EP 143: Pro Real Estate Flipping Strategies with Al Blocker

Seasoned real estate investor and developer, Al Blocker, shares a wealth of knowledge from his extensive experience in home flipping and property development, primarily in the DC, Maryland, Virginia area (DMV). Al delves into his journey from corporate America to real estate mogul, discussing his strategies for achieving successful flips, the importance of mentorship, and the nuances of navigating the real estate market. 

He emphasizes the value of building a reliable team and the tactical decision-making that has allowed him to maximize returns on his investments. This episode is packed with actionable insights that can empower both novice and veteran real estate investors to elevate their game. For more detailed advice and real-world examples from Al's career, tune into the full episode!

Key takeaways to listen to:

• Mastering home flipping by leveraging professional mentorship and strategic partnerships.
• Transitioning from corporate America to full-time real estate investing with confidence.
• Utilizing thorough market analysis to optimize real estate investment returns effectively.
• Building and maintaining a reliable team to streamline project execution and maximize profits.

About Al Blocker

Al Blocker is a dynamic podcast host, real estate investor, home flipper, guest speaker, and inventor. Transitioning from a successful career in technology sales, where he excelled in closing complex software, services, and enterprise SaaS cloud deals, Al shifted his focus to the real estate industry. In real estate, he thrives as a developer, investor, and expert in house flipping, leveraging his deep understanding of strategic business partnerships and customer engagement from his tech background.

Al is the voice behind the "Rip & Flip Podcast," a platform where he dives into the nuts and bolts of real estate development and investment. Through his podcast, Al shares invaluable personal insights and actionable tips, aiming to build sustainable cash flow for real estate investors of all levels. His podcast is particularly beneficial for first-time investors, providing a detailed guide to flipping houses and navigating the associated risks. Al’s energetic and straightforward approach makes the "Rip & Flip Podcast" an essential resource for anyone looking to enter or excel in the real estate flipping industry.

Connect with Al Blocker:

• LinkedIn - https://www.linkedin.com/in/al-blocker-484bb242/
• Instagram (@ripandflippodcast) - https://www.instagram.com/ripandflippodcast/
• Podcast - https://podcasts.apple.com/us/podcast/rip-flip-w-al-blocker/id1604316729

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• Send us an email: rm@ridgelineig.com

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Transcript

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[00:00:00] Al Blocker: Hey, Randall, I do have an administrative question for you. So is this, so when I do my podcast, it's only audio. Is this audio and camera video? Yep. Okay. No problem. No problem. Had I known that I would have had my makeup team coming in. Yeah, 

[00:00:13] Randal McLeaird: man. Hey, we got time. You're the star. You tell me what you need, my man.

[00:00:19] Al Blocker: No, I'm all good. 

[00:00:20] Intro: If you're a real estate agent earning 200, 000 a year and you want to grow your passive income, this show is for you. Learn secrets other agents use and hear from experts in our field who will guide you on your journey to investing in assets like apartment communities, so you can take your commissions and turn them into cashflow.

[00:00:40] Intro: Here's your host, Randall. Let's dive 

[00:00:43] Randal McLeaird: in. Hey, welcome back. Today's guest is Al Blocker. He is in the Maryland and Washington DC. Marfis, he's a Home Flipper podcast host and just all around great guy. We have a good conversation. We talk about rehabbing and one of his most recent projects, some of the tips of the [00:01:00] trade and.

[00:01:00] Randal McLeaird: Some of the things that he does that help him stay on top of the game. So if you're looking to rehab, you're looking to get into that side of the business, then by all means, perk your ears up here, you're going to learn something here on this episode with Al. So let's jump in. If you're getting value out of the show, please go on, write and review.

[00:01:16] Randal McLeaird: Why don't you go ahead and for those listeners who don't know who you are, give us a brief background, how you got into real estate and what you're doing right now.

[00:01:22] Randal McLeaird: So a little bit about me. 

[00:01:23] Al Blocker: I 

[00:01:23] Randal McLeaird: had a 

[00:01:23] Al Blocker: long and solid corporate run in corporate America. My last step being with Microsoft. But I got into real estate. I had always been in real estate as a landlord, but I wanted to transition or pivot out of the landlord business and become a little bit more transaction transactional being going into flipping.

[00:01:45] Al Blocker: So I took that big leap of faith into the flipping business about seven years ago. And took on my first project. I watched a lot of the flip shows and thought to myself, my goodness, I [00:02:00] think I can do this. And beyond that point, it's probably two months thereafter. I identified a property that was in the DC, Maryland, Virginia area.

[00:02:09] Al Blocker: We call it the DMV. It was actually in Maryland. And I went for it. I put an offer on the place and got the offer accepted. Didn't really know too much about flipping other than what I saw on TV. So what I did, Randall, I sought the help of a general contractor. So I hired a GC just to give me an overview on what his thoughts were in an assessment of the property, things that I should probably stay away from and the things that I should do.

[00:02:36] Al Blocker: So in short, I paid him 150, 150 well spent, and I assembled my own team. Thereafter, I went for it. Was able to get that first flip done within three months, made over 50, 000. And I thought to myself, my goodness, this is the real deal. So it needs to say, I repeated that solution and continue [00:03:00] thereafter.

