Posted on: July 25, 2022
WI 1001 | Virtual Deals

 

Mike DeHaan is doing nearly 100 deals per year and is in nine markets currently. Best of all? He’s doing it 100% virtual. Mike joins Lauren Hardy to talk about his journey from struggling to close one deal to doing nearly 100 annually. He talks about key strategies he used to close deals fast, reduce selling stress and increase his margins. This episode is full of value for anyone looking to wholesale virtually.

If you like what you heard in today’s episode and want to go even deeper into virtual real estate investing, check out Lauren’s Virtual Investing Mastery program.

 

Show notes:

  •     (0:58) – Beginning of today’s episode.
  •     (1:58) – Mike’s background and entry into real estate
  •     (4:44) – Why Mike struggled to close sales at first.
  •     (8:50) – Why Mike went virtual and how he chose his markets.
  •     (11:20) – Mass market wholesaling and why chase “low-hanging fruit”.
  •     (14:50) – How to properly use JVing to wholesale virtually.
  •     (17:07) – Increase your margins by doing this.

 

Resources:

  •     Want to learn more? Check out our Virtual Investing Mastery program.
  •     To speak with Lauren or one of our other expert coaches call (281) 835-4201 or schedule here.

How This Investor Scaled To 100 Deals Per Year And 9 Markets – Virtually With Mike DeHaan

Are you a brand new real estate investor? You’re not sure how to get started or where to get started or what platform you can go and ask questions to. Over at Wholesaling Inc, we have started something called the Rhino Round Table. On the last Saturday of each month, me, Lauren Hardy, Brent Daniels, Chris Craddock, David Dodge, and Grace are there to answer your questions over at Wholesaling Inc on our Rhino Round Table. This is live. You can come in and put your questions ahead of time or you can ask them live on the show.

I, as a land coach, will answer your questions. Lauren Hardy, as a Virtual Investing Mastery, will answer your question. David Dodge, in charge of the BRRRR program, and Lauren have rolled out the Rhino Roadmap. This is Wholesaling 101. Join us on the last Saturday of each month at 1:00 PM Eastern Standard Time. For one hour, on a Saturday, we will be there to answer your calls and answer your questions about starting a wholesaling company, real estate investing, buying and selling land, and creating a business around it. Come and join us. We will see you soon.

I’ve got Mike DeHaan on the show. Mike is a previous student of Virtual Investing Mastery, the best place to get your virtual investing and virtual wholesaling education. Mike came into my program. He was not virtual but he was in a market that was telling him he needed to go virtual. With the help of the group and that coaching support, he got that courage. Mike is in nine different markets. The guy is killing it. In this episode, I’m going to ask him all the details about how he grew from not virtual at all to nine markets. That’s crazy. Mike, welcome to the show.

Thanks. I appreciate it. A lot changed. It’s funny because we are relatively established in our local market when we started working together but there was something about getting outside of our immediate sphere that was tricky. You helped us get over that.

How did you get started? Give us a little bit about your background.

I don’t come from a real estate background. I went the traditional path. I went to college and got an engineering degree. I worked as an engineer for about five years. After five years of that, I decided that I hated it. In 2018, I quit. I didn’t have a plan. I had an entrepreneurial mindset. I wanted to work for myself and have my business. I dabbled in a bunch of things and ended up getting into real estate because every single business and wealth generation book that you read leans on real estate heavily.

I started getting into real estate primarily flipping houses. Wholesaling wasn’t on the map for me at that point. I was buying stuff from wholesalers and realtors. This was back when you could get stuff on the market pretty easily. At the end of 2019, I could see that options are becoming fewer and further between. It is funny to think about how hard it was to find stuff in 2021 versus back then.

WI 1001 | Virtual Deals

Virtual Deals: With how our business had grown in our marketing budget locally, we were at a point where if we wanted to keep doing more deals locally, we had to spend more money significantly.

 

The margins weren’t there that I wanted. I decided I’ll start sourcing my deals. I partnered up with my business partner who’s also my college best friend. We started marketing, sending mailers, doing cold calling, seeing what happened, and trying to figure out the sales process with no real base. We learned how to pull some data and start going for it. It took us about six months to get our first deal but after that, it was off to the races. We were able to start growing pretty steadily up until we met you.

What I caught is that in 2019, it started to get harder to find deals on the market. Was that in Spokane, Washington?

It was.

This is the power of virtual investing because, for me, it started to get harder to find deals on the market and the MLS in probably 2014. That shows you how every market is not the same. I was in a very highly saturated market. I would compare Orange County to Manhattan, New York, and markets like Miami or something like that. You were not in a more competitive market. You were still able to ride that MLS wave and buy properties the traditional way off the MLS. You were even buying fixer-uppers at enough discount to be able to fix them and flip them up to 2019.

