Not All Real Estate Mentor Programs Work- This One Does
Dave: Hi, I’m Dave Dinkel. I’m here today with Henry Galiano. Henry is Cuban. He came to the United States when he was almost 9 years old. Before he came here, he was a sheepherder. He gave that profession up because he hated to see the sheeps processed, I’m going to say. Now, last – a little over two years or so, you’ve been a full-time investor.
Dave: You’ve done about 20 deals. And the reason I asked him to come by and he said he was glad to do it, was I had done transactional funding on three of his recent deals. As I was talking to him about it, one was a $50,000 profit?
Dave: OK. Wholesale?
Dave: I’m not talking about anything else. I said to him, “Where did you get it?” And he said bandit signs. We all know that bandit signs don’t work. But it depends on where you place them and what they say. So bandit signs have been very good to you, and you still use them. You’re a bandit sign guy.
Dave: One of the students called me before last weekend and said, “I want to put out bandit sings.” And I said, “Great. How many?” She said 25. And I said, “OK, that’s a good start.” Here’s what it should say because you can use bandits signs just for buyers and use them for sellers. In her case, she was looking for buyers. So Sunday night late, she was calling me back and say, “Oh my gosh! You can’t believe what happened.” And I thought she got incarcerated for putting out the signs. Not so. She had so many phone calls. She was going through four sheets of paper on a paper pad with names and so on.
Dave: And that can happen.
Dave: It just depends on timing and so on. So, let’s talk about your career. You came from a background of doing …
Henry: Farm work I guess.
Dave: OK, farm work.
Henry: Or herding.
Dave: But you actually …
Henry: Well recently, I was public adjuster.
Dave: Public adjuster, which was kind of a conflict of interest for you because you work for the insurance company. It’s a whole other side of working for the public.
Dave: And really, it changed your mind about how the public sort of gets taken advantage of frankly by the insurance companies. But you’ve moved on.
Henry: I did.
Dave: You said to me you’ve been married almost 13 years.
Henry: Thirteen years.
Dave: Two sons.
Henry: Two sons.
Dave: And you and your wife have always wanted to do real estate.
Henry: Always, ever since we got married.
Dave: OK. And you got into it sort of part-time and public adjusting full-time. But you’re into it now.
Henry: I’m into it full-time, yes.
Dave: OK. You told me a story about two deals that you did, one of which was a rehab and a corresponding short sale. Not a short sale, a wholesale deal and the profits on them. Now, tell us the story about your rehab?
Henry: Correct. Well, the rehab – the profit was $6,000 and I did split that. So the profit was $3,000.
Dave: You split that with a funding partner?
Henry: No, I split that with my brother. We were partners in that deal.
Henry: And it was – I mean rehabs are addicting. However, the amount of work that I put into that rehab, that we put into that rehab was definitely not worth the time. I mean it was a very good experience. However, the short sale, it took about 30 hours and it was a $50,000 profit.
Henry: So, I mean it was a no-brainer. From that moment on, I say I want to do wholesale. That’s all I want to do.
Dave: How many months does it take you to do the rehab?
Henry: The rehab was fairly quick. The rehab took only 6 weeks until we had the buyer and then there was a little complication with the appraisal. Then it took about another 2 months to close. So about 3 months, a little over 3 months.
Dave: It wasn’t terrible.
Henry: It wasn’t terrible. However, it was very stressful. And then when I think about that rehab, which was $6,000, and I think about the wholesale that netted the least, which was $3,000, I’d take the wholesale any day. It was – it took me about 5 hours.
Dave: What do you think your average wholesale profit has been would you guess?
Henry: Average has been about $10,000.
Dave: OK. So kind of little on the low side but that’s probably because or your buyers’ list.
Henry: Correct. And most of the wholesales that I’ve done, not most, I’d say at least 50% of them have been other people’s wholesales.
Dave: OK. So you’re reoffering other wholesaler’s deals.
Dave: And you’re reoffering those to your end buyer’s list.
Dave: But you need a bigger list.
Henry: I need a bigger list.
Dave: OK. We’ll talk about that before you go. Remind me. What else can you tell people? What other experiences you had that had been notable in your short career?
Henry: I say the best advice is read the material. Follow through with it. And even if you don’t believe it, follow through with it. And then you will believe it. I mean I’ve had many experiences where – and if there’s something that you’re trying to do that’s against the material, don’t do it because it’s going to cost you.
I mean one of the things that I’ve read in one of the materials that you guys have which I think is about assignments or a subject to, it says check the title first. Check the title first. And I knew I had to check the title first until an attorney title agent said, “Don’t worry about it.” And I insisted, “I think I should check it first.” “Don’t worry about it.”
When it was time for me to resell the property, there was a $30,000 mortgage on it which was pretty much all my profit.
Dave: So you had to pay it off. You couldn’t negotiate it?
