Posted on: January 06, 2020

Are you ready to dominate the wholesaling world this 2020? If so, you can’t miss today’s awesome episode!

On the show, Cody interviewed Chris Jefferson, a successful wholesaler (he averages at least 70 deals per year!) from Richmond, Virginia. Aside from being a prolific wholesaler, Chris also has significant real estate experience under his belt. In fact, he has tried several aspects of real estate including fix and flips and wholetailing.

Ever the go-giver, Chris never held back and candidly shared many of the techniques that’s currently working in the market right now. Not only that, he also provided real time value and feedback so you can get your wholesaling efforts off to an exceptional and profitable start!

Key Takeaways

  • What got him into wholesaling
  • What wholetailing is for him
  • How much he earns wholesaling versus wholetailing
  • Some of the common risks of doing a wholetail deal
  • An example of a wholesale deal he did through text messaging
  • What the text message he sent out was like
  • The list he sent out text messages to
  • Why it’s ideal to pay attention to the prospective seller’s response time
  • Why you need to meet people at their energy level when negotiating
  • The beauty of taking massive imperfect actions
  • Why speed is key in the wholesaling business
  • The assignment fee he got from the deal he did
  • Game-changing book he recommends
  • What he’ll do differently if he has to start all over again

RESOURCES:

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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Episode Transcription

Darren Bentley:
Hey guys, Darren Bentley here and welcome to another episode of the Wholesaling Inc Podcast. The number one podcast for all things wholesaling. And before we get into today’s episode, which is going to be chockfull of gold, I promise you, I want to remind you about an incredible offer that we’ve been running all of last week and which is ending tomorrow night at midnight. To start your new years off with a bang, we wanted to do something really big to help you get started on your wholesaling journey. As you know, Wholesaling Inc is the number one wholesaling program in the country right now, producing more successful real estate wholesalers than any other real estate coaching program you can find, period. Brent Daniels talk to people program is quickly becoming the de facto standard among wholesalers who want to be the best at cold calling. His program is unbelievable and just continues to produce success story after success story. It’s really, to quote Brent Daniels, bananas. I mean, crazy stuff is happening right now with TTP.

Darren Bentley:
Well, this past week, we have been running a promotion offering anyone who joined either of these programs, a massive discount off the tuition price. When you join the Wholesaling Inc coaching program, you will receive $1,000 off the cost of tuition. When you join Brent program, the TTP program, you will receive $500 off the tuition costs. And as if that’s not awesome enough, we are even offering a massive discount on our newest program, REI Radio with Chris Arnold. When you join Chris’s program, you will also receive a $500 discount.

Darren Bentley:
The bottom line here guys is, we know that what we have is the best in the industry because it works. End of story. We know there are a lot of people out there who are struggling to make wholesaling work for them. Our programs can help you achieve all of your goals. Whatever those goals are, whether they are doing your first deal or growing a big real estate wholesaling empire, we know that we can help you get there because we’ve done it for many, many people regardless of whatever experience they have.

Darren Bentley:
To take advantage of this incredible opportunity, you need to visit www.wholesalinginc.com and fill out an application form. Either Tom or Cody or Brent or someone else from our team is going to call you to discuss your goals and how we can help you get there. But you have to move fast. You got to act quickly because this incredible offer ends tomorrow night at midnight. So as long as your application form is submitted by tomorrow night at midnight Pacific standard time, you will have a chance to receive this massive discount when you join whatever program it is that you join. That’s it for now, and let’s get onto today’s episode.

Cody Hofhine:
You’re listening to another episode here at Wholesaling Inc. My name’s Cody Hofhine. I’ll be hosting today’s podcast episode and I’m super excited to be with you guys. For those of you that are listening for the first time, I want to welcome you. Today we’re going to be talking about wholesaling. Wholesaling is just simply the art of finding deeply discounted properties that then you could turn for a profit. The individual that we have with us today, he does about 70 deals a year and this consists of fix and flips, wholetail deals, straight up wholesale deals, and we’re going to break down one of those wholesale deals that he just recently closed on. So the secret here behind this individual who’s going to be speaking is what’s great is he’s so good at just consistently finding deeply discounted properties but then has a ton of different opportunities to exit.

Cody Hofhine:
Like I said, he does a variety of things, but specifically for this podcast, we’re going to break down how he wholesold. We’re talking about wholesaling, how he wholesold one of those deals just recently. We’ll share how much he made on the deal, all that fun stuff here during this podcast. But get out a piece of paper, get out a pen and get ready to jot down some gold nuggets that you can take action on so that each one of you can get closer to either your first deal or your next deal. So today we have Chris Jefferson, he’s from Richmond, Virginia. He just recently closed the deal that we’re going to be step-by-step breaking down, and this guy is going to share everything. So like I said, get ready for learning like, how do I do a deal? He’s going to share how we got this deal. What was the marketing channel? What kind of list was he marketing to? He’ll share it all so that we can help each one of you get one step closer deals. So let’s, without saying anymore, bring on Mr Chris Jefferson. Chris, how are you doing my man?

Chris Jefferson:
Hey, I’m doing great, man. How are you?

Cody Hofhine:
Good. So how is the Richmond, Virginia market?

Chris Jefferson:
The Richmond, Virginia market is awesome. We get some great deals done here and overall it’s a great market to work in.

