5 Strategies for Foreclosures & Short Sales

Michael Stansbury (00:01.236)
Hello and welcome to the Real Estate Pros podcast. I’m Mike Stansbury and today we have Donald Torrance from Indiana. He’s in the northwest part of Indiana, close to Chicago. Donald, how are you?

Donald Torrence (00:18.606)
doing great, how about yourself?

Michael Stansbury (00:20.194)
I’m doing excellent folks. We’re going to get into Donald’s story, get into his origin story and he’s got a lot of time under tension in the real estate world. But before that we’ve got to pay the bills and Investor Fuel and that’s who is the podcast is brought to you by We Help Real Estate Investors, service providers and real estate entrepreneurs, 2 to 5X their businesses to allow them to build the businesses they’ve always wanted and to allow them to live the lives they’ve always dreamed of. Donald, tell me I’m always interested.

One of the things I like to ask our guest is, hey, were you doing something before you got into real estate? What got you into real estate? What was the thing that tripped you up and put your face planted into this career?

Donald Torrence (01:02.158)
Well, it’s crazy. My interest was peaked in college. I went to SIU down in Carbondale, Illinois. I stayed in a 16 unit apartment building. The owner had, it was twin buildings. It was all college kids. This was back in the 80s, so we was paying $175 a month for a studio.

I only see this guy when he come cut the grass. He had a management company that collected the rent, but he only showed up to cut the grass. And I’m like, man, this dude pulling in $5,600 for each one of these buildings. I said, he don’t even do any work. So that piqued my interest in him, buddy of mine that I grew up with.

came home from college and was telling him about it and he took me around because he was buying properties and he was renovating them. We never knew. We just thought he was working on houses with his dad. He showed me a couple of properties and I was like, you bought this stuff? You crazy. You spent your money on it? And I talked about him so bad until I came home for Thanksgiving break and he had a check stub laying on his table. He told me to pick it up and look at it and it was 50-some thousand dollars.

And I looked at that and was like, how did you get this? And I’m questioning him, questioning him, and he tells me from this property. I fixed it up and I refinanced it and I pulled cash out of it. And I was like, you gotta show me how. This was the early 90s. This was, I wanna say 86, 87, more or less. It was more so the end of, cause I came home, I graduated in 88, came home in 88.

I actually started working as a maintenance tech in 88. Wound up becoming a building engineer and by the early 90s and that’s when I said, okay, I gotta get into this real estate because I’m working for companies that’s doing the real estate and decided.

Michael Stansbury (03:09.834)
So that whole sequence was always in the back of your mind. You could probably smell the room.

Donald Torrence (03:13.706)
Absolutely.

Absolutely, absolutely. So I wound up getting licensed and certified as a building engineer and learned everything I could about building, the building and real estate space as a building engineer. 95, fast forward to 95, I bought my first property. Six bedroom, three bath house, me and two other partners that I grew up with.

And renovated that and pulled cash out of it and bought three more properties Renovated those three pulled more cash out by the time we was all said and done when I looked up we had 137 rentals So so now was all in that that that all transpired from 95 to 97 With all those different properties

Michael Stansbury (03:56.798)
And there you go. Wow. Just like that.

Donald Torrence (04:13.728)
It was a little bit overwhelming not knowing how to manage it, do anything myself. One of the partners decided he didn’t want no part of it no more and said, you can have it all. And said, and just walked away. And the other one, we just parted ways on the last partner and it was all left on me. So I had 137 rental properties for me to figure out what to do and how to manage them.

Michael Stansbury (04:28.409)
wow.

Donald Torrence (04:43.564)
And I was cheap. That was the worst thing that you can be in this industry is to be cheap. Not hire contractors, not want to pay, write a check. I’ve learned to not ever do that again because when places would break, something go wrong, I’m not paying a contractor. I know how to fix it. I’m gonna fix it myself. So that was, that was my big…

Michael Stansbury (05:05.023)
Right.

Donald Torrence (05:08.222)
Mistake that I made in my process by 99 12 properties in foreclosure So I’m gonna do and I was scared thought I was going you know They was gonna come down to because the banks was calling threatening just making making me just nervous about what all they can do I Didn’t know no better

met my attorney in 96 and met his mother-in-law in 95. She schooled me and told me, don’t worry about stuff. And he came in and helped me. They helped me get out of that situation, which I’m forever thankful for. He’s still my attorney to this day. I still use him. He still closes deals for me. So I’ve learned a lot during that process.