Henry: I had to pay it off. I didn’t negotiate and that’s actually the rehab where I made $6,000.
Dave: Oh, OK. So you would have made $36,000 had you not had the..
Henry: $36,000, correct.
Henry: Or I might have not gotten the deal. But …you know..
Dave: The attorney didn’t pull the title policy.
Henry: Until it was time to close.
Dave: Yeah. Well, that’s …
Henry: It was my fault.
Dave: That was malpractice, is what that is frankly. I don’t know if it’s your fault. He should know better. I mean he makes money on pulling the title work so I don’t know. We’ll see.
Now, before you came into our program, you had taken a very expensive program.
Henry: I did.
Dave: And it was kind of an eye-opener but you didn’t do any deals out of it.
Henry: I did. It was an eye-opener. I mean I knew very little about real estate. It’s a very broad program. I even had a mentor in that program for about a week. And even though I learned a lot, it was very broad. I didn’t feel like there was a personal connection between me and the support that I got from the program. I felt that they were so far out from where I wanted to do the deals that their knowledge was either biased or maybe restricted by, I don’t know, the law.
Dave: No, I don’t think so.
Henry: They didn’t have the knowledge. I mean this program has really helped me because it’s very personal. All it took was a lot of perseverance. And perseverance might be half, and just following through the material like I said in the beginning. Follow through even if you don’t believe it at first. You follow through it and it worked.
Dave: It does work. One of the things I want to mention just before we leave, and I see this all the time, people ask me, “Does this work anywhere in the country?” My question is, “Why wouldn’t it work anywhere in the country?”
One of the things that bothers me a lot is many of the other programs have documents, for example, purchase and sale agreement.
Henry: Oh yeah.
Dave: And they will have a purchase agreement when you’re a buyer so it’s on your side and a sale agreement when you got to sell, which is grossly weighted toward your best benefit. Now, if you always deal with a homeowner and a homeowner never asks an attorney or a Realtor® to look at it, it’s not a problem. However, if you’re going to come into the real world and be a professional, you got to use your state bar association as well as Realtor® contract. That’s the bottom line.
You can lease it. You can get it online in many cases. It’s free in some cases. You need to rise to the professional level of using the same contract that the other professionals in the business are doing. Those ones that are funky, those other guru contracts I call them, but the biggest deals you’re going to lose are the ones when you didn’t realize you need a real contract.
Henry: That’s true, yeah. The contract basically was one page. The one that I got from the other program is a one page.
Dave: Pretty simple, right?
Henry: Very simple one page. In retrospect, it was a very onerous. It’s very – the buyer can do this, the buyer can do that, the buyer can – and nothing about the seller. I mean it’s definitely not – I mean not recommended at all.
Dave: No. If you’re putting in an offer on a listed property, that contract is never going to go pass the agent’s eyesight the first time.
Henry: It’s not.
Dave: Most states have somewhere between 5 and 20 pages as a contract. They have it for a reason. Actually, the reason is to protect the Realtor®, not to protect the buyer or the seller even though they’ll say that to you.
So Henry, no more sheep.
Henry: No more sheep. One more thing I want to brag about.
Henry: The best – well, not the best deal but the cheapest deal I’ve ever bought, $2,500 for a house that needed $2,000 worth of rehab.
Dave: What do you sell it for?
Henry: I sold it for $12,500.
Dave: OK. So how did you find it out of curiosity?
Henry: Bandit sign. Wait, the best part is that I negotiated them during the course of 6 months from $12,000 down to $2,500.
Dave: Oh, by the way, let’s talk about the property in Keystone Point.
Henry: Oh yes.
Dave: So a short sale.
Henry: Yes, I think it was a short sale.
Dave: The bank wouldn’t take a dime less than 800.
Henry: Nope, not at all.
Henry: Eight hundred.
Dave: And here’s a guy with no money. Credit doesn’t matter. And you’re not going to get $800,000 to do the closing.
Dave: So what we typically do is we get a contractor’s estimate on repairs.
Dave: The bank looked it over. Now, these are real estimates of repairs. These aren’t mumbo-jumbo.
Henry: Seawall, for a kitchen.
Dave: Seawall, OK.
Henry: Or a structural installation of the windows, things you know that the typical person will overlook. However, an inspector can see that these things have either not been completed or they have been done incorrectly. And that is material difference. So when you put that down, you realize you have $300,000, $400,000 worth of repair if you’re going to do it properly in that area. And we got a discount up to $500,000.
Dave: OK. And how much does the house worth today?
Henry: One million.
Dave: OK. Not a bad job. I’m going to say one other thing. You bought a property with your mom or you got your mom into a property.
Henry: Oh yeah, last month.
Dave: OK. And it’s her first property ever.
Henry: It’s her first property ever here in the United States, yes.
Dave: OK, nice. So you take care of the family.
Dave: Thank you, Henry.
Henry: Thank you.
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