Posted on: January 09, 2020
WI 341 | Former Construction Worker

 

Are you at a point in your wholesaling journey where you’re ready to think big? Can’t wait to do more deals and earn massive returns? You’re in luck! Today’s guest will show you how!

Jerry Norton is a very successful real estate investor and wholesaler. He is also the owner of Flipping Mastery, an education company that has helped students flip a whopping $100 million worth of real estate. From digging holes as a construction worker in his 20s to becoming a self-made millionaire by the time he turned 30, Jerry’s story is impressive as it is inspirational.

If you can’t wait to take your business to the next level, listening to today’s episode is a huge step in the right direction. Jerry not only candidly shared many of the tips and techniques he uses, he also shared how he shifted his mindset and became the successful and inspirational man he is today.

Today’s episode is loaded with so many gold nuggets; prepare to take plenty of notes. Truly one of those episodes you’d listen to over and over again!

RESOURCES:

How A Former Construction Worker Did Over 1,500 Deals With Jerry Norton

Episode Transcription

It is time to start thinking bigger. I’m going to interview Jerry, who has done over 1,500 transactions. We’re going to break it all down so you know exactly what he does to do so, not only deals but huge deals as well. I am here with Jerry Norton.

It’s good to be here.

If you are on YouTube, you have seen this guy because he’s got one of the most popular and impactful YouTube channels about real estate in our space and industry. That’s Flipping Mastery TV. You’ve done an unbelievable job of over years and years educating people on how to get their first deals, how to flip properties and bigger deals.

We’ve got over 400 videos, all on wholesaling and flipping. It’s a lot of work.

Tell the audience who you are and how you started. Share a little bit about your background because it’s incredible. You have a big family and got a lot of things going on.

I started in Detroit. I was working minimum wage for an underground construction company digging holes. I got married early. I was 21. I started a family. I had a few kids and realized, “I’m not cutting it and doing it for my family and kids.” I wanted something better. This is everybody’s story that gets into real estate. I found real estate and started wholesaling. I did driving for dollars in Detroit but I was so scared about what it costs to do deals. I went to the bottom of the bottom, like $5,000 houses, when I started wholesaling. I got pretty good at it. It took a while, maybe about a year part-timing it and then I finally made that transition into, “I want to do this.”

We have a lot of people here that have full-time jobs but are part-time in real estate. It’s their passion. They have the entrepreneurial spirit inside of them but they have responsibilities. They have bills they have to pay and people they have to take care of so they’re doing it part-time. You did this part-time.

I said, “I’m going to do this until I have a year’s worth of my regular job got saved up.” Here’s what’s crazy though. In my first month full-time, I quit the job full-time. I did 5 wholesale deals and made $52,000, which was twice what my job paid me in a year. People ask me, “Do you wish you quit your job earlier?” I don’t know. That was my story and journey. Everybody is different. When I had all of my focus on it, it was amazing what I could accomplish.

I have a video on this channel about saving up six months of your expenses so that you can go into this. You’re not going into it with that huge fear like, “All the bills are catching up to me. I don’t have enough money to cover it.” It turns into stress. That stress turns into some negativity that boils in. That’s amazing that you suggested that you wanted a year’s worth.

I did a year’s worth but it was $25,000.

How many kids do you have?

I have nine. At the time, I had three.

You start wholesaling. What were you doing in the beginning? You were driving for dollars. What else were you doing? What year is this?

This is 2004, 2005. I come in right where everything started dropping. 2006 happens. I’m wholesaling all through this. All of a sudden, these out-of-staters started coming to Detroit, which was crazy. Everything is a fire sale. I started wholesaling to these out-of-staters like California. Even overseas money is coming in and buying. I called it the cheap factor. It didn’t even matter if it was a good neighborhood. It was cheap.

He who names the price first loses.

The problem was as I’d wholesale one of these out-of-staters a deal but then I couldn’t wholesale them another deal until they fixed it up and rented it. To speed the process up, I said, “I found you the deal. Why don’t I fix it up for you so I can sell you another house?” That was my reason for doing it, not because I wanted to rehab. By default, I got into rehab. I started doing the turnkey thing. I fixed it up and said, “What if I got a tenant in place?”

