David: Welcome, welcome, welcome to the discount property investor podcast. I am your host David Dodge. My co-host Mike is in the field once again but that's a good problem for me to be having right? Regardless today, I have a special guest on the show. Her name is Tracy Royce, she is the Royce of real estate, I love it. 

Tracy: What's going on guys?

David: Welcome, welcome, welcome Tracy how are you today?

Tracy: I appreciate you man. I am doing fantastic, all things considered. Hanging in there, thriving, not looking forward to the hundred- and seven-degree temperature today but I'm doing great.

David: Wow, yeah that's crazy. So, Tracy is located in Phoenix, Arizona. Before we jumped on and hit the record button and went live, I was asking Tracy: I was like, how do you do deals in Phoenix like everybody and their brother is an investor there. Right?

Tracy: Yeah

David: And she said: you know, you just got to be persistent and I think that's a good lesson that we can all carry away from this message or this podcast today: is just persistence. I'm happy to have Tracy on the show today. I've been following Tracy on Instagram and if you guys aren't already following Tracy over on the IG, go check her out 'Royce of real estate' is her handle and she does big things, so I've just been kind of watching her and following her, and I love seeing some of the transformations that she is doing with her rehab. So, I am pleased to introduce Tracy. Tracy, how the hell are you today?

Tracy: Thanks man, I'm so excited to be here. I love how you call it: The Instagram, it's like 'The Facebook' you know. 

David: Hahaha that's right.

Tracy: We're all up in The social media. Yeah yeah, no I'm doing fantastic. I mean thing have been rocking and rolling you know with COVID happening and everything that's happening with that. Everyone's just asking the same questions like: how's this going to affect the market? you know it's a flipper house that's going to affect us as wholesalers. How is that adjusted their businesses, and right now things are still cranking. That's not to say that that's going to last forever but right now there really hasn't been a big change with how you know this epidemic is affecting Phoenix in and of itself for real estate market.

David: Got you. So, let's let's take a step back real quick and let's talk a little bit about how you gotten involved in real estate, how long you've been doing it, what are your core focuses? so those people that you know, aren't familiar with The Tracy Royce right? understand a little bit about her background, where she's coming from. So, we know that you are in Phoenix, how'd you get started? how long have you been doing it? where are you focused?

Tracy: Yeah yeah, thanks for asking. So, a lot of people, same with you David, I'm sure they ask: how do you get started in real estate investing? Well, mine was working behind the scenes for real estate investors for the better part of a decade, and what that looked like is I had started off as a loan officer, my heart was never in that niche I just- that was when loans were super easy to get and I had all these, just you know the types of loan where you don't have to prove anything and if you could fog a mirror, they'll give you a loan. Well, I never felt right about that and I just saw that that stuff was happening and one of my old landlords oddly enough had approached me, and he said: hey listen, if you're still doing some facet of real estate, I have about 25 properties, and he had a full-time job with a municipality, and he said: I need someone that I can trust to help me and if you want to come work for me as an assistant, I'll pay you xyz. So, I jumped at that opportunity and started working for him, was self-employed and started working for other investors doing the same thing. Well, fast forward for about 10 years, 10 years of doing that and I was working for one of the largest real estate investors in Phoenix at the time, right when the market was crashing, and short sales and pre-foreclosures were the predominant type of real estate. So, I got to witness the last recession from a standpoint of: how to thrive in that market without having to be exposed and just learning and learning and learning and learning and learning. Well, doing that for about a decade, I finally figured I cut my teeth and off, and for the last seven years I've been doing everything that I did for them for myself, but my background is in distressed real estate, creative financing, creative disposition, thinking outside the box. I do have my license, it's inactive but I've never really thrived to be an agent like a typical agent. So, in a nutshell, I'm a full-time investor that worked behind the scenes for other real estate investors and I really would say that that's a great way to get into the industry, is to go work at a title company or for related business or another real estate investor as you're learning to do this on your own. Not necessarily quitting your full-time job and jumping right into this and doing what the TV shows say you to do.

David: So, whenever you said that you were working for these investors or investor, what did that look like? Were you at a title company working for them or were you like, just on their team or- can you explain a little bit about what that looks like?

Tracy: Yeah. I was never the type to- it was always directly for that investor and that could do, that could be anything from doing their property management, helping systemize some of their processes and procedures, putting manuals in place, just doing things to help take enough off their plate so they can focus on income-generating activities or just taking the things off their plate that didn't make sense for them to do. So, doing that for a long time really help me implement that in my own business as well, but it was always just for the investors directly.

David:  You weren't doing any of your own investing. You were just working for them. How long do you do that for?

Tracy: 10 years. I mean, they would bring me in on deals and every once in a while if I would find my own lead, they would kind of coach me through it. So, it's not to say that I couldn't do my own, I just didn't. And then after you know, doing that for about a decade, I finally branched off. So, for those of you out there wondering how long it takes before you can quit your full-time job, you don't necessarily have to follow my timeline, you know, certainly a decade is a long time. But that being said, you know, I am ready and just, I feel educated and primed to really be able to teach and coach. Hopefully help other people what's about to happen but also take advantage- and I mean that in the most way empathetic that it can possibly sound, but really as a real estate investor, be able to pivot with this with this environment.

