JF2065: Hard Work Niche Deals With Karl Spielvogel

Karl has done over 200 real estate deals focusing on the more difficult deals that no one likes to deal with because there typically is less competition, harder work, but a bigger reward. Some of the deals he likes are multiple heirs, title issues, excess proceeds, and partition sales.

Karl Spielvogel  Real Estate Background:

  • Real Estate Investor in Charlotte
  • Has done over 200 Real Estate Deals.
  • Specializes in Niche Deals/ Solving messy situations that lead to big profits.
  • Examples of niche: multiple heirs, title issues, excess proceeds, and partition sales: Some of the Profits from these deals have been 243k, 228k, 163k, etc..
  • Say hi to him at : www.UnclekarlsMastermind.com 

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“These niche deals are a lot of work, but the profits are very high per deal. ” – Karl Spielvogel


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m your host today, Theo Hicks, and today we’ll be speaking with Karl Spielvogel. Karl, how are you doing today?

Karl Spielvogel: Doing great.

Theo Hicks: Great, thank  you for joining us. Looking forward to our conversation. A little bit about Karl – he is a real estate investor in Charlotte, NC. He has done over 200 real estate deals and he specializes in niche deals, solving messy situations that lead to big profits. Examples of niche deals would be multiple heirs, title issues, excess proceeds and partition sales. Some of these big profits from these deals is $243,000, $220,000, and $166,000. You can say hi to him at UncleKarlsMastermind.com. Karl, do you mind sharing a little bit more about your background and what you’re focused on today?

Karl Spielvogel: Yeah. When I first got involved in real estate, I owned some Subway sandwich shops and I was getting tired of that, and a buddy of mine said “Hey, there’s this course from Ron LeGrand.” He took me to that and I started learning and getting involved in that. I did real estate from 2000 to 2008, I did pretty good, but I went from (I thought) being a badass and lost everything in 2008 and became a dumbass, and then I did a used car business with my ex-girlfriend, another mistake, and then I got back into doing real estate again about four years ago.

We have about 5.5 million in assets right now, and we owe about 2.5 million. We like to do a lot of deals, like getting multiple heirs, partition sales… We also do land, we do variance, subdividing assemblage, anything that’s difficult. We wanna stay away from the stuff where somebody’s getting 20 postcards… We’ve found that by diving into these niche deals – they’re a lot of work, but the profits are very high per deal. We’re not a volume type person. We do maybe 3-5 deals a  month, but they’re typically bigger deals.

Theo Hicks: Of your portfolio of 5.5 million dollars, what is the main niche that you focus on? I know you talked about a lot of them, but what’s the main one, so they can dive into that one?

Karl Spielvogel: Well, we find most of our deals through tax delinquents, foreclosures, vacant properties, and then we use our GIS system. We’ll find some land that can be subdivided, we’ll look for a small lot that we’ll buy and get for cheap, and get a variance and make it buildable… We’ll look for a house next to a land, and then we subdivide the land off… But most of our stuff just comes by looking at the tax delinquents, the vacants, the foreclosures, and using the property look-up. That’s our main source. Then after that it’s about diving deep and solving the problems.

Theo Hicks: So you’ve got the tax delinquents lists, you’ve got the foreclosure lists, you have the vacants lists. What’s the next step?

Karl Spielvogel: Let’s say we’ve got the tax delinquents lists. We’ll typically skip-trace it, or we go out and knock on the doors… For example the tax delinquents – what we like to find is we like to pull up the tax delinquents and see if the people are passed away, because those are the best ones. Or if the house is vacant… So we look into that stuff and then we dive deep into it.

We even have one deal where there was six different people passed away; it was a vacant house. It had 23 heirs. We put it all together. We’re into that deal for about 65k and it’s worth 200k. So we dive deep into them, that’s how we get the big deals.

Theo Hicks: Let’s do an example. Let’s talk about the 23 heirs, 65k all-in price, worth 200k. How did you find it, and then how does that even work? How do you buy a deal with 23 heirs?

Karl Spielvogel: Well, we started out — I was basically driving for dollars. We had a property that we were looking at… I was driving by, and the grass was cut, but something looked funny about the house. I don’t normally do this, but the house didn’t look lived in, for some reason. So I jumped the fence, and went up and looked in the windows, and noticed it looked basically vacant. I noticed that the electric meter was missing.

After that, we pulled up our county GIS system, pulled up the owners, and found out that they haven’t been paying taxes for four years. Then we skip-traced them and found out both owners were deceased. After that, we started building the family tree out.

We built this whole huge family tree out, and then  we started calling all the heirs… And most of them didn’t even know they were heirs to a property. Basically, we just called them all up, told them they’re heirs to this property, that we wanted to buy their shares out, and then we just made deals with all of them and got them to sign.

