Posted on: November 12, 2021
WI 818 | Wholesaler’s Formula

 

A successful wholesaler spends decades learning what it takes to flip houses and land for big profits.

In this episode, Brent Bowers is joined by Colin Murphy who shares his formula for his wholesaling business. Colin also recounts how he began as a home flipper in London, moved to Florida to try his luck in the same industry, and has now transitioned to cross-country land flipping while living his best life with his wife in Spain.

Tune in to learn how Colin Murphy found a way to make his business work from anywhere in the world.

A Wholesaler’s Formula To Make Money Anywhere In The World With Colin Murphy

Episode Transcription

I’ve got an amazing guest. I want to put him on the hot seat. He’s the host of the Colin Podcast about Real Estate. He’s overseas. He’s got an amazing story. I’m totally fascinated with this guy. He’s got a lot of experience flipping houses and land. Let’s let it out of the bag. Colin Murphy, how are you?

I’m doing great, Brent. Thanks for having me on the show.

Thanks so much for being on the show. I know you got off vacation. Tell me a little bit about yourself. Where are you in the world? What are you doing? You fascinated me with your story, so please share a little bit with the Wholesaling Inc Tribe.

It’s a little bit of a topsy-turvy international story. I’m originally from Ireland. I lived in Tampa, Florida, but I now live in Madrid, Spain, with my Spanish wife. I have been a full-time real estate investor since my mid-20s. I started in London selling advertising space in magazines. After that, I opened an office in Dublin, selling real estate in emerging markets like Central and South America, and built up a nice little business there that was great for a few years until the 2008 crisis wiped me out in my mid-20s. We closed the office, let go of people, fired my sales managers, and started again. In 2009, I started a firm with two friends called Torcana, and we started selling Florida condos to British and Irish cash buyers.

This is distressed real estate during the crash, and that went great for a few years. We made a big transition in 2014 to becoming fix and flippers. We started buying, renovating, and selling our own inventory. Instead of selling it to British and Irish buyers, we targeted American sellers, particularly American investors. People wanted mostly mom-and-pop investors that wanted to build a rental portfolio. As you can imagine, there are a few fits and starts. The first few deals barely broke even, but we latched onto this thick stream of profitable deals in Northeast Tampa, Florida.

Investing is a journey. You go through different phases and the only way you progress is by taking action and keep moving forward continuously.

We grew every year. We expanded quickly from 12 flips the first year to over 100 in 2019. We did probably 350 flips in a small area in that 2015 to 2020 area. I have pivoted since then, slowed things down, started transitioning into the land business, and relocated back to Madrid, Spain. It has been very eventful years and a lot of fun in real estate.

That is so much to unpack there. You have gone through 2008 and 2009. You were wholesaling condos to British buyers. Were you getting them on their contract? Were you buying them? Were you doing ABC closings?

We would be best considered as an international marketing agent. We got a commission from the listing agent or broker. We got a percentage on each deal we sold, generally about 6% back then. It was all about scale. We were receiving fees from international overseas marketing agents that were mostly bringing overseas cash buyers. That has a lot of benefits in that. You’re not using your own money, putting your money upfront, or even putting the property under contract, but that has cons because you don’t control the deal. It was only after a few years that the big boys started muscling in and our access to inventory dried up dramatically.

We used to be selling B-quality condos in Orlando, Florida for $80,000 that were rented out for $950 and had swimming pools and tennis courts and beautiful ten minutes to Disney. After a few more years, you’re being offered C and D quality stuff for the same price or more. We had to move on, and the answer was taking control of our own inventory then becoming more wholesalers, assigning deals and regular fix and flippers where you’re buying a rundown property and fixing it up.

You remind me of a book called Who Moved My Cheese. The book is simple, but it’s a great book. It’s about these mice. Their cheese moved, and one mouse kept going back like, “It’s going to be back.” The other mouse flexed and went somewhere else where the cheese was at. I see you constantly flexing, changing, and gifting your business as time goes by.

Every five years, I do a major pivot. That seems to be the way it has been for several years.

You went to 2014, fixing and flipping in Tampa, then you hit on something that piqued my interest that perked my ears. You transitioned into the land. What was that like? Why land? How did you transition into that?