David: Got it. So, you did this for a decade helping other investors win. How long ago did you decide: okay, I want to be the investor. How long ago was that? 

Tracy: Uhh, let’s just call it about 7 years, at this point- middle of the year will be 7 years.

David: So, you've been really kinda full time for about 15-17 years in real estate but you've been doing it for yourself for 7. I love it, very very cool. So, guys, she said it and I'm going to repeat it. You know, it doesn't have to take 10 years to get into being a real estate investor. However, if you don't know what you're doing quite yet or you don't have the capital or the resources, or the knowledge, or the how to. You know, the best way to get involved is to go start working with or for somebody else, like a title company would be a great place to start. I love that. I think that is phenomenal advice. So up to speed here on how long you've been doing it. Now you have doing it full-time for yourself as the investor for about 7 years. What is your areas of focus? Now again, we know that you are in the Phoenix Market. I'm under the impression that you do all your investing there too, right?

Tracy: I do. My specialties are pre-foreclosures, distressed real estate. You know, distressed real estate as you know is sort of encompassing a lot of different flavors of channels of types of real estate. But the flavor is all distressed, so that can look like divorce, short sale, pre-foreclosure, foreclosure probate. It really just falls under that non-traditional real estate hub. So that's more or less what I specialize in and my business model has been to fix up properties- fix and flip properties, use chunks of those money- use chunks of that money to buy rentals and then create long-term wealth as I'm flipping properties. So, you know with fixing and flipping, and with wholesaling is you know, we're only as good as our last deal right? Like it's fun, we get to fix up houses.

David: Yeah. Fixing and flipping, and wholesaling is a job.

Tracy: It’s a job.

David: It doesn't create any passive residual, reoccurring, however you want to look at it, income. I absolutely love flipping properties. I absolutely love wholesaling properties but the end of the day, I don't even think I've heard of anybody referred to it this way but it's right on right? You are only as good as your last deal because you still got to get up the next day and get out there and hustle, and you know work leads to find motivated sellers to get that next deal.

Tracy: 100%

David: So, I love it. We align so perfectly with that. 

Tracy: Oh good.

David: So, you fix and flip and- do you do some wholesaling too? I'd imagine it's hard to not do wholesaling if you’re marketing to motivated sellers.

Tracy: Well, its- so the last few years, it hasn't really made sense to wholesale. It's not to say that I won't from time to time but that hasn't been my business model, because it in the ease of me making a phone call to get it sold to a wholesaler. I can use the same energy to put it on the market. Maybe change the locks, maybe not, maybe do a couple thousand dollars’ worth of work to whatever the house needs and just put it on the market and an investor, well, out-of-state investors or other investors will pay nearly retail. Whereas if I had to put it through a wholesaler, they're still needing a discount so they can sell it essentially to the same type of buyer. So that would be a method called 'wholetailing', where you're basically wholesaling it near retail price. So, for newer investors, if you're still in a really good market, you can certainly just throw it up on the market, get bids there, and let the highest bidder win essentially.

David: Now when you put these on the market- you had mentioned earlier an agent right or no? I can't remember.

Tracy: No, I have my license but now it's inactive. I used to list some of my own properties but just after talking to my attorneys, I just- I don't want as much liability and I'd rather have the agents get paid so I do not have my- my license is inactive at this point.

David: Got it. So, you have a different agent essentially help you get it listed. Are you listing these owner by contract?

Tracy: I'm sorry, what do you mean?

David: So that's actually a good question that I need to explain so I'm glad that you asked. So, in the St. Louis Market where I live, there's actually an option in our local MLS that will allow us to list the property as owner by contract.

Tracy: Oh, I've never heard of that.

David: [inaudible] maybe a little different. I'm not an agent but you know, I see that in there. So, when you are listing a property, are you buying it first and then listing it as the owner or are you listing it with your equitable interest in that property via contract?

Tracy: Yeah, so I always take properties down so I- you know, title is vested in one of my company-in one of my LLC's. However, I do think- with what you're saying, having an option and learning options in this environment could be a really good methodology to go to homeowners and say you know, listen John homeowner, the market's changing really rapidly and what my buyers are in the market for is changing rapidly as well. Can I get an option on your house to be able to market it to these people for you know x amount of days or weeks or months on your path? Now, I'm not an attorney, I'm not an agent, I'm not a broker so make sure that that abides by a local laws, that's my disclaimer. But you bringing that up makes me think that this could be a way if someone's getting their feet wet or if your wholesaler. Think about using an option.

David: Yeah, so we love the option contracts. Guys, if you are listening, you are watching, we actually have an option contract that we'll give you for free over at freewholesalecourse.com. 

Tracy: Nice, I just teed you right up for that brother haha.

