Posted on: December 29, 2021
WI 851 | JV Method

 

A real estate joint venture (JV) is a model approach between multiple parties that aids in developing real estate projects and brings valuable profit to the table. Moreover, this approach is the cheapest way to close deals and stay connected with people around your market. Today we are joined by Ryan Rice, a remarkable 25-year-old real estate tycoon.

Ryan will give us a glimpse of how he generated 50 deals in his first year running his business and used the said approach to find discounted properties. Later on, Ryan and Tony shared their experience of leveraging marketing on TV and how they soared their way uphill.

The Exact JV Method This 25 Year Old Newbie Used To Close 50 Real Estate Transactions

Episode Transcription

I’m excited that you joined us. I got a treat in store for you. I’m going to come out and tell you exactly what we’re talking about. I’m interviewing a 25-year-old that started in real estate at the beginning of 2021 and has closed 50 transactions. We are going to talk specifically about the JV approach that he took to start with no money and bootstrap this thing and create a lot of capital very quickly for himself. For some of you that are new, got in the game, have time, and might not have a lot of capital, I want to share this strategy because Ryan Rice has utilized it to snowball his business very quickly.

We are going to talk about how he has gotten to 50 transactions. Ryan has worked with Lauren Hardy. I always love to have a tribe member on with Wholesaling Inc. Lauren Hardy puts them on television as well. I’m excited to talk about his journey with TV. I got Tony Javier with me. Every time I come on and go through these numbers, I’m like, “You go to be kidding me.” You’ll stay to know about the dollar-per-dollar return he’s gotten on his television so far and what he’s got in the pipeline. I’m shaking my head, going out of control. I love it. Tony Javier, my sidekick and co-host, welcome to the show. Thanks for hanging out with us.

It’s good to see you again.

Let’s do this. Ryan Rice, those who don’t know your background, tell us where you are. Everyone knows you are newer to the game and you started beginning of 2021. Where are you located in the US?

I’m in St. Augustine, Florida. It’s a little town directly South of Jacksonville.

You got into real estate. What were you doing before you got into the real estate game?

Before I worked as a wholesaler, I was in construction, which is funny enough. I was working a gig where the goal was to be the CEO of the company. I had to start at the bottom and work my way to the top. Halfway through it, he pretty much was like, “I enjoy being the CEO myself. Sorry.” That same day I was like, “I appreciate you. Am I good to dip out?” He’s like, “Yeah.” That’s when I started the journey into this.

What set your sight on becoming a real estate investor? You got a lot of options. There are a lot of businesses and industries to start out there

While I was working construction 50 or 60 hours a week, I bought a five-unit in Georgia. I’d saved that money and bought a five-unit about three hours away in a little town in Georgia that no one had heard of. While I was working construction, I bought that five-unit because I have listened to a lot of podcasts involving real estate and love the idea of the passive where you don’t go to work and sweat your butt off to make money.

I was on Zillow that night after work. I pulled up the multifamily filter and zoomed out. I wanted to find that best 1%, looking for it everywhere. I couldn’t find it in Florida. I found it in that little town and locked it in. I closed on it in 30 days. I didn’t even do an inspection. I put 25% down on it. Every weekend for 3 or 4 months, I got a couple of guys I worked with and paid them to come up with me and my truck and worked 80 hours a week. That was my first dive into that.

How in the world do you do 50 deals in your first year starting from scratch? Let’s talk about this JV model approach that you’ve taken and break it down into some steps. Fundamentally, from a high-level view, talk about the JV piece and then we’ll go step by step through your process of making this happen. When you define a JV, how are you defining that in your world, this thing that you snowballed?

JV is just like a partnership. One guy finds the deal, one guy finds the money, and then they come together and split the profit in the end.

JV, to me, is like a partnership. One guy finds the deal and you can dice it up any way you want. Typically, it’s one guy who finds the deal, and one guy finds the money. They come together and do some splits on the profit in the end.

With you, your JV partnership is about taking a piece of the pie together, making a win-win situation. How did you stumble onto this? A lot of people that get in, what they are initially going to do is do the deals themselves. They are going to wholesale the deal or fix and flip and go to a hard money lender. What even got your eye on this concept of trying to snowball this JV piece?

