Posted on: May 21, 2020
WI 432 | Successful Wholesaler

 

Today’s guest is a real estate agent who eventually realized that when it comes to generating quick cash, wholesaling is the best way to go!

Jake Washburn is a successful wholesaler from Philadelphia, Pennsylvania. While he’s also a real estate agent, Jake discovered how lucrative wholesaling can be when he bought his first property in 2016.

Armed with knowledge and skills he has learned from podcasts and personal experience, he’s already setting up and automating his system so he can do more with less time and effort.

In this episode, Jake shared an insight into his wholesaling journey—how he discovered wholesaling, how he strikes the right balance between being a wholesaler and a real estate agent, and how and why he refinances his deals.

A selfless go-giver who likes helping others, Jake also shared the online resources he uses and the techniques that have helped him succeed. You’ll learn so much invaluable knowledge and wisdom in today’s episode, so don’t miss it!

From Real Estate Investor To Successful Wholesaler

Episode Transcription

I am thrilled because in this episode, I have Jake Washburn out of Pennsylvania here to talk about some deals that he’s doing, how he got into wholesaling, and to break down what it takes to be successful in this business. Jake, say hello to everybody.

How is everybody doing? I’m excited and honored to be here. Thank you, Brent, for setting the time aside to do this. I appreciate it.

Thank you. You’ve got an incredible story. I’m excited to ring the bell for your victory. Let’s bring it all the way back. When did you find wholesaling?

I found wholesaling the hard way. I was on the other side of the transaction. My wife and I were itching to get into real estate and buy our first rental property back in 2016. We bought it from a wholesaler and didn’t even know until we looked at the HUD-1 Settlement sheet. It said, “$8,000 assignable to the equitable owner.” That’s when I said, “What’s this? I’m excited to check that out.” I bought a second property about a year later. It’s $33,000 to the equitable owner.

I said, “I might be on the wrong side of the table here. Let me start looking into wholesaling.” What ends up happening is after 2 or 3 properties, if you’re not all in under 75%, you’re leaving money in the deal on the cash-out refinance. Eventually, you’re going to run out of money if you don’t have private partners and stuff like that. I said, “What’s the best way to generate some cash relatively quickly?” That’s where we started looking into what is wholesaling? How do you do it? How can I be a part of this?

Are you and your wife business partners in this?

We are.

We will get into that. Going back to 2016, were you doing the BRRRR method? Were you looking to build up your portfolio as a side business? Were you working full-time? Tell me about your schedule.

I was working full-time. I was a few years out of school. I was working as a data analyst in the pharmaceutical industry. I was heavy into BiggerPockets. I was starting to listen to that, going to forums and asking a lot of questions. I decided, “It’s time to pull the trigger.” We got a home equity line of credit. That gave us about $45,000, which was enough for a down payment and to get the work started.

After you start the work then the hard moneylender can start giving you draw money. We bought that first property back in 2016, hoping to do a BRRRR. We got saved a little bit by the market as it appraised for higher than what we thought it was going to. We barely broke even. We didn’t have to leave too much in the deal and then kept going from there.

WI 432 | Successful Wholesaler

Successful Wholesaler: If you don’t have any deals anymore or all your deals dried up, your contractors aren’t going to work for you anymore and your money is just going to sit there. So you have to start finding good deals.

 

Will you explain what BRRRR stands for to anybody that’s reading this?

B is for Buy and then you’re going to Rehab, Rent, Refinance and then Repeat.

Why do you refinance? Why not just buy it and rent it out?

If you’ve got a deal and you’re all in for $100,000 either the money that you used for that is sitting out there and it’s tied up. You can’t go into another property. You’ve got to refinance to pull that money out that you’ve forced through the equity. Your repairs are the things that you’re doing to force the equity. You’ve got to be ideally under 75%. It’s even better if it’s 70%, depending on if you buy in an LLC or you buy in your personal name so that you can refinance, take that equity out and move on to the next one. You can keep doing it, ideally or indefinitely, forever.