I started transitioning into it during the whole COVID area when I was super worried about real estate, big portfolio, the value of my rentals, and the world economy in general. I wanted to try and see if I could continue to be in the real estate book. I pivot a little bit into something that is lower risk but potentially scalable and profitable and something that I could do because I was in Tampa, Florida, at the time. I always wanted to move back to Spain. My kids grew up here and spent half their lives in the US. We wanted to come back here before they became teenagers, and I’m bringing them up here. I wanted a remote-friendly real estate business.

WI 818 | Wholesaler’s Formula

Wholesaler’s Formula: You learn a lot renovating one house. It develops resilience which is an essential characteristic, and it’s more important than intelligence or luck.

 

In the land, we checked a lot of boxes because when you’re renovating a house, there’s a huge amount of things to coordinate and moving parts. Whereas, as land, there’s generally not. You’re buying an unimproved piece of vacant land for $0.40 or putting it under contract for $.040 and finding somebody else to buy it for $0.80. It’s a wonderful business, as you know far better than I do. I was in love with the idea of those quick turns. I was even happier with the idea of building income streams with owner finance because I have been receiving money from rentals for many years. I love the idea of having owner-financed income streams as well. The land business has been a lot of fun since I have started doing it.

You’ve given me so many questions that I want to unpack. The first one was low risk. Why would you consider land as a low risk? I agree with you, but it’s not about my definition. I want to hear your definition. Why would you say the land is lower risk than a house flip, rental, or working with a condo and selling it to a cash buyer?

It all depends on your perspective. A large proportion of the inventory we used to buy for the fix and flips was in the foreclosure auctions. We’re bidding on a lot of houses that we can’t even get into. You’re buying them cash on the same day as the auction. You have to do the research on the liens yourself because you are going to get stuck with them all. There are a lot of risks that you’re spending like $150,000 on a Tuesday morning, and you might not even get inside of the house for six weeks. It might take you another few months to fix it up, and you’ve got to sell it for a 10% or 15% margin because the margin has started getting tighter in the last years. Real estate fix and flipping started getting harder as inventory got lower.

With land and particularly the way a lot of smart land flippers like you do, you’re only acting as a wholesaler. You’re putting a piece of land under contract and trying to do either an assignment or some double close. For me, in my last few deals, I have been buying them on a Monday and selling them on a Wednesday. It’s very little capital risks and much lower amounts of money. Proportionately, the profit margins are much higher. You’re generally doubling the amount of money you’re putting in.

I would never sell a $150,000 investment for $300,000. That never happened. I would probably put $270,000 into it and hope to sell it for $300,000 worth of land. You could do five deals a month where you’re buying them for $10,000 and selling them for $20,000. Your money’s only out there for 1 or 2 days. It was a totally different level of risk from my point of view.

You sparked a lot of the Wholesaling Inc. readers when you said, “Buy on a Monday, sell on a Wednesday.” Tell me about that because that’s phenomenal. Do you mean two days from now, like Monday, Tuesday, and Wednesday the same week?

I’ll give you an example. I bought two lots, one for $7,000 and another for $10,000. I’m selling them both on Monday, four days later, for $15,000 and $20,000. I’m putting up $17,000 and getting $35,000 back a few days later. Clearly, I coordinated the buying and the selling. I had those pieces of land under contract where I could purchase them any time between now and the end of January 2022. As soon as I got them under contract, I purchased them with the right to market, which is a very important clause in that contract. I had the right to market them. I listed them for sale on the MLS and Land.com.

If you aren’t prepared to take some risks in life, you’ll probably end up working for somebody who is.

Whenever somebody expresses an interest in buying them and is ready to buy them, we’ll set a closing date for the 25th of October. I will send them on to the title agent, and we will coordinate. Her name is Jennifer. She’s a wonderful title agent I’m working with. She’s working with me on the buy-side and the sell-side. I say, “Jennifer, let’s make sure I buy these 3 or 4 days before I sell them and line up the person I’m buying it from, the person I’m selling it to, and let’s make it work.” It’s not that hard once you have the systems and the right paperwork in place.

You’re an ultra-connector. I’m doing some math here. You’re getting them two partials of land under contract, one for $7,000 and one for $10,000.

There’s no deposit and no right to cancel at any time, so there’s no commitment whatsoever. I had done my homework ahead of time that I knew $7,000 was a good deal. I generally try and sell them for $0.80. The land I’m selling is for $15,000. I found a buyer on the MLS after five days, which is unusual for land because it can take a lot longer. The reason was because it’s worth $18,000, but I would rather get sold in 6 days and wait 70 days or 80 days. I would rather move that quickly and have a win-win situation.