Fast forward, I learned a lot about foreclosures in that process. So between 99 to 2003, I probably had did over 100 short sales. And in that process, the banks was going through their transitions that investors can no longer negotiate short sales. You had to be the licensed realtor or you had to have a certification in short sales and foreclosure.

Michael Stansbury (06:04.316)
Right.

Michael Stansbury (06:15.05)
Wow.

Michael Stansbury (06:30.368)
You couldn’t directly do it with them, okay.

Donald Torrence (06:32.525)
Absolutely. So 2003, I got certified in foreclosures and short sales. banks allowed me, now I got the relationships with loss mitigation. I’m doing a lot of negotiating again. But by 2005, 2006, I’m probably 300, 400 short sales in.

In some way, either I’m negotiating them for investors, I’m negotiating them for homeowners, not so much that I’m doing an actual deal myself, but I’m actually working the transaction out. But, absolutely. But.

Michael Stansbury (07:06.06)
bright.

Michael Stansbury (07:11.318)
you were connecting the buyer and the seller and you were helping the borrower. Yeah, absolutely. so, and then you going through that and it’s just interesting to me that they made you get a certification and all these things that it just seems to add more complexity. And I remember doing short sales and a lot of people were afraid to do it because of the complexity and you weren’t because you knew basically how they worked, right?

Donald Torrence (07:29.399)
Yes.

Donald Torrence (07:39.502)
Absolutely, that’s the key. That’s why most people don’t do them. Now, it’s the key word now. Let’s do a short sale. And most people say, did a short sale, but it didn’t go through or the banks didn’t get back to me. You got to be that hamster on the wheel and make that wheel squeak for the banks to actually keep you afloat on what’s going on with that transaction. If you don’t, you won’t know what’s going on with it.

Michael Stansbury (08:07.712)
Right, so you’re constantly trying to push the buttons of the people that made decisions and said, hey, we gotta get this deal done. And yeah, I remember the short sale thing, we definitely won some good profit margins by, you know, they wanted 180, here we got 80. Okay, we’ll take it. And you’re like, really? Yeah, we need to get this off our books.

Donald Torrence (08:11.896)
Yeah, that’s it.

Donald Torrence (08:25.57)
Yeah.

Michael Stansbury (08:31.33)
Yeah, so it was also a timing thing. don’t remember. Maybe you can paint a picture, but the banks have to do their books and they have to make sure that everything, they have to get stuff off their books. And sometimes you can leverage that aspect of the date and time. And I think that’s what our guy did is he was really good. like, we don’t even talk to him until next month when the clock is really ticking.

Donald Torrence (08:44.494)
Absolutely.

Donald Torrence (08:57.175)
Right.

Donald Torrence (09:01.593)
They go through their audits mostly between the end of September, early October, all the way up until the end of November. So that’s your time when you can really get some great deals from the banks because they need to clear off as much as they can off their books because it limits the amount of money they can borrow from the Federal Reserve.

So in order for them to do that, they gotta get as much properties moved off of their books so they can get a higher borrow.

Michael Stansbury (09:33.91)
So Donald, what is, because I don’t see a lot in my market, but what is the short sale market look like today over there in your part of the world? Is it still something that’s happening, but not at the same pace? What do you see happening in the near future?

Donald Torrence (09:46.84)
So.

So Illinois is in the top rankings, top 10 rankings as far as the most foreclosures listed. And this year, I want to say last month, there was over, I forget the exact number, but there was thousands of foreclosures listed just for Illinois.

So Illinois market is right up there. And if you watch the foreclosures, they study creeping up. They study creeping up. With people losing their jobs, it’s going to tremendously out of control. The government is going to try to keep it from being another 2007. I say 2007. People always say 2008.

Michael Stansbury (10:29.313)
Mm-hmm.

Donald Torrence (10:34.222)
It started affecting 2007 because I had properties that went on the market. I never forget the one property we had. We did a complete renovation, went on the market at $5.99. The relative calls us probably two weeks after we on the market and said we need to do a price reduction. I said, we ain’t been on the market long. She said, yeah, but the value’s over here dropping.

Nobody’s really saying nothing. This is 2007. So the market tank, so we dropped down to 469. We dropped from 469 to 369. She tells me we need to drop again to 299. And I said, forget that. I’m not doing that. I’m not dropping no more. I’m losing money. There’s no way I’m dropping.

I let the property go because it was just too much to keep dropping, keep dropping it. And I just didn’t have the mindset, the people telling me or guiding me to say pivot, hold the property, keep it as a rental. And I think I didn’t want to keep it as a rental because we just spent so much money on the renovation that I did not want to use it as a rental.

Michael Stansbury (11:47.98)
Right.

