"How to Use Opportunism and Strict Criteria to Find Great Deals"
Real Estate Investing Expert
Episode 33: "Best Deals"
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Welcome back to The Real Estate Nerds Podcast! On today’s episode, investor Scott Price joins real estate attorney Scott Smith to talk about the details of the strategy that keeps him on top. The pair of investors also analyze one of Scott Price’s all-time best deals. Tune in to hear the full story.
Scott Price: The Opportunistic Investor and His Strategy
Scott Price sits down with Scott Smith to discuss his early life and real estate career. Scott Price also shares what he looks for in a deal, what due diligence looks like in the auction context, and how he keeps himself accountable to his own criteria for good deals.
[1:00] Scott Price has worked traditional W2 jobs for most of his life while investing part-time for the last 15 years. He made the transition into full-time investing last year. Scott and his wife have collected a portfolio of multi-family, single-family, and office rentals over the years. Scott explains,“We’re opportunistic. We don’t just jump in on one asset class. We jump in on anything that might be a good deal.”
[3:24] Scott Smith asks Scott Price for a brief overview of the Best Deal he is here to discuss today. Scott Price chose to share a deal that highlights the use of leverage. He bought a 2-building apartment complex in an online auction and used creative financing (and re-financing) to turn this one property into multiple assets for his portfolio. This one property turned into three cashflowing properties.
[5:20] Scott Smith asks our guest about his background in these types of properties and what made him feel comfortable purchasing property online. He also asks what due diligence looks like under these sight-unseen scenarios. Scott Price has made such purchases three times. Scott Price shares his strategies for evaluating these types of properties, as well as a couple of anecdotes about how he has made these purchases.
[7:40] Scott tends to bid on many properties with the understanding that he may have to lose the earnest money if the property can’t feasibly be fixed or used for rental purposes. Because the property he’s discussing today was a foreclosure, he hit some additional bumps in the road. Risk is simply part of this method of purchasing.
[8:30] “I paid $295,000 but later learned it was in the $800,000-900,000 range. Even if I had just sold it for $400,000, I could have made a profit,” Scott Price explains.
[9:25] Scott shares a bit about his strategy for finding deals and risk mitigation: “I specialize in tertiary markets–small towns. A lot of investors don’t even look there.” He goes on to explain how he examines these properties, from inspections to the quality of the tenants. He tends to do a lot of his own footwork.
[11:50] Scott Smith asks if Scott Price has ever actually tracked the amount of time he spends on due diligence. Scott tends to zero in on a particular town and carry a list of criteria to narrow down his options. He also deploys his network to his advantage when checking out properties.
[14:30] Scott Price describes how he and his wife have automated their criteria and developed checklist systems that account for everything from comps to taxes. They start with high-level concerns, then work out the smaller details later in the process.
[16:15] Scott Smith asks where investors can learn these bits of knowledge that Scott Price has gained through experience. Scott Price points out: “One of the best sources to learn about these processes would be places such as Meet-ups.” He also praises podcasts, books, and MasterMind groups for being excellent resources on these subjects. He also points to the value of seminars. Tune in to hear who Scott’s favorite real estate guru is and why.
Scott Price’s Best Deal: Good Luck at an Auction
The two investors refocus on Scott Price’s Best Deal.
[18:00] Scott Smith recaps the early indicators that this was a good deal and asks about the “rehab phase” that follows auction. Scott Price shares that “I basically did my inspection after purchase, which of course is the opposite way than you want to do it. But that’s the way it works at auctions.”
[19:10] He explains that this is not always the case, but it was for the type of auction he used.
[20:10] Scott Price elaborates further: “I take really good care of my properties, because I’m generally a buy-and-hold investor.” For this reason, and for the sake of the tenants, he does his best to keep his properties in excellent shape. He credits creative financing with giving him the financial buffer to hire professionals and address unexpected issues.
[21:30] When asked how he vets contractors, Scott Price replies: “I’ll talk to the brokers, property managers, and investors in that specific market. And I’ll look for the same names coming up.”
[23:00] Scott Smith highlights that Scott Price must do a high degree of planning to execute his purchases.
The Takeaway: Dream Bigger Than Real Estate For True Success
Scott Smith and Scott Price conclude the show with the key lessons listeners can take away from Jason’s experience.