I got a deal under contract with someone in my church. This was at the end of 2020 before I had even quit my job. I locked it in, but I needed funding. I had no clue on how to close this deal. I had no money. I had bought that five-unit and poured all my cash into that. I knew I had a deal and I had to lock it up, so I had to figure out how to close it. The hard money lender that I ended up finding ended up being that person I had JV’d on.

He’s like, “I can fund this deal and you’re going to have the headache and stress of having to make sure the construction goes good and finding a good contractor, managing the flip and getting insurance and all that stuff, or you could partner with me on it.” From there, that bloomed into, “Now I have a resource. When I get deals under contract, I don’t want to take them down myself. I can partner with him. In the end, I’ll either make the same money I would have made on a wholesale or even more.” The only work is getting the deal in that case.

You are locking the deal up, finding it and then moving into this strategic partnership where they are doing the brunt of the work in the sense of putting up the capital and doing the rehab, or whatever that looks like. Let’s talk about this. Step one, you’re going to find a deal. The question is, how are you locking that deal up from a percentage standpoint? What are you looking for that you got enough meat on that bone to make this JV process work? What’s your calculation?

I’m not super strict. I know there are a lot of people that push certain formulas. For me, I see if there’s meat on the bone. After closing costs on the front and back end, “Does this deal make enough money to make it worth it? If it does, I’ll lock it down.” That’s usually 70% of ARV. If someone’s wanting $200,000, we’re trying to lock it up for $140,000 to $150,000. That’s assuming at that number doesn’t need any work. From there, I would be in partnership with someone and the profit of that $30,000 we would split it $15,000. All my work was that conversation. I lock in all my deals over the phone. It’s that conversation and DocuSign.

You lock up the deal number two, then you find this person to JV. What is the right JV partner to have? What’s the avatar? What are you looking for to make this thing successful?

It’s super tempting for new people to find the guy who will pay them the most money. That’s super short-term thinking. In my opinion, you need to be looking for the guy who is doing the most in that space. If you’re in the wholesaling or real estate space, find the guy who’s the best. Most of the time, the guy that’s the best is not a guy you can call and say, “Let’s have coffee. I want you to mentor me.”

That guy is busy. He doesn’t have time for you. You call that same guy and say, “I locked in a deal. I’m a new investor. There’s some meat on the bone here. Let’s do something.” All of a sudden, you got a mentor with the best guy in town and you’re going to make money with half or way less than half the work you have to do.

How many of these JV partners do you need to pull this off? Do I need 10, or just 1 or 2 good ones? What am I looking for?

It depends on how many markets you’re in. I would say one for a market. Most people are not going to be in a ton of different markets, but for me, it’s just 1 or 2 guys.

WI 851 | JV Method

JV Method: It’s tempting for new people to find the guy who will pay them the most money, but that’s just short-term thinking. You need to be looking for the guy who is doing the most in that space.

 

You keep it simple. I want to find 1 or 2 A-plus players in the market that are big players. In your mind, they’re professional and have the capital, so you don’t have to worry about deals.

As a new wholesale, you have all these fears to lock a deal down. It’s like, “How am I going to get this close? What do all these things mean? Who’s going to transaction coordinate? It’s just me.” If you partner up with someone like that, they have a whole team of people on salary. It’s all they do. You can pass it to their team and you are good. They’ll coach and you can ask anything you want. You go into that office and you are a celebrity because you are the guy bringing deals.

It’s a great way to get some mentorship on top of making some money. That guy picks up the phone when you call because when that phone rings, he’s like, “Ryan’s calling me with another deal.”

Guys like that are high-level thinkers. They don’t have time for someone to pitter-patter and not be involved in their life in a business way. They don’t need friends. No offense. They are not looking for more buddies. Same with you guys. I’m sure you’re not looking for a whole bunch of new friends, but if you have someone you can go into business with, who’s a great person as well, then all of a sudden, the stars aligned. You’ll have lunch and hang out with him.

From there, step number three is how you do your percentages. Let’s start with the fix and flip. If you pick up a great deal, it needs a good amount of rehab or high rehab. What’s the percentage that you get to put in your pocket off of the profits on a JV?

If it’s a good flip, like a $40,000 or $50,000 rehab, we take down about 1/3 of the deal.

If it’s a lipstick or a wholetail and there’s no work required, what percentage of you take in there?

