Turning Negative Equity into Gains

Bobby Vieira is a dedicated full-time real estate investor and the visionary Founder of Universal Short Sales (USS), recognized as the fastest-growing short sale processing company in the USA. With a passion for turning 'dead' short sale leads into thriving opportunities, Bobby collaborates with wholesale investors nationwide, empowering them to extract consistent profits from properties burdened with negative equity

Transcript

Mike: 0:00

All right, everyone. Welcome to the real estate game changers show. I'm your host. Mike McKay based in the Jacksonville, Florida market. And each and every week we do this show with people who are changing the game of real estate all over the country. For people who are in the Jacksonville market or thinking about getting into it, feel free to reach out to us if you need any help on anything. And we are still a very active buyer in Jacksonville. If anyone has had, has any deals that they're looking at wholesale. So this week on the show, we have Bobby Vieira. Bobby, welcome to the show.

Bobby: 0:30

Thank you, Mike. Great to be here, man.

Mike: 0:32

Cool, man. So for people who don't know you can you share a little bit about how you got into the real estate business and how that's led you to where you are today?

Bobby: 0:40

Yeah, back in 2015, I graduated college and I jumped right into the corporate world. I was in the exciting business of selling commercial tires. And I think I lasted, I always had the entrepreneurial bug. I was a horrendous employee. So I think I lasted six, maybe eight months before I decided to fire myself. And I just got my real estate license at the time in Pennsylvania. And I just jumped two feet in the fire, all in, no side gig, nothing. I quit my job, jumped into real estate full time. And just like any agent, I was, running around like a chicken with my head cut off, no clue what I was doing, just trying to get any possible business. And I started to stumble upon short sales. Long story short, I got noted in the local market as a short sale expert, just through trial and error and just getting good at them. And then in 2019, I launched my company now, which is Universal Short Sales, where we do short sales across the country. It's pretty much.

Mike: 1:40

And one thing we were talking about offline is I was telling you I haven't bought a short sale since 2017. I didn't know people were even still doing them. You said you've been doing it even when interest rates were low. Could you just share a little bit more about your strategy and I guess how that was even possible?

Bobby: 1:55

So the two big factors, number one, because our model, so we do short sales in all 50 States. So because our model is so scalable, we're able to pick and choose the pockets of the country that make the most sense. Where there is, distress and there's negative equity. That's number one. Number two is a lot of people, they think just because, the market's super hot, properties are flying like crazy inventories low that there's no short sales, but what you have to remember is the United States. As much as I love this country, this is just the truth. This is a very extreme consumer society. People run up bills. They run up credit. A lot of everyday consumers aren't smart with their money, so they find ways to lose equity in their house. People really do. They just find ways to do. I mean, if they're deep into pre foreclosure, the deeper you get the more equity you lose because the fees compound. Perfect example of what's happening right now. Let's say, okay, how many people, Mike, over the last three years, do you think just the average everyday Americans were sitting there going, honey, oh my God, look at what our house just appraised for. We've never had this kind of equity before. Now's the perfect time to pull the equity out and go buy that boat we always wanted or the, renovate the kitchen. So stuff like that eats up people's equity. I do have a staff that does cold calling, but honestly, at this point, we're almost a hundred percent referral and JV based. So we have thousands of wholesalers, thousands of realtors we work with throughout the country. And specifically the state of Florida, as we were talking offline, Florida is like our biggest market at this point, but yeah, it's just referral based a lot of referrals.

Mike: 3:34

And I remember a long time ago, short sales took a while. Is that a myth because people don't know actually how to do them? Or is that just actually like how long it takes, like a year or whatever to get approved for the bank or mortgage company?

Bobby: 3:47

it's certainly not a myth. No, there's nothing short about a short sale. I would say on average, it takes four to six months minimum. The one that you're talking about where like it takes a year, that could still happen. It doesn't happen a lot with us, but it absolutely can. It all depends on the complexity of the file. How many mortgages do they have? Do they have back taxes? Is there an IRS lien? These deals are usually real complicated.

Mike: 4:10

Gotcha. And like, so, you know, you work JV referral basis. So you talk a little bit of how that works. Let's say I have a deal in Jacksonville, and I say I can't make any work here. There's no equity, no other options. Work sellers. Cool. Doing a short sale. What's next.

Bobby: 4:25

Yeah. We have a form on our website. You just go right on, you hover over contact us, and we have a form that says wholesalers submit leads here. You submit the lead. We sign a JV agreement with you. 20 percent of whatever we net from the deal. We do all the work. You don't lift a finger as a wholesaler. We do all the work months and months. And then we send you a wire or a Venmo, Zelle, however you want to get paid.