David: You teed me up right up for that so if you guys are looking for an option agreement, go ahead on over to freewholesalecourse.com, we have regular purchase and sales, and options. I think the option agreement is one of the most underrated tools that a real estate investor can use. I take the transparency approach Tracy, I like to let the seller know as much as possible about me, my business, and how I plan on doing the deal because we do a lot of wholesaling and you know, when you're buying your buying, but when your wholesaling, your kind of promising somebody that you're going to buy it and then your accounting on somebody else. So, I like to just make it very transparent, let them know. That way if something does fall apart, they know that there was that possibility but I'm not going away and we're going to get it done and we're going to try again. With the option agreement guys, it's phenomenal because you're not required to buy, it just gives you the option to buy so I don't know if you're familiar with stocks but it’s very similar. You acquire the option to buy their property, but you're not required to, but with that agreement it gives you the equitable interest in the deal therefore you can then take it, you can shop it legally or- that contract to purchase legally via text message, via email or in some cases like in my market, you can actually list it on the MLS as owner via contract, so it is such a powerful tool.

Tracy: I love it.

David: I absolutely love it, very cool.

Tracy: Man, you just hit fire right there. It's worth notating that this conversation is better had in this environment. If we try to have that conversation six months ago, it’s like: hey seller I'm going to shop this for you. They would have laughed us out the front door because things were so stringent due to the rate of competition and how strong the sellers’ market is, but as the market is starting to shift you have to think more fluidly as an investor to say, what is changing and what solution to what options can- you know, no pun intended, but like,  what options can I bring to the table to offer different exit strategies for the seller? and an option is one of them, so the bigger takeaway of this is: what used to work a few weeks ago or few months ago is slowly shifting guys. So, you as a real estate investor, you have to think differently as well, especially if you've only ever been in a seller's market or like what you experienced in your local market the next 10 years. You've got to pivot; you can't be a one-trick pony.

David: That is such a good point, I love it. You can't be a one-trick pony, you gotta pivot. Right. So, the option agreement is one of the tools that's in my belt, has been in my belt for 5 years, but you are absolutely right. The last couple of weeks, we've really pulled that tool out and just started using the hell out of it, right. So, when and why would an option agreement be a good time to use it or like why, right? Let's just take a quick break and talk about that. So, I like to use the option agreement when there's not a ton of equity in the deal, right? It's a thin deal or it may just be a weird deal. Last but not least, it's probably- it could be a good deal, but it's not something that I want like I don't like to buy small properties. I don't buy strange properties. I don't even like buying properties that the rehab cost is going to be more than the purchase price. So those are a couple of the reasons that I personally would use an option agreement. So, number 1, let's just take a quick example on that and that was when there's little to no equity, right? Well, let's say that there was enough equity to sell that property and make a couple grand on that deal, but if I have to then go, you know, first buy that property, and pay those closing costs and those holding costs, and then wait to then sell it, it might not have as much juice, right? It might be-

Tracy: Or any, at that point.

David: Yes, exactly so you can use these option agreements. Now typically with the purchase and sale agreement, my partner always argues with me which is hilarious, but with the purchase and sale agreement, you typically have to opt out of that if you can't buy or you won’t- or you're not able to fulfill. Now, with all of our CYA clauses that we all have in our contracts, one could argue either way right? but the cool thing about the option agreement is there's no opting out because it's basically gives you the ability to buy, but you have to opt into that agreement. You basically have to say: I want to exercise my option, so I love the option agreement for that reason. You don't- if you forget about it or it doesn't work, you're not on the hook right? 

Tracy: Right.

David: The other thing about the option agreement and then I'll get back on track here but the last thing here that I love about option agreement is I usually when I get an option on a property. I don't ask for like 10 days, I don't ask for 15 days, I'm asking for like two to three months right?

Tracy: Mm. Okay.

David: And my option agreement is a non-exclusive agreement so again guys, go over to freewholesalecourse.com, you can get a copy of it for yourself. But it's non-exclusive so the way I present it to the seller is: hey you know, let's use a hypothetical scenario. They're asking 200 grand, they owe you know, 190. My offers 140,150 right. It's way below even what they owe, and they don't have any money to bring to the table. So, in this scenario, I could say: hey I can list this property either on market or off-market, I need an option to do it and if I'm able to get it sold for you, then it's going to be a win-win. I make a couple grand, you're going to get the property sold, but I'm going to need some time here and I typically asked for you know, two to three months, however, sir/ma'am, seller, if you find somebody else that's willing to buy it and I didn't bring them to the table here, you don't owe me a penny right? and all that I ask is that you keep me informed if somebody else comes along. I only get paid if I can produce a buyer that buys right. And when you explain it to the seller, it’s like, what do they have to lose? 

Tracy: What to lose, right?

David: What do they have to lose? They don't pay me anything, ever. I make the money whenever it sells, you know via the spread or even have the buyer pay me some sort of a fee right and call it a commission. I'm not an agent, so a fee right, but it is a phenomenal tool. So, option contracts, guys I think we beat that to death. We love them. They're amazing.