[00:03:00] Al Blocker: So that's basically my foray into real estate. And I know that. With me having my own show as well, a lot of people reach out to me always expressing an interest in how they can get into the flipping business. And it wasn't that difficult for me, but I always suggest to people that if you don't know anything about this industry, there are a lot of pitfalls that can suck you in.

[00:03:23] Al Blocker: And I say that to say this, always align yourself with a mentor, if you can, someone who's 

[00:03:28] Randal McLeaird: been there and done that. All right. Who was your mentor then? TV shows

[00:03:33] Al Blocker: It's funny, it's a mix. So the general contractor that I just mentioned that did his assessment, I would hire him for every project that I was considering. Just to have him do a preliminary walkthrough. So he was my coach. He was my mentor and he was my trusted advisor since then. I've gotten a good cadence with flipping home.

[00:03:55] Al Blocker: I've come to, I don't want to call myself an expert, but I think I know what I'm doing at this point. [00:04:00] Yeah. So the guy that I think is Chris, by the way, Chris was the first guy that introduced me to the sphere of flipping. And he's been alongside me since then. Three years ago. 

[00:04:10] Randal McLeaird: Yeah.

[00:04:11] Randal McLeaird: That's awesome. So did you hired him 150? I assume you didn't get a home inspection. You had him go instead. So kill two birds, one stone. 

[00:04:19] Al Blocker: Yeah, so that's a great question, Randall. And what I have realized is this, and this has just been me and my approach to flipping homes and all the clips I've done, believe it or not, I've never had home inspection done.

[00:04:32] Al Blocker: And here's why. It's very simple. If I'm flipping, typically, not even typically, all of my flips are complete renovations. We're talking roofs, all the trades, that's electrical, plumbing, HVAC, everything is pretty much a gut, so there's really no reason for me to invest in an inspection. Everything is, I got it out so that it's virtually all new, or it is actually all new.

[00:04:56] Randal McLeaird: Yeah, so when you first met with him then, and you [00:05:00] sourced this GC, which one, if that was your first one, fantastic, great relationship, because it is hard to find somebody that either, Knows what you're looking for, or can walk you through that process and we'll sit by your side. So one, I think it was a great idea to actually pay them to come out and actually do the inspection or the walkthrough with you.

[00:05:18] Randal McLeaird: So I commend you on that. After you used him, did he connect you with the trades or did you go source those yourself? Or how did you go about getting your bench? 

[00:05:27] Al Blocker: That's a great question. I left out a pivotal part of the introduction to Chris. So what I did not mention is how I found Chris is.

[00:05:35] Al Blocker: He was overseeing a project directly across the street from me. So that was very convenient. So to answer your question about how I picked up trades, I actually leveraged a lot of Chris's guys. And believe it or not, to this very day, some of them are still with me. 

[00:05:52] Randal McLeaird: Yeah, for sure. Some of them are still with me.

[00:05:53] Al Blocker: So it worked out well all the way around for me. 

[00:05:56] Randal McLeaird: Yeah. 

[00:05:57] Al Blocker: My, brokering the partnership and relationship with Chris. [00:06:00] 

[00:06:00] Randal McLeaird: All right. So let's dive into the deals. And the first deal you did. Were you still at Microsoft or you came off the job and you were, 

[00:06:07] Al Blocker: yeah, so I was double dipping. And the good thing about my situation, Microsoft, I was an outside salesperson.

[00:06:13] Al Blocker: So I had a lot of flexibility in my schedule, right? As long as I was hitting my numbers. No one bothered me and I worked extra hard and made a concerted effort to make sure that I was, killing my numbers so that I had the freedom and the flexibility to do my real job, I like to refer to as the real estate, right?

[00:06:29] Al Blocker: So I was doing both while at Microsoft and I tell people this all the time. I've worked my job. To the point where it afforded me to do the things that I want to do later on in life. And that's get into real estate. I've made good money in corporate America, but I was very wise to my money. And I was very intentional while corporate America was very good for me.

[00:06:49] Al Blocker: A couple of things that I don't want to say brought me the wrong way, but really incentivized me to pivot out of corporate America. Number one, I always wanted my own production. I wanted to be a star in the show, right? So I [00:07:00] needed my own production. Number two, I was looking for freedom and flexibility, financial freedom, right?

[00:07:06] Al Blocker: A lot of people, unfortunately, work jobs just to exist. I really wanted to live my life. And there's a price you pay for that. So to answer your question, yeah, I did both while we're working at Microsoft. And again, Microsoft afforded me the platform to transition out and do this 100 percent and no regret.

[00:07:27] Randal McLeaird: Yeah. You said something I've often thought that, do you work to live or do you live to work? And yeah, that sticks with me every time I hear somebody speak about that and talk about that. So good for you. Yeah, for sure. I think that's one is that having done that rehab seven years ago, And making 50, 000 on that deal.

[00:07:45] Randal McLeaird: Is that your bread and butter? Is that pretty typical of the return profile? Or is that Oh man, I happen to just get lucky on that one every year one since it's been 25, 000 or, I don't know the market up there. So what a typical return is. 

[00:07:58] Al Blocker: So what I would say, [00:08:00] Randall, is this. The goal is always to get a 20 to 25 percent return on my investment, but there are a couple of variables that factor into that equation.