Donald Torrence (11:48.942)
But if I knew what I know today, I’d pivot.

Michael Stansbury (11:52.674)
Yeah, yes, you would have said there. but you’ve been uniquely, and I think maybe you can call this a little bit, but you’ve been through a foreclosure process yourself. You’ve had property. Yeah, I think every good real estate investor has learned from a Valley, but it was at the end, right? Because you’re still in it. Yeah, because a lot of people are, when they don’t know what they don’t know, what is the foreclosure for the borrower?

Basically, I mean it does hurt, right? No doubt, but you can come back from it.

Donald Torrence (12:24.622)
Yeah, absolutely Absolutely, absolutely So and one of the things that as an investor you start your master figuring out how can I how can I what else can I do besides Going through that process. What else do I have at my disposal? So you start looking at all the different strategies that you have it’s like that

If you have a plumber that comes to your house and he only have a crescent wrench, he’s only able to do one thing. But if that plumber has a truckload of tools, he has a way to fix any problem you may have in your house. So as an investor, you have to have those opportunities too by having different strategies that you may have.

to actually use because if you get in trouble, you need to know what you need to do to pivot to get out of trouble. And most people don’t. They just ride that wave until they sink. And you just need something else to pivot to get out of that situation when you start going into foreclosure or feeling yourself going into any kind of hardship.

Michael Stansbury (13:33.73)
Yeah, multiple tools, yeah.

Yeah, and one of the things that think you just articulated is, know, hardships come, valleys come, and it’s important to have a plethora of tools and maybe a plethora of people. And have you ever been involved in any kind of networking group or real estate group or a mastermind that has helped you in your travails? Yeah.

Donald Torrence (13:49.336)
That’s it.

Donald Torrence (13:54.254)
Whoa.

I have. Let me go back to, because I did some coaching programs, Ronald Grant, Russ Whitney’s. The first one I ever did, I think everybody did, was Carlton Sheets. So I think I did all of those back in the 80s because I was still trying to figure out, I mean in the 90s, because I was still trying to figure out what

Michael Stansbury (14:15.99)
Yeah.

Donald Torrence (14:26.54)
what was it that I was doing because I didn’t know. I was just buying properties and was putting tenants in it. That’s all I knew.

When you start hearing people talk about different strategies, you start figuring out, that’s possible. so, and to hear it in a group setting that each person may have a different strategy or a different technique. You learn from that and then you might take what they just told you and say, now I can add to that. I have something else that I can do or there’s other opportunities for me.

So you not, when that waves come, cause there’s a wave coming. I see it coming. So when that wave come, you can actually pivot to, so you can survive it. Because it’s going to be a lot of people that’s not going to survive what we got coming ahead of us. and them not knowing other, our wholesalers, you think about the wholesalers, they might get more deals in.

Michael Stansbury (15:17.068)
Right.

Michael Stansbury (15:24.3)
Right.

Donald Torrence (15:33.442)
what’s coming on, but they only limited to trying to get a property for a low price. So outside of that low price, what are you going to do if the seller says, I need to sell, but I can’t sell it at this price because I got a mortgage. What do you do then? They’re going to have an answer for that seller. So you actually didn’t do them any service. You just wasted their time for the most part.

Michael Stansbury (15:49.825)
Yeah.

Michael Stansbury (15:55.658)
Right. Right. And this is where you think, especially coming up, the person that has that quiver that can do a short sale is a lot better equipped than a wholesaler because a wholesaler can’t make it work. And they’re not going to take the time to really sit with the owner and show them what their options are. But somebody that’s been through the short sale process is going to be able to do that. Because you’re right. It is one of those things where

Donald Torrence (16:22.122)
Absolutely.

Michael Stansbury (16:26.108)
if the wave comes, all those wholesalers will be looking for work to do unless they get that skill set. That’s interesting. Yep. All right. So, you know, one of the things we talked about in the pre-show, because we always have folks just to know, just to let you know how things are done. We usually talk beforehand. And one thing that’s interesting about you, Donald, is you’re actually helping kind of the least of these in your market. You know, the folks that are maybe down on a lot, maybe homeless,

Tell me how you’re helping those folks in your market with real estate with what you’re currently doing.

Donald Torrence (17:01.442)
So we’ve transitioned all of our rentals to where we can actually provide rooms. So for some individuals, they want their own private rooms. We’re doing room rentals, our bed rentals. So we’re providing a room or a bed, whereas two people in a room.

The benefit of this is that you get to manage your property and see what’s going on a lot better than you do if it was doing traditional rentals. We have cameras in our places. We can come in whenever we want. We can monitor whatever they’re doing. So there’s house rules that’s also in place that they have to follow.