[23:30] Scott Smith points out that listeners can learn from Scott Price’s meticulous, data-driven, criteria-based approach to selecting and evaluating rental properties. Scott Price adds that his checklist approach also allows him greater flexibility: “It opens up the opportunities for higher returns and better deals. We’re not constrained by where we can drive to in 20 minutes.”
[26:15] Scott Price shares his own lesson with our listeners: “The most important thing is a vision of what I wanted to do in life.” He goes on to describe his family’s use of vision boards, and how real estate is a vehicle to pursuing these greater passions rather than an end in itself. “Eventually, you’ll be successful in real estate because you had a bigger vision.”
[27:35] Scott Smith concurs and shares some of his own personal moments of introspection about purpose.
Connect with Scott Price
Connect with Scott Price through his website, Bonvolo.com. You can locate his email and personal phone number on the site. He’s most interested in connecting with others who are actively deal-hunting or have an interest in tertiary markets. He is also open to just speaking to anyone who has questions about what he does or how to succeed in real estate.
Thank you for joining us on today’s episode of the Real Estate Nerds Podcast.
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About Scott Price
Scott Price is half of the husband and wife team leading Bonvolo Real Estate Investments.
Alongside his wife Karen, he intentionally set up a model currently with no direct employees and relying on outsourcing strong team member roles. The couple created a Vision Board and plan together. Meet and work on daily goals that fit into a bigger life picture, with real estate as their primary source of income and wealth generation.
Scott has been investing for 14 years, gradually acquiring more properties while also working full-time W-2 team & program management roles at tech companies. Within the last year, he has transitioned into full-time real estate investing to enjoy its benefits. Scott worked as a real estate broker for 3 years to immerse himself in world of real estate, allowing him to set and achieve his long-term real estate investing goals.
Scott Price currently owns all current properties himself without partners. He has developed an independent base and is focusing on growing the business further, looking forward to incorporating partners and syndications in near future. Scott has used creative financing, including 401(k), cash-out refinancing, and rolling all profits forward to grow his personal portfolio.
Scott is opportunistic for the best deals across a variety of asset classes.He currently owns multi-family, single-family rentals, office and retail space, medical offices, and raw land. He also diversified recent sale profits into partnering on other’s deals via hard money lending. To learn more about Scott’s experience and latest activiites, check out his work on BIggerPockets or connect with him on LinkedIn.
When making business decisions that affect your long-term goals, like what types of investments to make with your retirement dollars and which vehicles to use, it really is best to be aware of all of your options. We frequently talk about the Solo 401(k) and Self-Directed IRA as tools for funding your retirement. But what about life insurance? And what about the stock market? What if we told you there is a tool that allows to to reap some benefits of both? It’s called Indexed Universal Life Insurance–and some investors have found it a useful addition to their retirement plans.
What Is Indexed Universal Life Insurance?
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How much money do policyholders stand to make? Historically, returns run between 5-9%. The S&P Index has actually returned at 9-11%, but the upside limit on UILs stems from the account’s cap rate. For this reason, many advisors argue that the UIL can make a wise addition to a retirement or estate plan once more traditional and self-directed accounts are maxed out.
Tax Benefits of Indexed Universal Life Insurance (IUL) Plans
There are three key tax benefits of IULs. First, you may pay into the policy with pre-tax or after-tax funds. Withdrawals from the policy may be made tax-free if you are under 59 1/2. Such withdrawals are regarded as loans, with your death benefit serving as collateral. Any funds paid out to the beneficiary are also tax-free, including normal benefits upon your passing. This is true regardless of their value.
Ask the Experts at Royal Legal Solutions About Your Retirement Planning Options
Regardless of where you are in the retirement planning process, Royal Legal Solutions an assist you. We have extensive experience educating investors about self-directed investment options. Many of our investor-clients love our Solo 401k information, product, and compliance services. Our Self-Directed IRA services can also be helpful for retirement planning, as the SDIRA is yet another vehicle that allows you to diversify and take total control of your investments. To determine which of the available retirement planning strategies are best for you, consult with one of our experts at Royal Legal Solutions. You may also contact us with any questions you may have about your options.