I had the AWESOME opportunity to interview a Real Estate mastermind, Chris Bruce. He is an amazing estate investor with a resume to boot.
Chris has been a full-time investor since 2010 and has made it his goal to flip houses virtually from anywhere in the world.
As someone who grew up in the rough areas of Detroit, Chris took an affinity toward real estate after the crash of ’08 and hasn’t looked back.
Today we get a chance to sit down and discuss the state of real estate and how anyone can start to create generational wealth in this space. So Chris, how are you man?
Chris: I’m doing great John, and I want to say thank you for having me on the show. I love that I get an opportunity to talk with you and the blackwallet community.
John: I appreciate it! So tell me your story! How did you get into real estate?
Chris: I got into real estate, officially in 2006.
I had an opportunity to buy a rental property on the east side, Detroit, Michigan on Beaconsfield and bought my first rental property.
At that time, you could get a house as long as you had a pulse.
I was 21 at the time, I was thinking: “Oh, this is good, you know, I’ll just keep doing this.” I put a tenant in there, everything was great until he ended up getting shot.
Just like that, my tenant was gone.
Here I am stuck. I didn’t have any tenant placement companies. I had just moved to Florida two years ago and I was like: “Man, I don’t know what I’m gonna do, I’m trying to pay rent here. I’m trying to pay my mortgage up there.”
So, I ended up losing the house to foreclosure.
The market had crashed so I couldn’t sell it.
And I lost that house before closure.
So I was like: “Man, I need to figure something out.”
My daughter’s mom, at the time, was pregnant.
I was trying to figure out: “Okay, now I’m bringing a kid into the world, how I’m I going to do this without a job? What the heck am I going to do?” So I was looking at all these other options.
I ended up coming across a guy in my market who was advertising how to flip houses. He had literally flipped a house across the street where one of my friends lived and made 13 grand. All while I was partying in Miami for memorial weekend.
So I’m like: “I’m out here partying and spending money and this dude is making money.”
“I got to figure this stuff out.” So I ended up begging my daughter’s mom, at the time we were together, to purchase his course for $997.
This was a time where everything was workbooks and DVDs.
So I put it on her credit card and I started buying foreclosures AFTER the market crash.
Initially, it took me 26 deals, literally 26 properties to put under contract and fail on every single one of them, before I actually got my first deal and made five grand.
I was hooked.
“This is what’s going to get me out of my job.”
I loved wholesaling.
I tell people that is the entry level to get into real estate. You really don’t have to have any experience, no license, no cash of your own, and no credit on your own. And I don’t know any business in the world where you can literally get paid tons of money for, literally, moving a piece of paper around.
John: For the individuals that are new to real estate investing, tell me a little bit about wholesaling and how that process works.
Chris: Sure. So as a wholesaler, your job is to match two people up.
Think of it as a real estate matchmaker.
You have the seller and you’re ideally looking for someone that needs to sell their house.
Maybe they are in foreclosure, maybe they’re behind on their taxes, maybe they just inherited the property and they don’t want to be a landlord.
You’re looking for an ideal seller with a property that probably needs some work or some upgrades.
So in exchange, since they’re desperate for money, instead of them trying to sell it at the top retail price that they would get, they will actually come to you or you would seek them out via your marketing pieces and what you’re offering them as a service to not only close in 30 days or less, but also pay cash and buy it as is, even if it’s falling down to the ground and not charge any commissions.
So let’s say a house is worth 100 thousand dollars and you agree with this seller to purchase it at 50 thousand dollars.
What you do is, you sign a purchase contract for that 50 thousand dollars and it’s worth 100 so you have 50 in equity.
Now, you go out and market the property to either a landlord that wants to buy a property and hold for cash flow and lease it out to a tenant, or you find a rehabber, people that are on HGTV shows that want to buy it, fix it up and then resell it, for top of the market.
Now, let’s say you find a buyer that wants to pay you 60 thousand dollars. Essentially, you take the contract, get another contract that you signed with the buyer as well too, and you do an assignment contract which is basically saying: “Listen, I have this contract for 50 thousand dollars from the owner. I’m going to sell you this contract for 10 thousand dollars.
