Today’s guest has been involved with real estate for a few years already, doing fix and flips, building up his rental portfolio, and doing wholesaling. While he was able to find deals back then, he was oftentimes uncertain how to find the next one.
Fortunately, when he joined the tribe in December of 2017, he got access to a system he can use and was able to finally tap into expert guidance. His investment paid off big time as the ROI he got has been truly massive—a little over $60, 000!
Regardless if you’re still finding your first deal or your nth one, you’ll surely get a lot of wisdom and insights from this episode so make sure you don’t miss it!
- After buying a new list (high equity owner occupied and absentee owners), he sent out a thousand postcards each week over a 6-week period.
- On the 3rd week, he got a call from a motivated seller who owned a distressed property.
- After talking over the phone, he set up an appointment and visited the property. While there were instances when he didn’t know what to do, he made sure he was upfront with the seller and he decided to take massive imperfect actions anyway.
- After purchasing the property for $80, 000, he had it listed for $150, 000. He got more than he bargained for as the highest offer he got was $161, 400.
- After all was said and done, he walked away with a little over $60, 000 in profit. Definitely a huge compensation for a transaction he only spend 15 to 20 hours on!
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Cody Hofhine: Welcome to another episode here on Wholesaling Inc. My name is Cody Hofhine, I’ll be hosting today’s podcast and I’m super excited as I am with each and every one of our podcasts episodes because it really is made for you, the listener. Each of you out here listening to this podcast, we hope that you get gold nuggets each and every time that you listen to this so that you can take massive imperfect action and get your first deal. Now for those of you that are new to this podcast, we talk about wholesaling and simply wholesaling is just the art of finding something at a deep discount. We’re going to be talking about how we wholesale or how we find deeply discounted properties and then we turn them for a profit. Whether that’s a signing a contract, whether that’s what we’re going to be talking about today going through like a whole tale deal where you do kind of a wholesale and retail at the same time.
We’ll be talking a little bit more about this one in specific, in depth, and he’s going to deep dive exactly step by step how he just made a lot of money on one of these contracts, one of these deals that he put together on finding a deeply discounted property. So stick with us throughout this whole podcast. Get a paper and a pencil and get ready to jot down some notes because this guy has been doing it for a short amount of time and he’s already found some great success. So he’s going to literally break this down step by step. That’s what this podcast is all about, making it so that each of you can learn something from it and go out there and replicate it. Go take action. So my man, how the heck are you and are you ready to light up this podcast today?
Guest: I’m ready, Cody. Thank you. I appreciate you for having me.
Cody Hofhine: Absolutely. So here’s the thing, fill us in, give us a little background of who you are and some of your experience with real estate and ultimately how you got into wholesaling.
Guest: I’ll just talk about my second run in real estate. I had one that started around the crash and I went with it. My second run has been a few years strong now. I’ve done some fixing flips, bought some rentals, held onto them, resold them and now I’m here at wholesaling.
Cody Hofhine: So rentals, fix and flips, and here you’re wholesaling. Are you strictly doing wholesaling now or do you still do the fix and flip? Do you still do the rentals? What does that look like?
Announcer 1: Yes, I’m recently married. We want to build up a rental portfolio. First and foremost, I’m trying to source deals for that. Then the next step would be if the numbers make sense, I like to fix and flip them. And if that doesn’t work then wholesale is definitely the third option.
Cody Hofhine: You just recently joined the tribe about the end of December in 2017 and since then you have taken some massive action and the results have, I guess the payoff, the ROI, has come back super strong for you. Let’s get right into the meat and potatoes, and let’s help each one of the listeners today understand how you did this deal so that they can start to learn from it and hopefully take action from what you’re talking about today. Where did this lead come from and ultimately, how did you come upon this lead?
Guest: A few weeks after joining the tribe, I bought a list and I had been melding own list I’ve built over years. I bought a new list, which was high equity, both owner occupied and absentee owners. I mailed 1,000 postcards a week for six weeks, and I turned it off, probably not a wise thing to do, but I knew that I was doing that before this started just because I was coming up on a wedding. So week three or four of mailing a thousand postcards a week, I got a phone call from a lady and very casually she picked up the phone and said, “I need to sell my house”. I knew immediately that there was something there.
