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Wholesalers And Real Estate Agents with Guest Co-Host Robert Orfino
We’ve talked to six or seven people about the membership and the mastermind and they’re all in that spot. We had a good guy come in. I’m not going to say his name or what club he’s in before that. He’s like, “I’ve got my single-families now, but it’s not producing cashflow.” I said, “The appreciation must be fantastic.” With a big smile on his face, he was like, “Yeah.” I’m like, “That’s what single-families do. I’m sure you’re making a little bit if you’ve got multiples.” He’s like, “It’s not enough.” We talked about small apartments for a little bit. We talked about, “Why aren’t these other big groups and all these big gurus in Texas doing small multifamily? Why would I come with you and Jason when I’m already in this group and I dropped $25,000 or whatever it was?” I was like, “I don’t think they touch it. I don’t know the inner workings of these other big groups, but I know for a fact that a lot of these gurus out there who will simply state, ‘We’re not doing less than 100 doors. We need 150-door minimum,’ because of the way they structure the deal.”
They do a syndication deal. One-hundred and fifty doors, you’re buying them at let’s say $100,000. It’s a Class B property and somewhere outside of Dallas. Good luck if you find that property, but let’s pretend that it’s there and for sale. You’re sitting at $15 million. They want to do the syndication structure where everyone can get paid along the way and there’s a sponsor, there are people who that can do all this stuff. What happens is, it’s great. That’s a great formula and that works. There’s been a high level of real estate investors who’ve been doing it for decades. However, you don’t put a syndication deal together for a nine-unit in Corpus Christi. It can be a waste.
You go to the local bank, you get 80% LTV at 6% to 7% and you come up with 20% down. That’s what we’re teaching. That’s what we’re doing. If that’s the model you want to follow, come along. Of all the people we talked to, the conversation starts just the way we’ve been saying it, “Do you make over $150,000 a year? Are you good in that world?” “I’m good.” “Do you have some seed capital, $50,000 or $40,000? If you want to do multifamily, maybe $60,000 or $70,000?” “Yes.” “How’s your FICO?” “My FICO’s great.” You can join us on this journey and we’ll introduce you to all the people that we’re working with or you can go do it yourself. It sounds like you’re in good shape.
I also met with a private lender. This guy joined one of these local clubs and #won, not winning. He won. He’s got eleven or twelve, maybe fifteen duplexes paid off. He set a goal twenty years ago that he was going to retire at the age of 50. He retired this year 2019 at the age of 50. He’s got 20 to 30 doors free and clear. Now he’s looking around saying, “What am I going to do? Maybe I should do a couple of Airbnbs and get some cashflow.” He did most of the stuff in his Roth. He has got his retirement planned and he’s in good shape. I talked to him and he’s going to maybe work with us on an Airbnb. That should be fun. I’m a fun guy to work. We banter around the office all the time so it’s fun. These people are out there. They’re at a point in their life where they realize that, “I’m not broke so I don’t have to follow the “I’m broke” strategy,” which is a big realization.
When a lot of people with money walk into one of those rooms and they’re talking about no money down, no credit, you can do this and it only takes ten hours a month. Those people walking those rooms, spin heel and walk right out because they know it’s not real. They say, “That’s not for me. I don’t need to door knock pre-foreclosure. That’s not for me.” That doesn’t mean door-knocking pre-foreclosure is a bad thing. In fact, it’s probably one of the best ways to find deals as a wholesaler. We’re going to talk about wholesalers. We love them, most of them. We love wholesalers. Wholesalers bring us deals. We bought nine units from a wholesaler. We have two wholesale deals ourselves that were put out to our groups.Get your real estate license and find a wholesaler to work with. Click To Tweet
We work with wholesalers. Because we talk a lot about having $150,000 and having about $50,000 in capital to deploy and a decent FICO, I don’t want anyone to think that we are discouraging or beating up wholesalers. In fact, we’re not. It’s a critical part of our industry to have people out there that are finding off-market deals. That are tracking down these people across the country and getting a contract signed. They’re bringing it to investors like ourselves. It’s important. We work with them. However, our point has always been that it is hard to create wealth from wholesaling. We have fun with the gurus all the time and that’s fun.