Essentially, what it does is it allows you to get your capital or money out of the properties, put it into a new one, and then keep doing it to the point where you’ve got a portfolio where it still has equity in it because you bought the properties, but now you’ve got a rehab property that’s being rented. They’re paying your mortgage on it. After a while, you’ve built up a ton of equity, your net worth, and you are off and running. Hopefully, it gets to the point where you’re getting enough passive income to cover your expenses and then you’ve got that true freedom of schedule.

You’ve got to build up that critical mass and be patient enough to know that at some point, you’re going to go from $0 to $2,000, $3,000, $4,000, $5,000, and $10,000 a month in passive income. You can get there if you do the BRRRR correctly, if your numbers make sense and if you’ve got a partner on the financing side that is okay with you having a lot of loans. It’s all about relationships there too.

It’s beautiful because you’re seeing, “How did these guys source these deals that I’m buying? How did they source it so much lower than I’m buying it for $8,000 or $33,000?” You started peeling back the layers and you’re like, “Sourcing real estate opportunities is where it’s at.”

At the end of the day, you can have a lot of money and even have your construction company but if you don’t have any deals or the deals are dried up, your contractors aren’t going to work for you anymore because they’re not getting work from you. Your money is going to sit there because you don’t have any deals to put it into. It does start with finding a good deal. I talked to someone in Philly. He’s a big landlord and has got 400-plus properties.

He says, “You only need three systems. You need a system for financing, for finding deals, and for construction.” It all starts with finding deals. That’s why I wanted to get into wholesale and get the absolute best deals on the properties. I can either use cash or hard money. When you buy it right is when you make money. I’ve had friends of mine make $20,000 to $30,000 on the refinance and that’s tax-free.

All wholesaling is sourcing real estate opportunities. That’s what we do. That’s what wholesaling is about. You’ve got three main options for sourcing deals. One, you can do marketing where you pay for people to call you. Two, you can get referrals. You can become the guy or gal in your area that people know to send deals to where you buy, which is essentially what you were doing before but you weren’t sourcing it yourself. You were getting the wholesale.

By doing the BRRRR Method correctly, you could go from 0 to $10,000 a month in passive income.

The third way is to be proactive and earn those deals by picking up the phone and talking to people, or going to the door and talking to people that way. These are the only two ways to be super proactive. Because of the certain situation that we’re going through in the world, these phone calls are so powerful because you can’t go to the door anymore. You have to pick up the phone and it’s more productive. You can talk to a lot more people if you’re picking up the phone every single day and calling on distressed property owners. That’s essentially what you’ve been doing.

In the beginning, you’ve got to make a lot of calls yourself to get comfortable with the script and with talking to people. I hired it out to a Filipino cold caller. For $7 an hour, 24 hours a week, he’s hitting the phones. I got my wife on Mojo Dialer. She’s going to be hitting the phones for another sixteen hours a week so that we have that full coverage throughout the day. We’re already starting to see some of the fruits of that labor with people wanting to sell land that they don’t need or that they need the cash. I’ve gotten a couple of listings as a realtor from people that got laid off and need to sell their property. It’s starting to happen at least where I’m at. That’s what I can see.

Let’s unpack that a little bit because you talked about two important things that I love hitting on. The first one is going after vacant land. Where do you target? Vacant land typically breaks down into three parts. There’s rural where it’s out in the middle of nowhere. There’s in the bubble where it’s by the city but it’s bigger lots. It’s typically 1 acre to 5 acres and 10 acres on the bubble and then there are lots in town. Which do you specialize in?

I only work in Philadelphia. If you’re familiar, it’s a very old city. They’re all row houses. They’re anywhere from 14 to 18 feet wide. We’re talking about building up high 3 or 4 stories. It’s all a large rectangular-shaped lot. The one that we closed on was incredible. The closing was in the back of my car with mobile notaries. That was a $10,000 vacant land.

