Powerful Strategies for Quick Property Turnarounds

Stephen Schmidt (00:02.728)
Welcome welcome back to the show where we interview the nation’s leading real estate entrepreneurs. I’ve got a real treat for you guys today I got Joe Ornelas in the house today He reigns from West, Texas and he has been in real estate for more years than probably some of you have been alive He’s been licensed as a real estate agent since 1987 collective total he’s been doing real estate and general contracting now for over 35 years and we’re gonna

Joe (00:15.32)
Correct.

Stephen Schmidt (00:30.416)
go all over talking about some real estate today. But just before we get started, just remember at Investor Fuel, we help real estate investors, service providers, and real estate entrepreneurs, two to five X their businesses, which allows them to build the businesses they’ve always wanted to allow them to live the lives they’ve always dreamed of. With that being said, Joe, welcome to the show today.

Joe (00:49.741)
Thank you. Glad to be here.

Stephen Schmidt (00:52.142)
Likewise glad you’re here. So give us a little background on you, man How you how’d you get started in this crazy game and how’d you get to where you’re at now?

Joe (01:00.449)
Well, I like to read motivational books and back then with cassette tapes. But I got interested in making money and my ideas to work less and make more instead of just working for somebody else. I wanted to invest on my own and do the best I can. correct me if have not been a real estate

Stephen Schmidt (01:09.915)
Mm-hmm.

Stephen Schmidt (01:18.544)
Mm-hmm.

Joe (01:30.259)
agents since 87. I only had it for three months because I couldn’t do it for, you know, I couldn’t support my family in three months in real estate. But I learned enough to learn how to invest by myself.

Stephen Schmidt (01:40.06)
Uhhh, okay.

Yeah.

So do you still have your license then? I guess maybe I missed that in our pre-show conversation.

Joe (01:49.687)
No, no, I did not have my license. I just have the experience. But I did take the complete course. knew I learned law, real estate law, real estate marketing, and in some case, investing. So I’m familiar with that. And I think I’m real good at selling, but my own stuff, I wasn’t good at selling other people’s stuff, but I can sell my own. Because I determine the terms, whereas to try and sell somebody else’s terms.

Stephen Schmidt (01:54.012)
I gotcha.

Stephen Schmidt (02:13.328)
Hmm.

Stephen Schmidt (02:19.781)
Right? Yeah, I agree with you. You know, I think that’s and this is something some real estate agents might have a problem with me for, but you know, I don’t think that if you have a real estate license that you’re in real estate, you’re actually just selling other people’s real estate. You’re not really in real estate. You know what I mean? So I like your point there that you that you make. So tell us, tell us what happened post that then. You had three months, you went back to work in construction. You’re now at

Joe (02:33.996)
Correct. Correct.

Stephen Schmidt (02:47.427)
general contractor do a lot of the work on your own houses like what what’s gotten you to where you’re at today what has been the last two decades worth of focus for you

Joe (02:55.254)
persistence and not letting anything that turn me away from what I want to do. I don’t let obstacles get in my way. I just go around them or over them because once I fix my side on something, I’ll just go get it and the best I can. I tell people, get out of the way if you’re not gonna leave and I’ll do it. But for my own…

buying process, I said I look for any for sale by owners, call them up. And if there’s any chance with the money I have in can go ahead and make an offer and buy it. And then as soon as that home is livable, put a for sale sign and buyers come right away.

Stephen Schmidt (03:43.227)
So do you generally use all your own money for the deals that you do?

Joe (03:51.231)
Yes, that’s my experience, yeah. Which is not very much because you can buy a home for several thousand dollars. mean, actually buy owner finance and you have the deed, you have a deed, but then you can turn around and sell it right away to somebody else, get a down payment, give the payments to whatever they can afford, take that money and go on to the next one. And to me, I feel like they’re paying for that home I just bought.

Stephen Schmidt (03:52.729)
Really? No kidding.

Stephen Schmidt (04:16.784)
Hmm.

Joe (04:21.196)
So if they decide to move on, I’ll have that property back and continue.

Stephen Schmidt (04:28.783)
That’s interesting. So correct me if I’m wrong here, but you essentially are doing the seller financing on how you buy the property and then turning around and doing the same thing with an in buyer. No kidding. I haven’t heard of anybody that’s actually doing that very much. That’s really interesting.

Joe (04:41.525)
Correct. Correct.

