Posted on: July 20, 2020
WI 474 | Rental Portfolio

 

Today’s guest is a force to be reckoned with in the real estate world. Dubbed as the Equity King, he has the amazing ability to find real estate opportunities with massive amounts of equity.

Marcus Maloney has come a long way from his first taste of real estate at just 12 years old. Today, he has completed over 3.3 million worth of wholesale transactions. While he still wholesales virtually in multiple states, he also invests in cash flowing rentals.

Marcus has also mastered the art of turning marginal profit into significant equity position. In this episode, Marcus candidly shared some of the wisdom and techniques that has helped him achieve the success he’s now enjoying.

This episode will inspire and motivate, so you owe it to yourself not to miss it!

How to Build a Rental Portfolio From Halfway Across the Country

Episode Transcription

We have an awesome episode with another fellow virtual investor. He’s based out of Arizona. His name is Marcus Maloney. Marcus, welcome.

Lauren, thank you for having me.

I’m happy to have you. I got to know you a little bit because I was on your podcast. What is your podcast’s name?

We Love Equity Real Estate Show.

It was fun. I enjoyed being on it and I said, “Why are you not on mine, being that you’re another virtual investor?”

WI 474 | Rental Portfolio

Rental Portfolio: Find a partner you can start a joint venture with when you are just getting started.

 

I said, “Let’s do it. Let’s go ahead and rock and roll.”

We go with it. We roll and we’re off the cuff. That’s what we’re doing. I’m super stoked to have you. Tell me a little bit about yourself. First of all, where do you live?

I live in Phoenix, Arizona. I’m in the Southeast Valley. I’m in the Queen Creek area of Arizona. I’m about 40 minutes Southeast of Phoenix. I wholesale here in Phoenix, but my main business now has transitioned virtually to the Chicago market. We’re in Chicago, wholesaling in quite a bit. I have rental properties there. We’re looking at expanding and doing some more things in that Chicago market, and also in other markets in the Midwest, Indianapolis, St.Louis and Milwaukee.

I can’t say I know anyone who wholesales in Chicago, so I am excited to meet you. I always get excited when I meet someone who’s doing deals in areas where I have never met anyone doing deals there before. Tell me a little bit about the Chicago market.

It is very progressive. It’s a lot different from the Phoenix market in the sense that it was behind as far as the downturns. When Phoenix, California, Florida and Las Vegas got hit quick really hard, Chicago got hit but it was a long progression. It wasn’t all of a sudden. It was slow. You could still pick up houses for $50,000, $40,000, some even $30,000, where on the next block, a fix and flipper was doing it and selling it for $200,000. We saw the spread difference there. It was like, “Let’s do it.” I got into it by accident.

If you don’t know how to get started with real estate wholesaling, simply look for the bread crumbs left by other people. Don’t be afraid to get out there and make mistakes.

How did you get into it?

I was doing deals in Phoenix, and as I always do, I’m on Instagram, Facebook, Twitter. I was posting some of the things that I was doing. My wife’s best friend reached out to me. She was like, “My mom passed away 3 or 4 years ago. I have this property and I need to sell it now.” I was in this situation where like, “I could do it and make some money, but what if this thing goes south? Now my wife’s best friend is upset with me. My wife would be upset with me, and this falls on the relationship.”

I was transparent. I told her, “We work with investors. I can get this deal done for you.” I found out what she wanted. At the time, I was JV-ing with a realtor in Chicago. I said, “This is what I have. This property and the seller are very close to me. I want to get it done. I need everything to go smoothly.” We ended up doing it. We got the property under contract for $100,000. We turned around and sold it for $125,000. She was happy. We were happy. Everybody was happy.

I tell all of my students, “Find a partner that you can joint venture with, not just when you’re going virtual. When you’re going virtual, always JV with someone at first. Even when you’re getting started, JVing is a good way for you to feel more confident that you have this partner you’re working with. They have the answers and buyers. You don’t have to stress so much when you’re trying to sell the property and make some money. That’s cool that was what you were doing. How did you find that partner?

I was doing some other things in Chicago. I knew I wanted to shift there because things in Phoenix were starting to ramp up, and the prices were starting to get crazy. I was putting some ads out on Facebook and Craigslist. That’s how you tell how long ago this was. He reached out to me and was like, “If you got any deals, let me know and I can help you move them.” I said, “Perfect.” He sent me over the JV agreement and it’s been history. We were doing deals. I’m not JV-ing with him anymore, but we did about a dozen deals together, if not more. I’m a strong advocate of JV-ing and partnering. That’s how I got started.

WI 474 | Rental Portfolio

Rental Portfolio: Partner with people who know what they are doing. If you try to do everything yourself, you may look like a fool and lose money. There are so many ways that it could go wrong.