Cody Hofhine: I love it. When you’re on the phone at this individual, you knew there’s something there. She said she needed to sell, she needs to sell immediately. Was there any other triggers to kind of help them understand, like when you’re on a phone call, how do you know that someone is really ready and not necessarily wasting your time and they absolutely need full retail price, but what was it specific about over and above just, Hey, I need a cell. What was the specific about the conversation? Let you knew that hey, this could be a deal.
Guest: I felt like she had let her guard down before she even called me. It was casual, but at the same time I could hear urgency in her voice. It was a bit of a feeling. But also, some of the things that she said and she had a lot of tough things going on in life. We talked for a good five, 10 minutes and that I set an appointment, went out there and walked the house with her. And just getting that vibe from her, I knew that it was immediately something that she wanted to do. And if we could come together on a number, it would work.
Cody Hofhine: Awesome. So that was in January. This phone call took place, you said?
Guest: Yeah, late January.
Cody Hofhine: Late January, and putting this all together. Now let’s say we go to the house, you’re talking to them, you got the lead from a postcard sending out to a high equity home. For those listening, you can buy a list through a company called, for example, listsource.com and I’m assuming you had a heck of a discount on that list.
Guest: Yeah, that’s what they tell me. I’m happy with it.
Cody Hofhine: Perfect. So we have a tribe discount that is for ListSource. You bought a list, you’re sending out a 1,000 postcards a week. A couple of weeks into that cycle, you get this phone call and now you go to the appointment. When you went there, was it just a quick, easy go in there and start talking to her and put under contract or what did that conversation look like?
Announcer 1: It was actually kind of drawn out, it took a half hour or so and I want to be really respectful to this situation, but I was kind of uncomfortable in the house. It was not necessarily a great house. There were a lot of dogs and things that dogs leave around all over the floor. I mean it was disgusting.
Cody Hofhine: So it was a bad shape. It was a poor condition, really distressed home.
Guest: After you pass the front door, from the street, you would never have known, not in a million years. The yard was kept up pretty well and there was just no evidence from the street that they were really having a rough time. The minute you stepped through the front door, it was a tough situation.
Cody Hofhine: Then talking to him, what did the conversation look like? At this point, are you like, “Oh man, this is in bad condition”. How do you start to begin to even negotiate a price? Or was she already telling you I’m going to sell it and here’s what I need and for it?
Guest: So I found out both of them the conversation and a little bit more. When I got there she originally told me that she might not be able to pay the next month mortgage. But when I got there I found out that she was already like two or three months behind. So there’s even more motivation right there. And when it came to negotiating, she told me what she needed to move on in her life. And this is literally walking away money, not here’s my sales price. She just told me the amount of money that she needed so that she could move on and feel good.
Cody Hofhine: Okay. So she lets you know the numbers and instantly did you know that that was going to work? Were you aware already at this point what she owed on the mortgage and then she needed X amount on hand, so it’d be over and above what the pay off and all the debts included in this property are, once you knew that number where you already in your mind thinking, this could be a deal or is it like, “Yes, this is a deal” or a, “I don’t know yet because this home is in such bad shape.”
Guest: Yeah, I had a number that I’d be comfortable with if I could get it below that, and I had no clue really where she was going to be at. But once I saw the place there was a huge swimming pool, all kinds of stuff that I saw your average person would not know what it would take to fix that up. And I don’t even know what it takes to fix up a pool, but I could just tell it was a ton of work. So I wanted to get as deep of a discount as possible, but really when she told me she basically want to walk away with $10,000 but we were able to get her a little bit more than that, but when she told me that, I told her the only way that I’ll know if I’ll be able to buy the house is if we know her mortgage balance. So while I was in the room, she called her mortgage company with me there, on speaker phone, and we found out her balance.
Cody Hofhine: This is so key. I want to take a minute to stress on just some of the pinpoints, some of the things you just said and how much gold is in what you just said. So those of you listening, the key thing is a: he just took massive action, went over there, didn’t know what he’s going to be going into. Then once he was into it and found out that this is a distressed property on the inside, it’s disgusting. It didn’t stop him and he started thinking to himself, listen to how he was an expert. “There was a pool, there was this that need to be fixed, there’s this need to be fixed and I have no idea”. He’s not an expert in knowing what a pool costs to repair. But the key thing that he said was, “I knew I just needed to get it at a deep discount. And so I was going to do everything I can to just get it for a best price possible on my side”.