It was sort of funny – we threw a little barbecue in South Carolina, where most of them met me. We went down and got everything signed there. One guy was a semi-homeless guy. We tracked him down in Chicago… But we just basically called everybody and signed it, and then we ended up owning the property.

Theo Hicks: You guys are like private investigators.

Karl Spielvogel: We’re more private investigators than we are anything else.

Theo Hicks: How are you funding these deals? Are you raising money? Is it your own money?

Karl Spielvogel: Yeah. Well, my business partner uses IRA money. We use private funds… We could always use some more (hint, hint). But private money and our own funds. Because we’re buying stuff with messy titles, we have to pay cash, and then we straighten the title out afterwards.

Theo Hicks: So I’m not sure you can answer this question or not, but — you own 5.5 million assets, you owe 2.5 million. Obviously, some of that is equity created. But of the equity put into the deal, what portion is yours and your business partner, and what portion is private money?

Karl Spielvogel: That’s a good question. I really don’t know. Probably private money is maybe 20%-25%. The rest is our money that’s invested in it, and my partner’s Roth IRA money.

Theo Hicks: Okay. So Joe does apartment syndications; they buy apartments that are stabilized, have some cosmetic changes, so it’s pretty easy to get the projections and present those to investors. How does that work for deals like this? It seems like the profit margins are so large, it seems like there’s a bit more risk… So what types of returns are you offering, and how are you calculating these returns?

Karl Spielvogel: For the private money, you mean?

Theo Hicks: For the private money, yeah. Or even for yourselves, I guess.

Karl Spielvogel: Yeah, for the private money we’re anywhere from 8% to 15%. Typically, people are loaning us money on the ones once we clear the title. But we’ve got people that will loan us money on the bad titles, because they know that we can clear it; that’s typically around 15%.

But most of these deals we’re in for very little money. That deal that we’re into 65k – that includes renovations and everything. What we do is we typically have people deed us the property upfront, when there’s a multiple heir situation, and they get paid later. We’ll pay them anywhere from 0 dollars to 500 upfront, our own money, and then when we clear the title, they get the rest.

So we’re getting into these deals for very little, because a 23 heir deal – who’s gonna buy a fraction of that? They know we’re the only game in town, so they’ll sign us over the property, typically for no money to $500, and they get paid when we clear the title.

Theo Hicks: Okay, so it looks like your most profitable deal was the 243k deal. Let’s talk about that one, kind of similar to this 23-heir deal. How did you find it, and then how much did you buy it for, how much money did you put into it, and how much is it worth, and what did you do with it?

Karl Spielvogel: That property – a birddog called us up that we know, Gerald. He does some work for us. He said “Hey, there’s a property that’s vacant. Some squatters in it, the guy passed away…” So we got it from a birddog. And the first thing we did was pulled it up — it’s in a very good area, and these squatters had moved in. So I’m like “This could be a huge deal.”

So the first thing we did was we built a family tree. Actually, for this one, even though we didn’t own it, I hired a genealogist, so we built a family tree. What happened was the wife passed away first, so her side was out… So the husband passed away, and when he passed away, his share would have gone to his brother. Well, his brother died in an airplane crash in Crete in 1973, so then it would have gone to his two sons, Jack and Louis. So they were the rightful heirs to the property.

So we skip-traced — we couldn’t find them, we couldn’t find them… We did so much investigation on this deal… I went to the funeral home where the guy was buried, I got the book everyone had to sign in, I called everybody there, and one of the people there told me that the mom from the two boys had remarried a police officer outside of DC. So we spent nine months just working this deal, trying to figure it all out, trying to find Jack and Louis.

Well, one night after probably ten beers, it sort of clicked that maybe the mom had changed her name when she got remarried, and Jack and Louis had a different last name. So then we had our genealogist do some more searching, and she found where the lady – I don’t wanna say their names – got remarried to the police officer outside of DC. Then we skip-traced the kids and found them.

Now, there’s a lot of other problems, too. There was a code enforcement letter, it was going for sale for taxes, and there’s also a niece that had a lease for a dollar a month, which we ended up buying that out. So it’s really important once you track these people down that you set the table.

