Making $15K/Year & Living with His Mom to 5 Deals in 5 Years with LOW Money

by NEW YORK DIGITAL NEWS


You DON’T need a ton of money to find and fund real estate deals. Despite earning just $15,000 per year, today’s guest found the perfect property for him and scrounged the money to close. If you’re willing to learn, network, and put yourself out there, you can do the same!

Todd Fullerlove Jr. had recently graduated college, gotten married, and welcomed his first child when the reality of starting a family hit him like a ton of bricks. Living paycheck to paycheck, his little family was forced to move in with his mom. Todd knew something had to change and decided to give real estate investing a try. The only problem? He had no money! Fortunately, Todd had learned that you don’t need to be sitting on a pile of cash to get started. So, Todd did what every smart investor does—he found the deal first! From there, he built relationships and raised capital. Just by taking action, Todd has completed five deals in five years!

In this episode, Todd will show you how to find and fund off-market deals through the power of private money. You’ll also get a full breakdown of the short sale process, from working with banks to navigating home appraisals and broker price opinions (BPOs). Stick around until the end to hear about the loan Todd used to buy his first rental property with low money down!

Ashley:
This is Real Estate Rookie episode 423. Can you invest in real estate while you are broke? We’re going to find out today. I’m Ashley Care and I’m here with Tony j Robinson

Tony :
And welcome to the Real Estate Rookie podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today’s guest, Todd Fuller. Love is an investor out of Oklahoma who started investing as soon as he got a big pay cut at work, which is kind of counterintuitive, but he’s going to walk us through how he got started and all of the learning lessons he had along the way from buying his first deal to finding a mentor to rehabbing properties to the loan product he used, which he also recommends for Ricky’s who are starting out. So Todd, welcome to the Real Estate Ricky Podcast brother. Excited to have you on.

Todd :
Well, thanks for having me. I’ve been listening to BiggerPockets for about six years straight back in. I remember other listening to it back in the original Josh Doring days. So yeah, it’s an honor to be here and I’m just super excited to tell my story.

Ashley:
So Todd, you’ve been listening for six years. Give us an insight of what was going on in your life before you actually found out about real estate investing and decided to start this journey.

Todd :
Okay. So I graduated from Oklahoma State University and had a kid and got married very young when I was a senior in college, and I pretty much went to the job fair and took the first job I can get and relocated back to Texas and everything happened so fast. So my wife and I decided to move in with my mom living her upstairs in my old childhood bedroom, just like every wife imagines. I soon realized I was getting paid 30 grand a year and I thought it’s the most money I ever made. And I’ve come to realize that that did not go far and I was living check by check, broke upstairs in my mom’s house and one day I go to work and boom, the company is sold and the new owners decided to cut everyone’s salary and I come to realize what’s worse than getting paid nothing is getting paid $15,000 a year, that’s like $200 every two weeks. And I just knew at that point I was select, I can never let this happen again. I have no control over my life. Something needs to change.

Ashley:
So what were those first steps that you actually took as to, okay, I need to change my life? Did you do a Google search or how did you proceed to I have nothing right now. What are the steps that I’m taking to change that?

Todd :
Well, I reached out to an old college professor that I had a good relationship with and he told me to read a book called The Millionaire Next Door, and that’s where it all started. I read that book and I realized, okay, I’m broke. I’m not poor. That’s a difference. It’s a mindset thing. So then they referenced the Richest Man in Babylon in that book. So I read that and if you read those two books, somehow naturally you’ll come across Rich Dad Poor Dad. And when I read Rich Dad Poor Dad, I was like, okay, this is what we’re doing. Actually, it’s funny because when I read Rich Dad Poor Dad, I decided I needed to start a laundrymat
And I needed to figure out how to make money while I was sleeping. Then through the process of trying to find a laundromat, I googled how to make money really quick and the first thing that came up was BiggerPockets Wholesaling. And I just dived into wholesaling listening to every BiggerPockets podcast. I would wake up, listen to a podcast, swipe, brush my teeth, listen to a podcast on the way to work, listen to a podcast on the way back about three or four days, just headphones in all day and just submerging myself with information I knew about real estate taxes before I even knew anything. So I just submerge myself with information.