That paperwork goes to either a licensed attorney or a title company and from there, everything gets dispersed out. The seller walks away with 50 grand, the buyer walks away with a new property and you walk away with a 10 thousand dollars check or wire to your bank account.
John: I love how you simplify the process and you made it super simple, absorb and understand. So tell me, if someone’s new in the space, in real estate investing, one thing that I learned early on, in taking webinars and being on bigger pockets blog, was that there are so many different avenues of real estate investing that you can get into.
So as someone new in the space, what’s one thing they can do to get started?
Chris: First thing: educate yourself.
There are so many different strategies and different ways to make money in this business.
I honestly would say, start off with wholesaling because you could go in as a joint venture with another investor.
Joint venturing is one of the simplest ways to get in.
If you don’t have any marketing money, you really don’t know anything. If you go out and let’s say you find someone like myself that has deals and you go post on Craig’s list for buyers, you can literally just connect to someone that already has deals and sell their deals to your buyers.
So all you’re doing is finding a buyer and you just post the ad up on craigslist that says: “Hey, I have properties for sale in this city. They’re heavily discounted. Please contact me.”
You put the ad up, you’re going to have people that are going to reach out. So you can just have a conversation with them, find out what properties they’re looking for if they’re cash buyers and literally just match them up with other wholesalers that have deals.
I still joint venture to this day.
I just joint venture with my students doing the same thing. I brought a strategy that I use to find my buyers and doing that strategy, we both walked with $17,600 apiece.
John: I think that’s a great pivotal piece because people think that they’ll just get into real estate and then suddenly they’re making millions of dollars.
Chris: You have to trust the process and definitely work on developing yourself. Because sometimes, I think the only bad thing is that we are in the age of having everything fast, with the Internet and things like that, and success is not like that.
It does take some time. So long as you’re willing to put the grind in, it’s going to work out for you.
John: I just finished reading The Millionaire Real Estate Investor by Gary Keller.
One thing that he talks about is your inner circle. With you, let’s talk a little bit about how you do this virtually. How do you create a circle of people when you’re completing transactions virtually?
Chris: That’s a good question.
The good thing is that with the Internet you can really find a lot of different people in a certain market.
So what I did when I first started out virtually, I just put up an ad on craigslist.
I know that there are people out there that are searching craigslist daily looking for items and jobs for them to make a few bucks here and there. So, initially, what I did was I put an ad out in the services section for someone to just go and be the eyes and boots on the ground for me. I paid $25 and they literally would go out, look at the houses, get the pictures for me for, put the lockboxes on them, everything.
John: That’s super forward thinking, I like that.
Chris: And then to take it a step forward, I started building relationships. A good thing about Facebook and social media is that it’s easy to connect with other people around the network that are in the same niche as you.
So, like Facebook groups, there’s a lot of real estate investor groups. I have a group out that has like 10,600 people in there. There are tons and tons of Facebook groups. You can literally go in there and connect with someone that’s in your market.
Since I had a pretty solid network back in 2013, one of my friends connected me with a guy in Jacksonville.
From there, we looked at our competition on Facebook.
We got on the phone and we chatted. I told him what I was doing, he told me how he was doing and we literally did a couple of dozen deals in Jacksonville and I had never even been there before.
He was literally finding buyers for me, selling all the deals. I was just finding the deals, locking them up over the phone. Just use social media to connect with other people. As long as you bring some value to someone else, then it’ll be a good relationship.
John: That’s great advice.
So one, you use craigslist and you found like an individual that does not necessarily have to be in real estate, but someone that’s hungry, that knows the city well, that can go out and take photos for you, check out the property and be your person or your liaison in that city.
And then two, you use social media, Facebook groups to create and foster these relationships. And I feel like that’s something that I’ve been doing as well as I’ve been on a bigger pockets forum, I’ve joined some Facebook groups in specific cities that I’m looking at just to like get a sense of the field and get to know these people.