Mike: 4:49

Are you guys getting paid like an agent on these deals, like a commission or are you like somehow putting it under contract? What's the strategy to make money here?

Bobby: 4:56

That's a great question. So I created a hybrid model. So our first strategy is a fee based model. In that case, we're not the buyer. We're just processing the short sale. We have a 12 step system. Then at the end of the deal, we get paid on the HUD from the buyer. Very similar model as if you were going to assign a contract. Instead of an assignment agreement,

Mike: 5:15

Is the buyer already predetermined before that point or?

Bobby: 5:19

in that case, Mike, it's typically, it's either the buyer brings us the deal and says, Hey, I'm trying to buy this short sale. Will you process it for me or realtor? So every short sale has to be listed on the MLS. It's a lender requirement. In those cases, the real estate agent lists it, sells it, and then the buyer signs an agreement with us, our short sale processing agreement, and they just pay us on the HUD the same way they would sign an assignment contract. It's no different.

Mike: 5:45

Got it. And they would do that because the realtor who's running a short sale doesn't know what they're doing. Is that usually the that or?

Bobby: 5:51

I wouldn't say like that. It's, you mean like, why would they bring my company into it?

Mike: 5:55

Yeah, because I've had a lot of times a listing agent or historically years and years ago would process it. But I don't know what things are now.

Bobby: 6:02

There's a lot of agents that still, to do their own short sales. I would say 99 percent don't know how to do one and that's not a dig. That's not an insult. It's just so niche, man. There's no book you could read. You can't take the real estate license exam. It doesn't teach you how to do them. You need experience. So I would, but another thing too, we have a lot of agents. That bring us their short sale deals that have done short sales forever, but they see the value in us. Why the hell would they want to wait on hold, chase down documents from the, like, why would you want to do that? Go out, make your money as an agent, leave the hard work up to us.

Mike: 6:39

Gotcha, and you said the hybrid model, so that's one way. You get brought in, the buyer pays you a fee. are the other ways?

Bobby: 6:45

I buy it. We're an acquisition company too. So I'll purchase the property. We'll process the short sale. And then my acquisition company will buy it. And then we'll typically, depending on how much work it needs, sometimes put it right back on the market. Sometimes do a little bit of work. Like I just bought one. I closed a couple of days ago in Jersey, Hamilton township in Jersey. We'll do like a clean out, a big clean out. It was like a hoarder house. Probably patch up some holes, I changed the locks out, simple stuff, and then we'll put it back on the market for an investor to buy.

Mike: 7:13

Yeah, but in that case did you guys go out and find that deal listed as a short sale? Because it had to be listed on the MLS. How did the process behind that deal come up?

Bobby: 7:22

Yeah. All of our deals are off market. So that one specifically, Mike. was a wholesaler, right out of the Jersey market, brought the deal to us saying, Hey, listen, I think he was going to wholesale and I'm pretty sure he was going to sign it. The mortgage payoff came back way too high. Seller was pretty deep into pre foreclosure, and we were able to come in and help and once we fix it up, list it and sell it. He'll get 20 percent of our profit for, like I said, literally doing nothing.

Mike: 7:50

Yeah. And then but when you guys had to list on the MLS did you not run into other investors who were also trying to buy the property or is there like a way you position your offer to be better to the mortgage company?

Bobby: 8:01

That's a great question. I get that one all the time. So it has to be listed in the MLS. Like you said, we have specific verbiage because we have this all systemized. So every short sale we do, whether it's in Florida, Jersey, Timbuktu, doesn't matter. We have the same system. So we have verbiage that discloses to everybody who wants to look at the property, Hey, it's under contract. We only have it in the MLS cause it's a bank requirement and the price is not approved. Don't get excited.

Mike: 8:30

Interesting. So you can actually be under contract before you put it on the MLS. That's that the bank doesn't stop that they just also still has to be listed.

Bobby: 8:39

They don't stop it because the bank wants you to follow their itemized checklist. As long as you're following their checklist, they're not going to give you any shit. Now one thing that you have to be careful with is, you don't want to do anything that like looks deceptive. If you're going to make an offer on a short sale, we disclose everything to the bank in writing. Everything we're doing, there's even sometimes where we'll make an offer and if we can't get it at our price. We'll release our interest in the deal and then someone else will come in and pay us, I'm like essentially releasing terminations similar to innovation before we do that we put everything in writing to the bank telling them that's a potential exit strategy.