Also, because he had passed away without a will, there was estate issues. So basically, we called the guys up, we said “Hey look, there’s a property in Charlotte, you guys are the rightful heirs, but there’s a whole bunch of problems. There’s squatters in the property, there’s code enforcement, there’s estate issues, and it goes to sale for taxes in two weeks. We can offer you $35,000.” “This is found money, first of all, and normally we’d negotiate, but since there’s so many problems, we’re gonna sell it to you for $35,000.” So we bought the property for $35,000, and then we had to wait nine months in North Carolina — we didn’t wanna open the estate, because were afraid there’d be claims and stuff, so we waited…

He had to be passed away for two full years, so we had to wait nine more months. We were totally into it in the $50,000 range. We did a couple little minor repairs to get it off the code enforcement list, paid out bonuses and everything, and we sold it for $310,000. So our net on that deal was $243,000, but it was a lot of work. We were basically private investigators, tracking down heirs that their names had changed. That’s how we ended up getting that deal.

My partner even a couple times said “Give up on it, give up on it.” I’m like “Nope, I’m gonna get this. I’m gonna figure it out”, and we got it done two weeks before it went to sale for taxes.

Theo Hicks: Wow, that’s a crazy story. I bet you have a lot of stories like that.

Karl Spielvogel: Yeah, everything from guns pointed to our head while knocking on doors, to being threatened by motorcycle gangs… It’s crazy.

Theo Hicks: Before getting into the best advice ever, what’s the craziest story you have?

Karl Spielvogel: The craziest story… I’m trying to think here. There’s so many of them, I can’t even think. This was sort of a funny; this will take a little time, but there’s a piece property that — again, I don’t drink anymore, but I used to drink a lot. So I was drinking at the bar, and my bartender said “Hey, my mom is going into foreclosure. Could you help her?” I’m like, “Yeah, we’d like to talk to her.” So I met with her, and she owned a piece of property in the county of York. It was surrounded on two sides – this piece of property – by the city of Tega Cay. Tega Cay is a very rich area, and if I could annex the property into Tega Cay, then it would be worth a lot of money, versus being in the county.

So I went and met with the city manager, and I said, “Hey, can you annex this piece of property into the city of Tega Cay? Because I wanna build some houses on it.” And I’ll never forget what he said. He said “Son, we’re not gonna do that.” I’m like, “Why not?” He goes, “Well, we’re building a baseball field. We’d like to buy your property, but we don’t really need it.”

So I came down and met with him, he said “I can give you maybe 85k, maybe 90k on this property.” I was like “Okay, well that’s a little bit low…” During the time we went back and we did a short sale on it. From 65k, we ended up getting it for 50k. So I went back to talk to the city manager and said “Hey, let’s negotiate on this property. Your price is a little bit low, but let’s talk.” He goes “Well, now I can only give you 65k for it.” I’m like “Why?” He said, “Well, that’s all we have in our budget. I can only give you 65k.” I was like, “Well, wait a minute… Your price went down. Let me ask you a question. You’ve just told me you have no jurisdiction. It’s in the county.” He goes, “Correct.” “You said you’re not gonna annex it”, he goes “Correct.” I said “Then I can open a freakin’ goat farm.” And he crossed his arms and said “Well, I guess you could…”

So what we did is we went and rented goats… You can actually rent goats. We went and rented three goats for two hours, and we had goat cupcakes, we had a big banner “Uncle Karl’s Goat Farm Coming Soon”, we had Goat Farm T-shirts printed up, we had a little party out there and we did this whole thing about how we were gonna open a goat farm in Tega Cay. We did a Facebook live… I even sent them emails saying “Hey, we’re getting ready to open a goat farm.”

We were just silly. We filmed a Facebook live, we had some neighbors come over, and we did this little whole production. We had a little ribbon-cutting ceremony, and had a little golden key made up… We got pictures; I’m gonna send you pictures. That day we got a $100,000 offer for the property, closed in seven days. So we ended up selling it for $100,000, closed in seven days.

So I guess the moral of the story is that — we positively extorted the town of Tega Cay. So that was probably the craziest deal we ever did.

Theo Hicks: Oh, man, this is very entertaining. I’m sure I could talk to  you for hours about some of these stories… So based on all these experiences, what is your best real estate investing advice ever?

Karl Spielvogel: Two things – focus on niches. We do a lot of land, a lot of stuff too, but find some niches that not everyone else is doing, learn those, and then also be relentless on your deals. I could tell you story after story where we were relentless… But also, pivot. Most of our deals we got stuck, and we were done, we couldn’t get them to go through, and at the last minute we pivoted. I could tell you crazy stories, like — we mailed out chocolate bars one time to this lady who kept telling us no, no, no… We said “Hey, you’re missing out on a sweet deal. Please give us a call.” She called us, we got the deal, two days before the foreclosure.

So you’ve always gotta be persistent, learn the niches, and then take that step back, pivot, and also collaborate. We spend a lot of time at our office, talking to people, trying to figure out how to put these crazy deals together, with multiple heirs, and partition sales, and buying liens and judgments.

