Rob Swanson started flipping houses full-time well over a decade ago. Shortly after he got started as a real estate investor, he made his first $42,000 in a single month. He saw a lot of people who could do the same thing, but they were paralyzed by fear and never put in the small amount of effort it takes to learn the little secrets that make all the difference. From that point forward - it wasn t long before he hit his first six-figure month, making $250,000. A self-proclaimed natural born teacher, Rob enjoys showing real estate investors how he runs his business so they can copy his systems and use the same tricks, tools and resources he uses to make money. He s been interviewed by CNBC, Forbes Magazine, The Wall Street Journal and other local and national media about real estate investing. After the most recent crash, he put together a $10,000,000 real estate fund using none of his own money. On a personal note, Rob believes business should exist to create lifestyle and residual passive income. That s why he runs his real estate investing business very differently than many people.
Rob Swanson We're talking to Rob Swanson with www.flipcashdeals.com. What's your background and how did you get started in real estate investing? It's an interesting question because ten years ago, probably 12 years ago now, I was probably like most people. I was working a job that I half enjoyed and I half didn't enjoy. The part that I didn't enjoy was I didn't like working for somebody else. I knew that I wanted to be my own boss and I wanted to quit the job at some point and basically do my own thing, so I was looking for anything. I was looking for businesses, stock market, commodities, franchises, real estate. You name it. I was on this massive search. It ended up that one evening at a local real estate investor club here in the Denver area and what the guy was saying from the stage made so much sense. I'm like, "I can wrap my head around that. Find a property that needs work, figure out how to get it at a low price and then make a profit on it." It made a ton of sense to me. I dove all in to figure out how this real estate investing thing worked. My biggest challenge at the time was I didn't have cash. I didn't have a bunch of credit that I was going to go out and use, so I had to figure out how to do this business without the traditional things that most people think about. I was working a job in a construction company, at the time. I was a project manager and I thought, "This transition makes sense into real estate investing," so
I was on this pursuit of trying to figure out how this whole real estate thing was going to work and one thing just led to another. I just started to consume all of the information that I could and learn and learn and learn how real estate investing worked. I started to connect with different people. Buy a cup of coffee, go out for lunch and one thing led to another and eventually I got into my first deal. I did my first deal, and we might talk about this a little bit later, but my first deal I bought with 100%, no money down. 12I made over $40,000 on that little brick ranch house in Lakewood, Colorado. From that point in time, I was hooked long term on this business. It was about six months after that that I ended up quitting my job and going full time. How did you buy that house and make $40 grand with no money down? This is the interesting part about it. I heard that here's what I needed. I needed a seller that was motivated to sell so that I could go in and solve their problems. I think part of the thing that people need to realize is that they need to reframe how they think. It isn't how much money can I make from real estate investing, the money comes if you figure out and you learn how to solve problems and take advantage of opportunities that present themselves. I was working my job. I was driving down 6th Avenue in Denver, Colorado and I saw this big sign up off the highway and it said, "For Sale by Owner." I thought, "That's the kind of person that I need to go and talk to." I knew nothing.
This is the thing that you have to understand. I was just completely shooting blind. I was making things up along the way, but I was taking action. I end up pulling up to this little house, walked up to the door, knocked. An older lady came to the door and I said, 'Hi. My name is Rob and I buy houses in your neighborhood. I was wondering, obviously, you'd like to sell, I was wondering if you'd be interested in selling me your home?" A conversation ensued from there. She told me a certain price that she wanted that she was selling the house for and I said, "You know, I'm not sure that I can pay the price you're asking unless we could work out some terms." We just started to have a conversation and I really didn't know where I was going, so I asked her a question. I said, "Would it be OK if I went and put the numbers together and brought you back an offer in the next day? Tomorrow?" She said, that would be perfectly fine. I didn't know what to do as soon as she said, "I'm really willing to sell and I'd like to do a deal with you." I just asked for permission to go get my head straight, get my numbers together and come back the next day. That's exactly what I did. I came back the next day. I offered her a no-money-down deal where she basically carried all of the financing and I bought the house, she became the bank basically. I didn't go and get a bank loan. I didn't go qualify for a loan. I didn't use any of my own cash or any of my own credit. When we showed up at the closing table, she became the bank and I just started making payments to her over the course of the next five years until I ultimately then resold the house. 13This is what's great about it. The price I got was about 40% of the value of the actual property. The reason for that was I was able to show her that if she took a lower price but payments over time, she would make as much money as if she took all of that cash up front.