[00:08:11] Al Blocker: Number one, you have to look at the acquisition, right? What are you paying for? You got to look at your reno or construction costs, right? So I've been on both ends of the spectrum where the worst I've done is about 12%. The best I've done is about 60%. So anywhere in between is probably a good rate of return for anyone in the flipping business, 30 to 40 percent or so.

[00:08:39] Al Blocker: So it's a variation, but the goal is always 20 to 25 percent return on my investment. 

[00:08:45] Randal McLeaird: Yeah. And so I had a question about this. And the reason I asked where you still at Microsoft is because it would help you finance a project if you're trying to use debt. So were you using debt or are you paying cash on your first deals?

[00:08:58] Randal McLeaird: And how do you operate now? Are you [00:09:00] like, I don't want debt. I want to be in and out of this with my own money and my return goes up. Or how does that look? 

[00:09:04] Al Blocker: And that's a great question. So I'll preface with this. I've never bought money. I really did leverage not only, my nest egg at Microsoft, but jobs that work prior to.

[00:09:15] Al Blocker: 4 0 1 Ks. So again, I was serious about getting into real estate. There was a lot of fear and trepidation, just like most people experience who are entertaining getting into real estate. But I took that plunge, and the plunge was, I liquidated some of my assets, some of my money that I had been socked away for years to get into real estate.

[00:09:36] Al Blocker: No regrets whatsoever. So again, I have been self-funding all of my projects. 

[00:09:42] Randal McLeaird: Yeah, that's fantastic. I mean it de-risks it. Massively, if you are going in and do, it feels I guess at the time it may be risky, but so on your first deal to go and pay cash, congrats, because it may have felt pretty risky to do that.

[00:09:57] Randal McLeaird: But I couldn't sleep at night. Yeah, [00:10:00] finish, finish 

[00:10:02] Al Blocker: Many sleep with mice. But, I would say this. There are no guarantees in real estate. While I think that real estate is very sound and very lucrative, there's a risk associated with, and while I am much further along than people that reach out to me inquiring about how to get into real estate.

[00:10:20] Al Blocker: I still assume a good deal of risk every time I take on a project, it can come in different aspects, but there's always going to be some element of risk associated with this flip business. It's simple as that. 

[00:10:33] Randal McLeaird: On that point, you got any war stories you want to share? Because I'm always curious, like what's the worst thing that's happened to you since you've been flipping houses?

[00:10:40] Al Blocker: So I'm glad you asked me that. The worst thing is I've had some bad. Contractors or subcontractors? No. Yeah, and you've got to be deliberate in how you select your contractors. So I'll abbreviate the story. I was in a pinch one day and I needed some painting done because we [00:11:00] wanted to list the property two days thereafter.

[00:11:02] Al Blocker: And I was in a pinch and I found a guy. Now I don't encourage people to do this. I went down to the local home Depot. If you're in Texas, you go to home Depot there, there guys are just hanging out, looking for work. So I said, you know what, how bad can this be? So I picked up a guy and he did some painting for me.

[00:11:22] Al Blocker: Guess what? Unfortunately that night or the next night, I just gotten new appliances in. Guess what? The next day, all of my appliances were gone and I know it was that guy because the neighbor across the street had the ring camera and it caught his car. But here's the problem. I didn't even get the guy's phone number.

[00:11:47] Al Blocker: I don't even think I knew his name because I just wanted him to come in and do a job. It's going to take. Two or three hours, Pam, and he'd be on his way. So that's the worst thing that's happened to me needs to say, I don't pick up [00:12:00] any locals from my local home depot anymore. The good thing about what, where I'm at right now is I've got a stable of contractors that have been with me now for a number of years.

[00:12:09] Al Blocker: Now, the key to that is to keep those guys. You got to do one thing. You got to keep them busy because if you don't keep them busy, guess what? They have the right to go to make money somewhere else. And, no different than you or I, they want to keep their pipeline full. They've got families to feed.

[00:12:25] Al Blocker: In fact, that is the worst thing that's happened to me. That the story that I just shared about the guy that I picked up. 

[00:12:31] Randal McLeaird: So I'm going to ask you then about some systems, but before I do that, because obviously you've learned along the way and you have a way of vetting and running these projects now that you are GCing, because it's, that's what it sounds like.

[00:12:42] Randal McLeaird: You're the guy that's putting everything together. Okay. Before I go down that road, I do just want to highlight that I have done the same thing. When I bought two houses back in 2009, I think they were each 20, 000. These houses, they were on the East side of San Antonio. And it was way back in the day, right after [00:13:00] great financial crisis, right?

[00:13:01] Randal McLeaird: So I buy these two houses and I was like, I'm just going to slap some paint on them. Be good to go. Went down, hired a bunch of guys or picked them up, drove them over to the house, had maybe five, 10 gallon buckets, right? Just sitting out, ready to go. Said, paint the house. So I left, went to the other house that was just down the street, same thing, dropped off some buckets of paint, paint the house, go back to the first house, it was maybe an hour and a half later, they had painted everything, the windows, the outlets, the switches.

[00:13:30] Randal McLeaird: That's a real paint job. Everything was painted. 

[00:13:33] Al Blocker: Wow. 

[00:13:34] Randal McLeaird: You painted the house, I can't. 

[00:13:36] Al Blocker: Wow, that is crazy. That is 

[00:13:38] Randal McLeaird: crazy. I don't feel 

[00:13:39] Al Blocker: so bad hearing that story now. Yeah. 

