Posted on: May 18, 2020

In the height of the COVID-19 pandemic, many people were asked to work from home. Undeniably, going virtual is considered the next best thing to working in the office. Can you apply the same principle to your wholesaling business? You’d be delighted to know the answer is a resounding YES!

If truth be told, even before the pandemic hit, some people have been wholesaling virtually. And they’ve been very successful at it. In today’s episode, virtual wholesaling coach, Lauren Hardy, talked to one of the biggest (and most successful!) virtual wholesalers in the country—Tag Thompson!

Tag is an economist, real estate investor, and successful entrepreneur. Prior to pursuing real estate investing full-time, he has started and sold 13 successful businesses. Since 2017, Tag has been operating in 7 different cities and have made over a million dollars in assignment fees!

If you’re considering wholesaling virtually, you’ll get a clear insight about its basics in today’s episode. If anything, listening to today’s show is a huge step in the right direction!

Key Takeaways

  • Where a huge percentage of their market is at
  • Why a “package deal” is more complicated to do
  • Where a wholesaler can get money to fund their deals
  • What the most difficult aspect of virtual wholesaling is
  • Software he developed that has helped his business
  • What makes a good virtual market
  • What the “go offer” principle is all about
  • How he came up with his business principles, processes, and scalable systems
  • Time when he struggled in the business
  • What he learned from the experience
  • How people can get in touch with him

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

Lauren Hardy:
Welcome to the Wholesaling Inc. podcast. I am your host Lauren Hardy. And if this is your first time listening in, welcome. You are about to experience the number one best wholesaling podcast in the world. If you are already one of our loyal listeners, one of our Rhino Tribe members. Welcome back and thank you for tuning in today for a very special episode. Today we have tag Thompson in the house. Tag is one of the biggest virtual wholesalers in the nation. He’s a mentor of mine and also a good friend. Tag, how are you?

Tag Thompson:
I’m awesome Lauren and excited to be here?

Lauren Hardy:
Awesome. Thanks for coming. Tag Thompson is a successful entrepreneur, economist and real estate investor. Over the last 20 years, he has started and sold 13 successful businesses. In 2017 Tag left his position as the COO of a $6 billion wealth management firm to pursue real estate investing full time. Starting a wholesaling business from scratch. He and his partners have made over a million dollars in assignment fees and are now operating in seven different cities. Whoa, you’re pretty big time, aren’t you?

Tag Thompson:
I know, I’m pretty big deal.

Lauren Hardy:
I think so. Tag, thanks for coming today. Why don’t you get started by telling everybody how you got started in wholesaling back in 2017?

Tag Thompson:
So I kind of fell backwards into it. Like you just mentioned, I was working for a wealth management firm and honestly I got a little burn out of sitting in meetings where really wealthy people would complain about how they only got a lot more wealthy last year. [crosstalk 00:02:57] super wealthy. So yeah, I don’t know. It just wasn’t my personality. It’s not necessarily who I am. I didn’t get excited about making really wealthy people more wealthy. And I’d always really liked real estate and wholesaling in general because it’s something that people with nothing can start and actually make a lot of money in.
You can start in wholesaling with, just the shoes on your feet and knocking on doors if you want to. I mean, there’s no bottom to it. I mean, literally anybody can get into wholesaling. And a lot of wealth has been created from this industry. And I just love seeing these stories of people who, man the guys that I got out of prison, I came from nothing, didn’t graduate high school. And watching these people become six figure earner within a matter of years just by wholesaling. I thought the stories were beautiful.
One of my close friends is a real estate investor and he’s my current business partner, David [Olds 00:00:03:55]. He kind of taught me everything about wholesaling and real estate in general, before I started. And after I left the wealth management firm, I just went to him and I said like, “Is there room for me to do this with you?” At the time he was mainly doing flipping. And he said, “Well Chattanooga is pretty small. We’re pretty tapped out here already, but let’s give it a shot.” So we tried in Chattanooga for a little while and that did well, but we really kind of tapped the market in Chattanooga. And that’s what led to getting into virtual. So that’s how I got in.

