I have been investing in real estate since 2001 and in 2003 I made the decision to move to Florida and to become a full time real estate investor. I spent two years learning about real estate as a bird dog (deal finder) for my mentor Ben and his partner Alan. In 2005, I started my own company and began purchasing rental properties. My strategy at the time was buy, repair, rent, and refinance (known as the BRRR Method). This is a very effective strategy if you buy properties at huge discounts to market value since you can buy a house, fix it up, rent it out, and refinance it with mostly other people’s money. If you purchased the house low enough (60% or less of market value), you should be able to get all (or most) of your cash back when you refinance with a conventional loan.
This allows you to repeat the same strategy when you purchase your second house using the same funds from the first house. Currently conventional lenders will let you buy up to 10 houses in your own name. This means you can use this strategy to buy up to 10 rental properties with almost no money down (or very little money down). This is one of the best kept secrets in real estate. And it’s what I teach my students.
When the market turned down at the end of 2006, I used the opportunity to write my first Home Study Course. I called it “Millions in Real Estate With No Cash and No Credit”. My goal was to teach others, how I had accumulated millions of dollars in real estate in just a few years, using other people’s money. It took me almost two years to write that Home Study Course. The end result was over 800 pages. It was literally a “how to manual” plus my story wrapped up into one Home Study Course. I then added a 6 Disc Audio CD to cover some additional information about wholesaling, fixing and flipping, comparable sales, and rental properties. By the time I was done with the Home Study Course it was July of 2008. I went on a cruise with my father that same month (my last trip with my dad before he passed). I brought the manuscript of the Home Study Course on that trip and he was the first person to read the manuscript and give it the stamp of approval.
In July of 2008 The Financial Crisis was in full swing, and real estate prices had been going down for almost two years. The Federal Reserve and the Treasury, had tried and failed to calm the markets. That same month, Indymac Bank failed, and there was talk about a government bailout for Fannie Mae and Freddie Mac. On September 7th of 2008, a few days before my birthday, the Treasury stepped in to nationalize Fannie Mae and Freddie Mac and put them into receivership. That same month, Bear Stearns and then Lehman Brothers collapsed. That same month, Merril Lynch was purchased by Bank of America, and the Federal reserve stepped in to buy AIG to prevent them from going belly up (watch the movie “Too Big to Fail”).
These were unprecedented times. Real estate prices had collapsed and were plummeting (along with the stock market) and banks were failing everywhere. There were so many bad loans and homeowners in default, that the market was literally flooded with toxic mortgages (see the movie “The Big Short”).
No one wanted to buy these mortgages. That month, the economy almost collapsed, and there were runs on banks and money market funds were trading below $1. The Federal Reserve had to step in to reassure the public by insuring money market funds. Only after the fact, did the public realize how close we came to having the entire financial system collapse. The Federal Reserve literally forced the CEO’s of the ten major banks to work together in order to prevent that from happening. This was a first in U.S History.
By the end of September 2008, the Treasury Secretary had submitted a $700 Billion Bailout to Congress. That same month, Goldman Sachs and Morgan Stanley had to switch from being investment banks to commercial banks in order to have Federal Reserve protection. That same month, Washington Mutual went bankrupt after depositors withdrew $16 Billion dollars out of their bank accounts. The economy was literally at the end of an abyss and people were taking cash out of the bank, stocking up on food supplies, and buying guns and ammo.
It felt like the world was ending. On September 29, the Stock Market crashed. In October 2008, Congress approved the $700 Billion Bailout. On October 6th, global stock markets crashed again. The following week, the government stepped in with a $1.7 Trillion Commercial Loan Program, and all of the worlds central banks formed a coordinated global action of slashing interest rates, and guaranteeing bank financing. We had never, ever in the history of this country witnessed something like this before. That same month, the Federal Reserve lent $540 Billion to money market funds. Clearly the Federal Reserve was going to do everything in their power to prevent the system from collapsing.
Real Estate prices were now at ridiculous levels. The pricing was just absurd. Houses that had previously sold for $200,000 were being offered as bank owned properties at $50,000 or less representing a decline of 75% from the peak. What I found interesting, was that the media and everyone was talking about how bad things were and how real estate will “never recover”.