Cody Hofhine:
Okay, tell us a little bit about yourself. What got you into just real estate in general or wholesaling? Because I know you do a variety of things, but what got you into doing wholesaling and real estate?

Chris Jefferson:
Yeah, it’s interesting. I guess the short story is I started out 12 years ago and recently I had flunked out of college and was trying to figure out how to get my life together and what the next step would be. So I started wholesaling and did a few deals and the great recession came and that turned that world upside down. As a result of that, I got into doing short sales. Started doing short sales and in 2010, transitioning to buy my first flip property. We ended up scaling that business by 2011 into a business that was doing about 20 to 30 flips per year. Did that for quite a bit and then we moved into doing new construction properties. So we did a lot of infill new construction building, [inaudible 00:06:57] for a bit, we did that at a high velocity.

Chris Jefferson:
Then in 2015, what we ended up finding was we started running into cashflow issues because we had so many different rehab and new construction projects going on. So as a result, as an office, we decided that it made sense to aggressively start to wholesale. We had all these leads that we were interacting with. Since I first started, I always maintained direct to seller marketing channels. The mistake that I made at the time was that I cherry picked the deals and the deals that I didn’t want to purchase the flip or to build, we would just discard those leads. So we left a lot of money on the table.

Cody Hofhine:
Wow. That’s what I’m saying. I’m like, how many dollars did he leave on that table?

Chris Jefferson:
Millions I’m sure. Millions. We recognize this and anybody who’s ever done fix and flip or done velocity in terms of construction, it’s a draining business. It’s a costly business. It takes a lot of money to cash for those type of projects when you do that many at one time. We started wholesaling again in about 2015. It was pretty crazy. So we started wholesaling with a combination of wholetailing and it started to essentially shore up PD cashflow issues that were being created from our flip business. When I saw that after a few months I realized, I said, Hey, wait a second, we’re making more wholetailing property-

Cody Hofhine:
Break it down a little bit. What is wholetailing? For those that are listening, they’re like, okay, I think I understand the concept of wholesaling, but what’s a wholetail deal?

Chris Jefferson:
All right. I’m going to say what a wholetail is to me, everybody’s got a different perspective because it’s such a new term, right?

Cody Hofhine:
That’s right.

Chris Jefferson:
I think the reality is it generally just means this. To me and my business, a wholetail deal is a director of seller lead that we make a decision that we do not want to do a traditional wholesale. So we don’t want to do a traditional assignment. Instead, we’ll actually purchase that property. We will purchase the property, take it down, and then we will list that property on the MLS. So we will do that. And I see this as a confusion, I hear from a lot of people. We don’t just do that on properties that need minimal work or just cosmetic flips. So we do that on any type of property.

Cody Hofhine:
So you can do a wholetail on a home that’s completely ran down. It may be garbage. Even though for most people are like, Oh you can’t put it on MLS because no one can qualify. You just do it as like a cash sale at that point.

Chris Jefferson:
Exactly right. We closed a deal last month that was a tear down. The house was a tear down. The house next door was being torn down as well. So I purchased that property, did nothing to it absolutely at all except get the squatter out, purchased it, and I stuck that property on MLS. We ended up selling that property on the MLS. But it wasn’t one that we could have wholesaled and made the same amount of money.

Cody Hofhine:
Yeah. Tell me maybe the difference. I think that’s what intrigue some of the people listening today. They’re like, okay, there are deals that I’ve thought about had I wholetailed it versus wholesold it, I could’ve made X amount. On this specific deal, what would you have made for a wholesale assignment versus when you did the wholetail deal?

Chris Jefferson:
Right. So if I would’ve done a wholesale deal on the one that was a tear down, I would’ve made about five to $7,000 as an assignment fee. And by wholetailing it, so by purchasing it, used a private lender loan. So by purchasing it and then putting it on the MLS, we have agents that we work with that charges a flat fee to put a property on the MLS. So the true cost there is on the sales side. We do pay a sales commission when we list on the MLS. So [inaudible 00:10:45] selling it and making a net out of $25,000. [crosstalk 00:10:49].

Cody Hofhine:
Holy cow. So if you’re making five, you’re five times in what you did?

Chris Jefferson:
Exactly.

Cody Hofhine:
That’s awesome.

Chris Jefferson:
So it takes a little bit longer. We could have wholesaled it and made 5,000 in a few weeks versus I think it ended up being a six or seven week deal once we put it on the market, we listed it a little bit high, dropped the price a couple of times. But we did it with a 100% private financing. So it didn’t cost me any money out of pocket. My lender makes a little bit of money. I make really good money. I make 25,000 instead of 5,000.

Cody Hofhine:
That’s right.

Chris Jefferson:
And the idea behind that, when we shifted heavily into the wholetail business model, was we wanted to create situations with our lenders. So keep in mind. I’ve been building houses and flipping houses for a really long time. So the availability of private capital was there and we wanted to maintain those relationships as we moved into a wholesale business model and then we’d have less flip inventory. What the opportunity for us in that is, is that we build up and strengthen these lender relationships. We work out deals with them to provide a pretty quick return, obviously on a wholetail transaction. And what that does and the intent with that is, is as we move into different market cycles and different opportunities present themselves, we have already built these really, really strong private lender relationships, [inaudible 00:12:08] about opening a war chest of [crosstalk 00:12:11] when the market slips.