That is so huge, Ike, that you would share that because so many times we’re trying to be an expert at things. We’re trying to be an expert appraiser, an expert pool repair, an expert AC and mechanical, an expert roofer, an expert framer. And we’re trying to think of all these numbers instead of just simply looking at it as I just know that I’ve got to get this as low as possible. So let’s just find out the lowest price I can get on this and let’s put it under contract. So that’s first and foremost, huge. And then the second thing is that you just made it happen. I’m trying to think of the last thing you said because there so much gold in what you’re saying, but this is huge. You just took action and you didn’t act like an expert in everything. You don’t need to be an expert in everything. You just need to go in there and listen to their story and put it under contract as low as possible. So keep going.
Guest: Yeah, I was very upfront with the lady, I told her the things that I was scared about. I told her I was scared about the roof. I was scared about the foundation and I told her the truth about the pool that I have no clue. And she understood all that and just given the situation, we just moved forward and now…
Cody Hofhine: The fact that you got the mortgage company on the phone, right then, instead of just leave it at the fate and saying, “Okay, call me back when you’ve got the mortgage”, that you did it right then and there. And that is so key. That was the other one I wanted to capitalize on. While you’re in the house, you’re already saying, “Hey, let’s get the mortgage company on the phone right now cause we need to know how much you owe so we can start to be able to put this deal together and see if there even is a potential of this being a deal or no deal”. You didn’t just sit. And so many times you say, “Okay, call the mortgage and then just let me know when you find out”, and meanwhile some other investor comes in and wins the deal because they did exactly what you just did.
They took the time right now, in the spot, and let’s call the mortgage company and let’s find out what you owe and let’s figure out how to structure a deal today. Not tomorrow, not a week from now, but right now.
Guest: Sure. Yeah.
Cody Hofhine: You figure out the number, what did the mortgage company… What was that number looking like? Here’s what she owed. What was it when you got on the phone, what did that look like?
Guest: She owed a little less than 68,000.
Cody Hofhine: In your mind, if this home was completely fixed up, what would it be worth?
Guest: Probably 215 to 220.
Cody Hofhine: 215 to 220, it’s in a ran down situation in its current situation. It’s not the prettiest home. So there’s a lot of repairs that need to be done. She owes $68,000 and then simply did you just say, “Okay, so let’s do the 68,000 and let’s add 10,000 to it”, or how did you now structure it?
Guest: No, we talked for a little while and she just told me all the things that she planned to do. In my mind, pretty much at the time she told me she would take 78 for it. We ended up agreeing on 80,000 and then I pay both sides of closing costs. Although we didn’t agree on it, we found there was another lien later that was a little less than $1,000 that I also ended up paying just because.
Cody Hofhine: So your approach on this wasn’t like a typical wholesale start to finish transaction. You actually purchased and closed on the property and you own the real estate, is that correct?
Guest: That’s right, yeah.
Cody Hofhine: Okay, normally what people do, so are those listening, is sometimes what you’ll hear people do is they’ll put it under contract and then sell or assign that contract for a fee and it’s called the assignment fee.
He actually bought this property, put it under contract, closed on it, covered her closing costs. There’s obviously no commissions for real estate agents, and he actually owned this real estate. Over and above that, there came to be another lien. This is so common with the quality of the homes and some of the situations you’re dealing with that these things do pop up. So another lien popped up. It was less than $1,000, you covered it. So all in all, what were you into this home when you closed on it?
Guest: Rounding up probably, let’s include insurance, 82 and a half.
Cody Hofhine: Okay. $82,500 and what was now the focus from there? Did you just put it on the market as is or did you start cleaning up or what’d you do?
Guest: Yeah, there was a ton of cleanup involved, and talking with her, she had a grandson that he used to live with her and I think he had recently moved out, but he was there and could help out. So I negotiate it for them to actually clean out the house, just as much as possible. So there was no real guide to how much. But I asked them to clean it out as much as possible. I ended up renting them Uhaul for two or three days and they moved quite a bit of stuff. I was really happy it was well worth a couple $100 for the Uhaul. It would’ve probably cost me $500 or $600 for the amount of work that they had done to have it done myself. She needed a five weeks seller leaseback, that was the first reason I decided just to go ahead and close on it. There was no reason to try to do something awkward, where I wanted to wholesale it and then ask somebody to make sure that you take care of this lady for five weeks while she transitions onto another part of her life.