She didn't' need the cash up front; it was a win-win situation for everybody. I got a great deal that I could make money on. She got a great price because she was willing to take that price over time and ultimately, the deal came together and everybody was happy and she made money and I made money. You sold the house five years later? I did. What I did is when I initially bought the house, I turned right back around and I advertised the house for sale with a rent to own, so a lease option. Actually, this is what's pretty neat about this deal. Before I even closed on the property, I already had a tenant buyer lined up that wanted to buy the house from me, but they didn't have great credit. They had a good income, a good job and then had a stable life, but they didn't have credit so they couldn't qualify for a new bank loan. What I was able to do was structure a deal with them and sell the house to them on a lease with an option to buy over the next five years. Before I even closed on the house with the seller, they had already given me a $7,000 deposit as a deposit towards this option to buy that, as soon as I closed, the next day they moved in and they lived there for five years until they ultimately purchased the home. That's a very cool story.
And profitable too. Everybody won. I, the investor, won. The seller won and the family that ultimately lived in the house and bought it won. Where'd you go from there? What I started to do from there is realize, "This is great, but I can't really build a business around hoping that I run across a motivated seller by randomly driving down the freeway." I realized that I needed to figure out how to build a system around getting motivated sellers calling me on a more regular basis. I have a saying in my office and I run an active real estate investing business to this day, if we're not making offers we're not making money. That was one of the themes that hit me early on. I needed to be constantly in connection with a motivated seller. That means I needed to be making offers. One of the things that I do today is I buy a lot of bank owned and a lot of HUD properties and those are two types of properties that are motivated sellers. I buy, literally, HUD and REO or bank-owned properties at $0.30, $0.40, $0.50 on the dollar every single week. I really put a lot of focus into building systems around buying those HUD and bank-owned properties because they're publicly available. As long as people know where and how to get access to them, you can make offers on a regular basis. We've built a lot of systems in our business to do that automatically and they're great deals. They're super cheap and most of the general public doesn't know how to approach banks and approach the government in the right way to buy that cheap.
That's what we've done to transition a lot of our business to make sure that we have deals coming in every single week. Your two revenue leaders are bank-owned REOs and HUD homes? Yes. That's correct. If you were starting out as a new real estate investor today, what would be the one thing you'd focus on? Same? Absolutely. Wholesaling,bank-owned and HUD properties. That would be the thing that I would do the most. When I say wholesaling, what I mean is building a process or having a process that you can follow to make offers on dirt cheap properties, put them under contract and then find guys like me that have cash and are interested in buying those properties. When a wholesaler finds a great deal and can put it under contract and then brings me that contract, I'll actually pay that person $3,000, $5000, $7,000, $10,000, depending on how cheap they have the property under contract for, I'll pay them to basically buy their position in the deal. That's what a wholesaler does. It's the easiest way to make thousands of dollars as a new real estate investor, jump in and really start to learn how the business works. What's the biggest mistake new investors make?