Lauren Hardy:
Awesome. Yeah. No, thank you for giving us that rundown. So you currently live in Chattanooga and you do some deals in Chattanooga, but you also are in several different cities as well. So what would you say, what’s your percentage that are you’re in Chattanooga?

Tag Thompson:
Yeah, we’re about 50%, sometimes a little bit more. About 50% of our deals come from Chattanooga. We’ve expanded our Chattanooga market a little bit as well. So we’re in surrounding areas. But we’re also in Charlotte, Knoxville, Huntsville, Birmingham, Atlanta. There’s probably one more I forgot in there, but yeah, we’re mainly in the Southeast part of the state, part of the US. So yeah, working virtually in all those markets and it’s going great.

Lauren Hardy:
I don’t think I’ve ever asked you this, but do you flip houses as well? Or are you just strictly wholesaling?

Tag Thompson:
We don’t flip. That was actually one of our goals last year was to not flip any houses. So that was one of our goals last year. And we accomplished that one. And this year, we’re not going to flip either. We have figured out that whatever package deals, so multiple property deals kind of come across our deck, getting those across the finish line is difficult. So we are going to start purchasing those, putting a little bit of work into them and then selling those on the retail market after the fact. But no traditional flips. That’s not what we’re into these days.

Lauren Hardy:
Right. Okay. Now explain for our listeners. Why is it a little bit more complicated, when you get a package deal? Are you saying that maybe like a seller has five houses that he wants to unload and the benefit to that seller is, you’re saying, well hey I’ll pay all cash. I’ll take down all five. So you’re probably going to negotiate a sweet discount. But now my guess is it’s hard to find on the disposition side, either a buyer to take all of them, or you’re working with five different buyers with my guess is why you were going that way?

Tag Thompson:
Yeah. So you described it pretty perfectly. And I hate this scenario because when I talk to newer wholesalers, they run into that guy that has 25 rental properties. And he says, he’s interested in selling and they get so excited. And this is going to be an awesome deal. And if they get to the point where they put it under contract, those deals are incredibly hard to sell. Because now you’re talking about 25 different sellers, you’re talking about 25 different properties that need to be appraised and comped. So it’s at minimum going to be a package deal of probably 1.5 To $7 million. And I tell wholesalers this, if you’re talking about buyers, your market, if you’ve got a million people in your area, there’s probably 5 or 10,000 people that have $70,000 that they can spend on a real estate purchase.
But there might be two that have one and a half million dollars. So your buyer pool gets incredibly small at that point. So it’s a lot of frustration and they’re very hard to sell. So for that purpose we buy them, that way we control the deal. That way they’re our tenants now, and we don’t have to try to work with somebody else’s tenants. We handle all the paperwork ourselves. It’s our property. So they just make it a lot easier to sell that way. So that’s our strategy now. But I hate telling new wholesalers that because they get so excited about those deals. And I felt like I’m popping their balloon every time. It’s just, it’s awful.

Lauren Hardy:
Well then it makes a lot of sense. So essentially on the disposition side, you’re going to [inaudible 00:07:48] them as we call it. You’re not like HGTV going in there and-

Tag Thompson:
No.

Lauren Hardy:
No, you’re just going to get them like where they could pass inspections and they’re livable.

Tag Thompson:
If there’s vacant ones. You’re going to fill the vacant ones. That way it looks a little more attractive to a buyer. We can put the whole package together to just be more attractive.

Lauren Hardy:
Where are you getting the money?

Tag Thompson:
Yeah.

Lauren Hardy:
That’s a question. Where can a wholesaler that doesn’t have any money, maybe get money for something like this?

Tag Thompson:
Yes. There’s a whole industry of hard money lenders, private banks. We use one called Longhorn to do most of ours. And we have some private investors as well that lend us money for it.