Tony :
I love the Google search of how to get rich quick, right? That’s the epitome of what leads us all down the rabbit hole. But you said Richest Man and Babylon. I’ve actually never read that book, Ash. Have you read that one before?

Ashley:
Yeah, I have. I think twice actually.

Tony :
Yeah, I’ve read Million The Millionaire Next Door, I’ve read Rich Outport at obviously I’ve never read Richest Man in Babylon. Give me the quick synopsis. Todd, what was that book about and why did that one stand out to you?

Todd :
A guy named Bazi and he’s the richest man in Babylon, and the king goes to him and say, Hey, can you teach this town how to become you? How to earn a lot of money?

Tony :
Yeah. Well, I appreciate that. Quick one down and for me, like I said, I’m almost looking for that next book and I would assume if I haven’t read it, maybe there’s other folks in the rookie community who haven’t read it either, but if you want to get your own copy of the Richest Man in Babylon, head over to biggerpockets.com/classic books. But how do you actually start to transition from consumption towards action?

Todd :
Now, this is something that you said in a podcast before where you said, if you’re getting to the point where you know what everything means in the podcast, it’s time to get out of the analysis and actually do it. And that’s kind of truly how it was. I was knowing what everything meant. So what I did the first step I did, I told everybody, I told my mama, my neighbor, the mailman, I just told everybody that I’m looking for real estate to buy. And I had the philosophy of I wasn’t trying to find a flip or a rental, I just wanted to find a distressed property. So when somebody would ask me what type of house you were going to buy, anything that somebody don’t want, anything that somebody is distressed or need to get out of, and I just told everyone and I posted on Facebook and I just was the real estate guy. And through that I met a seller. My father-in-Law contacted me, said somebody at his job is getting divorced and they have a house situation. And I told her, you can help her. And that was how I got the lead for my first deal.

Tony :
I just want to say how cool is that We always talk about the importance of sharing the fact that you want to buy real estate with as many people as you can, and even if you haven’t done a deal before, which is hard for a lot of rookies because you might feel like imposter syndrome or whatever it may be, but Todd, you were proof your living proof that when you do that people actually start to keep that in the back of their mind. And your father-in-law never would’ve thought about that had you not been sharing it. So just what a super cool way to find potentially your first deal.

Ashley:
No, I was just going to say you’re in this analysis paralysis, you realize what time it is to take action once you know everything, and then all of a sudden that phone call comes. Was there any kind of panic? What do you mean? You told the lady, I can help her, I don’t know what I’m doing. Or was it like, yes, I got this and running out the door and making it happen? No,

Todd :
I was extremely excited. I was like, thank God about time. I’m pass overdue. You got to think I’m in my old high school bedroom, I’m looking over at my wife and I love my wife so much. That’s my motivation. I look at her, she come from a small town, I’m like, I just want to give you everything that you need. So I turned around and looked at her and like, oh my God, it’s finally going down. So I immediately packed up my bags and drove four hour north after that phone call.

Ashley:
Todd, I want you to share more about how you invested with no money and got this deal wrapped up so rookies can follow in your footsteps, but first we’re going to take a short break and we’ll be right back after award from our sponsors. Okay, so Todd, walk us through that first real estate deal, go through the steps of how you were able to make this happen.

Todd :
Okay, so first is how I acquired it. So I drove four hours north immediately I got that phone call and met with the seller. It’s a typical distress situation. She was getting divorced, it was her house, her name was on the mortgage. And come to find out she was underwater on the house. We wanted to find a win-win solution. I wanted a house to invest. She didn’t want a foreclosure on her credit. So what we did is we called the bank together and she gave the bank permission to talk to me about her loan, which is a huge step. And I learned that banks do not want to foreclose on houses contrary to property belief banks are in the money business, they’re not in the holding real estate business. And so they worked with me to get this house sold. So originally they was going to sell it to me before for what to do on the mortgage, and I just told ’em that the house is not worth this much and you won’t sell it and was going back and forth. And the way that I proved that, I just went to the house, took a bunch of pictures and sent it to ’em and say the house is destroyed. And they was flabbergasted, but they believed me and we ended up becoming to the agreement that we’re going to get an appraisal or a BPO on the property and whatever comes back more, we we’ll sell that property to you. And that’s how we agreed on the price.

