January 3, 2017

Real Estate Case Study

Episode 42:

Richard Shelton was born and raised in southeast Oklahoma where he started working in his family’s grocery store at the age of 12. His grandpa started in the grocery business in 1936. His family continued his grandfather’s legacy until they sold the stores in 2014. During his 29 years in the business there were drastic changes in the grocery industry.

So Richard decided to try his hand at real estate and he did a lot of research into several different coaching programs and was most impressed with Mitch Stephen’s program.

Here is a real estate case study on the work he has done so far.

What you’ll learn about in this episode:

  • Richard’s background
  • Richard’s real estate case study
  • What he learned going through his first deal
  • Richard’s goal of meeting both his and his wife’s freedom number so that she could retire from teaching
  • What Richard’s typical deals look like today
  • Why you need a mentor and an attorney very early on
  • Why Richard is considering using LiveComm.com for his phone collection and answering needs
  • Richard’s goals for next year and the years going forward

Resources:

Transcript:

Mitch: This is Mitch and welcome to the Real Estate Investor Summit Podcast, we have a case study today, and a guy from Eufaula, Oklahoma. His name is Richard Shelton, he took a leap with both feet, went from one completely life to the real estate life full time, and we’ll gonna talk to him right after word from a couple of my tremendous sponsors, so listen folks and we’ll be right back. 

All right. I appreciate my sponsors, as always they’re a great people, if you are interested in what they have to offer, I stand behind them a 100 %, or they wouldn’t be on the show, and let’s move in right now to, talking to Richard Shelton.

Hey, Richard, how are you doing?

Richard: Doing great, Mitch. Yourself?

Mitch: Fine. First of all, I wanna thank you for taking the time to come on. ‘Cos when you go solo into the real estate investing business, I guess you are pretty busy most of the time. 

Richard: Oh, yes. Am pretty much booked up. 

Mitch: So, this is a case study, just to let the listeners out there, maybe what other people out there have gone through, when they jumped into the investing game in both feet and leave a world completely behind, and so, I wanted you just to take a back to, who is Richard Shelton in his previous life. Tell us a little bit about Richard.

Richard: Well, I grew up in the real estate industry, my grandfather started a grocery store in Oklahoma back in 1936, and so it was a family business. And we ran it for years, but over time, margins got thinner and expenses have gone up and then we heard about obamacare. I mean, it just hit the point of being ridiculous. And so, we put up our stores for sale, and got them sold, and the thing that got me at owner financing was, one of the stores a guy wanted to purchase from us over owner financing. And so, that’s what got my wheels turning. And after that, you know, I wanna find out who’s the best at it, and that’s when I ended up coming across you. 

Mitch: [LAUGHTER] I take that as a compliment. I’ll take it or I can get it. So, did you owner financed all your stores? Or just one store or what?

Richard: No, they bank financed one store and they owner financed the other one. 

Mitch: Okay, so, is this a doom and gloom proposition or were you ready to get out of that business anyways or–

Richard: I was ready to get out, it was, you know, we had 85 employees and half of them weren’t dependable, I was working myself into the ground 7 days a week, you know, I’ve been doing it for 20 years. 

Mitch: We’re you making big money, medium money, and smallmoney? 

Richard: Made big money, back, you know, 15 years ago. But, as the years went by, the margins got thinner and thinner. By the time we got out, I think that the average, average grocery stores, are netting less than 1%. 

Mitch: Wow. And you know, that’s happening to a lot of moms and pops, they just don’t get the economy the scale or buying power you know, I think it is happening all over the country.

Richard: It is. 

Mitch: It’s sad. It is sad when the [INAUDIBLE] life change and so. It is a cycle, and I don’t think it will ever stop, so. How did you land on, did you know that you wanna be in the creative real estate environment, or is it something that you just kind of walked into slowly.

Richard: During our really good years, in the grocery business. We did– some do commercial leases, our general income would come and go, original convenience store. So, I already had some interest in the real estate, but after doing the owner financing on selling the stores, you know, I actually came across one of your Facebook Ads, and read through it, and it would be perfect fit, you know, in my geographic area. Because, we just have so many people that are renting and you know that could be buying homes, because in the area that I am in, about 70% of the population, in this rural area, are rentals. 