Lauren Hardy:
Okay. That’s cool. Well, it’s kind of a next level thing. I would say. It’s not like a beginner strategy for wholesalers or for beginning wholesalers, but it’s just something to think about. It’s the strategy I don’t think we probably have talked much about on this podcast. So I’m glad we got to talk about this. But let’s move on a little bit and talk more about virtual wholesaling. Because that’s actually what you and I have in common and that’s how you and I met. So for our listeners, we met because we were both TTP students. And we were just crushing our cold calling game together. And I noticed that Tag was a virtual wholesaler and I’m a virtual wholesaler and there wasn’t a lot of us out there. So I reached out and said, “Hey, let’s be friends. We need to talk more.”
And Tag and I have really had lots of long discussions about our strategies and how we run our wholesaling businesses virtually with the knowledge that I’ve gotten, that we’ve kind of developed together over the few years. I came out with a virtual wholesaling course and a coaching program that we are launching and we’re working under Wholesaling Inc. And that’s why I’m hosting now. So super exciting. But a lot of it kind of started from conversations that you and I had. So let’s dive into virtual wholesaling. Let’s talk about, what would you say is the most difficult aspect of virtual wholesaling? Maybe when somebody’s getting into a new market, what would be the biggest hurdle you think they face first?

Tag Thompson:
It’s great to see this kind of come full circle because when you and I first started talking, there were no programs.

Lauren Hardy:
Yeah there was nothing.

Tag Thompson:
You couldn’t pay any money and have someone teach you how to do this. There was a few random books. But you and I both got into virtual out of just necessity, we just had to. And so it’s great to see you create this beautiful program that people can go through and you can teach them how to do this. That’s such an awesome thing. And I’ll encourage everybody to sign up for it. I’m a believer. It’s good stuff.

Lauren Hardy:
Yeah. Awesome.

Tag Thompson:
For a newbie wholesaler that’s getting into virtual, probably the hardest part is learning how to value a property in the city you’re unfamiliar with. So you don’t know the layout, you don’t know the neighborhoods. You don’t really know about how much houses cost, because most of us we can guess about how much the house costs on the street we live on. But if I were to say, “Hey, I’ve got a seller who wants to sell a house in Wetumpka, Alabama.” The likelihood that anybody knows, A, where that is or how much real estate is worth there is pretty low. So that’s probably the hardest part about getting into virtual wholesaling. And we ran into that right away. When we started going to these virtual markets. We developed a thing called Go Offer. Lauren was one of the very first people, she actually got to experience it in like super beta beta version.

Lauren Hardy:
Beta, yeah. Beta beta mode.

Tag Thompson:
So she had to kind of test that out with us and help us develop that in the very beginning. But we took a software and we developed this software that essentially looks at every property in and around the subject property area. So everything in that neighborhood and analyzes it based on every criteria that our artificial intelligence can find. So, I mean in some areas, it can’t find a ton of things. You know bedrooms, bathrooms, square footage, all of that is easy. But it goes as far as saying, does this house have a gravel driveway? Does it have two stories or one story? So it really dives in deep and extracts all of that data and goes through an algorithm and it tells you an offer range based on the condition of the property. So it’s very simple. If you have an address and you know the basics of the condition on the property, you can know how much to offer the seller within a millisecond.
I mean, as soon as you hit search, it’ll give you an offer range to offer the seller. So we tested the product for a full year and it’s worked in every market that we’ve tried it in. So that’s usually the biggest problem that going into a new market you face, is understanding how to comp things. The other thing is just analyzing the market itself. And you did a great job in your program describing how to go into that market and how to analyze a market before you really spend much time. So that’s a really, really hard thing to do. And it takes us some skill to figure that out. That’s it.

