Turning eBay Earnings into Money-Flowing Leases

Mindy:
Welcome to the BiggerPockets Cash podcast, present quantity 291, the place we interview Tom Brickman, the frugal homosexual, and listen to about aspect hustles, actual property, and flipping merchandise on eBay.

Tom:
I’ve been with that firm that moved me to extra for 15 years, I left them simply this previous January. And if I wouldn’t have finished that investing in 2010, 11, 12, 13, I went aggressive from 10 to fifteen. I wouldn’t have been in that place to have the ability to go away that 9 to 5 job.

Mindy:
Hey, howdy, howdy. My title is Mindy Jensen, and becoming a member of me at present is David. Hip hip hooray from the Army Millionaire Group, podcast mastermind, blah, blah, blah, blah, all of the issues.

David:
All of the issues.

Mindy:
All of the issues. Thanks for becoming a member of me at present, David. David and I are right here to make monetary independence much less scary, much less only for someone else.
To introduce you to each cash story as a result of we actually consider that monetary freedom is attainable for everybody, regardless of when or the place you’re beginning.

David:
Completely, whether or not you need to retire early and journey the world, go on to make massive time investments in property like actual property, or begin your personal enterprise, we are going to allow you to attain your monetary objectives and get cash out of the best way with the intention to launch your self in the direction of your desires.

Mindy:
David, I’m tremendous excited to speak to Tom at present. I’ve been following him on Twitter for a very long time, in all probability six or eight months now. And I like his tales about actual property. I like his tales about flipping merchandise on eBay, that’s really my favourite factor. As a result of I’m somewhat bit jealous. I dwell vicariously by means of him and his aspect hustles with the flipping, simply because I attempted it. I didn’t do properly. I didn’t have any technique to my insanity, I simply would purchase issues on a whim. Oh look, this’ll be nice. After which it wasn’t and I crashed and burned, and my $20 funding by no means went anyplace.
Wow, go determine. So I’m tremendous excited to speak to him and see how he makes it occur.

David:
Yeah, I agree. The eBay tales are phenomenal and a few of the stuff that he’s doing is simply tremendous distinctive and tremendous cool. However what I actually like is that it exhibits which you can aspect hustle with minimal time and minimal capital outlay, it doesn’t take a complete lot to get into this aspect hustle. And there’s a ton of different aspect hustles on the market, so it simply exhibits that beginning anyplace you may completely make a ton of progress in the direction of your monetary objectives.

Mindy:
Yeah, he’s producing revenue when he needs to. if he decides that he doesn’t need to promote anymore he can simply pull every little thing off eBay for some time. Or if he decides he needs to work extra, he can go discover extra product and put it on-line. So I actually like the flexibleness of this aspect hustle. It does take somewhat bit of labor determining what merchandise are working, however he’s bought some ideas for tips on how to simply work out what’s promoting and what’s isn’t as you’re on the retailer. So I believe that’s numerous enjoyable.
Tom Brickman, the frugal homosexual from Twitter and Instagram. Welcome to the BiggerPockets Cash podcast. I’m so excited to speak to you at present.

Tom:
I’m excited to be right here, that is superior.

Mindy:
Okay, I do know that you’ve got a ton of issues to speak about since you actually do every little thing. Actual property and aspect hustles, and we have now rather a lot to study from you at present. So let’s leap proper into it. The place does your journey with cash start?

Tom:
So I might say my journey began round six years previous. My father was a police officer. I’m the oldest of 4 children. My mother stayed dwelling with the youngsters. So I keep in mind us all the time being tight from the very starting. And at six years previous, I keep in mind my dad purchased his first rental property. He got here right into a home on the proper worth, just a few blocks over from the place we lived. And I believed it was the good factor on this planet to go along with dad to gather lease.
I might go over there on the weekends and paint with him. In order that was the beginnings of, oh, actual property’s cool. Oh, you may make cash. Oh, another person goes to pay you to dwell in your own home. That is superior. And that’s the place I began and that’s the place my frugality got here from as properly, as a result of my dad. And dealing with my dad over time, I realized that he’s not going to suit… He’s going to slap paint on it and not likely repair all of it the best way. So he and I’ll butt heads, particularly now I. He’s far more conservative than I’m. And if it’s broke for me, I simply need to change it.
However that was the beginnings. And we all the time had cash however we have been all the time tight. And we took a household of 5 of us on the time and we drove to Florida once we did a visit one yr, and this was in somewhat Geo Prism, a 1990 Geo Prism. So a household of 5 in a Geo Prism-

David:
That’s intense.

Tom:
Going from Cleveland to Ohio, right down to Orlando, that was a life expertise, we’ll say that. I do know he’s not going to be completely satisfied for me bringing this up, however I convey this as much as him typically. There was a time the place he purchased us new mattresses from Sam’s Membership, however it price me to ship. So we needed to go decide them up in his boat as a result of that was the one manner we may transfer these mattresses. And certainly one of them blew out once we have been driving dwelling, and it was nonetheless a traumatic expertise that I inform my associates at present.
And every time they’re like, “It prices $75 to ship.” I’m like, “Take my cash and ship it,” as a result of I don’t need one other boat expertise.

Mindy:
I’m your dad. My dad is your dad. Oh man. Yeah, we drove… We had a maxi van, which is a daily measurement van with one other seat at the back of it, which is the one distinction between your Geo Prism. I’m pondering Geo Metro, which is even worse, however not by a lot.

Tom:
Geo Prism’s a tiny little Toyota Cam… Regardless of the smallest one is, that’s what it was. And that’s what we drove right down to Florida, household of 5. That was an expertise.

Mindy:
Did it have air con?

Tom:
It did. Yeah, it wasn’t a foul automobile and this was within the 90s so it wasn’t tremendous dated, however it was only a cramped household of 5 in a tiny automobile for 19 hours driving right down to Florida. And naturally my dad doesn’t need to cease alongside the best way since you’d need to pay for a resort. In order that was an expertise.

Mindy:
Drive straight by means of?

Tom:
I believe we took little relaxation breaks alongside the best way, however I don’t keep in mind us stopping at a resort. Clearly once we bought there we had a resort ready, however yeah, it was nearly a straight shot. I believe we did it in 25 hours complete.

David:
I’m undoubtedly a automobile sleeper on street journeys after I’m by myself, bu not with a household of 5.

Tom:
Try to sleep with a household… Proper, the household of 5, that wasn’t taking place.

Mindy:
Don’t lay on me. Yeah, okay. Okay. In order that seems like tremendous superior enjoyable. Did you go and decide up the mattress off the street and put it again within the boat?

Tom:
I keep in mind being within the backseat and shrill. I’m like, “Oh my God.” It didn’t hit anybody fortunately. And I believe my mother and my dad went out and picked it up. I vaguely keep in mind it was my sister’s mattress, and it was the field spring and it was broke for her entire life.

David:
And also you saved $75 on supply.

Tom:
And we saved $75. And I’ve a narrative to inform 30 years later, however it shaped me to the frugal homosexual the place I’m at present. So with out these again tales and going to Florida in a Geo Prism and driving down the street with a mattress flying out of your boat, I wouldn’t be the place I’m proper now. In order that’s what introduced me right here.

Mindy:
Okay, let’s quick ahead to highschool.

Tom:
Okay. So in highschool, I went to a personal faculty, my dad paid for that. That was a part of… I went to a personal faculty. And after I say personal, it was only a Catholic highschool, not navy faculty. I bought a job as quickly as I may. I labored just a few odds, reducing… Mowing yards. I labored at a deli. My dad bought me a job at a good friend of mine, I went and labored for her uncle one summer time.
I did all types of odds and finally ends up till after I turned 16 and will get that first actual job. And I labored two jobs from 16 to 18 after I went away to school, I labored at a deli and I labored on the Hole. And dealing on the Hole for five,15 an hour actually laid my groundwork for the place I’m at present, which is wild when give it some thought. However that job at 15, he crammed out paperwork for me and he signed me up for Hole inventory buy plan, which I didn’t even know what it was. I simply thought it was a ton of tax.
And all I cared about was shopping for garments for affordable as a result of I didn’t need the youngsters at college to make enjoyable of me. In order that Hole inventory buy plan is what I cashed in after I was 21, and I purchased my first multifamily property that manner. So I didn’t even know I had it till I used to be 19.