That’s great advice, man. Really creating relationships and leveraging those relationships to understand the local market and everyone gets something out of it. So I liked that a lot, that’s genius. So alright Chris, I got something for you. Tell me. Walk me through a transaction. Like let’s say you’re searching, you find a great property. Walk me through the process from beginning to end.
Chris: Sure. So initially you’re going to do some type of marketing strategy to find a deal. So it may be cold calling outbound, let’s say vacant properties, maybe it might be doing direct mail campaigns, Facebook ads, but there’s some type of marketing that has to be done in order to get in contact with the owner. Once that is done, you’re in contact with the owner.
The conversation is basically trying to figure out, is this person in a situation where they need to sell?
There’s a lot of people that want to sell and the people that want to sell are different from the people that need to sell.
Because when you want, the thing is that you may want to sell, but you are not desperate for the money so you can hold out for months, years even, to get that amount of money that you’re looking for, which might be top dollar.
And people have to understand this; real estate, buying a house, purchasing a house is the most expensive investment you’ll ever make outside of a car. So everybody’s not willing to part ways with getting a lower amount for the house when they know what it’s really worth.
But the people that need to sell are willing to lower their price because they’re in a need. When you find it, you identify that person that needs to sell. What you do is you would converse with them to figure out what their needs are?
What is the reason why they need to sell?
You become a problem solver.
I’ll give you an example.
I had a situation where this person was like: “Man, I built this house up from the ground up with my dad and you know, it’s very sentimental to me. Honestly. I just don’t have the money to fix the property up anymore. I ran out of money.
I’m older, I don’t have the patience anymore. I just want to get rid of it and I don’t want to pay the taxes because it’s due next month. I really just want to go into the New Year debt free and not have to worry about this anymore.”
So I was like: “Okay, fine.” So from there, we were able to then show him what the comps were, what properties were going for, because that’s very key is understanding not just what the house is worth in top condition, but what it is worth in the current condition.
So once you’re able to let him know that: “Hey listen, I know you want this amount for your property, you want 150, but where we’re at, we really need to be at 80. But we’re going to give you a bit more money because we like the house in its a condition and we know it needs a lot of work. So we’re going to give you 100 thousand dollars. This is what we can pay for it.”
From there we signed a purchase contract with him, saying: “Hey listen, it’s going to be 100 thousand dollars. We have a closing date that’s going to be pushed back 30 days but we’ll probably close before then.”
Then, we delved into our marketing methods to find a buyer.
We found a buyer that was willing to pay 140 for the property, mind you, we have it for 100 thousand dollars.
When a buyer knows that you’re making more than 20 thousand dollars, sometimes they get a little antsy and want to talk you down.
To combat this, we perform a double closing.
We use transactional funding, so there’s a lot of banks, not banks, but there’s a lot of funding people like private money investors, investors or whatever, our title company provided that, will lend the money.
There are literally companies that have money and they will put a transaction, by lending that upfront money but you do pay a fee. So it might be $500 to do it, it might be $800 to it or whatever, lending that money to you for not even a whole day. Like they really lend it for an hour or two hours.
And so we closed on the A to B transaction, which is a 100 grand. The seller got their 100 thousand dollars and then the buyer came in and closed on the B to C transaction, which was 150 thousand dollars.
But if you are making more than that and you don’t want the buyer to know how much you’re making so they won’t know what you’re doing either because you’re closing on it with them. So that means that it’s showing that you are the buyer, you can just do a double closing and so that’s what we did on the transaction.
John:Got it, okay, that makes sense. Okay. And then boom, it’s done. That’s amazing man. So wholesaling in essence, for those that are kind of getting into this space, is you’re kind of like the negotiator of the liaison between the buyer and the seller and then paid a contingent on the difference in what it sells for.
So essentially you’re a marketer, you’re like a high-level marketer where you find the quality. Well not even that, you’re also a sales guy because you have to go and approach people. So it sounds like, yeah, you have to have some great skills. Sales and marketing definitely play a big piece.