Let’s break this down. You pulled a list. Where did you pull your list of vacant lots?

I don’t know if other cities are like this but Philly makes these spreadsheets available online so anyone can download the spreadsheet. From there and in Excel, you can filter out by zoning. Is it vacant land? Is it commercial? Is it multifamily? Is it a property versus vacant land? I have a background in data so I’m able to go in and filter that out. I try to use that to my advantage.

Is this an online resource?

It’s all online. It’s OpenDataPhilly.com. You can download vacants, code violations, tax delinquents, and all the properties in the city. There are 581,000 parcels in the city. Filter through that and come up with your list. It’s pretty great. The data is not always great as some of the paid sources but it will get you some deals, for sure.

If you are not in Philly, look around. You should be able to find some of this public data available. Search and ask around. I don’t know if you’re part of Meetup groups, a REIA or something, but ask around and see where people are pulling their lists from. You’re going right to the source or some recorder’s office in Philly. You’re pulling that data, filtering it through and then you skip trace it to get the phone numbers. What are you using?

We’re using Lead Sherpa and I’ll tell you why we use Lead Sherpa. You can suppress against previously skipped phone numbers so you don’t pay twice for the same phone number. That’s huge, especially over time. You’re pulling 20,000, 30,000 to 50,000 phone numbers maybe a year. You don’t want to pay for those twice.

WI 432 | Successful Wholesaler

Successful Wholesaler: In Nigeria, if you have a vacant lot next to your property, you could sell it for a dollar but there will be deed restrictions. So you have to get those restrictions removed before you can find a buyer.

 

You get the data, put them into your Mojo Dialer, and then press go.

We triple line dialer and start hammering away.

The Filipino cold caller that you pay $7 an hour for, how did you find him?

I originally found him through an agency on Upwork. I was using them and he was good. I said, “How would you like it to not have to go through Upwork and work directly for me. I can give you more hours and up your rate.” Upwork is probably taking 20% of his income. Effectively, he was getting $5 an hour and now he’s getting the full $7. It’s a better living for him and his family. He’s getting more hours. I use Hubstaff to manage his hours and payroll. It automatically pays him every week. He can do timesheets and vacation hours. It takes pictures of his screen like Upwork so I can see what he’s doing throughout the day.

You have given so much. I’ve never even heard of that. I’m going to have to look into that. The issue that I’ve always had with any foreign cold caller, and typically they come from the Philippines, is the accountability, the training, and making sure that they’re active listeners. This means that they’re not silent after they ask a question, “Would you consider an offer on your property there?” They say, “Yes. No. Maybe. How much? Who are you? How did you get my number?” There are only six responses whenever you ask somebody if they would consider an offer on their property. What I find difficult is training the Filipino cold callers to be active listeners and say, “Sure. I got it.” How is that going for you?

We could use some more training. I haven’t been as good as I should be because I’m still working a day job four days a week. I’m trying to keep up with the leads that he’s feeding me, honestly either on the realtor side or on the wholesaling side. I would love to have that extra time and freedom to be able to train him and mold him into an incredible cold caller. He’s still doing well enough to get me leads. Honestly, part of it is filtering out some of the bad data.

When I look at my effective rate, I’m making $400 or $500 an hour wholesaling if you do the math. It’s better for someone at $7 an hour to at a bare minimum filter out the bad numbers. We can focus on at least getting the person to answer the phone and mark them as a contact. I’ll follow up with them. I can go through the script and continue the conversation where he left off. At least he can get the price, condition, bedrooms, bathrooms, motivation, and timeline. He’s pretty good but he’s not perfect.