Ashley:
Todd, a few things there just to break down, what does it actually mean when somebody is underwater on their property? Can you explain this lady’s situation that you were able to try to help her with? How did she get into that?

Todd :
Yeah, so being underwater just means that you owe more on the asset than it’s worth. So she owed $80,000 on the property, but just through neglect and being vacant and just not keeping up the value of the property goes down quicker. So she owed $80,000 on this property, however, it was not worth near as much.

Ashley:
So in her situation, she probably fell behind on payment. She couldn’t sell the property because she owed more, and that’s where you came in and negotiated with the bank to perform the short sale. So you talked a little bit about that process of going with the bank and doing an appraisal, sending them information on the property. What are some other things that somebody should know about approaching a bank to do a short sale?

Todd :
Well, it’s ironic because short sales are extremely long. Now I described it in 15 seconds, but this whole process took one year. Wow. Because you’re working with the government and as we all know, the government is extremely efficient and they move very fast and they seek approvals for every single thing. So it was a short sale, but that’s what I liked about the deal. From talking, I went to a lot of meetups. I even started a meetup and just met a lot of guys and everyone wanted to buy something and turn it over and make cash quit, and I knew that I had zero competition and buying a short sale property, no one else will wait that loan to do it, but I had nothing. But

Tony :
You said something specific about like, Hey, we’re going to land on either the BPO or the appraisal. So first if you can define BPO and how it differs from an appraisal and then what ended up happening, which one was higher of the

Todd :
Two? Okay, so A BPO is a broker price option. So how happened with us, the bank picked a real estate agent to a real estate broker to go to the property and based on his expertise, come up with a number. And that’s pretty much what it is. The appraiser is just a licensed appraiser that finds the value of surrounding properties and based off the current condition of the property gives it a value. So an appraiser is more official and certified A BPO. Honestly, it’s just a guy who just say, man, I think this is worth about 10 grand.

Ashley:
I’ve had an appraiser and someone, a broker come to do the BPO before to the same property. And it was like maybe six months difference and there wasn’t a ton different from the property, but that was literally how you explained it was exactly how I saw the guy like, oh yeah, this looks good. Yeah. Oh, I like what you did here, appraiser’s just like what’s the actual facts of how much does this cost and blah blah, stuff like that. It was very different. Yeah. Okay. So now you’re negotiating with them, you have the appraisal done, what does it come out to and what are the next steps?

Todd :
So the BPO came back as 20,000 and the appraisal came back 16,000 and that’s when I realized, oh, it didn’t matter what number it came out, I don’t have any money.
So the bank gave me 30 days to come up with $16,000 in cash to close. However I ended up becoming. So this is something about a short sale. When you’re in a short sale before they sell it to you, they will list it on the MLS for about two weeks just to make sure somebody else don’t come and buy for more than what you bought it for. So knowing that information, I went and befriended the real estate agent. We just became buddies social. So when he listed it on the MLS, it already said pending when he listed it. So I knew no one else would buy it but me.

Tony :
So Todd, I’m laughing on my side, right? You said it doesn’t matter what it came back at, but I still got to figure out how to get the money for this thing. So it sounds like you’ve been kind of laying the seeds for building some of these relationships. You said that you were attending a lot of meetups, you started your own meetup, which you just kind of glossed over as well, which I think is super important, networking with different folks. So what strategy did you take to go out there and find the money that you needed to take this deal down? Well,

Todd :
That’s the beauty about BiggerPockets. It eliminates every bias of why you can’t do anything. They have a solution, and I don’t remember which episode particularly, but I remember a guy said, you have to go where if you want to find money, you have to go where people have money. So I sat down and thought, where do people have money that buy houses? Oh, the auction. Because in Texas you have to buy the house full outright at the auction in order to buy it. It’s no 10% down and come later. So what I did, I went to the auctions, the public foreclosure auction, and I sat in the back and everybody that bought a house, I just kind of looked at ’em. Then as soon as they bought the house, I walked up to ’em and introduced myself and asked them for lunch and asked them if I can buy them lunch. I can’t tell you, I have bought so many people’s lunches that it is crazy. I probably spent a mortgage payment on lunches a month,

Ashley:
But I’m assuming well worth it,

Todd :
Well worth it how I found my first mentor, and that’s how I found my first private money lender who funded my deal.