Mitch: Yeah. Yeah. And that is a great market. You also have affordable houses where you live right? Let’s talk about the pricing of the houses, right around that you are buying and selling. 

Richard: You know, the medium house around is going between, you know, $70,000- $120,000 for a nice house. Now, you’re rental properties, you can pick those up for you know, $20,000-$40,000 all day long. And in that area that is where am buying in, is that $20,000 -$40,000 range. 

Mitch: Yeah. So, a lot of people are listening gonna go, “Where in the heck do you find houses like that, this must be shaft”. You said, it was a nice house, that you get between $70,000- $120,000. And your lower in houses were picking up between $20,000-$40,000. So, just want to let other listeners know, if you are from California, Las Vegas or Phoenix or Arizona, or some places where houses are more expensive, sometimes you have to go outside your geographic area, and open up shop, for the record, am helping people plan to do right now, you know. They live in LA and they’re opening up shop somewhere in Texas or Alabama or Oklahoma. One guys’ in Rhodes Island and open up shop in Alabama. And it can work. He actually have a business you can work on, instead of him, if you could a lot of distance between you and your shop. So, how difficult was getting the hump of doing your first house. Talk to us about that process or that anxiety, or if there was anxiety, am guessing there was, of doing your first house. 

Richard: There was. You know, just the fear of not knowing what to do next, was–and plus, I didn’t– I was finding a real estate attorney that would understand what I was gonna talk about, next the biggest key to being comfortable is to find the right attorney to have people in place to get things done. And you know, and it takes a few deals, you know, before you have that in place. But, finding the right people to go-to, that was my biggest hurdle in fact, I find the right real estate attorney, I talked to over 20, until I finally got someone that I was comfortable with and–

Mitch: You need to understand what we were trying to do, right?

Richard: Correct. Yeah. When the great detail would be in, you know, real estate is only what he does and that’s what I was looking for. 

Mitch: And he is not necessarily in your hometown, he just needed to be in your state. 

Richard: Right. 

Mitch: Is he close to your or far?

Richard: He is about 80 miles from me. 

Mitch: He might be as a million miles, right? Because, you’ll not gonna go there and pick papers, or sign papers. He have to find ways to do it, you know, technology, right?

Richard: Correct. 

Mitch: Yeah. I mean, were you thinking to yourself, “This is a huge intersection in my life”. And were you pretty confident how’s it gonna work out, or were you just praying that it will work out?

Richard: Well–

Mitch: Because, you know, you spend a lot of years in that grocery business, and that’s a lot of time that you don’t sometimes develop other skills when you’re just doing practice in one arena. 

Richard: Well, what I did, after I have all this get done, and have a grocery business, I have to take about 2 months to just do a haunt and do whatever I wanna do ‘cos I had time today. Then, after that, I took 2 months and I read and researched and went through you know, several seminars and got the basic knowledge where at least I understood all the lingo, not you know, not to keep up with the conversation on real estate, in which I was very fortunate, because the owner financing of the business that I held, basically, replaced my income, it’s not like I was having to going to starve if I didn’t do a deal. 

Mitch: So, okay, you didn’t had a gun onto your head. But, you knew that you were not just gonna sit at home, and just live. 

Richard: No.

Mitch: You got some other goals too, didn’t you?

Richard: Yeah. I did, you know. One of my goals was– my wife is a school teacher. And in figuring that a school teachers aren’t paid very much and she would have been teaching for 17 years and we got to the point where you know, this is gonna be her last year to teach, which she was really excited about.

Mitch: Yeah, I remember, we talked about that. That was your goal. So, we went and sat down and did some numbers. You already had your freedom number met, as far as your personal income in what you needed to do. Like what I say, freedom number it is not about being rich, it is just about covering your overhead and having a little bit extra. But, we’re actually gonna talk about your wife’s freedom number. Because, that was really the goal, we needed to replace her income so she can come home. And you guys, really did a good job of keeping your overhead low. You know what I mean, which is a key, a key factor when you are trying to get free or get someone, or get your spouse free. How long have we been associated together, Richard? Do you remember when we first started?

Richard: About a year and a half. 