Mike: 9:20

Got it. Okay. Is it so that's injury is like an ovation for a short sale and they don't object to you or most of the time, at least they don't object to you getting paid in that way, or

Bobby: 9:32

Nope. Nope, and I'm super safe So HUD Mike, whether it's a release fee or our short sale processing fee that I was talking about before, we disclose it up front and then on the final HUD right before closing, we'll actually submit it to the bank so that they look it over one final time. So then we get a stamped HUD saying, Hey, you see our fee. You see we're getting paid and you're cool with it just to be safe

Mike: 9:57

Just to be safe. Yeah. And then for people who are, maybe running into these kind of deals, like what are the kind of pitfalls that you see when people do try to do a short sale or maybe try to do it on their own?

Bobby: 10:10

Listen, the number one pitfall is exactly what you said before they take forever Literally like their group like people will ask me like numerous times. I've been asked they're like wait You have a short sale company. I'm like, yeah, they're like, what the, they look at me like I have five heads like I'm crazy. Like, why do you do so many short sales? You know what I mean? So that's the biggest pitfall as a buyer is like if you're looking for one deal, if you're like, okay, I need this one deal a quarter. I probably wouldn't make an offer on a short sale because you're just taking a risk. It's better for investors that have, hard money, private money, a little bit of scalability. So you're not just waiting on one deal to close.

Mike: 10:47

Yeah. Gotcha. And so those are the models that you run are the feed based one, like kind of the JV model. And then is that it? Or is there like a third one? Cause you said hybrid.

Bobby: 10:58

That's it. Just the hybrid. Just, it's either fee based or, we're gonna make an offer on it and try to buy it.

Mike: 11:04

Gotcha. Okay. And yeah, it's really interesting. You mentioned offline that you have quite a few deals going on in Jacksonville right now. A lot of our listeners are obviously in the Jacksonville market. Want to tell us a little bit about maybe one or two of those deals and how they came about.

Bobby: 11:19

Yeah. One of them, fingers crossed. It's a fee based deal. Hopefully it's going to close here early next week, such a, so like this deal is so chaotic, but it's just a typical short sale deal. It's on Sandler Lane or Sandler Ave. The owner lives in California, different time zone. She has a friend, like her lifelong friend apparently, living in the property, renting it. The friend stops paying her, just at some point decides, screw you, I'm going to stop paying. The property goes deep into pre foreclosure. This one was sent to us by one of our wholesaler JV partners as well in Jacksonville. And man, I'm getting my stress out just thinking about, so we get involved in the deal. She has an auction date. So she's that deep in a pre foreclosure that the bank has already said, Hey, this is the date we're going to auction your property off. So we had to reach out to Duval County, figure out what the process is to file a motion to, postpone the sale. We successfully did that. And we're not attorneys, by the way, I just want to disclose that we're not attorneys, but we successfully helped the seller do that. So that took several months alone. Then we had to start the short sale process from scratch. We got a botched appraisal. So the bank wanted too much money. We had to wait four months until the appraisal expired, resubmit an offer. And now we finally have a buyer. And then there's chaos with the it's in an HOA. That's a whole nother thing. I don't want to go too deep in the woods, but yeah, there's like the HOA that had to be paid. It was a very complex deal. We're all good there with it.

Mike: 12:51

You said before, like pre foreclosure, so you can still possibly execute the strategy, even if the property is like pretty far along, like in actual foreclosure.

Bobby: 13:01

Yes and no, once the bank actually forecloses and takes the property back, it is considered an REO, real estate owned, and you cannot do a short sale on that, it's too late. But when it's in pre foreclosure, you absolutely can do a short sale on it.

Mike: 13:16

And the way that, if someone were to find a deal off market, right? If we were to find a deal off market in Jacksonville we can then bring it to you, that's like the feedbase, they can bring it to you to process it how does that, just trying to understand how the business works.

Bobby: 13:28

Yeah. Yeah. Yeah. So if you want to be the end buyer, let's say it's something you want it to buy, fix and flip or buy and rent out, as long as you want to take title to it, that would be the fee based model. We get 10 grand on the HUD. We process everything and you pay us 10 grand on the end, just like you pay a wholesaler. Now, if you just want to refer it, which is what most people do, I'd say most people are looking to sign the contract, figure out it's a short sale. So that, so really it's a deadly, you can't assign a short sale contract or those are just referral based ones where we'll take it. And then whatever we make, we do all the work and pay 20 percent referral.

