From $0 to $515K in 6 Months: Ed Ferris on Arizona Land Flips, 1031 Exchanges & Market Strategy

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Show Summary

In this episode of the Real Estate Pros Podcast, host Erika interviews Ed Ferris, a seasoned real estate professional with a wealth of experience in the industry. Ed shares his journey into real estate, the lessons learned from his early years, and the importance of understanding market dynamics. He discusses strategies for maximizing ROI, navigating risks, and a unique success story involving a significant land purchase. Ed emphasizes the importance of maintaining focus on goals and leveraging experience to help clients avoid pitfalls in the real estate market.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Ed Ferris’ Website
    • Ed Ferris’ Email: [email protected]
    • Ed Ferris’ Phone number: (602) 568-5377 or (480) 244-4856

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Ed Ferris (00:00)
  early in the morning one day i got an offer for two fifty for the property

  I want to say four to six hours later, I got an offer for $700,000 on the same property. And I told them, said, well, if you want the commission off the property, you’ll have to give me 750. And they gave me 750. And I sold it and closed it within six months to the day from when I bought it. And even though I paid a high rate of interest, even though I had to make payments in the meantime, I started out with $0 in my hands, $0 invested.

  And six months later, I $515,000 in a 1031 exchange.

  Erika (02:12)
  Hey everyone, welcome to the Real Estate Pros Podcast. I’m your host, Erika. And today I’m excited to be joined by Ed Ferris. He’s shaking things up in the real estate and investing space. Ed, I’m glad to have you on the show today.

  Ed Ferris (02:26)
  Thank you for the

  invitation.

  Erika (02:27)
  I think our listeners are going to have a lot to learn from your experience in the real estate world. So let’s jump on in here. First, Ed, can you share more about your story and what inspired you to get started in real estate and investing?

  Ed Ferris (02:43)
  I’ve always

  had an interest in real estate ever since I was a youngster, even a teen probably. Although my path was altered many times throughout my life. I I graduated high school at 17. My dad died a week later. I had to drop out of school and college and support the family because we had a family-owned business. then, you know, many things come along the way.

  hurdles you have to overcome and challenges you have to withstand. ⁓ I’m from Connecticut originally. I’ve lived in California, lived in Colorado, lived in Florida, lived in Martha’s Vineyard. I’ve lived in various places. But when I came to Arizona, I just fell in love with Arizona. Actually, in the beginning, I thought it was kind of weird because everything was brown. There was really no like forests and trees. But if you go

  an hour to north, you’re in the forest and trees. Arizona has like every climate under the sun. And I came to love Arizona and I don’t think I’ll ever live anywhere else. Although the real estate industry in Arizona ⁓ offered a lot. There was a lot to do with multifamily when I first got here and I was involved in multifamily for a decade or so.

  And then I got into the real estate sales part of it, mostly residential. have done some commercial as well. ⁓ In the market in Arizona has, you know, exponentially increased. And a lot of people became very wealthy with real estate because they were able to hang under their properties through the ups and downs. been the RTC, there’s been many different debacles over the years that

  you know, challenge those investments. But I think that in the overall scheme of things, if you were able to hang on to your properties throughout those things, you have done very well. And I started my own firm, I want to say it was probably around 1991 or 92, somewhere in there. I don’t even recall, but I’ve been doing this for quite some time.

  Erika (05:55)
  Yeah, yeah. Wow. know, Ed, can you share, you know, more about those early years? Because, you you learn a lot in those early years. there some lessons there that, you know, you still take with you today with what you do in real estate?

  Ed Ferris (06:12)
  ⁓

  Yeah, you always have lessons as you go along. I don’t think you ever stop learning ⁓ Some of the more valuable lessons ⁓ They come too late, it’s kind of like hindsight ⁓ I know many people in the industry some of them were in it for short periods of time made bundles of money and

  got out. I know other people that have been in it as long, if not longer than myself, who can’t ever seem to get ahead of where they are, even if they hire more agents or do a larger team, because their expenses just get to be more and more. And so they have to bring in more and more. So there’s a balance there somewhere. I mean, there are some people

  ⁓ that have done very well doing the marketing end of it. ⁓ And they’ve gone national with their marketing. And up until that point, they struggled as a broker and a company. But I think if you have your goals set and you’re willing to do what it takes to get to where you want to go,

  You just have to maintain that and you can make those adjustments along the way, but you can’t flip flop. And I mean, I don’t know if you see it much, but today you see people that, ⁓ today you have to do flips. Tomorrow you have to do assignments. The day after that, you have to do owner wraps or carries. you have to do multifamily. Then you have to do, ⁓ you know, is it? Group housing. You can’t keep changing.

  your goal, you have to maintain a goal and work on that and build what it is you were trying to do in the first place.