Mitch: It’s been a year and a half. And so, how many deals have you done in that a year a d a half?

Richard: Well, I did my first– actually, I bought my first property in July of 2015. And right now, am at 18 properties. 

Mitch: Yeah. You know, numbers are pretty humble there in your part of Oklahoma, but so, is the cost of living and other things, it kind of bounces out. But, what is 18 houses doing for you in cash flow?

Richard: You know, the month to month cash flow not including down payments, right now is $4,200 a month and after finishing up some deals, I have gone this month, by January 1, we should be right about $5,000. 

Mitch: Is that enough to exceed your wife’s income as a school teacher?

Richard: Well, my wife’s take home as a school teacher right now is $2,600 a month. So, yeah, almost double. 

Mitch: Okay. So, mission accomplished in a year and a half. How that is kind of make you feel?

Richard: That makes me feel pretty darn good. [LAUGHTER]

Mitch: I bet your wife’s ecstatic. Because, just like the grocery store, things are getting tougher and tougher and I think the way that you can’t discipline kids in schools, and the way they are raising their kids when they are not in school, it must be tough. Did she find it find it to be really tough in this fashion, i’m just curious?

Richard: She is. You know, it’s– you are expecting to do more and more to have less and less control,and so she’s– her patience are wearing thin and she’s ready to step out. 


Mitch: Well, 17 years, given to your community that way, is– she has done her share. So, tell what does a typical deal is. I mean, you can pull out a real deal by the numbers, you didn’t have to exact, what is your typical deal. How does it look like?

Richard: Well, one deal I just wrapped up a couple of weeks ago. I bought a foreclosure on Walnut Street for $20,200. And it was a little 2 bed, 1 bath house, brick walled and slabbed, and anyway, within 4 days after I was close buying it, I had it under contract under owner financed it for $49,500.

Mitch: Wow. So, almost perfect picture in the owner financed value formula, right? What to offer and what to sell it for. 

Richard: Yes.

Mitch: And you, did you know you could sell it for $49,500? Did you backed into the rents, or are we are looking it into currently market analysis?

Richard: Well, I backed them into rent to own this, which was pretty cool is that the guy was buying it, he wanted a $1,000 a month payment. 

Mitch: Oh, okay. 

Richard: Yeah, when you are talking about a little bitsy house, that–he wanted to pay off quick. He wants to pay off that house in 6 years, at a $1,000 a month, and you know, I actually took a bank loan on this one, for 5 years, and my payment is $380 a month. 

Mitch: So, $380 is what you’ve got–you owe every month, for 5 years and then this guy’s paying you $1,000 a month for 6 years. So, wow. You are clearing a $620 a month.

Richard: That’s probably less taxes and insurance, that’s $80 a month. 

Mitch: Oh, that’s included in his $1,000. 

Richard: Yes. 

Mitch: Okay, okay. So, am still 500 bucks a month for 5 years, it is over $60,000. How much money do you have in this house? Did you put it to $20,000 a piece, you borrowed that $20,000 right? All of it?

Richard: Yes. I borrowed the full $20,000, the only thing out was closing costs about $1,000. 

Mitch: And okay, how much is this [INAUDIBLE] now?

Richard: He put down $2,000. 

Mitch: So, you’re covered again. Put $1,000 in your pocket. So, not only do you not have any money out of your pocket, you had about $1,000 to create a $520 dollar positive, $40 positive–$540 positive per month, for the first 5 years, then you get the $1,000 for the last year. 

Richard: Correct.

Mitch: Because, you are paying, it goes away in 5 years. So, do you recognize this as the way to get rich?

Richard: Definitely. 

Mitch: I mean, it is not your goal when you talked to me, you said that–you told me, first of all, I’d like the audience know, this man gives a lot to a church in their community, he gives a lot. And that’s what really he wants to be doing. But, he also realized and know, it takes money to walk around this planet for another 20-30 years, God willing and so, you know, he is out there applying himself, he is too young to man and too bigger a man to wanna sit down on a porch and drink coffee for the next 20 years, it just probably drive him nuts, huh, Richard?

Richard: Oh, most definitely. 

