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Dec. 11, 2022

Ep 294: Power Of Arbitrage

Ep 294: Power Of Arbitrage
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Transcript

0:02 literally died watching this picked up. Thanks for the last something that's $10 million for at least for somebody else 0:22 why didn't I think of that? You know? Sometimes I think right? We overthink it you know what I mean? I think you just need simple solutions for simple problems 0:37 my husband literally died watching this 0:44 that's that we want to start off with the video because many of the we laugh at this one a lot because the power of arbitrage people sleep on the power of arbitrage and like people have been doing this stuff for years. I mean years literally. So I was really watching a tic tac video and a guy so he would buy like the slingshot which is a three wheeled cars. He bought it in another city and drove six hours away and sold it for like seven to $10,000 more just by doing the other city. The video like made me laugh because that's what Anthony did. You have that he would go Who You betcha pickup trucks. And he'd fly to Austin he fly to Dallas go pick up that truck, bring it back to San Antonio because you can sell it for more. And it's the power of arbitrage. 1:30 I drove to a I actually took a plane to Dallas, I picked up a Ford F 250 that I got for 5000 bucks. And I sold it the next day for 10,000 in San Antonio just drove it five hours away. 1:41 This is the power of arbitrage. So the power of arbitrage and like yes, Hermoza talking about millions of dollars. But Anthony, what did we do in the land game? 1:52 We do the exact same thing. So that's why that video is so disturbing. So the first time we saw the video with her mosey we were excited. We're like dang, heck yeah, that's the game, bro. Like we sent it to each other. We're freaking High Five digital high. fiving right, because he's in LA. I'm in San Antonio. And I was like, this is cool. We're I was like, amazed. This is like dope. It's so freakin smart. Hey, guess you know, where are you doing the same thing. And then it started kind of going viral with people making videos making fun of him. And I was like, oh, like the dude just gave away the most powerful information on the planet, right? Because when we think about arbitrage, we're thinking of Bitcoin arbitrage, where you buy, you know, tether, or whatever you buy Doge on this site for like point 008 cents, and then you sell it on another site for point 01. And we're like friggin, I made a fraction of a penny and everybody's high fiving the smartest thing to do in 2017, and in the last year is in the last run up before the crash. But if you apply it to a bait a $10 million deal, people are laughing like, oh, man, that's so stupid. like, Ah, man, he just gave me so much game right now and people are passing by on it's like this, make frickin video about this. 2:53 And it's the reason why I mean, Anthony loved that video because it was so simplistic that we showed it to our mastermind students the same video like Hey, check this out. And like we're mean Anthony like we see it plain as day like we understand that, that that that sentiment, the value, and we understand that 100% But like to see a video making fun of it, and then a video a video making fun of it. It's just like, oh, man, it goes over there. They totally missed. Totally missed the gym. totally miss the gym. And I think we talked about this whole time is that sometimes people aren't ready to hear the information. And yeah, they might think they're laughing laughing laughing It was hysterical moment. They didn't have an exact day. But we left over to the bank. 3:35 Yeah, yeah. So So think about that, right? What are we doing right now in the land game, right? You can get a house right? You're doing arbitrage and wholesaling, you get a house under contract for 100 grand retail value on its 250. You sell it to an investor for 140, you made 40 G's, and all of your friends are making videos and they want to interview you because you made 40 grand in 30 days or 45 days, right? And they carry you across the freakin you know, everybody's cheering for you. Well, when our world would land, we just flipped two acres or now my 80 G's, right so that we arbitrage on just two acres. Now we're looking at deals that are in the millions 1.8 million, you know, 2.5 million, and we're doing the exact same thing. So we're able to arbitrage 2030 40% out of these deals. So now instead of us looking at deals where you can flip a house for five grand or six grand or eight grand, our deal is starting to look like 400,000 Right? We've had one closing hopefully in the next 23 days, it's going to bring in 300,000 Right, we have some in the pipeline that are going to take probably six months to complete the deal. One point 5,000,001 point 7,400,000 500,000. So it's the exact same principle. So check this out. Now let's get on the horn multi level. I have a deal in Houston, where the lady wanted $10 million for her land. 10,005,000 500,000 She's gonna give us 500 grand if we could bring a buyer. We fell short. We had somebody that had nine she shot us down. But we found a deal. Now she says I would trade it for some land. If you can find land by San Antonio in this area. It's called New Braunfels. So now we have a deal They're that we're looking to lock up for 3.2 million. We message the seller from Houston. Okay, this now this is like nine months later, okay, this is not like one week to the next. But now we asked her if she would trade this 160 acres for 400 acres over by Houston. This isn't a way more valuable area way more exploding area way more up and coming area. But we're looking to take that exact same principle where we would take a $3 million property and trade it for a $10 million property. So who's laughing now. 5:27 And I bring this up to be on Twitter because like one thing cool about land is you can sell directly to the retail market, you can skip selling to investors, and mean at the outside with all the time but I saw some Twitter yesterday, wholesalers talking about oh, you know, you need to make sure you write in your the best for profit too, because that's where the investor is gonna buy it. I mean, answer like, ma'am, if the investor were selling to retail, 5:50 and what was my famous quote? I was like, why would I? Why do I need a middleman, I'm the middleman. 5:55 I need another middleman. I don't, we don't need another middleman. So and it's comical because like, wholesalers literally built their whole business around selling to other buyers and they built in that profit for them to nestle it all up in a nice bow. And but they're getting they're laying up all that money. Of all the hard work, they did the arbitrage of that deal. And they they give it to a nice present nice boat to another buyer, that's gonna make a huge amount of money on it. 6:21 I've had wholesalers bring me stuff that I made 50 grand on it. I mean, like, oh, you can drop the wall one deal for 100,000. Right? So if you think about that, we go directly to the end buyer. I always say this for wholesalers, right? They think they're geniuses. I'm a wholesaler we do wholesaling too. So I'm not trying to make fun of anybody in particular, I'm just saying a typical wholesaler. They go through and then they take to pay cuts to get the cake to pay cuts. And then they go on Facebook and brag about 6:46 it. So the building the haircut, 6:50 taking two haircuts, imagine going to Great Clips, getting a haircut and leaving going to the barbershop next door and taking another haircut. That's all 99.9% of wholesalers do. So what they're doing is they're taking the property, they're getting it at a great price. And so they're losing money, they when they sell it to the investor, and then the deal is done for them, they get their paycheck, but they're taking a second loss when the investor sells it to the retail end buyer. So you get your missing two paychecks out of that deal. us we're going to arbitrage straight from the property owner and we're selling it straight to the retail end buyer at full price or above ARV like above comps, how many times have Realtors came up to us and said hey, nothing's ever sold for that in that area. You guys are never gonna get that then what happens next? 7:29 Too many times, man too many times like the agents think they're the gods and they set the prices of weapons. But here's the thing, we don't go to their buyers either. 