Thinking that they need to have everything figured out at the very beginning before they start taking action. That's number one. That's, I think, the biggie. People over analyze because they're fearful rather than just jumping in and taking action. I think that the second thing is not having a plan. Number one they're fearful because they don't have it all figured out. Second is they don't have a plan and the third is too many real estate investors, I see this all the time, try to stick a square peg through a round hole. What I mean by that is they figure out from some guru or some guy out there, or gal out there, that, "Here's some real estate investing strategy that they can do." They take that investing strategy, which by the way, probably works great. It just might not work great where they live. This big problem that I see people run into, this roadblock is they're trying to do the wrong kind of deal in the wrong kind of market and as a new investor it's very hard to know what to think, who to believe, how to know how this stuff all works. I see that happen a lot; people sort of beating their head against the wall doing the wrong things in the wrong places when a little strategy shift in how they approach their business could be very, very big. Take me back now. You've got this one house. You've got a system. You're trying to figure out how it works. What did you do next? You're still working for the construction company. What I did is I started making a massive amount of offers and I basically went
into the multiple listing service, the MLS. That's where all bank-owned properties get listed, the MLS. I got access to that by contacting a local real estate agent. I said, "Hey, Mr. or Miss Real Estate Agent. Log in to the MLS and do a search for all bank-owned properties that have been on the market for 30 days or longer. When you do that search, go ahead and then send me all of the information." I didn't really know the market that well at the time, so I got all of this information. When I first did this, I probably got 60 or 70 properties that they sent me right out of the gate. I just went down the line. If the house was listed for $60,000, I submitted an offer for probably $35,000. If it was listed for $50,000, I submitted an offer for $30,000. About 60%, roughly, of the list price, I just made offers. Just blind, random offers. That might scare some people thinking, "How do I know if I'm right?" You might not, but you'll figure it out very quickly. Here's the thing that people have to realize. Just because you made an offer, doesn't mean that you actually ever have go close. One of the things that I learned very early on is that I got a lot of information very quickly. I learned the market super fast by making offers and getting probably 99% of them rejected. They would counter back to me and I would be able to start to figure out the values and the prices and what was going to work in a particular city. My advice to people is just start making offers. Sooner versus later that's the fastest and easiest way to start learning what's going to make you money. You started making offers and then you got rejected, but some took your offer and then some countered, so now you're starting to get inventory.
Correct. Once I had inventory as a wholesaler, because remember I didn't have cash to close on these houses. I didn't want to go qualify for a bank loan. What I did is, and you've got to go back, this was a decade ago before the Internet and back in the day what I used to do is I used to run a classified ad in the local newspaper in the Real Estate Wanted section and the Real Estate For Sale section. Something to the effect of, "House for sale. Cash only. $38K. Call Rob" and then my phone number. I would get local real estate investors that would call me off of that ad saying, 'I'm a real estate investor. I have cash. I saw your ad in the newspaper. What do you have for sale?' Then I would tell them the house. I'd give them, "I've got 123 Main Street. It's a three-bedroom, one-bath house. It's beat up and distressed really bad and I'm selling it for $38,000." I probably had it under contract at that time for 30,000. If they looked at the deal and evaluated it and determined that $38,000 was a great price, then they would make me an offer for $38,000. I would be able to use their $38,000 that they paid me to actually go pay cash for the $30,000 that I had it under contract for. That next step was finding my cash buyers. Today we have the Internet, so today I use Google and I use Craigslist a lot to find my cash buyers. Just like in the olden days a decade ago I had to run ads in the newspaper. Today I run free ads on Craigslist and I get phone calls on a regular basis of cash investors looking to buy wholesale properties from me. Every one that I sell, we make an average of $5,000 to $6,000 profit on most of our wholesale deals. Then what do you do? You pay the seller in cash with what you got from the
buyer. You made $8,000 and then the buyer just has the house and does whatever he or she wants with it? That's exactly right and that's the beautiful part about it. I don't have to be a landlord. I don't have to fix and flip. I don't have to have any private money. I don't have to worry about toilets or tenants or trash or any of that stuff. I'm just the middle man and I pocket $5,000, $6,000, $8,000 bucks. Now you've got this whole system going? Exactly. Then the key there is one of the big things that I learned early in my business that real estate investors always try to do is, so now I'm doing a deal. Now I'm making $8,000. How do I make $16,000? I have to do two deals. How do I make $24,000? I have to do three deals. How do I make $32,000? I have to do four deals on a monthly basis. Let's face it. Most of the time the reason we get into this business is because we want to go make a lot of money. We want to create a good lifestyle and make a lot of money. What I see a lot of real estate investors get stuck with is what I call 'going deep versus going wide.' I'll explain that for you. Most real estate investors, to make more money, try to go deep in their local city and just find more deals, but that can be pretty tough to do. The reason it can be tough to do is you have to realize how inventory gets basically added into a market.
