In today’s episode, we’ll dissect a subject that’s often discussed in forums, FB pages, and on many social media platforms—how to build a good cash buyer’s list.
This episode’s special guest is Ross Denman, a business developer who has also been an investor for 9 years now. Aside from his impressive portfolio, he has done some rehabs, a little wholesaling, and owns a few rentals.
If you are still in the process of building your buyer’s list, this is one episode you shouldn’t miss. From the conversation, you just might discover the missing link that’s going to take your wholesaling business to the next level!
- Value property managers can provide to wholesalers
- How he builds win-win relationships with wholesalers
- How wholesalers should approach property managers
- How you can make people active investors
- The peerless value good property managers provide
- Importance of networking especially with property managers
- Why it’s wise to use other people’s money
- Advice he’ll give to those who would like to get in the investing arena
- Game-changing book he recommends
- Wholesaling Real Estate Summit 2018
- How to Win Friends and Influence People by Dale Carnegie
If you are Ready to Explode Your Wholesaling Business, Click here to Book a Free Strategy Session with me right now!
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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 episode and today we’ve got something that’s going to be outside the box. Typically what we do here is we interview our students that have gone through the program and have found a deal and we deep dive how they find these deals. Now this episode is going to be so much value because there’s so much in the forums, in the, maybe even like Facebook pages. I always hear people, how do we build a cash buyers list? How do we build good cash buyers lists?
And we’re going to deep dive that subject and more in this episode. So today we have Ross Denman from Indiana, Indianapolis and he’s with us. He’s a property manager and this guy has a great portfolio that he manages. We’ll have him fill in all the details of what he does, but ultimately we’re going to have him share why it’s so important to have property managers on your list of cash buyers and how they can help you out and how they can help you move deals and how they can help you in your wholesaling business.
So everyone that’s listening, get a pen and a piece of paper and get ready to jot down a bunch of gold nuggets from this episode. And we’re going to help you step by step right here, taking action on how to build a successful cash buyers list. So Ross, my man. How are you doing brother?
Ross Denman: I’m doing very well. How are you doing Cody?
Cody Hofhine: Good, good, good. So fill in the gaps. Help our listeners understand a little bit more about you, your background, and then tell me a little bit about like your property management, how many homes you manage and all that fun stuff.
Ross Denman: Okay, so I’ve been investing myself for about going on nine years now. I’ve done a little bit of wholesaling, not professionally, just putting deals together and kind of taking a cut, done some rehabs. I actually own a few rentals now and I came over to property management just to kind of do it professionally while I was building my investment business about five years ago. I’m in kind of the sales position. I’m in a, I’m a business developer, so I work on the business side, not the rental operation. I work with the investors. I work with the homeowners. We’ve got about-
Cody Hofhine: Okay, 450 and that, is that all right there local in Indiana with you or is that across the nation or what does that look like?
Ross Denman: Across the nation, I want to say there’s about 60,000. We’re a national property management company. Our office manages about 450 though.
Cody Hofhine: Okay, that’s fantastic. And so let’s kind of go right into the meat and potatoes and help. There’s so much talk and you probably see this as you’re scrolling around maybe on Facebook or just social media or maybe forums, but a lot of people getting into wholesaling. Sometimes there’s that hiccup and there’s that hard moment or rough challenge in front of them because they just can’t find cash buyers. And so I love this episode and what it’s going to do because I don’t think many people realize just how valuable a property manager can be for a cash buyer to be on your list. And so let’s kind of break it down and help them understand what is it, why would I want you a property manager to be on my cash buyers list? What kind of value could you add to my wholesaling business?
Ross Denman: For me, and Indianapolis is a cash flow market. So I mean there’s a lot of out-of-state investors. 90% of my investors are out of state. And with that, they’re always looking for inventory, always looking for deals. I’m on all the major wholesalers lists here and I’m their boots on the ground. I do the due diligence, I will visit a property, I’ll help them build a rehab budget, we’ll get sales comps, rental comps, kind of build a structure out and you know, work the deal from the top to the bottom. So I’m kind of, like I said, the boots on the ground. I help with the due diligence for my investors that are building their portfolio that we manage.