That’s a 50/50. The people with who I partner have their own capital. There are no hard money costs incurred with that. Some people you JV with are going to have to borrow the money themselves. All of a sudden, they are going to have a lot more costs incurred. Your split’s going to be lower. I would suggest partnering with someone who has a lot of cash, so you don’t have to incur that potential 4% to 7% fee on the deal if it’s a six-month rehab.

For the readers, we are familiar with co-wholesaling. I reach out to someone that’s got a great buyers list. Their strength is on disposition. I send them that deal. They blast it out and take a percentage. I’m doing that because I don’t have a strong buyers list. What you’re doing is not cold wholesaling. It truly is, “I’m going to find a great partner, someone that I can learn from and trust to do these deals.” You are doing deals together. You are in the process. You are learning. I do see this as different than co-wholesaling. What you are doing is a true JV relationship.

You are not doing this with a bunch of different co-wholesaling people. You have got 1 or 2 that you sink your teeth into and create a long-term quality relationship with. It’s a nice twist on the co-wholesale piece. Let’s put some numbers on this. You told me out of the 50 deals you have closed in 2021, half of them will be JV. The other half you’ve done yourself. That’s cool to understand. What are the 1 to 2 biggest values you saw from going this route starting day one to build this business with the JV route?

The biggest thing about it is scalability. When you are in the beginning, you are not at the point where you can take down hard money and put 10% to 20% down on each deal, plus fund construction. There’s a lot into that when it comes to taking down a deal yourself. Whereas if you JV, they’ll handle all of it, unlike what my mentor told me. The second I locked down on a deal and called them and like, “We were good on the numbers,” it was like, “Go get the next deal.” The hardest part of this business is getting the deal.

JV partnership is about taking a piece of the pie together and making a win-win situation.

It freed you up to do what you need to do. That’s become a great marketer and a deal finder. Rather than losing all that time managing or rehab and doing the deal, you got to sharpen the skill that matters most. That’s finding discounted properties.

I have spent very little time on disposition overall and it’s been great because now my skills in closing deals and getting them have grown immensely. It’s been good.

I’m picking up that you are a long-term thinker. You are playing the long game and not the short game. Do you think you will continue this JV route because it’s something that got you off the ground fast, or do you see that you will slowly pull back and start to do more of the deals yourself as you are building your own capital reserve? I’m curious about that.

Initially, as I have a lot more money now than I did at the beginning of 2021, we are slowly moving into taking more deals down ourselves. We have multiple flips going and a couple of Airbnbs beyond. Things are starting to expand out in that way. No matter what, we’ll always have a facet of our business that JVs of high-level people because it’s the cheapest way to be close with those people.

Not to sound like it’s a transactional relationship, but it truly is the cheapest way for me to stay connected with the types of people I want to be without paying $60,000 to be in the mastermind. We can partner on one deal a month and then, all of a sudden, work together all the time. I’m a sponge. I’m trying to absorb high-level thinking, real estate and investing. The stuff I know now for being around these people is insane. It’s like a different level than how I was in 2020. It’s not even comparable.

I hope readers are all taking notes of this. There are multiple valuable benefits that are coming out of this process. To sum it up, you are heavier on the JV as you start to grow the capital. What I see you doing is slowly shifting that weight to start taking more of these deals down, but to some extent, always be doing a little bit of JV in because it gets you in the doors that you want to get into. It shifts over time. It’s a great model. Your numbers show that it has worked. The 50 deals in your first year stepping into real estate is no joke. You are doing that at 25 years old and that’s no joke as well. Tony, I don’t know that I am mentally there yet.

You and I think as he does now, but I have been thinking that I was probably 30-some years old, at least 10 years into the business, if not closer to 12 to 15, before I went to that leverage mindset of getting other people involved and utilizing them to the fullest capacity. To do that at 25 in your first year in business is super smart.

Let’s talk about television. Tony, you and Ryan got connected through Lauren Hardy because Lauren Hardy came to you to help her set up her TV. I remember that interview. TV has been valuable for her, but talk about the connection initially with Ryan.

Lauren launched commercials earlier in 2021 and started doing well. She has added a second market since then. I can’t remember how she connected with us. I think it was by text. She said, “Ryan is interested in TV. Connect with him.” Ryan and I got on the phone or a Zoom call. I told him about TV and he’s like, “This is what I’ve been looking for, inbound leads. Let’s go.” He jumped on right away. He realized leverage with his JV partnerships. He understood leverage with his marketing with TV and you are going to see how it’s paid off for him big time.