Tracy: It's pertinent.

David: They are amazing, yes. Tracy, I have to be honest. It's rare that I come across an investor that does marketing and is you know, getting properties, but doesn't wholesale. The fact that you are closing on these is awesome, but I also think that that might be due to the market that you're in. You guys have a pretty high level of competition so is that something that you kind of proposed to people? or you know, say in your sales process like: we're going to buy it, we're not shopping this you know, yeah, we're going to go sell it after the fact, that's what we investors do, but there's no chance of me not buying once I make an offer or give you a contract.

Tracy: Yeah it has been but that also has been shifting to with what I want to do or what I will be doing in this market to limit my exposure. So, one of the things I'm going to start implementing is seeing if the seller will keep their loan in place. So, if I am going to flip, much like you, our price points are so much different out here, but hahaha.

David: I got a little kitty in the way here.

Tracy: Hi there! That's adorable. But uh picking up properties that the rehab cost and timeline isn't phenomenal because although we haven't seen prices start to shift here downward. That's not to say that we can't be in a balanced market here in the next two, three, four months. So, I don't want to be in a position to where you know, my rehab done in four to six weeks and we're putting it on the market towards the end of summer and school starting back up and whatever might happen in queue four with everything that's going on. There's just a lot of uncertainty and that's not to say like, don't continue to move forward with business but how can I- she's so adorable.

David: She won't- she's persistent so we're just going to go with it.

Tracy: Her little fluffy tail is getting to me.

David: Yeah, we're just going to go with it, she just wants to sit on my lap. 

Tracy: Yeah, yeah why not?

David: So, you buy and sub too, it sounds like.

Tracy: Yeah, so that's part of what I'm shifting and how I'm approaching sellers. And again, that conversation might not have worked 6 weeks or 6 months ago, but as the market is shifting, it warrants- it at least proposing that to people like, listen I can give you this price but on the condition that you might need to stay home alone for the next 4 months or whatever the timeline is for me to be able to resell this.

David: That's a phenomenal strategy guys if you are rehabbing too, right? because you don't have to have the funds to purchase. You can take it over, you can get the funds from a private lender, your own money, a hard money lender, even a bank, to go rehab that property and typically the rehab you know, is going to be way less than the purchase price, not in all scenarios but typically, and it's going to basically make the barriers to entry.

into the flipping business that much easier. I love it.

Tracy: A lot of investors, I feel like that have been spoiled on what's happened the last decade. They're not going to be able to figure out or have the desire to try to pivot with the market because it seems too scary. So I think that sellers might have left options at this point when it comes to professional investors and then second by the fact that they have been primed to buy er- to have investors by their house now so all these ibuyers, Zillow, Instant offer, Purplebricks, all these other ibuyers, it constantly being advertised, you know, I know a lot of agents and investors were freaking out by it but you know, I wrote something in forum saying: guys., this is the next gen of real estate investing. You need to get on board and align yourself with that mentality and what you bring as a value-add or your business is going to implode. So, with them being out of the market temporarily because of everything that's happening with the epidemic. I think it gives us as individual investors more of an advantage plus people, you know, maybe a decade ago you show up at the door, you know, door knocking and saying: hey you're in pre-foreclosure, I want to buy your house, it was a lot different than it is now. People are aware of what real estate investors do, what they do, the money that they make, what they're looking to do with the property so they're just going to be a lot of advantage if you educate yourself and pivot with the market, there's going to be a lot of opportunity coming up.

David: Absolutely agree. Love that, love that. So other than buying sub too, are you doing any other kind of, type of creative financing, are you doing any type of lease options on the front side or the back side or anything along those lines? or is it typically just sellers financing in place, you buy it, you fix it up and then you list and sell it?

Tracy: So, I'm going into- it's not to say I won't still fix and flip, you know, that's part of what I do, it's in my blood much like you, I love doing it, it has to make sense moving forward. But also, I'm-

David: The wholetail

Tracy: The wholetail but I'm also moving into more of a cash flow mentality, you know, I stopped buying rentals the last year or so just because the prices kept escalating and being able to cash flow on those, I just figured kind of wait it out and wait for something like this so I'm going back into cash flow, cash flow, cash flow so one of the things that I'll be doing is not only sub too but working with private investors at a one-off to be able to hold properties and then lease option them out. I don't like purchasing on lease option, I'd rather the seller have their loans stay in place and then make, you know, my dividend if you will, from the difference of what the mortgage payment is and the- 

David: So, are you doing like a sandwich lease option or are you buying it and lease option it out? I guess you probably could right? and/or keep their financing in place and then lease option it out as well.

Tracy: Exactly

David: So, I guess you could- You could do it multiple ways there.