Cody Hofhine: The interesting thing here is you’re connected to the investor, which is huge and a lot of these investors are out of state. And I don’t know if it’s true for you in Indiana, but it’s true for me in Utah, my out-of-state investors actually pay more for these properties than my in state investors. Is that the case for Indiana? Is it, do you feel like people are coming there for cashflow and maybe they’re from California, which is not a cashflow state? It’s more of an appreciation state. And so they’re okay with an 8% or a 10% or 11% return on their money, where sometimes maybe the instate people are like, “Nope, I only invest if it’s 20%.”
Ross Denman: Yes, I would say the out of state investors are willing to pay more. Once again with me kind of walking them through the deals, I’m a little bit more stingy with their money. But yes, oftentimes, especially from, I would say we have more California investors than anywhere else and they’re definitely okay with an 8% return on investment or 8% cap rate.
Cody Hofhine: That’s right. That’s right. And that’s something that’s big to point out. So as someone that’s working with a property management and why us as wholesalers, why would we want to start working with property managers is you’re tied to people that they’re already investing their money with you. They’re already having their rental portfolio managed by you. And so by simply making a relationship, a connection with someone like you, Ross, it’s huge. It’s valuable because now you can say, “Hey, thanks for sending over this deal. In fact, Jim, John and Joseph are looking for homes right now and I’m going to reach out to them right now and present it to them.”
Ross Denman: Yeah, it’s also beneficial for me. There’s a lot of times as a wholesaler, you may have your own cash buyer that’s looking at a certain market and they don’t have a network here and sometimes it helps kind of pad yourself as having certain resources in that target market of saying, you know, “If you’re looking at a rental, here’s a couple of property managers you might want to call an interview that we’ve worked with. We’ve had other clients work with. You know, they’ve got some contractors on staff or other people in their network that might help you with whatever your needs might be.”
Cody Hofhine: So you bring up yet another good point about how just connecting on filling some of the other gaps. Sometimes maybe I don’t have the personal money right now to close on a home, but it might be something that this home does require me to close on it first and then sell it to an investor or sell it to a retail buyer. And there’s probably value in the sense of these other investors maybe have money sitting in the sidelines that they’d like to put the work that you can connect us and they could be even just a hard cash lender or a transactional funders. I mean, do they do that for you in certain circumstances?
Ross Denman: I have never done like a short term loan, but I get all my private money from clients at the property management company.
Cody Hofhine: Okay. So any kind of money that you need to do for like rehabs and stuff, you’re connected to these investors that have that money, that readily available to loan it to you.
Ross Denman: Yes.
Cody Hofhine: See and that’s huge because there’s so many times that us as wholesalers, and for those of you listening that if you have to, in some states you might have to do a double close every time where you’re actually using transactional funding. Well, it could be that these relationships with these property managers, they know a lot of investors with deep pockets that are readily, like they’re just ready, they’re ready to invest into this market and they’re trying to find all ways possible to get their, their money working for them. And this would be a great introduction where you talk to that property manager, someone like Ross and say, “Hey, see if you have someone, one of your investors that want to lend money for a month to me, while I do this or lend money so I can just close on it and pay him 1% on their money or whether for just the 24 hours that I use it and then put it back to another investor.”
Ross Denman: Yes, certainly.
Cody Hofhine: Okay, what else? What else is like a key thing as you’ve worked with wholesalers, what have been ways that that relationship has been a win win relationship with the wholesalers that you’re currently working with in Indiana?
Ross Denman: So I’ve got three main wholesalers and actually one of them’s out of Salt Lake City and they do a lot of wholesale in Indianapolis. My last rental I purchased through them.
Cody Hofhine: Uh-huh (affirmative).
Ross Denman: But I know that a lot of them offer me referrals, both for buying and selling, which is just nice for me. Of course we get reciprocal opportunities. We are a brokerage. We don’t do a lot of listing. We don’t do a lot and we do almost no buying on our end. Usually I have outside realtors that we hook people up with for those kinds of things if we’re doing MLS deals. But there’s always reciprocation.