Cody Hofhine:
That’s awesome. That’s solid. So great, great input here already. For those of you that have thought about the wholesale versus the wholetail, that’s a great description of what it can be. What are some of the things that they would need to look out for? On a wholesale deal, sometimes you don’t even have to close on it. It’s just a straight assignment and you can just assign the deal without even closing on the deal. Some people might have to double close. What are some of the risks so that we can help those that if they were thinking about it, that they knew what some of the common risks are of doing a wholetail deal?

Chris Jefferson:
Yeah, so I think the common risk of doing a wholetail deal is one, you’ve got to, and at least in Virginia. There are some states that you don’t have to do this. But in Virginia, you’ve got to actually purchase the property. So you can’t list the property on the MLS without having owned it or currently owning it.

Cody Hofhine:
That’s a good point. That’s the same here in my state. And I would say probably majority. So this is good, good, good, good content you’re giving.

Chris Jefferson:
Yeah. I’d say that’s a downside. So you have to have the ability to raise the capital and you have to be intentional about how you set up those financing agreements, all those lenders. Lenders are going to like short-term but they’re not going to like short short-term. Because they can’t make enough for it to be worth sticking that money out. So you have to structure it and at least this is what we do, we structure it where we give them a little bit of a bump on that short-term interest. We add an extra point in there on the loan because annualized interest at 10% is it going to cost you very much when you hold something for 60 to 90 days. We put an extra point on the loan, reduces it a little bit for the lender and doesn’t have a ton of impact for us. But that helps us to buy that possible setback in terms of doing wholetailing. That is you don’t want to purchase a property and then not be able to sell it.

Cody Hofhine:
This is a good one. I was like, at some point he’s going to say the obvious one and that’s it guys. So those of you that are listening, that’s the obvious one, is taking down or purchasing a home and then realizing your numbers were completely wrong and then realizing you can’t even sell it for what you bought it for. That can be one of the things that can happen. So you really do need to know your numbers. Now obviously Chris knows his numbers, he knows what he’s going to purchase when he does, and he’s done this before. But it’s one of those things you do need to come to this educated enough to know what your numbers are and those numbers actually do make sense because we have seen, just like Chris mentioned. Even though it sounds like, Oh yeah, you’ve got another number as well. We’ve seen people purchase homes and then not be able to move it because their numbers were off that much. So good, good point, Chris.

Chris Jefferson:
Yeah, 100% right. So first flip I ever did, I lost 15,000 on this flip. And the only reason I lost money on this house was because I convinced myself that the numbers were something that they weren’t. Real estate comparables, when you look at comparable sales on a property, especially when you’re dealing with, it’s different when you’re dealing with a property like in suburbs where the entire neighborhood is the exact same. But when you’re doing deals that are inside of a city area and things can change block by block, you really can truly make yourself believe at the comps or anything that you’d want. The danger with that is you can find data. So if you get a deal and you’re like, Hey, I want to make 20 grand on this so it’s worth $80,000 and you make yourself believe that, when you go pull those comps, you’re going to find the data to make yourself believe that it’s [inaudible 00:15:41] property.

Cody Hofhine:
So good. So true, so true. And that ended up being one of your biggest losses, I’m assuming?

Chris Jefferson:
Yeah, it was rough. And it was my first deal. I’m discouraged, I’m thinking, Hey, I just flunked out of college. I’m thinking maybe I should try to [crosstalk 00:15:55].

Cody Hofhine:
And now I just flunked out of flipping. Come on.

Chris Jefferson:
Exactly. It was a tough, tough thought process. What I learned from that deal, that was my college level clipping experience in terms of the money lost. So what I realized from that is that forever forward and from that moment, that was 2010, so forever forward from that moment, I’ve got to be as true to the comps as possible. And that deal is not a deal, I’ve always got to be ready just to walk and accept it’s not a deal. I’ve got very specific comparable parameters that I like to use. I tend not to really deviate from that too much unless it’s a rapidly appreciating situation, which I think we’re overall most likely on the back end of that, at least in Richmond for a long time, the market appreciation was happening at a pace that would outpace the value of a property.

Chris Jefferson:
You can predict that based on the quarter over quarter numbers. I think we’re on the backside of that, at least here. So those decision making has to be different, especially when it comes to wholetail decisions when we talk about risk of potentially buying something and then not being able to sell it.

Cody Hofhine:
So true. So true.

Chris Jefferson:
Yeah. What I tell people with that is ultimately you’ve got to be honest with yourself. Nobody else can do that for you. So whoever in your business evaluates deals, whether you have a partner or whether you’re a sole proprietor, it’s your responsibility to just stay in touch with the comps and be true to the comps. And don’t put yourself in a situation where you’re going to lose money. But what I will say is I’ve had a couple of deals that we went to wholetail, but we ended up not selling them for what we anticipated and often what happened in that situation was we ended up making roughly what we would’ve made wholesaling in the first place and I still see that as a win. It’s a downside, but it’s still a win because we further nurtured that relationship with those lenders. So as we continue to move forward, it’s going to increase the opportunity that’s available to us in terms of capital.