For sure, we are not beating up on wholesalers. We want them to come to us. We want to work with them. We’re looking for properties all the time. If you’re a wholesaler, we’ve got an avenue to get to us and to some of our buyers. To think that you could jump into a wholesaler with no money and it’s going to be the way to get out of credit card debt or to make $10,000 in the next 30 days, we think that’s a sham. We think the odds of becoming a wholesaler now and in the next four weeks, making $100,000 is probably unrealistic. Is there a possibility? Yes. I believe in a universe of infinite possibilities.
There is a planet out there somewhere where there are real vampires and they turn people. There’s another planet full of werewolves and there’s a planet with dragons. It’s infinite possibilities but that’s not practical real estate investing and that’s what Jason and I are about. We understand how wholesaling works. I started there because like everyone else, I went to the REIA Club and they told me that’s what to do. I went out there and I found out how hard it was. I always tell the story. I’m a pretty smart guy. I’m not the smartest guy in the room. I’ll never make that claim. I love to surround myself with smart people including my wife. She, without a doubt, is much more intelligent than I am.
That being said, it took me almost three weeks to put my first yellow letter campaign together, doing all the things that I was told to do. Making sure I had the website, the PO Box, the right phone number and a throwaway phone number, finding the list, purging the list and doing all this stuff. It took me three weeks to do it. I was like, “This sounded a lot easier when the guy on stage said it. What am I missing?” The reality was I wasn’t missing anything. I was doing the work. No one explained to me that you can’t jump here and tomorrow go ahead and send out your yellow letters. You can, but they’ll wind up costing you $1.50 a yellow letter. You can do it turnkey out there.
We didn’t have those resources. We had to figure out how to do photocopies of stuff. It was crazy. Finally, three weeks in, we were able to send out 1,500 letters and the phone rang like they said it was going to ring. That was good except nine out of ten times, the people that were calling either had the house listed already or was looking to list it with an agent. We had to convert that into, “You should sell it to me because I’m a private investor,” and went through that whole speech. That was eye-opening for us. Within six weeks doing wholesaling, I realized right away someone in my world very close to me should be a real estate agent because I could turn that lead over to them.
“Do you want an agent? You don’t want to sell directly to me. I have Linda. I’m going to have Linda call you in the next five minutes. She’s going to call you up right now. She’s going to come out there and we have a listing appointment.” To me, sending out all those yellow letters and doing all that marketing to take the one out of the ten and to leave three on the table because they’re looking to list it with an agent. You’ve left three warm leads on the table to only keep one. When you hear Jason and I say, “You should go out and get your real estate license,” you should. I would absolutely take it a step further and find a wholesaler and say that any lead that you get that says they want to list it with an agent, call me immediately. Let’s do a three-way, immediately call me in and I will get on the phone and I’ll come out there and I’ll get the listing because I’m working with a wholesaler now and I’ll refer you a marketing fee.
That strategy as a wholesaler makes a lot of sense. You’re going to have to realize taxes, the cost of marketing and the cost of your time. I saw a video out there, “I’m making $29,000 on this deal.” I’m like, “Is that gross?” I’m not a troll. I’m not saying that Jason is either most of the time. I go out there. I look at posts. I read it and I’ll say, “BS,” and I move on. If you post on my page or you’re tagging me, I’m going to ask the real questions. Someone needed to ask that guy, “Is that $29,000 gross or is that net? Did you count your own time? Did you count the marketing dollars? Yes, there are closing expenses and all that other stuff. Yes, for sure, you’ve got to pay that.” I would in my mind and I’m wrong on the bookkeeping, but I would look at all those closing expenses as a cost of goods. That comes off the top. Now, we have our gross. Are we taking out the gas, your auto insurance, all that stuff that you had to do to get that deal?