Mike: 14:07

Yeah, and are there any restrictions if you were to buy a short sale or like restrictions what you can do with the property after for any certain amount of time, or is it

Bobby: 14:16

Great question. Mike, that one that I just bought that I mentioned before in Hamilton Township a couple days ago. We have to hold this. This project we could bang out in a week. We have to hold it for four months.

Mike: 14:27

Is that always or only with certain mortgage companies

Bobby: 14:30

So no, that's actually another great question. A lot of people think so. The biggest myth in short sales is that deed restrictions are dependent upon the mortgage servicer. It's not. It's dependent on the type of loan. So any type of FHA product VA product, Fannie Mae, et cetera. Any government backed loan is always going to have a deed restriction on it.

Mike: 14:51

Got it. So if the previous owner who you did the shorts of for had one of those government back loans, then you've got that kind of waiting period. Got it. Interesting. Huh. And, how many of these things are you guys doing?

Bobby: 15:02

Right now, our average is seven new deals a month. So like we sign on, whether it's going to be fee based or we do it at, seven new contracts a month is our average.

Mike: 15:11

okay. You brought us in before about the appraisal, how does that work with the bank? Like you have an offer in but are they wanting the appraised value for it? Or like you said, that's obviously caused some hurdles with some deals.

Bobby: 15:23

Yep. Mike, the best way I could explain the appraisal with the bank in a short sale. It's the end all be all so we could do a perfect job on a short sale. We could hit every step of the process perfectly, but what happens is when the bank orders an appraisal. So let me actually back up for the listeners, just for like clarity. So what Mike is asking me about is the third party appraisal. What the short sale lender does is they're going to hire. Usually it's a local appraiser. Or it's a local BPO agent, either, or they're going to go out to the property. Now they don't work for the bank. It's a neutral third party appraiser. They're going to go out to the property to do an interior valuation. And then submit it back to the bank. Whatever that value comes back at the bank is going to want in or around that number. So if you offer 75 cash and the appraisal comes back at 300 grand, No matter how absurd it is, the bank is going to counter you at that number.

Mike: 16:20

Got it. How often does that become a problem? Because I imagine some of these houses need work, right? And we all know how appraisals can be, right?

Bobby: 16:27

Yeah, it happens quite a bit, man. It's a part of the business. I know a lot of people try to play it off oh, yeah, we're perfect. When it comes to appraisals. Listen, we do have a process in place where we keep a very, we're very involved in the appraisal process. We're sending them supporting documents. We're having a conversation on all the work that's needed. We have our listing agent, a requirement for our listing agent, is to actually attend the appraisal, point out everything that's wrong, so that nothing is missed. Even though we do all that, at the end of the day it's a human being. Like at the end of the day, if they're like, Bob sent me all this stuff, I don't really feel like listening to him. I, I have dinner with my wife at seven and I want to just bang this appraisal out. So I don't really feel like doing it and like they'll rush through it. And that can happen.

Mike: 17:18

Yeah, and how early in the deal is that appraisal being ordered?

Bobby: 17:22

I would say on average, midway through the deal, but that's actually a great question because sometimes they order it as soon as you open up the packet more often than not. Let's say there's 12 steps, Mike, by step six or seven, they're going to order it a little bit later in the deal.

Mike: 17:36

Gotcha. And you mentioned earlier, and I think it's a good point to bring up the, like you were saying, you can't assign. A short sale deal, and I think a lot of people wholesale listen to this show. So could you just elaborate on that a little bit more so they understand?

Bobby: 17:48

Yeah. When I first started doing short sales, I, instead of going out and getting the right information, I just assumed that I knew the answer for some reason. And I spent months getting it done only to realize that you can't assign them. So the way a short sale works, whoever is on the purchase agreement. So if it's Mike McKay, LLC is buying the property, Mike McKay, LLC has to close on the property. You can't get the short sale approved and then assign it to Bob Vieira, LLC. You can't do that.

Mike: 18:23

Got it. Elaborate a little bit on some people may not know what innovations are, first of all, but elaborate on that strategy. And like, when do you use that kind of you said similar to innovation strategy. It's not exactly the same, but when do you go with that strategy versus, just taking it down and maybe renovating it.