Cody Hofhine:
I love it. Guys, these are awesome points. My last one [inaudible 00:18:10] before we move on to this deal that we’re going to talk about where you just closed. The last one is also looking at the time of year. This time of year when it comes to the Christmas season, when it comes to the winter months. For here typically in Utah, real estate starts to go down on the retail side. You start to see home sitting on the market a little bit longer than when it is when there’s no snow on the ground. So those are things you got to consider and you’ve got to consider the cost of keeping that house warm. You’ve got to keep the gas on, utilities in your name and keep that house warm so the pipes don’t freeze and blow up. You’ve got to pay for insurance. So there’s things out there that can happen. But those are some of the things that as long as you’re prepared for, and they’re still part of your numbers and it still makes sense, you can move forward.

Cody Hofhine:
But those are the things that, that was my problem, one of my biggest we were lucky nothing happened, but we had bought a house and it stayed on the market longer than we thought, but we didn’t think about the insurance costs. We didn’t think about the heating bill to keep it above freezing, so the pipes didn’t break. There’s things that go on with the winter months. So that’s the last one I want to tell you about, but we’re going to break down now a deal that he just did from his phone, not even talking to him through text messaging. So I’m excited to hear about this, Chris. Let’s go through this and maybe break it down step by step. What does the text message look like and what kind of lead source were you texting when you got this deal?

Chris Jefferson:
Yeah, so for this particular deal it was actually on a stack list. The list was a driving for dollars list and a tax delinquent list as well.

Cody Hofhine:
So he’s on two different things that you’ve sold. Like I’m driving for dollars, here’s a home that I think is great, it’s distressed and then come to find out it’s also on the tax delinquent list. That’s awesome.

Chris Jefferson:
Yeah. We used a service called Lead Sherpa that is a text platform for investors that really, really is a really solid product and it gives you an opportunity where you can skip trace inside of it and reach out to your property contacts pretty quickly.

Cody Hofhine:
That’s awesome. So what does the text message look like? Is it a small text, is that a long text? Are you just trying to get someone intrigued? How do you get some intrigue from a text message essentially?

Chris Jefferson:
Yeah, so the interesting thing is we went pretty heavy in the text messaging earlier this year, maybe a bout a year ago actually. We jumped into it and there are so many different variations of what that initial text is. We probably, I think we’ve got maybe like 10 different initiative texts that we use.

Cody Hofhine:
And you use that for split testing purposes or because there are so many different personalities that not any given one is the text message you have to hit them with 10 different ones?

Chris Jefferson:
Yeah, actually that’s a really good question. It’s a split test method. What we’ve also found is we frequently had to mix it up. So we may have somebody that we may have texted with one initial message a month ago, maybe we texted them with that message twice, never got a response. Then we’ve now switched that up on a follow up and we change it to a different initial message and now we get a response back. So texting right is still in that early stage where people are starting to implement in their business, things of that nature. But what we found is you have to frequently switch those messages. One, because of carrier issues, carriers can block those messages if they see you sending out a blast with the same numbers of the exact same message over an hour. So we like to have that adjusted for the purpose of getting responses, but for also the purpose of deliverability as well.

Cody Hofhine:
Yeah, yeah. This is crucial. Guys, write this down. Sometimes when we’re listening to this, we don’t know how much gold this is that he’s sharing right now. There’s 10 different versions of that initial text. And I think so many times when we at the, maybe even at the beginning stages, I know there’s many of you listen to this podcast, you’re at the beginning stages and sometimes you’ll try a marketing channel and it doesn’t work. So your first thing is to be like, ah, it doesn’t work, so I’m not going to do it. It just doesn’t work in my market. But what we can learn from Chris and what he just said is, well, one message may be may not work for some people, but then the second message hits him up. It’s no different than cold calling and direct mail. They’re two different marketing channels.

Cody Hofhine:
We’ve sent a guy five direct mail pieces, never heard once, but then we get a cold call and he answers the phone and says, “Yeah, I’ve got a home I’d been wanting to sell forever.” And it’s like, “Man, we’ve been mailing you like five times. What’s going on?” There are so many different personalities out there that they respond different even to the variation of those text messages. So this is good stuff, Chris. I love it. So it’s on a tax delinquent slash driving for dollars. You send out the message and then instantly was it messaging back through text or call you back? What does that look like? What is the call to action? Are you just looking to engage further by text or getting them to call you?

Chris Jefferson:
Cody, I really like this question because I’ve been involved in a bunch of these text conversations and what works, what doesn’t work. For us, we like to engage the person in the text message. Your initial text message, you want to address the person directly. You don’t want it to come across as a bulk solicitation and it shouldn’t be. So you wanted to address the person individually and now it’s whoever it is that it’s in the seat driving the conversation. Reference the property address and then what the intent is. The intent for us is to identify them as the owner and also to see if they’re opens to an offer.

Cody Hofhine:
That’s awesome. Awesome, awesome. And once from there, then it starts to get to the details where you’re going to hop on the phone.

Chris Jefferson:
Right. We like to drag that a little. So to some people who, and this works, the beautiful thing about this business is you can do it so many different ways and it can work. You got to find obviously just what works for you. So what we found is we learned to make a gauge on if that person appears that they’re being responsive by text and we don’t feel that we need to immediately get over to a sales rep to then carry the conversation by phone, we’ll take that. And I’ve done a few deals by text, but we’ve never actually spoken on the phone. Like getting it under contract, trying to [inaudible 00:24:13] kind of thing. So you have to gauge the seller. So if you’re talking to a lead and they’re responsive by text, they’re not just giving you one word responses, we tend to engage in that person in that conversation and getting information that we can as far as, what’s the condition of the property, why are you looking to sell, have there been any recent repairs to the property in the last couple of years?