I’m a huge fan of relationships and the wholesalers that I work with, you know, they send us new leads for clients. We send them opportunities. I’ve had off market deals that I don’t want to deal with and that I’ve sent to wholesalers said, “Hey.” Throw them a bone and say, “I’ve got an opportunity. Why don’t you give him a call? See if you can’t help these people out.” I don’t have time for it a lot of times. Yeah, so you may find lead source and deal flow. You may find buyers and other opportunities as you said for joint ventures, for capital and just a variety of things that come up as you kind of increase that whole sphere of influence
Cody Hofhine: And one thing that I think is worthy of mentioning is, as you see some of these deals from the wholesalers and you’re like, “Man, this is going to be perfect for this investor that I manage his portfolio.” They end up buying it, but probably on the flop side is sometimes maybe some of your investors are looking to liquidate or get rid of some of their properties. Is that something you guys push out to wholesalers as well where that’s where that reciprocation comes back or what does that look like?
Ross Denman: I have not done it this year. I’ve kept more stuff in in house. Last year, I definitely did it six or seven times. I spoke with you earlier about somebody I know that I just turned on to a wholesaler. But right now just literally in the last 48 hours, I have put some of my clients in touch with a 32 unit apartment complex and two units, two single family homes that I have a client in Moscow that she’s looking to liquidate hers and I’m trying to sell those before they go on the MLS and I’ll probably have a little assignment in the middle of myself.
Cody Hofhine: Well, and I think there’s probably, this is … I sit here sometimes I wonder like, man, it could be cool to work as a property manager. I think there’s so much collaboration going on here. But there’s probably a lot of people not, well, maybe at least a handful of people listening to this podcast today that are maybe property managers and they’re thinking, “Man, why did I not think of this? Why did I not think of working with wholesalers?”
Because if you can connect the wholesaler’s deal with the current investors that you’re managing their portfolio, vroom, like you just picked up another rental for you to manage so it ends up being a win win. You’re providing your investor with solid deeply discounted properties and then in turn you get to manage yet another deal. So do all property managers, I’ve tried to sit here and think like not all agents are good to work with when it comes to wholesaling because sometimes they’re just stuck with that 3% traditional way of doing real estate and then some real estate agents are amazing. They’re like, “Utah, I love the investment game. This is where I make more money than I do on the 3%.” Is it the same with property managers or every property manager pretty open to the fact of working with wholesalers or are there some that are just kind of stuck to the traditional way of just property management?
Ross Denman: It’s going to depend. Our office and the company that I work for pretty much specializes in property management, meaning that we’re not a turnkey company. We’re not, most of us aren’t full service investment companies. So any wholesaling that I do, like I said, it’s not much. It’s a half a dozen deals a year and it’s just putting them together and keeping a few thousand dollars out of it. I don’t do it for major money, I don’t do it professionally. I do it as a service to my clients and put a little extra cash in my pocket.
There are shops that do everything. Everything from wholesale to rehabs to purchase rentals and even a [inaudible 00:12:15] in house and sell turnkeys. It’s a lot of turnkey companies that also may wholesale were they have great deal flow. They pick and choose what they want and then they will offload their deals.
Cody Hofhine: That’s awesome. That’s awesome. So if someone was to go now build… If the wholesalers and the listeners on the podcast are thinking, “Man, I’m going to start doing this channel of building a cash buyers list. I’m going to start reaching out to property managers.” What should that conversation really look like and what should they also be ready to do? Because it’s not about just, build a cash buyers list, build a cash buyers list. But if someone was to come present something to you, if I was coming to you as a wholesaler and I wanted to add you as a connection, what are you wanting to hear from me so that it makes it sound like I’m in it to really make this a win-win and it’s not just in it for me? What do you like to hear so that these guys maybe approach property managers the right way?
Ross Denman: For me, I have three things that are important. First is I love to build my network. I love networking with other real estate professionals, real estate investors. It creates more and more opportunities for me every year to make money in some manner. I’m looking at right now, getting into owner financing and note investing. It’s way out of the scope of wholesaling. But as I meet more people and I see different types of investing, circling around real estate, it helps me kind of educate myself. There’s a lot of sophistication out there and the more people you meet and see what they’re doing, the more you can learn and more ways that you can find better ways to become an investor.