Joe (04:47.349)
Well, like I said, yeah, you don’t hear about that very much because sometimes you hear about all this legalities of it. But in reality, it’s called a wraparound note. They sell it to me. They probably owe it to somebody else. So I’m doing the same thing. I’m selling it to them. They pay me. I pay what I bought it from. And it’s totally legal. mean, and to me, I haven’t had any issues with

Stephen Schmidt (04:56.912)
Mm-hmm.

Stephen Schmidt (05:01.851)
Okay.

Joe (05:17.3)
But then because I continue to make that payment and up to now I said in 30 years I have not lost one that left and left me where I lost the property because they left. So I never lose. If they leave, okay, great. I’ll get to do it again.

Stephen Schmidt (05:33.592)
Right.

Stephen Schmidt (05:39.32)
Right and make even more which is kind of like a secret hack within the within the space right like you know i’ve got a perfect example that I actually just Was putting a sub two deal together at with a with a friend of mine who? They needed to pull you know x amount of cash out of the property because they had a contingency offer on another property where they were moving out of state and I told him i’m like look you guys have the perfect house to to do a sub two deal on

Joe (06:00.586)
Exactly. Yeah.

Stephen Schmidt (06:06.575)
So let me go ahead and just figure out how to get your guys’ profits in it. We take the house over and worst case scenario, we don’t make any of the payments and you get the property back. And then you’re right back at square one with a payout for the equity that you’re after from a retail sale anyways. So it makes a ton of sense, I think, for people that are in a prime position, but it’s also a really protective channel, I think, for the investor as well.

Joe (06:22.783)
Yes.

Joe (06:37.726)
Yeah. Like I said, you got to look at, to me, I looked at the 80-20 rule. 20 people, only, what was I say? Only 20 % of buyers can go to a bank or a finance company. So we got 80 % of people that we can sell to. And I know back then it was just me, you would write a name down, but then it seemed like they wanted you to kind of make sure they were able to do it. You couldn’t sell it to a child.

put the name of the child, needed to put it somebody who had some responsibility. That’s the only thing that I’ve learned, but it works out no matter.

Stephen Schmidt (07:12.453)
Right.

Stephen Schmidt (07:16.699)
So now, many of these deals do you typically shoot to go after in a year? Are you still like actively 100 % working full time? I know with that long of a career, is it time to take it easy or what gets you going in the mornings?

Joe (07:31.166)
No, I’m always open for any opportunity. mean, sometimes, like the last two properties I bought, they put it on Facebook, Home for Sale, which would give $2,000 down. And I answered right away, I went right over and said, yeah, I’ll take it. And that’s how I bought this property. At the same time, the guy said, hey, the guy who bought a house has another property for sale. So right there, I bought two properties within a week. And then,

Stephen Schmidt (07:50.149)
Yeah.

Joe (08:00.369)
The next one, what I did is immediately put it for sale and sure enough within a few days there was a buyer, I had the down payment and so they’re paying for that property. I’m still working on my first one, but it’s a multi-unit so I’m hoping to get it for sale right away.

Stephen Schmidt (08:21.115)
Sure. Now, so you say you’re in West Texas, but that’s a quite a large place. So like where what exactly is the market you play in primarily? Is it just where you’re centrally located or?

Joe (08:25.801)
It’s a big area.

Joe (08:34.537)
Well, I’ve done far west Texas near El Paso. It’s called Van Horn, Texas. And then about 45 miles east of where San Angeles where I live. I’ve had two properties there, but I’m open to any opportunities. And if I travel and I see a house for sale, said, that could be one of mine because I think houses, as long as they’re livable.

You could, you can get somebody to buy it. I don’t like to rent because that’s a big mess. But anyway, I’d rather sell it to somebody than rent it. Because I can. Well, because they’re fixing it and I don’t have to come around and fix stuff. They’re the ones doing it. And they’ll improve the property for me in case they move on. So, um, and renters want to improve the property. They want to they won’t even pay it.

Stephen Schmidt (09:13.019)
Why is that?

Stephen Schmidt (09:21.851)
you

Joe (09:32.563)
that I’ve seen. but I’m sure there’s, you know, renters that are very faithful in paying and taking care of. But like I said, my interest is just buy property, put it for sale, get the down payment and move on.

Stephen Schmidt (09:51.663)
Yeah, 100%. So what’s your turnaround time typically look like?

Joe (09:55.849)
few days because as soon as I take possession of the property I’ll go put it for sale sign. I mean in this type of situations closing is right away because we don’t really involve title companies. just but we still get a deed a note and deed of trust through a touch to attorney and there’s some attorneys they’ll you know they’ll fix them within a couple of days.

Stephen Schmidt (09:57.882)
Really?

Stephen Schmidt (10:17.456)
Mmm.