Bobby: 18:39

Yeah. Yeah. So people have different answers on this. There's some guys out there that do it every single deal. That's all they do is they just novate short sale contracts. I like to play it safe. I never want to create a pattern because even though you're not doing anything wrong, technically, I never want to create a pattern of, you get audited one day and they look and they're like, huh, this guy, this guy, like a hundred times he made offers on short sales. And then all hundred of those times he removed himself as the buyer step somebody in, you know what I'm saying? Maybe I'm overthinking it But I only like to do that Mike if it's absolutely necessary Oddly enough I'm doing it on a Jacksonville property right now the buyer just sent us the release and the only reason I'm doing it is because I originally Wanted to double close his properties on Copic app, Copic row. I don't know. I'm terrible at remembering off the top of my head, but, it's right in Jacksonville. And I wanted to buy the property needs so much work. I wanted to buy it and renovate it, but it needs way more work than we thought and we couldn't get it low enough. Okay, we got to prove that a discount but not a big enough discount where we could take title to it So because the margins are a little bit smaller on this one makes sense to do the release and termination or novation or whatever, but Again, I try not to do it unless when it's super necessary and then might not to ramble on about this But this is really important for anyone listening, don't just go out there and try to do these novations you need a really good attorney and they have to put together disclosures for you and you need to send those disclosures into the bank as soon as you make your offer. Never, ever try to do a novation style deal on a short sale without disclosing it in the beginning to the bank Because you're opening yourself up to a really bad can of worms.

Mike: 20:29

And then, on that one that you are doing. I know a lot of people when they novate deals traditionally obviously they're putting it on the MLS, but it's already on the MLS. So it's like your buyer, just like another investor that you found, instead of assigning it, you're just doing it as an novation and that's why it works. Or how does that work?

Bobby: 20:45

yeah, so on this particular one that we're talking about, I think you're asking about in Jacksonville our listing agent, she's super like in the investment world. She's really good. So she has a database of investors. So she was able to come in, get someone to pay it at the price. But what we would typically do if we didn't have that was just put it back in the MLS, just change the price. Again, we have verbiage for this, Hey this is a, your contract price is going to say this. And we just disclose it

Mike: 21:13

And then you have it approved at that amount and then you just get paid on your release interest, just like a regular novation.

Bobby: 21:18

Yeah, that part of it, but even the backend is a lot more complicated because I just don't want to give off like the, yeah, you could just run around and go, no visual, like the backend, you can't just okay, let's say I get a deal approved in my name. And then I release my interest, the new buyer steps in, the deal actually goes back under for review. And then a new short sale approval letter is generated in the new buyer's name.

Mike: 21:44

And there's some risk there that maybe won't get approved at the same price or something else may

Bobby: 21:49

I guess there's always risk, but there's no reason why it shouldn't get approved. No. Because I did the work, got it approved, I know the number the bank wants now. It's just gonna take a while. It's not like a quick. Assignment or typical novation, you're going to hold maybe 30, 60 more days until you could close.

Mike: 22:06

Sure. Gotcha. And you mentioned you bought a property in New Jersey. It's a pretty light renovation. You are going to buy this one in Jacksonville. If it came back, that number that made sense for you to renovate it. You're based in total other side of Florida. Like, how are you managing these renovation projects remotely?

Bobby: 22:23

I have a really good network of investors and boots on the ground. So I'll give you a quick story recently, about a month ago, maybe a little less than a month. I actually closed on a flip deal. I renovated and flip the property in Alabama, right outside of an army base, Daleville, Alabama, some random little town. I've never been there, Mike, and I don't even have a team on the ground there. What I did in that deal was I found a rockstar agent. He's literally one of the best. Like he wins awards, he's on his stuff and he owns a brokerage. And I brought him in as the listing agent on the back end and what that did now is I have a rockstar listing agent. Number one to confirm my numbers because I'm not an expert in that market. But then number two, I was able to happen to his Rolodex of, contractors, handymen, cleaning lady, so like I'm leveraging his Rolodex of people and his network in that area.

Mike: 23:19

Gotcha. Okay. And are you just hiring trying to go the general contractor route, I'm assuming? If you're going to, do it remotely? Are you subbing things out?

Bobby: 23:27

If it's a big project, there's no way in hell I'm subbing them out. I'm not going to lie, but my ideal renovation where I'm comfortable doing it remotely is work where we don't have to pull permits. So we could get good reputable handyman in there that do good work, but they're obviously more cost effective. And I'm not like subbing stuff out and running a project,

Mike: 23:49

Yeah, that's a whole another business on top of the short sale business.

Bobby: 23:52

a lot of interesting,

Mike: 23:53

Yeah. Cool. Cool. And do you guys do any stuff in your own backyard in

Bobby: 23:58

Anything in Sarasota right now, oddly enough, we've done short sale deals and stuff around this area, but I don't have a flip or anything going on here. No.

Mike: 24:05

Yeah. I think we were talking a little bit offline. You said this short sales have ticked up quite a bit with the rate, rise in interest rates. You want to talk about like maybe why you think that is.