Mitch: Then you see this, and so, it is the business that you thought it was gonna be. Is it harder than you thought? Is it more complicated than you thought? It is more drudgery than you thought, or is it more fun that you thought it’s gonna be? Tell me, what is your feel of the business, right now?

Richard: Oh, I love it. You know and I love the strategy of you know, am always looking at property and then think to my head,  what are my options to do with that. Is there really money? Is it worth jumping in and take the risk on it? And what I found is, owner financed properties after I close and buying them, there is no problem, finding someone to sell it to, ‘cos there’s so many people, that are renting that you know, want an owner financed property. You know, out of the 18 properties that I’ve done, the average time that it’s taking me to find the owner financed buyer is about 2 weeks.

Mitch: Wow. And am just curious, are you using Livecomm, or you just don’t need it?

Richard: Am not using it right now. Right now, it’s just me. 

Mitch: Yeah, I understand. So, what do you think if someone’s out there and getting to start a new life like you do? What’s that one piece of advice that you just kinda deliver to him?

Richard: Well, the piece of advice that I would have, you know. Get familiar with it, and get you know, get the people in place to get started. And you know, ‘cos you are going to come across questions, and hang ups, especially in the beginning. And you know, you need to be able to you know, give Mitch a call and say, “Hey, what do I do with this”? And you also need a good real estate attorney, that when it comes to closing that can advise you. You know, those were the 2 things that I went up early, that made this move smooth to begin with. 

Mitch: Yeah. I certainly, this call is not to be self-serving, and I appreciate you mentioned being in the scenario, but I think your point was, whoever it is, whatever your niche is, find someone who really has accomplished, what you would like to accomplish in that niche. Get your mentor, because and am not saying this again to be self-serving, but it would have been a whole different story, if you haven’t had a mentor, right?

Richard: Oh, it would have been totally different. You know, because the thing is, I didn’t even know what questions, I ask in the very beginning. 

Mitch: Yeah.

Richard: And you know, it doesn’t do any good to sit down with an attorney, if you don’t know what you to ask him. You know, you’ve got to have basic direction and what you wanna try to accomplish, before you can ever get the ball rolling. 

Mitch: So, to some of the people who are in this call, Richard signed up at the optimum level, he has my phone number, he can call me whenever he wants to call me. You know he called me, as I remember correctly, you are pretty self-sufficient guy. You don’t need a lot of hands to lean, but when you needed to question or you needed or get some confidence on something, you know, we were calling and talking. I don’t remember, but I do this, for people at that level a lot. But, I don’t remember if I did it with you. Because, you are such a self-starter, did I get on your phone with your attorney, so that we can make sure that this is the right guy, or you did that on your own? Because, I don’t remember. 

Richard: I did it on my own. 

Mitch: Okay. You’re a business owner and quite a student, but just for the record, I helped people find these attorneys and their CPAs by, you know, get them on the phone, and get on with them, talking with them. Sometimes, like what you said, we got to go 2, 3, 4 or 5 before we find the one the one that believe on it. I think you had an attorney tell you all kinds of things about owner financing, didn’t he?

Richard: Oh, yes. I had some people say, “You can’t do that”. You know, I just had some, just not even want to deal with it at all. And you know, the worst thing that you can do, is talk to an attorney who is just general and does a little bit of everything, that’s not who you want. You want somebody specialized. 

Mitch: And when an attorney tell you that this is illegal and you can’t do it, you know he is the one guy right away. [LAUGHTER]

Richard: Yeah, that’s right.

Mitch: Well, you are not that guy click. [LAUGHTER]

Richard: [LAUGHTER]

Mitch: But it is scary, because you know, I have students go out there and they call their attorney and these attorneys tell them and they are calling me back to say, “Mitch, this guy’s saying that you can’t do this. And am going, “Well, they are wrong”. I mean, there’s only a couple of states that I think that this state doesn’t really wanted you to do it. One is Pennsylvania and you know, I’ll give them that, and there’s a couple that you know what, you really don’t wanna do it there, you know. Find the place that you want, do some research, do some data, and find the kind of culture that you wanna buy in and sell in, and go there and open your shop from afar. But, it gets kind of scary for my students sometimes, when he attorneys are telling them that this is illegal, or how many realtors, have you ever gone through a realtors that you can’t do what you were doing?