You said turnkey. What does that mean?

These are low-income rentals. I would fix it up.

This is a neighborhood where the houses are worth how much?

At the time, they would appraise for about $80,000. I would buy them for about $10,000 to $15,000, REOs mostly because everything crashed. I put $10,000 to $15,000 into them and then sell them for about $50,000 to $60,000.

An REO is a real estate owned by a bank. It was a foreclosed home. At some point, somebody couldn’t afford the mortgage. It goes back to the bank. They have all these properties. Jerry was reaching out to the banks to get these deals and then fix them up for these people.

I would fix them up and then take a step further.

Did you use your own money to fix these up? Were you using other people’s money? How did that work?

At this time, I could only keep 1 or 2 on inventory because of cash. I eventually started to raise money. I took another step and said, “Why don’t I get a tenant in place? That will make it even easier.” I would then buy it, fix it and put a tenant in place with property management. I could take it to these investors and they would buy them.

You got a renovated house and money coming in from it. It’s income-producing because you got a tenant in there. These tenants were screened by Section 8, so guaranteed rents. You would turn it over to an investor.

In 2007, I did 80 of these turnkey properties where it was all done, ready to go. Here’s a tenant in place and go. 2008 happened and the problem that happened was the financing. My buyers would buy them for $50,000, appraise them for $80,000, refinance and buy another one. I could sell 1 guy 10 houses. Now it was just cash buyers. It killed my model but I adapted quickly.

I immediately said, “I’m going to go retail.” I stopped my turnkey model and went into first-time buyer neighborhoods in Detroit. I moved out of the low income and went into the $150,000 neighborhoods. I did the same thing. I bought it, REO and renovated it. It’s a little different because it’s retail. I was doing granite and stuff. I turned around and flipped it. I make maybe $25,000 to $30,000 on the house. It was all cookie-cutter, like a production line. I could buy many and fix them up. I would go through 2 or 3 buyers.

How are you finding these deals?

WI 341 | Former Construction Worker

Former Construction Worker: Most people don’t know that you can still get great deals on the MLS because that’s not what anybody else teaches.

 

Mostly all REOs.

Are these on the MLS?

I teach this technique still because it works well as a double-dip strategy. I would go directly to the listing agent, unrepresented and let them submit the offer for me. As my buyer’s agent, they’re getting 6%. I’m getting pocket listings.

I talk about this on here, reaching out to real estate agents for wholesale deals. They know that I don’t want any of the commission. They can keep whatever commission they have but give it to me before it hits the market. Once it hits the market, you’re going to have a bunch of offers and go through so much paperwork. It’s going to be a headache. “Bring it to me before you do it. I’ll make it as smooth and as clean as possible.” You’re essentially doing that to people that were getting properties that were foreclosed on real estate agents.

All REOs go on the market. They go on MLS and there’s a designated agent that represents the banks. It’s the same agents getting all the deals. They call me up and would say, “This one gets listed on Friday. Give me your number.” I will submit my number. I don’t know if anybody’s ever seen this. It would be active at 9:00 AM, pending at 9:01. They locked it up for me. That was my main strategy because there was so much of that inventory out there.

Do you have any suggestions for what people can do now? Jerry moved to Phoenix. How do you take advantage of the MLS to get sales?

I didn’t know this until I started putting myself out there in the community on YouTube. Most people don’t know that you can still get great deals on the MLS because that’s not what anybody else teaches. Everybody else teaches all these off-market strategies which work. To me, the MLS is this untapped gold mine. If you double dip, you don’t have a competitive advantage.

Double dip means the person that’s listing the property gets all the commission.

It means you cannot have a buyer’s agent representing you. Otherwise, they’re going to want 3%.

Even if I have a license.

I tell them, “I’m licensed but I’m not going to use my license.” It’s dual agencies. It happens all the time. It’s normal real estate. You’re strategically doing it.