It’s a process. It’s an evolution to get them consistent, which is the number one factor. If I could give anybody one skill, it would be consistency. I don’t even know if that’s a skill. That’s showing up. If you can consistently do it, you will get deals. As you start building your skills and understand the different personality types and that there are only certain responses, then it gets exciting because then you can start pouring gasoline on your business, going deal after deal, being consistent, closing and building up your lead pipeline. Let’s look at this deal. It was from the list that you got from the county. It was from your cold caller. What was the seller’s motivation to sell this vacant lot?

This is interesting. I don’t know how the seller came upon this person. It could be a scam. She knows someone in Nigeria and she wants to move to Nigeria. She’s got this vacant land that she bought for a dollar from the city. It was a special program back in the ’90s. The city wasn’t doing too well. It had a lot of vacant lots with blight, graffiti, vandalism, and stuff like that. If people had a vacant lot next to their property, they would sell it for a dollar but it would put deed restrictions on that property.

They don’t want people flipping it for a profit. It took about three months for us to get those deed restrictions removed. She said, “I want $20,000 net in my pocket to walk away.” I found a buyer. We made that happen. The buyer fell through. I went to a bigger wholesaler and said, “Can you help me find somebody for this?” I was only going to make $4,000 with the original buyer.

In wholesaling, you really only need 3 systems: system for financing, finding deals, and construction.

I turned it over to the wholesaler and said, “You’ve got the best buyer’s list in the city. Everybody knows that.” He found someone. It was a $16,000 spread and we split it. I got $10,000. He got $6,000. Ultimately, the owner was super happy. The guy that’s buying it is happy. He’s going to put a new construction house on there and sell it for $400,000 in the next couple of years. He’s happy. Everybody is happy.

That’s a total of $16,000 from one cold call. That is what I’m talking about.

There’s a part two. She lives next door and now, she wants to sell her primary residence and move to Nigeria. We’re going to end up listing that on the market because that’s the best option for her. It’s not a house in distress and she’s not in distress. In going along with what you teach and what The Go-Giver teaches about doing what’s in the best interest of the client, we’re going to list it on the market. It’s going to be a nice commission. She’s going to be able to liquidate that property, move on with her life and be super happy about it. It’s part 1 of 2.

Not only did you make $16,000 off of one call but potentially more once the commission comes through. What kind of sale are we talking about here? Is it $300,000 to $400,000?

It’s about $150,000. It’s still a good sale. It’s a very up-and-coming neighborhood.

The other thing I wanted to peel apart here is you’re a real estate agent. A lot of people reading this have their licenses. I’ve been licensed since 2004 but I would love to get your perspective on it. What is it like? How do you balance between wearing your realtor hat and wholesaler hat?

It’s something where there’s enough equity in it and where the seller has a baseline price like this one. She only wanted $20,000. I knew it was worth $40,000. I’ll say, “Let’s do a cash situation with no fees and commissions. You’re going to walk away with a similar amount even to what if you would have listed it. It’s a lot less hassle at the end of the day.” We did the closing in the back of my car. That’s one thing.

If someone is dead set on retail, they won’t budge. They’re not super distressed. I’ll say, “Are you working with a realtor? If not, let’s work together. Let’s get you the highest and best price.” That’s what works best for them at that moment. Could things change? Absolutely. At that time, if they’re stuck on retail price, I’ll put on my agent hat and say, “I’ll put the listing together. Let’s get it on the market and get it sold.”

Tom Krol pounded this into my head and everybody reading this. He said, “People will trade their equity for speed and convenience.” That’s essentially what we’re doing. That’s how we source deals. People will trade equity for speed and convenience but sometimes they don’t need speed and convenience. They want the price. They want to go retail. What you’re doing is providing that service. What I highly suggest to everybody reading this is if you are licensed, you are super passionate about wholesaling and you want to get the biggest and best deals, I always go in as a cash buyer first.

It’s the backup plan to be able to list the property. I don’t go, “Here are your two options. I can list your house and give you a cash offer. Which do you want to do?” I listen to what they’re saying and see if they are truly motivated. If they have that problem that we can solve and they need the speed and convenience then I go straight to a cash offer. If they want retail, if they’ve got some time, or they don’t have that distress then that’s when you go to listing the properties, which is a powerful strategy.