[00:13:41] Randal McLeaird: No, it's, I have plenty of those, but so let's move on. We'll talk about some of the systems that you have in place now.

[00:13:46] Randal McLeaird: Just give me, an idea. Are you one at a time? So you're using your own capital. Are you buying one, doing the job, selling it, buying another, or are you like trying to stack rehabs now or what does your system look like? 

[00:13:56] Al Blocker: Yeah, that's a good question. So the cadence for me now is, [00:14:00] I think it's important to mention to people that if you're going to get in the flip game, time is of the essence, especially for those that are borrowing money.

[00:14:07] Al Blocker: The clock is ticking as soon as they distribute that cash to you. So I say that to say this, my system now is identify property. I do my walkthrough, make the offer. And as soon as the offer is accepted, my guys go to work the next week, right? So we go into that thinking a couple of things. We always have a timeline associated with turning these projects around.

[00:14:27] Al Blocker: So the one I just completed, the goal was to have, to be in and out in 45 days. It was a pretty extensive flip. We didn't do all the trades. We didn't make the hit the 45 day mark, but we did it in about 6570 days, which still isn't bad. So the goal again, get in, get out 75 days, get it on the market. And then Randall, while we're in the midst of this project, while we were rather in the midst of that project, we're actively looking for the next project.

[00:14:56] Al Blocker: And I'm at a point now where people are actually reaching out [00:15:00] to me. I probably get about 5 or 6 hits a week about properties that are available. Yeah, we get in. Get out within 60, 65 days or so. Meanwhile, we're looking for the next project because by the time we're able to get that one on the market listed with the hopes of having it sold within a week or two, we move right to the next one.

[00:15:20] Al Blocker: So that's the repeatable solution. 

[00:15:24] Randal McLeaird: So are you, is your closing for the next one in line predicated on the sale of that one? And you're rolling that capital in or you? That is correct. As a matter of fact, 

[00:15:32] Al Blocker: as a matter of fact, I go to a settlement. The timing of this podcast or this interview is impeccable.

[00:15:37] Randal McLeaird: I go to settlement tomorrow. I know. I saw when we first started talking, I saw that you had posted a video, Hey guys, this property's for sale. And then I just jumped on today and it was like sold. And that was less than a month. Exactly. Hey, good for you, man. That's awesome. 

[00:15:50] Al Blocker: Yeah. So it's sold a couple of weeks ago, settlement is usually there's some lag time in between because they got to get the appraisal and the inspections, all that kind of stuff.

[00:15:58] Al Blocker: So the cadence rather was pretty [00:16:00] rapid and right in line with The system that I've adopted. 

[00:16:03] Randal McLeaird: Okay. Let's talk about in general, how you're running these things. So I, again, when I first started, I was doing very similar to what you were doing. I would rehab a house. I would GC the whole thing. I'd bring the guys in.

[00:16:15] Randal McLeaird: We evolved over time. We were trying to stack and do a ton of them at a given time. So I had in house project managers. I had contractors and crews, and then my project managers were managing GCs on jobs. And so we were doing a bunch of them at the same time. Headaches, herding cats, like it turns into a lot of different things, right?

[00:16:32] Randal McLeaird: So your setup seems as though you have one. You're not sourcing your own deals in the sense that you are marketing for deals. Is that accurate? 

[00:16:40] Al Blocker: So and let me expound on that. What I should mention is that the last project that we completed that I'm settling on tomorrow was actually, this is the first time it's unprecedented.

[00:16:51] Al Blocker: And what I did a joint venture. And I would encourage a joint venture for those looking to take the toe ankle foot approach into flipping. [00:17:00] So the joint venture, unlike what I've done before, everything was on me as the investor, that is me. Identifying the project, shoring up my team, making sure things got done, making sure supplies were ordered, all of that as a one man band, right?

[00:17:18] Al Blocker: But the joint venture, what that is, in short, is the joint venture for those that are listening and aren't aware, it is when two or more people come together to take on a real estate project, and you've got two members. You've got an operating member, and I want to be crystal clear on this. The operating member is a person who presides over the project.

[00:17:38] Al Blocker: They do the day to day work to ensure that the project is getting done. So that's the operating member. And then you've got a capital member. The capital member finances some Or all of the project. So this last project that I did for those that follow me on social media, a 600 over the street, that was a joint [00:18:00] venture.

[00:18:00] Al Blocker: First time I've done it, it worked out. This afforded me an opportunity to relieve myself of the day to day. As you just mentioned, headache, chasing contractors down, things of that sort, because I was the capital member and my partner who's done over a thousand flips himself, This was a, I don't want to call it marriage made in heaven, but close to it.

[00:18:22] Al Blocker: It worked out well for us. Yeah, it worked out very well for us. 

[00:18:25] Randal McLeaird: Did you guys just go in 50 50 type deal, JV? 

[00:18:27] Al Blocker: The JV, it was a 51 49. I had 

[00:18:31] Al Blocker: The principal interest in the adjoining issue, 

[00:18:33] Randal McLeaird: yeah. And I guess the other side of that was the sourcing of the deal, right? How are you sourcing those deals?

[00:18:39] Randal McLeaird: Because, What I want to drive at, is there are multiple ways. If you're looking to get into the rehab business, there's multiple ways to do it. What we did when we first got into it was I did all direct mail. I did all kinds of marketing. I was going direct to seller. I wanted to be the guy that was getting the deal at the deepest discount.