What are you saying to these agents? There are people out there that maybe have never done a deal or maybe have done a few. I remember from the outside looking in. Before I got a real estate license when I was 22, I felt intimidated by higher-end real estate agents. I feel they’re going to ask me questions. They’re going to feel I’m a fraud, stupid or I don’t know what I’m talking about. How do you communicate with them and have that confidence and certainty? We talked about certainty and likability when we talked to anybody.

Here’s what I do. Don’t ever call it an agent unless you’re calling them specifically about their listing. That’s number one. You can have a real conversation. You call up and say, “I’m calling you about your listing on whatever street. I’m a real estate investor. I’m a cash buyer. I’d like to make an offer but I’m unrepresented. I would like you to submit the offer on my behalf, so you get both sides of the commission. How does that sound?”

Not all of them but 90% of the time, they’ll say, “Yes.” I follow up and say, “Do you have any other listings that are distressed properties that I can make an offer on? Would you mind calling me on your next listing before you list it? I’ll take a look at it and get you my number. We can get my offer submitted before going on the market.”

If you learn how to wholesale, you can wholesale your way out of any mess you get yourself into.

I love this because when you’re out there networking with real estate agents, maybe you’re meeting them in Meetup groups or somewhere out there, maybe it’s a barbecue or something, you don’t just go up to them and be like, “I buy houses. Send me your deals.” Say, “What houses do you have that need some love or that are trash and need a renovation?” “I don’t have any.” “Do you run across them anytime?” “I do.” This seems crazy but I love those. I want you to reach out like, “Will you save my number on your phone as Brent Cash Buyer?” Build that relationship.

This is how powerful this is. It’s never about the deal in hand. It’s always about future deals. I had an agent call me up about a deal that I double-dipped on. It didn’t work out because I couldn’t get my number. He calls me up and says exactly this, “It’s off-market. I’m getting ready to list it. Before I listed it, I told the seller, ‘I might have a buyer. Let’s see if my buyer is interested.’ The seller was like, ‘I would love not to go on the market. I would love to have people coming into my house.’”

We’re talking. I ran my numbers in my formula, ARV and repairs. It’s $105,000. I don’t tell them $105,000. He who names the price first loses. I said, “What do you think they’re going to want?” He’s like, “I’m advising them to list at $99,900.” I’m like, “We might be able to make that work.” I’m going to be going for $90,000.

The beautiful thing about working with real estate agents is they already have a number. They’re not going to be like, “Mr. Buyer, what will you give me for this house?” They already comped it and brought it to the seller. They’ve already done all that work for you. You go, “That works. Do you think they’d take $99,000 or $95,000?” If you take that first one, the seller is always going to wonder if they left money on the table. “That might work but see if you can get it for $98,000 for me. $98,000 works a lot better.” “He wants to get $98,000.” “We won’t budge off $99,900.” “That’s great.” They feel great.

This came from an agent on a deal that didn’t work out. I had that double-dip conversation and I said, “Call me when you get deals.” These guys are in the market. That’s what they do. At some point in time, they’re going to come across distressed real estate. You want them calling you. I tell people, “Imagine if you had 25, 30 or 40 agents in your market doing that with a double-dip relationship and calling you.” It’s powerful. It’s free. There’s no ad spend, direct mail or buying data, nothing.

The only thing you have to do is pick up the phone and call them.

Everybody is looking for the easy way out. With the digital world we live in, we’re like, “I want to make money in real estate, online, without talking to anybody.” What I love about you is how real you are with talking to people. With all of the advancements in technology, there are as many registered real estate agents as there were years ago. Isn’t that crazy? It’s still a people business.

There’s more here in Phoenix. It’s incredible. You build your whole business off of talking to these people. You were going directly to the seller and having these relationships. As a real estate agent for a while, people would send you blanket emails that say, “I’m a cash buyer. This is what I’m looking for. Send it to me.” Delete. Somebody calls me up and says, “I saw this listing. I want you to represent me.” That relationship goes on and on. I sold 1 guy 73 properties back in the downturn when it was REO properties and bank-owned properties. It was incredible.