WI 432 | Successful Wholesaler

Successful Wholesaler: If you’re working part-time in wholesaling, try to take as much manual labor out of the sales process. Learn how to automate the things that you can automate. You’ll manage your time a lot better.

 

Be careful because I see a lot of real estate agents that get into this. They start giving some opportunities and getting some leads. Everything turns into a listing because they don’t feel comfortable giving them a lowball offer, which is silly. Remember, in every single purchase, transaction or anything, I don’t care if it’s a tube of toothpaste or a house, a ready, willing and able buyer determines the value of everything.

If you are the buyer, you determine what that property is worth. That is such a powerful thing. Once you get that seated into your brain then you are going to go out there and find some fantastic deals because we sabotage ourselves a lot by assuming we know what or how much the seller wants. Let them tell you. Uncover that by asking great questions. It sounds like you do and you’re having a lot of fun with it. You’ve got another job that you work four days a week. You’re a real estate agent and a wholesaler.

It has been a challenge. Maybe I haven’t scaled up as fast as other people that are doing it full-time. Coming from data, I have good systems in place. A lot of stuff is automated now with Zapier, web integration, and stuff like that. Mojo syncs up to the CRM. I’m trying to take as much manual labor out of the sales process as possible. That’s forced me to become super time efficient. Honestly, I don’t go to every appointment. You have to pre-qualify people over the phone to see if it’s worth the 30 or 45-minute drive. Sometimes it is. Sometimes it’s not.

There are four pillars of pre-qualifying every seller. That is the condition of the property, their timeline to sell it, their motivation, and their price. If you ask questions so that you’re getting those four answers, you are going to go on qualified appointments. You’re not going to waste a lot of time driving to people or meeting with people that will never do business with you.

That is so critical especially when you’re starting. If you learn the habit of pre-qualifying 100% of your leads 100% of the time, you’re going to be successful way faster than if you’re jumping in the car and going to every single property or anybody that’s having a nice, friendly conversation with you. Friendly conversations are great. It’s even better when you pre-qualify them and determine whether or not this person is going to do business with you.

Make sure that you’re pre-qualifying. If you need any of these resources or checklists, there’s TalkToPeople.com. Check it out. Jake, what is your goal? Is your goal to have a big portfolio of properties? Is your goal a certain amount of passive income? Is your goal to explode this wholesaling business to where you don’t work in it anymore?

I have my goals set up in steps. The first goal for me is to do at least six figures a year wholesaling. I have a deal that we’re locked up for $55,000. Once the environmental is done on that piece of land, that’s going to be a huge jumpstart for me and my business to get to that goal. I’m doing this full-time. It’s phase two. Phase three is then being able to cherry-pick those deals when I can. We’re buying one that I got from another wholesaler but because a lot of the buyers have dried up, I was able to get the price down super cheap. In being poised with cash at the right place and time, you can pick up a lot of good deals. That’s part of the goal as well. It’s building that portfolio. That’s the ultimate goal.

Those are the phases. To anybody that wants to be a real estate investor, unless you come from a family of wealth or you already have wealth, cash, inheritance, or money that you’ve made but if you don’t have that, which most of us don’t, you need to get that cash into your bank account. That’s what wholesaling is. Wholesaling is hitting the lottery. It is having inheritance flying. What you do is you source deals, wholesale them, build a nice nest egg, and then cherry-pick the best deals that you’re sourcing yourself to keep building your portfolio and now, you’re building wealth. That is the master plan. It’s very simple. Don’t complicate things. I would love to pump everybody up. What is your passive income goal?

My big hairy audacious goal is $100,000 a month and it’s doable. If you’re making $500 a month on how many properties and get to that point, you’re at $100,000 a month. I know people that have that.