Joe (10:24.9)
And so we closed immediately. And so that what makes it easy for me. One time I sold my own home and I sold it within a few days, but then it took them three months before we close. And that was a very stressful time. don’t want to go this route. It’s uncertain three months of waiting, when are we closing? When are we closing? But that’s why to me, I make it easy for a customer.

Stephen Schmidt (10:27.586)
Really?

Stephen Schmidt (10:44.752)
Mm.

Joe (10:55.432)
Somebody comes up, how much you want? And I tell them and say, well, I said, I want this amount of down payment. And they say, well, we don’t have it. I said, well, if they tell me, can I pay you $500 a week for the next month or so until we get the down payment? And I said, sure. And then we’ll start the loan at that time. And I sold about four properties that way by helping the people. I sold one to my sister. She says,

Stephen Schmidt (10:55.771)
Sure.

Stephen Schmidt (11:12.698)
Hmm.

Stephen Schmidt (11:17.176)
Right.

Joe (11:24.519)
I don’t have $5,000 down, I’ll pay you $500 a month until I get to $5,000. And then we’ll start the loan. And that has worked out great. She’s four months from finished paying off that property. So I’m very confident in doing that.

Stephen Schmidt (11:37.049)
wow, that’s awesome. So now, how do you generally find your buyers? I mean, I’m sure eventually you’re going to run out of sisters eventually.

Joe (11:46.983)
Well, no, I’m only sold to one relative. Actually, two. All and I’ll tell you this example because, well, board of mat, well, simple for sale signed by owner. know, people that are looking for rent right away to see for sale by owner. I think for sale by owner makes them think that they’re going to get easy terms, but actually they’re not. If they qualify to a bank, the interest will be lower.

Whereas to an owner of finance, the interest is not higher. That’s where they pay for not having good credit. But my sister only came in because I put it up for sale and I told her this is what I want and my sister begged me, sell it to me. I okay, you pay what I want and then you can have it. yeah, I mean, if I want under one house, I want $45,000, $5,000 down, $500 a month, 10 years.

Stephen Schmidt (12:37.954)
Okay

Joe (12:47.577)
And it took less than a day. I had people, yeah, we’ll take it. And this home was not even livable at the time. But they saw an opportunity and I gave it to them.

Stephen Schmidt (13:01.465)
So how do you typically find these people? They just come out of the woodwork. Do you have like a reputation for being the real estate problem solver in your area or how are you able to turn around so fast?

Joe (13:12.358)
Well, because there’s like I said, when I was in real estate, I showed houses all the time, but nobody could buy. So there’s a lot of people out there looking to buy a house, but they can’t because of their credit. And that’s where I think where banks are making a big mistake that they don’t finance people that are willing to buy and pay more. But they’re willing to pay say an investor like me and many others, they want to pay up to 10%.

if they can get an opportunity to buy that property, which that’s where it comes in 80-20 rule. 80 % of people are willing to pay more interest. 20 % can only, are the ones that qualify through a bank or finance company. Well, that’s how I do it. But people, there are plenty of people wanting to buy, but they can’t. So they’re looking for an investor that’s got property available. Yeah.

Stephen Schmidt (14:02.501)
Sure.

Stephen Schmidt (14:09.753)
because of credit challenges or income or things along those lines that like somebody that’s manually, because I know like banks can manually underwrite a deal, right? Like technically speaking, they could do manual underwriting with somebody that has a zero credit score, things like that. It’s just most people don’t realize that’s a case. And so you’re kind of cutting out a long and lengthy process by creating a very simple solution for people that might have the means and just literally can’t do it because of the profile.

Joe (14:37.702)
Well, because how do you explain somebody paying $1,500 a month for rent, but a bank will not make a loan to them and pay $800 a month? The people say, can pay $1,500 and you won’t let me have a loan. It’s only $800 a month. See, how does that make any sense? So to me, that leaves us investors a big opportunity to jump right in and give them something they’re comfortable with.

Stephen Schmidt (14:57.572)
Right.

Joe (15:07.481)
So to me, it’s very simple. I wish I could have the ability to find a… Well, I found it difficult because people that can afford, go through a finance company, they’re real picky. They want this and they want that and you have to take certain place. But people that can’t go through a bank, they’ll take whatever the best they can get and they’ll take it right away. So…

Like I said, if I had sold every person to every person and when I had my real estate license, I would still be doing it. But 80 % could not qualify. So I think, well, I’m going to work in the 80 % and don’t qualify and I’ll sell it to them.