Lauren Hardy:
I definitely know what you mean with both of those things. I have personal experiences that I can share. My first virtual market was Nashville, Tennessee. And I remember telling you, I was like, “Yeah, like I’m building houses in Nashville.” And because I was doing ground up construction and Nashville was great for that. It was a developer’s market. And so I was, I was like, “Okay, I’ll be a developer, whatever.” Because I was a house flipper in California. I thought, okay I could do this. But then I started wanting to wholesale as well. And that was where I was having a hard time. I was just having a difficult time. It just seemed to be… I use this word competitive. It did seem to be that there was like so many wholesalers and so many developers everywhere just chasing after the same houses and the same lots.
So being that I was out of state, the whole neighborhood would be changed by the time the comps, that I could even access comps. I would call a seller up. Then the seller would go, “Well, I could just walk outside and go talk to the developer across the street because they’re building four units right across the street. I’ll just get an offer from them.” And 9 times out of 10, who’s going to win, the guy in front of her or the girl on the phone from California who doesn’t have a Southern accent. Like ha ha. So I lost every time.
So I realized that wasn’t a great market to get into as a virtual investor. And had I had somebody giving me some basic parameters and there’s not a lot. I mean, it’s not a whole lot, but it’s things that are important. I probably wouldn’t have wasted my time to be honest. I would have either just stuck with developing homes there. I wouldn’t have wasted my time trying to wholesale. So yeah, you’re right. I mean, there are some basic things that you and I kind of discussed over and over again about just what makes a good virtual market. And I do address it in my course.
But you’re right too about then the second half is once you pick in a market, what’s the offer pricing? How do you figure that out? I mean, that is very difficult. And when I first went to Oklahoma City, I could not figure out how to make offers for the life of me. I mean, I was always offering way too low. All the sellers were like no way. And I was like, I don’t understand, how could you make any money off of it if I go any higher? And I realized I was analyzing it completely incorrectly.

Tag Thompson:
Yeah. My personal opinion is that kind of the traditional model for getting to a maximum allowable offer, that MAO is broken. Because it assumes that the wholesaler that’s talking to this seller knows about construction and knows about how much repairs costs. That’s a big, significant part of that formula. The traditional formula of 65% of ARV minus the repair costs, minus your fee. That’s a big chunk of money. And if you underestimate or overestimate your repair costs, then the deal’s dead. So our stuff, our programming analytics takes repair costs out of the picture. We treat properties more like commodities.

Lauren Hardy:
What are these trading for, right?

Tag Thompson:
Yeah, I ask people all the time, how much is a Big Mac? Like how much is a Big Mac? It’s 3.99 I think. And I say, “Well, why is it 3.99?” Well, that’s because that’s what McDonald’s and their billions of dollars in research have figured out. That’s the most that somebody will spend on a Big Mac. So if we’re selling Big Macs, competing with Big Macs, we’re going to sell it for roughly 3.99. So we look at markets. So we say, okay what are the similar houses to this one with every parameter that we can find. What did that sell for? Well, that one sold for that and this one should too. And we’ve found that that theory plays out in every market across the country. We don’t need to talk about repairs. We don’t need to get estimates. We don’t need any of that. We need to be able to isolate the similar properties because that’s what an investor already pays for a house just like that.

Lauren Hardy:
Exactly. It really is just looking. I mean, I used to do the, what I always heard was 70% minus repairs. And then being a flipper in California, I had to get even more competitive and I was getting up to like 85% minus repairs. I mean, then make sure I list it myself and cut every cost I could. But yeah, going into a market like Oklahoma City, that which was my second virtual market. I could not figure out how to offer. And you were the one that told me, “No, you just need to see what other buyers are buying at and just minus your wholesale fee you want.” And make sure I use the word, support your narrative to the seller.
Make sure you can support your narrative to the seller that, hey houses like yours are selling to other investors between, let’s give a number, 55 to $65,000 in your neighborhood, given the condition of your home. I’m going to offer you 55. What do you think? And then I just try to get the seller as low as I can. And we’ll put it out to the end buyers and see, get a bidding war going. And hopefully we sell it for 65. Don’t overthink it. People are overthinking it I think, with the whole 70% minus repairs thing. Your Go Offer idea I mean, seriously saves so much time for people.

Tag Thompson:
Go Offer, it’s a principle. It’s just go offer, don’t waste time. Don’t analyze a deal, get your number and go offer. That’s it. Find as many people as you can get in front of and offer them that number. And some will say, yes.