Cody Hofhine: But this is huge, Ike, because you truly are in it to help individuals. And I want people to really take notes on this. You are really here to create the best situation for this individual. You’re trying to really help them out and make it a win-win and you’re serving them over and above and not leaving it to another investor saying, “Please take care of them”, and then if they do or don’t, it’s not in your hands anymore. But you said, “No, I’m going to close on this cause I really want to help these people.” They ended up living in the house over and above when you closed on it for an additional, did you say five weeks?
Guest: That’s right.
Cody Hofhine: See that’s absolutely awesome. And how do you know if that would’ve happened with another investor? So I think that’s what’s key. And probably what also helped her feel warm and fuzzy about moving forward with you as the person to buy at their house.
Guest: Yeah. She also needed a little bit of that money to be able to move. I did do a seller lease back, I held back some of the funds, so I held back $3,500 and the reasoning behind that is, if she had gone past the five weeks that we agreed I wanted to have basically like $100 a day penalty. So that would allow me to go through a month and then I’d have $500 leftover that, in my world, I would use that for an eviction praying that I never have to do that. So she was out right on time and I was able to give her complete $3,500.
Cody Hofhine: From there, did you have to do anything more to the house before putting it back on the market?
Guest: Yeah, I did. I don’t know if I needed to, but I did about $1,000 worth of landscaping kind of in the back. We took down a couple of big trees, had to clean up near the pool. Then I spent about another $1,000 to empty the pool, acid wash it, and then refill it. But we didn’t do any like landscaping. It was just removal of stuff.
Cody Hofhine: Sure, and the house is kind of clean canvas.
Guest: Right, then I spent another $1,000 or so, and these are rounded up numbers, give or take $100, but spent about $1,000 to have the inside as clean as possible. OxiClean, bleach, I mean any kind of…
Cody Hofhine: Did you have to gut carpets? Is there anything like that or did you leave all of the carpets, leave the same color walls?
Guest: I didn’t pull anything like that. We left all surfaces the way they were. There was no carpet in the house, they were all hard surfaces. We just did a true deep clean. It smelled like animal leftovers. I mean it was crazy. So we did spend a fair amount of money just to clean that up, after they had moved all their own personal stuff away.
Cody Hofhine: Okay, so you put in some sweat equity or you hire someone out to do all these different things, which is awesome.
Guest: Yeah, we hired it down.
Cody Hofhine: Now from there, what were you able to begin… What did you put on the market for, to the public on the MLS?
Guest: Yes. So I listed it at 150 and I just went off the comps of what the lowest stuff was in the neighborhood that was selling and there were a couple they look like maybe foreclosures that had sold in the neighborhood that were between like 140 and 160 so I put it on at 150.
Cody Hofhine: 150 and then from there, what did it look like? Was it something that started getting action really quick and a lot of interest? Tell us the whole process.
Guest: I worked with the realtor, he’s a buddy of mine. I bought a house from him before but never sold through him. And just learning what I learned in the tribe. We tried to kind of mimic a little bit of what the tribe does, but going to the MLS, so we put it on the MLS like on a Thursday night. But we were strict and all viewings to like a two hour window on Friday evening. And then after that, starting Sunday, we kind of made people wait part of the weekend, and then starting Sunday we did kind of an open, anybody can go take a look at it as long as you’re with a realtor.
Cody Hofhine: This is so key, because I would have never thought about that in a wholesale. I think this is so smart of you to use that, to get a lot of viewers there at the same time to kind of create that feeding frenzy where they start to maybe even bid up the price. So what a brilliant, brilliant idea to implement that even on the retail side. I think that’s absolutely brilliant.
Guest: Thanks man. It ended up working in our favor.
Cody Hofhine: So did a lot of people come on that Friday during that two hour window?
Guest: About eight or nine. Which is not a lot, but they immediately started… I mean other people were starting to set up appointments so that they could get in immediately once the open showing happens. So we didn’t have a big turnout, but it did work.