It wasn’t until 2019 that you were feeling the burn. I was a direct-to-seller right out of the gate. I never even did MLS because it was always challenging in my market. That’s why we go virtual. In our markets, certain things change. Your cheese moved. If you don’t know that reference, it’s from a book. That’s interesting. I appreciate another thing that you said. It took you six months of trying to figure out direct-to-seller marketing before you got your first deal.

It was a grind. One of the biggest issues is that I and my business partner were both engineers by degree. We didn’t have sales skills. We were going into this from an asset-based viewpoint. We would go into these conversations with sellers and be focused on the house. We didn’t have any empathy for their situations. We didn’t know how to close a deal pretty much. It took us a while to figure that out.

Since we didn’t have a sales background, we would be embarrassed by our offers. It is a big thing that so many people deal with when they first start. I’ll always remember the first appointment that we ran and the first offer that we made. We sat in this living room with these people for two hours and gave them this whole spiel that was a bunch of nonsense because we already knew what our offer was going to be. We were so embarrassed to say it.

Every business and wealth generation book you read leans on real estate heavily.

After two hours of sitting there, we were seeing them get visually frustrated that we were still intruding on their day. My business partner spews out the number. He’s like, “We’re going to be at $135,000.” They both freeze. The wife goes, “You need to get out.” They start fighting. We’re up and moving towards the door. They’re screaming at each other because of this whole thing. It was an interesting situation.

That is so funny. You’re crediting your six months of struggle to the lack of sales skills.

Figuring out the marketing systems and building a CRM and all that stuff wasn’t our major hurdle coming from an engineering background, especially me. I was a systems engineer working in a Boeing factory. That stuff was fine. It’s data. It’s setting up software. That’s all easy but the sales skills were not there at all.

You’re sitting. You did a two-hour sales presentation, and then they start yelling at each other. That is a funny story. Thank you so much for sharing. I’m the opposite. Sales are easy for me because I have low self-esteem. I want everybody to like me. I am good with people. I’m a people person but I was a mess with my CRM for years. I am so lucky that I know the Owner of REsimpli. He has helped me personally onboard my CRM. If it wasn’t for Sharad, I would be a mess. My CRM is now very good but I bet your CRM is out of control with your background. I bet it counts like everything. It has all these bells and whistles.

We use REsimpli because it is such an easy turnkey system. We have tried several different things over the years. We veered away from it a while back because there were some of the features that we needed. We always end up coming back because it’s so simple.

It was made for our business. In any other CRM, you’re going to have to customize it to your business but Sharad did that for you. It’s amazing. I got on it in 2022. I’m obsessed with it. If you want 50% off your first month, then you can go ahead and give it a shot. They have unlimited onboarding, which I love. That’s what your non-technical person like myself needed. I scheduled onboarding twice a week for three months. I want you to check out the training I put together on it.

Go to ScaleWithREsimpli.com. When you sign up with REsimpli, use my code VIRTUAL. They will customize your drip campaigns to look like mine. It will follow the protocol that I have on the training program of ScaleWithREsimpli.com. You also get 50% off your first month. Since we got on the conversation of CRMs, that is very interesting that even an engineer-minded person is like, “It’s REsimpli all the way.” That’s awesome.

WI 1001 | Virtual Deals

Virtual Deals: The things that people worry about don’t really matter. As long as there’s an investor presence, which there is pretty much everywhere, it really doesn’t matter.

 

A hack with REsimpli, too, is if you have a team and you’re worried about training them up, schedule an onboarding call for them. REsimpli will train them for you, so you don’t have to waste any time. We do it with all of our sales guys.

Let’s talk about your transition then from your backyard in Spokane to then going virtual. What was that like? When you joined my program, you weren’t virtual yet. What did you do? What was next?

The reason we started to look virtual was because of how our business was growing and the different marketing channels. Spokane is a limited-sized market. It’s not super big. It’s a greater area with 500,000-ish people. With how our business had grown and our marketing budget locally, we were at a point where if we wanted to keep doing more deals local, we had to spend significantly more money. The returns on our money were getting smaller.

We’re like, “We have a system here. We know how the process works. We’re getting the lower 80%. Instead of fighting harder for that 20%, why don’t we go and find the lower 80% in another market?” We dabbled, watched YouTube videos, and tried to figure out all these different things. We had both been listening to the show for a while. We heard your show and decided to reach out and give it a shot.