Michael Stansbury (17:43.838)
because, okay, great, yes, because it’s this different, yeah.

Donald Torrence (17:49.932)
So we’re reaching the homeless population, where there’s veterans. my gosh, there’s so many veterans that’s homeless. There’s people that go through an eviction that just don’t have a place to go because their family that’s not local or their family is in another state. So we’re taking people of all walks of life, people who come home from prison that just don’t have family that they can turn to, people coming from recovery.

We’re taking all of those individuals and giving them a place to stay. And we base it off of if they do have to have some form of income, whether it’s SSI, SSDI, some of the non-for-profits like Catholic Charity or Salvation Armies will cover a couple of months rent for them. And some people need to stay for a week, some need to stay for a month.

Some, we have a couple people that’s been with us for a little over a year now. So some people come and they just don’t, know, they want them making it stay home. And they can stay as long as they want. They’re not on a lease. do a, our documents that we have them sign actually gives them the right to leave whenever they want. So, and it’s a much better area for them and it’s a controlled environment.

Michael Stansbury (18:49.663)
Wow.

Michael Stansbury (19:07.062)
Wow.

Donald Torrence (19:14.83)
So yeah, and they have chores. They have to keep the places clean. We do have a place clean once a month, which helps them out too. Cause it’s cleaning us inside the stores and stuff that they typically wouldn’t clean. Most of them just doing surface cleaning. They’re not doing like a deep cleaning like the cleaners when they come in.

Michael Stansbury (19:15.498)
And they’ve got rules that you’ve to attend to in order to stay there as well.

Michael Stansbury (19:37.75)
Right.

Donald Torrence (19:38.062)
Well, it works out great. It’s a much higher cash return cash flow than you would if it was traditional rental. Just to give you an example, our one bedrooms were typically rent for $1,400 in Indiana. We’re getting $2,400 for our one bedroom.

Michael Stansbury (19:52.874)
Right. And that’s such a win too. one of the things that, so I didn’t know this was a thing until, you know, you don’t know this is kind of a thing that happens until you have something happen to your family and somebody needs to use it. We had a family member that, you know, did the typical thing that every family has probably experienced where,

They got onto some substance abuse problems and then they started making some bad life choices. They ended up being arrested. And you know, one of the things you do as a family, and this is just, this is advice for people is, is don’t help them on the way down. Just let them hit, hit the bottom. And so these places, if it wasn’t for one of these places that my family member transitioned from a group home to a home like this,

Donald Torrence (20:23.875)
Yeah.

Michael Stansbury (20:46.298)
where they are able to stay for six months and then get back on their feet. It’s just a great transition for them to slowly get back into society. And now it’s been 11 years and the family member is not just living but thriving and helping people in the same situation. Totally clean, got their felonies expunged, but it was for

Donald Torrence (20:56.298)
Absolutely.

Michael Stansbury (21:12.758)
you know, from property, but if they didn’t have these opportunities to kind of deal with things, then, you know, they’re just left out on the street.

Donald Torrence (21:22.862)
Right, that is so correct. because right now we’re housing 54, we sitting at 54, 52, somewhere around in there. Our goal this year is to try to house another 100 people this year. If we can get past that threshold, we will.

And that’s the beauty of the whole real estate space when you can actually do something other than just rent them out, flip them. Plus flipping properties, can, I mean, that’s, that’s a chore within itself. It’s fun. But after a while you get bored with it. You’re like, okay, okay, what else is there besides this? So you start looking for some other avenues to do. And this is actually very rewarding.

Michael Stansbury (22:04.598)
What else is there? Yeah.

Donald Torrence (22:14.592)
And just to hear some people’s stories and see that you helped them out of the situation is great. Because we have women-only housing, male-only. We don’t do any co-ed. And then we have places that we actually do single moms and single dads and couples. So we get to dibble and dab in that whole array of families that we can actually help.

We just took a young guy in, he’s 20, I think he’s 20, that his brother just couldn’t handle him no more. He needed for him to start doing on his own. Just to hear their story and how he’s been in his brother’s life to try to get him on the right track. That was an amazing story. And to see that we was able there to actually give his brother some footing to actually get started was good.

Michael Stansbury (23:11.842)
Yeah, Donald, that’s amazing. Well, I want to talk about this other part of your biography, which I think is amazing. So I have four children. You have eight children and 20 grandchildren.

Donald Torrence (23:20.878)
Yes. you know what’s crazy? We just did an Easter egg hunt at our house.

Michael Stansbury (23:30.732)
much did that cost?