7:38 Mostly. Yeah, so yeah, we're not we're not we're not going to their buyers. And so what agents are funny too, I love agents to death, I think I'm actually getting getting licensed sooner or later. But what they do is they they when they're looking to list the property, they tell the seller that they're gonna get way more than they know that they could probably bring in for it. And then when when they're looking to lock somebody in to get like a buyer representation agreement, they're promising they're gonna find something for pennies on the dollar some crazy price like all the comps a 20,000 in this area, and then they talked to us are like, Why do you guys want 25? We can't do that. Like, yes, you can. If your guy wants it, he'll do it. Just on that deal yesterday, they send us an offer. They wanted $300 for a 30 day option. And that 30 Day closing like, ya know, like 1% non refundable no option at all. And if you message back today, they said they'll do it? Of course you will. Of course you will. So God bless you agents, brokers that are watching this, you know, like I said, we I think we're still gonna get into that game as well. But there's a lot of different ways to play this game. You know, it's not just got to stop thinking about real estate in the traditional sense. It is just all based on arbitrage 100% arbitration. 8:37 And like for all the agents listening, there's good agents Not gonna lie, there's there's good agents, but there's tons of them, and we love them to death. 80% of them are bad. 8:48 My bad, it just is under informed because somebody taught, somebody taught them to, you know, their grandpa's way to do it. And they're grandmas way to do it. That's probably still running the brokerage. And then that's all they've ever learned. So I have agents that hit me up all the time, that work for brokerages, and they're like asking me all these questions. Why do you guys do that? How does this work? How do these completely mind blown, based on what we're doing, but it's all just the power of arbitrage, being able to capture something from the marketplace and move it to another place in the marketplace without doing anything? So the SEC, the Hormoz example, again, wanna go back to this because it sounds funny on video, but it's like, let's do a little breakdown. So he's saying, you buy something that's worth 10 million for 8 million, right? And then you sell it for nine, then you make a million, right? If people were like, what I'm gonna have the 8 million, any contract, right? I don't care what kind of business contract you're in. And this is not legal advice, talk to your attorney, et cetera, et cetera. If you're going to do any kind of contract that's worth, you know, time and money, right. And most real estate contracts are but if you're buying a business, and it's worth $10 million, if you're buying a piece of property that's worth $10 million, if you're I don't know, I don't even know what else you can buy besides business and real estate. That's worth $10 million. I'm sure there's machines, I'm sure there's a lot of things, but not none that I can quickly reference. But if you're making that type of purchase, there's always a contingency period or an option period where you have time to do some homework. Nobody's gonna move $10 million Some 30 days or like from one day to the next, not typical anyway. So you have this period where you have like a due diligence phase during that due diligence phase. Yeah, you're probably going to call some of your friends and some of your business contacts. And you're going to ask them, Hey, I'm going to buy this thing for $10 million, would you want to get in on this? Right? So during that due diligence, period, what are you doing, you're effectively chopping the deal out, right. And that's a gray area. I mean, there's different laws depending on what you're doing and how you're putting the deal together. But it's not like you have to write a check for $8 million, and then turn around and sell it for nine. Once you contract that property, once you once you got into the marketplace and find this property, find this business, and you contract that thing to purchase for $8 million, you're gonna have plenty of time to do some due diligence, all that and that's up to you up to your negotiating skills, legal, what's what's, you know, on par for that industry, or that type of asset. But you're probably going to have somewhere between 30 days and a year to look at that deal. Right? So you get it under contract for eight, 8 million, you might even put a considerable amount of earnest money for a deal like that, it might be $80,000, right? $800,000, you never know. But you same thing, you just you sign some paperwork, you deposit a small check, which you can get from a third party. So you're still zero out of pocket if you're completely broke. But you're good at sourcing deals. Now you have this contract for $8 million, you turn around, you bring in a partner or an end buyer, and then you move you arbitrage you move that contract to a new end buyer for a million dollars profit for yourself, and how do you provide value? Why is this legal? Why is it possible? Why would somebody do that? If a company is in a position to buy a $10 million business, and they're getting it for nine, they're loving you, they don't even care if you made a million dollar profit. So it's not doing something shady, you're not disrupting the marketplace, you're not playing? You're not even playing in a gray area. If somebody brings me a $10 million apartment complex for nine, I love that guy. That's great. That's fantastic. 11:41 Yeah, I think the bigger the prop, the bigger the value of the property, the more grace period, you get to extend that time period to even work that deal. So we're people in houses, they have 30 days or less than with a property as we get 90 days minimum or more. 11:56 Some of these wholesalers call us and they're like, I got seven days, I gotta close in 10 days, like, how are you going to move a million dollar land deal in seven days? What were you thinking, Carl? Right. And as we get a deal under contract, we're getting 90 days, six months a year, right? And that's just the nature of the beast. Again, if you're gonna move something that's worth two or three or $4 million, everybody understands that. That's the very slow move. So thanks, guys. You know, we appreciate it. And I think this is a good one. If you if you watch this thing a couple of times, check it out. Let this play into your memory banks. Again, we're trying to arbitrage a $3 million for a $10 million deal. So that whole home warranty thing whether it be laughing at them just went right over their head, take a deeper look. pay a little bit more attention a little bit more humble and even learn black. Thanks for hanging out with us guys. 12:35 Open up your mind for perspective. We'll see on the next go leave us a review on good apple leaves a review on Apple. 12:43 Go to the Apple good or leave us a review on Apple and our podcasts. It would super help a lot if you're getting value from this if you've been following us for a while I was I was like