I find that when we price things a little lower, that gives almost like a feeding frenzy. It gets us a few more offers and sells a little faster. For that $3,000 difference moved it in five days for you. You got the other one under contract for $10,000 and put these both on the MLS and Land.com. You’re not physically buying this land, spending money out of your pocket, or having to get a hard money loan. You’re selling these things with the exclusive right to market them. How does that look like with your seller?

I’m not going there either. I’m on the other side of the world. I’m in Madrid, Spain. These are parcels of land in the middle of nowhere in Tampa, Florida. They are these regular lower middle-class subdivisions and a lot of mobile homes. They are regular lots. The great thing about that method I described, where you put it under contract and have the right to buy it and market it for months, is your prospective buyers will do the due diligence for you. You need to do the due diligence to make sure it’s worth $15,000 when you’re putting it under contract for $7,000.

You’re basically employing the buyers. You’re not having to employ a staff member or pay someone to go out there and do it. You’re allowing your buyers to do the due diligence. I’m doing the math here. You spent about $17,000 to make back $35,000. That’s an $18,000 net income, not including expenses, realtor fees, or closing costs. You did that in one week and did multiple of these a month or a couple of weeks. How much time are you spending on those two lots to make a quick $18,000?

It’s very little. I send out blind offers. I work with people to calculate the average value of lot sales in those zip codes for those land sizes. It might be 1.6 times the tax value as the average valuation. I’ll offer a percentage of that, maybe 40% of that value, by sending an actual offer signed by me, “I’ll offer you $4,710 to buy this piece of land. Please sign here before October 17th.” I usually give them a month. I have a business reply mail envelope. The postage is paid, so all they need to do is sign it, pop it into the envelope, and put it in the mail, or they can take a photo of it and email it to me. I get these contracts in the posts a couple of times a week, but in reality, they’re in my virtual mailbox.

I use Traveling Mailbox. It’s a service that receives mail. They’ll scan them and email or forward them to you, or they will deposit checks. They do a bunch of stuff for $15 a month. They come in twice a week. I will open and double-check the lot information to see if the value was about right. I would give a quick phone call to that seller saying, “Mr. Smith, we got your agreement over the weekend. Thank you very much. Tell me a little bit about the lot.” They’ll say, “I got it from my grandfather. I’m living in Texas, and this is in Florida. I have never been there, so I have always thought about selling it. I have been paying $200 a year in taxes for years. If you’re going to buy it in cash, that’s great.”

I said, “We’ll be in touch. You’ll be contacted by my title agent, Jennifer. We’re looking forward to working with you.” Either that day or the next day, I will list it for sale on the MLS and Land.com and wait whenever it might be until a buyer shows up. When they do, I send them a contract, they sign it, and I send back the same contract to the closing agent, and we try and coordinate the two sales. Realistically, it’s probably one hour per deal in terms of hours per deal.

WI 818 | Wholesaler’s Formula

Wholesaler’s Formula: If you’re looking to fix and flip houses, try and try and stick to a few neighborhoods at the start and then scale from there.

 

You’re telling me you spent about two hours to make $18,000, roughly $9,000 an hour?

That’s pretty much the return once you get everything up and running. You’ve got your marketing spend and mail all these thousands of people to get the tens of deals, but it’s still an enormous return on investment and certainly is easier than dealing with houses.

That’s $9,000 an hour and no money out of your pocket except this thing you blind offer. I call mine LOL, Land, Offer Letters. Every time we get one back, we laugh out loud because we know we got a piece of land under contract at less than $0.50 and sometimes $0.60. I’m not in Tampa. I know it’s hot out there, but as far as a hot market anyways. We were in a couple of parts of Florida. That’s magnificent. You’re making me think about my strategy as well because a lot of the time, I’ll buy these things or sign the contract. I have not been putting them on the MLS. We’ve only done that one time with a house, but that’s a wild strategy.

I pay a flat $500 fee to realtors who bring me a buyer. It’s not a big deal when you’re selling a piece of land for $15,000 or $20,000 or $30,000. It was only $500. You barely noticed it. I’m already a licensed realtor, so I can list them myself, but you could easily find an investor-friendly realtor to list them for you or their services that let you list it yourself and piggyback on some virtual broker. You don’t need to be a realtor to put stuff for sale on the MLS. You can do that. I would encourage people to do that because the MLS can automatically feed them through a whole range of websites like Zillow and Trulia and a bunch of other websites that people look at. Not only people buying big houses, but also people that want a piece of land to put a mobile home on. It’s worth doing.