[00:18:54] Randal McLeaird: And then I would go and I'd hire the GC or I GC the job. So I had just this lead [00:19:00] flow coming in, in house that I was working on. I've since changed that. And so you have started, it sounds like you were buying. Not direct to seller. You had lead sources, either from brokers or from wholesalers or from somebody.

[00:19:13] Randal McLeaird: So yeah, that's what I'm driving at. I want anyone that's listening to know that you don't necessarily have to bang your head against the wall, doing a marketing campaign, trying to find these deals off market, you could actually partner with somebody and find those deals. And so I'm curious how you set it up because you obviously had another job at the time you started.

[00:19:30] Al Blocker: Yeah. So that's interesting. So my very first property that 

[00:19:33] Randal McLeaird: I 

[00:19:33] Al Blocker: bought, it was actually an MLS. It was in the MLS and I was able to negotiate to the price point that was comfortable for me to make the purchase. In addition, I will tell you, as I mentioned earlier, people reach out to me quite often that are pretty good properties that are on the market where they know the owner.

[00:19:52] Al Blocker: And I might have a conversation with the owner and get it at a premium price. Another way is, I get agents that [00:20:00] sometimes reach out to me. Now, this is interesting agents to reach out to me about properties that they are aware of and the arrangement they want is, okay, I can get you to this property.

[00:20:11] Al Blocker: If we put it in the MLS, it's going to be for sake of conversation, 700, 000. But here's what I'll do. I'll get you the property for 100, 000 under 100, 000. But what I would like is to get the listing on the back end. That's fair. And I've done that before. So there's been a variety of different approaches that I've taken to source the project.

[00:20:32] Al Blocker: There is no one set way or entry point for me. It's been really across the board. But here lately, I'll mention it again. It could be a tribute to my social media presence. People listen to my podcast. People are reaching out to me quite often about properties this week, and it's only Thursday. I've had six this week.

[00:20:51] Al Blocker: So I'm spending a lot of time going out, driving around, doing assessments of properties, things of that sort. 

[00:20:56] Randal McLeaird: Yeah. Again, I guess the reason I highlight it is because [00:21:00] if there's an excuse or a rationale or somebody saying I don't have the time to see it or to market for those types of deals, there's certain ways you can structure this business to where it is more hands off than it might sound.

[00:21:11] Randal McLeaird: Yeah. You need to check on the property, you need to go to the property. But if you hire a GC, and if you're buying from wholesalers, then you're really, the only thing you're doing is the finance and make sure the numbers work. And then you're hiring the GC and managing the GC. And that's just not how I structured it for a long time.

[00:21:26] Randal McLeaird: I was like, I got my hand in everything, I'm doing it all. And 

[00:21:30] Al Blocker: You just raised a very good point that I'd like to speak to. Wholesales. I got a call yesterday from a wholesale. And you gotta be careful about the whole wholesale approach. And to expound on that, first of all, wholesaling, it's an unregulated industry where people are wholesaling homes.

[00:21:48] Al Blocker: The issue that I had yesterday, I had a guy reach out to me and he gave me the address of this property. Unbeknownst to him, I was intimately familiar with this property. In fact, I know the owner. [00:22:00] Unfortunately, the guy's mom passed away, left in the house. The house is pretty clear, but. I looked at the numbers.

[00:22:06] Al Blocker: The wholesale numbers were 687. And I said, wow, this is interesting. Because most people that are approached by a wholesaler, they don't have any intel or data on the property other than what the wholesaler shares with them. This property was unique. The numbers came at 6 87 I think it was, but I've actually been to this house on numerous occasions.

[00:22:27] Al Blocker: First of all, the house needs everything. At the end of the day, it's a 5 80 house, 580, 000 house, not 68. That's 100, 000 over what people should be paying for that house. So you just have to be very careful about when wholesalers are showing you like they'll give you comps and Arabies. You gotta know what you're doing because This house is number one.

[00:22:52] Al Blocker: It would be a five to six month project. That's a red flag to me again. As I mentioned earlier, I want to be in and out in three months. The [00:23:00] other thing is, I think you, this is going to require about 200, 000 plus to get it where it should be. When I look at the comps there, the margins are just way, way too tight to make a decent profit off of that.

[00:23:14] Al Blocker: So the moral of the story is, I've actually done a few wholesale purchases myself where it's worked out, you gotta know what you're doing, you gotta know the market, you gotta know what the thresholds are in terms of construction costs. You got to look at the comps out 

[00:23:29] Randal McLeaird: there, all of those things.

[00:23:31] Randal McLeaird: Yeah. I'll second that I didn't buy anything from a wholesaler. That's why I went direct to seller because it was. I was getting the deal. I knew what it should have been selling for all the same reasons you just mentioned, but the money that I spent in marketing to acquire those deals, I look back on and I would say, it may have been a net if I would have just paid the 10, 000 wholesale fee for some of these deals.

[00:23:53] Randal McLeaird: And so that's the model that I have now, because it's a lot less time intensive for me answering the phone and doing all those things to, for us to do flips. But I will [00:24:00] second, again, what you said. So if you are getting numbers from a wholesaler, things to watch out for would be inflating the ARV, which is the after repair value, making it a lot higher and then reducing or limiting the actual repairs, because a lot of wholesalers have never actually flipped a house.