So I spent the month of October 2008 (while all of this chaos was happening) doing research. I read thousands of articles, and studied hundreds of books about prior real estate price declines. It seemed to me that with interest rates at record lows, and based on the historical evidence of prior real estate declines, that the most logical conclusion was that prices would eventually recover. To me, it looked like we may be sitting on the greatest opportunity of our life time to buy real estate at the bottom.
And that is how the idea of the Distressed Real Estate Institute was born. At the end of October 2008, I founded my real estate education and training company the “Distressed Real Estate Institute”. In order to create awareness, I decided to open up a real estate investment club as well. I called it the “Distressed Real Estate Investor’s Association”. At my first meeting in October 2008, there was only one attendee. At my second meeting, 5 people showed up. At my third meeting there were 15 people. Within a few months by February of 2009, I was having north of 50 people showing up at my monthly meeting (which was being held in a coffee shop). The cost to attend the meeting was just $5 and you got a free beverage included with the $5 door fee. I started teaching people about investing in real estate, and telling them about the incredible opportunity to purchase real estate at these rock bottom prices.
This was March 2009 and I decided to put my money where my mouth is. In March of 2009 I borrowed as much money as I could from all of my private lenders that I had and I purchased 7 houses in Port St Lucie, Florida. My purchase prices were $35,000, 36,000 and $37,000. These were all 3 bedroom 2 bathroom homes in nice areas that had previously sold for over $200,000.
The crazy part was that everyone around me was telling me that I was nuts. These were houses that would easily rent for $900. And they were in great condition. At those prices, the cash flow was just nuts. At the time I was borrowing money from private lenders at 10% interest only. That meant that if I borrowed $40,000 to purchase one of these houses my payment was only $333 per month. But I could receive $900 in rent. I failed to see how this could not be the greatest investment ever.
These were not the like the boarded up vacant bank owned homes that we saw on the market in 2011 and 2012. These were houses in move in condition. This was the first wave of people who had lost their homes and some of the houses were literally in move in condition. One house, the prior owner had vacuumed the carpets before leaving!
There were hundreds of bank owned properties listed on the MLS. The inventory on the MLS in Port St Lucie went up to 7,000 homes (when it was previously 1,000). I literally cherry picked the best houses, that were in the best condition, that needed the least amount of work to be rent ready. They were listed at $50,000 and $60,000 and I was offering the bank $36,000 Cash, with no inspection contingencies and a 14 day closing. And the banks were accepting my low ball offers which was just unbelievable. I wish I had purchased hundreds of those houses.
At the time, what was happening was that the banks had so many bad loans on their books that they literally had to dump houses for whatever they could get in order to get bad loans off of their books. And NO ONE WAS BUYING. I was the only nut case that wanted to buy. Everyone told me I was crazy. When I asked how can I be crazy buying a house at $35,000 people responded “what if it goes down to $25,000”.
And that was when I began to realize that we were literally at the bottom of the market. There was so much fear that no one wanted to buy perfectly good 3 bedroom 2 bathroom homes. That was when I decided then, that I needed a platform to be able to share with people why they should be purchasing real estate. I coined a phrase “from now, until the day that you die, you will never get an opportunity again to buy real estate at these prices”. This became my mantra at my real estate events.
In May of 2009 I held my first real estate educational training boot camp. I called it the “Distressed Real Estate Boot Camp” since I was teaching people how to buy distressed real estate (bank owned properties). I wrote a book called “Wholesaling Bank Owned Properties” and I realized that not only could I purchase these houses really cheap but I could also flip them for a profit to other investors. People ask me today, why I flipped so many of these houses and didn’t keep them all as rentals. The answer is that I only had so much private lender money that I could tap into. I couldn’t buy and hold unlimited houses. The other answer was that I needed to generate an income. Being a landlord is great, but flipping a house for $5,000 or $10,000 more than what you paid for it is money in the bank. I became really good at finding bank owned properties and making offers to the REO Listing Agents. I got so good at this, that it didn’t take very long before I was offering to buy more houses than I could handle.
That was when I set up the site www.cheaphousesinsouthflorida.com I started marketing to investors who were landlords and rehabbers looking for a good deal on an investment property. Back then, you could market on Google Adwords for just 3 cents a click. Today it would be over a dollar a click. I spent just $10 a day marketing keywords like “cheap houses in florida”, fixer uppers in florida, “investor specials in florida” etc. The first cash buyers to call me in 2009 were foreign investors from Brazil, China, Russia and Europe. They wanted to take advantage of the collapse in housing prices and Florida was their number one destination. I was in the right place at the right time. I learned how to buy houses from the bank and how to flip these houses to these investors.