  Erika (08:22)
  Yeah, absolutely. ⁓ I know that you’ve worn many hats in how you’re involved in real estate. How do you decide which opportunity to pursue?

  Ed Ferris (08:35)
  I think if you look at the whole picture, you you’ll listen on the news. The real estate market is up, the real estate market is down, the real estate market is this, the real estate market is that. That’s a very generalization. There are some places, like here in Arizona, Silverleaf or Paradise Valley, if you buy a scrap in either one of those places, I mean, it’s gonna cost you a million dollars and…

  the average price in both of those places, probably five to eight million dollars. ⁓ But back in the day, you could have bought something in there for $180,000. So if you were able to hang on to what you do in the long run, real estate is a very stable investment in the long run. In the short run, it could be very volatile. In the volatility, if you’re not.

  financially, mentally, emotionally prepared for it, that volatility can make or break whatever it is you’re trying to do. So I think that the best thing for someone to do is A, not to put all their apples in one basket. B, understand what it is they’re doing and prepare themselves for the long haul. If they’re going to do a short haul thing, let’s take a flipper. They buy a house and they want to fix it and flip it. It’s the market.

  takes a little turn while they’re doing that, they might not be able to make a profit, might even take a loss. So you have to understand what it is that you’re going into and where you’re headed with it so that you’re prepared for whatever could come about.

  Erika (10:56)
  Absolutely. Well, you know, we’re talking about the market today, Ed. Are there certain strategies that you tend to be using to get the most ROI? ⁓

  Ed Ferris (11:08)
  Yeah, ⁓ if I’m working for a seller, I’m doing my best for them to attract the clients that would be most interested in their property to get the highest and best value out of their property. ⁓ If I’m working for a buyer, I’m obviously trying to get them the best I can get them for what value they can afford. And there’s

  A lot of balance today, more so, I mean, four or five years ago, the market was insane. You could have put a sign in your front yard and you’d have 50 offers in, you know, an hour. Today, well, even then, 30 % of the offers then, maybe 20 % of the offers now are cash buyers who, they all are doing the same thing. They’re trying to buy below market so that they can either assign,

  or flip a property and make a profit. But an end user would be willing to pay the seller a little bit more if the seller’s willing to put a little bit into the property, some paint, flooring, whatever. They might be able to sell it to an end user, whether it be an investor for rental property or an owner or principal residence, and get their maximum value out of that property. So today’s market

  Yes, the interest rates matter, but not as much as the price. The price is more important than the interest rates. I mean, I think you and I have had a conversation previously where I think you could pay a much higher rate of interest if the value was there for what you were purchasing.

  Erika (13:00)
  Yeah, so you know, it’s interesting because this might kind of tie in to what else I was going to wanted to bring up, is you mentioned that before that 160 acre land purchase.

  you made that a success.

  Ed Ferris (13:20)
  Well,

  actually, it came out of ⁓ probably one of the worst moments in my life ⁓ because at that time I came home, my wife had moved with our daughter, wanted a divorce, and I was not in a very good emotional place. ⁓ So I didn’t know what I wanted at that moment because everything that I thought I was working for had disappeared.

  What happened is I took the airport, which in Phoenix is basically in the center of town. I took the airport and I just started looking around and around and around. I got within about an hour of the airport and I found a piece of property that was marketed for $350,000, but it was canceled. And I spoke with the owner agent.

  who also had her husband and another couple as partners. And I said, would you be interested in, you know, a cash offer on the property if I could find a buyer for it? And they said, ⁓ sure. So I, I took it to everybody. I mean, I was only looking to make a sale because I was just not in a good place mentally, emotionally, and psychologically, because my whole life fell apart.

  So I went to everybody and they all thought I was crazy to even bring it up to them because this property was between Mobile and Australia Mountain Ranch. And you had to drive on a paved road and then seven miles down a gravel road to get there. Bill Clinton was president at the time and he designated 350,000 acres across the street to be the Sonoran Desert National Monument.

  So this corner of property that I purchased or that I was talking about was at the very end of where you could construct anything. And then it became a preserve. There is a gravel road that goes all way through there. There is a gas pipeline that goes through there, but everybody thought I was nuts. So I then started saying to people, look, I don’t have the money.

  But if you know anyone that is willing to loan me the money, I’ll buy the property.