 

When I first moved from Chicago to Phoenix, I didn’t know the landscape. I didn’t know what was the good area, what was the bad area or anything like that, but I knew I wanted to get back into real estate. There are some direct mails. I sent it out, I was trying it and I got a call from the seller. This is how you know I didn’t know what I was doing. I got the property under contract at ARV. I had eight buyers and I sent it out. Everybody was like, “You don’t know what you’re doing. This is wrong.”

I was starting to feel down about myself. One guy hit me up and he was like, “I see you’re out there trying. There are a lot of people that talk about doing it, but you’re out there doing it. You’re not afraid to make mistakes. Come on into my office. Let’s sit down and talk.” I started talking with him. I became his acquisitions manager. I’m not sure if you know of Justin Colby. I was the acquisition manager for him and Gable Strowski. We were doing deals. I felt comfortable on the phone. I was closing deals over the phone. I was like, “This is great.” I told them going in, “I’ve always been a solopreneur. I can help you out. I’m willing to learn and do whatever you want me to do. Eventually, I’m going to go out on my own.” We got to that part where I went out on my own and the rest has been history. Gab is partnering with me on deals in Chicago. My once mentor is now a partner. That’s JV and it works.

You have to partner with people who know what they’re doing. When you try to learn it, be a hero and do it all your own, you are going to either look like a fool, screw up or lose money. There are so many ways that it could go wrong. I love that you did that. That’s cool that you worked as an acquisition manager for high-volume people like that. If you don’t have any experience in this business but have that opportunity, why not? You went from Phoenix. There are a ton of Phoenix investors. We know that Phoenix is full of our industry. You’ve chosen Chicago. It sounds like you were from Chicago. What are you doing in Chicago? Are you wholesaling a little bit or doing some buy and hold?

We have a portfolio that we’re building. We have about seven doors, and we’re aggressively buying more. I was out there, walked a couple of properties, and talked to a couple of sellers to see if we could get some properties under contract. We’re still very active in Chicago. What I want to tell people is that if you’re getting started and you don’t know what to do, the only thing you got to do is look for the bread crumbs and the trails that are left by other people. Don’t be afraid to get out there and make a mistake. I’ve got to the point where pride became too expensive. I had to let my guard down and say, “Whatever I got to do to learn this business, let me get out here and do it.” That’s exactly what I did.

I love that you are not only wholesaling virtually, but you are building a rental portfolio virtually. I tell people, “Virtual works with any disposition strategy.” I built homes, flipped homes, did wholesaling, and held rentals virtually. Let’s talk more about rentals because we don’t talk about that as much. Wholesaling virtually is the thing that most people think off the top of their heads. Holding a rental portfolio virtually is doable. What are the reasons why somebody would go virtual holding a rental versus in their own backyard?

Never let roadblocks stop you from achieving your goals.

What happened was the price points in Phoenix became too expensive. The numbers were not making sense. Anytime you purchase a property for $300,000 and your rent is $1,500, $1,600 or $1,700, it wasn’t making sense. I can go to Chicago or to a market that I knew and buy a property for $30,000, put another $20,000 to $30,000 into it, but then rent it for $1,500. I was looking at the money that could be made and I was like, “Why buy in Phoenix when I can buy in Chicago with less exposure but more money?” That’s what we started doing.

That’s like a 2% rental price rule.

Here’s a quick story. I was watching this property. It was a duplex. The guy had it for sale on the market for $65,000. I was watching it and wasn’t thinking about pulling the trigger. I was like, “Let me see what happens with this property.” It came off the market and didn’t sell. I said, “I’m going to grab my yellow pad of paper.” I sent him a quick message because I looked the property up in the Assessor’s Office. I got the address and sent him a message. I said, “I noticed that your duplex didn’t sell on the MLS. Did you pull it off or are you still interested in selling it? Give me a call.”

Three days after I sent the letter, I got a call. He was like, “I am interested in selling it. What would you be willing to offer?” I was like, “$50,000 is a decent offer for the property.” He was like, “Let’s do it.” I got the property for $50,000. I put another $20,000 into it. The first floor is renting for $750 and the second floor is renting for $675. It worked out. When I was building the portfolio, I was doing it all by myself. There was no management or anything at first because we would rehab the properties. We made sure all of the mechanical and everything were sound, so we don’t have to worry about any damage or anything like that.

Lo and behold, I had one property and I got a call at about 4:00 in the morning. I was like, “This is my tenant. It’s not good news.” He gave me a call and he was like, “The garage is on fire.” It was a detached garage. He was like, “I called the fire department. What do you want me to do?” I said, “You called the fire department. There’s nothing I can do. It’s 4:00 in the morning. I’ll give you a call in the morning.”

WI 474 | Rental Portfolio

Rental Portfolio: It is tempting to squeeze every nickel and dime in every deal you are working on. But in the end, doing that will only waste money and result in tons of mistakes.

 

I gave him a call in the morning. They put the fire out. I called my insurance company and they cut me a check. I had my contractors go over there and redo the garage. There was nothing else that I could do. From there, that’s when I started putting a property management team in place because we started buying more properties. I couldn’t fly from Phoenix to Chicago just to watch some properties.

