Rick Otton of We Buy Houses explains to us how he buys and flips houses with $1 and three pieces of paper, the fastest way to buy a house in Australia today!
Video transcript below:
Rick Otton, We Buy Houses
Rick Otton: It’s the fastest quickest way to buy a house in Australia today. I don’t have to go through bank approval processes, I don’t have deposits, I don’t have to do anything. I have got six different strategies to do that.
Everything changed in 2009-2010, we brought in the National Credit Code and there was a section they called Article 18, which meant that anybody now can make payments on anybody else’s loan and if you don’t want a house and you move away from it, I can pick up everything, I can pick up the house, the furniture, the loans and I can just step in and you step out. It’s the fastest, quickest way to buy a house in Australia today. I don’t have to go through bank approval processes, I don’t have deposits, I don’t have to do anything. I have got six different strategies to do that.
Therefore classic example, about the one I was telling you, the lady couldn’t sell the real estate agent, the real estate agency called me to do it, because they said listen we can’t sell the lady’s house. So I said okay, what do you owe on it man, tell me how much she owed on it, I said I will pick up the payments. She stepped out, someone else came in, I said tell you what, if you want to renovate this place, you don’t need a bank loan, just start to pick up these payments, when you renovate it, flip it make a profit. They pay me 20 grand to get it ahead of anybody else, because everybody is standing in line to get one of these. They renovated, they made a 100 grand, they did that in about 5 weeks, they paid me another 30, so I made 50 out of that. And they got into the house, they renovated it, used the renovation to build in equity it, flipped it, had the deposit, [now they are gone].
I own a company called, We Buy Houses, but when people know you can transact houses in just a few minutes, real estate agents give us lot of them. They will try to sell a house, they can’t sell, they can lose a listing and they just call us in and the first question I always want to know is what’s the value of the house like. Sydney houses are likely worth about 636 on average up, what’s the cash, what’s the debt. Houses you get like a 100% of people want to sell, 15% need to sell, over time the 85% that want to sell become the 15%.
There is two ways you can add value to a piece of property. You either renovate it, which adds value or you change the financing structure on it. Both things will add value to a piece of property. All I do is make properties easy to buy. If I make properties easy to buy, they are easy to sell and because they are easy to buy, well people come buy in and they push the value up. I don’t set the market, the market sets the price. So as a result of makings things easy for people to buy and changing the paperwork, people pay more for the property. Everybody who buys and sells a house only has two motivations in life, to move from the debt or to get their hands on the cash. Therefore all you need to is really simple paperwork systems that move people very fast away from the debt and move people towards the cash.