Bobby: 24:16

Yeah. Yeah. A couple of reasons. So you and I were talking about, it's very interesting something we're seeing a lot of right now, people that just purchased their property within the last three years. When there was artificially low interest rates, insane bidding wars, what happens is even though prices aren't dropping, people are overpaying by such a vast amount of money over market value that once God forbid they lose their job or, they have, they get divorced or whatever the hardship is and they can't pay their mortgage anymore. They have no equity. We have several deals like that right now. So that's one thing for any wholesalers or investors listening. Just because it's a hot market, don't sleep on those retail leads that just bought their houses. Because, we're seeing a lot of pain there.

Mike: 25:05

Yeah, it's interesting. You mentioned that I was telling you offline that we had a couple of those come in. That are subject to deals that bought in the last two years. And previously we were not mailing anyone who had on their house less than five years and then we did it and we got to, so we were making a mistake for a while.

Bobby: 25:21

It's crazy, but you wouldn't think to, it wouldn't make sense to mail some, you know.

Mike: 25:24

Why would they sell? You think this it's just trash, but you think it, yeah. And when do you think like a short sale does make sense versus doing something like a subject to,

Bobby: 25:34

Yeah, great question. So a lot of our JV partners as of late, As of the last year and a half have been heavy sub two investors because a lot of sub two deals, when you're evaluating a deal for sub two, like the ones you're talking about, there's two main factors that come up in the deal that don't make it a good sub two. Number one, they're just way too far underwater. And you're like, screw this. I'm not taking this over, a hundred grand underwater. I'm not assuming this. And then number two, the back payments are way too much to get it caught up. And the cash on cash return isn't there, like it doesn't make sense to catch them up, take the property over if they're in pre foreclosure. So in those situations, when it doesn't make sense for a sub two, those deals are almost always perfect fits for short sales.

Mike: 26:19

Yeah. And when can you not do a short sale? Are there any scenarios when it just doesn't make sense or it's not allowed?

Bobby: 26:26

Yeah. Sometimes on FHA loans, government backed loans, if you just buy a property, let's say you just purchased a property and three months later you want to do a short sale. A lot of times the FHA, cause that's who's underwriting it. It's not the bank, it's the government. The FHA will look at the file and say, nah, we need to see a little bit more delinquency. You're a couple months behind, but you just purchased the property. And then also if there's no mortgage delinquency and you can't prove an actual hardship, a bank isn't going to let you do a short sale because, they're not going to take a loss for no reason.

Mike: 26:59

You have to prove that there is some kind of hardship? Is that kind of part of what you guys do?

Bobby: 27:02

100%. Yep.

Mike: 27:04

And like, how do you go about proving that to the bank?

Bobby: 27:08

So the more qualified a short sale deal is, the easier it is to prove a hardship. So like Mike, if I was You know, if you came to me as the buyer and I had to do a short sale you're trying to buy my house and I'm, seven months behind on my mortgage, the bank already filed foreclosure. They're starting the process to foreclose on me. That situation is very difficult to not come up with a good hardship. Because whatever reason I give the bank, the reason is backed up by the fact that I'm seven months behind, now where it gets a little tough is if someone's maybe a month or two, then you have to really be specific and granular about why exactly they're not making the payments. And then while long term, this is a long term hardship.

Mike: 27:54

Oh, so they want to see that it's not just a short term thing that it's like going to continue to be a problem. Otherwise, yeah. Why would they agree to take the loss?

Bobby: 28:02

Exactly. Because in a short sale, think about it. A bank is lending you a lot of money for a house. That's a lot. It's hundreds of thousands of dollars. And you're asking them to, Hey man, I know I owe you half a mil, but you mind just taking 300 that's essentially what you're asking them to do.

Mike: 28:17

Yeah. What's your, and I know no one has a crystal ball, but what's your prediction of the next like few years for short sales?

Bobby: 28:24

Yeah, this is interesting because there's a lot of like doom and gloomers out there on the internet that are like, the sky is falling! Run! Oh wait! And it would be my benefit to be one of those guys, but I don't know. That's just cringy. I just like to be able to like, listen, overall as a country, I don't think like there's going to be some crazy crash coming up or chaos. What I do think is it's pocketed. There's certain states and there's certain pockets of the country where we're already seeing a lot of pain and that's where it's going to be going forward. I think. And one thing to keep in mind too. So I think that inventory is so tight right now, especially with affordable housing and entry level homes that I don't see like a crazy crash in price. Coming for the next couple of years, but just because there's no crash in price doesn't mean there's not major distress coming financial distress. So that's my prediction to answer your question is I think the market's going to be okay for a bit in real estate, but I think we're going to see more and more motivated sellers. I really do.