You do not have to spend 2 or 3 years doing cold calling, text blasting, RBM and this whole outbound prospecting. If you want to jump over that quickly and get into mass media or any type of marketing that is creating inbound calls for you, you don’t have to wait. I can tell you all day long, all three of us sitting and doing the show, we’ll tell you, we’d rather pay and make the phone ring than spend time and pound the phones to make a deal happen.

I hope that challenges you that you don’t have to sit there doing what everyone else has been doing for a long time. Ryan is a good example. He’s like, “I get this real quick. I’m going to start spending some money and make my phone ring.” Ryan, let’s get into television because you have got some exceptional stats that I want to talk about. You have been advertising on television.

WI 851 | JV Method

JV Method: The faster you understand how to leverage through a team, through partnerships, through marketing, the quicker you’re going to grow.

 

Let’s go through a few things that attracted you to TV. I hear this a lot and it’s one of the most important. Number one, it has given you instant credibility as a new person in the real estate investor space. My question is, how do you know that that credibility exists? What are you seeing when people call you or when you’re doing appointments? How do you measure that?

One other big way I have noticed is that it seems like we are the only call. It’s very often with other marketing methods. You are competing with seven other people and companies and then all of a sudden, you have to work a lot harder. Whereas for TV, you are usually the only call. What I found in my market seems like when I get a phone call for a TV ad, after that conversation, I know for a fact if the deals are happening with me. They are not calling everyone else and double-checking my offer with another company.

They trust you already because you’ve earned credibility by being on television. We know that everyone assumes if you’re on TV, you have to be an expert. How else would you have paid to get on there in the first place? That’s huge. Number two, it leads to the second benefit because you do not have large competition. It’s just you. You are getting bigger spreads. When you and I were talking, doing some math, you’re making about an extra $7,000 deal off your TV ads and you are from your other marketing channels. Elaborate a little bit on that.

The spreads are a lot better due to many factors. One of them is they’re not going to fish you out against eight other people. I’m not going to have to counter out a different offer. They are pretty much in their head. What I offer is what’s fair and that’s what they can take. From there, it’s a done deal.

You will love the fact that it’s an inbound call. Walk us through what a call coming in off TV is like versus something like direct mail or a response to a text blast.

There’s a big difference. In an inbound TV call, you are qualified. You are already the guy. The rapport you instantly have from a TV ad versus an inbound text call or an inbound mailer is a month worth of rapport. You would have to build with a mailer or with someone you know, as a random text or call because they’re like, “Why did you send me a mail? Who are you? What is this?” My market with the TV is like, “You are the TV guy.” It’s awesome to be able to talk with someone who’s on TV. I’m like, “No problem. We are real. We would love to do honest work for you. Let’s talk about it.” From there, it’s a game-changer.

I can see it as I’m doing a video. I’m convinced. I’m on the right path with this TV thing. Tony, let’s go through some numbers here because when you coach people, we get a lot of value from seeing other people succeed. What gets us going is when someone comes in like Ryan is doing 360 dunks right off the bat. He’s closed out 7 deals in 5 months. This is paid in the bank account for a total of $125,000 in revenue. The dollar-per-dollar that I’m showing is 1 to 7. Is that what you’re showing?

Yes. Seven times return on his money.

What do you think about that? We hadn’t got the pending yet. We are talking about closed and paid out.

I know Ryan likes it. I liked the number that’s coming next even better.

You want to try to get to a visionary spot as much as possible and delegate everything else.

Let’s also remember that’s closed from starting marketing. One of the things that we love about mass media, both television and radio, is the phone starts ringing right away and the deal flow starts. How soon have you found on TV on average? You are locking up deals and getting them closed out.

Within the first 30 days, most of our clients are locking up multiple deals. We have some clients that take 2 or 3 months to start locking up a lot of deals. Ryan could tell us in the first 30 days. How many deals did you lock up in your first month?

It was 2 or3. The first month was good.

You texted me. You did like $85,000 in your first month.

The check came in. I was like, “This is awesome.”

Let’s put some math here. You’re spending how much per month on television? $3,600?

Yes. $3,600 a month.