Tracy: Exactly, so that'll be the name of the game for me the next, what I'm figuring the next three years, two to three years is basically buying creatively, having equitable interest in the property and then renting out with an option to purchase later. So, it'll be a rental contract- I don't want to get into all the semantics but-

David: Yeah no no, I get it out. One of my good buddies Joe McCall, I don't know if you've ever heard of Joe or not, but he does a lot of the lease options and one thing that's really creative that he does is the sandwich lease option. So sometimes he won't even buy the property, I think more times than not, he will sign a lease with them but a long-term lease, a five-year lease, 3-year, 5-year, maybe even 10-year lease. Then he will then lease option it out, but he'll have the option as well so if they ever decide to buy, he'd just execute his buy and just makes the money in the middle and he gets paid in three or four different ways. It's a very very very cool strategy, love Joe, love that strategy.

Tracy: Yeah, Joe's the man and his approach to this, you know, I think it's just going to be more poignant with everything that's going on cuz he specializes in like prettier houses and really just packaging them and yeah his buying is-

David: Joe and I gotta drop Gavin in there too. Gavin's my dude, if you're listening or watching Gavin, I don't- I'm not trying to leave you out buddy. Joe and Gavin, those guys are the best, I love him.

Tracy: There you go.

David: But that is very true, it gives you more options, lots of ways to get paid. You don't have to purchase the properties, you can, you can even buy them sub too, right. And do it through a title company and keep their name on the loan, there's so many different ways. So, Tracy, it seems like you have found yourself a niche of doing wholetailing, but you're also kind of pivoting into doing more of the cash flow deals. I love it, my partners and I don't do a ton of wholetailing, we do a little here and there.

Tracy: Well, I will say, so wholetailing really isn’t my main thing, basically it's fixing and flipping, and then wholetailing is maybe like a very very very small portion of that. So mostly fix and flipping

David: Got it. Okay, cool, very cool.

Tracy: So probably the same as you David where it's like: you'll do it from time to time but that's not like your main exit strategy.

David: Got it, got it. So, fixing and flipping is your main strategy, the wholetailing is just a tool in the belt via an option, maybe, maybe not, very cool and then you're moving over into the cash flow game where you're going to be doing lease options on the exit. I think it's phenomenal and very cool that you have zeroed in that niche, I mean you know, you have a good plan and a lot of people, they have all these goals, but they have no plan. It’s just a dream to them right but you put together a plan, you said this is what I'm going to focus on and we're going to get this done. Very very cool, I absolutely love it. So, let's talk fixing and flipping before we go too long, we got about 10 more minutes. Let’s talk fixing and flipping, I want to hear, you know, some of the strategies that you're using, what you're looking for. Now, you are in the Phoenix Market, which you know, not all the listeners and viewers are going to know a whole lot about that so maybe you can tell us a little bit about that market as well. But what are you looking for? What do you typically try to make on a deal and how are you going about it?

Tracy: Yeah so I more or less, and this came about inadvertently, specialize in entry-level and medium price homes, but making them look more luxurious. So what that would look like is_

David: I love that cuz your photos on Instagram have like the coolest transformations like houses that- like I'm like looking at these before pictures and I'm like, is this even the same property? like holy shit! You made this thing look amazing!

Tracy: Thanks man, and these houses are like 200 thousand to 250, they're all like under 300 thousand but it's fun for me David. So its fun for me to do extra material sourcing and especially when there's a smaller footprint, I can afford higher quality materials.

David: That's a great point. It's easier to make it look really nice when it's small right?

Tracy: Totally, and still within the comps obviously, you don't want to go overboard, it's not my- you know, I'm not making my dream- my personal house, I'm not falling in love with them to move in but that still to say like, you know, people have become spoiled with HGTV and these shows but again that's a good way because it gives me an outlet to do more design on smaller footprint properties that are in an entry-level and medium price point and that as a combination is really just explosive for people getting multiple offers typically over list price in the shortest amount of time. His tail haha

David: I know right, she won't leave me alone, she's hungry I gotta feed her

Tracy: It's like the poof at the end, it’s so cute, it's like a little muppet. But that has been a combination and a methodology that has worked really well for me so you know, for those of you that are out there, if you're wanting to get into fix and flipping, one of the things that I would recommend is getting into entry-level pricing because affordable housing is really hard to come by, and so to your point about Phoenix Market, it is phenomenally competitive out here and with things shifting, you know, just honing in on what are you great at? What are you good at? What can you outsource but then turning and burning so sometimes if it takes me a little bit longer on a rehab on it, you know, 2,000 dollar loan, it's not that big of a deal. You know, me taking extra time to material source, get out all my punch list items done, bring your A-game and when that bad boy goes on market, just open the floodgates and get it sold. So if it takes me longer on the front end, I make it up on the back end and I'm typically looking to pull down at least 10% of the full market value and net profit.

David: I love it 10% of the whole market value and net profit. You're doing houses in the 2 to 350 range I'd imagine something along those lines. Again, very very good tips and tricks here guys, check this out. You know, you can afford to do higher materials in these smaller houses because you're basically calculating this by cost per foot right? So if the total square footage is smaller, you have the ability to spend a little bit more and make your money go a little farther on those materials. I love it, that is an amazing strategy. Let's talk a little more about how you were marketing. How are you finding these deals? Now, you had mentioned that you're an agent but it's inactive, and you've been doing this 7 years full time for yourself but really like 17. So, you'd- I would think you know all the good ways to go about marketing and I'm curious to hear what you are doing currently to find these sellers.