On Land.com, that’s a bit more expensive. It’s about $200 a month to get 5 listings on it simultaneously and $270 a month once you book 10 listings. Once you’re up and running and got a few deals in your pipeline, it’s a no-brainer because you get buyers for your land, and more importantly, you’re able to build a buyers list for future deals.

It’s so worth it. Even the $500 is a listing. Another realtor helping you out is probably taking the phone calls, uploading that thing in the MLS, and checking all those boxes. It sounds like money well spent that brings you a return on investment. If you could go back ten years and give Colin Murphy ten years ago some advice. What would it have been when you were messing with houses?

I can’t complain. The house mark has been good to me. For a lot of it, I was living in Spain and selling houses in Florida, and then I moved over there for five years to drive the business forward. I met a lot of great contacts over there. For me, it’s a journey. Investing is a journey. You go through different phases. The only way you progress is by taking action, gaining experience, learning from your mistakes, and keeping moving forward continuously. Don’t stop. Don’t rest. Keep going. I had no problem selling 350 hard houses before I figured out that this is a lot easier to buy vacant land. I don’t mind that because the houses were good to me. I learned a lot.

You learn a lot either by renovating 1 house or 50 houses. It is a worthwhile journey, generally speaking. One thing it might do, which everybody needs, is develop resilience. That’s an essential characteristic. It’s more important than intelligence or luck. Being Irish, I had my fair share of luck over the years but having that ability to keep going when other people might give up and do it.

If you’re into houses and you want to scale, go deep before you go wide.

If you want to know how you develop resilience, exercise and sleep are good ways of giving yourself a strong chance of getting it. The third thing might be a healthy attitude towards risk. You need to invest money in a land-flipping business to get it working. If you are not prepared to take some risks in life, you’ll end up working for somebody who is.

If you are not willing to take a few risks in life, you’re probably going to work for someone that’s willing to take those risks or who is. That’s good. I had to repeat that for the audience. Give me your favorite real estate deal. It could be land or a house. What’s the most interesting, favorite real estate deal that you like to talk to us about?

The first one was a short-sale condo in Orlando, Florida. It was a place called Cypress Fairways. We got it for $30,000 in 2014. This is way back when short sales were going for a complete sung. This condo would have been sold in the low 200s in 2006 when stuff was going crazy. We got it for $30,000. I remember we rented it out for a year for about $700 a month. It’s an enormous return on investment. We sold it for $85,000 and made about $45,000 profit on that plus rental income for a year, which told us a little bit about property management and tenants as well. It was a fantastic learning experience with a relatively low amount of money, which is $30,000 cash, and I sold it for $85,000. That was fantastic.

The lesson we learned not to do was we bought a few in Charlotte, North Carolina. This was when we were based in Tampa, Florida. I do some remote flips now from Madrid in Tampa, but only because I have done hundreds of them, and I have teams of people abiding by very clear systems and processes. When we were beginners in Tampa, we bought some much bigger houses in Charlotte, like the $250,000 range, to try and sell them for $400,000 and tried to renovate those with roofs, kitchens, landscaping, and bathrooms. It was a nightmare because you had to go up and down three times a month.

You go out there and think you’re going to see some kitchen countertops delivered, and they’re not there. You go back a week later, and it’s still not there. It’s incredibly stressful. We got out of those deals with three deals with a combined $300,000 sales price each week and came out with a combined net profit of about $3,000. We barely broke even after a mountain of work and stress, but it was an education on what not to do.

Did you include airline travel and expenses for cars and taxis and transportation?

I don’t think we did. If we include that, it’s broke even or lost money. I included what we spent on the house and what we got back out of it, but you’re right. We should have been including all those flights and car hire and hotels. It was terrible. We only became successful when we went deep. If you’re into houses and want to scale, go deep before you go wide. I used to be promoting houses all over the world, but it was only when I started promoting it 10-mile by a 3-mile rectangular box in Northwest Tampa that we had success in houses. With land, it’s a different story. You can be buying land in multiple counties or even states. It’s a different type of business model. For anybody looking to fix and flip houses, try and stick to a few neighborhoods at the start and scale from there.

I love that point because that’s the same thing I do in the land. I’ll test out a market, go in, and look at what’s the hot volume land size. If I see one-acre, quarter-acre lots, or even 5,000 square foot buildable lots, I’ll dip my toe in that and test out the waters. If it seems to be a good market for land, I’ll then expand to the entire county. I’ll send LOL to the entire county land list. You’re right. It’s a lot easier to expand and dominate that area, and it’s the same with houses as well.