Stephen Schmidt (15:52.752)
Right, because then you obviously you create an almost a blue ocean for yourself instead of the red ocean of lenders and trying to get people approved and everything else you’re swimming in blue water.

Joe (16:03.94)
Correct, anybody comes along that has down payment, has a job and wants it, it’s your house. When are you gonna move in? And well, that’s it.

Stephen Schmidt (16:12.485)
Sure.

Joe (16:18.605)
I think everybody should be given an opportunity to buy because I heard people, well, you know, some people may file for bankruptcy. how many corporations file for bankruptcy? Whereas we might say this individual filed for bankruptcy. And I think, well, the big guys file bankruptcy. can’t, why should we deny this person if he has some issues in the past? But if they want to house, I’m willing to help them out. Here’s your home. Here’s your opportunity.

Stephen Schmidt (16:29.52)
Mm.

Joe (16:48.76)
do the best you can. And I like, I’m a people person, they tell me, I only have this and I said, well, whatever you want, we can make it work. I don’t like to compare to car sales, but I’m willing to give anybody a chance to own a home. mean, and it’s like anything, mean, you don’t have, you buy a home,

Stephen Schmidt (17:11.193)
Mm.

Joe (17:17.123)
And if you can’t afford it, well, somebody else will come along. You buy a car, if you can’t afford it, they’ll come get it. So.

Stephen Schmidt (17:24.385)
Right. Now you bring up a good point though, like what happens when somebody no longer starts making the payments? Obviously you get the house back, but what happens when that’s the case and they’re still in it?

Joe (17:36.344)
Well, to me, I haven’t had that experience. think it’s more difficult if they ran to get them out than if they have, we have to foreclose on it. But like said, I’m prepared and I know that can happen. believe that. I’m not surprised of anything, I mean, it’s not that hard if you’re already prepared for it. These people are not paying because remember, if I’m financing them.

I have to make the payments to where I bought it from. So I have to step in and help them out. But most of the time, the buyers, if they can afford it, they’ll move on. Whereas a renter, some know all the rules, all the tricks, what they can do. So I find it more difficult if you had a renter and they stayed. Whereas a buyer, well, I can’t keep it, I just move on, let him have it back.

That’s my philosophy, if you can say that.

Stephen Schmidt (18:40.229)
Sure, yeah, no, that makes sense. So what would you do different and what would you do the same if you could go back to the beginning and restart all over again?

Joe (18:51.82)
Well,

Well, what I would want to buy is more houses of my own. Have the ability to buy more. When I say buy, don’t necessarily pay cash for them, but be able to take possession of them, which in most cases, all you have to do is sign the deed, the Northern Deed of Trust and it’s yours, but you still have a big old loan on it. So if I could buy multiple, only buy one house through a bank, and that was because somebody had run off.

on the bank, said, do you want it? I said, yeah, I want it. But as soon as I got it, I turned around and sold it. So had I had more, said, funding to buy, that’s what I would do, buy more. Because I think real estate agents, and you have some regulations you got to go by. You can’t do certain things. But to me, if the people, family wants it, they have it.

Stephen Schmidt (19:57.82)
So and what would you what would you do the same?

Joe (20:03.138)
Well, buy more houses and offer the person that can’t get it through, well, through banks. Banks have the money, they should lend it out, but they have certain rules, which I don’t have rules. I said, if you want it, you got down payment or we’ll work with it. You can pay so much. And if it works out for me, then they got it.

Stephen Schmidt (20:28.155)
So what’s with everything you’re doing right now? What’s next for you? What’s the big? What’s the big future plans for you?

Joe (20:36.587)
I’m looking at multi-family homes. I would like to be able to get an apartment complex and buy apartments. mean, apartment complexes and I’m thinking also building my own subdivision in a certain area. I had purchased 10 acres one time and I started subdividing.

I I had all the plans and yet the engineering people came in and said, we need $200,000 to fix this. And I said, well, sorry, guys. So I wound up selling that in four parts, divided 10 acres in four parts. And I got four times more than what I bought it for. So to me, since I’m in construction, I would like to buy big property, large property and then

build a subdivision and just, I don’t actually do the work. I show people how to do it and then I step back.

So, and I’m a multi-tasker. can have people over there, over here, there, and I’m just looking for an opportunity. Practically what I’m doing is maybe like a vulture, see where there’s an opportunity and take it. And I’m not afraid of taking risks. I I’m not concerned. Well, what if? I don’t worry about it. I’ll worry about it when I get there and then we’ll figure it out.

Stephen Schmidt (22:04.667)
100%.

Stephen Schmidt (22:17.069)
What’s been the best deal you’ve ever done?