[00:24:16] Randal McLeaird: They'd never actually rehabbed a house. They have no idea. And they're just going to put a 50, 000 rehab at 30, 000. Yeah. With an ARV that's 20, 000 higher than it actually should be. And now all of a sudden you're never going to make any money on the deal. Yes, those are certainly things that you got to look out for, make your own ARV number and repair number.

[00:24:33] Randal McLeaird: Exactly. So let's talk about some systems that you're using right now. So do you have any kind of, so when you're going through and you are getting your bids and you're working with contractors, I could really geek out on this with you and just figure out what exactly you're doing. So you get your bids, where are you housing those bids?

[00:24:50] Randal McLeaird: Like how are you scheduling your guys? Walk me through a rehab on this most recent one that you had. And we can stay at 30, 000 foot view, but maybe give me some [00:25:00] details on how you're running it so that you know that it's going to be on time on schedule on budget. 

[00:25:05] Al Blocker: So I'm sure there's probably great similarities in my approach and your approach.

[00:25:09] Al Blocker: So I'll share with you what I'm doing. So the system is, it's pretty straightforward. I do my walk through the property along with my contractor. And the first decision I have to make is do I want to do. So the one I just did was about 3, 500 square feet. That's a pretty big house. Yeah. So the first question I asked myself is I got to look at the comps, right?

[00:25:29] Al Blocker: What the comps are. Obviously I look at my price point, what I picked it up for. I'm going to look at the comps and my acquisition. I then have to determine what my budget is that I want to spend on the house. Do I want to make this a primo house or do I just want to do a really good clean out and turn a pretty good profit?

[00:25:46] Al Blocker: So here's what we did. On this property, the one we just sold, we didn't do all of the trades. We were more focused on doing a good clean out. So the good clean out is all the bathrooms. We did [00:26:00] obviously a new kitchen. We took out some interior walls to create more of the open concept. And we just really dressed it up on the outside.

[00:26:09] Al Blocker: So all new paint, we painted the entire house, the exterior, we painted the interior, refinished all the floors. So that was merely a good clean out where we knew we could do it at a certain price point, that being the construction and renovation. And by the way, we went over by 11%, which isn't terribly bad.

[00:26:28] Al Blocker: And we turned it around. Again, it was like 75 days. So this one was again, a really good clean out versus what I've done in the past, where I've gone in and done complete renovations and when I say complete renovations, everything down to the, in fact, I advertise one of the properties, everything down to their doorknobs is brand new with this place.

[00:26:50] Al Blocker: So this wasn't a complete renovation. 

[00:26:52] Randal McLeaird: Yeah, 

[00:26:53] Al Blocker: we could have done a little bit more. In fact, my partner and I, we actually talked about we got midway through and we looked at each other said, we could [00:27:00] probably put a sauna in this basement area right here. It's got the perfect layout for it. It's got the electrical panel right outside.

[00:27:07] Al Blocker: It'd be great for sauna. That would have been probably been another 25, 000. So we wanted to stop while we were ahead of the curve, while we were realizing pretty good returns on our investment. We said, stop right here. It's really good. It shows 

[00:27:20] Randal McLeaird: extremely well. Let's do it. What's the ROI on Asana?

[00:27:24] Randal McLeaird: You put 25 in, are you getting 50 out of that? There you go. 

[00:27:27] Al Blocker: Didn't make sense to do that. So it would have been a nice decorative thing. And for those that are into Saunas, that's great. The convenience of having that right downstairs in your house. But we hit the no button on that.

[00:27:38] Randal McLeaird: Yeah. Yeah. It's like not needed expense. Yeah. That's a challenge. So we got one back this week at a foreclosure that I had owner financed and we just walked it this morning with the contractor and she's what do you want to do with this thing? And it's part of it got burned and so it's just, it's one of those conversations that I have with.

[00:27:56] Randal McLeaird: The contractor all the time do you want to go and blow it [00:28:00] out? Or do you want to just clean it up and try to sell it as is type thing. And so it's different when you're actually buying a new project. I've owned this thing for a long time. So you get seller fatigue, I think, or owner fatigue on some of the deals.

[00:28:10] Randal McLeaird: But I'll tell you 

[00:28:11] Al Blocker: the other thing, Randall, I'll tell you something else that really helped out. So again, I've been so accustomed to doing before this joint venture, everything fell on me, everything from start to finish. And it was really comforting and reassuring to have, a second set of eyes, a different opinion, different input.

[00:28:28] Al Blocker: So we didn't agree on everything, but it really helped the partnership. It really and truly did. Because what I was able to do is really compensate for, I don't want to call them weaknesses, but maybe some shortcomings that my partner didn't have and vice versa. So we really did compliment one another.

[00:28:45] Al Blocker: And in the end, it worked out very well. The only thing that you forego in the joint venture is what? Yeah. You've got to share in the profits, what, if it absolves you from some headache, significant headache on a day to day basis for [00:29:00] two or three months, it might be worth it. 

[00:29:02] Randal McLeaird: Yeah.

[00:29:02] Randal McLeaird: That's the question that I have then. Are you looking to, if you guys are going to keep going, doing the same thing together, would you be adding again? Because now you have two of you is to the sum of the parts greater than the whole, can you guys come together and do two rehabs at a time?

