How Travis Mercer Uses AI to Find Real Estate Deals, Flip Homes & Build Passive Income

 

Travis Mercer (00:00)
Learn to to think about things that are impossible being possible. I literally today I there’s a house on the market for three ninety nine, I could pay three fifty for it. So I opened negotiations at three forty, and sure enough, they took the three forty.

So you look at a property like, they’re not gonna take out 50 or 60. How do you know you didn’t try? So I think you know, in Mike Tyson’s quotes of, you know, just get out there, start dirty, start nasty. It won’t be clean, it won’t be pretty, but you gotta go out and you gotta get started. So I I encourage you to work, you know, you hop on your your social medias. There’ll be play’ll be investors and stuff, hopefully in your area that are doing meetups. Certainly go to those, start learning what you can. If you want to get down to you know a courthouse.

Issa Hanna (02:12)
Welcome back to another episode of the *Real Estate Pros Show*. I’m your host, Issa Hanna. And today I have Travis Mercer here to share his knowledge with us. Travis, welcome to my show.

Travis Mercer (02:20)
Thank you so much for having me.

Issa Hanna (02:21)
And I’m super excited to have you. We were talking earlier. Very insightful guy, very knowledgeable and personable. Nice guy to talk to. So for people at home already wondering who is Travis Mercer, what does he do? Can you kind of give us what you’re focused on and what your day to days are like?

Travis Mercer (02:38)
For sure. So I kind of started out in W-2 like a lot of the world. I was slinging IT equipment up in Chicago. The weather really wasn’t for me. Took a job in the financial sector, was promoted, given my own financial office for Wells Fargo, and ran that office for a year, turned it around, made about a $1.6 million difference in their their bottom line, and they sent me a bonus check for six grand. And at that time I decided I needed to find out a a new a new career path. So I started doing my research.

Looking at the different demographics and the Census Bureau and where I really thought was going to go. And Charlotte checked all the boxes for me. Charlotte, North Carolina, second largest financial capital of the United States. And we’re growing, I think we got 214 people a day right now, moved to the city. So our market’s flattened a little bit, but not nearly what some of the other markets have had. So we’ve got a lot of underlying factors here in Charlotte that have allowed us to really capitalize on some great opportunities. So

Got into retail, was doing retail real estate from like 2005 to about 2008, which most people will recollect that was be the financial downturn. And at that time I was given the opportunity to go work for a subsidiary of BlackRock in Deutsche Bank, which was Invitation Homes. And I remember I’m sitting there watching Buffett on TV. He’s like, “Well, if I had the means right now, I’d be buying up all these single family resident homes.” I’m like yelling at the TV. I’m like, “I could do that. I already have all the math done.”

So the universe allowed for me to get that opportunity. So I went to work for them, purchased about 2,800 homes in 18 months. I think my biggest day was 186 closings in one day. And I’m reporting back to the to the guys in Wall Street that, “Why didn’t you buy more? Why didn’t you buy more?” “I’m trying.” So that was an excellent fun opportunity. That that portfolio is quadrupled in value for them. So they’ve done extremely well for themselves and then their investors.

But I wasn’t making the money sitting in the acquisitions chair. That was kind of the agents I was using to buy the property. So when they started slowing down and my proverbial restrictions came off on what I could or couldn’t do or buy, we went out and started flipping stuff. My wife at the time was running she was the branch manager for a mall out in Gastonia, a suburb of Charlotte. And we bought our first townhouse from the courthouse for I think it was like $73,000. And my buddy went in.

We’re a little nervous because it was pretty locked tight. We could kind of see through the windows. We didn’t really know what we were getting, but the price was right. So our buddy went in, painted it for us. And I think we sold it for like a hundred and sixty-three thousand dollars. So we had a a banger on our our very first opening deal. And when we closed that one, I called my wife and was like, “Hey, how about how do you about going get your GC license and quitting the mall gig?” She said, “Sounds good to me.”

So, and she’s super a studious, delight of my life. Roxy, she’s super amazing. So she’s she did. She she sat down and studied the books for two weeks, went and challenged her GC exam, got her GC license, and off we went. And we probably flipped about 250 ish homes now at this particular point in time. So that’s that’s kind of my day to day what we’re doing. In the interim, we’ve been building out a small rental portfolio of both LTRs, long term rentals, traditional rentals.

I think we’ve got about four or five of those, but we’ve really been moving a lot of our stuff over into the midterm rental space. We found Furnished Finder to be a a profit doubler in many cases. Stuff that was renting out for 17, 1800. You put it up on Furnished Finder and it’s clipping 34 to 3500 a week. I’m sorry, a month. So it was really maximizing out those cap rates for us. So we’re kind of in the in the interim throes of rotating some of those right now.