Mindy:
Okay, so that you mentioned he crammed out the paperwork. Was that your boss or your dad?

Tom:
My dad.

Mindy:
Your dad. Okay.

Tom:
Yeah, I took it dwelling… It was again at first was digital, I took it dwelling and I’m like, “I don’t know tips on how to fill out all this. Are you able to assist me?” And he whipped by means of the paperwork, went again to work the subsequent day, turned it in. And that was the beginnings of my Hole… I simply thought I might work tons of hours and my checks could be $83, and I didn’t perceive why. However that’s how I bought my first down cost so I like that a part of the story, although I didn’t have some huge cash to point out.

Mindy:
So that is an attention-grabbing situation that I believe lots of people can study from, particularly in the event that they’re younger, however even when they’re not. Should you suppose your test goes to be X and it’s manner lower than X, to start with, that first paycheck that you just get, you’re like, “What’s FICA? Why is my test so low? I labored 40 hours and I make… I’m sufficiently old to make 3,35 an hour at minimal wage.”
And, “I ought to have far more cash than this.” And also you’re like, “What are taxes?” That first test is absolutely surprising. However in the event you suppose your paycheck must be X and it’s manner decrease than X, undergo and just remember to’re getting the fitting deductions and also you’re… Or in the event you suppose it must be X and it’s far more. I’ve had firms the place I mentioned I need to contribute to the 401k.
After which the subsequent week I get a paycheck and I’m like, “Why didn’t this undergo?”
Oh, we forgot. Okay. Effectively, go repair it. As a result of it’s straightforward to repair that week, it’s not straightforward to repair six months later or on the finish of the yr once you’re like, “Wait, I used to be speculated to be contributing to my 401k the entire time.” And so they’re like, “Effectively, higher luck subsequent yr.”
So learn your paycheck stubs, identical to studying your bank card statements and all of these issues. However this has a contented ending since you have been within the Hole inventory buy plan. How a lot Hole inventory did you’ve got? Did you promote excessive? Did you simply not care and also you bought it anyway? Whenever you mentioned, “So I cashed out.” And I’m like, “Don’t money out.” And you then’re like, “However I purchased a multifamily.” I’m like, “Okay, let’s hear that story.”

Tom:
So yeah, I cashed out after I was 21, I had labored at Hole since 16 to 21. Hole additionally had a tuition reimbursement so I used to be capable of go to school comparatively debt free. I paid for a semester… Or I’m sorry, I paid for one class a semester and Hole paid for 3 a semester, which was superior.
However after I cashed out at 21 I used to be in my senior yr of faculty, and it was about somewhat bit over a $10,000. And that was an ideal down cost on a $90,000 duplex. And that was how I bought into actual property. I noticed my dad doing it, I knew I couldn’t dwell anyplace cheaper than that duplex. My home cost was $738. The downstairs tenant paid 600, so I lived upstairs for $138. And the place may you reside for $138? And that was my mentality again then, was I’d quite pay $138 than have this Hole inventory.

David:
Yep, I believe that makes numerous sense. And given the time that you just’re in, it’s undoubtedly straightforward to say, properly, Hey, in the event you left that for the subsequent 50 years it may develop to X. However for one, I take a look at if it’s a single firm I take a look at that as somewhat bit extra dangerous over the long run, but additionally simply the truth that the chance price of entering into an actual property funding at an early age or getting right into a technique to slash your dwelling bills after which be capable of reinvest that cash, I believe is… That’s enormous in comparison with simply having the Hole inventory.

Tom:
Positively.

Mindy:
Okay, so I’ll approve this inventory buy or inventory sale, however you cashed out $10,000. That sounds to me such as you might need some capital positive factors that you must pay. Did you’ve got a tax invoice that you just have been shocked by?

Tom:
I didn’t as a result of Hole… I believe I really bought when it was down and it was a really, very small tax invoice from what it may have been. Since you have been shopping for it at a reduction once you labored there and it had fallen, it was a type of the place simply every little thing simply aligned excellent to promote it.
I did have a small textual content invoice again then, however it was nothing in comparison with Hole has not cut up or something loopy like that.

Mindy:
Okay, so that is what yr? 2004?

Tom:
2004, yeah.

Mindy:
Okay. And so the place did you progress subsequent? You might have this duplex, you’re dwelling within the crappy upstairs condominium?

Tom:
I’m. I got-

David:
Sensible transfer.

Tom:
I bought cocky. I took out a HELOC on that property, and I’m like, “I need to dwell in Cleveland by my household. I need to return to Cleveland.” And it’s 2005, and I took out this HELOC and I used it and I purchased a single household in Cleveland, Ohio… Effectively, proper outdoors of Cleveland, Ohio. And I purchased it on the high of the market. And I posted about this one rather a lot on Twitter as a result of I purchased it for 85 and I bought it for 52 10 years later. It was simply a type of that I had no enterprise shopping for.
After I went and took out a mortgage for the third property in 2009, I used to be horrified by all of the paperwork and questions and underwriters and all these items. I’m like, “I don’t perceive, after I purchased this final home that they had me signal a bit of paper and it was mine the subsequent day.”
It was such a seamless, straightforward course of again then. However then it made sense on why there was a monetary disaster in 2008, they have been simply giving loans to everybody who had no enterprise shopping for properties.
So 2005, I went to Cleveland and that’s… 2006. I took a job with an organization that mentioned, we’ll transfer you right down to Dallas for six months for coaching and we’ll transfer you proper again. And I’ve been in Dallas for 17 years, in order that didn’t occur.

David:
Good, no massive deal. Effectively, it sounds such as you a minimum of like Dallas, so.. Or I hope, in any other case perhaps you could possibly… I wouldn’t think about you keep someplace like a costly metropolis.

Tom:
Yeah, once you develop up in Ohio and also you see all the expansion in Dallas and the enhancements, it’s like, “Why would I ever need to return?” Not that I’m doggy on Cleveland, as a result of my household nonetheless lives there. I nonetheless spend money on Toledo, Ohio closely. However Dallas has been a fantastic market to be in, particularly after I entered.

Mindy:
Okay, so let’s take a look at your holdings. 2006, you moved to Dallas for six months. Did you purchase a home in Dallas instantly?

David:
Six months happening 17 years.

Tom:
Yeah, happening 17. Precisely. I needed to repay my dangerous debt as a result of I bought bank cards and I had all that. And so they’re like, “You desire a third mortgage? Earlier than we provide you with this third mortgage you bought to do away with this bank card debt.”
So I took on a part-time job and I simply used that cash. At the moment I took this job in Texas making $33,000 a yr. I took a part-time job making, I don’t know, 8,50 an hour. And I simply, for a yr of working that part-time job, I paid off my $17,000 in bank card debt that I had racked up from 2004, 5, 6, 7. And this was 2009 after I lastly… Debt free in addition to actual property and was prepared to purchase my first property in Texas was 2009.

David:
Was this… So I do know Mindy loves bank card debt. So did you tackle bank card debt since you have been making an attempt to make use of it for updating properties, or was this only a time in your life the place you weren’t frugal and loved a credit score restrict?

Tom:
I used to be not frugal, however I used to be… Between the time that I left Hole and between the time that I discovered this firm in Texas that I labored for for the final 15 years, I used to be doing a little… Somewhat little bit of eBay flipping and the money owed simply grew, and I used to be not frugal. I wished to have a flat display screen TV. I wished to have a DVD participant, all of the issues that have been cool within the early 2000s I wished.