Lauren Hardy:
I like that. I didn’t realize that. That’s what it was. It was a principle. I like that. And it’s true. Because some people, they really do over analyze, what should I offer? What should I offer? And it stops you from actually just blurting out a number to the seller. Well, I definitely got to say, I really do love the way, Tag, you think. And a lot of the way you just run your business. One of the things I really love about Tag is that everything, every process in his business, he thinks about how can I scale this process? Everything that he does is scalable. So I do love that with Go Offer, you thought of that in a way, it probably came out of a necessity because you were training different acquisition managers.
And that’s really difficult when you’re trying to build out a team, how to teach someone how to value an investment property in a very sophisticated way. That’s days and days, weeks and weeks of training versus you’ve came up with a way of not less sophisticated, but same results. And you’re able to hire. And if somebody quits, you can hire someone in their place and retrain them very quickly. I really like that about you. How did you come up with those kinds of principles or that way about you?

Tag Thompson:
Yeah, so it was out of necessity. I’m a person who I love processes. So I had to isolate the requirements of process. So if it’s an acquisition manager, there’s really like only three or four key things that a good acquisition manager needs to do. So I isolated those and then created a system that made those four things as simple as possible. The technology to be able to call a lot of people. That’s very important. And the ability to give offers very quickly. Because if somebody can give offers very quickly, they can deliver a lot of offers. And as you know very well Lauren, the more offers you give, the more deals you get. That’s just the way it works. So the ability to deliver contracts effectively and get contracts back, these are some very key things that that position does.
And you isolate it and make that as simple as possible in a very linear system. And it works. I mean, you and I, when we started TTP, everybody was opening call centers and hiring a bunch of people to call, right in their office. It was a little bit different back then. But we had to create a system for that. And we had to… Cold callers don’t typically last very long. I lost seven in one week, one time. So that was a huge panic moment for me. And so at that point, I realized I have to have a system in place where I can hire a cold caller and have them on the phone with sellers in four hours. So we did that with cold callers. My acquisition managers, I can have them up and running in about a day and a half. So yeah, it’s important to be able to have simple systems. And those can just scale indefinitely.

Lauren Hardy:
Yes, definitely scalable systems. If that’s something everybody can remember from this episode. As you’re building your wholesaling business and growing. When you’re just starting out, you don’t even think, you still think small. And you’re just trying to figure it out. But really one day you might have a team underneath you and you always just start from the beginning with scalable systems so you don’t have to like undo things that you’ve already done. So yeah. I love that. I love a lot of your philosophies. Well, let’s switch gears a little bit. What is something that you are super proud of right now? Do you have any big successes wins? Maybe like how many deals you ended up closing in 2019? What’s something you kind of want to brag about? Let’s talk about wins.

Tag Thompson:
Yeah. I’m really proud of you, Lauren. I am. I mean, I really am.

Lauren Hardy:
Other than me.

Tag Thompson:
No, I’m really proud of you.

Lauren Hardy:
[crosstalk 00:22:03] brag about you.

Tag Thompson:
Yeah. The course you’ve created is impeccable and it’s so well designed. So I’m really proud of you. But I’m proud of the business that I’ve created. I’m very proud of the fact that, I’m not sure how many teens of employees here that we get to provide a good life for. And I’m really, really proud of that. I’m really proud of Go Offer and the way it’s going to be able to help wholesalers get to that offer number quickly and send in a lot of offers. So I’m really proud of all that stuff.

Lauren Hardy:
I’m proud of you too. I think Go Offer is a really, really great idea. So I’m super excited, when you launch that we’ll definitely talk more about it. The reason I like to ask about wins is because I like to segue into the next question which is, tell us about a time that you lost or you really ate it in this business. I think everybody loves to talk about how great they are and how many deals they closed and how great they’re doing. But for a newbie wholesaler, who’s listening to this podcast. I think they would all appreciate if you could share a time where you weren’t as awesome as you are, and you struggled with something in this business? Maybe it’d be like a really bad deal you had, a crazy seller that blew up on you, whatever. Share a time that it was hard.