The government and banks have a certain number distressed properties that they've taken back and not every city gets the same number of properties, so you might be in a city that gets a whole bunch of distressed properties. You might be in a city that gets very few distressed properties. If you want to make more money in a city that gets very few distressed properties, how easy do you think that is? It's not very easy because you end up competing against so many other real estate investors and you just can't. You might be able to get a deal a month, maybe two, but to start to get three deals, four deals, five, ten deals a month to go deep into your market and get that many deals to make more money gets pretty hard. What I do in my business is I go wide, focusing on trying to do five deals a month in my local city, what I do is go wide and I expand into other markets. Remember, as a wholesaler you don't ever have to look at properties, you don't ever have to estimate their values accurately; you don't have to ever estimate repairs because who's going to do that for you? Your buyers are going to do all that hard work. If you go wide and expand your wholesaling business into multiple different cities, you can then pick the cities that have the most distressed property and inventory available. You can pick the cities that have the most cash buyers available, this is exactly what I do in my business. Now I go into maybe two or three or four different cities and I do two or three deals a month in each city and pretty soon I'm doing seven, ten, 12, 15 deals a month very easily and regularly. The key to this is I've figured out how to build a team that does 93%t of that work for me, so while you might hear this and think, "That sounds like a lot of work," the reality is I spend a lot of time skiing up in the mountains.
I spend a lot of time going fly fishing. I spend a lot of time going to my kids' soccer, dances and ballet recitals, so I've figured out how to get a team that I only pay when they perform or when they sell one of our properties. They do 93% of the work and I basically sit back and pull the strings and oversee the rest of the business. How is it that you don't have to see the properties? That's what's great about it. You don't have to see the properties because, let me give you a little hint and a little tip. Most of the types of houses that we buy are on the lower end of most cities; the lower-priced end of most cities, so we're not typically buying the upper-end houses. We're buying lower priced houses. That way if I buy it cheap on the lower end and I rent it out, I can make a good return on my cash or if I fix it up and flip it, I can make a good quick cash profit. There's a lot more people that can afford lower priced properties than higher priced properties. If you start to look from city to city, and I've successfully and profitably flipped houses in about 14 different states and 26 different cities across the country, what I've come to realize is this, most houses on the lower price side of the market are about the same size and they generally range anywhere between 1,000 and 2000 square feet, depending on if there's a basement or not. I can go in and almost completely gut and rebuild a house for between $25,000 and $35,000 anywhere in the country. I know that if I just guess, if I clearly guess a $30,000 rehab budget, I'm going to be pretty darn close most of the time.
Remember, as a wholesaler, all I'm trying to do is get close so that I can make an intelligent, really low offer so that when my rehabbers and landlords, my buyers start to run their actual numbers, they're pretty close to the numbers that I guess. That's why you don't have to look at houses. You don't have to estimate repairs because at the end of the day your cash buyers are going to be doing all of that detailed work. It's like I get to sit back and throw hand grenades and then they have to shoot the rifle. I don't have to be very accurate with a hand grenade. They've got to be pretty accurate with the rifle, so I toss in all of this inventory and tie up these properties and then just bring them to my cash buyers who ultimately pay me $5,000, $4,000, $8,000. They do the hard work. They take on all the risk. They bring the cash to the table. They do all of that work and I'm just delivering inventory. Bring it home now. You figured all this out and now you start to systematize it and then do you go into your own business? You leave your day job? That's exactly right. What I've been able to do is, because of my background, I was in the construction industry. I was in engineering. I did go to college. I got an engineering degree. Here's what's funny about it, I've never been accused of being the traditional engineer. I can always make jokes about engineers because I am one, but people look at the way that I run my business and they say, "You must be an engineer because it's step by step by step." We just follow the simple steps in order to get the results we want.
That's what engineering is all about: Making things brutally simple so that we can build a system around it and then scale the business as big as possible. A little over ten years ago I ultimately did, I quit my job. I went into business for myself full-time as a real estate investor. I've been doing that ever since. I've been through the upside of the market and the downside of the market and I'm still here successfully. The reason for that is I know some things that most real estate investors don't know and that is how to pick the right markets across the country to drop this little system into to get other people to do all of this work and get paid on easy, what I call, low-hanging fruit deals that most investors out there just completely miss. What I do is I do regular training webinars where I teach people exactly how I do this. In fact, I've been invited into very high level real estate investor master minds where I teach a lot of my strategies on picking the right markets and how to run your business living wherever you want to live and doing business where it makes the most sense. That's one of the key things that I run and live my business and life by. I do regular real estate investor trainings that people can just jump on and sit in for an hour or so with me and learn how I run my business and do that stuff and for the people reading this right now, that's available to them as well too. We talked about someone being involved in real estate while still having a job. Why is now the best time to get into real estate for revenue generation?