Tony :
Todd, I just want to ask one follow-up question here. So you go to the auctions and great idea, right? Hey, I’m going to go where the money is at. But what are you actually saying to these people? Say that I’m the guy that you met at the auction or ashes, the lady that you met at the auction, or are you just walking up to ’em and saying, Hey, can I buy lunch? What was the exact scripting that you were using that a Ricky might be able to use if they go to their local auction or wherever they might be going, where the money’s at?

Todd :
Well, first I printed off about a hundred business cards and just like every rookie CEO of I buy [email protected],
President of Todd’s Real Estate. So after somebody bought a profit, I walk em to ’em like, Hey man, congratulations. That is awesome. And they say like, yeah, yeah, it’s all good. One thing about investors, they love talking about themselves and how great their deals are going. And I would say, man, is this your first time doing this? And I’ll just start asking questions and just seem genuinely interested. I am genuinely interested, but I’m just asking questions. Is this your first time doing this? That is crazy. Are you scared? What are you going to do with this property? How did you know about this? Man, this is awesome, man. I would love to learn more. Can I want to go grab some tacos? And nine times out of 10 people would take a free lunch with you because I just ask open-ended questions. What do you think about this? What are the options? How are you going to get out of this? How are you going to make money? Asking questions to a learn before I can steal their ideas. That’s one thing I love about real estate. You can just repeat what other people are doing. And two, I want them to know that I’m not just here to look for answers. I’m here to pick up on their philosophy for I can learn how to do what they’re doing.

Ashley:
So now that you’ve had these meetings, what are some of the things someone should consider before going to an auction to find a private money lender? Or maybe they’re going somewhere else, they just dropped 50 K on a golf club membership to join the country club where the money is in their community. What are some of the things they need to be doing besides just taking someone out to lunch? What are maybe those next conversations after the initial lunch that happened?

Todd :
A number one is just being honest and genuine because people can pick out a fraud or a opposer or somebody who’s just money hungry immediately. So just having a natural curiosity and caring about the person you’re talking to is number one. Next is do your own research. If you’re going to talk to somebody about what they’re doing, figure out who they are, find ’em on social media, look up what houses they’re bought, what their company’s is, what their company is, and talk to ’em about their company and ask open-ended questions is a big thing. Don’t go to a guy and say, Hey, you in real estate, you make money. It’s a very short question. They’d be bored. Just ask them open-ended questions like, Hey, I saw on your website that you did this. Is this something y’all normally do or is this a new direction your company is going? How do you think that you can come up with it with so much money to do such a big project and just ask and open-ended questions. They will converse. And lastly, just kind of shut up and listen. If you ask the question, they will tell you the answer. You just got to, what’s the old saying? You got two ears and one mouth. Listen as twice as much as you talk and just sit back and just listen and just enjoy the ride.

Ashley:
When you actually did your pitch to them about becoming a private money lender, was this for the purchase, the rehab, what was kind of your pitch that you had laid out as to I need this much money, this is my interest, I’ll pay? Or kind of walk us through that initial pitch of I guess selling your opportunity you had.

Todd :
Right. Well, I never directly asked anyone for money. I just told them my situation and I told them like, Hey, I found a property. These are the numbers and I don’t know what to do. Can you help me? And about the first five or six people just introduced me to banks say, go to this bank and tell them, go to this bank and tell them, go to this bank and tell them. And eventually my first mentor said, man, that sounds like a good opportunity. I might be interested. Let’s go have some lunch and talk about it.