Joe (22:23.938)
Well, when they practically gave it to me, they said, Joe, just take over it and we’ll pay closing costs. And I said, great, how did this happen? But that was the best thing I got because as soon as I got it, I turned around and put it for sale. The seller actually said, here’s a property. You can take two months to make your first payment. We’ll pay the closing costs and everything.

They’re landing in your laps. All I had to do was turn around, it for sale and get a down payment and move on.

Stephen Schmidt (23:01.241)
Now why that why did it go like that or they just had desperate to get out of it?

Joe (23:06.146)
Well, it needed a lot of work, so they didn’t want to mess with it. And see, they had a renter there, they couldn’t get him out. Finally, they called me to go give them an estimate on repairs, and then they said, well, why don’t you buy it? I said, well, how much and what are the terms? He said, well, you don’t have to pay nothing, just we’ll give you a note, indeed, of trust, and it’s yours. I said, well, let’s do it. And that’s how that started. I mean,

Stephen Schmidt (23:34.031)
How’d you get the renter out?

Joe (23:36.289)
Well, he was already in process of getting out and wind up not so comfortable situation, but he was already on his way out. And he just had a lot of stuff behind, but I gave him as much time as he needed. I didn’t make any threats or anything just because I knew he was on his way out. He didn’t stick around. Of course, he threatened me, but…

But then, know, that didn’t last very long. knew he was out and I just took what I had, cleaned it up, it up for sale. Family came over. We like it. And then I told him how much I wanted down. That’s very simple. then, you know, a wrap around note, I just go around the one that sold it to me and they know it. They were investors too. So,

I think one of the best places to find houses is go to investors that have plenty of houses for sale. And then they might have a property that needs to, they want to get rid of it and they’ll make it very easy for a buyer to get it.

And my other part was selling my notes because usually what I buy it for, I’ll turn around and increase the price, increase the interest rate, make the contract. And then I go to a note buyer and say, look, I have this contract, 10 years, $800 a month, this interest rate. of course there’s a discount, but they’ll pay me that money upfront. They’ll wait for the…

for the buyer to pay them that 10 years while I have to take the money now and go on to my next puppet. And some investors are very wise. They said, okay, I don’t want to buy a whole note. I’ll just buy four years or eight years of that note. And that leaves me the two years or four years at the end of it. So I’m always have that in mind that so many years from now,

Joe (25:50.432)
they’re going to start paying me back and I can do the same thing again. So to me, it’s been, I’ve been receiving payments from selling notes for about six years now. When I sit back month, they start sending me the payments and well, that’s pretty nice. What’s that called? Residual income that comes in every month and that property.

Stephen Schmidt (25:54.213)
Mm-mm.

Stephen Schmidt (26:19.045)
Mm-hmm.

Joe (26:20.509)
So, like I said, I don’t just want just one thing concentrating as many seconds.

So, but I really enjoy helping out people that otherwise they can’t have a home. You know, because banks won’t lend it to them, finance company won’t, they’ll use some excuse. And most people, you know, through their income, their credit history, whatever, it seems that so many obstacles to owning a home. What I make it so simple, as long as they want it, they get it.

Stephen Schmidt (26:38.575)
Right.

Stephen Schmidt (26:55.194)
Hmm.

Stephen Schmidt (26:59.055)
You bet. Well Joe, thanks for joining us today. If anyone wants to learn more about you or what you’re working on, where should they go for that?

Joe (27:05.843)
Well, okay. That’ll be great. Let me know.

Stephen Schmidt (27:10.875)
Well, where should they go to learn more about you? Like, do you have like a LinkedIn or an Instagram, a Facebook, anything like that?

Joe (27:14.911)
Oh, I linked in was I was part of that, I have not Facebook. said. What I have to have a property available for sale. Then I’ll post it on Facebook or marketplace or. You know, even local. News outlet. But basically. The last several properties have sold been through.

through Facebook and of course the regular sign up front for sale. That seems to work pretty cool.

Stephen Schmidt (27:54.235)
There you go. Well, if you want to connect with Joe, send him a letter because he’s old school.

Joe (27:58.931)
Yeah, send me a yeah, Facebook, find me on Facebook and say I have this property you want it. I’ll probably say yeah. Where is it?

Stephen Schmidt (28:08.335)
There you go. I love it. Awesome. Well, hey, thanks for thanks for hopping on Joe and everyone. I hope you enjoyed today’s show We’ll see y’all in the next episode

Joe (28:13.171)
Okay.

All right, thanks for having me. Have a good day.

Stephen Schmidt (28:18.054)
You got it.