Mike: 29:28

Yeah. And then you mentioned you were tracking certain areas, where these. Properties are coming underwater. What data are you looking at to track that? Or how are you identifying these areas?

Bobby: 29:39

That's like a two part question. I'll give two answers. First, to keep it super simple, which is what I like to do, I just look at pre foreclosure volume. Where are the states? First, I'll look at, okay, what are the states that have the most active pre foreclosures, where the bank is actively trying to foreclose, and then I'll take those states and I'll get granular. I'll say, okay, There's a shit ton of pre foreclosures in, let's say New York. What's going on here 80 20 rule? Typically 80 percent of the pre foreclosures are coming from, one or two counties. So then I'll see where is that pain? Florida is a perfect example. As we speak right now, there's over 35,000 active pre foreclosures in the state. So then you just have to get granular. And then the second part of my answer is, follow things such as CoreLogic, just like real estate data solution companies. Atom Data is awesome. CoreLogic, DS News, I read a lot of that. Because they track, negative equity and that kind of stuff. So just follow that.

Mike: 30:36

Sure, cool. And what's your plan for your business for the next few years? What are your goals?

Bobby: 30:41

So I want to go super deep in, the short sale business. Keep on going deep, keep on developing amazing relationships and partnering with more wholesalers. Realtors, investors to help them profit on these dead leads. And then at the same time, which is off the topic of short sales, but I'm hyper focused right now on buying and and reselling properties that are entry level. So no matter what the market is, Mike, right now I'm looking at properties that are at or below the median in the local market. I think there is a massive supply shortage and a lot of demand, even though interest rates are up for those entry level houses. So those are my two focuses.

Mike: 31:24

Gotcha. And for the wholesalers out there, right? If they're coming across these deals, like maybe they were throwing a lot of these in the trash, which I think, we've certainly been guilty of, right? What are just like a couple of things that you would say, Hey, you should go to that appointment. Is this could be something that could be worth it. Yeah. Absolutely. Absolutely. To go after as a short sale, like any tips for them.

Bobby: 31:44

Yeah. So qualified short sale, there's three factors. They're very cut and dry factor. Number one, negative equity. So property is worth 200 grand as is forget about the ARV as is it's worth 200 and they owe 300 on their mortgage. Let's say so there's 100 grand underwater in that situation. So negative equity, then you want to look for mortgage delinquency. So are they behind on their mortgage? Even if it's only like a month. Even if they're current, but they're about to be behind any kind of mortgage delinquency, you want to look for. And then factor number three, I call my bonus factor. The seller can't be motivated by money because they're not going to make any money in a short sale.

Mike: 32:27

Yeah, that's an important point.

Bobby: 32:28

Yeah. Yeah. Just to recap negative equity. Bind on payments, can't be motivated by money, and then you have a short sell.

Mike: 32:33

Do you have any wholesalers you work with who particularly target these deals or is it more like just as they're sifting through, they're like, Oh this is one I would have thrown out. Let's make an opportunity out of it.

Bobby: 32:44

Yeah, I don't know that they target them, and I actually, this is probably like a terrible business move by me, but I actually suggest they don't. You know what I mean? The way I like to put it is, I'm just a tool in your tool belt. You don't have to go out and find Bob Deals so he builds a big business. Do your thing, market to your leads, especially if you're marketing to a lot of pre foreclosures, A hundred percent you're going to come across a bunch of short sales. If you know how to qualify them, you will find short sale deals. Those dead leads send over to us and we'll monetize them for you. Now I will say that people that we've done multiple deals with Or that made a bunch of money. One of our JV partners last month in Wisconsin made a check for 14 grand a wire rather for literally doing nothing, she's a little bit more aggressive trying to find those deals now, so it's like a repeat business want to find them, but yeah, you don't have to go looking for them. No,

Mike: 33:39

Yeah you'll stumble into them. Yeah.

Bobby: 33:41

stumble into them if you look for them.

Mike: 33:43

Cool. We're we're getting close to the end here and there's always two questions that I like to ask at the end of the show. And the first one is what is the craziest or most uncomfortable situation that you have ever experienced in a real estate deal?