David:
You probably did the conventional 20s factor.

Mindy:
Okay, so that you labored a part-time job-

Tom:
However really feel like I stored it beneath management.

David:
I imply… Yeah.

Mindy:
$17,000. And what was your wage at this Dallas firm once you have been in 2006?

Tom:
33,000.

Mindy:
Ish.

Tom:
Yeah.

Mindy:
And also you had racked up $17,000 in bank card debt. Okay, I used to be going to be like-

David:
I used to be simply going to say Mindy’s like-

Mindy:
No, since you have been making 60,000.

David:
I don’t know if I really feel like that’s managed.

Mindy:
I’m making an attempt to help you, however hey, you paid it off. That’s what we’re going to deal with, is that you just bought your self into debt. Many individuals get themselves into debt and keep there. So that you didn’t keep there, you paid it off. Yay for you. And also you took a part-time job to do it.
There are such a lot of individuals who get their full-time grownup job they usually’re like, “Effectively, I’m not going to work part-time as a result of that is my job now. And I’m simply going to… I assume I simply have debt now.”
And I like that you just do what it takes to earn money, to generate revenue so you may go after the factor that you really want. You alluded to eBay flipping, which is my favourite a part of your story. As a result of I’m jealous. You might have made it work. I failed miserably. I didn’t actually keep it up. I went to the thrift retailer, I like thrift retailer buying. However I can’t purchase every little thing as a result of my husband’s like, “No, I don’t desire a home stuffed with crap.”
So I’m like, “Oh Ooh, I’ll promote it on eBay.” No matter I used to be shopping for individuals, have been like, “No, we don’t need that both. That’s why it’s on the thrift retailer.” So I’ve been a horrible failure at my eBay flipping. I need to hear the way you flip on eBay and make it profitable.

Tom:
So I’ve been flipping on and off since faculty. There was a retailer outdoors of Cleveland, I used to be dwelling they usually have been marking down purses after I was there. They have been an excellent title model, Diesel purse, they usually have been $1,50. And I keep in mind asking the cashier, I mentioned, “Are these actually $1,50?”
And so they had them sitting up there subsequent to the register to attempt to add them onto peoples gross sales. And I simply pushed the cart proper as much as her and I purchased each single certainly one of them, there have been two colours. And this was again earlier than eBay even had Purchase It Now and I might promote them two at a time, they usually paid for a full semester of faculty.
In order that was the origins of the eBay. And over time I’ve purchased duds and I’ve had dwelling runs that I didn’t even know have been dwelling runs after I was shopping for them.
And in some unspecified time in the future, I actually converted to eBay with the discontinued makeups, with the bras, with all these sorts of small, straightforward to ship objects which are cheap. Dallas is tremendous central, situated for lots of closeout locations to dump their merchandise. So when closeouts occur in any respect these completely different shops, they’ll get shipped and dumped proper within the heart of the nation.
And I am going out to the flea markets and I can discover… You’ll be able to all the time go on the market and discover one thing. And it’s such as you with the thrift retailer, you may go to the thrift retailer and discover one thing however you bought to get another person to purchase it. And the beauty of the flea market is it’s so cheap that once you go and make investments $100 on an enormous field of make-up it’s $100 funding, it’s not such as you’re dumping.
A few of the pallets are $30,000 for a pallet, and I see individuals doing it and being very profitable, however I’ve all the time been far more snug with the conservative $100 field of make-up than a $30,000 pallet of electronics.

Mindy:
Okay, you simply threw out a ton of key phrases that individuals who don’t flip on eBay could not perceive. So to start with, you mentioned, “I promote purses, I promote make-up, and I promote bras.” I don’t know that you’re a client of this stuff.

Tom:
I’m-

Mindy:
Personally.

Tom:
Particular.

Mindy:
How do you get began in one thing that you just don’t use?
Like I don’t promote jock straps on eBay.

David:
I don’t know that anybody would purchase that.

Tom:
You in all probability may earn money.

David:
However you’ve go to go discover them at a reduction, Mindy.

Tom:
It was simply a type of that the chance was there. I labored on the Hole so I noticed what was promoting, what was not promoting me, what individuals have been coming in for. So I had the retail publicity, and it was simply there was numerous alternative there. Are you all the time going to want a bra? Are you all the time going to… These are necessities that aren’t going to go dangerous. There’s very low danger. They have been very low price objects, the bras that I used to be flipping and I became a rental, these have been just a few {dollars} initially.
And I had simply met my husband and he sat with me. It took us a day to peel all of the clearance stickers off of them to get them able to resell and reflip. However when you’ve got endurance, and proper earlier than we have been on the brink of document I used to be simply speaking about these fleece pajamas that I’m shopping for proper now.
Sure, no one needs these pajamas proper now and that’s why they’re 5 bucks. However you realize what? They’re going to be $15 in October when everyone needs pajamas once more. So there’s a lot of alternatives on the market and also you don’t need to have a flea market. You’ll be able to actually go right into a closeout retailer and simply begin scanning stuff together with your eBay app and see what’s promoting.

Mindy:
Okay, clarify that after which return to the entire pallet factor.

Tom:
Okay. Yeah, so-

Mindy:
You scan-

Tom:
When you’ve got the eBay app, you may scan something with a scan bar at any retailer that you just’re at and you may filter it to see what’s promoting. And if there’s nothing in that bought class that signifies that merchandise is one thing you don’t need. If there’s a ton in that bought class that’s one thing you need to put in your cart and purchase. And it’s straightforward. It’s simply a type of… When you’ve got the eBay app and begin scanning, you may stroll by means of any TJ Max or Ross kind retailer and you may refill a cart of stuff that’s promoting, and you may double, triple, you may make some cash on a few of these objects.

Mindy:
Wow, okay. I’m going to go obtain the eBay app and go zip by means of and see what you’re speaking about. Let’s get again to this pallet of $30,000 of electronics. I do know what a pallet is. Are you able to clarify what you’re speaking about right here?

Tom:
Completely. Finish of season, anyplace from Hole or Goal, or any of those massive retailers, they’re clearing stuff out. They’re going to herald the brand new fashions. Electronics is absolutely dangerous, particularly since you get numerous cellphone circumstances and cellphone circumstances are solely good for that cellphone model and previous cellphone variations. I keep away from electronics, I don’t need something to do with it.
However I do see individuals on the market who’re shopping for these pallets of finish of season stuff and flipping them. I imply there’s some huge cash, and sure, you could spend $30,000 shopping for one pallet, however you could possibly have 3000 items on it. And each bit is X quantity of {dollars}. There’s some huge cash that may be made, particularly with older video video games, older DVDs, there’s some cash there and there’s some folks that simply really feel snug flipping that form of merchandise.

Mindy:
That seems like one thing you’re going to want to learn about.

David:
I didn’t know that you could possibly scan the barcode with the eBay app. However as we talked about earlier than, I’ve finished an honest quantity of storage sale and or flea market flipping, one-offs, I don’t know that I’ve ever purchased something in bulk and bought. However I might undergo and I might pull up the app and seek for it. The barcode would’ve been tremendous cool, however I like that. I really did a… It was a $1,000 develop your dough problem in 2019, however it was a few completely different bloggers. We have been going to attempt to see how a lot they might take $1,000 to over the course of the yr, and everybody was doing shares or no matter.
And I used to be like, “I need to do actual property, how do I get to the place I can put this cash down as a down cost?”
And I went the storage sale route. And it was bizarre as a result of it’s like, I’m solely investing $100, $200 a month as a result of spending $1,000 at a storage sale’s really rather a lot more durable than you suppose. However I used to be making… By the tip of the primary quarter I had $3,500 out of that, and I used to be like, “Man, if I may simply work out tips on how to get extra purchases, there’s really a reasonably respectable margin there.” However it’s enjoyable.

