Orna & Gary Interview

Circle of Champions Winner

Orna and Gary are business partners and they flipped a fourplex (quadplex), a four unit small apartment building, earning $14,000, achieving this in 90 days

What you’ll learn in this episode:

*They started with small apartments about three years ago. First, they attended Ron Legrand seminars. They assumed the right path was graduating from single family homes to multi-family homes, but after reading Lance Edwards’ book, their attitude started to change. They were heavily involved in single family homes and wanted to see if that could work. They were doing this in Los Angeles and found it difficult because of the prices and other roadblocks.

*Another reason they made the switch to multi-family buildings is because it would be difficult to do a rehab on a single family house in another state without being there – having to trust people they didn’t really know to help them

*Orna moved to Los Angeles to be a filmmaker and entered real estate because the film industry is so volatile

*Gary feels that the main objective in doing multi family is having the ability to build income on a continuous basis rather than having to look for another property to flip all the time. You need a combination if you really want to do well. He doesn’t believe you can get rich just flipping properties

*They had their direct mail marketing done by Lance’s people. The person who responded to the postcard that led to their first deal called Gary’s office. He had a productive discussion with her and hearing the preliminary numbers as far as expenses and income led him to decide it was wise to make an offer. Their offer was accepted

*Orna and Gary sent the seller an LOI with the three offers. They chose the cash. There was a discussion about the $250 “door thing” and Gary was able to talk them into leading that into the contract. He considered it a very good deal. The title company did all the paperwork and Gary just received confirmation that it was going to close soon

*Orna thinks it’s good to have a partner. It can be scary doing everything by yourself when you’re embarking on something new. She likes the idea of splitting up duties with Gary and complementing each other’s strengths and weaknesses.

*She remembers their marketing started in mid-January and by mid-March Gary got the first call. The tag team concept worked perfectly, with Orna following up Gary’s call and getting more details. It’s a great way to build rapport with the seller or buyer.

*The purchase price was $150,000 minus the thousand dollars for the repair

*Gary says the property had a lot of plusses going for it, but admit they had considered offering less. Their starting offer was $150,0000 and the seller left it right there. The big plus was over $400 per door per month profit of cash flow. It had a master lease that would be in place for another year and a half that guarantees income even if the apartments are empty

*Gary admits they were teetering between buying the property and utilizing the income from it or selling it to provide a possible cushion moving forward

*Their buyer answered an ad on the Who’s It buyer generator. They did the buyer flyer, executive summary. They got 21 total responses

*A guy named Alex called Gary and made an immediate offer. They negotiated a bit and landed on what he and Orna were looking for a $15,000 profit. They wound up with $14,000 after a few days of negotiation. They had bought it for $150,000 and were asking $165,000

*The first offer was full price but they wanted Gary and Orna to pay $3500 towards their closing costs. Gary responded no. The buyers returned and said they didn’t realize that Gary and Orna were wholesaling, they thought they were the owners. The buyers’ counteroffer was worse than the first. They went from $3500 to $500 on the closing, with a purchase price of $164,000.

*Gary explained that the buyer was getting equity in the property and $400 per door per month cash flow

*An explanation of their work as a “tag team” and how they discuss and plan for different potential scenarios (including if the buyer pulled out of the deal) in the buying and selling processes

*The bank’s appraisal came back lower than what the bank was willing to lend compared to what the original amount they would lend to the buyer. It was $159,000 to $164,000

*The bank originally thought Gary and Orna were real estate agents

*Gary says the most important thing he’s learned is the importance of sticking with it. He believes you don’t fail until you give up. There are a lot of things to learn. He urges newcomers to the multi-family word to be patient and utilize any avenue you can to fill the gaps. He reads a lot about financing multi-family properties and how to work deals he doesn’t yet understand

*Orna says you need to have a good foundation on how things work and then keep the momentum going, reading articles and books as well as researching the marketing to see what’s going on in different places. Understanding trends is important, as is patience because everything happens step by step

*Mark has been doing real estate on and off for six years, recently deciding to take it more seriously and do it full time

*He found that with other mentors and seminars, he always left wanting more information. He found Lance’s boot camps to be one of the better ones. He believes if he had upgraded his mentorship, he would have gotten all of his residual questions answered

*He chose small apartments vs. single homes because of the bigger potential returns. If you have one unit and it doesn’t rent out, you’re losing money. With apartment buildings and multi-family you have a bunch of units, so you have better cash flow possibilities

*He found his deal on the net and contacted the realtor who had it listed. The list price was $420,000 and gave him the three offer LOI he learned from Ron Legrand in his boot camp. The seller would not owner finance at all. So he wouldn’t accept the offer. He countered at $382 after Mark submitted $360

*All communication was through the broker. Their negotiation process was very easy

*For $420,000, Mark put together the three offers and he accepted cash at $382,000 and then put together a buyer flyer and did the marketing through Lance Edwards

*He got it under contact with the realtor and submitted the contract to customer service and they told him to submit it with the flyer and a summary

*He got around ten calls from the flyers buyer generator, but everyone was asking for owner financing and he couldn’t make that work. He again tried to convince the owner to self-finance, but he would not

*Mark’s sale price was $399,000. He was aiming to profit $17-18,000

*Every potential buyer wanted financing and had no cash to worth with

*Mark put down $10,000 in earnest money

*He is moving on to the next deal, using Craigslist and Loopnet. He has since closed another deal in Branson, MO

*The most important thing he learned is how to calculate income and expenses. Also, post ad for property for sale. They always have like 15-20 percent expenses. With Lance’s program, they give you the formula and show you actually what it’s going to be. So even when you think you’re getting a deal, you’re not actually getting a deal. You can pretty much call out the seller right away. Another thing is you just have to stick with it and keep going.