Chris: Absolutely. You are definitely a marketer. I tell people that’s first what you learn. You even become a person that’s like almost that person that you start to help other people in a sense. And when you’re talking with some people, you kind of like a counselor also as well too.
Like there’s a lot of times where you’re more like a therapist in some situations. Some people are really going through some stuff.
Like, I mean I’ve had transactions where, literally, someone is arguing with their family member about the price of getting rid of the property. And so, you’re not only like just a marketer but you become a counsellor, you become a therapist so you can become all those things in one transaction. But at the end of the day, actually, generally, you are a marketer first. So you’ve got to market.
John: Great to know. Kind of bringing that into the next question. I have about four or five more questions and then we have like a fire round where we just fire off some questions for you off the top. And so me myself, I’m a big proponent of remote team members. My Marketing Agency, we have nine team members, we all work remotely.
And as you know, companies like Automaticc, WordPress, Amazon, Invision is another company that has 700 plus employees that work remotely. How do you make it work in the real estate space?
Chris:Yes. So in the real estate space, just to show you what my team looks like. We have two cold callers that are calling leads outbound to see if they’re interested in selling the property. All of those assistants that work in the Philippines.
Then we have a lead manager as well that manages all of our leads from our direct mail campaigns. We have a code call center that is virtual, that actually is in Tampa. They are local and they work around the clock, 24/7 and they handled the initial call from our leads that come into the direct mail then our lead manager handles the rest.
I have an acquisition manager that is local as well too. And he, basically, acquires all the leads and turn them into deals. He’s the one that’s actually doing the negotiating things like that. I have a disposition, a woman, which is actually my acquisitions manager’s wife, she’s a realtor as well. She’s the one who actually goes out and sell the deal.
She goes out and finds the buyers, gets them into the property, shows them. And actually gets the buyer to commit to a price. And that is how everything is done remotely. And my team is a virtual office, I’m actually going to be getting an office next year because we’re going to be expanding. But as of the past eight, nine years, man, it’s really just been, everything was virtual. So it’s been cool.
John: Chris, that’s amazing man. And it’s so funny how we both parallel because I think, I talk about this a lot, people have a misconception of when you’re leveraging and hiring people offshore, they think: “Oh well you know, these people don’t speak English well, you know their skill set because they’re inexpensive, they’re not going to do a great job.”
And that’s a huge misconception. Because one, a lot of these individuals are college educated. They start coding development, customer service at 16. So for example, I have a project manager in the Philippines as well, and you talked to her on the phone and you’d never know she was from the Philippines, she sounds like she’s from here.
And you know, it’s because the education system, they start them in English at an early age. And also the price of living is so much cheaper there, you know what I mean? You might pay $75 for health insurance there for a month as opposed to here where you’re paying thousands, right?
So the quality of life there is high and the cost of living is low and I just wanted to say that because I know you understand that as well.
And with the Internet, it’s really bridged the gap for us. So with that being said, you have your team, I love how you broke it down where you have individuals that do your cold calling, I’m assuming you probably have scripts and content. I know you offer some courses and stuff like that as well, which I want to get into for resources for our readers.
And so just to flip the subject a little bit, if you had to choose one book in a real estate, what would you choose? If you have someone that’s new and again they’re like, listen, I have time to read one book in three weeks. What would you recommend?
Chris:Outside of my book?
John: Shameless plug,
Chris: Shameless plug, right? It would definitely be the Emerging Real Estate book. The reason why I say that is to understand the opportunities and understand different markets and trends.
This a phenomenal book because across all markets, there are ups and downs, there are highs and lows. And so really being able to really figure out which market I should be investing in, especially if you’re thinking about going into a virtual market outside of your local market, this book is great. So yeah, I would definitely say Emerging Real Estate.
It’s a really good knowledge of how the business works, how you can make some money through real estate and even the long-term play with holding off. That’s probably the book I recommend.
John: Got It, got it. No, that’s perfect. I just started it yesterday. Guys, it’s called The Emerging Real Estate Markets- how to find and profit from up and coming areas, David Lindahl. And this is perfect for me because I’m looking to purchase out of state as well.