Mindy:
So the place does one get a $30,000 pallet of electronics?

Tom:
There’s so many various resellers on the market. Bulk.com is one, you should purchase them on eBay even from different resellers. I all the time prefer to attempt to go as near the supply as doable. So I do know when Goal is pulling it, who they’re promoting it to and I’m going proper to who they’re promoting it to.
As a result of numerous occasions it will get so watered down and cherry picked that once you get that $30,000 pallet, you could possibly in all probability promote it for about 30,000 however there’s not numerous revenue. And I don’t need something that’s been cherry picked by means of with the shelf poles.

Mindy:
Okay. Yeah, you need the great things proper off the bat. So that is actually attention-grabbing as a result of I by no means had barcodes to scan and I clearly didn’t know that that was a factor.
However it looks like that might be rather a lot simpler however you’re additionally perhaps paying extra or perhaps not paying extra since you’re at… TJ Max has some actually high-quality stuff simply marked down, typically actually, actually low in comparison with the unique worth. I keep in mind there was a beautiful leather-based Armani skirt and it was not my measurement, and I used to be like, “I’ll food regimen to get into it. It’s an Armani skirt, I ought to completely purchase this.”
However it was usually, I don’t know, $2,000. I don’t even know why it was at TJ Max however it was $30. And this was… Effectively, I don’t know if this was eBay time or not, however it was like, that is such a low worth. Then once more, would I pay $30 for a skirt? No, I’m too low cost for that. However $30 for a leather-based Armani skirt I’ll pay for. I don’t know, it shouldn’t matter however it did.

David:
Seems like an excellent revenue margin although in the event you flip it.

Mindy:
Yeah, I may have flipped it if I solely knew all of these items. Okay, so that you talked about that you’ve got some-

Tom:
I promote leather-based skirts, that’s certainly one of my objects that I promote. And I really… It’s loopy that I promote numerous them, however we do. And it’s an enormous revenue margin on them.

Mindy:
Do you’ve got largely ladies’s put on and ladies’s objects that you just’re promoting, or do you promote males [inaudible 00:27:42]?

Tom:
I promote males’s stuff, however it doesn’t promote like the ladies’s stuff and I can’t get it as low cost. So the leather-based skirts I paid two bucks for. The lads’s shorts, I paid six bucks for. And after I promote these leather-based skirts I’m promoting them for 60. And after I promote these shorts I’m promoting them for 40. So I’m going to go extra with the leather-based skirts for $2 and promote them for 60 bucks versus the $6 shorts that I promote for 40 bucks. So I promote each, however the ladies’s stuff tends to promote rather a lot higher.

Mindy:
What doesn’t promote properly?

Tom:
Seasonal stuff, something Halloween or Easter. You might have a tiny window to promote it and in the event you don’t promote it in that window you’re going to sit down on it for one more yr. And different finish of season, like when the telephones cellphone circumstances don’t promote properly since you’re all the time upgrading your cellphone. And in the event you get caught with a foul batch of older cellphone circumstances you’re going to be sitting on these.
So I’ve had that. I’ve had sweet earlier than that I purchased a pallet and it had all sweet. No one needs that. So I simply donate it in these circumstances, once you get caught with one thing. Or I bundle. After I can’t promote one thing… I simply was posting about I purchased these Elizabeth Arden make-up luggage. I crammed them with all of the stuff I couldn’t promote after which I bought the make-up bag for 10 bucks. So I didn’t make any cash however I didn’t lose any cash. I removed my extra, and that’s… I’ve been actually massive with bundles. After I can’t transfer it I’ll bundle it with one thing that’s good. And people are inclined to promote rather a lot higher.

David:
That’s really actually good, I like that.

Mindy:
That’s, I’m pondering stock administration, as a result of that was going to be my subsequent query. The place do you retailer all these things? You’ve bought 500 homes, which we didn’t even discuss but. However not 500, however you’ve bought a bunch of homes however they’re all leases. Do you’ve got any warehouse house?

Tom:
I don’t. I personal a retail house with space for storing however I don’t use it. I lease it. And I had a 400 sq. foot visitor home at the back of my home, and if I can’t match it in there, I can’t purchase it. That’s the rule of thumb in our home.
And it did overflow into the home at some factors, particularly through the holidays after I was going loopy and we’re transport 20, 30, 40 issues a day, however we simply moved. And I bought a two automobile storage and a storage shed. And as soon as these are full, that’s my storage and that’s the place my… I’m not going to spend more money for the storage items as a result of I’m not there. However I’m good with the place I’m at.

David:
So I like this as a result of individuals are all the time speaking aspect hustles, it’s a buzzword. Everyone, “Oh, aspect hustle.” And folks will go… I hear a bunch of excuses for why this aspect hustle gained’t work or why that aspect hustle gained’t work. And the truth is that this simply goes to show which you can actually earn money doing something. You might be shopping for merchandise that you just don’t use at a reduction and promoting them and making an enormous revenue margin, and you aren’t tied to… Quite a lot of these aspect hustles are nonetheless tied to your time, you must spend three hours driving for Uber to make the… No matter, that is in your schedule. I find it irresistible.

Tom:
100%. And I used to be working with somebody, he wished to begin small. His consolation degree was Walmart. He went into Walmart final summer time, he purchased a bunch of clearance toys. He sat on them for somewhat bit. After which in November… And by the center of December he bought every little thing. And he bought sufficient toys that it paid for every little thing that he purchased for individuals for Christmas. In order that was his objective. He wished to have the ability to do a free Christmas. And simply by shopping for the… I believe he invested two or $300 in clearance toys. In the summertime, he turned that into $1,300 within the winter.
And sure, he needed to go to the put up workplace and ship them so there’s time in there, however he was capable of cowl all the remainder of his vacation bills simply by holding these toys for a sure period of time. And timing is half of the deal once you’re flipping, is these toys have been nugatory to individuals in July however individuals actually wished to place them beneath the Christmas tree in December.

David:
Effectively, relying on what you’re shopping for and the dimensions clearly, that’s going to alter your packaging. However the USPS will ship you free envelopes and free bins in bulk. I believe I’ve 100 sleeves after which I simply log in and click on print, and I can ship a ebook or no matter. And I’ll simply have 4 of them and simply stroll by the put up workplace and drop them off. So there’s methods to streamline that, for certain.

Mindy:
So what’s your greatest problem with this eBay flipping?

Tom:
Okay, for eBay flipping it’s… There’s just a few completely different challenges that go along with it. There’s typically the place you simply get some individuals which are simply unpleasable. I’ll refund an merchandise although I do know that there’s no defect, simply because I need to keep away from the unfavourable suggestions. The streamline of merchandise has not been a problem, as a result of every time I’m working out of that good merchandise, I’ll go spend a weekend out on the flea market and I’ll discover… I’ll scan and scan and scan and discover… So I haven’t had an issue.
After which the opposite factor is holding the merchandise. These shorts that I purchased for males I’ve been sitting on since final winter, and now they lastly began promoting this winter as a result of I’m promoting the shorts off season. Not one of the malls have shorts proper now. So individuals are shopping for shorts for cruises, for holidays and whatnot. So it’s holding it, and when is the fitting time to ditch it? When is the fitting time to only say, I’m finished holding this, I simply need to donate it and get it out of my stock.

Mindy:
Okay. So this begs the query, as a result of many individuals who hearken to this present are cash nerds and hold a spreadsheet for the reason that daybreak of time of all of their spending perpetually.
Do you are taking stock and hold monitor of what’s promoting and what’s not? And when’s the fitting time? And being in retail, I labored in retail and there’s the summer time season, the autumn season, vacation one, vacation two, you’ve bought all these… The place vacation one is you’re promoting bathing fits for those that are going to the Caribbean when it’s heat, the place it’s heat when it’s chilly by you. So that you stroll into the division retailer and also you’re like, “Why are there bikini’s in all places?” As a result of individuals are shopping for them.
Do you retain a retail mindset as properly? Or do you retain monitor of once you’re itemizing issues?

