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Dec. 30, 2022

Ep 313: Lessons learned From Our House Demolition Disaster With Guest Brian Grimes- The Importance Of Inspecting Before Closing

Ep 313: Lessons learned From Our House Demolition Disaster With Guest Brian Grimes- The Importance Of Inspecting Before Closing

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Transcript

0:02 Hey, thanks for joining this episode, this episode called deal breakdown, we cover cool and interesting stories, we have our guest, Brian grabs again, definitely go check out his previous two interviews, if you haven't seen it like coming out, you'll see you'll see it when it comes up. What is your cool, interesting story, man? 0:18 Um, cool, interesting story. If we're talking real estate, so I get, I get a call on one of these properties. And this is something that I want you guys to do, I'm gonna give you one of my best systems. So I send my guy out to look at a property, he goes and he walks around, he's going through the motions, and he comes back, he's like, the deal is good. Go ahead and bid on it. So we put down 30k on this deal, it's a shell. after repair value is $220,000. We're like, oh, man, we're gonna make 50k This is a great deal. So we close on the deal, and nobody goes back in it. And we show up, I send him my head contract. And he's like, Brian, did you guys buy this already. And I'm like, here we go. And he's like, bro, the property sink in about 16 inches. I'm like, 16 inches. Yeah, the living rooms down. And I think there's some water like a creek running under this property like this thing is going to collapse. It's lean. And the property to the left of it had already collapsed. So this deal ended up being completely like garbage, we ended up having to bulldoze this property, and do like a ground up deal on it, which ended up being profitable. But the morals of this one is you gotta you have to send in your head guy, whoever knows how to do structural work, whoever can really inspect this thing, you have to send them in before closing, you can send in a junior inspector, somebody who goes through the motions, just get you some camera footage in order to put out an offer. But before you put that money out, you better do a final walkthrough. And this leads me to just a maybe even a more fun story with this similar type of concept. So I'm at the closing table. And we're about to close on this deal. It's a nice big property, but it's rough. It's just four walls like this thing is it's toast, right? And I got it under contract for 19k. Somebody brought it off of the off of the sheriff sale. And we're at the closing table. But we have the system now because we got burned before. Hey, we need to do a final final inspection of this property before we close. So I send my guy shoot him a text get over there. It's 10 minutes away. Let me know what you think. He sends me a picture. It's just a pile of dirt. The house had been bulldoze. That morning, it was on the emergency demolition list. It had been bulldoze, that morning, it was rubble, they blew the house down and just caved it into the basement and just ran some dirt over it and called it a day the city. So we ended up backing out of the deal. But had I not had that system where it before I close, I would have bought a piece of dirt for $19,000 that was worth nothing. So these are these are those systems you need, you have to do your final walkthroughs you have to do your final inspection, even as of the day of, especially if you're investing in shells, because these properties can end up on the emergency demolition list. If you don't check, and they can get blown up at any point, we had a hard rain the night before some bricks fell loose city came out and blew it up. 3:28 Can you stop that at any point or is like once you take ownership like you can like hey, I'm gonna fix it and fix it hold on hold on, you can get it, 3:36 you can you can get a make safe emergency permit. So you can get a make safe permit. And if you apply for that permit, where if you call the city with the that that controls if you call that department that controls the demolition list, you can actually get it off of the list under that context that you're going to pull this make safe permit and get the work done. But if you don't do any of those things, and if you don't own the property yet, it's kind of hard to do it. You can get documents drafted that would give you like a third party power over that property and allow you to pull the permit. Or you could push the seller to do it. But most people don't, right, you're moving quickly, you might be doing two or three deals and you just forgot to do it or your system didn't do it. The best way is to keep your eye on it. But once you buy it, yeah, you can get it off that list. You just have to know that process. And we learned that process after we had this experience of this house. Just getting bulldozed and we're like, man, we could have just lost 15 You know, $19,000 like that. Plus closing costs. So easy way to lose money. 4:37 I have never heard of this list. Do you put your marketing list demo list? 4:43 Well, it can be a really good list right? So the market the demo list is good. You can have like water liens and some of these different violation lists. The grass is too high. They're getting fined. You can pull a lot of these lists the demo list is good for shells for sure. You can definitely get some prop resolver that. 5:02 I've never heard of that list. And it doesn't show in your market. Because here you said a previous episode on your old homes, they're they're ready to go anyway, 5:10 oh, they're there. When I say they're ready to go. In Baltimore, they their solution to blight, they funded a program with millions of dollars per year, they all they do is drive around blow up houses. That's all they do. They're just like, we can't, we can't build enough developers out here. So we're just gonna blow him up. With their create, they say, God doesn't create more land, and they do in Baltimore. They do in Baltimore, man, they're creating more landlords by the day. So if you become a ground up construction specialist, you got more opportunity. But now they will definitely do this stuff. I mean, millions of dollars a year, go into government contracts. And if you wanted to be like a home demolition specialist, you could qualify and get some of these government contracts as well, which is another business model, you don't always have to invest in real estate, you could specialize in some piece of it and make a lot of money like that with government contracts. So there's just so many ways to skin this cat. But it definitely happens every day, houses are demolished by the city. 6:11 So we have asked this question either now or can't talk about that. So are these like, I haven't, I've never ever felt this, I wouldn't know there's a rowhomes. And the separating was like three feet like arm width apart. 