If they don’t answer, I text them and say, “I’m a cash buyer. I want to submit an offer on your property.” They’re going to call you in five seconds because they’re going to see that. I say enough to get them on the phone because it’s a relationship.

You started getting into the first-time buyers. At the beginning of this, we talked about thinking about a big mindset. Jerry is the master at this because he kept going bigger. He does huge deals and deals nationwide.

Here’s what happened. I’m doing these little flips that are making $25,000, $30,000 a flip. They’re 1,012 square foot houses. One of these REO agents brings me this deal that’s $4,000 square feet in a part of town that’s nice. I ended up doing this deal. It’s the biggest deal I’ve ever done at this point. I sold the things for $400,000. I did the same rehab I did in my other houses. It was just bigger, more to paint. I still had to coordinate a painter and new cabinets. I started to do all the same things.

I made $75,000 on that flip. I had this a-ha moment where I’m like, “I made three times as much into the same amount of work. What am I doing?” That next year, I did probably a quarter of the deals the year before and made twice as much money. I’ve taken that concept and mindset of focusing more on margin than volume. I see a lot of people do this and it’s okay. If you want to be the volume guy, there’s a model for that.

You better be a good leader, able to manage people and grow a team. You can do that model well. What worked well for me though, was saying, “How do I make more and do less?” That’s been my real focus. I’ve transitioned into higher-end and then I do multimillion-dollar deals. I’m still doing single-family residential but they are $1.5 million, $2 million and $3 million homes. A lot of them are new construction.

How much do you net?

WI 341 | Former Construction Worker

Former Construction Worker: With all of the advancements in technology, there are as many registered real estate agents as there were ten years ago. It’s still a people business.

 

Up to 500,000 on one deal. I’ve got 2 that I’m all in for about $1 million. I have one we’re going to shoot for $1.5 million, the other one is $1.6 million with the cost and carry. I do these with zero of my own money and 100% funding.

I get this a lot. A lot of my TTP family members and TTP students, their progression, when I talk to them, is, “I want to learn how to do my first deals by being proactive. I want to do it to where I’m making enough to either do this full time. I want to develop and buy apartments or build.” There’s a natural progression there that says if you know how to source opportunities in real estate, the sky is the limit. You can go and do apartments, build hotels and do these multimillion-dollar mansions.

Stretch out of your comfort zone and flex your risk muscle. That’s been the biggest thing for me. I’ve had to flex that risk muscle, push and get a little bit. These deals are not comfortable sometimes. In some of my deals, I’ve got $10,000 a month in carrying until these babies sell. I couldn’t stomach that on day one but I’ve been able to build up a tolerance and learn the things I need to learn to then have those big paydays where I make $300,000, $400,000 or $500,000 on 1 deal.

You can also put together a resume of deals that you’ve done and raise a ton of money. You have to learn how to find these deals first, go through all these things, work with contractors, lead people and make sure that these deals get done and you get a profit. You show that and all of a sudden, people are like, “I trust you. I need to do something with my money. Here you go.” You go out and expand it for them.

Wholesaling is always my root and it should be for anybody. This is what I tell people, “If you learn how to wholesale, you can wholesale your way out of any mess you get yourself into.” I’ve done it several times where I’m like, “I don’t know how I’m going to flip my carry next month or at the end of this deal. I’m going to go wholesale a couple of properties and get $30,000, $40,000.” If you know how to do it, it’s amazing.

That’s because you have a network around the whole country and you know how to evaluate properties around the entire country.

Something that I see so many investors try to shortcut or skip is learning how to evaluate or analyze deals. They go to realtors and say, “Can you do the CMA or a comp report for me?” This is being lazy. Learn how to comp a property and look at the distance, age of the comp and all the features that are similar to your subject property.

How do you develop that? If somebody is sitting there, reading this on their phone. They’ve never comped a property. They’re a teacher, a truck driver or in the military. They’re like, “I’ve gone to Zillow. Is that what I do?”

