On the show today we have… My First 3 Deals with Tony Truong!
Listen on: iTunes | Stitcher | Spotify
Show Links:
– Motiv Group
– Certain Lending
– Jimmy Tang
– Loftium
Show notes for My First 3 Deals with Tony Truong
The Vantastic Life is…
– is on the Hawaiian island of Kauai!
Joe is hanging out in Poipu Kauai and Julie’s girls are playing basketball for the first time, which is awesome!
Nghi with Certain Lending is on the podcast.
Tony is with Motiv Group
Julie
How many deals so far?
Tony
I’m on my 7th deal.
Julie
One thing I’ve notices is that your branding with the Motiv Group!
Joe
Give us your whole life story!
Tony,
I grew up in Seattle, and my parents moved from Vietnam. Then I worked for Fry’s for 4 years, and did a lot of sales training.
I was going to school and got into Microsoft as an analyst, but realized that I liked sales and tech more than sitting at a desk.
I was thinking what can I sell to make a living, and thought about what the biggest thing was that I could sell. Car sales…. no! Real Estate!
Julie
A lot of people start when they are young. You came from a sales perspective rather than loving real estate. That’s cool! And super smart.
Then what happened?
Tony
I learned a lot from there, and I told my sister that she should tell everyone that I was selling/buying real estate.
I actually didn’t have any money, so I did a subject to. I acquired the property subject to and then funded the deal with my credit card.
I met Jimmy Tang through LinkedIn and Jimmy helped me out.
Nghi
How did you learn how to do the rehab and all that?
Tony
I found the contractor at the gym. The rehab was supposed to take 3 months but took 11 months.
The contractor just did a really bad job. He was actually living in the house for 3 months.
Julie
What came up with the 20k budget?
Tony
The contractor did.
Julie
Go really deep!
Tony
There was a 2 month red tag on the property. Then I fired the first contractor and found another contractor at the gym.
There was a guy in the back of the house that was a drug dealer, and he dumped all of this needles in the backyard. Then I went to him and he said he’d clean it up for $100. And then I rented a u haul and the drug dealer stole it for a week.
So, I went to Fixated and met Tarl Yarber. Who I asked if he’d come out and buy my house. Tarl said he could only pay 200k because there were closets.
I was able to add IKEA closets by mounting them to the wall.
So I just listed the property. I owned around 220k. Someone called me and asked what they could do to get the house, and that they’d been outbid a bunch. I told them 325k, and they agreed!
Julie
I’ve never heard anything that crazy!
What happened at the appraisal?
Tony
It came back at value!
Julie
Let me say that we are not in that market right now. But if you want to try this, give me a call and I have some ideas.
That is a crazy story!
I want to know more.
Nghi
I feel like we need to give a disclaimer.
You said your budget went from 20k to 80k…
Tony
The original plan was to do paint, flooring, and some exterior. Then someone said to finish the basement. But the permitted said the basement was too short and we needed to take out the drywall. But because the house was from 1902 we were able to fight that.
Oh, and the materials were stolen, but the police never came out.
Julie
How did you pick the price?
Tony
I just picked it based on what I needed to make.
Julie
Building out basement space is not worth as much as building out main floor space. Go buy an investor a coffee to see how they do it.
I break mine down based on main floor and basement space.
Just remember that basement space isn’t worth as much.
How did you pay for this?
Tony
Credit wise I was really established. I had one at 30k, 20k, 10k and 5k. And I payed all of the minimums for 11 months.
All of my Microsoft paychecks when to the contractors.
Julie
That’s #1. Now, how are you getting your education?
Tony
A lot of networking. I take people out to lunch and start picking their brain.
I also quit Microsoft before finishing my first flip.
Nghi
Why did you quit?
Tony
I was so stressed that I couldn’t do my job.
I was living at my parents at the time, and I didn’t have a car payment.
Nghi
I usually don’t recommend quitting your job when doing real estate.
This is one of the rare cases that I would say it’s OK to quit and spend more time focusing on real estate.
Julie
There was no contact or anything?
Tony
I did have one that I got from Tarl.
Julie
Did that contractor get overpaid for the work?
Tony
Yes, when they see that you just need to get the work done they will charge you more.
Julie
Do you still see the contractor at the gym?
Tony
No, I quit that gym. Hahaha.
Julie
What’s deal number 2 look like?
Tony
I went to Jimmy and told him that I couldn’t do it anymore and that I needed to learn. So, I partnered with Jimmy Tang 50/50, and everything else became streamlined on the next deal.
Julie
That is a life changing thing right there! You must be a charming guy!
Keep going.
Tony
2nd deal was on budget, and everything was smooth.
Jimmy brought the deal from another agent that we agreed to give the list back.
We went through civic for the financing. 350k with 100k down and we got a rehab loan for that too.
Nghi
How much was the rehab?
Tony
150k, it was a pretty big project. It was a down to the studs flip and we added a loft.
The prices that the GC quoted was much less than before.
Julie
And challenges on this one? I feel like going down to the studs can bring things up.
Tony
The contractor got confused on a few project and insulated before we were permitted. So he had to tear that out. But it only cost us time.
When we did list it, the appraisal fell short.
We tried to wait to sell after winter. Like everyone else was doing.
Julie
Also the market was taking a drop by about 10% at that time.
Tony
It did, but we got our asking price (729k) in 3 days.
It only appraised at 680k. So we came down to 700k, and agreed.
Julie
When did you get your real estate license?
Tony
Back in 2017, but I didn’t do anything with it.