Tom:
We’ve got a small system like what you probably did in retail, however it’s often like… I used to be going to donate all my winter sweaters that didn’t promote after this final Christmas, however I ended up promoting 37 of them this yr spherical. So that they sat on eBay for over a yr. The one price was me storing them. However now after this final one, we went forward and donated no matter hadn’t bought.
So sure, I’ve a, okay, it’s sat right here for lengthy sufficient. Generally I’ll promote stuff with expiration dates, when it’s near the date I’ll simply bundle it, throw it in one thing, or donate it as a result of I don’t need it to go dangerous sitting there ready for it to promote.

Mindy:
What do you promote that has an expiration date?

Tom:
Deodorant.

Mindy:
I didn’t know deodorant had an expiration date. The place do you get deodorant?

Tom:
There are-

Mindy:
Like clearance?

Tom:
There’s a closeout-

Mindy:
Clearance deodorant?

Tom:
There’s some huge cash in discontinued scents of deodorant. It doesn’t even make sense, however they’re like, “This scent works for me and this scent doesn’t work for me.” So they may spend more cash shopping for these, and numerous these locations, these massive firms will donate their finish of season or their manufacturing stuff. And when you’ve got that proper scent, I used to be transport deodorants left and proper final summer time. And I wouldn’t do it once more as a result of half of them melted on the best way to the individuals. If it will get too sizzling the deodorants going to soften.

Mindy:
Oh yuck.

Tom:
However there may be some huge cash in these discontinued colours, discontinued scents, discontinued cuts of denims and that.

Mindy:
Now that I might consider, as a result of once you discover a pair of denims that match. Oh, after I discover a pair of denims that match, I am going again and I purchase 10 as a result of I can’t discover one other pair. And also you’ve bought to put on them and put on them in, so that you’ve bought to rotate them by means of.
What has been your greatest shock, holy cow, I can’t consider this bought for a lot, like win?

Tom:
I purchased a storage unit from a good friend and he had numerous discontinued scents in there that he was shopping for from malls when the field would get ripped or the lid would break. And he had circumstances and circumstances of this cologne, it was known as Good Life. It’s made by the identical individuals as Cool Water. And I’m identical to, “Oh cool. I can in all probability get 20 bucks for these, I’ll record these. They’re all wrapped, in good condition.”
And so they even had samples in there. And I’m like, “Oh, this smells good.” And I’ve been promoting these, I’ve bought all of the colognes for $250 a bottle and I’ve been promoting the little samples for $22 a bit. And I had circumstances and circumstances of them, so it was simply one thing I by no means would’ve considered. After which I simply determined… And it was like that off probability, like, “Oh, I ought to test this out and see what that is.” And I missed certainly one of them.
There was a case of males Sweet’s cologne that I threw away. After which after the very fact I discovered one bottle and I regarded it up, and I’m like, “Oh my God, they’re promoting for $87 a bottle and I simply threw all these away.”
However it was simply a type of, I might’ve by no means thought to even look it up till I used to be standing there. And I simply did it on an off probability.

David:
How a lot did you pay for the storage unit?

Tom:
Somewhat bit over $1,000, and in the event you noticed the quantity that got here out of the storage unit. And this good friend had a lot of storage items and we purchased rather a lot on the similar time. If I might’ve finished it proper I might’ve purchased separately and actually processed the merchandise. As a result of like I mentioned, I threw away issues like a case of Sweet’s cologne that I believed had no worth, and I’m simply glad I didn’t throw away the circumstances of Good Life cologne.

David:
Man, that makes me really feel like… So my greatest win which is completely not replicable was I bought a printer for 50 cents and I used to be capable of promote it for 80 one thing {dollars}. And the return was one thing 10000% or no matter, however it’s not an enormous chunk of change simply a big proportion ROI.
250 a bottle, that’s an superior return. Who cares concerning the proportion? A pair circumstances of that, you promote 4, you break even.

Tom:
So what I used to be doing was I used to be turning round and utilizing all these earnings and I used to be shopping for properties with them, and I used to be shopping for the properties that everybody was ignoring in Texas. And that’s actually how I began going. After 2009 and 2010, 2011, I used to be shopping for a minimum of one or two a yr, and I used to be utilizing this eBay cash or no matter cash I may generate to purchase them. And buyers didn’t need condos again then.
And simply final yr I bought a $15,000 rental for $97,000 and I turned it right into a multi-family property in Ohio with it. In order that’s the place I actually grew like loopy and that’s the place I made this enterprise sufficiently big that I may go away my 9 to 5.
I’ve been with that firm that moved me to Texas for 15 years, I left them simply this previous January. And if I wouldn’t have finished that investing in 2010, 11, 12, 13. I went aggressive from 10 to fifteen. I wouldn’t have been in that place to have the ability to go away that 9 to 5 job.

Mindy:
So you obtain pallets stuffed with discontinued merchandise, bought it on eBay, took that cash and concurrently purchased extra merchandise and properties that you just rented out, after which bought the properties that you just rented out. And 1031’d them I’m assuming into properties in Ohio?

Tom:
Sure. Yeah, I’m an enormous fan of the 1031 change. I’ve turned a lot of properties that I purchased early on in Texas into a lot larger… I purchased a business house with a 1031 change for one more property. I couldn’t have gotten that financed if I didn’t… I discovered financing, like nontraditional financing, as a result of on the time it was tremendous distressed. But when I didn’t hearken to BiggerPockets I might’ve by no means been capable of get that fully financed as a result of a financial institution wouldn’t contact it.
So I used to be capable of community with the neighborhood simply from listening to the present and happening the message boards, and I discovered financing that manner. So I bought inventive alongside the best way and I used my 9 to 5 cash to purchase my merchandise as a result of I had more money from that. As a result of I all the time home hacked, I all the time had a roommate paying my invoice. I all the time had a tenant paying my mortgage. After which the cash that I made is what I used in the direction of my actual property.

Mindy:
How do you take a look at a bit of property that’s so distressed a financial institution gained’t contact it, and say, “Oh yeah, I need to take that on.” Lots of people will go on that. The rationale that it was obtainable for you is as a result of it was so distressed and the financial institution wouldn’t contact it. And individuals are like, “No manner, if a financial institution doesn’t need it, I don’t need it both.”
How do you identify that it’s going to be an excellent property versus a whole and complete catastrophe?

Tom:
And I’ve had disasters over time. I purchased a crack home on eBay, which we are able to contact on, however I take a look at, does it have good bones? And that business house was in a candy spot, and it was simply so distressed and so ignored, however it had good bones. And after I had an inspector undergo it, they’re like, “This place is strong. It simply wants fully up to date. It wants a brand new furnace. It wants a brand new roof, it wants this,” however the bones have been there.
And even with the condos, after I was shopping for these 12,000, 15,000, $21,000 condos, the complexes have been well-kept. It was simply the HOA owned a few of them, they have been simply distressed, forgotten properties, however they have been in a great place or an excellent location. And that was my key. If I am going right into a property and I’m like, “I might dwell right here,” then I’m going to purchase it. If I am going right into a property and say, “I might by no means dwell right here.” And I’ve purchased these earlier than the place I’m like, “I don’t really feel snug right here.” And people are the primary ones that I all the time promote.
However you bought to take a look at, how are the bones? How are the neighbors? What’s happening round right here? After which go stroll round and discuss to individuals. I’m taking out trash at a brand new place and I’m simply speaking like, “Hey, what’s happening? How lengthy have you ever lived right here?”
Speak to the neighbors, see if they’d need to dwell right here. Would they need to lease? Do they like dwelling there?