[00:29:18] Randal McLeaird: And so it, it makes up for that in. You know what I mean? What's your plan? 

[00:29:22] Al Blocker: 100 percent you struck a chord there. So we've actually had conversations about increasing our cadence, the volume, right? So we're actually thinking about the last conversation, which was when we broached this two weeks ago. We might be able to take on 15 to 20 projects.

[00:29:38] Al Blocker: This might be a small number To your listeners out there or even to yourself, but we could probably take on 15 to 20 projects a year by doing a joint venture. And we will probably do is open this up to a limited pool of investors as well. That will afford us an opportunity to extend our footprint, extend our reach, take on more.

[00:29:58] Randal McLeaird: Yeah. I'm just curious. [00:30:00] Is that like the lifestyle you want? Because it is a different. Lifestyle again, for anyone listening, like you can go deep. You can go deep on rehabs and you can get a whole machine up and running. And, or, if you still have the job and you're still a real estate agent full time or, working in the corporate world full time, you can still do this on the side, really, if you have the contractor set up to do it.

[00:30:20] Randal McLeaird: So for you, are you're like, yeah, let's go. Let's rip it and grip it, rip it and flip it. Yeah. Yeah. Yeah. 

[00:30:26] Al Blocker: Rip it and flip it would be the correct pronunciation. You just mentioned something, Randall, and I don't want for your listeners that are working a job that are entertaining the thought of getting into residential flipping to think that, if you work in a job, it's going to require it being flipping.

[00:30:44] Al Blocker: You need to have a presence. On these projects on these sites, because I'm here to tell you firsthand, things can go wrong. Things will go wrong. And if you're there, if you have a presence, you're there to [00:31:00] address things because sometimes things need to be addressed right then and there. As opposed to coming back the next day or a week later.

[00:31:07] Al Blocker: So if you are straddling corporate America and flipping, just to make sure whether it's yourself or you've got a family member or friend, someone needs to have a regular presence there to make sure that things are being done in accordance to the way they should be done. 

[00:31:25] Randal McLeaird: Yeah, a couple of points that I'll add to that.

[00:31:28] Randal McLeaird: It's right now with FaceTime makes things a little bit easier. I know guys that are flipping across the country and they don't ever see the house. But it also goes back to that partnership with the boots on the ground contractor who you've hired for that job and then actually relaying that information to you so that that's.

[00:31:44] Randal McLeaird: You're getting that info in a timely manner, not after the fact like, Oh, your retaining wall was supposed to be, five feet high. We got it a foot and now this will, whatever it is, whatever the thing is, just make sure you have that set up. But there are tools that you can use that would help with that.

[00:31:57] Al Blocker: I'll show you one example. So something happened on this [00:32:00] last project. So it was, the guy was there to refinish the floors and he had three different colors. We had talked about the color that we wanted for the floors, but he showed up with three different samples. So he needed to get them done. That day, otherwise he couldn't come back for, several days and we wanted to get it done that day.

[00:32:18] Al Blocker: So had I not been there, my partner had not been there to render that decision. Time is money that would have set us back another week or so. Little things like that. 

[00:32:27] Randal McLeaird: Even worse, if he would have just gone and actually done the job and did it wrong, then you're having to tear up tile. Yeah, I agree a hundred percent.

[00:32:35] Al Blocker: Little things like that. 

[00:32:36] Randal McLeaird: Yeah. Yeah. It certainly helps because again, if that communication is in there with the contractor and they. Just do something. And it's not the way you want it. Then stuff like that just starts happening. So I've always gone back and forth. I don't know if you've thought of this or not, but of having a contractor who all they do is flips for investors.

[00:32:55] Randal McLeaird: And finding that person in your marketplace who does that one. My concern is that they're going to be [00:33:00] overwhelmed. Too many projects, too many things going on. Do they have the capability and the capacity to actually manage all of those projects and take on the ones that I want to do as well? So that's something that I've always flip flopped on.

[00:33:10] Randal McLeaird: Two, are they going to do the vision the way you have it in your mind? Or are you going to be okay with them doing it 80 percent the 80 percent rule, where it's like, they're going to do it 80 percent and that's good enough, but it's going to get the job done. And the reason I'm asking all this is because You can literally, if you have that partnership with somebody, and I say partnership loosely, not a full JV, but they're your partner who's doing the rehab, and you're just literally finding the deal, going and buying it, and then giving them the keys, and saying, give me, the middle of the road rehab, here's 40 grand, go to town.

[00:33:42] Randal McLeaird: Have you ever considered 

[00:33:45] Al Blocker: So, in other words, you're asking, have a contractor that does turnkey, that does everything, right? Pretty much, 

[00:33:52] Randal McLeaird: yeah. If it needs to be done, they get it done. You say, here's my budget, 40 grand, I want it to look like that house down the street. 

[00:33:59] Al Blocker: Again, [00:34:00] that's a very good question. At this juncture, that's pretty much how I operate, up until I got into this joint venture.

[00:34:05] Al Blocker: When I identify a project And I close on it. I get the keys. Obviously, I get my lockbox set up. My guys will go by. They know the paint to pick up, the paint selection from Sherwin Williams. They know how my kitchen floors should be, the tile that I use in my kitchen floors. Or if it's wood, they know the wood to go with.