Chris Jefferson:
We like to engage that conversation by text if they appear comfortable in doing so. The benefit, I’d say really the biggest benefit is it gives us the ability later on as we negotiate and interact with that seller to reference back to conversations that we’ve had with them pretty easily because it’s by text and we can really just look at a PDF or look at it inside Sherpa, and it allows us to have a reference point as we move forward with them in terms of negotiating. It also gives us the ability to, from a training perspective, as we put more people inside Sherpa, they get the opportunity to refer back to conversations easily, see what worked, what didn’t work. I’m going to give you a really good gem that works really well for us, is it also-

Cody Hofhine:
Let’s hear it, guys. When someone tells you, I’m going to give you a really good gem, that’s a time to say whatever you’re doing. If you’re driving, you pull over right now and get ready. So let’s hear it, Chris.

Chris Jefferson:
We started having this issue where we would be engaging in conversations with folks by text and then the conversation would drop off. They said they were open to an offer, they were telling us information about the property and then for whatever reason, that conversation just started to tail off. One thing that I realized that we needed to do, and this is probably about 90 days ago, is that we had to pay attention to the response time. Generally, we think about ourselves. I’m an entrepreneur, I think about, I’m essentially available all the time. There’s a lot of people who have jobs and things of that nature where they don’t have access to a phone or they meet the person they only text, spending time throughout the day they don’t constantly check their phones like we might.

Chris Jefferson:
So we started going back and paying attention to the response time on their text messages and what we found was over the course of a few days talking to a lead or a few weeks talking to a lead, generally speaking, most people responded within the same time windows daily. We made a shift in the business to know when we go to follow up, we don’t just follow up when we want to follow up. We follow up when that person is showing a pattern of responding in a certain time block. So if I’m trying to follow with you Cody and you respond 4:00 to 6:00 PM typically in our text conversations over the last two to three weeks, then we’re only going to try to catch you inside of that time window and that follow up initial text because we had found that that gives the highest percentage of likeliness to get that response to reengage in conversation.

Cody Hofhine:
So good. I’m just sitting here chuckling because I’m like, I hope, I hope everyone listening to this is receiving, understands the value behind what he just shared. Knowing those patterns, knowing the data, this is a data driven business right here in what he’s explaining. Instead of just mind-driven where it’s like, well, I’m just going to text whomever I want. He’s letting data tell him you know what, you should be texting them during this time because that’s when they initially responded to you and he allowed the data to drive his business. Because when we get more to where data’s driving our business, that’s when we start to see the real liftoff. That’s when we see our business go to different levels and we start to scale. Where everyone talks about scaling their business. But most individuals that are scaling their business that are succeeding are data-driven individuals.

Cody Hofhine:
They know where to put their marketing dollars because their data’s telling them, this is the best place to put your dollars because it’ll give you the highest return. So look at what he’s saying with these text messages. This is the time, the times that they’re responding, keep your further conversations within those times because it’s not that they’ve gone dark, maybe it’s just the fact that all the other times you’re sending out those texts is not in a timeframe when they can actually get back to you. And then it starts to play a game on us. Like, Aw man, I’ve lost this one. When indeed it could be just a simple time that you’re responding to them. So killer, killer, killer stuff. So what did this deal look like? You get this deal, you’re talking to them through text, you go out there, was this something that you just ended up putting in a contract just through text? Or did you actually get out to their home on this particular deal?

Chris Jefferson:
No. The reason I sent you this or talked to you right about this particular deal is because this may have been one of the most interesting seller interactions I’ve had in the past 12 years. So the conversation started about text and the seller, she started to drift a little bit on us. We recognize that is when we need to transition it into a phone call because now we’ve engaged in a little bit. They’re waiting and saying, “Hey, you said you want to buy the property. Well, what do you want to do?” So our sales rep, he transition that into the phone call and set an appointment. He went out, took a look at the property and took pictures of the property and that’s how that works for us. Rep goes out, takes pictures of the property, I get those back and then review them and determine from the pictures whether or not we want to wholesale it or whether or not we’ll want to wholetail it.

Chris Jefferson:
We got the pictures back and I took a look at them and it was really in between, so to speak. And when I say in between, we use a method determine wholetailing versus wholesaling is if we feel that with the wholetail we can net out after lender expenses, closing costs and commissions more than $17,000, then it makes sense to pursue that as a wholetail to take a shot at that higher profits. This one was between like 15 and 17. We couldn’t really hammer that out and as a result, I figured that I needed to go look at the property personally to make the determination. But a rule of thumb that I have, it’s not a real deal unless we have it under contract. So it’s not worth me personally going out and looking at it unless we have it already under contract before I go to look at it.

Chris Jefferson:
We started playing this cat and mouse game with the seller in effort to get the property under contract. And the reason I wanted to talk about this particular deal is because you see this happen a lot with sellers in terms of them being hard to get back on the phone, being hard to make some decision. You have to really negotiate with them and really you sales tactics to close that loop and get them back on the path of progress in terms of sitting down and getting a contract done. So we interact with the seller, she’s all over the place. Sales rep, he sends out the initial contract and we’ve agreed on a price verbally. He’s spoken with her by phone, she’s agreed to a price and we are trying to get that signed by DocuSign.

