This is a continuation of the Flip2Freedom podcast with Sean Terry. In this episode, Sean interviews Robinson Aries and finds out how wholesaling took him from bankruptcy to making bank.
Robinson: So, I started selling a lot of pre-construction properties. I jumped into buying used properties, tidying them up with a little money. Back in that time,100% loans were available, and I started pulling some money from other properties that I gained some equity from over time. As you remember, back in those times, they worried that the properties were going up about 20-25% per year. So, let’s say you got a property for $100,000. Next year you have a property value of $125,000. Doing nothing. Probably buying with no money. So that was the way I was doing it, which was not the best way. Now, I understand that much better. But, that was the way to go back in that time. Buying with little money. Putting a little 3-5%, 10% at the most, in buying those properties, tidying up those properties. In good construction, and after a year, the developer delivers a property and you can sell the property for 30-40% above the price that you got it.
Sean: Right. So what happened when the market crashed?
Robinson: Well, here in Florida, we were at the top of the market. The same way that the property went up; the same way it went down. And, of course, back in that time, I had like ten properties. I was holding those properties. I basically rented them out, because I was told the market was going to change. I was going to pull some equity from those properties, which was available to do back then. I thought, this is going to pass. I’m just going to hold it. I’m going to rent it out. I was renting those houses in the range of $1,500 – $1,700 a month. But what happened was that the market started crashing in those areas and people that were renting my houses were losing their jobs. Suddenly, my property that I had rented for $1,700, I had to lower to $1,000.
So, my negative equity, my negative cash flow was growing every month. So, I said, “Oh my God. This is going nowhere.” I got a stock. I got six properties in that area and I had a couple of pieces of land that I bought in the west coast, Tampa. I said, I cannot hold it any more. That was back at the end of 2008. So, I called the banks first, “I cannot hold these properties. I’ve always paid on time, but not anymore. I need help.
Sean: Now remember, in 2008, that’s when Washington Mutual crashed. Remember that?
Sean: You know, they got pounded. They were done. The market was crashing, 500 to 700 points a day. People were up in arms. What the heck was going on? And, a lot of people just walked away. But you actually called the bank, which was good.
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