Tag Thompson:
Yeah. I have it somewhere around here. I have what I call my learning or my favorite learning hud or closing statement. So we had a deal, we had a $60,000 assignment fee, $60,000 [inaudible 00:23:36]. And in the South, that’s a pretty big assignment fee. We don’t get a lot of deals that big. So it was a life changing assignment fee. I mean a lot of people in our are office commission based. So we had people lined up ready to get these big commission checks. And 10 minutes before closing, we got a call from a buyer and he backed out. 10 minutes before he was in the car on his way to the title company and backed out, the last second. So that was a really, really bad day. I mean, walking out of my office and pulling my support staff off their desk and saying, “Hey, I know you were expecting a 6 or $7,000 commission check today, but that’s not happening.”

Lauren Hardy:
That sucks.

Tag Thompson:
That was a really bad day. So that was a big loss. In the end it was probably our fault. We made some mistakes that kind of spooked the buyer at the last minute. But we had a really bad day and then came in the next day and got back to work. And we’ve made well over a million dollars in assignments since then. So yeah, even though that was a big loss, I kind of use that to tell people out there, especially a newer wholesaler who maybe you haven’t gotten your first contract yet. That over the course of your wholesaling career, you will lose deals, deals will fall through. But you have to just get back and keep making phone calls and keep giving offers because the good will outweigh the bad. You’ll get past the big losses and the wins will overtake them. And now we laugh about it. We really do. Well kind of. We laugh about that loss.

Lauren Hardy:
I’m laughing.

Tag Thompson:
But the loss was powerful. It taught us that even with a big, I mean, that was one of those deals where after it fell through, we were like, “Holy crap, how are we going to make payroll this time?” How are we going to… So it taught us a lot about the value of perseverance and just getting back up. So that was probably our biggest loss learning moment that we’ve ever had.

Lauren Hardy:
Oh yeah. I always say, don’t count your chickens before they hatch.

Tag Thompson:
Don’t do it.

Lauren Hardy:
Don’t do it. Also another saying, it was never yours.

Tag Thompson:
Absolutely right.

Lauren Hardy:
So I always remind myself with a deal, I always say, it’s not yours yet, it’s not yours till you’re holding that check in your hand. So I purposely, I don’t get overly involved in the micro of my business. I’m not really looking at my contracts and saying, “Okay, well, how much is it proposed that we’ll make out of that? And how much this one, how much that?” Forget it. I more look at like, okay what do we have scheduled that’s closing. Still not even [inaudible 00:26:16]. And I don’t even count the dollar signs. I’m just more like, okay, how many do we have scheduled? And what days kind of thing, put them on the calendar. Just so I can see my calendar has closings scheduled. And that is a good feeling, but I don’t know how much those, I don’t even pay attention to what’s coming in until literally I get a FedEx package with the check in the mail.

Tag Thompson:
Yeah. That’s very smart.

Lauren Hardy:
And then that’s when I’m like, oh sweet, that was a good one. Good job guys. And then I let everyone know, hey this came in and everybody collect your commissions. And we do not count our chickens before they hatch any more because we’ve had that exact same experience. It’s a right of pass. It’s going to happen to me again.

Tag Thompson:
It will. Absolutely. We’ll have a deal fall through this month. I don’t know which one, but we’ll have one.

Lauren Hardy:
Totally it’s part of the business. Well, okay Tag. We talked about a lot of things and I really want to thank you so much for dropping all this really good information for everybody. If anyone wanted to get ahold of you, how could people get ahold of you? And I’ll include it in the show notes.

Tag Thompson:
So Facebook or Instagram are great. Just search for Tag Thompson. I’m the only one. So that’s really the best way.

Lauren Hardy:
Awesome. And if you guys want to visit my website and you’re interested in my coaching program, please go to www.wholesalinginc.com/virtual. There’s a lot more detail in there. I have a cool video you can watch. All right well thank you guys for listening. Tag, thank you so much. Everyone, thanks for tuning in.

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