Chris Jefferson:
We like to do one of two things. Typically, we prefer to get deals signed electronically by DocuSign. If not, if there’s somebody that doesn’t seem that they are very computer literate or doesn’t have easy access to computers, where they may work at a job and then they can only access it at certain times, we want to get deals on a contract as quickly as possible. So often we’ll send out a mobile notary and we’ll tell, Hey, that matter where you’re at, we’ll send a mobile notary out to you to sign the contract. So this lady, she became hard to pin down to get the contract done. She wasn’t very responsive and I don’t remember the particular text, but we have a text that we sent that is something to the effect of, it’s a passive aggressive text and it’s kind of, “Hey, I don’t know if I did anything wrong. I know that we agreed on a number, we were trying to get the deal done. If for whatever reason you don’t want to work with me, please just let me know.”

Chris Jefferson:
So she responds to that and says, “No. Hey, I want to sell the property. I’ve just been traveling and things are really busy.” So somebody like that, we immediately recognize that they may have a hectic schedule and if we are just waiting for them to say, Hey, I can meet today, I can look at the time track today. It might never happen.

Cody Hofhine:
That’s right.

Chris Jefferson:
What I like to do is we have an office and so I like to get people in the office and get them in the conference room. I know that if we can get them down and I can sit down with somebody face to face, the likeliness that we can negotiate a deal and get it put on paper increases significantly. So we had the lady come to the office, so Cody, she shows up, sit in the conference room, [inaudible 00:32:50] the sales rep. I’ve never met the lady before. She pulls out my purchase contract and she’s got where she’s edited the contract.

Cody Hofhine:
I like everything but this, this and this.

Chris Jefferson:
Oh man, it was crazy. She edited the contract already. And if I could show it to you, she basically changed the entire contract. I mean, like everything. I couldn’t pinpoint one thing she didn’t change. She changed almost the entire contract. She didn’t want the indoor signs in there, all these different things. So we sit down and I’m speaking with her and I believe that you have to meet people in their energy level when you’re negotiating with them. She was being very matter of fact, not really saying very much. So I said, “Hey, so you’re an attorney?” She started laughing. She said, “No, I’m not an attorney. But I used to work in a legal department at a local Fortune 500 company that’s headquartered here.” I joked back and I said, “Yeah.” I said, “I see what you did to my contract.” I said, “I’ve never had somebody beat up my contract like that.” She even corrected my grammatical errors. I’m a college dropout so I don’t know everything. It’s no real estate. She’s even corrected my grammatical errors inside of the contract.

Chris Jefferson:
So we go over the contract and we literally go line by line on the things that she wants to take out of the contract. Sitting in the conference room, it sucks because I’m on short time because I have an appointment that I have to get to and I can’t miss and I didn’t anticipate sitting down with her and having some few changes in the contract. So we go through the contract, we go line by line, and-

Cody Hofhine:
Which is necessary sometimes. So everyone listening, sometimes you have to go over and above if you want to get bills done. So keep going.

Chris Jefferson:
Yeah. I liked that you said that right because my sales rep even said, and he gets paid on these deals, he even said, he said, “Chris, man, is this one that we should just say screw it and just not make the deal?” I’m like, “I think we could at least make 10 grand. So we don’t want to leave that on the table. So sit down, we keep going through the contract.” I start to realize that her concerns in the contract and once you take the wheel back, so to speak, really came down to three things. What that came down to, she did all these changes. But what her main concerns were one overall, and this isn’t one to three, but just overall not feeling she was going to be taken advantage of. You got to be able to recognize that, especially more in these direct to seller interactions.

Cody Hofhine:
That’s right.

Chris Jefferson:
There’s not the typical bridge of the trusted third party. So there’s not the-

Cody Hofhine:
Realtor or the attorney.

Chris Jefferson:
Exactly. Exactly. It’s our responsibility as wholesalers to go above and beyond to bridge that relationship gap and solidify that trust in these transactions. So I recognize that the indoor signs was a concern for her because she understood that in a different capacity. Both similar as it worked in a corporate world. She had a concern about the closing date, so we wanted the closing date to be very fast and she really needed more time. I just couldn’t figure a method to drag out the time. Then she also uniquely had a concern about, inside the contract we have more like an attorney line or clause that is pretty standard. It just essentially says that in default, people dealing party would get attorney calls. But that was like a big thing for her for whatever reason. So we go through, we isolate down to these three things and we start talking about the three things.

Chris Jefferson:
The first being the indoor signs. I explained to her, I said, “Hey, listen.” I said, “I can understand the concern about whether the property is being Assad or not. What I can tell you is that I’m a direct buyer, I purchase real estate and I use different entities. I’ve got almost 20 different LLCs that I use to purchase property. And as a result, when I do buy a property, I typically always buy them inside of a land trust. So what I did is to build confidence with her in that I pulled up a closing from the previous week from a hotel that I bought.

Chris Jefferson:
I actually ended up showing her the land trust because I recognize that she was a detail person and that I needed to build trust with her. So I ended up showing her some paperwork from a land trust on a property that I just bought the week prior. I explained to her that, I don’t know what land trusts I’m putting it in until I know exactly what I’m getting the loan from to close the property. So she understood that, we resolved that and we resolved that by, I just created the land trust on the spot and then had the lady at the front desk to notarize it, now the land trust is concluded.