Why is now the best time? It seems like that question gets thrown around a lot and I hear a lot of, sort of, cheeky interesting answers. A lot of them are really corny, but let me tell you this. I've been a full time real estate investor through the peak of the market, through the crash of the market and now after the crash of the market. I can flat look you in the eye and tell you that I have made more money in the years after the crash of the market than I made before the crash when prices were skyrocketing and all the appreciation was there. When the market crashed it was the perfect time for a real estate investor that knows what they're doing. Prices drop by 50%, 60%, in some cases 70%. Many people lost their houses for a variety of reasons, oftentimes through no fault of their own and became a renter. There are just huge residual cashflow opportunities today for real estate investors. There are huge opportunities to buy really cheap and especially as a wholesaler there's never been more distressed inventory available to turnover and wholesale quickly for $6,000, $8,000, $10,000 profits than right now in today's real estate market. It's a great time to jump in. You also talked about certain geographical areas. Which geographical areas are more effective when applying your methodology of real estate investing? You like the lower-end markets? Yes. I go into a lot of detail on that in my live trainings that I do. I basically have seven market criteria selectors and let me just talk about a couple of them, just so
that people can kind of get an idea of how we approach things because the key is to realize that you can run your real estate investing business like I do from behind my laptop. I literally run my business from my laptop and from my cell phone, so if I'm on vacation and look, I've been on vacation for the last four days. We've been up in the mountains with my family skiing. I've made over $40,000 over the last four days while I've been on vacation. The key is to understand you can run your real estate investing business from wherever you want to be and wherever you are, wherever you want to live. Geographically, here's what I look for. I look for, these are my two, of the seven market selectors that I go through on my live training, these are the top two that I look at. Number one is inventory. I look at the number of distressed properties available in a local market because if I want to make quick, easy cash, I want to know that I'm putting my effort in where I know there are distressed deals. I know there are profitable deals. That's the key. The first thing I look at is the amount of inventory. The second thing I look at, and this is key to actually making a profit is the number of cash buyers. Are there a lot of real estate investors in that local city that are paying cash for properties? If those two criteria hit, then I start looking at the next five criteria to basically rank the cities and pick the best city to drop my wholesaling operation into. My goal, when I open a new wholesaling market is to drop into that market, get it up and running and be profitable, meaning I'm closing one or two deals a month in the first 30 to 60 days. That's totally possible when you pick a market that's got a lot of inventory, a lot of cash investors buying properties and then you drop your system into that market that just starts to turn over that inventory and put yourself in the middle of it.
Obviously you've had some success stories. What got you into teaching your system? I was a local real estate investor here in the Denver area. I used to attend a lot of local real estate investor meetings. I used to get invited to come in and talk about what I was doing. I used to get hit up by real estate investors all the time looking for cash. They wanted me to fund their deal or partner their deal with them, and this was just on a local basis. What ended up happening is more and more people started coming to me asking me, "Would you teach us what you do? We're just trying to break into this business of being a real estate investor." Or, "We're already a real estate investor but we're trying to go to the next level and we see that your business scales. We see that your business isn't limited by the amount of cash or the construction crews or your own time. Your business scales and we see you out on vacation a lot. What's the deal with that?" More and more people started to come to me and ask me for advice, for training, teaching and that sort of thing, so I started to organize some training and some teaching and opportunities here locally and then one thing led to another. All of a sudden I was referred from one real estate investor in Denver to somebody in Chicago and in Florida and then California and pretty soon I had a following of people all over the country that were coming in and wanting to learn my systems. Then, I got invited to teach at certain masterminds and high level things.