Here’s something you have to realize. I don’t have your phone number in my phone, so when you text me, if you could tell me who you are, that would be awesome because I now have about 500 texts with no names next to them. I have no idea who’s texting me, “This is mastermind or webinar or wholesale coffee.” I don’t know who you are, so let’s do that. We have a guest in. His name is Charles. He is a local wholesaler and I bought a property from you. I’m happy about that property. That was a good deal. I wanted to say we’re not here to discourage wholesalers. It’s definitely hard and Charles is going to attest to that. You need it. We love you. We want to work with you. However, you have to evolve. Charles, tell us a little about yourself. Are you a native Texan? Were you born in Texas?
I was born and raised in Houston. I’m a Houstonian in the Cypress area and I moved out to San Antonio for four years. I came back and I started my real estate career. I did some traditional real estate. I had my license for a bit. I was working with a brokerage that was providing so many leads, which was nice. It was becoming overwhelming to keep up with all of the leads while I was doing something on the side, which is now we call it wholesaling, which was making me more money than what I was doing in traditional. I started thinking, “This is working.” A good friend of mine, David, got me into it. He said, “Let’s put some letters out.” I said, “There’s no way this can work. We put some letters out and we’ll get a bunch of people calling us wanting to sell their house.” I was wrong. It definitely did work. I started liking that. I quit my traditional real estate gig and went full-time into wholesaling. I’m still doing that for a few years now. I will tell you all the ups and the downs about that.Real estate wholesaling is a very lonely business. Click To Tweet
I will add the first caveat to our conversation is that Charles is a salesperson. His follow-up skills are amazing. He has a way to reset the conversation every time you talk to him meaning I might have said no the last time I talked to him. He calls you up and he assumes that you’re going to say yes this time. We didn’t bring you on for your wholesaling skills. We brought you on because you’re top-notch sales guy on the phone. The conversations and the way that conversation flows and you’re a good listener on the phone. I can hear you holding back and biting your tongue when I’m talking to you to let me get it all out. You bring it back around. You can craft a conversation. You are a nine or a ten in that world.
I appreciate that, thanks. Coming from you, that’s an honor. I will tell you from day one, you start trying to get into wholesaling, get ready for the struggle. Get ready for the battle.
Letters work, so this is why we love Houston and Southeast Texas is almost every wholesaling strategy works. You can cold call. You can do yellow letters. You can do door knocking. You can do bandit signs. There are two guys over here in town that does nothing but bandit signs. That’s how they’re doing it. All of these strategies work. When you did your yellow letters, do you remember the numbers? Let’s say you sent out 1,000, how many phone calls would you get?
Our first campaign was unconventional. The result is not a typical type deal. We certainly didn’t do enough to be worthy of getting this deal, but we did. We put in $300 apiece, me and my partner. We got a nice little $5,000 pop. We were like, “This is awesome.” We lost a few hundreds of dollars in marketing. We went through that too.
I know we run across this. The worst-case scenario for a wholesaler is you have a deal in your hand. You know it’s a deal and nobody buys it.
It’s the worst feeling in the world because you feel not only did you lose money, but you have let the seller down and that is one of the hardest things to go through. I’ve been through that. It sucks.
You call New Western, they want to buy for $10,000 less than you have for it.
Not to knock on them too much, but they’ll sign the paperwork and sign your contract. A broker said, “I can’t do that much. We’ve got to reduce the price,” once they find out how much you’re making. I didn’t mean to say that, but yeah.
We have a rule, if a wholesaler changes the terms while it’s under contract, we never talk to that person again. You have to do that stuff. You’re not doing cold calling. You’re not doing yellow letters. Where are you getting most of your deals from?
Without giving away all my secret special sauce, which I definitely want to give away some of it. I hear a lot of people say, “You can’t find deals on MLS and wholesalers. The list is worthless.” You can find deals on the MLS. We do a ton of stuff on that. We’ve done cold calling and do some of that, but MLS deals are awesome. You’ve got to know how to talk to the realtors. You’ve got to know how to work it and how to structure a deal like that where it benefits everybody. It’s a win-win.Residual income is where you need to be. It's a natural evolution process. Click To Tweet
You’ve got to have a little EMD. That’s the big one. We get a lot of that from other investors when we talked to them. We just get a little flabbergasted. Someone will say to me, “That deal is on the MLS. I’m not interested.” I’m like, “It’s on the MLS at $140,000. We’re offering to you at $108,000. What’s the problem?” They’re like, “I could have gotten that deal.” “No, you couldn’t because you don’t have the phone sales skills that Charles has. You’re lacking at the bottom. This guy’s a nine or a ten. This is why he’s able to get on the phone and get that deal down $40,000, $32,000, whatever it is. We’re able to run it to you.” The way we typically work it in our world with Mr. Texas Real Estate is if we are putting the EMD down. Meaning Mr. Texas Real Estate writes a check and we contracted, we have almost every intention, I’d say nine out of ten times, we’re going to move forward with that deal. If no one else can see that it’s a deal, fine, we’ll buy it, we’ll fix it and do that.