The biggest thing with us being engineers was the paralysis by analysis. It’s going through and trying to figure out which market to do it in, “How are we going to find boots on the ground? How do we know where the good neighborhoods are and all that stuff?” You did a great job of helping us overcome that. The funny thing was once we got into the program and started going through your stuff, we realized the things that people worry about like the best neighborhoods, “Is it an ideal market?”

As long as there’s an investor’s presence, which there is pretty much everywhere, it doesn’t matter honestly. We were in a position where our business is doing pretty well. In the worst-case scenario, we waste a few months of money on marketing, and then we go somewhere else. We already have the basic concept down. Ultimately, we took a leap and ended up going to Knoxville, Tennessee for our first market, which is completely opposite of the country to us. The reason we chose there was we viewed it as a similar type of market to Spokane in the way that it was similar in size.

Spokane is a forgotten market next to Seattle. We looked at Knoxville versus Nashville. Nashville is hot now but back then, it was Knoxville versus Nashville. We’re like, “It’s close. No one talks about it. It has never been talked about on any podcast specifically.” You hear other podcasts. People will blow up these different markets. We never heard that one. We were like, “Let’s give it a shot.” There’s Phoenix. There are all sorts of random ones that people do. We decided to give it a shot and jump in over there. There we went.

The biggest challenge in looking for areas is knowing the best neighborhoods and also finding strong buyers.

You mentioned, “Why don’t we do the low-hanging fruit in different markets?” What do you mean by that?

You know how it is when you’re working with sellers. There are always the sellers that come through that are like, “I want to sell now.” There are the sellers that come through that are like, “I have motivation. I need to be sold a little bit first. I need to have a little bit more rapport first.” Outside of those, there are the long 6-month, 8-month, or 9-month follow-ups. Those always tend to make up a good amount of marketing because a lot of the money comes from the follow-up.

Our premise as we started to look into these remote markets with Knoxville included was we’re not going to bother with the people that are going to be pushing us off for a long while. We’re mostly going to go in with more of a mass marketing approach and search for those ones that are ready to go. That way, what it did was reduced our time and team resources while still allowing us to make money. Our total ROI is a little bit lower on marketing because we are missing opportunities admittedly but we are able to heavily focus on those strong opportunities. If you’re making money, you’re making money. We don’t need to be squeezing all the juice out of the marketing.

Honestly, in this business, you don’t have to do what Mike and Lauren do. Even in what I do, my model changes. I had more of a, “Let’s try multiple markets and be in more markets,” mentality for a while because I wasn’t flipping as much. I took a step back from house flipping and then I started realizing, “I miss the house flipping.” That gave me a lot of joy and purpose. I love house flipping, building houses, and stuff like that. I wanted to bring that back.

I’m not going to flip houses in 6 to 7 different markets, especially when it’s so hard to find construction resources. I had to think about what I wanted, “What brings me joy in this business? What do I want 2022 to look like?” I decided, “I’m going to pick a market where I can get the best margin and spread where it can be the most competitive.” One of the markets I was in was starting to get ridiculously saturated. I was like, “It’s time. If we get low-hanging fruit there, wholesale it but let’s focus my efforts on flipping.”

Instead of going the big team model, I’m scaling down because I found that I don’t have to close as many deals but I still make the same amount of money. My profit margin is better. I’m a lot more careful now about my expenses. I’m going for the better deals, so I don’t have to do as many of them. This is a new change for me. In 2021, I was in multiple markets. I love that about this business. You can mold it to what you want to do. It sounds like you’re in nine markets. That’s crazy.

We have scaled very heavily. A lot of that was in 2022. Our big goal was to do 100 transactions in 2022 when we started. We don’t need to be in nine markets to do that but we’re quickly approaching that 100 deals in 2022 mark quicker than we expected. We doubled down and decided to keep growing. The reason that we opted to do that and why we’re able to do that is we’re pursuing the low-hanging fruit.

WI 1001 | Virtual Deals

Virtual Deals: If you have a good deal, people will buy. But if you have a mediocre deal, people are more hesitant if you’re not from the area.

 

We found that when we were in Knoxville, the biggest challenge when we were looking at these areas was knowing the best neighborhoods and also finding strong buyers when you’re not present in the community. People tend to be a little bit more skeptical when you’re outside of the area. Everyone says, “If you have a good deal, people will buy it,” which is true.

If you have a mediocre deal, people are more hesitant if you’re not from the area. If you have a representation, they’re more likely to buy it. I find that a lot in Spokane. What we started doing is different real estate masterminds and things like that. We’re pretty active in the national community. We would connect with strong buyers that wanted to flip or had strong connections in those markets.