Bobby: 33:56

Man, there's just so many, there's just so many in my business. Cause there's just so many distress situations. And a couple years ago. I bought I guess this isn't really uncomfortable, but just chaotic. I went in with a partner and we bought an eight unit mixed use property. And it was a value add deal. It was cash flowing from day one, tenants in every unit, but it was a big value add play. Mike, I think we owned the property for three months maybe, four maybe. And it's right around Christmas. This is like the worst Christmas ever. So I'm back in Pennsylvania visiting my family and I get woken up to a phone call from one of the tenants. And as soon as I answer the phone, it sounded as she's talking to me, it sounded like she was like, standing near a waterfall or something like I hear water just pouring down. I'm like, what is she calling me from like Niagara Falls? What is happening? She's screaming because the water coming down so loud. She's Bob, there's a leak. I'm like a leak. It sounds worse than that. She said one of the pipes burst. So now I'm thinking, like your typical pipe burst. I'm like, okay, this is, it's not that bad. So I said, all right, send me pictures. She snaps pictures. The entire basement, let's put it this way, the leak was so bad when the pipe burst. 14 and I know this to be a fact because the water remediation company came and they, that's how they calculate how much they're gonna charge you. 14, 000 gallons of water. If you can even imagine it was a swimming pool. That's a swimming was in the basement. The entire basement was completely merged. We opened the cellar doors. I don't know what you guys call them, but like the storm doors, we call them,

Mike: 35:29

Yeah, the ones that open upwards sideways. Yeah. Yeah.

Bobby: 35:32

I'll call them storm doors. When we open them up, water was overflowing. That's how submerged the basement was. The electrical, everything was underwater. Okay, that's what insurance is for. This is a nightmare, worst Christmas ever, but that's what insurance companies are for, right? Wrong. They denied us. So now we're sitting there with a property, 14,000 gallons of water in the basement, insurance company denies us. And it was just, when I say a nightmare deal, look, I feel like I went through like a university course on real estate just for that deal. Depositions with insurance companies, crazy lawsuits. It was. People breaking into the property because we had to vacate. I was driving the tenants to a local hotel. It was terrible.

Mike: 36:13

Yeah. Did you did you end up being able to recover some money from the insurance company after all the, the fighting that you have to do with them? Are they still?

Bobby: 36:20

Peanuts. They ended up giving us peanuts.

Mike: 36:23

Oh,

Bobby: 36:24

No, it sucked, man.

Mike: 36:25

that sucks. That's certainly a crazy story.

Bobby: 36:27

Yeah.

Mike: 36:28

You still own it?

Bobby: 36:29

No, hell no.

Mike: 36:29

I'd ask, you never know.

Bobby: 36:31

Nope, nope, I'm good. I said, okay, we're going to cut our losses, learned a lot of lessons, get me the hell out of here.

Mike: 36:37

Yeah, cool. And the second question I always like to ask at the end for the newer people is if you could go back in time, give yourself one piece of advice when you were looking for your first investment deal, knowing what you know now, what would you tell yourself?

Bobby: 36:51

It's an unconventional one. It's not cliche, but I would definitely say, if you're new, pick a niche early. Even if it's not like a super granular niche, like short sales are like really specific. Try to get really good at... Something, even if it's a skill, even if your niche is a skill, try to just focus on one thing, get really good at that one skill or type of investment property or whatever, and then build from there. You don't have to stick with that niche forever. Just like I'm expanding into, affordable housing and rehabs and stuff, but I think it's important, especially now because wholesaling is such a crowded space. I feel like it's tough to just be a generalist. Especially if you're new. So pick something, focus on it, get really good, and then expand from there. I think that's what I'd tell anyone that's newer.

Mike: 37:43

Yeah, I think that's a great piece of advice. Great piece of advice. So if people want to reach out to you after the show, they have questions, maybe they have a property they want to either have you guys process or, refer to you so they can kick back and just wait for the wire to hit, how can they go about getting in touch with you or yeah, or submitting a property over to you?

Bobby: 38:01

Yeah. Find me on Facebook. Bobby Vieira on Facebook. Shoot me a PM. Even if you don't have a deal, don't feel like you have a deal. Hit me up. We'll hop on a call. I'm happy to just chat network. Go to universal short sales. com. And if you ever do have a short sale deal to send us, you simply hover over contact us and then you'll see the dropdown list that says wholesalers submit properties here. It's as easy as that. Shoot me a PM on Facebook, my cell phone for anyone on audio. 2 3 2 again. 32 32. Don't spam me or like semi random stuff, please. But yeah, text, say, say that you heard my conversation with Mike and yeah we'll talk. I'm happy to connect.

Mike: 38:43

Cool. This was awesome, man. Thanks for being on the show.

Bobby: 38:46

Yeah no. This is great. Thanks for having me.