So I would say that the persistence, pivoting, and learn niches.

Theo Hicks: Okay, are you ready for the Best Ever Lightning Round?

Karl Spielvogel: Yup.

Theo Hicks: Alright. First, a quick word from our sponsor.

Break: [00:16:52].24] to [00:17:55].03]

Theo Hicks: Okay, what is the best ever book you’ve recently read?

Karl Spielvogel: I like Traction, because my business is so disorganized and messed up… I’m trying to straighten it out, so it’s more organized and streamlined. So I’d say Traction is probably one of the best books.

Theo Hicks: If your business were to collapse today, what would you do next?

Karl Spielvogel: I would go back in, because I’ve made a lot of great connections… I would go back to everybody — because I lost everything in 2008.  I’d go back to say “Hey, I’m starting over…” I have the knowledge, I have the know-how, so I’d just reach back out to all my business partners… Because you don’t need money for what we do. We’ve just gotta find the deals, and we can go out and start doing the exact same thing. Going back after tax delinquents, foreclosures, using our property look-up system, and that kind of thing. That’s how I’d start back over.

Theo Hicks: So besides that $243,000 profit on that deal, what has been your best ever deal?

Karl Spielvogel: We did a $228,000 deal on a vacant house that was owned by a defunct corporation; they had a divorced couple, the wife had the rights to it. It had a $750,000 lien she thought was attached to it, but it wasn’t attached. So that was our second-best deal ever.

Theo Hicks: What about a deal that you’ve lost the most money on?

Karl Spielvogel: I was really stupid… I went off a Zillow value, and I put it under contract, and I had two partners with no money, and we ended up losing about $32,000, and I got sued… And had to settle a lawsuit. So that was being really stupid; not even a rookie would go off a Zillow. I just was trying to hurry and not paying attention, and I was just stupid.

Theo Hicks: And then lastly, what is the best ever place to reach you?

Karl Spielvogel: I’ve got a phone to call: 704 777 77777. That’s our office number. Leave a message. That’s probably the best way to reach me. Or send a friend request on Facebook. We’ve got Uncle Karl and Friends, or Karl Spielvogel. Or let me give you my personal number – 704 995 5385.

Theo Hicks: Well, Karl, this has been a very interesting conversation. I was muted while you were talking, but I was laughing a ton at your stories. Very entertaining, very interesting, and definitely all of the different stories and examples you gave hit on your best ever advice, which is focus on niches obviously, be relentless on your deals, pivot when you need to, and then obviously, when  you’re doing these kinds of complicated deals, to collaborate with people to brainstorm what to do.

Just to go over some of the examples you gave – there’s one that had 23 heirs, that you bought for 65k, that was worth 200k. Driving for dollars, you just found out that it was vacant… Both owners were dead, you build out a family tree, you called the heirs, made deals with each of them, even put on a barbecue to get that deal done.

You talked about your best ever deal, with a $243,000 profit, where a birddog calls you up, he found a vacant property where the owner passed away. You had to hire a genealogist and it took you a long time to find who the rightful heirs were. Then you talked to the about all the different issues and offered them 35k to buy that property because of these issues. They ended up selling it to you. Based off of the rules with the estate, you had to wait two years after the original owner had died, so nine more months before you could sell the property. You sold it for 310k.

And then my favorite, which is the goat story, where you found a property through a bartender. The property was surrounded by a very nice area, that you wanted to get annexed into the area, and the city manager said no, because they’re building a baseball field, and offered you money for it. Then he comes back with a lower offer, and you did your Goat Farm production, something [unintelligible [00:21:22].10] That same day you got a 100k offer that closed in seven days.

I’m sure you’ve got plenty more of this type of stories. I’m sure you’ve got some content on that on your website…

Karl Spielvogel: We have a podcast, Uncle Karl’s Crazy Real Estate Stories. And also the mastermind group, Uncle Karl and Friends Mastermind Group. It’s only $149/month and we dive into details on how we do these kinds of deals.

Theo Hicks: Yeah, and [00:21:51].15] because as he mentioned in his best ever advice, a lot of people are focusing on the single-family rentals and apartments. And while that’s obviously a great investment, if you do have the time and you are relentless,  you  can focus on these niches where there’s really no competition at all, it sounds like. It just takes time, takes effort, it takes some creativity… And you can make a lot of money, without having much competition in today’s market. So definitely take him up on that offer.

Alright, Karl, I really appreciate it. Again, very entertaining interview, I really enjoyed it.

Karl Spielvogel: Thanks for having me on, I appreciate it.

Theo Hicks: Absolutely. Best Ever listeners, thank you for listening. As always, have a best ever day, and we will talk to you tomorrow.

 

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