Cody Hofhine:
Yup.

Chris Jefferson:
So we do that, that was [crosstalk 00:38:01]-

Cody Hofhine:
But these are good points. Chris, really quick, just to point out to the individuals listening. So many times I think we try to solve problems. We try to be prepared for the problem, I should say, pry better words. We try to be prepared for these problems like, Oh, but what if this happens? But what if this happens? But what if this happens? I can promise you, just from listening to the conversation, Chris, he just said, I’ve never even seen this before. It’s not even the fact that he could have even prepared for any of this. That’s the beauty of just getting things done. When you’re a wholesaler, you’ve got to be willing to not sit there and overeducate yourself and just think, okay, but what if this happens and this happens? And you start preparing.

Cody Hofhine:
The problem is most of you will never take launch. You’ll never go out and do a deal because you’re just stuck behind this analysis process. What Chris is suggesting though is just get out there and when the problems present themselves, that’s when you solve them. And many things during this, I can tell you just from listening to this conversation, they’re brand new things he’s never even had to do before, but you just figure it out on the spot. So when we talk about this massive imperfect action, Chris has given you a step by step, perfect example of what it means to just take massive imperfect action. Get out there, put a home under contract, and if some kind of struggle, trial challenge faces you, at that moment you figure out, what do I need to do next to keep moving this forward? Not how do I prepare for five years before I go out there and even put one home under contract? Chris, I love this.

Chris Jefferson:
For the past five years, you had written on the whiteboard in the office, speed is life. Okay?

Cody Hofhine:
Yup. Yup.

Chris Jefferson:
I guarantee you when it comes to wholesaling, speed is life. We’re all contacting the same lists, we’re talking to the same home owners, speed is life. The quicker that you can analyze a property, the quicker that you can make an offer on a property, the quicker that you can move a property to closing, the more successful overall and you can be [inaudible 00:39:52] in general.

Cody Hofhine:
So, so true. So what did you end up making on this deal, my man? After working through all these problems, what did this allow you to do and did you do a wholetail deal on this one?

Chris Jefferson:
I did not. We ended up doing a wholesale deal and we realized that we had to really be intentional about how we did this deal. So the numbers fell too tight to make sense to do a wholetail deal. What we did as a result, we decided to wholesale it, but I recognize that this lady was super protective. So when I went to look at the property after we got it under contract, as I’m walking through the house taking pictures, and this was a property she had tried to rehab and ran out of money. She is following me around the property as I’m taking pictures, she would not provide a key right for access. We know that we want the key so that we can get our buyers in the door, things of that nature. So what I realized was I said, “Hey look,” told my sales rep, “So we’ve got a call our best buyers, this isn’t a buyers list deal. We need to call our best buyers. There’s obviously a trust issue here with the seller. We bridged that pretty well but we can lose that at any moment. We don’t want to flood a bunch of people through this property that don’t have real interest in buying it.”

Chris Jefferson:
We target very specific areas of Richmond that we know we can turn properties very quickly. So what we did is we reached out directly to about three of our really, really good buyers and we did that through the agent lenders just before us, so dispositions. She reached out to those three buyers, went over the pictures with them, went over the market analysis with them and we narrowed it down to one of those buyers that, his ballpark number of what he would pay for it was higher than what we were asking for it. We knew if we could get him in the door that this was a deal that he would want to buy and close on. And we know that we can close deals in seven days.

Chris Jefferson:
We made the intention of decision of letting him go to the property first. It wasn’t one that we needed to try to beat up or like I said, run a bunch of different buyers through. It was a turn and burn. It was one that we needed to get a buyer on the door, give them a really good deal, make some money and get down the road. So we do that and we ended up making, on this particular deal, we ended up making 15,000 as an assignment fee.

Cody Hofhine:
15,000. Chris, you know what’s coming, my man. Hold on one second. (Bell ringing).

Chris Jefferson:
Right. There we go, there we go.

Cody Hofhine:
We got the victory bell for that one, my man. Working through this and then finding a unique way to disposition it brought you in a $15,000 assignment, which is absolutely awesome. That is a good assignment amount. So let’s do this with, in closing of this podcast, I want you to, why don’t we want you to learn from just this one specific, let’s do this. We’ll keep it the same. The two questions I always like to ask, let’s start first with, what’s a good book that you have read recently that would be game changing for someone that is just getting into wholesaling that they’re wanting to do their first deal, what’s something that you have read that’s been like, Aw man, this a book worthy of sharing?

Chris Jefferson:
I’m going to tip my cap to you guys. So The Go-Giver, I ended up reading recently, it’s a phenomenal book.

Cody Hofhine:
Such a good book.

Chris Jefferson:
I want to say why I think this book is good for everybody in business. We live in this space, especially as wholesalers where there’s this unnecessary idea of competition. The reality is that that’s just not real. We can help our fellow wholesalers, we can help each other and it will overall make the community better. I’ve seen you guys talk about this book for a long time. A couple of people on my team have read this book and motivated me to go up and read it. I believe overall for a long time being a go-giver. This is just a really important book that can help change your mindset and being able to recognize that by giving, things will return to your tenfold, whether that’s in your personal life, in your business life, whatever the case might be.

Cody Hofhine:
So true. And then Chris, here’s my one that I’m excited to hear for myself is looking back, knowing what you know now, what would you do differently if you were starting ground zero?