Secondly, my job is to build this business. The biggest thing that somebody could do to me, say, “Hey, I always have buyers wanting to buy here, but they’re out of state. They don’t have a network here. And I’m really trying to build up a network so I have better resources to work with my buyers. So, I’m looking for a few good property managers to put on a short list.” So when I have somebody buy a rental property and they say, “Hey, do you know any property managers in town?” If I’m a newbie investor and I find out, I live in California, I’ve got plenty of money and I can’t invest here and I go to a Midwest market like Indianapolis, Memphis, Kansas City. Those are kind of hot markets that a lot of people buy cashflow properties for. And I don’t know anybody there, why would I buy a rental property if I don’t have a good property manager, if I don’t have a good contractor for rehab? You know, all these things.
And when the wholesaler says, “You know what? I’ve got that taken care of.” You’re going to give your buyer that much more, I guess courage-
Cody Hofhine: Love that.
Ross Denman: Because now you’ve got a referral and you’re going to help that buyer along that chain and you’re going to put him into a network and help him build a team. And then once that team’s built, as long as everybody’s carrying their own water and doing what they’re supposed to do and they’ve got a good team and everybody communicates well, everybody trusts each other. You feel like you’re getting value in what you want, that investors can be back and back and back. Most wholesalers, I know literally 90% of their deals are sold to 10% of their buyer’s list. So making people active investors and the biggest way you can do that is to provide resources for them. So being on that short list saying, “Hey, I’m looking to work with property managers and I plan on kind of, putting you out as a referral for anybody that I’m working with, but I would like to see something on my end.”
And then thirdly is an opportunity to find good inventory for my buyers. And so when I have somebody say, “Hey, we’re looking for another couple of deals.” I start scouring the MLS. I keep a closer eye on the buyers lists that I’m on. And when something comes in that meets their criteria, I’m the one, I make a phone call, I go out to the house, I get the pictures, I’ll shoot a video, I’ll bring my contractor, we’ll build a rehab budget, we’ll get sales comps, we’ll get rental comps. We’ll underwrite the entire thing from top to bottom and find out if this deal makes sense and if it doesn’t, where does it make sense? And see if the wholesaler is willing to negotiate or if there’s a way to even structure this.
Cody Hofhine: Yeah, yeah. I love it. I love it. I love it. These are key, key things and again, it’s always about those relationships. So everyone listening to this, those are some of the key points right there in these last couple minutes. There’s so much value in gold, sitting right there to you to re-listen to and write down. Add value. Ross is talking about whenever you do business, do business to add value, and here as a wholesaler you can add extreme value to your buyers that are out of state that …Because in all reality, a bad property management company can make a good investment, look not like a good investment. So it’s not just finding a great deal, but a bad or a mismanaged property can also be an awful investment. And so to make sure that you have the quality property manager that you’re looking for and to make sure that they’re actually going to do what they say and actually make sure they’re monitoring the rents and make sure that they’re paying on time and make sure that turnover just happens super quick versus sitting on the market for multiple months.
There’s a lot of value, if you can find a great property manager and refer these to the people that are buying your homes, that are out of state. Saying, “Hey, not only am I going to sell you this property that needs a little bit of fix up or is rent ready, but I’m also going to line you up with a property manager that’s going to make sure that this investment is managed correctly.”
That adds a lot of credibility and adds a lot of value to your buyer. But then on top of that, you’re now solidifying that relationship with these property managers so that when they come across something, they think of you first to be the one that acts as the wholesaler.
Ross, I love this, my man, this is good stuff. This is making me think outside the box and say, “Cody, you need to add even more property managers, your list and even out of state property managers could be huge.”
Ross Denman: Good deal.
Cody Hofhine: Okay, my man, well, if you’re used to our podcast, we always end it the same way every time. Is there a book? If you could recommend a book that would be beneficial to help people maybe think outside the box or something that’s inspired you, what book would you recommend to my listeners that has been a game changing book for you?
Ross Denman: I think, you get inner game and outer game and sometimes we’re learning stuff about real estate or wholesaling and it’s an outer game. But I’m a big fan of things that change the way that you think. And one of the most fundamental books I’d read early on, years ago before I was in real estate, was a Dale Carnegie’s how to … Now I’ve to think of how it works, how it’s, how it’s pronounced.