One way I worked to expand was that we got on the radio and started expanding to other small markets. That helped us. You made me sweat a little bit when you talked about flying to another state to go and see a flip house. The contractor said, “The kitchen is 95% done.” I have done that so many times when I go and inspect.

WI 818 | Wholesaler’s Formula

Wholesaler’s Formula: How do you develop resilience? Exercise and sleep are good ways of giving yourself a strong chance of getting it but, ultimately, you need to have a healthy attitude towards risk.

 

A lot of times, I’ll give the contractor a couple more days, and I show up, and nothing has been done. It has been weeks. I remember doing that. I would lose my temper on a weekly basis flipping houses. I was like, “This is not me. This is not who I want to be.” Thanks so much for being on the show. Talk a little bit about what you’re doing with your podcast, how you’re educating your audience, how people can get in touch with you, and how they can also listen to your podcast.

I have a real estate podcast. It’s Colin Podcast about Real Estate. I’m a very curious person by nature. I love teasing ideas out of people and talking to them. I’m interviewing people that I find interesting. I’m not trying to cater to a particular audience or demographic. I want to talk to a wholesaler, a land flipper, a lender guy that buys a condo, does multifamily and mom-and-pop operations, somebody that has built a business that has done more than 1,000 deals. I try to identify different guests and grill them for 45 minutes to have a great conversation.

I ask them about where they’re from. I want to know about their early days, how they got started, what mistakes they made, what they learned, what mentors helped them out, what lessons they’ve got for the moment, how they scaled up. What their goals are for the next five years, what interesting things they’re working on now, and how that might apply to other audiences that are a few steps below them on the ladder? It’s a purely fun show for me. I’m delighted with how big the audience has gotten over the years.

It’s all real estate-related guests on there and on some non-real estate-related, like people that might talk about mindset, motivation, goal setting, or whatever piques my interest. If you want to look at that, you’ll see it on iTunes and all the usual places. I have a website called ColinInvestments.com, where I’ve written reports about real estate deals I found interesting, whether that’s top ten mistakes to avoid or another report about land flipping, whatever it might be. I send out newsletters about twice a month.

You can get a hold of me through the website. I’m on social media. You can find all that stuff on the website ColinInvestments.com. I’m always happy to help people on their real estate journeys. I generally set aside 3 20-minutes slots a week to answer questions for free for people that want to know about land flipping, house flipping, private lending, or whatever it might be. I’ve received a lot from real estate over the years and had a lot of help from mentors. Now that I’m not working as intensively as I used to because the land is a lot less intensive than house flipping, I’m trying to give back a little bit while I’m here in Spain.

That’s why I wanted to get you on Wholesaling Inc. because you’re doing amazing things. You’re giving back those twenty minutes slots. That’s unheard of. People don’t do that. Colin Murphy, a total go-giver. It’s another book that we recommend in the Rhino Tribe. It’s the Go-Giver. Not to be confused with the go-getter but a go-giver. Colin, you’re a go-giver. I appreciate all the advice and everything you shared. It’s going to help our audience.

If you’re thinking about getting started in real estate, head over to WholesalingInc.com/land and schedule a call. You’ll talk to one of us at Wholesaling Inc, and we’ll see what your goals are. If you feel like we’re a great fit, I would be honored to coach you. Also, check out my YouTube channel. I launched it. Search Brent Bowers on YouTube. I’m talking about all things land investing. Subscribe to that channel. Thanks so much, Colin.

Thanks again, Brent. This has been a lot of fun.

God bless. Talk to you later.

 

Important Links:

 

About Brent Bowers

Brent Bowers, is an investor and coach with a focus on buying and selling vacant land. As an Army Officer with over 8 years of service, Brent was spending a great deal of time away from his family, and he knew he needed to make some changes in order to be more present with his wife and children. In a short period of time, Brent was able to expand his business, hire a team, and (most importantly) spend quality time with his family while still working hard and helping others.

While Brent invests in many different types of real estate, his favorite investment strategy deals with buying and selling vacant land, and he enjoys sharing his expertise in this area with his coaching clients. Brent chooses to live his life based on Bob Burg’s quote, “Your influence is determined by how abundantly you place other people’s interests first.” He is passionate about helping other people find success in real estate investing, particularly in land investments.

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