And then we’re also in the STR space. We’ve got two lake houses that do really well. I can share a link with you. I’m actually a host on *The American Dream* TV as well. So there’s a there’s an episode of my *American Dream*. It’s an Emmy-nominated TV show. We can get to get you that link. So I go and kind of discuss some of that. Those those have done absolutely amazing. Cause when I got into the real estate game, that was really just my time I wanted back. Because everybody’s either chasing their time for money.

Or you trade your knowledge for money. And I’d rather trade my knowledge than trade my time. So like our lake houses, I mean, they went up one we bought three years ago, I think for eight hundred and it’s worth one six now. So that that background income of, you know, yeah, it’s equity locked in a house, but okay, you’ve got eight hundred thousand dollars that you didn’t have to get didn’t have to go anywhere to make. And that’s just, you know, one of those houses. And that particular one, I think it did about a hundred and sixty eight thousand top line revenue last year as well.

We found in the STR space you really kinda got in the get in that upper upper echelon where you got a lot less competition. At one time in Charlotte, like, okay, there was four places in Charlotte that would sleep twelve or more people. I own three of them. So you’re gonna rent for me, me, me, or the next guy. Where if you come in those one bedroom well, you know, one bath spaces, it’s just so every there’s so many of those on the market, it’s just so super saturated. Plus I’d rather, you know, in the appreciation, the lakes appreciate faster. And if

The market’s gonna go up five percent. I’d rather have five percent of a million than five percent of a hundred thousand. That’s simple math for me. So it’s kind of my day to day.

Issa Hanna (08:28)
Yeah, for example.

And that

Amazing. You know, the flipping the houses and then now scaling into the the STRs and you got a couple LTRs. I’ve been seeing a lot of people pivoting. And and I want to pull one thing out of your response that you said that is very knowledgeable. Get into the upper echelon ones, the ones that there’s not so many of, because that saturated market, that’s why you’re hearing all these horror stories about STRs going bad and people getting into

their first short-term rental and and and everything, you know, they’re not making the money because there’s too many people doing it. So try to get something unique or or or something in that upper echelon. So man, I I love that the the advice you just shared with us. And then home flipping, you know, you you’re building generational wealth. You retired your wife, you know, a as a fellow husband, you know, everything we do is for them, you know. So

So the fact that you’re able to do that to do that for her i is amazing, you know, and then the scalability of our business and the scalability of what you’re doing, you know, getting into the different facets from flipping. You started as an acquisitions guy, you know, and now you’re in business on your own because you did gain that knowledge, man. I I just the whole answer, amazing. The origin story, I I I love that, Travis. And and another thing I wanna say, I want to pull out from our conversation earlier.

Said you’re strength. Said you’re an acquisition tactician. And that’s why you’re so good at getting these houses. So can you give our viewers some more about that and why you are that?

Travis Mercer (10:06)
Yeah, so yeah, for sure. So I when I when I approach any particular project when I’m looking for a flip and we’ve done some really awesome things with FlipFinder, which is a website that may or you may or may not yet be able to find. It’s it’s it it’s in its fledgling. I think V1 just we I just got the emails from V1 where we’ve got Claude and ChatGPT connected now to the MLS. And so they’ll go in and literally underwrite everything in the MLS for us.

And then I just get an email that says, “Hey, look at these, you know, top 10.” So we just break everything down. I mean you just put it just put it all in the numbers, make sure you’re, you conservative through ARVs and I’ve got, you know, a spreadsheet that just breaks it all down. It says, “Okay, this is your expected rate of return.” And that’s it. Like if you’re not gonna make fifteen percent in a quarter, then you just don’t write the check. So that’s kind of my what I try and adhere to is to say, okay.

It’s a it’s a time cost of a money function. So is it a six month job? I gotta be making thirty percent. If it’s a four-month job, okay, fifteen percent’s my threshold. And just being able to stick to the guns of it and make sure you just, you know, don’t don’t don’t fall in love with a deal. Be willing to walk away from any deal at any time. So just you know, really sticking to those numbers. And I as I kind of mentioned earlier, I I view it as a baseball game without an umpire. You you know, the deals are deals are they’re pitches and they can come.

Floating by, floating by, floating by, and someone’s gonna throw you a curve and a knuckle and a fastball. But sooner or later there’s gonna be a fat one just floating right down the middle, and that’s the one you line up and swing at. So maintaining that discipline to just make sure you just stick to the stick to the data. Data day real estate’s got the the three most important l things are obviously location, location, location. But the next three is data, data, data. In my opinion.