Because where I lived down here in south Florida, listen if you want to buy a rental, you got to be dropping at least half a million dollars for. So how can potential real estate investors choose the right path for their goals? Like, whether flipping, buy and hold, BRRRR method, how can they choose the right path?
Chris: Oh, well you got to look at what your intent and goals are. Everybody’s intent and goals are different. Of course, if you’re looking into getting into generational will and really making passive income, then your play is going to be different than someone that just wants to make quick cash right now.
I tell everybody if you are starting from the bottom, like most of us have, is very good to get into wholesaling because it allows you to build up your capital. And then start to reinvest those profits into getting into a different phase of real estate.
So even if you want to go into fix and flips or you willing to take that money and started buying and holding properties, like I said, for long-term wealth, that is what you can do. But you got to really look at where you’re at.
Some people may have money that is listening to this and say, hey look, I don’t want to be that person that goes I just want to park my money that I have in my 401K or my retirement accounts and just make passive income.
And if that’s the case, then you can find other investors that are doing projects like rehabs or they’re actually going out and acquiring rentals or multifamily units, things like that, and park that cash in there and get a certain return.
There are opportunities where you, literally, could have your money tied up for three months and make eight to 10 percent on your money, which is way more than the banks, whatever, I can’t hear you.
John:Nice. Listen man, it’s 2018, I feel like this will never be something that— we got cars that run on electric, we got cities that have no power, but for some reason, we can’t get conferencing to work.
Chris:I know, right?
John: We got underground tunnels of cities running, but you know, it is what it is. Right? So this is my next question. So everybody’s talking about a pending correction or a correction in the market, its 10 percent bear market and 20 percent recession? I think it’s like 40 percent. So everybody’s talking about: “Oh there’s a recession coming.”
What do you predict in the next five years? Because myself, us like-minded individuals, we don’t necessarily want a recession but we know that when the market dips you can go in and get these real estate properties for a lot cheaper. So what are you predicting, and again, I know this is something that you can’t really know per se, but what do you predict in the next five years of real estate?
Chris: Well definitely, I mean, everybody feels like they have this Lobo or glass ball and they can tell you when it’s going to happen, so we really don’t know, but it has to happen in the next five years. I mean, history repeats itself. If you look at trends and look at history every 10 years, there is some type of dip with real estate.
The last one was ’07, ’08. So, you know, we’re behind, we’re due for one. People are saying it’s going to happen sometime in 2019 or before but it has to happen. I mean, there just has to be a correction.
Will it be as bad as the recession? I really doubt it. I just don’t think that people are in that position where, you know, last time again, everybody was getting a property, there was subprime mortgages up to the ceiling.
And people that weren’t qualified for these properties, we’re getting them at 200, 300 thousand, 400 thousand, 500 thousand dollars loans so it had to happen. But there will be a correction that’s going to happen.
Markets, you will see the prices will drop and the opportunity for guys like me, you, John and everybody else says, listen, is that if we do have some cash, some capital stacked, you will be able to get properties for a lot cheaper than they are right now.
Right now the market has really topped. Like I was literally selling properties way overpriced. I’m talking about people are paying like— usually where I’m selling deals, 60, 70 cents on the dollar, people were paying me 85 cents on the dollar, 90 cents on the dollar.
And so that cannot go on for long, things have to get back to normal. So there will definitely be some type of correction. I only think that it will be bad as the recession if like a war starts, like that will automatically tank it. If some type of war should happen and I know they’ve been talking about Korea and those other places and stuff.
So if that happens and I heard someone else talk about the school with everybody taking those loans with school for college.
Chris: Yeah, I heard that could have something to do with it, you know, because that is like, I heard like a billion or trillion dollars or something like that people owe. So those are the only things I think that will make it go into the recession type of crash. But other than that I think is just going to be a recycle just like the normal ones were before the recession.
John: Great, great observation. I can agree with that one too, you know what I mean? And again you want to be cautious but you don’t want to be paranoid because then it’ll mess up. One piece of advice I got was, just stack some cash as much as you can, don’t do any large real estate investments and just keep doing your thing.