Mindy:
Okay, let’s take a look at this business property particularly, you mentioned it wanted a brand new furnace and it wanted a brand new roof. What did you pay for this property? And this seems like this was your first business property?

Tom:
Yeah, that was the primary business. That was in 2018, I consider, or 2019. And it was actually, actually, actually poorly listed. It was a 4 unit, three residential, one business house. The business house might be cut up into two so it was technically 5 on paper, however we simply left it the way it was.
And it was poorly, poorly, poorly listed, poorly marketed, poorly marketed. And it was 85,000. After which it bought lowered right down to 75. And I stored saying to my associates, I’m like, “Let’s go take a look at this. Let’s go take a look at this. Let’s go take a look at this.”
They went, they’re like, “Yeah, that is strong and a fantastic spot. And 17,000 vehicles drive down that street in a day. Let’s do this.”
And I put in a money provide of 65 they usually’re like, “No, we’ll do 70.”
And we’re like, “No.” After which they got here again they usually’re like, “Okay, we’ll do 65.” In order that was how that deal went.

Mindy:
And what does-

Tom:
And so thus far, I’ve invested about 40 into it. I did about 10,000 every unit between the roof, between the furnace, between updating… They’ve some Ikea kitchens in there, and it appraised for 200,000 this previous yr. So I’m 105 in and we’re 200,000 on the property now.

Mindy:
And it money flows.

Tom:
They have been making so little rents it was insane. However in 2020 we collected over $30,000 in lease from that place alone.

David:
With a whopping in all probability 6,000 in mortgage funds. That’s an enormous margin for upkeep and bills. I find it irresistible.

Mindy:
Wow.

David:
And that’s the magic. That’s the magic, individuals get turned away by properties that look and or scent horrible. But when the bones are good, the revenue margin is big. We’ve bought one proper now that there was a grease fireplace within the kitchen, the kitchen was the one factor that was broken. There was perhaps a door had some warmth injury, the remainder smoke injury.
You bought to drag all of the drywall out and no matter, a lot of massive updates. That factor, you’re set for 3 or 4 years and we’re going to in all probability flip a $75,000 revenue on the flip. Yeah, it’s enormous. However such as you mentioned, the bones have been good.

Mindy:
Yeah, you may…

Tom:
And a few individuals lack that imaginative and prescient.

Mindy:
There’s no downside that’s too massive you may’t throw sufficient cash at it to repair. It’s simply how a lot cash are you going to throw at it? And you could possibly have purchased one other property for 65,000 and put in 400,000 to get it value 200,000, that’s not an excellent property. Don’t purchase that one. Purchase this one as an alternative. The money flows all day lengthy.
There are some properties that don’t make sense at any worth. There are some properties you would need to pay me to ensure that this to be an excellent deal for me. You don’t have to purchase these properties, and because of this you must run your numbers and get used to working numbers. And I believe they are saying on the BiggerPockets Actual Property podcast, they discuss time and again about getting snug working your numbers. And once you’re first beginning out, analyze properties. Analyze properties each single day.
You had a very key level about this property that I need to spotlight. You mentioned it was poorly marketed. I’m seeing proper now on this market, I’m within the Denver market, it’s the hottest market I’ve ever seen in my entire life. And I’ve been in actual property since earlier than each of you guys have been born. And it’s insane on the market, I’m watching costs climb each week.
I had a shopper who put in a suggestion and bought it in the beginning of February, by the point we closed in the beginning of March, she already had like 50 or $75,000 in appreciated worth on this home. I’m going to do air quotes as a result of I can’t consider this market is so ridiculous, however I digress.
You mentioned it was poorly marketed. We’re on the lookout for one other property for this shopper, and we discovered one and it was poorly marketed. I couldn’t consider how poorly marketed it was. Any individual swooped in and bought it for one more 5,000 greater than we paid for it in all probability. The itemizing agent wouldn’t inform us something concerning the different provide, however he mentioned that it didn’t hit 800. And we have been actual near 800 so there wasn’t numerous room to maneuver.
However anyway, it was poorly marketed. It had horrible footage. It had no footage till Saturday, and the outline was horrible. It was manner overpriced for the market or for the realm in the event you don’t take note of that it’s like 3 times larger than another home there. It was going to be a fantastic home. And it was completely outdated, it was form of ugly. However you may repair all that stuff and you may… It was a 3 bed room with an enormous loft upstairs, two partitions and a door and also you’ve bought 4 bedrooms upstairs, which is massively extra useful than a 3 bed room home.
And it will have been… I used to be calling everyone I knew, “Can I pay you to get on the market and construct two partitions and a door for my shopper?” As a result of this may be such a fantastic funding for her. And I’ve bought the agent, I’m sending him texts each day. “Hey, in case your deal falls by means of we’re proper there. We are able to shut in two weeks.”
However search for the poorly marketed ones. We’re moving into now on… Every part’s going beneath contract on Sunday or Monday, go in on Tuesday and see what’s nonetheless there. Click on by means of the images and look by means of, oh, these are horrible footage. Or, Hey, that’s a… A few of the homes available on the market on Tuesday are there as a result of they’re horrible. They again as much as the practice and the busy… Throughout the road of the gasoline station, however a few of them have been simply missed and there have been higher homes available on the market that weekend so everyone went and bid on these homes.
However there’s nonetheless properties which are falling by means of the cracks even on this market. So search for those which are poorly marketed. This was the 5 unit that was marketed as a 4 unit, search for ones which are… Oh, it says it’s a 3 unit. I discovered an inventory that had zero bogs. You’ll be able to’t have a home with zero bogs. I don’t know in the event you guys know this, however it has to have a minimum of one toilet to be able to be a home.
So earlier than I reached out to the itemizing agent to right him on it, I clicked by means of to make it possible for it wouldn’t work for certainly one of my purchasers. As a result of when you’ve got an inventory arrange within the MLS or when you’ve got a search setup the place you’re wanting for at least one toilet, properly, this isn’t going to hit it. You’re not going to see this home.
So I clicked by means of, it was not going to work for any of my purchasers. So I reached out to the itemizing agent. I’m like, “Hey, you’ve got this listed as a zero toilet home. You might not get the traction that you just’re on the lookout for on this.”
However have manner open-ended searches. Don’t search for a 3 bed room, two tub between 550 and 575, search for a… Should you want three bedrooms, search for a minimal three bed room however don’t put bogs in there. And go on as much as 770 or 575 with no minimal, typically you will get one thing on the underside finish that’s attention-grabbing or mislabeled or… There’s numerous errors on the MLS, even on this market.

David:
You’ll be amazed. I believe letting someone take footage of your own home with certainly one of these, a cellphone for these of you on audio, might be the costliest expense in relation to promoting a home. I might wager that in numerous circumstances, your pictures, if finished poorly, will price you greater than the 6% fee you pay to the agent and shutting prices mixed since you’re simply not… No one’s going to take a look at your own home. There’s not going to… You’re going to overlook out on the competitors.
And it astounds me that there are, I don’t need to say brokers who’re lazy, however I’d think about it’s in all probability much less simply extra that they’re… They’re novices perhaps. However that you’d let one thing go to record in a market this sizzling with out skilled pictures that price two or $300 is simply thoughts blowing.

Mindy:
I’ll say which you can take good high quality footage together with your cellphone. The iPhone has actually nice… The most recent iPhone has a fantastic digicam. I’ve my husband take all the images for my listings as a result of he takes actually nice footage. I don’t do numerous listings and I inform them up entrance, look, we are able to pay for skilled pictures or my husband can are available and take these footage. He’s going to be right here a number of occasions all through the day as a result of some rooms look higher through the day and a few rooms look higher at night time with the lights on on the within. So he’s going to take footage of the entire home in each occasions, and we’re going to see what works finest.
And people are the images we’re going to make use of. And I don’t care if the kitchen is darkish within the itemizing and the yard is all mild, no one cares. They simply need to see what the home seems to be like.
However yeah, we take good footage, and in the event you can’t take good footage your self then it’s best to completely rent it out. However yeah, you click on by means of and also you’re like, “I can’t even see.” And for the love of every little thing that’s holy, shut the bathroom lid earlier than you are taking an image. The tip.