This is the blueprint that they have. Make money and put it into assets to the point where your assets are paying for your whole life and paying for you to buy more assets. It builds on each other. That’s what real wealth is. That’s how you build it up.

Always do what’s in the best interest of your client.

It’s generational wealth. That’s stuff you can pass on to your family. Put it in a trust and it’s forever wealth.

You keep these properties forever. You give it to your family or charity or whatever it is at the end of your life but you’ve got this incredible thing. We can make a ton of money but if we spend it all, there’s nothing left. Why not have something that you can give to your whole family? I don’t even care if it’s your kids, your relatives, whoever you want to give it to, charity or whatever it is. You have the opportunity to give somebody such an incredible gift and a head start to keep building. You did it in a principled way so that they understand how you did it so that they don’t screw it all up.

It’s phenomenal and you’re being an incredible example to your friends, peers, the people that you work with, the people that you know, and the people in your life. You’re an incredible example of being proactive, building wealth, being happy, and having freedom of schedule. It is the absolute best. It is so incredible.

I’m listening to MONEY Master the Game by Tony Robbins. The people that he interviews there like Ray Dalio don’t have to work but they work because they enjoy it and love it. They have goals for giving. The ultimate and most satisfying thing is to have the ability to give back to the community, charity, your church, or whatever you’re a part of. These billionaires sign a pledge to give 90%-plus of their wealth away. They’re making the world a better place. That’s the peak of why I do this and why a lot of people do this too.

That’s the purpose. Serve others. I love this business so much because we get to serve and help people that are truly in distress. Nobody is going to sign a contract to give away their property unless they have a problem that you can solve. It is incredible and rewarding. At the end of the day, when you’ve closed this transaction, they call you up, they are so relieved, happy and appreciative, it’s incredible. It’s the best. If people want to reach out to you, squat up with you in Philadelphia and be around you, how do they reach you, pick your brain, ask some questions or connect with you?

Look up Jake Washburn on Facebook. If you want to reach out to my business page on Instagram, it’s @Wyatt_Group. You can direct message and we can link up from there. I’m talking to someone who joined Wholesaling Inc. in the Philadelphia area. He’s working on his first deal. It’s so satisfying to be able to help the younger wholesalers start and get their first deal. You experienced that as well. It’s seeing the people that you’re teaching and coaching make this better life for themselves through wholesaling.

It works 100% of the time. There are not a lot of guarantees in life but this is guaranteed. If you have enough quality conversations with distressed property owners, you win every time. It is so incredible. Jake, thank you so much for spending some time and giving some incredible resources, insight, and inspiration.

I’m honored to be here, Brent. I’m looking forward to hopefully seeing you at the next conference when all this is over.

We’re excited about that too. If you are interested in joining the most proactive group in real estate investing, it is the TTP family and program. Go to WholesalingInc.com/TTP. Scroll down and check out what the program is about. Check out the dozens and hundreds of testimonials. If it feels good in your gut, sign up for a call. I look forward to working with you personally. Jake, thank you so much for being on here. You’re making an impact there in Philly. Everybody, as always, I encourage you to talk to people. Until next time.

 

Important Links

 

About Brent Daniels

Brent Daniels is a multi-million dollar wholesaler in Phoenix, Arizona… and the creator of “Talk To People” — a simple, low cost, and incredibly effective telephone marketing program…

Also known as “TTP”… it helps wholesalers do more, bigger, and more profitable deals by replacing traditional paid advertising (postcards, yellow letters, bandit signs, and PPC) with being proactive and taking action every single day!

Brent has personally coached over 1,000 wholesalers enrolled in his “Cold Calling Mastery” training, and helped 10,000’s of others who listen to him host the Wholesaling Inc. podcast, watch his YouTube channel, and attend his live events…

A natural leader, Brent combines his passion for helping others with his high energy, “don’t-wait-around-for-business” attitude to help you CRUSH your wholesaling goals as quickly and easily as possible!

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