6:22 Now the rowhomes the way that Ross homes are built is there's actually like a one, one to two foot gap in between the home so they are freestanding, until it struck structural capacity. They're just connected. Yeah. So there is a there is a dual party wall. So there's like bricks here and bricks here. And then there will be an enclosure. So there is a gap between those two property so they can be freestanding. I could demo this house and the one right next to it still be standing up. 6:50 Just don't sneeze when you're 6:53 Yeah, just yeah, just don't like with the Yeah, with the with the heavy. Heavy lift. 6:59 Yeah, you're gonna Yeah, definitely. That will be really disastrous. And I'm sure that's happened before. 7:07 Yeah, I I thought Robin was we're connected connected. But knowing the swamp area that can come in, knock that out. And I talked, I interviewed another Philly investor A while back, and he would get like multifamily, but it had been multiple apartments in them. Yeah. Are you dealing with that? 7:26 Yeah, I do. I do a lot of that. So one of my favorite hacks is going in and getting a something that has multifamily zoning, but has been set up for single family and converting it into multi. Usually when you do that you were created about an extra $100,000 of ARV sometimes as much as you know, a quarter million of additional ARV, so you can create a good profit spread. I'm actually working on a deal right now for one of my boots on the ground people. These are one of my people that they live out in like Nashville, I'm building a house for them. And we just closed on a property 140,000. And we're gonna, it's two stories, we're gonna blow off the roof and build up a level and turn it into a three story duplex. And this is going to increase the ARV from like 350 to 575. So this is going to create like 100 $150,000 Flip opportunity for one of my people and they got me doing all the work. I have my team in there, I'm flipping the property, building it, doing all the construction, and then handing it off to the realtors in the context that I have. So they're building it they actually close on this property while out of the country on like a vacation or honeymoon or something. So you can definitely if you tap into the right people with the right mentorship programs, you can do this stuff passively out of town, from anywhere in the country really anywhere in the world. 8:48 No, I think it's pretty cool. Even Baltimore, because it like characters lots get rezone for multifamily, and then some Yeah. And that's, that's, that's really like the ebb and flow of the real estate market is, wherever those inefficiencies are. Let's just demo the house and let's put something up new and really help the affordable housing crisis we have. Absolutely, yeah, it's really it's really important to and we're a part of that in some way. Wholesalers developers. So everybody's a part. 9:16 Yeah. Everybody's a part of that. You know, it's definitely an ecosystem. People ask me they're like, Well, Brian, why don't you cut wholesalers out, Mike, because wholesalers a good one wholesalers are good people. And also, wholesalers a can provide a lot of leverage, because everybody's leveraged like we're all part of this ecosystem. And you need good wholesalers that can bring good deals. So you can stay focused on building good deals, like you can't do everything at all times. And at points it's not worth it. Like it's better to just have that ecosystem. Even if they're making money. You're making money. Everybody's making money. That's a that's a good thing to be a part of. Yeah, 9:57 man. It's such such great little podcast man. I For everybody out, go check out the other interviews we did with Brian. They're amazing. Each one of them have their own little author. We speak a little bit and every single one of them and a 10:10 lot of times, I feel like 10:12 I'm asking you again but where can people find you online? 10:15 You can find me on youtube Brian loves cash flow and it's easy to remember because I love cash flow. So Brian loves cash flow on YouTube. You can find me on Instagram Brian Grimes underscore 247 Cfu for the 24/7 cash flow University where I teach you guys all about real estate and how to get started getting your first couple of properties. You can find me on LinkedIn, Brian Grimes real estate. You can find me on Tiktok at Grimes estate, and all of these channels backlinks and my free training on www dot work with grimes.com forward slash cashflow work with grants.com forward slash cashflow where I teach you guys how to buy properties for pennies on the dollar all across the country. You don't want to miss out on our free training so make sure you guys happen. 10:56 man Thank you Brian for coming on. And this has been a great it's been amazing day I learned a lot a lot about Philly. Go check out the money episode. Man. That was a good episode. It's good episode we're gonna check out the previous episodes. You're not going to be disappointed. I promise you. Thank you, Brian, for coming on. 11:15 Thanks for having me. 11:16 you on the next episode. Thanks for tuning in. Go leave us a review. Go like subscribe, ring the bell all the things that everybody else tells you to do you know what to do. We'll see you the next one. Bye guys.

Daniel Esteban Martinez Profile 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!