Cody Hofhine: Ultimately did you have a buyer in that moment, put forth some offers on the home and ultimately what were you able to put the home under contract for?
Guest: So the realtor told everyone that we wouldn’t be returning any phone calls or anything until Monday morning. So that allowed me to step back and wait until everything came in. By Sunday night we had six contracts, offers on paper and then a couple of verbals that I don’t know if they would hold water. So six real offers.
Cody Hofhine: Awesome. Now, of those offers, did you go with the highest? Did you go with what you thought was a solid, what did that look like?
Guest: We went back and negotiated with a couple people. I did end up going with the highest, but only because the lady that bought it waved her option periods, so her earnest money went hard immediately.
Cody Hofhine: Okay, so you ended up putting it on the market. You get six offers. What was that highest offer?
Guest: 161,400, $161,400.
Cody Hofhine: So it went for more than what you’re even listing it as, which is awesome here. That’s another key secret guys don’t always go for the highest listing. Go for a little bit less of a listing and you get more people engaged and it ends up bidding up anyways. So one 161,400. When everything’s said and done, brother, let’s go right to the meat and potatoes and get this victory bell or ring in. What is, when everything’s said and done minus out your expenses, minus out your closing costs, realtor fees on the back end, what were you able to profit from this deal?
Guest: Just one other fee in there is definitely in the holding cost. I went and borrowed private money from a hard money lender. He’s a buddy of mine, so it’s very easy. And he charges points, so with all that I walked away with a little over $60,000.
Cody Hofhine: Good night. Hold on one second.
Cody Hofhine: I love it. So a little over $60,000. Now this is where I want to do a breakdown. So for each of our listeners that might think, “Oh man, there was so many moving parts, there was so much going on, there was so many hours involved”. What do you think that was an actual time, your time involved, in this one deal, how many hours do you think that is? If you could kind of ballpark it?
Guest: Yeah, probably 15 to 20 hours.
Cody Hofhine: 15 to 20 hours.
Cody Hofhine: This gets so good. So 15 to 20 hours and you were able to profit over $60,000 on just this one deal. From there I’m assuming your day was just like, holy smokes, double pinching yourself, making sure this is reality. What did that all feel like? And ultimately what does this do for you and allow for you to do moving forward?
Guest: There’s a lot of emotion in it. I’m really thankful and grateful that’s even a possibility. I’m just really grateful I’m doing something that can generate that type of income and it allows me and my brand new wife to try to figure out how we really want to live rather than being forced to live a certain way. I don’t know if that makes sense, but the possibility and the potential is really what we’re looking at more than anything. That one check is amazing, but having the skill set I think is… It’s really starting to get me, I know that I can produce more. So that’s just where I’m headed and we’re looking forward to the future.
Cody Hofhine: Now, is your plan to do this full time going forward or have you always been doing this full time for the last few months or what does that look like?
Guest: Yes. I’ve been doing this full time for a few years. It literally is what I do. I just never had a system. I kind of joke about it like I’m not a musician, but if you take that analogy or that metaphor, it’s like I was playing by ear, which is cool for like solo jamming out, but you can never like collaborate with anyone cause you can’t read music. So I kind of had to humble myself and that’s why I joined the tribe. I was making deals happen, but I never really knew how the next one would happen. So I want to learn to read music. So I joined the tribe and then you start all over.
Cody Hofhine: That’s awesome. Well you’ve done incredible job three weeks into it and now you’ve got a system in place that you can repeat, duplicate, do it over and over again. Now in final, we always do this with all of our podcasts and all of our listeners. We hear a lot of reviews and responses by what’s going to take place right here. If you were to start all over again, obviously hindsight’s 2020, so if you were to start all over again, you’re at day one and knowing what you know now, what would you have done differently or maybe what would you make sure you would have done again because it was so successful?
Guest: I would be much more consistent for sure. I would believe people on the faith part. And what I mean by that is like you are doing it. There’s a lot of sunk costs involved. So when you’re marketing and spending all this time and not seeing anything come from it, you kind of have to have enough faith to get far enough along to where you can make some money. It takes a lot to get there. So just knowing what I know now or if I was telling somebody else, I would tell them to have faith and be consistent.