Issa Hanna (11:47)
A hundred percent.

Travis Mercer (11:48)
Yeah, so just getting a really good tool put together. And you can do it in a simple spreadsheet. Just getting that tool put together. And actually nowadays ChatGPT will actually fire you off some really good information. So just getting those numbers put down so you know know what your goals are and then sticking to your numbers without blowing rehabs.

Issa Hanna (12:38)
Exactly. So in other words, guys, you’re your the way you speculate is your net, right? You’re throwing that net out there. If if it doesn’t fit in the net, it’s not for you, right? I always my my analogy is you know if it makes sense, it makes dollars. If it doesn’t make sense on paper, guys, stay away from the shiny object at all costs, or it’s gonna cost

Travis Mercer (13:02)
I was just backpacking with a group of guys out in Oregon. We just did 33 miles, 7500 in vertical in three days. And they they’re all real estate guys. And someone was like, “Yeah, man, I just do it by my gut. If I just feel like it’s a good deal, it’s a good deal.” My my blood pressure is just going through the rhythm. Like, you don’t have an spreadsheet anywhere. Some people get away with it, but I don’t recommend it.

Issa Hanna (13:23)
A hundred percent. And then I did want to pivot into that. You’re an avid outdoorsman and and even a daredevil. So can you tell our viewers about some of the blood pumping stuff you’re into?

Travis Mercer (13:34)
I mean, it’s I’ve had I’ve had a a very entertaining life. I’m a certified aerobatic pilot. I’m a certified scuba diver. I’ve sailed the BVIs, the French West, Dutch West Indies. We take bareboats out with friends. I’ve got some I have an e-bike. You find me ripping around Charlotte on doing mountain bike trails. We have a the U.S. National Whitewater Center is here, it’s got some amazing trails in it. Side in North Carolina’s got a copious amount of mountain bike trails.

Just the state itself offers so much between the beach and the mountains. So yeah, we’ve got and we’ve got an Airbnb that I picked up at the courthouse for like 300. I think our rehab was like 120. I was finding cars and boats and I found a bunch of telephone poles soaked in creosote out in one of the fields. Getting rid of that. Yes, we’ve got fifteen acres on that that property that we we we found. So we’re able to kind of get out there, do you know, shoot guns, shoot bows.

You know, do campfires, just you know, general general outdoor stuff, staying out in the woods and being one with nature. I think it just offers a really good balance to life.

Issa Hanna (14:35)
Definitely. And that, you know, the W-2 life, you guys can’t can’t do all this. That, you know, real estate can make you get all this stuff done. You can buy the one thing that is not for sale in the world, and that’s time, to do that stuff and be around your family. So I love it and I love the way you’re choosing to use this time that that our industry’s afforded you. And now I want to talk a little bit of future, some things you have under wraps.

Passive Profits, let’s hear about that.

Travis Mercer (15:05)
So I’m sure I’m not the only house flipper that’s kind of sat down and figured out the scalability of it is difficult. Even if you have the ability to source as many deals as you want, and we’ve got a you know, tons of wholesalers we work with, and stuff comes across on my desk all the time, but you’re gonna run into a labor problem. We had three or four good GCs, and then I had one GC pass away at a wedding. My wife was obviously another one of our fantastic GCs. She came down with stage four cancer, so she’s kind of come off. And then so

We’ve got two other GCs that we’re still working with. I picked up another one, but in the interest of trying to solve the labor problem, I’ve really started to look more into the spec building space. And we’re able to find good properties here. We’ve got a builder that we work with, they build about 350 houses a year. I can get stuff built for around 115 to $100 a square foot. It’s selling around $200 a square foot.

So we can find deals that levered are in the 120 to 130 percentile. And Passive Profits is really designed for the people that want to get into the real estate game. They want to get a rental property, they want to flip their first house, or they want to do their first spec build, but they have a W-2 job and they just really they don’t have the time or energy to go out to get the tee box started. So we said, “Hey, we’ve got we have all the teams, we’ve we have all the knowledge. We’ll go find you the property, we’ll pick out the house. Well, our professional designers will design it for you, we’ll work with the builder.”

We’ll have the house built. All you have to do is qualify for the financing. We send you your draw funds, they get wired into your account. You just wire the money to the builder, is the only step that the client has to do. And they for that, they take the money side, get 60% of equity created. And we take 40% of the equity created. But levered, those numbers still come out where our clients are making around 60% ROI. And our builder is their average from pad to CO is 90 days.