Ashley:
I love that you did that because that’s what Brandon Turner had told me before is don’t go and directly ask someone, do you want to invest in this deal? Ask them if they know anyone that would be interested even. And you kind of in a sense did that as to, I’m not directly asking you for help. I’m not directly asking you to invest, just here’s what I have going on. And it kind of leaves it open for them to offer to invest in the deal or to help you out. And the reasoning he said was it kind of plants the seed and it doesn’t put the pressure on the person of like, oh, he’s putting me, this is why you invited me to LA on time, money, or whatever it may be. But also it has them thinking too, maybe they actually do know somebody else who would be a better fit to invest in the deal too, instead of just putting the pressure them.

Todd :
Then when the next time you see them, you can go straight to business mode and they can see how professional you are now where they understand, okay, we’re going to talk a lot about business. So once we had that initial conversation, of course, and went on BiggerPockets and BiggerPockets have calculators, and I came up with the wholesaling calculator. I created a binder, and when you create a calculator on BiggerPockets has like three or four sheets that look super professional, even though I didn’t really know what all that stuff meant. I just saw a bunch of graphs and circles and highlights and printed and color, and I just thought, man, I know my numbers. I don’t know what all this other stuff means, but it looks super professional. So I put in a nice binder, put my company logo on it, and when we sat down, I said, Hey, here’s how much I’m buying it for here. Here’s what I know, my competitive advantage, because my real advantage on the deal was I knew the location. I went to Oklahoma State University and the house was about five minutes walking distance from the property. And if you know anything about college towns, anything that close will sell and we rent. There’s many investors out there, they just don’t want to do the work, but if you can find the property, they’ll buy it from you.

Ashley:
Todd, what was your plan with this property right now? Is it you’re going to wholesale it, you’re going to rent it, you’re going to flip it?

Todd :
Yeah. So my plan was originally I was going to wholesale it and use that money to start a laundromat in Texas. So I’m still thinking about starting a laundromat. I’m still thinking about cleaning people’s clothes. My

Ashley:
Business partner, he actually owns a laundromat and it’s a headache for him sometimes, but it definitely is a cash cow, that’s for sure.

Tony :
First, kudos to you, right? Because you did all of the things that we talk about doing on the Ricky podcast to try and source capital for your deals. You didn’t just rely on your existing network, you started to expand your network, you found ways to give value, you were genuinely interested in other people, and that led to you finding the right person to work with. So I guess talk us through about once you actually pitch the deal, you guys agree, Hey, this is what we want to do. How do you go about structuring and facilitating actually getting the money from this private money lender to use it for that first deal?

Todd :
Okay, so after we had lunch, at the end of our lunch, my investors was like, Hey, this sound like a good deal. And I told him straight up like, Hey, I don’t have any money to make you interest payments. I don’t have any money. So yeah, he said, all right, let’s do this. I fund the project. I told him I sell it within 45 days. And he said, okay, you sell it. I fund the project. You take 40%, I take 60%, let’s call it good. Perfect. And I immediately drove home. I had to get out there quick before he can change his mind. So I immediately drove home and told my wife, and I’m like, we got the, we’re going to buy the house. And she’s like, yeah. And she’s like, where is it? I don’t know. I didn’t get that far. I think he’s going to cash app me. I probably should request a cash app. And so I had to make that awkward conversation like, Hey, can I have the money please? And he said, no, I’m not going to give you no money. I’m just going to send it directly to the title company. I was like, oh, okay, okay. And he explained to me how it worked.

Ashley:
But talk about that as a new investor or a rookie as to how that works with a private money lender working with a bank. The bank takes care of all that. Or in New York state, you use attorneys, the attorneys take care of all of that. But that really can be a common misconception because my first partner, on my very first deal, we created an LLC together. So we were both partners on it, almost in a similar situation. We were both getting equity from the deal, but it literally was him just writing me a check and that was it. We didn’t know either exactly what was the proper way to do it. We had a note payable that I think was one page, we both just signed it. We didn’t put a lien on the property or do anything with it. So it’s very interesting to see what those processes are.
And they can also vary so much depending on what state you’re in too, that I just had a private money lender from a different state lend to me, and it was very different how it had to be done in New York state compared to how he usually does it in his state when he’s a private money lender. So I totally get that. The misconception of, I have no idea how this works, were you supposed to come home with a briefcase full of cash that day, or is he supposed to meet you at closing, bringing you the briefcase to closing?