Julie
Did you put the two and two together about putting investing and brokering together?
Tony
No, Jimmy just didn’t have one.
Nghi
How long did it take?
Tony
It took 1 year exactly.
At the time I was talking to you and you said try for 1 year.
Nghi
Smart guy!
Julie
Big nugget! The first is the drilling the closet to the wall. The second is… it is crucial that you are paying attention to your loan terms and rates.
Nghi
I think most flippers are very optimistic when they are starting out. You are probably going to go over budget and probably time. Because of this I would always go with a 1 year loan and make sure your extension terms are good.
Julie
I think so many investors are so excited to get their first loan that they don’t pay attention to the details.
That’s why we love working with Certain Lending, they will point you in the right direction.
Why did it take so long?
Tony
We got electrical and building permits with this one?
We got an architect to do the floor plan that took 2 months of waiting.
Julie
I think that the word is out and people give flips a tougher time.
What’s next?
Tony
I bought another property about midway through the 2nd flip. I found it from the same agent.
It had a an unfinished basement, and this time I measured the ceiling height :-).
This one was 185k rehab, so it took a lot longer.
Julie
Do you like the big projects here?
Tony
That’s all that Jimmy does, so I didn’t know any better.
Julie
When the market did a dump it cleared out the investors a little bit. And back then you had to do these huge projects. Or I was doing pre-habs.
Nghi
This project was unique because the strategy changed at the end.
Tony
Yes, I had to get a private lender because all of my money was in the 2nd property.
One of my real estate broker clients had some extra money and agreed to lend me the money for my 3rd project.
Julie
When you are talking about what you’re doing, people with come out of the woodwork like this all the time. You are developing relationships and things will come from that.
This is your 2nd deal on your own and you’re already able to find private money.
So this person funded the equity portion with a promissory note.
Nghi
And I remember that you got money back when you bought the property, right?
Tony
Yes.
This was all in at 608k. But my project manager said I could build another house in the back yard.
So, right now we are renting out the house in the front and finishing up the house in the back.
I’m renting it via Loftium. There’s a long term renter upstairs and an Airbnb downstairs.
Loftium manages the rental upstairs and makes their money from the Airbnb.
Nghi
This one is interesting. You were trying to get a conventional loan on this, right?
Tony
Yes, but I needed 2 years of W2. So, I will do that after Loftium.
Julie
You should listen to our podcast with Keith Pitsch of Loan Depot.
Have you talked to someone about this?
Tony
Yes, I’ve talked to my lender and accountant to make sure I can do this.
Nghi
This is very important. He made sure that his accountant and lender were in line. Because you can show your income in different ways.
Julie
This is so big! There are many different ways to show the numbers. And you need to be talking with your accountant and lenders about this.
Tony
The Loftium setup is for 10 months.
I found them from another real estate investor.
Julie
So is this a loan?
Tony
Loftium Is your tenant and in the contract they are allowed to sub lease the space out.
It’s the same as a normal tenant.
Julie
When you go to get your loan you use the market rent.
Why did you use Loftium?
Tony
I didn’t know enough about the rental laws to do it myself.
Nghi
Loftium Is your tenant that they have a 10 month lease with you. So to you, it’s just a long term lease. So your tenant is like a business.
I learned a lot from working with Tony on this deal. You had a bunch of different strategies for this deal.
Tony
I tried to gather as much info as I could. If I went with tiny houses, I needed to do a water main extension.
Doing the 2nd house didn’t trigger the water line. You didn’t have to subdivide. We did a condo conversion.
This is LR2.
Julie
You bought the property and were just going to do a gut rehab, but your architect gave you the idea of adding the condo project…
Tony
That was about half way in.
Julie
If you could redo it would you tear down the house?
Tony
No, I would have gotten the permits so I could do the construction at the same time.
I’m not sure if I’ll keep the front house long term.
Julie
There a lot of stuff going on right now in Ballard where people are keeping a front house and building condos in the back.
I think Jimmy was just posting about some of this stuff on WAREI.
These are the things we talk about at our weekly mastermind.
How are you paying for the process of the permitting on the back house?
Tony
Through my brokering business. I am a real estate agent on the side.
I have a partner that manages the residential side.
Right now I’m doing a flip in Crown Hill, and I bought a property from Jimmy that is a 2nd story addition and another house in the back.
Julie
You are a hustler!!!
Where in Crown Hill?
Tony
103rd in Crown Hill.
Julie
What would happen if you found a deal right now?
Tony
I would buy is. I have a private lender that will fund all of my deals.
Julie
What do you do to generate leads?
Tony
My team does direct mailers and ads, but I like to take people out to coffee and find deals that way.
Right now we are marketing as real estate agents, but are on boarding 2 more people and will start doing door knocking.
Julie
I’ve learned to not give up and keep going. If you get the idea in your head that this is possible, it can be.
Nghi
Tony is one of the most interesting people that I know. He has no fear. He gets everything from talking with people. He works with Jimmy Tang which isn’t an easy thing to do.
Tony is very likable. You are on the fast track Tony. Even after doing 2-3 deals you have the experience of doing 20.
Julie
What’s next?
Tony
Commercial, mixed use, and apartments.
Julie
I have experience with those as well.
Feel encouraged and go for it!
That story is just crazy! I can’t believe it.
Tony
After that deal I have no stress.
Julie
Who does your branding?
Tony
Tammy Wise.
Julie
She does a great job!
Don’t forget to hit up our meetups! Awesome conversations about anything you can think of.
Burien (Tuesday) and Redmond (Thursday)
Leave a Reply