Cody Hofhine: How to Win Friends and Influence Others?
Ross Denman: How To Win Friends And Influence People. Yes. And I’ve read it probably three times, cover to cover, get the audio book and it always sets me back into the importance of relationships and networking has been the biggest thing that has really pushed me into success, has really, I guess lessened the learning curve for me. By working with people who has gone before me, who do it in a different manner, see things differently, think things differently. And by growing my network and my sphere of influence, it just constantly brings me new opportunities.
Cody Hofhine: I love it. Now thinking back to the beginning stages of investing, usually now looking back, you have 20/20 vision. If you were just getting into the investing arena or wholesaling arena or just acting as an investor in general. Now knowing what you know now, what is a tip that you would give those that are just beginning? That are just looking to get into the investment arena? What would you tell them? Knowing what you know now.
Ross Denman: Never use your own money and no, and I do use my own money.
Cody Hofhine: Sure.
Ross Denman: But honestly I think understanding how to make money without having to always put your life savings as skin in the game becomes important and whether it’s learning how to leverage private money and hard money, whether it’s learning how to wholesale deals or broker different types of deals, how to structure different types of deals, how to make an owner finance deal, how to … There are so many different options and learning how to leverage a small amount of money to have a great amount of power and to be able to broker a deal and get paid.
I mean wholesaling is one of them. Wholesaling is one of the first things that people learn in the investment world because it’s something that other than, I mean, I know what the big guys, they’ll have a $10,000 a month direct mail marketing campaign. So I know there’s money involved in marketing when you get to professional wholesaling.
Cody Hofhine: Sure.
Ross Denman: But wholesale-ing’s something that you can do on a shoestring budget early on and really start making money, learning what you’re doing and gain more traction.
Cody Hofhine: Love it, Ross. I love those things. I think that’s quality because as they get more and more seasoned, they’re going to realize just the power of what you said and that’s how to not use your money. There’s the money is in the money. If you can find a way to raise money and raise capital, man, there’s so many deals out there. It’s not the deals that you need to be worried about. It’s having enough money to get involved in those deals and the smart people and some of the richest people out there, never use a dime of their own money. They’re using other people’s money. That’s why you hear OPM, OPM, other people’s money.
Ross Denman: Yup.
Cody Hofhine: And that’s how they get rich and that’s how they get rich quicker than most investors. And it’s not an easy game. It’s not a get rich quick. I don’t want to pronounce that, but I will tell you, it’s a great way to grow at a faster pace than if you’re just using your own money.
So I love that. That’s some words of wisdom and some sound advice right there. But Ross, I know you’re off to a lake house this weekend. You’re talking earlier. That’s going to be exciting stuff, but I do want to thank you for joining us on this episode. I know it’s going to help our listeners understand the importance of just networking and specifically with property managers because you’re tied to so many cash buyers already. So that one phone call can be a connection to over a hundred, 200, 300 cash buyers by just one simple connection.
So thank you so much for joining us today, Ross.
Ross Denman: Yep. Excellent. Thank you very much for having me, Cody.
Cody Hofhine: ‘Kay listeners, rhino nation. You’ve listened to another amazing episode right here where we have shared some wisdom and some gold nuggets on how you can build your cash buyers list and how to make sure that you put property managers on that list because they’re connected to so many cash buyers.
On top of that, Ross has shared some amazing wisdom and gold nuggets on just how to approach property managers and how to make it a win-win relationship. For those of you that are looking for more tips, tricks, gold nuggets, go through the podcast, listen to the different episodes. But also if you want to be inspired, go over to Wholesalinginc.com that’s Wholesaling I-N-C dot com. Click on the reviews tab and you can hear how people are doing wholesaling all across this great nation to let you know that you can do it too.
Now in October coming up, October 15th, 16th and 17th we are having our live event and we are for the first time opening this up to non-tribe members so we have a select number of seats available. Go over to Wholesalingsummit2018.com to book your seat today. It will be sold out. Again, that’s Wholesalingsummit2018.com where you can book your seat to meet me and Tom live and be connected with an amazing tribe of wholesalers. Until then, keep listening to the same podcasts and God bless guys, take care.