Tracy: Yeah so direct mail was a huge resource for me, I hit that hard for a long time so that was a large majority of where I would get my deals. I was really bad at asking for referrals and I will say that I have flipped the switch on how I'm getting my deals at this point because especially with just having been on my own for this long and the community here. I personally am seeing more of an advantage to use the network that we all have with each other here because another thing about you know, it being so competitive here in the Phoenix market is there's a reason why it's competitive. There's a lot to go around, there's enough to go around and a lot of us, like we're all friends here.

David: Yeah, of course

Tracy: You know, so it's really become more collaboration over competition and especially for those of us that have been around for a long time, it's like: homie if you're still here, like you're in the game.

David: Hahaha

Tracy: You are in it to win it so let's do some deals together.

David: Looking at Google, the Phoenix populations 1.6 million, so that means you're talking about 700,000 houses probably right?

Tracy: There's a lot yeah. 

David: 500,000 houses let's say. So, I mean yeah, there is enough to go around and I was kidding earlier when I said: man, how do you find a deal that's like, everybody's in Phoenix, everybody's doing it but at the end of the day like, you could triple the number of investors and they're still going to be deals out there for everybody, right. There is an incredibly large amount of people that live in that market. My market I think is maybe you know, it's about 1.2 if you consider, you know, 20-mile radius or whatnot, so we're not that much smaller than you guys but are temperatures are a whole lot less, that's for sure.

Tracy: I think our- Yeah and that's just Phoenix I mean, the Phoenix Metro Market is like millions and millions of people.

David: Oh wow.

Tracy: Yeah, so there's a lot of homes here, but one thing I will say too that I hope helps your audience members David, is one of the reasons why I was able to-

David: 4.8. You were right, it's triple. Four point eight million, I didn't realize it was that big.

Tracy: There's a lot of us, there's a lot of us out here. So, when you're in a really competitive market, you're going to- you're sellers are going to have a lot of people coming to their door, mailing them, texting them, robo-calling them, whatever the case is, especially if they're on some sort of list that has you know, public exposure just to the fact that they're going through divorce or getting a foreclosure or something like that. What I was able to- not use, that's not the right word but how I was able to thrive in such a competitive market is that I really personalize a lot of things, my old website was very personal, my mailings were very personal, my messaging was very personal. When I showed up- if someone needed to talk about their life situation for 30 to 45 minutes, you know what I did? ask some questions and be quiet, and listen to them because a lot of times, the house is just a fragment of the challenges that they're having and you being the solution to that and just being empathetic and-

David:  I love this approach. Guys so, I got to interrupt, so what Tracy is saying here is that the house isn't the problem most of the time and I have to agree 100%. Now, sometimes the house is the problem, and those are the best deals right? But most of the time, the house isn't the underlying problem right. It's something else but selling the house will help them get some money or something off of their back, relieve stress, whatever it might be that then helps them- whoop hitting my mic here- that then helps them solve another problem that is the underlying problem. 

Tracy: Yeah

David: So, I 100% agree with you and I think that that is phenomenal. You have to understand that and have that mindset. That when you're going out and you're talking to these motivated sellers, that the house isn't the problem, it's actually going to be your problem once you buy it, but their problem isn't necessarily- not always but necessarily that house, it's something else and that house is just one domino that we can help them with to solve other problems in their life. I love it. So, you did some direct mail marketing in the past, are you doing it still?

Tracy: I've essentially cut a lot of my marketing off. I mean, I'm really connecting more, especially now, wanting to connect with agents and other investors and people in our market place because especially now David, I think that there's a big draw for how the hell do we pivot with everything that's going on and I'm like: oh I have some resource that I'd like to share with you all and so if I can help with that, I'd rather attract deals than go out and grind for them every day, you know.

David: I love that approach right. So, I've been in the business full-time five years, going on six. I've been in real estate for 15, so similar to you right? Very similar, I wasn't working for an investor for the first 10, but I was buying Reynolds, maybe one a year, one every other year, acquired 8 in the first 10 years.

Tracy: Oh, that's awesome.

David: I was paying retail, right. I didn't know anything about discount property investments, hence the name of my podcast, right? I didn't know about motivated sellers.

I knew there was people that would be motivated to sell but I didn't realize that there was as many of them out there.

Tracy: Oh wow.

David: By becoming an investor and offering- I mean, all we as real estate investors, the big picture is we provide convenience in exchange for a discount. That's it.

Tracy: Pretty much.

David: The 10,000-foot view. Another way to look at it, in the wholesaler niche is that we are liquidity makers. We provide liquidity to the marketplace.

Tracy: And how important is that right now?

David: And right now, that is going- there is going to be a wave. A massive wave of motivated sellers needing to get rid of properties in the next, I don't know I'd go as far as 18 months out from now, maybe more.

