Real Estate Nerds 17: Best Deals

Making the Deal Work for You

Darrin Gross

Expert Insurance Advisor

Listen to the Podcast Here:

Welcome back to the Real Estate Nerds Podcast. On today’s Best Deals episode, our host, real estate attorney Scott Smith welcomes residential and commercial real estate investor Darrin Gross. The pair of investors discuss Darrin’s first deal, which also happened to be one of his best. Darrin has since established a healthy portfolio of properties in no small part because of his ability to negotiate and identify the needs and problems of sellers. After all, a seller’s problem is an investor’s opportunity. Tune in to hear the full conversation and get some tips on improving your own real estate deals.

Darrin Gross and His Best Deal

Scott and Darrin talk a bit about Darrin’s background, entry into the world of real estate investing, and the worn-down duplex that started it all.

[1:00] Darrin is an insurance broker by day, and his work first exposed him to real estate investing.

[3:00] Darrin’s first property was an atypical duplex that was fairly rundown. Within seven months, Darrin had a second property and was earning close to half of his ordinary income.

[5:00] Scott asks Darrin about how he formed his team. In his early career, his team was disorganized.At first, he had only a property manager in place. His lender was also his seller, and he had another person helping with maintenance.

[7:00] Darrin’s earliest motivation for entering real estate was straight forward and modest: he wanted a new car. He also observed friends having success in passive investments, and that drove him to get involved.

[8:30] “The important thing about this property is that it’s the one that got me going.” The closing, like the property itself, was unconventional. The fact that his seller was carrying the note meant he bypassed certain typical pieces of the real estate buying process, like securing financing and inspections.

[10:00] Darrin describes how he got creative with this property. His essentially flipped the property several months later and was able to help a friend who needed $10,000 for another investment. Darrin was able to solve this problem with a line of credit he had, and crunched the numbers himself. He had an early realization:  “You can make the deal work for you. It’s not always about what somebody is asking.”

Darrin Gross’s Dealmaking: Negotiations and Motivation

Scott and Darrin dive into some of the details about what Darrin’s experiences have taught him about making good deals. The two investors talk about negotiation strategies and ways to gauge and exploit the motivations of a seller.

[12:00] Darrin also made some early observations about negotiations: “If you start high you can’t work your way low. If you start low, you can work your way up.” He tends to run the numbers first to find what works best for him, then make an offer that may interest the other party. He doesn’t tend to worry about offending the other party or catering to exactly what they ask for, but rather what number he can justify.

[13:30] Scott and Darrin briefly discuss the roles and motivations of brokers. Darrin believes brokers are beholden to sellers to get as much as they can for a property. Scott makes the point that quick sales and commissions for themselves are a big part of their job. Darrin agrees, but points out that.

[15:00] Darrin points out approaching with not just an offer, but a lender and pre-approval letter, can go a long way with closing with a seller.

[16:00] Darrin’s best deal involved a highly motivated seller. He knows from experience this played a role in his success: “You have to have a motivated seller if you want to get a good deal.”

[16:45] In this case, the motivation was easy to detect–the seller needed $10,000 cash.

[17:34] Scott asks what information can be used to detect how motivated a seller is. On top of asking and looking at what degree a seller is willing to negotiate, Darrin advises looking at circumstances that might be a problem for the seller, but an opportunity for the investor.

[19:00] Darrin advises that investors run their own numbers as part of due diligence.

[20:00] Knowing a seller’s reasons for selling gives investors an opportunity to identify circumstances that can later be used in negotiation. With Darrin’s experience buying distressed properties, finding more information can lead to unique opportunities for a better deal.

The Takeaway: Get in the Game to Win It

Scott and Darrin close the show by discussing the major lesson listeners can learn from this deal. For Darrin, the important lesson he learned was that he had to just dive in to real estate to enjoy success in it.

[22:50] Scott asks Darrin what key takeaway listeners can take from his story. For Darrin, the answer is simple: “You’ve got to get in the game. If you’re not playing, you can’t win the game.” If he hadn’t gotten in on his first deal, he wouldn’t have his current success.

[24:00]  The value in this deal, which Darrin refers to as his “accidental flip” for how he was able to leverage quickly to another buyer, is largely that it became a springboard: “That first property is what propelled and set me up to buy additional properties.” Scott agrees that the benefits that come your way aren’t the ones you expect.

[26:00] Darrin now makes regular monthly income from passive investment, and has also seized on real estate as an opportunity to pass on wealth to his children.

Connect with Darrin Gross

Connect with Darrin Gross by emailing him at [email protected] or calling him directly at (503) 504-7619. He is also active on BiggerPockets, the largest social network for real estate investors. To learn more about Darrin’s current business and access some of Darrin’s free educational resources on commercial real estate investing, visit CommercialRealEstateProNetwork.com. If you want to add even more great podcasts to your listening library, you can access Darrin’s podcasts here. Darrin is happy to discuss real estate and insurance with fellow investors. Don’t be shy–reach out if Darrin can help you.

Listener Resources

Thank you for joining us on today’s episode of the Real Estate Nerds Podcast.

For even more free educational resources on real estate investing and the law, check out the Royal Legal Solutions blog. You can also reach our host Scott Smith directly, connect with him on LinkedIn, subscribe to the Royal Legal Solutions YouTube channel, or join our investor community on Facebook.

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Hosted by Scott Smith, Lead Attorney and Founder of Royal Legal Solutions. Schedule your personal consultation now. If you have questions about our content or suggestions for future episodes or guests, reach our podcast team at [email protected].