So in many cases, I can have a house built faster than you can have one fixed. So if for your house flippers out there or for people that don’t know, or you know, a good a good kind of a rule of thumb is a rehab job should be about a week per 10,000. So if you’re looking at a whatever $90,000 job, that’s you should be in and out in nine weeks. So when you start looking at those time frames, the equity that you can create in a new property versus a remodeled property.

It’s just it’s a faster way to to income because speed really is the time cost of money really is the devil you’re working against. So yeah, that’s coming online. We’ve got Passive Profit Advisors. It’s the website is it’s probably 90%. And we’re working with FlipFinder, which is where we’ve brought AI. We’ve connected Claude and some other Anthropic and ChatGPT are now arguing about ARVs for us. But we’ve connected them fully into our MLS. So I get an email.

Every morning from everything on the the the literally the entirety of our MLS is underwritten for me, sent to me in emails. I just have to look at the top five to ten deals, determine if I want to take action on those, and then just go play ball. But that’s been able to suck off so much time because the underwriting process, going and finding the right deal, it it it it’s a huge time sink. It really is. And that’s where, you know, finding that, but which way I got I guess that’s where I cut my teeth as acquisitions tactician was being able to go out and find those.

But we’re getting a lot of that heavy lift kind of put onto AI now, which has been great. And just being able to bring that. So we’ve got the labor solved. You know, they can build 350 houses a year. So the labor problem is gone. We can source the dirt. So now it’s time to start giving back to the totality of the community and saying, “Hey, let’s get you in here. Let’s get you started. You’re working with an expert. Someone’s already flipped 300 homes or done 300 projects, purchased, you know, literally the largest REIT in the world.” So we’ve got all that back data that we can use to kind of look at our market.

And we want to start offering that to people. So in most of these cases, I mean we can actually make them free houses. You know, people jump when I say that. But what what I really mean is you’re going to create 20% of equity in the value of the of the property. So if your cost basis is 20% under, say I go buy a lot for whatever for 20 and build a house for 60 and I’m in it for 80 and it’s worth $100,000. That 20% that you create there is your proverbial down payment from a bank.

So you don’t actually have to make the down payment. You get a debt service replacement loan on it, pull your all of your money back out, cash flows, you’re making five, six, seven hundred, one thousand. So what am I looking right now? It’s like fifteen hundred dollars a month. It’s just free money and a free house that someone else is gonna pay off, and that equity just grows over time.

Issa Hanna (19:59)
I I love that and and it and and it the the name of it is perfect, Passive Profits. So you invest with with Passive Profits. This is perfect for the doctors, the lawyers, that you know, you guys are making that high income right now. This is a great future builder, very similar to stocks, very similar to to other things, gold that you would put money into.

Travis Mercer (20:21)
We’ve got clients that are actually doing that so they’ll so they don’t have to change move their portfolio position. They’re just grabbing a margin, a margin loan off of their off of their portfolio and using that into the system.

Issa Hanna (20:32)
Amazing. Yeah. So it’s it’s a definitely a a future building thing. So so for you professionals and any W-2 people that are out there and thinking about, “Okay, I can’t just retire off of Social Security or my, you know, my financial account,” this is another route to go. And and somebody like Travis, so knowledgeable, who’s already been there, who’s done it, one of the best in the country at it, who better to to put it with than him? So make sure you guys check out Passive Profits.

Because it it’s run by somebody that that knows what they’re doing. And and now I want to talk about, I want to give you the floor. I want you to plug your podcast. You have a podcast of your own. So tell our viewers about them and and guys make sure to subscribe to Travis’s podcast too.

Travis Mercer (21:16)
So I mean we have I’m I’m faultful that I didn’t really keep up on it, but if you wanted to hear kind of some of my older antics, there is *The Trickster’s Take on Real Estate Investing* can be found on on Apple Podcasts. And then our current one, we’re in the throes of recording. I actually have another recording for my the TV show tomorrow. And we’ve been we’ve been behind the scenes collecting video footage and stuff like that. So we’re gonna we’re working on getting a YouTube channel launched and then

Passive Profit Advisors will be a podcast. Hopefully, here you’ll be able to start getting our episodes out within a couple couple weeks. I’m guessing probably by the time this show launches, it you’ll you’ll be able to find it on your Apple Podcast. So looking forward to sharing those adventures that we’re doing there. And we’ve got one of my most recent teammates slash clients. She was a she’s a former commercial real estate attorney, was doing very, very well in her career, was actually offered a partnership at another firm.

Which, you know, but she she was smart enough to sit there and pause and decide if she wanted to sign up for another seventy hour a week job. And she knew what I was doing. I’m I’m friends with her husband. And she called me up and said, “Hey, I have this amount of invest to invest and stuff. Do you think you can replace my, you know, my attorney job where I’m making four or five hundred thousand dollars a year?” I said, “Yeah, that’s we can no problem.” So I got her into the math and said, “Boom, you do these three projects in a year. You can get each one of these done with probably fifteen to twenty hours of work.”

