Ever had a dream that came true a couple days later? I had a dream Thursday night where I had already retired thanks to my real estate investments but for some reason I was driving for Uber and talking to passengers.
Fast forward two days to 4:30am today. I’m taking an Uber to the airport for an early flight.
I talk to the driver for a few minutes about the future of Denver and then he points out the exact area where I’m looking for a deal to do a house hack as being a good buy right now. I mentioned this and he shares that he’s hoping to net $1M from wholesaling this year. He has 7 properties in Denver each fully paid off that he rents out. Now he’s got my attention.
It turns out that he’s not your average Uber driver. He’s not doing this to make money from Uber – he’s doing this to help source deals.
The common thread to his stories were airport rides like mine so I feel he’s doing the 4:30am shift to find airport rides – captive audiences who have the means to travel.
350k deal closed on a trip to the airport
One trip he did was with an older woman in her 70s who a few minutes into the trip started crying. He asked what was wrong – it turned out she had renovated a house as an investment property but decided to rent it to her nephew for $200/mo for the past 7 years. Turns out the nephew is a scumbag and never lived there – he just subleased it out without telling her to a large group of people to make money.
The “tenants” had trashed the place over the years and now she was stuck with a property that needed to be completely renovated and due to her health she was about to go into a nursing home. She couldn’t figure out what to do.
He offered to buy it for $350k cash on the spot, and said the paperwork would be done before she got on the plane. He called his team (title company + hard money lender) and she had a contract in hand by the end of the Uber ride. Deal closed that day with $350k wired to her bank account.
This worked out great for the older lady but even better for my Uber driver. It was in an expensive area near Washington park so he decided to add a second level to the property adding 1600 sq ft and fully renovated it. This cost an additional $200k and 5 months but he then sold the property for $950k, netting a 300k profit.
Another Uber Sourced Deal
He was talking to a guy who was about to put his property just North of the Highlands (hottest area in Denver right now) for $180k because it needed serious renovations. Uber driver said that’s ridiculous and offered to help him flip it – they split the profits over $180k + renovation costs. Don’t recall the exact #s (this was 4:30am with no caffeine) but essentially each party walked off with a substantial profit (something like $50k ea after rehab expenses).
Turns out that he’s used his profits over the years to build his dream home in St. Thomas where he wants to retire (he’s already retired from the military but retire from the RE game + his wife still works for the government). 10 years ago he bought a plot of land “half way up the hill” and after over a year of construction managed by him + his brother he finished building his 8,000 sq ft mansion on prime real estate 6 months ago.
Just before Irma he was preparing it for a huge housewarming party with all of his friends and had purchased over $12k worth of food.
When Irma hit it devastated the island of St. Thomas. He said every mansion near his was leveled but his was completely fine as it was built using a new poured concrete technique his brother created for building fire resistant cabins in fire prone areas.
His home with its own off-the-grid setup (generator + propane powered) + fresh water supplies + massive amount of fresh food was used by FEMA to shelter families after the storm who had lost there homes. FEMA is now renting it from him for $12k/week (less than the 18k/week he was charging wealthy vacationers) while it houses over a hundred of their workers as they cleanup the island. With that many people staying there they promise to restore it to the state it was before the start of the lease when they leave.
FEMA is also interested in possibly using his method to rebuild the island in a far more hurricane resistant fashion so he may go down with his brother to help rebuild the island. The previous construction method used on the island was actually more expensive to build while being unable to hold up well against Category 5 winds.
Random tips along the ride:
Use HELOC on properties that have appreciated to do hard money lending. Get a loan at 5% from the bank and relend it at 15% using hard money loans collateralized at 80% LTV minimum. ALWAYS look for OPM/leverage opportunities.
I’m going to use the one above. This is something I hadn’t thought of, once I’m tired of doing my own deals I’ll start lending to others and still collect great margins. Using the bank’s money, not mine of course.
Use double closing when wholesaling so neither party can see profit margins. He uses a hard money lender at 1.8% upfront to do get the funds, always has buyer lined up before he closes on the purchase.
Heard this tip recently on a BiggerPockets podcast as well. If I ever get into wholesaling I’ll do this for sure.
Send postcards to the owners of properties with tax liens and that appear to need work. Tell them you’ll buy it, including paying off their debts, and they won’t need to worry about the property anymore.
Will use this for sure. No plans to become a wholesaler yet but finding deals in Denver even for house hacking is rough right now.
Some people can only see risk while others see opportunity when given the exact same circumstances.
If you’re wondering – I gave him 5 stars.