[00:34:24] Al Blocker: That's come from having a cadence and great working partnerships with my trades people. Because they've been with me for several years. So they can't I don't have one person that does everything. So I've got one guy that does paints, he does my drywall, he does my floors. Then I've got another guy who's specific to electrical, I got my plumber, I got my HVAC guy.

[00:34:48] Al Blocker: But the one guy that does many things, he probably does about 40%. Of my project turnkey. Yeah, just this one guy. And again, it's having that repeated [00:35:00] performance with him that trust that cadence and a really good working relationship with him that allows me to have that type of trust that level of trusting him.

[00:35:07] Randal McLeaird: Yeah, I would say again, if you're looking to get into this, it's important to have somebody that is like that, because If you just have the major trades and you're trying to piecemeal like a carpenter to come in, you would be shocked at how long it takes to do finish outs on a project. You would think that once the major stuff is done, you're going to be done, but it's all the little things after all the big trades have left that make the property pop, caulkier, doing this, painting that, doing whatever it is.

[00:35:33] Randal McLeaird: So just make sure you have a guy who's well rounded that's able to go in and do the cleanup after the fact. 

[00:35:38] Al Blocker: I'll add something else to that random. So I don't know about what your, what the cadence or the tempo was like for your contractors, but I think it's important to highlight that when you hire contractors, If you can, to the extent that you can make sure that they're working for you full time, because I've had situations where, whether it be my painter, [00:36:00] he comes in at two o'clock and then he leaves at four o'clock.

[00:36:03] Al Blocker: You know why he does that? Because he's got other jobs he's worked. So I try and establish that right up front. I need you here. nine o'clock in the morning or eight o'clock in the morning until three or four o'clock until this product. And what I do, I really do level set expectations on a daily or weekly basis.

[00:36:23] Al Blocker: Okay, I need the living room painted in its entirety by tomorrow. Can you do it? He says yes or no. If he can't do it, guess what? I've got a backup, right? So the point is, you've got to make sure that your traits people Are giving you their very best in terms of their time committed to your project.

[00:36:45] Al Blocker: Again, I'll tell your listeners, time is money. The longer you're in there, you're going to be carrying calls. So you need to get in there and get the hell out. 

[00:36:54] Randal McLeaird: Yeah, I agree. I agree. All right. So it's a first quarter 24. How are you looking for the rest of the [00:37:00] year? What are you seeing? You think prices are going to maintain?

[00:37:02] Randal McLeaird: You think price you're going up in your market? 

[00:37:04] Al Blocker: Yeah. So that's a great question. I'm seeing a couple of things. Number one, with the rates still being slightly high, in the eyes of some people. I know some people that, got homes when rates were 12 percent and they're laughing at 7 percent interest rates.

[00:37:17] Al Blocker: It's what are you guys freaking out about? It's not so bad. So I'm seeing, rates are still high. Price points in the D. C. area where I'm focused at are still very healthy. The other thing I will say is this. Historically, the D. C. market has been a pretty strong market, relatively speaking, compared to other cities throughout the country.

[00:37:40] Al Blocker: So I'll continue down the path that I'm on. I've always got a watchful eye for, net new opportunities. Again, my pipeline is starting to fill now. With prospective properties. So I'll continue to do what I'm doing with the focus on the DC area, the DC market, and we'll see what happens.

[00:37:55] Al Blocker: But by all measures, it looks like 24 is going to be another [00:38:00] productive year for us. 

[00:38:00] Randal McLeaird: Yeah. Nice. So you've got those projects going on. You're adding, and you're looking like you're going to have this JV on to another deal without a doubt. 

[00:38:09] Al Blocker: Yeah. But I should mention that my partner, he's actually, he's a licensed agent, right?

[00:38:14] Al Blocker: So he's probably as privy to properties as I am. And again, I've got my social media outlets. That's a, that's worked fabulously for me here over the past several months. So between that and between him having access to properties and we're always looking for properties that are off market. And for your listeners, when you can get properties that are off market, you and this is not to rain on agents, but you lessen your out of pocket expense because you really do forgo dealing with an agent and you can negotiate it down to a much more attractive price point.

[00:38:47] Al Blocker: Yeah. So I'm always looking for stuff that's off market. 

[00:38:49] Randal McLeaird: Good advice. It is good advice. Before we go, if you are looking for selling a property, in the DC metro area, Al's your man. Oh, without a doubt. If you listen to this, [00:39:00] if you're an agent up there, I know we have a lot of agents that listen.

[00:39:02] Randal McLeaird: I've interviewed some top producers up in that market as well. So definitely reach out. Al's also got a podcast. It's 

[00:39:09] Al Blocker: RIP 

[00:39:09] Randal McLeaird: and FLIP podcast. That's right. RIP and FLIP podcast. Absolutely. Yeah, go check it out. Give them a review. Al, it was awesome catching up, hearing what you're working on. Thanks for sharing your advice, and we'll catch you guys on the next episode, all right?

[00:39:22] Randal McLeaird: Hey, Randall, I 

[00:39:22] Al Blocker: really appreciate you having me on, and you're doing great work. Thanks so much. 

[00:39:26] Outro: Did you know that 80 percent of the agents we speak with got into real estate in order to gain passive income so they could obtain financial freedom and become work optional? If you want to stay up to date, the best way is to make sure you're subscribed. So if you haven't done that, go ahead and do it now. We'll catch you on the next episode.