When you go virtual, it is tempting to nickel and dime everything, and squeeze for as much juice as possible by trying to do it all. In the end, you are going to waste money doing it that way in mistakes. You thought you made a little bit more money here and you’re going to screw something up on the other end. Perhaps something bad happens. It is important. When you’re virtual, you got to get help and get your boots on the ground.

You have to set yourself up as if you are there. You’ve got to have eyes in the sky. If it’s not you, it needs to be somebody else that’s there that you can call up. First of all, the tenants should be calling the property manager for them. You have better things to be doing. It’s still cool. You were living in Phoenix. It wasn’t making sense to buy rentals there. You didn’t let that stop. You went back to your hometown in Chicago and made it happen there. That sounds great.

What I tell people is there are opportunities out there. It may not be in your own backyard. Maybe you need to go 2 or 4 hours away. You can still find deals. You can’t let roadblocks stop you from doing what you’re trying to do.

A lot of times, people go virtual out of necessity. We’re lucky it was a necessity that took us there. You figured out that these returns are bananas compared to where you’re living now. You’re not even looking back.

You don’t need a lot of money to start with real estate wholesaling. Just put in the effort, close those deals, and manage your wealth accordingly.

I don’t even look at rental properties in Phoenix because I’m like, “What I can pay for a rental property here, I can buy 2 or 4 units there and make more money there.” Naturally, you don’t get the appreciation that you would get in Phoenix, but we don’t invest for appreciation. We invest for the long term. It’s like, “Why not?” That’s what it’s all about. That’s the wealth-building. I tell people, “You may have to get started with wholesaling because you don’t have any money to start it, but once you start closing those deals, you have to be prudent with your money.” You have to put some aside and say, “This is for taxes. This is for my long-term wealth strategy,” because you can’t always wholesale for the rest of your life. Some people can, but for the wealth-building component, you need to start owning some.

That’s one of the benefits of getting into this business. Wholesaling is a way that you can get in when you don’t have the money upfront. Anybody can do it. You don’t have to have a rich upbringing that will help you get into it. In wholesaling, I started with no money. I started with a credit card. It was a way for me to get into real estate investing with no money. Now I know how to find discounted off-market deals. The other end of it is building that wealth through owning property. The end goal is owning these deals and getting that consistent cashflow, and you’re doing it. You’re the real deal. That’s amazing. I want to know more about it when you start going into other territories.

The reason why I ended up in Phoenix is my wife had a job and I had a job lined up, but once I moved my family and everyone out here, my job got pulled away from me. I was here with nothing. If anybody knows what a First Premier credit card is, that’s a predatory lending credit card, and I had a $200 limit. My accounting practice was I got $85 worth of overdraft fees. I added that to my account. I had $85 worth of overdraft fees that I could use on this credit card. I started with the direct mail sending out those mail pieces. I will send out 50 a week. One popped and the rest was history. If you are out there and don’t have any money, don’t let that stop you. There’s money out there. You can find a way. If you don’t have the money, you have to use your effort. You got to use what you have.

You got to use your effort. There are plenty of ways that even if you don’t have money to market, you can make this business work. It’s what I call beating the bushes a little bit, but you can do it. It takes a little bit more effort. Let’s shift gears now. You have a podcast. How can people get ahold of you?

The podcast is We Love Equity Real Estate Show. You can find me there. All of my social media handles are @mrcsmaloney. I have a YouTube channel where nothing but free content, everything from starting as a wholesaler all the way up to doing multiple deals. You can find that information there. My website is MarcusEMaloney.com. I am a contributor on BiggerPockets on their podcast episode 386. You can find me. Just Google my name, I’m out there.

WI 474 | Rental Portfolio

Rental Portfolio: When you’re in virtual wholesaling, you have to get help and put your boots on the ground. Set yourself up as if you are there.

 

Thank you so much for being on the show. I’m excited and I’m glad we got to meet. I look forward to hearing a little bit more about your journey if you end up in other markets. Keep us all posted.

I will and thank you so much, Lauren. Thank you Wholesaling Inc family. I appreciate the opportunity to speak with you. Always remember to enjoy the journey.

Thank you. Take care.

If you like what you read, please subscribe. If you want to learn more about my coaching program on virtual investing, I want you to go to www.WholesalingInc.com/virtual and apply there. Take care.

 

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About Lauren Hardy

WI 489 | Negotiation TacticsLauren Hardy is a Virtual Investing expert and Real Estate influencer who owns multiple companies in the real estate industry including real estate investment, coaching, and software companies. She is also a Wholesaling Inc coach and co-host of the Wholesaling Inc Podcast.

Her experience in the last decade has been focused on real estate investing and creating products and services to serve the real estate investing community. If you are interested in investing in real estate virtually, house flipping, or virtual landlording, Lauren’s your girl.

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