Tony :
And we just had our fundamentals of funding series. So if you go back, I dunno, maybe 10 episodes or so, in the rookie podcast catalog, you’ll see that we did a few different episodes in the fundamentals of funding. And one of them, we talked a lot about, Hey, how does that actual transition of money work if you’re doing a private money deal? So we won’t go into the full breakdown here, but just know what Todd talked about, sending it to escrow or tattle is typically how folks handle it.

Ashley:
And then Todd, we’re going to take up a short break quick, but before we do that, I just need to know this partnership that you guys have created, was this on the back of a napkin when you were out for lunch? Did you have an attorney put together contract? What did the actual logistics of this partnership look like?

Todd :
Well, actually I’m a college educated man, so of course I just had a handshake deal. Of course, we just shook hands, looked each other in the eye and went about our day and that was it. So the way he secured his collateral, he just put a mortgage on the house and he was just a mortgage company. But for our 60 40 split, we just shook hands. There might have been some beer involved, and I just went home and that was it.

Ashley:
We’re going to take a short break, but when we get back, we’re going to find out what happened with its deal and if a handshake deal can work out. But we’re also going to find out how Todd was able to finance his other deals as he’s continued to invest in real estate. Okay. Welcome back. So Todd, what ended up happening with this deal that you did with your first partner?

Todd :
Yeah, so actually the biggest takeaway is I discovered the power of private money. I found out what could go wrong, did go wrong, everything, it went terribly wrong. I

Tony :
Love that you’re able to say that now with a smile on your face, how that’s growth there.

Todd :
Oh yeah. It was a lot of, so the cellar ended up selling a lot of the stuff in the house before we closed. So we showed up, the refrigerator’s gone, the dishwasher’s gone, the carpet is gone. I didn’t know you could sell carpet, you selling us carpet. But one of the biggest things I found out a lot of steelwater work on state is Steelwater. Oklahoma is a very small town and not many wholesalers target that place, but the wholesalers that did come to find out require a minimum purchase price, which I didn’t know that. So a $16,000 property that I was trying to wholesale for like 30, $40,000 doesn’t meet their threshold. And that’s what I did not know because a lot of the wholesalers saying, we at least had to invest 75,000 in each property. And I was like, oh, my sweet baby Jesus.
So I just hit the streets and we ended up finding a buyer and I was pretty much going to make no money. We ended up, after everything was said and done, was going to make 2000 bucks. So I went to my mentor and I just told him the story and I was like, man, you can just take the 2000 bucks. I appreciate the opportunity. I’m just going to try again. And he said, hell no. He was like, Todd, understand this. I have enough money I can hold this mortgage for the rest of my life. It doesn’t affect me at all. I didn’t give you this to make a bunch of money, but we’re going to make a bunch of money and figure it out. Just take as long as you need. And I was like, oh, snap. That’s awesome. So I have a plan. I didn’t want to come up with no backup plan, and my plan was like, Hey, I get paid every two weeks. I’m just going to work. I’m going to flip this house, check by check. So every time I get paid, I’m going to do one thing to the house, and when it’s done, give me about a couple of more weeks and when it’s done, we can sell it. And that’s what we did. We ended up putting about $10,000 in renovation into the property, and I was the laborer because I couldn’t afford labor, and apparently I’m very cheap laborer.

Ashley:
Did you know a lot of this stuff? Did you have any kind of experience doing construction or remodels or were you deep in the whole of YouTube University?

