deal with tennants. But I had ninety days to get the to get the work done, and it actually it got done in a short period than that. I think we were done in like, you know, sixty five seventy days or whatever. So by the time I had to make my first payment more just payment, I was able to move in, move my front frontiture in and it started. You was living there? Yeah? I lived there? How long did you live there? I was there for
three a little about three and a half years. My attention was to be there for two years because I knew that, you know, after two years, I would be able to sell the property no capital gains. And also I knew that my credit would go back up because I did short I did a short sell. See we didn't include that the condo that I had, I did a short sell on that. After two years, my credit went back up, and it coincided with my ability to
sell this property with no capital gains. Now I was enjoying myself so much that I actually ended up staying for a little bit longer than I anticipated. We had so many ports, you said, toga parties, and so you guys were both leving boils.
You guys are both living in the problem.
So can you talk about that capital gains? You said that in two years you allowed you not to play capital.
Game, right, so you hadn't been there twenty four months. That's the rule. What is capital Gamespital capital gains is the profit that you make on a property, the difference between how much you paid for it and how much you actually sold the property for it. So the profit is the capital game. And so the tax on the capital game happens on properties that are not your primary residents or you haven't lived in as your primary residence
for at least twenty four months. So that's why I knew I needed to be there for at least twenty four months in order to be able to collect those capital games, which in this instance was katy thousand dollars cash, and then be able to then have the capital to move on to buy a multi unit property and then start flipping homes and then partnering with my brother to really, you know, start to do more than we had ever anticipated.
So if you don't live in a property for more than a year and you sell it, but you use their proceeds to buy another home, do you still have to pay capital games?
Yoe? You can do what they call ten thirty five Yeah, exchange. Yeah. Oh yeah, he knew you knew what you want to there's different way.
Yeah, yeah, yeah, I answered my own question, all right.
So Okay, in the whole time that he was doing that, mind you, I'm also out to unit buildings while he's doing that. Right, So by the time he sold that property three and a half years later, I already had two three unit buildings and a cash flowing and so it's like the two of us are like like one person, right, because I'm implying one strategy. Yeah, and when his condo went from worth of one fifty to being upside down to thirty thousand, I looked at that I was. I
ain't never buying a condo. In fact, I ain't buying a house neither. You know, I'm going straight for the multi unit apartment buildings.
Thanks for making that mistake, bro, Yeah.
Somebody has to jump out there first, and yeah, bus over. But the thing is what we did learn though, is we learned about the power of cash flow, and we learned about the power of buying properties below market value and being able to get that cash and that leverage for us to then be able to go, Now, now I got this lump summer money, and now it's like, okay, now let's buy another multi unit property. So we for
cash flow. Now let's go. You know, we went hard money, you know, did a flip that way, and then you know, from there, now the wheels are turning and now you got the next deal and the next deal, more confidence, more confidence things you know, things go wrong, and those when you get burned when you touch that stove, we don't ever touch it again. So, like, you know, different things that we learned about how we deal with contracts
and stuff like that. You know, everything didn't just you know, shoot perfectly, but it still was you know, enabled us to make it to the point where we ended up on TV. How did you how much did you sell that property for? I ended up selling that property for three fifteen six three fifteen and well you want to give the exact three thousand and sixteen thousand and five hundred or whatever it was.
But yeah, in two years you held up two years three not bad. So one hundred and sixteen thousand dollars profit that you made right for three years and you got it for seventy seven hundred dollars.
How much was your monthly mortgage? A monthly mortgage was like I think it was like fourteen hundred. That's powerful.
That's actually really powerful because especially in New York, we're paying rent for nineteen hundred and twenty one hundred, twenty two hundred dollars a month.
Where is that at?
It's like, right, what twenty twenty one? Is that it is one bedroom?
Okay?
Not three thousand square feet? No way. Maybe it wasn't three bedrooms and four bathrooms.
Maybe nine hundred square feet, no.
Man, seven seven hundred square feet, one bedroom, one bathroom, row man.
And you gotta get the parking. So you got you.
Got a property for seven thousand dollars paying under two thousand dollars a month and you held it for a couple of years and made one hundred and sumi thousand dollars profit. I say that to say a lot of times people don't fully understand how attainable buying a home really is. Ken It's different programs and there's different ways you have to educate yourself. That's one of the reasons of the podcast. But it's it's not as far fetched as it may seem.
No, it's not.
I think I mean people, I think people live in fair right because they've never seen it. Like I said earlier, it's like we have first generation, so like we don't know what we don't know, Like people don't know that you these these these opportunities are out there.
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