And then with you, doing wholesaling that’s being in a perfect space because either way you come out on top because it’s not like you’re, you know, so, so.
Okay. So I got two more quick questions and then I got a fire around which is about four or five, like one-word answers. I don’t want to take too much of your time and I appreciate you taking time out of your day during this holiday season to talk with us here at Black Wallet. So what are some of your favorite online tools?
Chris: Favorite online tools, I would say I use that for my team to communicate. I use Voxee which is an app on my phone to communicate with my team through audio. I love Podio, which is a CRM that we use, as well, to communicate. We use Freedomsoft heavily with the real estate business which manages all of our leads and database of buyers and tracks our marketing campaigns. So those are some of my favorites that I will say that I love to use.
John: Got It. Perfect. Perfect. I’m learning a lot, definitely in this process. And I’ll send you some cool stuff after as well, but I’m going to definitely sign up for your online class that you have coming up and I’m going to talk about that in the last question coming up in a few. So I see you have beautiful young kids. What’s one thing you’d like them to learn from your work ethic?
Chris: Just to be persistent. If you’re going to do it, you have to be persistent. That’s what’s going to actually lead you to success.
John: Got It. I love it. I love it. Simple and to the point. All right, so Chris, we got the fire round. These are some quick, quick questions that I’m going to fire off to you. You got to answer them quick, just whatever comes to the top of your head and I’m going to get started. Let me know when you’re ready.
Chris:All right, I’m ready.
John:Alright, here we go. So number one, best entrepreneur movie? You have one movie every entrepreneur should watch.
Chris:But I will say, I got to do it fast, The Wolf of Wall Street.
John:That’s a great one, man. Leo was my favorite actor, so that’s definitely a classic. Okay. Best album ever?
Chris: Wow! Man. That’s hard. But I would say what comes to mind. Jay Z Blueprint
John:Jay Z blueprint. All right. Okay. And then your favorite entrepreneur?
Chris: Favorite entrepreneur. Russell Brunson.
John: Got It, got it. Founder of Virgin. Okay. So what’s one word to describe your work ethic? I think we kind of talked about this a little earlier.
Chris:One word describes my work ethic? Hustle.
John: Hustle. Okay. Okay. Alright. And if you had to start over from the beginning with everything you know right now, what’s the first thing you’d do?
Chris: First thing I would do is solve a problem. So whatever I could find someone that has an issue and I would solve that problem and that’s how you get paid.
John: Boom. Boom. I love it. Okay. And that was the last one. And then finally, Chris, I know you provide a ton of content and value to the community. Where can one find you online? And then two, what are some of your resources that you’d like to share that we could link up and people can get access to get into the real estate investing space?
Chris: Yeah, absolutely. So, definitely, I would tell people to connect with me on social media. I’m on Facebook, Esther Graham @Detroit Mogul, that’s my handle on most of all of my accounts. And far as resources, what I would say is I do have a podcast and we’re like 217 episodes in, actually, 219 episodes in at this particular time of this recording.
So you can connect with me at escapethenewbiezone.com. Again, that’s EscapeThe Newbie Zone Back Palace, my podcast. I have some other resources on there as well for free.
I do have a free book that I want to offer to everybody that’s listening. You just got to cover the shipping and handling and I’ll ship you my book at chrisfreebook.com and it’s going to show you how to really escape the newbie zone and the principles and the strategies that you need to have to get into wholesaling.
So just go to chrisfreebook.com, I’ll ship you a hard copy of it. Just cover the shipping and handling.
John:I’m about to buy it right now as soon as we get off this call. Chris, you know, I want to thank you again for taking the time out of your day to talk with us. You’re an amazing real estate investor and I’ve been learning a lot from you in the past eight months.
Me being a Newbie in this space and just being exciting and engaged in it. I’m going to make sure I sign up for your Webinar, thevirtualwholesaleclass.com. I want to make sure I keep following you, telling people about you. We’re going to share this everywhere and that’s it, man.
I wish you and the family, Happy Holidays. Happy New Year and I hope we can talk soon.