That’s been a little bit easier for you. We’ve been able to pull some EMD here and there, wire some money over and know that this is a deal. We’re not going to let this go back to the market place. Maybe we lost one that way, but everything else is Jason. I’ll buy it or we’ll find someone eventually to buy it. Here’s what I’ve always said about wholesaling. It’s a very lonely business. It’s great if you have your wife or a partner, which you’re blessed to have in both situations, but it can be lonely.
It’s probably the loneliest thing that you will endeavor to get into in real estate. It’s a long process and that’s why we have begun an event. It’s going to be every second Thursday and every last Thursday of the month. We’re going to be at EQ Heights at 1030 Heights Boulevard at 10:30. We totally didn’t do that. That’s a coincidence that it’s 1030, but it’s at 10:30 in the morning as well. Me and my wife, Crystal, she’s amazing. She’s been on this journey with me also every step of the way. We’re going to be out there hosting wholesalers, only wholesalers allowed, no buyers allowed, no sellers allowed. No fakers allowed, straight up wholesalers that are trying to make it.
We did it for a 10:30 in the morning versus 7:00 at night because 10:30 is you’re in it. If you’re available at 10:30 on a Thursday, you are in this business. It’s just getting together. We’re not going to teach you how to wholesale. We’re not going to do this five-day class or any of this nonsense. What we’re doing is getting together having coffee and talking about the industry. You need that probably more than anything else in this real estate world. You need a place to sit down twice a month, have a cup of coffee and network with your peers.
We hope to have a fellowship, talking with people, networking with people, getting a good vibe from each other and also helping each other. If you’ve got your deals, great, bring them. We are buyers and then we are also wholesalers. We can buy your deal. We can help you find the buyer to buy your deal. We’re there to encourage, support and help each other out.
If this is what you’re doing, if this is your endeavor and you’re out there in the world doing that, it’s going to be pretty lonely. If you’re in a big sweatshop, there’s a wholesaling sweatshop all over town. It’s the best way to describe it. There are these offices where 25 guys every day are cold calling. Five guys on the other side are doing dispositions selling. That’s not what we’re talking about. We’re talking about the woman who said, “I’m going to go do this,” or the guy who was doing this and it’s a lonely business. We set that up to support you. There are going to be no gurus in there. We’re not looking for people to come in and say, “I buy everything.” That’s great.
You can get on everyone’s list, but this is a peer-to-peer thing. There is no charge for it. You do have to buy a cup of coffee. It’s not a mastermind or any of that stuff. It’s very organic. Charles, you’re going to get people there from the big three, the big four. You’ll get gurus in there and kick their butts out. Kick them out and say, “This isn’t for you. That’s not what we’re doing there. We’re not here to pitch lease options. You’re not here to pitch how to do tax lien sales or any of that stuff.” I’m a wholesaler. This sucks sometimes. I want to go have coffee with Charles and his wife and we’re going to sit and talk about it, get renewed, get revitalized, and go out and do your stuff.
Please don’t come in trying to teach any strategy, any technique. I don’t want the guy to stand up, “Can I add this too? We can do this, this and this as well.” It’s not for that.