Richard: Yeah. I have. Yes. You know, I rent to a realtor down in the [INAUDIBLE] that [INAUDIBLE] is illegal. And I told them–my attorney says different. Not ‘cos he is opinion over years and went on, and–

Mitch: I got a good one for you. You might wanna pull it out not just for anyone, but someone’s really got into your craw, I have them say it to me, and says, “You know that’s illegal, don’t you”? And they said, “So, you have an attorney’s license”. I said, “No. You know what’s illegal to give an advice when you are not an attorney”? [LAUGHTER]

Richard: [LAUGHTER]

Mitch: Don’t you know that? I think you might better watch out what you are saying. You know, this is illegal, I might turn you in. You know what, it is illegal to give out advice without, “Attorney, can I see your attorney’s license”. Ugh. Anyways, but the best thing to do is what you did, just move on down the road, you know, don’t get in apiece and match with them, ‘cos that’s [INAUDIBLE], weirdos come out of the woodwork and start causing you problems, just put your head down do what you do, let’s have all the integrity we can possibly have, let’s make it a win-win for everybody that is involved. The lender, the guy that is moving in the house, and your family, you know, let’s make it all a win for everybody. And if it is not a win for everybody then, just don’t do it. Move on to another house, or build a different profession, if you can’t please yourself. Because, do you see, Richard, where a man of an average intelligence that really knows what’s going on in this owner financing, knows the business, the person can do rough things, couldn’t they? 

Richard: Ugh, yes. 

Mitch: You know, I mean. I see it all that time, we don’t wanna be in that group, and that’s one of the reasons why I like the Tuesday call, it is just like going to church on a Sunday, you get a shot of the good stuff, and remember what you are supposed to do. And what you are not supposed to do, and as long as we keep our integrity and reasons for doing what we are doing in the right place, then this business can go on for years and years and years and am a living proof for 21 years now and 1,500 deals and I think I have 3 lawsuits in my entire career and I don’t think, I know. I had 3 major lawsuits in 3 years, all of which I won, they cost me a fortune to win. And those people who are gonna sue somebody no matter who they buy from next, and I was the unlucky winner, it wasn’t anything that I did, because, they were in the extortion game, they were trying to extort me for money, and they made up reasons to sue me. And those three people will never make it in my door, ‘cos I know who they are, and I know how they sound like, and I know what they walk like, and I know what they talk like. And, it’s been long long time since I have lawsuits, this happened earlier in my career when I was learning. So, it is about how to make money, but it is also how to stay out trouble and managed your liabilities, right, Richard?

Richard: You know, that’s right. Every property you look at, I mean, you evaluate the risk plus reward, and you know, you just make a call, either to go forward or go to the next. 

Mitch: Yeah, more often than not, the problem is usually with your buyer. You know, the buyer’s the one that you have to pay attention to the most. That is a little bit harder, you got to look at them harder, and you have to listen to them harder. You know, if they are telling you– you know, actually someone tell me this, you won’t believe it and you probably gonna appreciate it now that I think about the business that you are from, I said, “Well, how much do I have down”. We have $2,000 down now, but we’re gonna get another $10,000 soon or more. I said, “So, where do you get the first $10,000”? And she said, “We’ll, I had a slip and fall lawsuit in the grocery store that we just settled on. And then my friend here, she had a slip and fall at a different store, and she’s gonna be getting me 10 grand, probably just about the same”. And I looked at those people and said–well, I didn’t said anything, ‘cos I don’t want to show up my cards. But, I just looked at them and at my mind, I was going, “Are you kidding me? Did I just hear what I think I just heard? Did you actually told me that? You actually told me that you [INAUDIBLE] person, screwing people with obviously lies, about slipping and falling, because you and your friend didn’t slipped and fall at the same week on a different store is an accident, you know. And you ever see those people and walk away from?

Richard: Oh, yes. In fact, I had one similar to that last week. I was at the house and he wanted to pay cash for it, and I said, you know, “Okay”. And then he said, “Oh. Am getting a settlement”. So, [INAUDIBLE] paid cash for, that’s fun and so I said, ” You know, could down a $1,000 earnest money, I’ll give you 45 days to close”. Then, he was like, “What if I don’t get my settlement? I said, use your own earnest money. 