Tracy: So, I would say, to that point and I really want to stress this to your viewers. Couple different things, if you are brand-new, don't be afraid to be transparent with sellers. They want to know: does this guy, this gal is showing up, right?

David: Love the transparency approach.

Tracy: Yeah and there's something to be said about: that's a really good question, no one's asked me that before but guess what? I'm going to find out for you and yes, I'm looking to make money on this or I'm going to bring another investor. Sellers have high bullshit modes.

David: Meters. Yeah, yup.

Tracy: Meters,, thank you. And when I was going to people's properties and listening to them and talking with them. Yeah, I had been in the business for a long time so I can couple that with experience, but for those of your investors that are beginners and they're like: well, how do I do this? because it seems like it's shifting so how do I get into real estate investing? Hear as much as you can but as people are talking to you, listen to that, be transparent and be a resource, and just make a connection with them.

David: Make a connection, make a friend. Absolutely, so whenever I'm on a phone with sellers, I think it's I think it's funny cuz I'm like overly transparent. I told him straight up: Hi, this is Dave, or if I'm calling out: Hi, my name is Dave, I'm with House Sold Easy, that's my company name. I'm an investor, I don't pay retail however, I can make it really really easy to sell your property. Like, I tell them that, I'm an investor, I don't pay retail and I do this for multiple reasons Tracy. One is I don't want to be chasing leads that suck if they're not willing to give me a discount. It doesn't have to be massive, right just at least a slight discount, I'm not the guy for you. I can't help you, you know, so let's just, let's move on but also it lets them know that you know, if they are willing to give me a discount in exchange, I can make their life incredibly easy. I can offer them a level of convenience, so can you that is above and beyond what anybody else can offer them right now, right. So that's that's all we have is investors, you know, convenience for a discount. And at the end of the day, there's really only like three things that we are offering them that makes up that convenient. So, what is that? Well, it's cash, it's quick and it's as is. That's it, I mean it’s that incredibly simple. People try to overcomplicate real estate investing and at the end of the day if you come across a motivated seller, they're going to fall into one of those three categories. They need to sell it quick, they don't want to make any repairs or updates or anything, so as is or they don't want to clean it out if it's full of shit, they want to leave it, right. So quick, as is, and of course being able to pay cash help speed things up, that also kind of falls into the quick category.

Tracy: Yeah

David: Let’s take a second and look at you know, if somebody wanted to go list their home, you know the time frame in which it would take to close. So, you know, could they sell it first in the market? sure, but even if they did which is very unlikely, especially if it's got a bunch of problems, right? It's still going to be 30 to 45 days to close and that's if it sells day one, which is very unlikely.

Tracy: Right

David: So, typically you're looking at two, three, maybe four months to sell a property through the traditional brokerage route and if the property needs a ton of work, it could take double that.

Tracy: And especially now, even if you can show it.

David: Yes, exactly. But as an investor, I might- I come in and say: yeah, I can close the deal on 7 days, but I'mma need a huge discount. But if you want to give me, you know, 15 or 20 days or even a month, I won't need as much of a discount, we can get this done and a 30-day close is extremely fast if you are not familiar with the alternative approach. Go get an agent, the thing about an agent and I'm not saying nothing negative about agents, we need agents, most people don't know what they're doing, right? But the thing about an agent is they are guaranteeing you a sale. All they are doing is saying yeah, I think we can sell it at this price, let’s put it up and see what happens. And that's just- that's the only tool that they have. 

Tracy: Well, coupled with the fact that especially now, that if they are saying: ok let’s- they are looking at the top line, what is the full market value? What we would do typically as investors, I'm like, I want to pull a title report, I want to get your payoffs, we're looking at leans, we're getting a full canvas so that way, before we go to close, there aren't surprises. If those surprises come up, if there- someone's boughten the last few years and there's no equity, what is an agent really going to do for them other than oh, I don't know, you know typically at least 10% percent of the sales price and closing cost. I don't have 10% equity, now what?

David: Now what? Now, we're going to list it overpriced so I'm not making promises that- I can't really- can't keep them to begin with. It's all a guess, but yeah, it makes it even more difficult. I love that.

Tracy: So, for the agents that are watching, cuz a lot of times, I feel like people get their licenses to become real estate investors, they're like: what do I do with this piece of paper? how do I invest? you know. So, if you're an agent watching David's podcast, what I would say is: look for the leads that sound like they don't have equity and connect with people like David in your market that don't- that do know how to do creative financing because you still can get paid on these leads. They might look like crap right now, but just think outside the box because you're going to see more and more and more of them so start to network with investors, go to local RIA's, go to meet ups, watch podcasts like this, reach out on Instagram. Connection is going to be the next gen of real estate investing.

David: Yeah so you know what, I was going to say something earlier and I got sidetracked, I have a bad habit of doing that, if you haven't noticed that.