It’s having coffee, that simple stuff. We put out the address, our number is (281) 401-9008. If you want more details, text us. We’ll get the information to you. Hopefully, we can do it publicly. If it gets polluted because sometimes these things do, we’re going to have to go and do it privately and say, “We’re not giving you the event. You’re going to have to fill out this form. It’s going to be all that nonsense.” We don’t want to do that. If you’re a buyer, great, (281) 401-9008, get on our buying list. Charles will give you a call. We’ll have a conversation. If you want to work with agents, we’ll get an agent to call you. If you’re buying in this market, (281) 401-9008 and say, “I’m a buyer.” Please tell me your name because we don’t have your contact information. We’ll get someone to talk to you.
If you want to buy wholesale deals, Charles will get on the phone with you and talk to you but don’t pollute the event. That’s what we are asking. We always pick on those big companies. We won’t do New Western. We’ll switch over to the Big State because we know Michael Boyd over here, we like to have fun with them. The stuff we’re saying is semi harmless. We’re not being over these things. It’s a call center, if you will. That’s a big strategy for these big houses. When you run a big call center and you rent a lot of office space, you’ve got five people on salary on this side, five people commission on this side, a manager, another manager, an owner and another co-owner, those margins get lean.One wholesale deal can change your entire life. Click To Tweet
There are bad apples everywhere. As you’re saying, we’re not picking on one particular company or person, but there are good and bad apples.
If you’re out there and you’re the solopreneur doing wholesaling and trying to work these strategies, we’d love to have a cup of coffee with you. Jason and I will not be there, Charles, at your show. We might have someone from a title company come over. She might buy some cookies for people. Obviously, she’s going to want you to open title into her company. We recommend it. It’s a patent title company. They’d be great. Charles, you mentioned once you get a little traction at the first one or two deals, it can absolutely convince you, move you and shift you. More so it probably convinces your wife or your mom or your dad or all the other doubters around you that it works, but what do you do from there?
Definitely one wholesale deal can change your entire life if you let it. The way I say if you let it is if you’re smart with that money that you bring in from that wholesale deal. It’s something I have learned. I have had some very hard lessons in that. When you get a wholesale deal that brings you in some nice cash, you want to reinvest it. You want to have your money work for you. What I learned is residual income is where it’s at. Residual income is where you need to be ultimately. It’s a natural evolution process, but you definitely want to take that money and use it wisely. It can and will change your whole life.
When I used to go through this, we were doing wholesale, we were doing a big way. We had the operation and the board and everything like that. We had folks come up and wanting to do calling for us, but we would say this. I totally got this from Mike Michalowicz who wrote Profit First and The Pumpkin Plan. Go out and check those out. He says here’s what you do. I make $5,000, I take 10% of that immediately and put it in a bank account for a rainy day. That’s my profit. I made a 10% profit, I’m good. You’re going to take 15%, you’re going to put it into another bank account and that’s for taxes. You cover your taxes. Take 35% of what you made and go out and pay down your debt because most people who are wholesaling have debt. Take the remaining 40% and reinvest it back into your company for marketing and getting those things going and run that little model over and over. You will be in good shape.
The first year I would say my wife and I and our kids, we lived off nothing but credit cards, trying to get this business up and running and started. It is a real struggle. I will tell you that if you don’t give up, you do take action, that is the biggest thing. Don’t sit there and get tons of gurus and you’ve got all this knowledge in your brain. You know what you’re doing and you don’t do anything with it. Get out there and take action. Go out even if it’s driving around. Drive around and look for a house that has high grass and knock on the door. You never know what’s going to happen from that.
When you drive for dollars, the key ingredient is knocking on the door or doing the skip trace. A lot of people drive and drive. You’ve got to take action. It takes about six months to start getting some traction. It’s going to take you three years to get good at this. First year, you’re going to be fumbling through. The second year, you set up systems. The third year, you throw everything away and you run it like a professional business.
Use your natural skills, if you know your natural gifts, you know the natural skills that you are born with, that God created you with, use that stuff. If you know that you’re not gifted at marketing, go and outsource that. Get yourself some help and use your time and use your gifts wisely. I would definitely say that.
Where are we meeting?