Todd :
Let’s just say this, I grew up with a single mom and we had a house cleaner, so I didn’t know anything. I went to YouTube University and I failed. I didn’t even pass. I kept watching this four or five different videos about how to install. It took me three days to install one toilet. The good thing about renovating house, once you do it once, it gets easier. The second time I was just on YouTube just looking up how to do everything. Like I said, I have probably one of the best wife in the world because she was up there with me holding a baby and painting, holding a baby, and just scrubbing, just spray painting and holding the baby and just being there next to me. So it was three of us. Even the baby kind of helped a little bit making a little mess.
So we just all weaned it. But what we knew was, I realized at that point, it’s not about making money at the house, it is more about getting your investors money back. That’s the first rule of private lending, never lose money. So we was just in there just trying to have a good time. And that’s one thing when you’re not worrying about money, when money’s not your number one goal, it becomes more fun. And that’s the good part of real estate when you’re just sitting back trying to get creative and letting your creative juices flow. So we ended up putting about $10,000 into the house, and we eventually sold it to a local business owner, and we bought the property for 16,000. We put about 10,000 into it, and we sold it for 50 grand.

Ashley:
So how much did you guys end up making out of that? Do the math for me, Todd.

Todd :
We ended up doing it for sale by owner, so we didn’t have to pay many fees, and we ended up selling it to the person that we sold it to. Didn’t use a realtor either. And it’s funny because when everything was said and done, my investor got back his 16,000, and I remember writing him a $17,000 check, and I remember thinking to myself, look, I’ve never seen this much money. How am I giving this much money away? But after everything said and done, I brought home about $8,000, which is the biggest paycheck I had in my young life at that time.

Ashley:
So Tony, I’m sure you already calculated this, but for the investor who invested 16,000 and got back 17,000, that is over a 100% cash on cash return for your money. Did you figure out the exact amount, Tony, you calculate that in your head.

Tony :
Well, how long did you guys hold it for Todd? How long did it take you guys from start to finish?

Todd :
It took about a full year.

Tony :
Okay. So yeah, just over a hundred percent.

Todd :
Yeah, from start to finish. Yeah.

Tony :
Yeah, just over a hundred percent, which is pretty damn good to put in 16 and get back 17. Right. So we do that all day if we could, right?

Todd :
Yeah. And that’s how we became really good partners. He was like, man, Todd, honestly, this is the best deal I’ve ever had. And I was like, awesome.

Ashley:
So did you guys continue to partner on deals?

Todd :
I just got off the phone with him yesterday. Yeah, we partner on another deal and he’s just become one of our closest friends.

Ashley:
So let’s go into your other deals After this first deal, I’m sure you’re excited. What is kind of the next step and did you use continuing to use a private money lender?

Todd :
So that’s when I learned that money goes out much quicker than it comes in. So I thought I was rich. I thought I made it with my little $8,000, and God, it blew so fast. So my wife and I was sat down together, we talked and we came up with a plan and we pivoted from trying to do flips and try to earn a big bulk of cash to trying to get something more stable. So we started focused on the rentals. Now I’m saying this still living upstairs in my mom’s house. So we figured how can we get a rental? Maybe if we buy a house, we live in it and move out, we can turn that into a rental. That’d be the quickest way, or come up with 20% down. So I know they call ’em accidental landlords, but we try to become purpose purposeful landlords.
So what we did is we just went on YouTube University, how to buy a house and read Brandon Turner book, how to Buy a House with No Money Down. And we’ve discovered something called A-U-S-D-A loan and A-U-S-D-A loan is 0% down primary home loan. If you decide to live outside of Seated Limits, I don’t need to be next to a Starbucks. I love to live outside of Seated Limits. So that’s what my wife and I did. So we got pre-approved, and you only needed six. Technically, you only needed 600 credit score for that, and it got approved. But then we found out there’s something called closing costs.
I don’t have that either. Can somebody else pay for it? And come to find out that and what A-U-S-D-A loan and the seller is allowed to pay 6% of your closing calls also. So we found a realtor that we worked with. We told him our plan, we’re going to use this USDA loan and asked the seller to pay our closing calls. And most realtors be like, hell no. Y’all sound like y’all can’t afford anything. But we found somebody that worked with us. We offered about 10 or 15 different houses. You’re never going to win a house versus conventional doing that. And that’s how we found our first house. We lived in it for a couple of months, then we moved out and that’s how we got our first rental.

Ashley:
When you made that offer asking for the sellers to pay part of your closing costs, did you intentionally increase your offer a little bit. So the purchase price was a little bit higher, so maybe they were getting 6% more in the purchase price than they would’ve if they went with another offer.