We would partner up with them and say, “We will find deals. You find buyers or you buy it yourself, and we will split things 50/50.” It has worked out pretty well because it has allowed us to increase our volume exponentially without having to solve that local problem, “How do we move these properties? How do we know where to go?” We now have a local expert in these areas.

You joint venture now. I had this same situation. There are two markets where we were able to figure it out virtually. People didn’t care that we were from California. We figured out who all the players were. It was pretty seamless. In another market I was in, I experienced that same thing. Maybe it’s not a slammer deal but I’m like, “These numbers make sense. Why is no one making an offer? Why is no one raising their hand?” It was because we were not local. There’s something about that culture in the area. They are skeptical of someone who’s not local.

I ran into the same issue. I started thinking, “If I flip everything I want, I get to keep whatever I want here and work on the flipping. I don’t have to have a disposition manager so I can cut that salary off my books. I can get a JV to move the deals that I am going to wholesale.” Isn’t that the same thing? How drama-free is your wholesaling? You have someone that knows what they’re doing in the area. It’s so nice.

It’s much better. Not only that but a lot of the people that we work with are big dogs in the area anyway. A lot of them buy our deals outright. It makes it even easier. To make sure that they are equally invested, we split our marketing costs so it brings down our overhead. Our margins are still relatively high as if we were doing the full circuit thing ourselves because we have a partner that’s helping contribute towards the cost of running the business there.

How do you structure the split of marketing costs?

People tend to be a little bit skeptical when you’re not present in the community.

We have the typical marketing costs that we run. That’s the same system we run everywhere. That’s a combination of mail, texting, and all the same stuff everyone else does. We send an invoice and say, “Here’s the total cost. Send us some money.” If they have a deal that we wholesale, then they want us to keep an extra. If it’s closing, we will do that. It’s straight down the middle. It works out pretty well.

You have nine different markets. Are you taking all your marketing costs and dividing them by nine? Is it marketing for that area?

It’s by market. We have different partnerships and arrangements in every single market.

That is something I thought about because my JV was like, “I want 50/50.” I started thinking, “I’m paying for marketing here. You have to pitch in a little bit.” It’s hard to separate because what about your employees? I’m sure you have some employees that work in multiple markets. Do they pay for that?

They’re all on commission. All our sales guys are commission-only. It works out that there’s no real overhead. We have overhead in terms of VAs. I have quite a few VAs that work for me doing data stuff but we work that into our budget because it’s relatively low-cost overall.

Do they contribute to the commissions though of your sales rep?

That all comes out of the commission. If they are buying a deal from us, there’s a wholesale fee that they will pay us. That’s usually the market wholesale fee. If we wholesale a deal, all of the commissions and any other costs associated with the transaction if we’re helping with cash for keys or things like that, it all comes out of the top. What we split is the bottom line or the net.

I need to work on my JV agreement. That’s good advice. Thanks for sharing. Mike, you’re crushing it. Anyone reading this would be extremely inspired. Thank you so much for sharing your story. You’re doing well. I am so proud that you came out of the Virtual Investing Mastery Program. We have made some changes. We are launching a 2.0 version of the program because times have changed. The market is changing. I wanted to make sure that Virtual Investing Mastery is addressing these market changes. We are including more support. We have a support call every week.

Those are the ones you said you used to sit on. That’s where you get me every single week. We’ve got a forum that I’m personally answering every single day. Once a month, we do in-person coaching at my office. I call it Office Hours. That’s the fourth Wednesday of every month. If you want to be a part of that, make sure you check out VirtualInvestingMastery.com. Mike, thanks so much for coming to the show. If anybody wants to get ahold of you, do you have a social media handle you want to drop?

The easiest way is on Instagram. It’s @Mike_Invests. I wish I had more interesting house photos and things like that but being virtual, I don’t go to properties. That’s the expectation versus the reality of being in this business. People think they’re going to be going to these properties and doing all these cool projects. Realistically, I don’t leave my house honestly from Monday through Friday in most weeks.

For the last couple of years that I was doing virtual wholesaling for a while, the hardest thing was filling up my social media feed with interesting photos of properties because I wasn’t there. They’re virtual. I had the same issue. I now have them because I’m flipping. I have my project manager send me photos but it’s the same thing. That’s so funny. You should go follow him anyway. Mike, thanks so much for coming to the show. Thank you so much for reading. If you think this episode would inspire someone else or perhaps somebody who is thinking about going virtual, make sure you share it. Thanks for reading. I will see you next time.

 

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