Cody Hofhine: Perfect, perfect. Consistent is everything and consistent on marketing and not giving up is huge. So when you tie those two together, so many times we get fearful thinking, “Oh man, I’m throwing this money out. Is it going to come back?”. And you’ve got to be consistent and that consistency is what continually will bring you the consistent phone calls, the consistent appointments, the consistent contracts, the consistent money and all starts with that word, being consistent and starting right from the beginning, consistent with your marketing. So that’s huge. I love that. What about a book? Is there any books that you’ve been reading recently that you’re like, “Man, this is a good book that I’d recommend to everyone to read”?
Guest: I’m kind of a nerd. I love to read so I’ve got a ton of them, but we’ll keep it short, Deep Work by Cal Newport.
Cody Hofhine: Tell us what is the just of it, what is the gold nugget from that that people learn?
Guest: That in life you have to carve out either space and/or time to really work on things that you want to improve on. Whether that’s work or business or health or whatever. You really have to have almost a sacred space. You have to go somewhere, you have to do something, you have to have deep work to get real results.
Cody Hofhine: Love it. Well, I want to thank you from the bottom of my heart and Tom would say the same thing if he was on this podcast with us. Thank you for taking time out of your day and sharing these gold nuggets, sharing your experience and sharing how you did this deal and breaking it down step by step because this story is going to resonate with listeners that are trying to maybe escape a nine to five or how do I get involved in wholesaling or what does it look like? And this story will be a great way for each one of our listeners to realize what they can do today to hopefully replicate and duplicate exactly what you just did. So thank you so much for taking time out of the day and sharing the story with us today.
Guest: Yeah, I appreciate that, Cody. Can I just have a quick second?
Cody Hofhine: Absolutely, please.
Guest: I wanted to thank, first, I did that first call, so I want to thank Derek. He’s the guy that talked me through it to make sure that I wanted to do this and I’m really happy that he did. He brought you on the phone and we ended up talking together, so that was great. Thank you, Derek. I wanted to thank Anne, she really set the tone for me. That whole right to revenue thing, I needed that conversation with her during the onboarding. So thank you Anne.
Cody Hofhine: Anne is so nice. Derek and Anne are two credible people. I’m so glad that you’re bringing their names up because they are crucial to the Wholesaling Inc team.
Guest: Two more, [crosstalk00:28:23] Bill and Lorraina.
Cody Hofhine: Bill and Lorraina. Oh man.
Guest: Thank you Bill. You’re a great resource. I’ve read a ton of stuff on the forums. Lorraina thank you for making it all work and Cody and Tom, I appreciate everything man. You guys are great.
Cody Hofhine: Well thank you. And I know these individuals will absolutely be honored and grateful that you mentioned their names because they are key players in our team and they all have a huge role in this. So I thank you for taking the time to thank them personally because they are, they’re great people and Wholesaling Inc couldn’t be anything without these individuals. They’re all part of the glue that makes us all stick together. So I appreciate it.
Guest: You guys have a good thing going. I’m glad to be a part of it.
Cody Hofhine: Thank you so much for joining us and we will catch you even more so along the road. We’re going to be doing some followups probably and I can see a huge bright future for you, so I wouldn’t doubt if you’re on the podcast for a followup podcast explaining what has taken place since this podcast and I know we’ll have a lot of listeners waiting for that as well, so thank you again for being with us today.
Guest: Yeah, that’d be great man. I’d love to take you up on that.
Cody Hofhine: Our listeners, Rhino Nation, thank you so much for joining us today. If you want to get involved in wholesaling, go over to wholesalinginc.com, that’s wholesalinginc.com, and go over there and click on our reviews page. That’s something worth doing because it will just build you up, motivate you and inspire you to let you know that you can do it because there’s hundreds of stories on that page right there of people just like you doing deals all across this great nation. So go over there and click on it. And if it’s something that you personally want us to help you build a wholesaling business where you can put some processes in place and some simple instruction in place, book a call with our team and you can do exactly what I did and get on the phone with one of our team members and they can walk you through it and see if it’s something that is a good fit. And if it’s something that it is, we’ll invite you to be part of the tribe and tell next time. Guys, we’ll see you right here on this next podcast. Take care guys.