It's pretty interesting, the level of students that I have, I had a guy, and I'll tell you this story. I won't make it long because I know we don't have a ton of time, but you'll find this very interesting. I had a gentleman, Matt, who came to me and said, "I'm working a job and I really don't like what I'm doing. I've been doing it for ten years. I make good money but I'm working 90 hours a week. I want to do something different." He ended up working with me over the course of the next six months and quitting his job, going into real estate full time and over the course of the next year, this certainly isn't typical, not everybody does this, but over the next year, Matt made over $200,000 because he just jumped in. He said, "I don't have a safety net anymore. I got to make this work for my family," and he started following the steps, taking action, even when it was uncomfortable. He made a ton of money. He's a full-time investor to this day. That's a guy that was brand new, knew nothing about real estate investing. Jumped in and was able to make pretty darn good money. The other side of the spectrum is I've worked with a lot of guys and gals that are very successful. In fact, one of my students runs one of the largest national REO asset management companies in the country. He's got 130 employees. He has over 15,000 graded REO agents all over the country. All they do, their clients, my student's clients are Chase Bank and Bank of America and Fannie Mae and Freddie Mac. That's who this guy's clients are. He ended up finding me. He sat in on my live presentation that I do regularly for people online and after going through that he reached out to me by email and ended up calling my office. We chatted and he ended up joining my coaching program and then paying for his operations manager and his head of distressed assets to join my program as well.
Here's a guy that said to me, "I learned more about how investors approach the distressed property business from what you've taught me than I have as 20 years in this business." This guy is a high level, he's the keynote speaker at some of the largest bank, REO, asset management conferences in the country. That's the kind of difference in level of folks that I've worked with and watched be successful with these systems. What's a reasonable expectation someone should set, let's say as a first-year goal, if they follow your method? What's a reasonable expectation? That's a hard one to answer. Here's why it's hard, I don't know the person. I don't know how hard they want to work. I don't know how bad they want it. I don't know how much they're going to let life get in their way. I don't know how many excuses they're going to make. 23That's my disclaimer. Here's the deal. I want people to jump in, follow the things that I teach, even if they beat their head against the wall trying to make it happen and they haven't had success yet, there's a reason they haven't had success. It's probably because they're trying to push the square peg through the round hole and if people will figure out how to make a little bit of a strategy shift, I want people to make their first $5,000 in the first 30 to 60 days. I want people to get their business where they're doing what I call "Make $15K Program." I want people to be doing $15,000 a month by 60 to 90 days. We want them to make their first deal in the first 30 to 60, then we want them to get and start to scale their business to $15,000 a month in the first 60 to 90 days. That is a
very reasonable expectation, very doable. I've watched many students do it. If the student is at that level where they say, "You know what, Rob? I'm already making $15,000 to $25,000 to $30,000 a month in my real estate investing business, then the expectation goes to the next level. Now what we want to do is we want to reduce the amount of work that you're doing in your business. We want your business to scale and we want your business to double in the first 90 days. Wherever you're at, it's getting either that first $15,000 a month or it's doubling your business by teaching you how to build a team and scaling the business where it doesn't put any more work onto your shoulders. What's next for you? What's coming up? What are you looking to accomplish? I am just continuing to take advantage of the real estate market that's out there. I know that the real estate markets that have crashed over the decades in the past, it crashed back in 1973, '74. It crashed in 1990, 1991, then it crashed again in 2008. We're still on the tail end of this last crash and it only happens every 20 or 30 years or so. Right now, is the time to just scale your business, take as much advantage of it as you humanly, possibly can and just get in right now because if people wait too long, they're going to find that we're riding up that next swing of the cycle. It's going to be too late. My advice to people is jump in. Learn what's happening right now and then three things. Keep it really simple because you don't have to make this business complicated.
Build a system around it so that you don't have to work your tail off and you can still make a lot of money and then scale the business so that you take as much advantage of the market currently right now as you possibly can. That's my advice to people and that's exactly what I'm doing. Is there anything else you want to add? No. I think we really covered a high level of my business, what I do, why I do it and how I tackle it. If people want to go deeper and really learn what I do and how I do it, see my seven-market criteria breakdowns, and really dive deeper into how I run my business on a day to day basis, I just invite people to join me on the live training webinars that I'm going to be doing. I really look forward to interacting and meeting some folks online. Visit www.flipcashdeals.com.