Todd :
So if the house was 200,000 and we asked them to cover 5,000 of closing costs, we would just offer 2 0 5,

Ashley:
Which makes sense. And then that basically just wraps your closing costs into your loan. But a lot of banks, when they offer the shiny no closing cost mortgages, you are paying a way higher interest on that instead of it evens out for the bank somehow. And it’s usually the interest rate when they offer a no closing cost loan, but this way you’re not, you could still get that great interest rate too without having to settle with the bank on that.

Todd :
And that worked perfect for us. We was able to buy a primary house with ’em. We brought like a thousand dollars to close it, and I had to pull that out, my 401k.

Ashley:
Oh, okay. So what did you do? How did you pull that out of your referral? Oh one K. Did you take a loan against your 401k or did you actually just pull it out and take the penalty?

Todd :
So I pulled it out and just paid taxes on it. My company at the time didn’t have a penalty. You just had to pay a really high amount of taxes on it apparently. I was like, it’s my money. I got to pay taxes on my money.

Tony :
Todd, just one last question. I just want to understand. We talked a little bit about the first deal and the second deal, but what does your overall portfolio look like today?

Todd :
So our goal starting this was to acquire one house every year for the rest of our lives, and we’ve been investing for five years and we purchased five different properties.

Ashley:
Congratulations on reaching that so far. Yeah.

Todd :
Well thank you. Thank you, thank you. Somebody said this before in the podcast, but going from zero to one is the hardest, but going from three to four is much easier. Much easier. So right now we had the one flip and we have four rentals, and now we’re just looking at the next piece of property to buy.

Ashley:
And looking down the road, what is the future? Is it continued to buy one every year? Are you wanting to retire early? What’s that kind of five-year plan down the road?

Todd :
Well, now we’re looking into acquiring land, so I never thought I’d be at this point, but now we’re at the point, the time, the effort it takes to buy a single family house and get it renovated, the reward isn’t there. We want to use our time and efforts to buy something bigger. So I had to decide I want to do something that’s not sexy that people don’t want to do. That’s what got me out to where I’m at now. So now we’re actually looking for land and I’m looking to create an RV park here in Oklahoma.

Ashley:
Oh, cool. Neat.

Todd :
Yeah, because people don’t like, they don’t make HGTV shows about RV parks. That’s what we’re looking into now. We’re looking, we have private money lined up now. We’re just looking for some land and just working with the city on development. And that’s been its own rollercoaster.

Ashley:
Well, we can’t wait to have you back on the show to talk about building a campground from the ground up, all the infrastructure that involves and putting everything into place, the operations. That’ll be really interesting.

Todd :
Yeah, I’ll see you some pictures of the whole, this is the first time I’m documenting everything, so we’re trying to document the whole process and bunch of pictures and stuff. So it is going to be cool. It’s going to be the biggest project we’ve done, but we definitely feel ready to do it.

Ashley:
Yeah, that’ll be so educational for anyone to watch and look that over. Well, Todd, there’s one missing piece from your whole story today that I think you could have taken advantage of and you didn’t when you moved out of your mom’s place. You definitely should have rented that out to get the additional rental income, but there was that one missed opportunity there. But thank you so much for coming on today and taking the time. We really, really appreciated having you here, sharing your story, and we’d love to have you back again to talk about this campground.

Todd :
Yeah, no, I’m super excited.

Ashley:
If you want to hear more great Gus, like Todd Fuller love, go in your podcast app, search real estate rookie, and hit that follow button as it helps us grow and find better guests. Thank you guys so much for listening. And if you haven’t already, make sure you join the Real Estate Rookie Facebook group. I’m Ashley. And he’s Tony. And we’ll see you guys next time.

Tony :
This BiggerPockets podcast is produced by Daniel Zarate, edited by Exodus Media Copywriting by Calico Content.

Ashley:
I’m Ashley. He’s Tony, and you have been listening to Real Estate Rookie.

Tony :
And if you want to be a guest on a BiggerPockets show, apply biggerpockets.com/guest.

 

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