You can do it right on Zillow. I like Redfin better but you can do it right on it. You don’t need a real estate agent. It’s not as many or as good as MLS because it has more filters but you can go on there and find your neighborhood. I like to stay within the major crossroads. I don’t like to go outside of maybe 7, 8 or 10 streets around my subject property. People say, “It’s within 1 mile.” I cross three main roads and it’s a different neighborhood.

Stay close. My biggest thing is relevancy. What are the most relevant comps? If I take 5 or 6 houses that have sold in the past year, which 5 or 6 are the most relevant to my subject property? You can make it out to whatever you want. You’re kidding yourself. You can hand pick the comps that you think would work.

You will make the values go all over the place.

Don’t compare a house built in 2005 to one built in 1948.

Give me the top three rules. You want to stay within 15% to 20% of the square footage.

I usually like to go a 500-square foot range, below 250. If it’s a bigger home, you can go 1,000.

You’re going to fail. It’s okay. Try again. The more times you do that, the faster and the more you learn.

If it’s 1,000 square feet, you’re not going 1,500. You’re going 1,250 and 750. Are you saying within 500?

Yes.

The giant ones don’t work but the regular ones do. What I like is it is neighborhood first. Within a mile, if you’re not crossing major streets and you understand lot sizes, you want something comparable.

You want something similar. Don’t compare a two-story to a ranch. I even look at curb appeal. Think about yourself as a buyer. A buyer is not going to say, “That house is the same as this house.” They’re different. A lot of it is practice and looking at a lot of comps. Here in Phoenix, I pay close attention to pools. Not all markets have pools. Basements and busy roads are a big thing. These are things that you want to learn. I call them the features of the property.

A lot of my students wanted to take that extra level, pass Zillow and Redfin and use PropStream through TTPData.com. Check that out. You get a free trial to test it. They use it to get down and look at the comparables.

Garages are a big thing. I’m sure if you don’t have a garage, you’re not comparing it to the houses that have garages or you discounted accordingly. Getting good at evaluating a deal is a skill that every investor, especially wholesalers, needs to learn.

That’s a huge feather in my cap when it comes to confidence. I can look at a deal and tell you real quick if that’s going to work or not. That’s only because I’ve comped thousands of deals. You get to hire somebody to do that on your staff if you get to that point. As you’re growing and doing this, I would almost play games with it. I would drive around and get ten properties, comp them and see what it would be. Maybe I would reference that to somebody that’s an appraiser or a real estate agent and see how close you are.

I like to get the average price per square foot of my 5 or 6 comps that I liked and are most relevant to the subject property. Multiply that by the square footage of your deal and there’s your ARV. Get good at that and practice that.

How long have you been doing this?

I’ve been doing this full-time for many years with thousands of evaluations. I love to look at a property and try to figure out what it’s worth.

In your business, you do a lot of things. On the real estate side, you have a lot of incredible products and things that you’ve developed over the last several years. You do big massive mansion multimillion-dollar deals and partner with people around the whole country. Talk to everybody that might be interested in that. Here’s the thing and I talk about this often on this channel. The toughest thing when you’re starting is, “Is this a deal or no deal?” Second to that is how big of a deal it is. Jerry has found a unique niche here. It’s not for everybody but certain people reach out to you and partner with you.

It wasn’t easy but I transitioned from doing my local market there in Detroit. What happened was our family went on a one-year RV trip full-time and traveled around the country. I made this goal of trying to do deals virtually. Virtual wholesaling or virtual fix and flip is a popular thing. I started doing that years ago before it was a thing. I got good at figuring out how to do deals, looking at a deal in a market I’ve never been in before and figuring out what the numbers need to be to make it a deal.

I do deals nationwide. It’s got to be a deal that fits the formula. I have a program where people can be a finder for me. I will give you some tools, training and software. You go find a deal, bring it to me and submit it through my portal. We do a full analysis of it. If the deal passes, I buy it and pay you $10,000. A lot of people love the program.

Do you buy it before you flip it? Do you close on it?

WI 341 | Former Construction Worker

Former Construction Worker: Most of the time, your backyard is a great market.

 

I close on it, pay out $10,000 and then fix and flip it.