  I did find a client, one of my clients said that they would do that. We made a deal, made the purchase for $175,000. And I wasn’t planning on selling it at the time. I thought I’d keep it for like 30 years. And then there was this 10,000 square foot house. The owner used to have a building company here on 10 acres. And I thought maybe I’ll trade it with them. And they didn’t want to trade.

  because they wanted to sell off the property after he had died they didn’t want any more property in that conversation with that agent there was a delman from chicago those who intend thirty one exchanges with some money made up there looking for things to buy they made me an offer i couldn’t refuse

  early in the morning one day i got an offer for two fifty for the property

  I want to say four to six hours later, I got an offer for $700,000 on the same property. And I told them, said, well, if you want the commission off the property, you’ll have to give me 750. And they gave me 750. And I sold it and closed it within six months to the day from when I bought it. And even though I paid a high rate of interest, even though I had to make payments in the meantime, I started out with $0 in my hands, $0 invested.

  And six months later, I $515,000 in a 1031 exchange.

  But I mean, obviously, 99 % of the people wouldn’t have done what I did. They all thought I was crazy.

  Erika (18:13)
  Yeah, I guess with that in mind, what is kind of like your approach to leveraging risk and doing things differently? How do you weigh that?

  Ed Ferris (18:28)
  You have to understand your markets. You have to understand what it is you’re considering. You really need to understand the neighborhoods and the surrounding areas. Arizona’s very unique. ⁓ I’ve sold very eclectic homes in its historic areas for money that you would think is crazy. It’s like, wow, that much money for that little tiny house.

  And then I’ve sold homes in other areas like Maricopa, 4,000 square feet for $300,000 doesn’t make sense.

  You have to understand all those different market areas and you have to understand what people are looking for. But Arizona is very unique in the way that it just keeps expanding. So the further out you go, the newer the stuff is, usually the less expensive it is, the further in you go, the older it is. And usually it has more market value because of its convenience.

  So I weigh many factors, the economy, your job, what you do, where you work, your family circumstances, your personal goals, your desires, and the real estate itself. The real estate itself, you know the old saying, location, location, location, but in Arizona, that is always true.

  But like Silverleaf was not a location. Silverleaf in Scottsdale was just an area that once they started building their homes over there were tens of millions of dollars. ⁓ Some of them probably even surpassed properties in Paradise Valley. But Paradise Valley was always the place for the high end buyer. Silverleaf has some gorgeous properties for exorbitant prices.

  that never existed until probably, I don’t know, 15 years ago or something, 20 years ago.

  Erika (20:44)
  That’s really something. Ed what would you say is ⁓ next on the horizon with all that you’ve done so far? What are your plans next?

  Ed Ferris (20:53)
  I’m

  rebuilding my own personal portfolio as I help people. mean, tomorrow I have two closings as it is, but that’s for clients. I’m rebuilding my own personal portfolio because at one time I did have, ⁓ I want to say $3.2 million worth of residential properties, which I probably only had $1.7 million invested in. But when the market tanked, all those properties,

  and all their values were less than a million dollars. That’s how bad it got. So that was the part that affected me the most. Will I do those same things again? No, I won’t. I learned many lessons that cost me a million dollars. yeah, they were lessons that, know, not only do I utilize for myself, I utilize them for my clients as well. My clients don’t have to go through that same.

  agony and pain that i went through i understand it they don’t have to understand that they don’t have to go through it because i won’t let them

  Erika (22:04)
  That’s great. yeah, you have all that experience and knowledge to help your clients. Well, Edda, you know, this has been great. Before we wrap up, if somebody wants to connect, collaborate, you know, maybe they need help with buying and selling. What’s the best way for them to reach you?

  Ed Ferris (22:25)
  Actually,

  I’m pretty sure if you just type my name in Arizona Realtor in the computer, you’ll find many different ways of contacting me. But again, the best and easiest for me is just to call me. ⁓ I have two phone numbers. One is a unique phone number. It’s 602-568-5377. But when I originally got that number 30 years ago or whatever it was, I was able to pick my number and I wanted to get

  a number that spelled out lot line was not available. So my phone number is 60A L-O-T-L-E-S-S. So if you dial 60 a lot less, that’s that number. My other number is 480-244-4856. Of course you can go to homesandparadisevalleyaz.com. could ⁓ email me. have.

  [email protected]. But I also have like a dozen other means of contacting me. But those are the main ones. I’m sorry there’s a tractor trailer behind me.

  He’s backing up. He’s going the other direction, I didn’t realize he was coming here.

  Erika (23:38)
  It’s all good.

  Yeah. Well, it was so great having you on the show and sharing your story and your expertise today.

  Ed Ferris (23:52)
  Well,

  I appreciate the invitation. It was a pleasure to speak with you and you know, you’re always welcome to give me a shout at any time.

  Erika (24:01)
  Well, we’ll do. for our listeners today, if you enjoy this episode, make sure that you’re subscribed to the Real Estate Pros podcast. We’ve got more conversations lined up with experts like Ed, who are out there building fantastic real estate businesses. We’ll see you on the next episode.