Mitch: [LAUGHTER]

Richard: He walked away. He wouldn’t do it. 

Mitch: Well, you know how many times I head–showing people. So, I learned to say, “Do you have your down payment right now” or “Is down payment to you is coming to you in the future”? And that’s when you find out, you know, I can’t tell you how many times I heard, “Well, am gonna sell my house, secure one of these days, pretty soon. I heard that a thousand times. And I said, “Call me when you get the settlement, because this house won’t be here. This house will be sold a couple of days”.

Richard: Yeah, that’s– you know, that’s what I told him. I definitely was gonna be do over a financed it [INAUDIBLE] you know, if he wanted to pay cash for, so be it. But yeah, he wants to down that earnest money, so I moved on and sold the house to somebody else. 

Mitch: Okay, man. Just a couple more questions, and then I’ll let you go, is your wife, when she retires from teaching, is she gonna helping you in the business, you just do something completely separate or just [INAUDIBLE] what are your plans?

Richard: She will be helping me in the business. You know, ‘cos I am very weak in technology, and there’s a lot of things that we can add to what I’m doing that, she will be great at, and am not. So, I think it will be a good thing, because a lot of the technology stuff they [INAUDIBLE]

Mitch: All right. This is what I want you to tell her. Study Livecomm.com a little deeper, because she’s gonna use that technology, and I think it will really help you a lot. When you start using that, I think you’ll gonna find, you’ll gonna let more people know about the house, in a very short period of time. And so, I think you’ll gonna have multiple buyers, and you’ll be able to pick and choose, which one you want based on how much they have for down payment or who’s asking for the least amount in concessions. And I think, you’ll gonna watch your down payment an upscale UP by about 20%, and I think your days on the market will come down, your days in the market is already weeks, so I don’t know how you can prove on that much, but, I think you’ll appreciate. And you’ll have to take less phone call by yourself, to find more buyers for that one house. You have to take less phone calls. And the phone calls can start draining a person over time. You know, answering the phone–are you asking the phone yourself and telling people, you know this is 3BR, 2 bath, and yada yada yada. 

Richard: Yeah. Yes, currently I am. 

Mitch: Okay. Are you getting tired of it, yet?

Richard: You know, there’s time when I am excited. And there are other days, when you are out there to do your stuff, and then you got phone calls left and right, you’re like .’Shocks. Yeah. It got to the point to where I’m getting enough calls that you know and I need something like Livecomm to get that off my back. 

Mitch: Well, we don’t do it here, but, let’s have a conversation in a few days, just so I can bring up the speed and some of the changes, and improvements and what’s going on, ‘cos it is really exciting. And people are using it now, and you know, just learning how to use it, just take a little bit of time, it is pretty user friendly but, anyway. We’ll get you there. I wanna thank you for being on the call. I wanna thank you for being such a great dude. You listened, you followed through, you took action, a year and a half, everything that we thought might happen, happened may be even more. The sky’s the limit now, for you and your wife, and I won’t be surprised if I call you back a year and  a half from now, and that $5,000 month cash flows, 10,15,20 or 25 I won’t be surprised. I won’t be surprised at all. 

And, you can take it far as much as you wanted to. Do you have a stopping point, or you just wanna go with it until it is no fun anymore. 

Richard: My goal is to do 40 houses next year, for 2017. And you know, by the time I reached 50, you know, I would like to have at least 500 of them doubled down. 

Mitch: If you do 40 next year in a phase that you are doing now. You have rather small margins on the house, but you are doing inexpensive houses. I am looking at 21 houses and at $5,000 cash flow, is that about the right assessment?

Richard: 178 houses, but what I did, you know, because wanted it by financing for 10 years on these houses. 

Mitch: Oh yeah. 

Richard: And I’ve got 20 and 30 notes out there, on those houses. What I was thinking is you know, the income that I have selling in selling these doors will get me through 10 years. So, am taking slim margins now, where I can have you know, a lot of cash in hand, for 10 years. 

Mitch: In 10 years, you won’t by anything on this 18 houses.

Richard: Exactly. 