Do they get paid if they send you a deal?

Yes.

It’s a nice option if you feel a little bit shaky in your buyer base or if, for some reason, you’re not sure if it’s a deal or not, they can submit.

Every deal that comes through, if somebody submits a deal, we do a full evaluation and give that evaluation back so that you can learn like, “I was off on ARV and repairs. Here’s why it’s not a deal.” There’s a deposit. You can go to about a 40-minute training where I go all through how it works, how you can become a finder and then get started from there.

Are there certain parts of the country that you feel this has been a huge impact on? You’re all over the place. Is it the bigger cities like Dallas or San Diego or is it smaller cities like Nebraska, Indiana or Midwest?

We did a deal in Indianapolis. I had no idea. I’ve never been there. I was stunned at how hot that market is in flipping going on. Real estate is booming there. It works anywhere. I tell people, “If there are houses and people are living in houses, it works.” A lot of people are in such a hurry to get out of their market and go to Phoenix, Tampa, Vegas and all these hot markets where there are a lot of opportunities but also a lot of competition. Sometimes your backyard is a sleepy little market that’s awesome for deals. My take on it is, “Most of the time, your backyard is a great market.”

Let me ask you this question. Do you think you were born an entrepreneur? You were working in that job and were like, “I can’t do this.” There are people reading this that are born entrepreneurs. There are people out there that read this that are like, “I want to do something else.” I don’t think people read this to do one deal.

Most people are highly dissatisfied with a job. They keep coming back to you and me. Something is calling them. There’s this inside yearning. I had it. Every day I hated my job. I wanted my own thing. People who have that need to let go of those fears, work towards it and get to it. That’s your calling in life. You’re not living your purpose if you’re not doing it.

I’ve been thinking about it a lot. Gary Vee was talking about a gene or something like that. That’s been sticking to my head. The last thing is, how do you go from a guy digging holes mentally to a guy that does 1,500 deals, nationwide and multimillion-dollar construction development?

To do bigger deals, more deals or wherever you’re at to go to that next level, it might be getting that first deal, picking up the phone and talking to somebody. Whatever that is that’s holding you back, you know it’s there. It’s that thing right over here. You’ve got to face it head-on. I’ve always done that. I’ve made a lot of mistakes and lost money on deals but the one thing I’ve done is I’ve gotten back on that horse and try again. I tell people, “You’re going to fail. It’s okay. Try again. The more times you do that, the faster and more you learn. Before you know it, you’re at a whole other level than you were before.”

You stack those small wins. “I picked up the phone. I dialed it. Somebody answered.” All these are little wins. All of a sudden, you go from digging holes to building mansions. It’s on your YouTube channel. Check out his YouTube channel. It’s phenomenal. You put out three videos a week. This is awesome. I love this. If you liked the collaboration here, let me know what your thoughts are. Give us some comments or any questions you have. We’re very active with the comments. This has been bananas.

I’m glad that you came in here. I hope to do this some more in the future. Folks, if you are interested, go out there and talk to people. Be proactive. Source opportunities. When you source those opportunities, if you’re running into some trouble and you need some help, reach out and check out our great resources to help you further your passion in this business and industry. It’s awesome. Until next time. You are the best. I love you. Go talk to people. See you.

 

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About Brent Daniels

Brent Daniels is a multi-million dollar wholesaler in Phoenix, Arizona… and the creator of “Talk To People” — a simple, low-cost, and incredibly effective telephone marketing program…

Also known as “TTP”… it helps wholesalers do more, bigger, and more profitable deals by replacing traditional paid advertising (postcards, yellow letters, bandit signs, and PPC) with being proactive and taking action every single day!

Brent has personally coached over 1,000 wholesalers enrolled in his “Cold Calling Mastery” training, and helped 10,000’s of others who listen to him host the Wholesaling Inc. podcast, watch his YouTube channel, and attend his live events…

A natural leader, Brent combines his passion for helping others with his high energy, and “don’t-wait-around-for-business” attitude to help you CRUSH your wholesaling goals as quickly and easily as possible!

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