So there you go, you got eighty hours of labor and you’re making and you’re just you’re getting you’re replacing your income. So she’s like, “Okay, I want to try that sounds a lot better than 80 hours a week. Eighty hours a year is better.”

Issa Hanna (22:49)
Like I said, our industry you can you can buy your time back just by by your knowledge that or knowing somebody like you that that can advise you on on where to put that money and and how to make, you know, that money turn into time. So man, amazing. And then kinda wanna end with you giving some advice to our younger people. A lot of people are just starting off. Our business is all about relationships, establishing them, growing your network. So

For people just starting off that don’t know where to start, can you give some tips on on how to get the ball rolling?

Travis Mercer (23:21)
Yeah, for sure. Obviously, you know, you you you want to find an an investment agent. And all real estate agents are just they’re not created equally. If you walk in and start asking somebody about a cap rate or an ROI or an IRR and they don’t know what you’re talking about, that’s not your guy. Also just

Learn to to think about things that are impossible being possible. I literally today I there’s a house on the market for three ninety nine, I could pay three fifty for it. So I opened negotiations at three forty, and sure enough, they took the three forty.

So you look at a property like, they’re not gonna take out 50 or 60. How do you know you didn’t try? So I think you know, in Mike Tyson’s quotes of, you know, just get out there, start dirty, start nasty. It won’t be clean, it won’t be pretty, but you gotta go out and you gotta get started. So I I encourage you to work, you know, you hop on your your social medias. There’ll be play’ll be investors and stuff, hopefully in your area that are doing meetups. Certainly go to those, start learning what you can. If you want to get down to you know a courthouse.

You can see that who’s bidding on those, do a little bit of skip tracing. CyberBackgroundChecks is a decent free one. Try and track down a local investor in your neighborhood. If you say, “Hey, I I want to be a mentor, I want to learn this,” the vast majority of people I know in this industry would be more than happy to open their arms and say, “Hey, come come follow along. I’ll show you what we’re doing.” But I think, you know, the house hacking is certainly a a big thing amongst some of the younger people that I’m working with right now. And house hacking being where they go and they buy a house and they re rent the other rooms out.

Cover the to to cover their mortgage to also allow them to live for free in many cases. Furnished Finder in Charlotte’s doing about a thousand dollars per room per month, which would cover quite a bit of a mortgage. Also the duplex side where you’re renting one one side and living in the other side is another good way to at least kind of initially get in there and get started. For some of my startup people I’m offering where I say, “Okay, the jobs you’re marked for 60,000 in capital and they say, ‘Okay, I want to get in for 10 grand.’ Okay, well you’re a certain percentage of the deal.”

Bring your 10 grand in, help where you can, your silent partner. And then they whatever percentage the 10 grand is of the of the total investment, they get that percentage of the of the profits on the backside. So that’s been helpful because if they if there’s you gotta get to five deals. There’s a whole chicken and the egg thing here in our finance world of the flipping thing. As soon as you’ve got five deals under your belt, they’ll anybody will lend you. But if you don’t have five deals, nobody will lend to you. So being able to kind of ride JV some deals with some some of these younger guys getting into it.

So they get that finance experience and, you know, creates a win win win. That’s really kind of what would you gotta look for. I’m a big believer in time, talent, or treasure and all three are being equal. So that would kind of be some some good places I would think to start.

Issa Hanna (25:54)
Nice man. I I mean, great places to start. Get out there and get the ball rolling. Even if you make some mistakes, mistakes are lessons in our business and you’ll sit back and laugh at it in ten years when you’ve got six figures in the bank account. So

Travis Mercer (26:09)
The win-learn approach is what I call that. Yeah. Yeah, you win you’re either winning or you’re learning.

Issa Hanna (26:14)
A hundred percent, hundred percent. And that’s that’s our business, you guys. So Travis man, I’d like to thank you so much for coming on the show. You really brought a lot of light to the show and and most importantly, a lot of knowledge, man. So I’d I’d like to thank you so much for coming on.

Travis Mercer (26:29)
Brilliant. I thank you so much for having me. I really enjoyed spending some time with you today.

Issa Hanna (26:32)
Thank you. And to our viewers at home, if you enjoyed my conversation with Travis and want to see more just like it, make sure to hit like and subscribe. I talk to people every day that can bring us different knowledge on every aspect of the real estate industry. Until next time, The Real Estate Pros are out.