Mitch: Okay, I was trying to [INAUDIBLE] out, you know 40 houses at the end of next year. Your average is 250 a house right now, which I thought was a little low, but you just explained why. You put them in 10 year notes, would you owe in 10 years. So, ‘cos you are trying to get it done, quickly. But, even with that, and so, 48– am sorry, 48–you sold 15 houses, times 250, all of them in a 10 year payouts, you are talking about $12,500 a month, but then probably, after 10 years, what’s the income of 48 houses, average, Richard, when you don’t have no payment, is it around 500, or more than 500?

Richard: Yeah. Most of them will be in the 600-650 range. 

Mitch: So, we’ll just gonna use the loan number, 600. So, 15 houses times 600, is $30,000 a month. You think you and your wife can handle a vacation and have a good time on $30,000 a month?

Richard: I think, we can handle that. 

Mitch: [LAUGHTER] There comes a time, where we just could eat and drink so much, you know, what I mean. I mean, you know, not unless if you want just some kind of entourage and a learjet, but, I didn’t see you living on that kind of stuff. So, I would say, and that if you just work one more year and quit. And I don’t see that happening either. You know, you work one more year, you bought like 42 houses, got your total houses at 50 and you quit. And I don’t see that happen. So, I predicted, you’re a guy in the next 5,6,7,8,9,10 years, will have an income of $50,000, $60,000 and $70,000 a year, and that’s just how it will be and it is kinda hard to imagine, right? In this little business called, owner financing and this little [INAUDIBLE] crack of houses that we are doing. Little Walmart houses for Walmart, people that you can end up, you know, making close to a million dollars a year. Just, because, you go out and bought a few houses a year, you know. Unbelievable. 

Richard: Yeah. That’s the beauty of it. And I love the way that the numbers work. With the– you can build a net worth very quick. 

Mitch: Yeah, I think– we didn’t even touch on one thing, you certainly, every house that you find, do you wholesale some houses, or re-sell some houses, or there are some houses, that just didn’t fit the model you did them, so far your 18 houses all fit in a box. 

Richard: There was one house that i just did a flip to another investor, made the quick $5,000 moving on. And there’s house that I have currently, that’s–for my area, it is kind of in-house, 5 Bed, 4 Bath home, deal about $200, 000 house. But, I picked it up for $9,000. And so, I’ve got that out in the market currently. 

Mitch: How much money will you flip that house?

Richard: I should make $60,000 -$70, 000 on that.

Mitch: Okay. Let’s–let me pick the number 60 here. And what’s your average down payment on the 18 houses that you done, so far?

Richard: Our average down payment is about $5,000. The lowest that I’ve taken is 2 and the biggest I think is $10,000.

Mitch: So, we are averaging about 5 or so, we’ll do a little math here. 18 houses times $5,000 equals, so you made, counting the wholesale house, not counting the 60 houses, ‘cos you haven’t made that one yet. Counting in 18 houses, you picked about $95,000 in cash, along the way and you created about $45,000 amount in cash flow. And it’s been your first year and a half. And you just started to get lien on your notes, exactly you are leaning the market’s doing. I think you have done a tremendous job, Richard, I hope you don’t mind, didn’t mind in this call, in being so transparent, but I love it because you are too transparent, because, we need to hear the numbers, man. And I needed to hear that anxiety that you had, the troubles that you had when you were first starting in the problems, but you also, needed to get a good sight. I think, a lot of people out there, are just trying to sell everyone’s just-the-good-side and not talk about anything like the anxiety or the hard things. And so, I’d like to give the both sides of the story, so that people have a true picture of how it works, before they jump. You know, ‘cos it really doesn’t do any good to people when you give them half story. And you did a great job on that. And I appreciate you very much.

Richard: Oh, yeah. You are welcome. I enjoyed it.

Mitch: All right, my friends, and go get them and I’ll be talking to you, soon. All right.

Richard: Alright, will do. Thanks, Mitch.

Mitch: This is Mitch, and you just got you some Richard Shelton over there, Eufaula, Oklahoma. And a guy that just started out, and give you a little insights of his first year and a half was like, coming from a completely different world, not having a ton of knowledge at all about real estate. Sharp business man but new endeavor, and appreciate everyone listening. This is Mitch and we are out.