Chris Jefferson:
Oh man. That’s a good question. And that’s something being in business 12 years, I’ve given a tremendous amount of thought and I’m done every aspect of this business from bird dogging to then wholesaling, new construction, flipping. We recently redeveloped 23 apartment units. We own an apartment complex we purchased. So we’ve done it. The answer to that question for me and the way that I run my business in the past 12 years is I would have focused on wholesaling. I would have never stopped wholesaling. We stopped wholesaling, but we continued, like I said earlier, with the direct to seller approach, but we did it for only my own business.

Chris Jefferson:
We were doing velocity in volume and flipping and we constantly needed new deals. So we only focused on deals that we wanted. I would have never stopped wholesaling from 2010 on right today. I would have always, always, always kept wholesaling because the power of being direct to seller combined with the velocity in revenue that you can generate, with wholesaling and what that can do on other parts of your business is phenomenal. So that’s one mistake and something that I would’ve done differently.

Cody Hofhine:
I love it.

Chris Jefferson:
Which I think is very important. Maybe, not maybe. It is the most important. I would’ve focused earlier and sooner aggressively on passive income.

Cody Hofhine:
It’s never convenient to bypass of income. It’s never convenient to buy rentals. I don’t care how big the business is, it’s never convenient. So keep going. I’m with you 100%.

Chris Jefferson:
Yeah. In hindsight, I truly, truly, would do those two things differently when it comes to the rental business. I vividly remember starting out, like I said, I did value in flips. So we had a lot of money coming in very, very quickly when I first started my business because of the amount of flips that we were doing. And it gets you jaded especially when you’re young. I was in my early twenties at the time. You get jaded in what you think things are supposed to be. That mental concept of I can make $24,000 in two weeks or I could make 300 to 400 dollars a month, I’m going to take the 24,000. So in hindsight, it’s not that I believe there’s anything wrong with taking the 24,000, what I believe is you have to mix it up.

Cody Hofhine:
That’s right.

Chris Jefferson:
You have to create passive income opportunities that will over time, if I look at my own a journey, so had I started acquiring those assets earlier, in that 12 year time span I would have accumulated a much, much larger network. Potentially less cash but maybe not. Because I could have leveraged against that portfolio, things of that nature. So those are my two, I don’t like to call them regrets because I don’t really regret anything at all.

Cody Hofhine:
Sure.

Chris Jefferson:
But I call them two, there are two things I’m conscientious of that if I could do it again, and I encourage people to do it that way, then I would’ve continued to wholesale and I would have absolutely made sure to pick up passive income producing assets and that would have given me the opportunity to leverage better. When I talked about running into casual issues from flipping 20, 30, 40 houses a year, if you’ve got a portfolio, you can pull out against some of that portfolio to fix those issues relatively quickly.

Cody Hofhine:
That’s right. It just produces opportunity.

Chris Jefferson:
100%. It just gives you, it gives you a lot of opportunity if you build a portfolio. Somebody gave me some great advice a couple of years ago when I started to pick up Reynolds. I was at my birthday, I’m in LA, I’m having a great time, and my buddy calls me and he says, “Hey man, what are you planning to do going forward? I know you’re talking about changing your business around, things of that nature.” I said, “Man, I’ve got to buy more rentals. But with the market, the way that it is right now, it feels like a phenomenal feat.” Because the market had appreciated so much, there was so much investment activity in the market that it’s hard to see that you could get deals for the price that you want.

Chris Jefferson:
What he said to me is he said, “Look,” and he goes, “just simplify it. If you bought 10 Reynolds for 10 years, you have a hundred rounds. And that’s a pretty reasonable target.” So if in 10 years you’re going to be 32 or 31 years old with all the other stuff you’ve got going on, man, that’s not a bad portfolio there.

Cody Hofhine:
That’s right.

Chris Jefferson:
So once I recognized that and made a brain shift, that’s what moved us into looking into apartments and some of these other different things and the apartments. It was just the way that we looked at it and said, Hey, we can pick up single family homes but we can’t do it at the velocity than we want to do, so maybe doing the apartments can help and jump the line a little bit. If we can pick up 23 doors in one space versus having to go buy 23 single family units, buying it in one spot in a complex is going to be an easier thing to do. So again, those are my two, man, if I could do it over.

Cody Hofhine:
I love it. Well, Chris, I want to thank you for being on the podcast today. It’s been an honor to have you share some of your wisdom, your knowledge with Rhino Nation here on the podcast. Thank you so much for being with us today. I know you’ve got a ton of things you could have been doing, so I appreciate your time.

Chris Jefferson:
Absolutely, man. I appreciate you having me on.

Cody Hofhine:
Okay. Rhino Nation, this has been another amazing, amazing episode by an individual that’s in the trenches right now doing it. That’s given real time value, real time feedback of what’s working in this market right now. So get into iTunes, get over to Spotify and re-listen to this podcast over and over again and start to really write down some of the gold nuggets that you’ve learned from this episode. But it won’t do anything for you unless you take massive imperfect action on those action items that you write down. Remember, this podcast is meant to just help you, lead you, guide you, but you have to take the step. You’ve got to take the action. So get out there today, take the action, let it lead you to a result, and let those results bring up your next question of what you need to do. Until next time, guys, we’ll see you on the next Wholesaling Inc Podcast. Take care.

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