We’re meeting at 1030 Heights Boulevard at 10:30 AM EQ Heights.One of the best ways to find deals is through networking. Click To Tweet
EQ Heights is a little coffee joint. It’s free. You’ve got to buy yourself some coffee. There are no beer and chicken wings. This is definitely a peer-to-peer sharing. It’s a one-hour thing too. It’s not going to be all day, pop in and look for Charles and say, “I’m a wholesaler. I resonate with what you said and what are you working on, how you work on stuff.” He’ll share. The other thing we want to talk about before we get through the end of the show here is one of the best ways you’re finding deals is through that networking model, correct?
Yes and I cannot stress it enough, your network is huge in this business. You have got to start networking. You have got to start meeting people, talking with people, like-minded people that are doing the same thing you’re doing. Also, people that are going to be bringing you in money to help you, which are your buyers. You’ve got to talk to people. Touching every time, not a simple email. You start building a relationship with buyers is huge as a wholesaler. This is what I found, once a buyer has bought from you, I don’t care how long it’s been, it’s so crazy.
If you’ve met with them and you’ve built some rapport with them, it could be four months down the line. All of a sudden you get a call from them randomly or you get a text randomly, “You bought from me that one deal.” You hold on to those buyers. You hold onto the buyers that you’ve talked with and you’ve made a rapport with because those are your guys. You can have 40,000 buyers on your buyer’s list and it doesn’t mean anything honestly. If you’ve got five, a handful or two hands full, it’s all you need usually.
Jason and I talked about it. If you’re going to start there, understand it’s going to be lonely. What we’re doing instead of constantly beating you up is we wanted to provide an outlet for you to do professional networking. There’s no pitch, there are no gurus, none of that nonsense. It’s professional networking so you can sit down and talk to people and get through. When we see the guys all the time, it’s like, “I’m going to teach wholesalers.” Here’s the worst one I saw, “I’m going to do a five-night class on how you could become a wholesaler,” but what he’s teaching them is how to go be a bird dog for him. A lot of guys out there, here’s the worst, it goes beyond that. At least that guy was free and maybe he’ll buy you a coffee. We’ve seen guys that charge $500 or $197. You pay me, Charles, $197 so you make phone calls for me. I will teach you how to make phone calls, but you pay me so you can make those phone calls. You don’t have a buyers list. I will buy them from you and I’ll give you a bird dog fee.
You’re pretty much going to teach me how to use my voice and make a phone call.
Please be aware of those guys. It’s horrible. A guy who did it is a lawyer. There’s got to be labor laws about this. We have one deal under contract. We talked about that. We have a couple of folks who looked at it. I don’t know the actual area that is, but we have it at $108,000 is what we’re selling it at. It’s worth $150,000 less than $10,000 worth of work.
In fact, I got my bid from the contractor. He’s right at $9,800.
We like to do that. We do put a deal out there. We’d like to at least get a contractor out there, give us a bid and show you the bins. They signed the bottom of the bin and he’ll go do the work. We have another one coming up.
That one’s in Beasley, Texas, south of Rosenberg. It’s a super-hot area and a hardworking community out there. It’s an awesome cashflow. It will cashflow you 1% or more all day long. It’s over 1.25 DSCR. If you’re interested in that one, give us a holler. I’m going to go show the first one, Woodsmoke that we have on a contract.
Thank you very much for coming in, Charles. We appreciate it.
I enjoyed it. Just continue to do what you’re doing, wholesalers. Don’t get discouraged. Come out and meet us, let’s get together.
We have a little fun with wholesalers because we don’t believe it can create wealth. It can create cashflow and get you into a position where you can start creating wealth. We don’t want people misconstruing that we don’t believe that wholesaling works because it does. It certainly works in Southeast Texas, which is for sure the greatest market in the entire country. It’s why I got into it and left no humid Southern California to come to Texas and work out here. Start my life out here and get my homestead and all that good stuff.
Wholesaling in this part of the country is absolutely a way to create cash. I don’t see it as a way to grow into wealth. Wealth is acquisitions. Wholesaling is going to be transactional. It’s (281) 401-9008 if you’re interested in any of those deals. If you’re in California, go ahead and text us. We’ll catch up with you. We’ve got wholesale deals. We’ve got buying agents. We’ve got mastermind. We’ve got all that good stuff so make sure you check this out. Follow along and if you need anything, go ahead and text us. Thanks.