Anthony GaonaProfile Photo

Anthony Gaona

Host/ Ceo/ Speaker

Hi! I am Anthony Gaona.
I’ve been in digital marketing for almost 15 years.I grew up in construction working for my dad when I was only 12 years old. Normally we had a ton of work or no work at all so a lot of my free time was spent learning how to generate leads.

It didn’t take very long for me to master online marketing because I became absolutely obsessed with it. For the last 15 years I’ve been generating construction based leads. At first I was running the projects myself. This led to sub-contracting all of the excess projects and eventually wholesaling the leads off to other construction companies.

One day I was preparing to build a single family residence for myself. In mid December, 2018, a simple YouTube search led me to the term wholesaling and the rest is history. The plan was to use my construction background to start flipping houses. By January 1st of 2019 I launched several marketing campaigns both on and offline for real estate seller leads.

Within about 4-5 weeks I had my first real estate contract locked up. It didn’t take long for me get a land lead where I made almost a full year’s pay on a single transaction. This came from a land lead and that forever changed my life.

I ran low volume larger land deals for the first two years of my real estate career. Like anyone who has been in real estate investing for an extended period of time, I started thinking about scaling my business.

Instead of deciding to vertically integrated and start hiring I imagined a model where I would teach my real estate investing methods to others. This would free up my personal bandwidth and allow for unlimited large scale transactions.

Currently our operations are expanding globally. The goal is to identify one person per major US Market that we can build a team around and drive traffic to so we can close high volume transactions together.

You can learn more about our vision and join our free mastermind by joining hivemind CRM on Facebook and all social channels

Daniel Esteban MartinezProfile Photo

Daniel Esteban Martinez

Host/ Ceo/ Speaker

I have been an entrepreneur since 2018. I come from a regular home just like most people. My dad worked on the roads in the Chicago area for over 30 years. He always taught me to work with my brain, instead of my body. Your body can only take so much abuse. I learned so much from my father. He always pushed me to work smarter and not harder.

I have owned and operated a trucking business for 2 years. I started learning real estate in 2019. Fell into the Data & Skiptracing business in 2020. My partner Anthony & I started Hivemind in 2021.

I have done a ton of different jobs coming up from painting, to door-to-door sales, telemarketing, truck driving, and loading trailers. What I learned most is that I want to stay in the digital business space. The leverage you can have delivering digital products to the marketplace can yield limitless possibilites.

I started The List Guys in 2020. It is a data and skiptracing service. We provide seller and buyers list nationwide. My clients have been getting great results and I am proud to help people killing it.

I started the Hive in 2021 with my partner Anthony Gaona. It is a real estate and business mastermind. It also comes with a all in one CRM, that can host unlimited websites and users.

Starting the Hivemind has been an amazing journey so far. Seeing one of our users make his 6 figure month in June 2021 leveraging our software, I know there will be plenty more to come!