I learned about double closings and transactional funding. Soon I had so many investors calling that I needed to find more houses. And that is where the idea of the “Partnership Program” came about. We needed more people to find bank owned properties and to bid on them. Initially we tried to hire people, but that became too cumbersome (and expensive). I realized that it would be better to train new real estate investors who wanted to learn how to wholesale and flip houses. So we started providing students at our Wholesaling Boot Camps with Proof of Funds Letters, Purchase Contracts and 3 days of training to teach them how to find houses and how to get these houses under contract. We taught them what our investors were looking for (and what we were looking for).
And then I would buy these houses and flip these houses to investors, and our company would provide the transactional funding, and oversee the closing with the title company. It was a winning formula. We were teaching new investors how to find and flip houses to other investors using our cash. Since 2009, we have trained over 5,000 students from all over the U.S (and world) how to flip houses. Our program has been very popular. And I have personally trained hundreds of people who are now full time wholesalers.
That Home Study Course, became the study guide for the boot camp. My first boot camp was held in May of 2009, and we have held that same Wholesaling Boot Camp twice a year, every since then. We also have a Fixing and Flipping Houses Boot Camp (which teaches fixing and flipping) which is held twice a year. For our coaching students we hold two Advanced Inner Circle Training Events for Wholesaling and Fixing and Flipping. We have a total of 8 live real estate training events per year.
Over the past 17 years, I have personally purchased and sold more than $100 million worth of real estate. I have flipped over 1,000 single family homes. I have also flipped over 500 homes with students that are in my Partnership Program. If you are an investor looking for a great deal on a bank owned property, or if you are a new investor looking to learn how to wholesale and flip houses I can help you. Many of our students become our investors. And many of our investors become our students.
I help investors find properties that are suitable candidates for buying, fixing, flipping or purchasing as long term rental properties. With my team at our company Lex Real Estate Group, we actively wholesale 10 to 20 houses every single month, and also rehab up to 15 fix and flip houses at a time. I also manage a fairly substantial portfolio of single family and multifamily properties in 7 counties.
Lex Real Estate Group specializes in finding investment property deals for our customers and in many cases we purchase these properties directly from the bank (REO or short sale). Our focus for our clients and students is finding investment and income properties with enough equity where there is sufficient spread for them to buy, fix and flip (or rent) the property for a profit. Our company Lex Real Estate Group works with income investors and landlords from all over the country as well as foreign investors who are looking for turnkey rental properties. Because we are investors, we know what real estate investors are looking for. We know the criteria that you need. We specialize in finding below market deals with good cap rates, lots of equity, positive cash flow, stable returns and property management included.
Over the past 17 years I have authored 7 books about investing in real estate. I have also been featured on the front page of both the Miami Herald and the Sun Sentinel as well as on CNBC, ABC, CBS, NBC, Fox News etc. I enjoy writing articles on investing in real estate for many real estate websites and blogs (including my own at www.lexlevinrad.com/blog). My Investing in Real Estate podcast has had over 2 million downloads. You can find info on my podcast at https://www.lexlevinrad.com/investinginrealestate/
Today the Distressed Real Estate Investor's Association™ is one of the largest real estate investment clubs in the U.S with over 10,000 online members. the Distressed Real Estate Investment Club holds monthly real estate meetings for investors on the first Tuesday of every month in Deerfield Beach, Florida. You can find more info about those meetings at www.distressedreia.com
So that’s my story. I am just a simple guy who got lucky and purchased real estate at the bottom of the market, and was fortunate enough to make lots of money doing so, And now I am able to teach thousands of investors how to do so too. Teaching is my passion. And I am good at it. It is the thing that I was born to do.
People ask me why I continue to hold events and why I continue to have my monthly real estate meetings. The answer is to effectuate positive change. That is my contribution. To help other people achieve their dreams and live the life they imagined. Real estate is the vehicle I use to do so.
For more information about me and my companies please visit www.lexlevinrad.com , www.lexrealestategroup.com or call my office at 561-948-2127. Feel free to email our customer support desk at [email protected]