David:
Yeah. And you then’ve bought the entire group of the pictures too, it must be the way you stroll by means of the home.

Mindy:
Thanks.

David:
As an alternative of like typically you open an inventory and it’s like, oh look, a closet is photograph one. Wow, such a cool closet.

Mindy:
Yeah, and in the event you can’t work out the best way that the home is laid out from the images, typically that’s on objective as a result of the home is bizarre. Generally that’s as a result of someone importing footage didn’t do it proper.
So undoubtedly click on by means of and take the time to see what’s there. And if it’s complicated to you it’s going to be complicated to lots of people. On this market there may be sizzling, sizzling frenzy each weekend. So in the event you see a home that appears beautiful and also you’re on the lookout for a deal, don’t go view that home that appears beautiful. It’s not going to be a deal.
Search for the bizarre homes, click on by means of the images which are, oh, it’s a kitchen. The subsequent image is a toilet. Is there a toilet off the kitchen or is that this… After which there’s the yard. After which there’s no extra footage.
Go see that home, that’s going to have far much less individuals scrambling to get in. That’s going to have extra individuals overlooking it or being like, “Nah, I don’t prefer it. I need to see a unique home.” And also you don’t need the competitors, you need to get in and be the one provide. After we made this provide in February, we have been the one provide on this home. Whereas there was one other home across the nook that bought 16 affords and bid up 150,000 over record.
We provided on that too however we didn’t get it. And we’re like, “I can’t consider there’s no different affords on this. We’re going to place a very tight acceptance deadline on this, simply because we both need to get it beneath contract or we need to go someplace else.”
And it was a fantastic provide, we weren’t making an attempt to low ball them or something. However some issues simply fall by means of the cracks, however you’ve bought to look, you’ve bought to be available in the market proper now, analyzing offers and actually leaping in to see. You’ve bought to know your market, and poorly marketed is your finest good friend.

David:
All proper. I known as dibs on this earlier so I’m asking, inform me concerning the crack home on eBay.

Tom:
Crack home on eBay was I had cash in my account, and I’m sitting at work and I used to be accustomed to the zip code. I used to be not accustomed to the road. I texted my associates up in Toledo, Ohio and mentioned, “Hey, are you able to drive by?” And certainly one of my associates is lastly like, “Yeah, I’ll go on lunch.”
And at that time I had already gained it as a result of it was a type of the place it had two hours left, it was public sale.com fulfilled by eBay. And my good friend glided by they usually’re like, “It’s tough, however I believe you may make it work.”
And I believed it was a unique neighborhood than what it was. I despatched my husband, he was my boyfriend on the time, and my dad to go take a look at it as soon as I closed and paid all my cash for it. This was a 13,500 home.
And I initially instructed my husband, “I’ve bought utilities on, you may keep there the night time. Simply take a sleeping bag with you.” And when he bought there there have been bullet holes within the doorframe. There have been bullet holes within the eating room window. After which my dad began sending me footage of syringes within the toilet. And I booked my boyfriend a resort down the street and he didn’t have to remain there. After which my dad’s like, “I’m simply going to stroll away from this one, simply lose the $13,000 and be finished with it. Don’t even mess with this home. We’re scared to be over right here previous six o’clock.”
And I’m like, “Is it actually that dangerous?” And it was. My contractor, whereas he was working.

Mindy:
Your dad’s a cop.

Tom:
Belief me, and that’s why he’s like, “Simply stroll away from it. It’s scary.”
However true story. My contractor was inside working, and there was a drug deal happening within the yard of my property, a child bought shot whereas my contractors in there.
And right here’s the tip of the story, which is my favourite half. It lastly resulted in July of 2021. I did pour a ton of cash, it bought an Ikea kitchen, it bought a brand new furnace, it bought a brand new roof, it bought a lot of enhancements. So I used to be all in at $38,000 on this property, which is far more than what I wished to spend. However I bought it in July of 2021 to my tenant. I proprietor financed it as a result of he couldn’t get conventional financing, and he’s completely satisfied there, it’s the nicest one on the road. It’s well-kept, he’s taken satisfaction in possession. And he’s present on his cost so it was a win-win on each side.
So I in all probability ought to have walked away and listened to my dad and listened to my boyfriend on the time, however it nonetheless turned out okay. It simply took a pair years to recover from the end line.

Mindy:
Do you purchase homes on eBay anymore?

Tom:
I don’t purchase homes on eBay. I don’t purchase homes in that zip code anymore. I’ve realized my lesson. I did purchase a aspect lot from the town. The property subsequent to mine was torn down. They bought me rather a lot for $150 simply if I might mow it, and I’m like, “Yeah, I’ll mow it.” That elevated the worth, why would I not purchase a bit of land for $150? So it was a studying expertise, that’s what I’ll say about that buy.

David:
However in the end you got here out all proper and also you realized a ton. And I believe you undoubtedly mentioned a key… I believe the important thing there was once you have been like, “Oh, I used to be accustomed to the zip code, however not the neighborhood.” And I’m like, “Ooh, I do know the place that is going.”

Tom:
I even lived within the zip code, so I’m like, “Oh, it’ll be tremendous. I used to dwell on this zip code. I do know this retailer’s proper there and that.” However no, it was not the fitting… And it was actually damaged down by streets, you could possibly go one road over and it’s good. You could possibly go one road to the left and it’s good. It was only a actually tough road. And also you realized as you go.

Mindy:
That jogs my memory of the Mark Twain quote, a person who carries a cat by the tail learns one thing he can study in no different manner. Generally you simply need to study the lesson. And yeah, I believe it’s sounds superior.
Oh, look, right here’s a home for $13,000. However then yeah, typically you simply need to… I purchased a rental and I realized that I don’t ever need to purchase condos. And I’m so glad that you just had success in your condos, however I didn’t.

Tom:
I’ve bought nearly all of them at this level, however they bought me the place I wished to go. And I maintain a few the three finest ones which are within the nice A category neighborhoods, however no, not a rental fan both. I might not need to… I’m by no means wanting actively for condos.
However in Dallas the place there’s not a ton of single households, and the buyers have been loopy for the one households, I needed to go for what everybody else was ignoring. In order that’s the place I began.

David:
I really feel like that’s like a transition for lots of actual property buyers, is you begin out numerous occasions you’re on the lookout for that 2% rule, that home that wants a ton of labor. You’re going to place a ton of sweat fairness. You would possibly take care of a crappy tenant, all these items that might go incorrect as a result of you are attempting to leverage right into a return to get your self off the bottom.
However then as your portfolio grows, you begin to get up to now the place you’re like, “That one’s extra nerve-racking than the opposite ones, that’s bought to go.”
So I’m at that time in my portfolio now the place I purchased a bunch of issues that have been… They money flowed nice, they appreciated nice. They have been good properties from a monetary standpoint however they have been complications. And so it’s like, “Okay, if I can do away with that headache and transfer it into one thing that may not money move is nice, however doesn’t name me. Nice.”

Mindy:
And also you study a lot by coping with the complications. Generally you’re studying like, oh, this can be a repair that I have to now make after I purchase a home. Or this can be a factor I want to verify is high notch after I purchase a home. Or this can be a downside with a tenant that I missed throughout screening that I have to… You need to all the time be studying from these head complications, however yeah, you may do away with the complications too.

Tom:
100%.

Mindy:
1031 into a very good property.
So we may discuss for one more 17 hours about all of the issues that Tom has finished, however all of us three have to get on with the remainder of our day.
So I need Tom to return again in a while down the street and discuss to us about 1031 exchanges and a few of these different enjoyable, extra superior actual estatey matters that we’ve had.