Donald Torrence (23:34.104)
So what I did was, cause I’m a cheap guy too. So I bought some of those plastic eggs that you can put candy in. And we filled it up with candy and then I took $120 and broke it up into singles and tens and stuff like that and stuffed them in the eggs as well. And we on a little less than six acres. So I spread the eggs all around the property and just let them, by the time they found all of them, it was done.

dark. And they were all tuckered out. Yes. So funny to watch them run around like that. So, but yeah.

Michael Stansbury (24:05.017)
no, that’s so great. Six acres.

Michael Stansbury (24:12.672)
That’s awesome. That’s what a great grand, that’s what a grandfather should do.

Yeah, so the age ranges of the 20 grandchildren, what do they range from?

Donald Torrence (24:24.974)
So the oldest is 18 and the youngest is getting ready turn one year this next month. Getting ready turn one year.

Michael Stansbury (24:32.002)
Wow.

And so is all your family down close by?

Donald Torrence (24:37.334)
So yes, I have a brother that’s still living and a sister that’s still living. So we all within distance of each other.

Michael Stansbury (24:46.946)
and your kids are close by as well. Are they involved at all in real estate?

Donald Torrence (24:50.263)
Absolutely.

No, don’t want to touch. What’s crazy is I got my son. Because we were, this is my second marriage. My first marriage I had a child from and then this. So when I met my wife now, she had three children, I had three children. 2015, we found out I had two more by the same person. So that’s what gave us, that’s what gave me the eight.

Michael Stansbury (25:21.45)
Hey, you got a… You got there. That’s great.

Donald Torrence (25:24.246)
Yeah, so but the cool thing about my son, which is my wife’s son, he wanted to learn what I was doing as far as the building around. So now he just took his stationary engineering license. Actually, he took it Tuesday. So he’s waiting for his results.

He’s starting to do all the stuff that I’ve told him to get all his license and certifications and stuff like that so he can be a person that they seek him out. The more I told him, the more he have, the more he can actually learn. He did tell me the other day that I understand why you did this and why you went into real estate doing it for yourself. I said, I never missed any of you all’s things at school. I did what I wanted.

I left and I never put the job first. A lot of people because they bound by the job because they need that job. I was never in that situation because I had the rental income. I had real estate that would actually sustain me even if I lost the job. So.

Michael Stansbury (26:27.499)
Right.

Donald Torrence (26:36.798)
Once you know you’re not controlled like that, you get a lot more freedom. And so he’s starting to see that now, and he’s starting to start come around now and start asking questions about how to negotiate a deal. What if the deal is upside down? Can you still, because he knows somebody who’s got a property now, but they over leverage. Now it’s like it’s still a deal.

Michael Stansbury (26:57.162)
Right. Right.

Donald Torrence (26:59.594)
I said, you know, once he gave me the numbers, I said, it’s still a deal. As long as they willing to do something creative, if they willing to let you hold, if they willing to hold the financing on it, or leave the mortgage in place, you can still make it work. But they have to be willing to. So he’s starting to open his ears up, because he didn’t hear me before. Yes.

Michael Stansbury (27:11.266)
Alright.

Michael Stansbury (27:15.616)
Yes, sir.

Michael Stansbury (27:23.488)
Yeah, and an amazing little experience and it’ll go, maybe dad had something that I need to check out. Yeah.

Donald Torrence (27:29.228)
Yeah, so now we’re starting to get him to actually see a different perspective and how he can actually make his life a lot simpler than just getting up going to two or nine to five every

Michael Stansbury (27:43.714)
and you get on it. Well, Donald, how can people reach out to you, find you, where they find you on all the socials and where can people find you if they want to do business with you in Indiana and Illinois?

Donald Torrence (27:56.76)
So I’m on all social media, Donald Torrance. I’m on Instagram, Facebook, LinkedIn. Just type my name in and out.

If they want to see or be a part of some of the things that we’re doing for the homeless, we’re actually looking for additional investors because we are actually putting together some additional deals that we’re doing. we’re also, those who are interested in being part of that can actually call 219-262-2517.

and I’ll get back to you if I don’t pick up most of the time when either I’m on the phone or something like that. But if you call and leave a message, I’ll get back to you and we could talk about either being part of some things that we got to help the homeless out. But for the most part, that’s where I’m at.

Michael Stansbury (28:54.732)
Well, awesome. Will you guys reach out to him if that’s something you want to find out more about it. Donald, thank you for being part of the Real Estate Pros podcast. Folks, like and subscribe, and we’ll see you next time.

Donald Torrence (29:08.004)
Thank you.