Tracy: Like, cats walking through and-

David: Hahaha, but what I was going to say earlier, you know is I've been doing this full-time for 5 years and when I started, I didn't have any referrals. Like, that didn't exist because nobody knew who I was, but now that I've built up a, you know, a decent amount of networking, you know friends, a community, I guess you would call it. We'd probably do 25 to 35% somewhere call it a third of our deals are from agents or other wholesalers that know what we're looking for.

Tracy: That's fantastic.

David: So, we still have a marketing budget, maybe call it five grand give or take a month. But a third of our deals are coming in at this point from our networks.

Tracy: That's huge.

David: So, I think the lesson here is you know, marketing is obviously the place to start right. If you have no network or no deals, you got to start marketing. Period. Right, but as you start marketing and as you start building up your reputation, and the number of deals, people will start to take notice and they'll be like: damn, who's this Tracy Royce on Instagram that's doing these really cool things? I got to get her on my show right? Perfect example, perfect example. So, they're going to see that you know, that you're doing big things and their going to call you and they're going to say: hey, I got this deal, or I have a house that I need to sell, are you interested? Right and that's a free lead, right? So, you don't really have to have a crazy high marketing budget to do deals.

Tracy: And with that too, if you're looking for referrals, cuz a lot of people wanna you know, if you're looking to get into real estate but save money on marketing like you're talking about, a big thing with referrals is educate and entice, educate and entice, educate and entice. So, give a lot of value and way of education, I just did this deal, this is what it looked like, this is what we bought it for, this is how we're going to sell it. But also entice them, I can pay you a $10,000 referral fee, if that's in the deal I want you to make as much money as possible. I'm not going to cut you out of the deal, some people will, I hate to say that. I want you to send me more deals, I want us to be homies, I want us to do deals together.

David: I love your mindset. Tracy, thank you so much for coming on the show. I want to wrap up before we get too long.

Tracy: Yeah man, cool

David: Guys again, if you are not familiar with Tracy Royce- R O Y C E, go check her out Instagram: Royce of real estate, she's doing big things out of Phoenix. You don't have to have a crazy marketing budget to do deals, she's proven that and there's lots of things you can do creatively to allow yourself to either get in and position yourself into a deal or to do more deals.

Tracy: Absolutely

David: The option is one of them, I absolutely love it. Tracy let's get- let's leave the audience, the listeners, the viewers with one last piece of advice. If they are new to real estate investing, right, and they want to get involved, what can they do? What should be their first step that they should take to get to start getting in into this this game?

Tracy: Think of it from a perspective of how can I give? How can I help? Not how do I get a deal funded? Where are the deals coming from? Start talking to people, everyone is feeling the effects of what's happening in the economy right now. People want to connect, and people want to talk and people want answers, even if you don't have all of them, come from a go givers perspective, be a resource, connect with people like David in your market, get leads, connect with investors, lather, rinse, repeat and get paid.

David: That's right guys, you don't have to be an expert at sales. Like, I'm working on building a sales course out right now but I look at myself as like being terrible at sales, but I don't approach it as a sale, instead I approach it like: hey this person has a problem, a) I need to make a friend and build trust and b) how do I solve their problem? If I don't have the answer, I'm going to tell them: I don't know but I'm going to learn, I'm going to figure out and I'm going to help you in the process. So, guys, I absolutely love it Tracy do you have a website? any type of course or coaching program that we can point the listeners and viewers to if they wanted more information about you. Obviously- oh you do Royceofrealestate.com looking on your IG now. Obviously check her out on the IG, I'mma drop that the- the IG hahaha.

Tracy: Yeah hahaha I'm all about the The Facebook. 

David: Yeah go check her out on Royceofrealestate.com, that's her website. What's that all about? I'm going to click on it here while you’re telling them about it.

Tracy: Yeah man, I just relaunched that so there's not a lot of content, but I'll tell you what, May, I have made the mental decision to go into just a content- a stream of content because I've typically been so busy on job sites and everything else going on in my business that I get to IG but I don't do a lot on my website, but now I'm going to be pushing a ton of content.

David: It looks really good to me.

Tracy: Thanks! I just need to educate- put more education on there so if-

David: Love the sidebar, with the social media and whatnot, this is cool. Yeah guys check it out Royceofrealestate.com, you can learn, connect with Tracy. She's got all kinds of good tips and tricks. Hey Tracy, thanks again for coming on the show. I'm honored to have you, I'm grateful for your time and we're going to have to bring you back on the show soon. You are jam-packed with gold nuggets. Again, I want to thank you so much. Any parting words for the audience?

Tracy: No, I just- you know, I'm excited to be here and I think that there's going to be a lot of people that need our help so for those of you that are wanting to get into real estate investing, those of you that have been doing it for a while. It's time to retool, so connect with investors like me and David, you know, we're going to have some fun still fixing and flipping houses, but guys there's gonna be massive opportunity so don't let fear get the best of you, think forward and let's all do this together, #buildmoretogether.

David: Build more together, I love it. Guys, you can do this, just take action alright. Remember we make our money when we buy, we get paid when we sell. Thanks for listening guys! Signing off.