A lot of people reading this might go, “I’m spending more on that on what I’ve got going on, and Ryan’s over here answering the call and taking down deals at $3,600 a month. That’s strong.” Here’s where it gets interesting. You got another three deals locked up that are going to be closing out here for another $190,000 on top of the $125,000. Do that math, Tony. If you got to take the $125,000 and the $190,000, that gives you a total of what?

A total of $315,000.

Divide that by his spending in the months he has through the end of 2021. What’s that dollar-per-dollar about to jump up to?

Let me preface this first. If you’re getting a 3 to 5 times return on your money, you are doing pretty good. A lot of our clients are doing 5 to 10 times on their money, which is good. If you do the math for Ryan, his numbers are 17.5 times the return on his money. For every dollar he’s putting in, he’s getting $17.50, which is unbelievable.

That’s why at the top, I was shaking my head. Ryan, you are sitting here, and someone is talking about your business and throwing those numbers back at you. As you hear us say that, what do you feel and think when you are like, “You are right?”

That’s unbelievable. In 2020, I was driving my car after work with my fiancée, now wife, driving by houses and seeing like, “That’s a fixer-upper. We should send him a piece of mail.” That was my strategy for a couple of weeks and a year later, here we are. Truly, it’s awesome.

Let me recap this. 1) You love the fact that it provides you instant credibility, 2) You are doing bigger spreads, 3) The quality of the call coming in on the inbound side. You’ll be sitting here at the end of 2021 with $315,000 off the television, giving you a 17.5% or, as we say, dollar-per-dollar return. That’s unbelievable. It’s the first time Tony and I have got to connect with you. I know Tony coached you, but I will give you public praise for understanding the leverage.

I know we talked a lot about the JV thing. For the people reading, the one thing I would tell you is the faster you understand how to leverage through a team, partnerships and marketing that’s not eating up your time, you are going to grow faster. That’s because when you’re leveraging, you are freeing up your greatest asset, which is time.

WI 851 | JV Method

JV Method: When you’re leveraging, you’re freeing up your greatest asset, which is time. That can be spent growing your business faster rather than getting caught up in the weeds of the day-to-day stuff.

 

That’s time that can be spent growing your business faster rather than getting caught up in the weeds of a lot of the day-to-day stuff, in which you are not going to grow as fast. That’s why we are always telling people, “You want to try to get to that visionary spot as much as possible and delegate everything else.” Ryan, you’ve done a fantastic job with that. Well done. Hats off to you.

Thank you.

If you’re reading and thinking through the process, I love talking about mass media. It’s easy for Tony and I to do it because our numbers with our students and ourselves have done this all over the nation at this point, both radio and TV. A lot of ways go hand in hand. They are a great force multiplier, but we are convinced 100% that this is the best route to go. We want to continue to expose you to this because it has been an absolute gamechanger in our business. Present this content and help other people set this up. Tony, if somebody wants more information and to connect with you and your team about TV and the opportunity, where do they go to do that?

Go to the website, RealEstateMastersTV.com/Chris. That will send you the website. Use that link to make sure we know that you are a Tribe reader and we’ll say good care of you. We only have so many spots around the country. If you’re thinking about TV at all, make sure that you jump on, fill out the form on our website, schedule a call with us and see if it’s a good fit for you.

As a Tribe member, Tony has been super generous about making you a priority. That’s why I want to continue exposing you to testimonials and students who have taken this tool that Tony has sharpened over the last years doing TV and show you that not just Tony can do it, but he can put it in the hands of a lot of different people where they’re seeing great success with it. Tony, I’m proud of you for the work that you did. You help a lot of people go to the next level in their business. It’s something to be really grateful for because you made a big impact. To the rest of you, as always, we appreciate you joining us. We’ll catch you soon when we add more value. Talk to you later.

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About Chris Arnold

WI 836 | Family BusinessChris Arnold is a 15 year Real Estate veteran who has closed over 2500 single family real estate transactions in the DFW metroplex. Chris is the founder of multiple companies that are managed by a US virtual team, which allows Chris to run his organizations while living in Tulum, Mexico full time. His passion for leaders has led to the creation of Multipliers brotherhood which serves the top 5% of real estate entrepreneurs out of the US. Most recently Chris has launched his REI Radio coaching program. This program is designed to teach real estate investors the marketing stream that everyone knows about but NO ONE is doing!

 

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