Tom:
Anytime.

Mindy:
Or experiences that he’s had.
However Tom, we’re not finished with you simply but. We nonetheless need to do our well-known 4. Are you prepared?

Tom:
I’m prepared.

Mindy:
Okay, Tom. What’s your favourite finance ebook?

Tom:
Favourite finance ebook is Tim Ferris, A 4 hour work week.

Mindy:
Okay, that’s an excellent ebook.

David:
Tom, what’s your greatest cash mistake.

Tom:
Largest cash mistake must be buying a home in 2005 on the high of the market and making an attempt to make that work in a neighborhood that I had no enterprise being in. I had no staff constructed. I had no help there. So I misplaced cash on all of it 10 years that I owned it and I misplaced cash on it after I bought it, so I carry that one as a studying lesson.

Mindy:
I’m sorry. I’m not laughing. I’m laughing on the manner you phrased that. I misplaced cash all 10 years that I owned it and I misplaced cash when it bought it. However you realized.

Tom:
I did.

Mindy:
Did you study rather a lot?

Tom:
I did, and it’s an excellent story to inform individuals after they’re like, “I need to be in actual property.” I’m like, “Effectively, let me let you know this story.”

Mindy:
Okay. Tom, what’s your finest piece of recommendation for people who find themselves simply beginning out?

Tom:
Do away with the dangerous debt, clearly. I’m an enormous debt free advocate. What are you able to do proper now? And there’s so many individuals which are to this point into debt however need to be in actual property at present as a result of they need to begin incomes cash, so begin engaged on that debt.
However then can also you get your self a $15 pack of enterprise playing cards which you can go out to individuals so that they know that you just’re excited by actual property so you may community? As a result of constructing that community even earlier than you’ve got that cash is superior, as a result of then when you’re prepared, you already know that that plumber can try this job for you.
You already know that this individual is in actual property and you may name them about this. So go spend the $15 on the pack of enterprise playing cards and go them out. Simply introduce your self, say, “Hey, I need to get into actual property. I’m paying off debt proper now however I need to be there.”

Mindy:
I wrote an article known as do ask, do inform. Your secret weapon for touchdown offers. And it was like, inform everyone that you realize what you do. The ethical of this story is you by no means know who is aware of anyone who’s about to promote.

Tom:
Certainly one of my finest offers got here from a person on the flea market who I purchased nail Polish from. And he’s like, “That is my mother-in-law’s home. I don’t need it anymore.” And I’m like, “I need it. And I purchased nail Polish from you for 1 / 4, so right here’s my enterprise card. I need the home and I need the nail polish. Let’s do that.”

David:
I find it irresistible. However you’re not incorrect, it comes from simply telling individuals what you need, what you’re on the lookout for, networking. It’s every little thing.
Oh, that’s highly effective.

Mindy:
Yep. I purchase actual property, are you aware anyone who’s seeking to promote any property? I’m excited by shopping for. And I lived subsequent door to a duplex. I used to be very pleasant with the woman who lived in a single half of the duplex, and he or she involves me and he or she’s like, “Oh.”
There was an indication planted within the yard in the future, and I come dwelling and I’m like, “Jude, you didn’t inform me that they have been on the brink of promote.” She’s like, “Oh yeah, I do not forget that you purchase actual property. Yeah, he instructed me he was going to promote it.”
It bought for 240. That man simply needed to promote it due to a divorce. He bought it for 650 6 years later. And I’m annoyed as a result of I might’ve stored it. Do ask do inform.

David:
All proper. And now the query that everyone eagerly awaits on each present, what’s your favourite joke to inform at events?

Tom:
So I don’t have a joke, however I inform a narrative about my first expertise with Texas. My firm gave us Texas State Truthful tickets and I went, and I didn’t know something concerning the state honest. And I’m simply making an attempt to make use of the meals tickets and the journey tickets and go dwelling. I’m in a foul temper. I paid $20 to park at a gasoline station. I don’t know actually what’s happening. And I’m standing in line at this swing journey, and I’m identical to, “Oh my God, what number of extra rides do I’ve to go on to do away with these tickets and go?”
After which it hit me. And there have been ladies standing behind me, they have been singing. And there have been ladies standing in entrance of me they usually have been dancing round. And somebody on the journey threw up on all of us and I simply began to cry at that second. And I ran throughout your complete state honest to attempt to discover my automobile at a gasoline station. It had been towed.
So it was like an ideal welcome to Texas. That is what Texas is. So every time I get requested, “Do you need to go to the state honest?” I inform that story. And I don’t go to the Texas State Truthful anymore. And it bought within the mouths of the ladies as a result of they have been singing the songs, so it was far more traumatic for them. It hit me on the shoulder, however it was once more, I don’t go to the state honest of Texas anymore.

David:
Not a joke however undoubtedly one thing value laughing about. That’s horrible

Tom:
One and finished, sure. I realized the arduous manner on that one.

Mindy:
Okay, I’ve an eBay associated joke for you. I simply bought my homing pigeon on eBay for the twenty third time. It’s extra of a homing pigeon joke.
I’m promoting all of my John Lennon assortment on eBay. Think about all of the PayPal.

Tom:
Oh, so good.

Mindy:
Okay, these have been horrible.

David:
As I mentioned, probably the most anticipated query on the present.

Mindy:
Tom, the place can individuals discover out extra about you?

Tom:
So I’m tremendous energetic on Twitter @thefrugalgay11, and on Instagram I put up renovation picks, I put up eBay flips. I’m fairly energetic on there, so in the event you guys need to join these are the 2 spots to undoubtedly hit me up.

Mindy:
And what’s your Instagram account?

Tom:
Identical factor, @thefrugalgay11, @thefrugalgay1 was already taken So I’ve to be @thefrugalgay11.

David:
11s an excellent quantity.

Mindy:
Okay. One one.

David:
Most likely my favourite quantity.

Mindy:
Tom, thanks a lot to your time at present. This was tremendous enjoyable. I realized rather a lot about eBay flipping. My husband shouldn’t be going to love this episode as a result of he’s going to be like, “No, you may’t try this.” However now I need to go discover these pallets of stuff and discover some $2 skirts that I can promote on-line. And I’m not going to do it however I need to, I dream. So thanks for sharing your story at present.

Tom:
Thanks for having me guys, this was numerous enjoyable. We lastly made it occur.
Thanks.

Mindy:
Okay, we’ll discuss to you quickly.
Okay, that was Tom Brickman and his fabulous story of promoting random issues on eBay to generate revenue, to purchase homes that generate extra revenue, that enable him to give up his job and promote extra stuff on an eBay to purchase extra homes.

David:
That is actually doing every little thing the fitting manner. It’s humorous to say that, like promoting make-up and bras and purses is the fitting manner. However the actuality is the fitting manner is to search out some technique to both save more cash or earn more money, after which to not contact it besides to take a position it.
And that’s what he did. He makes more cash, he buys an funding. After which he takes these investments and rolls them into new investments. And that’s the best way you construct wealth.

Mindy:
And he’s constructed wealth. He has… We didn’t get to his closing tally, however he has 16 or 17 doorways which are producing sufficient revenue for him to have been capable of give up his job earlier this yr and nonetheless be capable of purchase extra actual property. He’s simply cranking out his investments, and it’s only a actually enjoyable story. As a result of now he can work as a lot or as little as he chooses. And that’s actually the entire level of this monetary freedom factor, is to construct the life that you really want.
He’s not beholden to a job. He doesn’t need to work anymore for anyone else. He can do what he needs along with his days, and that’s precisely what he’s doing.
Okay, David, ought to we get out of right here?

David:
Completely.

Mindy:
From episode 291 of the BiggerPockets Cash podcast, he’s David Perret and I’m Mindy Jensen going again to fundamentals and saying, goodbye, alligator.